Obama’s Budget and Deficit Plan – and Our Decision Time


The president’s speech, April 13th, on his deficit plan relieved many who had not yet recovered from the ugly compromises Democrats were compelled to make to avoid a government shutdown. 800,000 workers – AND the hundreds of millions they serve – were left hanging in the balance, wasting a week or more of work planning for the possible shutdown, while Republicans clucked at their country clubs at their successes continuing the Reagan initiated destruction of the social contract between democratic government and the American people.

Just a few of the big hits in the continuing resolution (CR) for this year.

More than half of the $38 billion in spending cuts would hit education, labor and health programs.

Non-profit health coops funding (one of the best parts of the recent health care law) killed.

Funding for federal Pell grants, job training and a children’s health-care initiative will face deep cuts.

High Speed Rail: $1.4 billion cut.

Title 17 Innovative Technology Loan Guarantee Program: $860 million (worth $18 billion in loans) cut.

Wildland Fire Programs: $735 million cut.

Defense Environmental Cleanup: $584 million cut.

Energy Efficiency and Renewable Energy: $550 million cut.

National Science Foundation – Research: $444 million cut.

International Clean Technology and Strategic Climate Funds: $400 million cut.

Green jobs innovation fund: $40 million cut.

No funds are allowed to be used to establish the NOAA Climate Service.

The Environmental Protection Agency will see a $1.6 billion cut.

Democrats were able to beat back – for now – the most severe cuts originally proposed by House Republicans, and protect funding (this year) for Head Start, AmeriCorps, and the implementation of the new health-care and food safety laws. They were also able to beat back Republican attempts to destroy Planned Parenthood and NPR.

“Race to the Top,” Obama’s signature education reform initiative, will receive an additional $700 million in funding. In addition, the Securities and Exchange Commission received a $74 million increase from 2010 levels, which will help fund new securities enforcement measures.

But Democrats agreed to key concessions in important areas and were not able to reduce military spending.

The President’s Economic Platform for Re-election

Following the stunning $38 billion cuts in the CR, the President delivered a major speech on Wednesday outlining his long term deficit plan and vision. This plan will dominate the economic policy of his campaign for re-election. It retains many of the damaging cuts of the CR, but pledges to draw the line at Republican attacks on Medicare, Medicaid and Social Security benefit, and further promised to end any more extensions of the Bush tax breaks for the rich, and to end many corporate tax loopholes as well. Thank God. If we are going to talk about deficits, then we have to talk about shared, equitable sacrifices.

The president’s speech was a welcome effort to turn back the stupid and destructive attacks by the rich and reactionary corporations on working people and EVERY entitlement and right fought for and won over the past century and a half. Sam Webb’s speech to the 1st annual Communist Party Conference gives an concise summary of these rights at risk. (I call the cuts stupid – because the rebellion that will sweep this land will cost the wealthy and corporate fools a lot more than a tax increase if their recklessness is not disarmed).

Defense and Offense

Considering the political environment, and the fierceness of his enemies, the president’s speech was courageous, even if the basic character of the “line drawn in the sand” was defensive. But I do not use “defensive” necessarily in a pejorative context. In fact, a defensive posture is probably mandatory if you are going to “draw lines in the sand” and bring the majority of the people to stand with you, at least in American politics. In truth, in my near 20 years in the labor movement, I never saw a successful union campaign where the temper of the workers was to attack the company. The widest organization and the most determined struggles were always to defend ourselves against attacks on our security, or our rights. Not just union campaigns, but in nearly all  struggles where great sacrifices – even to the last measure of devotion – are asked of those who decide to fight, the defensive stance is necessary before all are certain they are on moral high ground. In the current  contest we literally cannot survive OR recover unless an entire social class – the “too big to fail corporations” are greatly reduced in their power to corrupt US democracy.

It took Fort Sumpter before arms were raised to defend the Union and, in the end, destroy slavery in order to save the Union; it took Pearl Harbor to persuade Americans to commit 250,000 lives to the defeat of the Axis powers; the dramatic defensive tactics of Dr Martin Luther King transformed a minority fight into a majority one.

Is the Obama Platform Sufficient for Economic Recovery?

That said, there is a big question whether the Obama proposal meets the minimum requirements sufficient to generate an economic recovery from the very serious crisis still underway, still unwinding.. There are some big missing items.

   1. The United States now really needs the government to be spending an extra $3 trillion on infrastructure over the next 12 years--other Pacific nations (China, Japan, Korea, Vietnam, India) are planning to do this scale of investment. Obama is giving up on this.
   2. The presidents plan proposed nothing on unemployment. The United States now really needs an additional fiscal stimulus over the next three years of $1 trillion or so. Obama is giving that up.
   3. The United States really needs failure to meet budget-balance targets to trigger high-bracket tax increases. Obama is giving that up in favor of another independent commission.
   4. The United States really needs to deal with the long term greater fiscal needs of an aging America by opening the borders (immigration liberalization).
   5. It is not at all clear that the existing Health Care reform can generate savings as long as the insurance companies, pharmaceuticals and piece-work doctor incentives dominate health care policy.


We are at an important crossroads where we have to confront political reality. If there is not a powerful push from the Left and progressive forces comparable or greater in strength to the so-called Tea Party, the president may well be pushed back again, as in the CR debate. Neither he, nor we, live in a political vacuum. The fight to preserve Medicare, Medicaid and Social Security, and to tax the rich to pay down the deficit will make the 2012 election the most straightforward, national CLASS struggle since the Roosevelt election of 1936. The spirited example of Wisconsin public workers and their tens of thousands of allies are shining a light on how to develop this fight. It is a vital democratic struggle that we must win. The reactionaries and neo-fascists are throwing everything they can into this struggle.

It is true that without addressing unemployment and infrastructure, it may not be enough to stem the tide of frustration that is amplifying right-wing demagogy. It will likely not be enough to secure economic recovery, and it will not be enough to return stability to markets. Yet we cannot turn away from the fight. If we do not break this attack from the right, if we do not move mass frustration leftward, another dark age awaits us. Conversely, If we do break the attack, the chances that our corporate and wealthy enemies will become divided and in disarray rise, and the subsequent chances for a counter-offensive that moves progressive aspirations to the center of the US political stage also rise.

The Left Can Make the Difference

A credible left economic recovery program, and a thousand candidates to run convincingly on it, would provide exactly the balance necessary to negate the reactionary pressures on both the president and congress.

Several alternative, peoples, budgets have been proposed that focus green investment, progressive tax reform and shrinking the military. They have some supporters in congress, but are still a  minority, even among Democrats. The counterattack from the Republicans has put most of them on the defensive too.

Its our job on the Left to take on this challenge. The most important step is to run as many candidates as possible. Ballot initiatives are also good handles, but candidates are best. Initiatives rarely inspire the breadth of mobilization we need. If only “Blue Dog” or similar local and regional candidates are on the ballot in the primaries,  then divisions will rise and the ability to turn out the grass roots will be a hundred times more difficult. Most of the offices where this is possible will be state, county or municipal where confronting the crisis must be done without any possibility of deficit spending as a way out. Thus the true meaning of shared sacrifice will be revealed there. The class nature of the struggle will be even sharper on the state and local fronts than on the national scene.


Meeting this challenge requires ALL to put UNITY against the right FIRST on their agenda.

There are some ideological obstacles that need to be overcome.

First, the obvious ones – or they should be obvious by now: division between workers by race, nationality, gender, sexual preference, age and disability.

Second, on the Left  various  arguments are often heard that say “deficits are a phony framework” that should be rejected in principle as a trap. Some liberal and progressive academic Keynesian economists, like James Galbraith, often fuel this trend by arguing that in financial crises where interest rates reach a zero bound that there is no theoretical limit to how big national deficits can grow as long as productive capacity ultimately returns to growth. That may or may not be true theoretically – but in politics there always IS a boundary. The public associates rising debt with rising risk; and rising risk with rising instability. Working people, in particular, know well the price paid over the past generation when wage increases were discarded in favor of increasing credit card limits. National debt is not the same as household debt – but the distinction is lost in political battles with reactionary forces determined to stop public good expansion by any means. Even Roosevelt’s coalition could not get the stimulus necessary on economic grounds alone. It required a gigantic externality – World War II – to overcome the political obstacles to the scale of public investment needed.

Third, some are simply fearful of the sharpness of the class dimensions of a struggle in which the rich cannot continue to get richer at the expense of the majority, and at the price of destruction of our democratic rights and institutions.

There is no escape from the deficit issue. Failure to win a progressive approach to long term debt will have one of three consequences: a) Republicans will increase their robbery of the public and send us all to hell; b) default – another version of hell similar to that being offered Greece, Ireland, Portugal; c) the Fed will monetize (inflate) the debt – i.e. massive wage cuts.

Take heart! We can take it on and win, and make Obama a better president in the bargain. We have nothing to lose but chains. Si Se Puede!

I have only addressed the domestic, economic side of the elections – but the international side must be addressed as well – coming next!

Photo by newlow/cc by 2.0/Flickr

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