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Obama 2013 Budget: White House Shows Some Political Smarts

14 Feb 2012
Posted by Stan Collender

My column from today's Roll Call explains why the politics behind the Obama 2013 budget that was released yesterday are a sharp departure from what the White House has tried to do with its previous budgets.

After three years of trying to propose something that would be at least marginally acceptable enough to get a conversation started, this year's budget is based on an assumption by the Obama administration that nothing it proposes will be accepted so it might as well propose the spending and tax plans it prefers.

It's just the latest sign that nothing is going to happen this year on the budget. It's also an indication that the Obama administration is now playing tougher politically than it has before.

Obama’s Budget: It’s More Than Math Calculations

By Stan Collender
Roll Call Contributing Writer
Feb. 14, 2012, Midnight

The fact that President Barack Obama’s fiscal 2013 budget released Monday adds up mathematically is almost entirely beside the point. The real question — the one we’ll be debating all year — is whether it adds up politically.

The 2013 budget does not include a short-term deficit reduction plan. That might seem counterintuitive until you consider the four main components to this year’s politics-of-the-budget equation that seem to have been most important to the White House as it put its proposal together.

The first is the overwhelming likelihood that nothing substantive or substantial will happen this year. This actually is one of the rare bipartisan agreements to come from Washington over the past few months. They might bemoan and decry the situation, but statements by Republicans and Democrats alike make it clear that few in either party think a deficit reduction deal of any kind is possible in 2012.

The only question is why this isn’t unanimous. Given the steady series of budget-deal-related failures in 2011, why is anyone still clinging to the hope that, absent a major budget-related crisis that allows elected officials to move from their current feet-in-cement positions, an agreement in 2012 is even remotely possible?

The second is the almost unprecedented hyperpartisan environment that exists today not just inside the Beltway but across the country. In this setting, anything the Obama administration proposes on any issue — but especially on spending, taxes, the deficit and national debt — is unlikely to generate much support from Republicans. No proposals from Republicans will be given so much as a glance by Democrats.

Given the partisan divide, it might be only a bit of an exaggeration to say that Obama’s 2013 budget would have been declared just as dead-on-arrival if it had included the exact same budget resolution with the precise Medicare premium support plan proposed last year by House Budget Chairman Paul Ryan (R-Wis.).

Third, polls now show that the deficit isn’t close to the top issue in the country. In some polls, it’s even close to the bottom of the top 10 and barely in double digits. Therefore, making deficit reduction the top priority in the budget would not be the most astute political move for the White House, and allowing the GOP to claim it as its primary issue will make that party seem out of touch to the majority of Americans.

That is, in fact, what the Obama budget seems to have assumed and is trying to do.

In putting together its spending outline, the White House also had to consider that there will be few opportunities for the GOP to exploit legislative leverage on the deficit issue this year.

A continuing resolution for all of 2012 is in place through the end of the year, and it’s hard to imagine that the GOP will threaten a government shutdown a month before Americans go to the polls. It also now appears that an increase in the debt ceiling won’t have to be considered until after the elections, so there will be no federal cash shortages or threatened (or imagined) defaults on U.S. debt.

That makes the payroll tax cut set to expire Feb. 29 the only real legislative cliffhanger between now and Election Day and the only opportunity for the GOP to demand budget-related policy changes or else. And given Monday’s announcement that House Republicans will not insist on offsetting spending cuts to pay for an extension, even that now has to be considered unlikely.

It also means that, with the White House refusing to focus on the deficit, there will be few opportunities for Congressional Republicans to make the president’s budget an issue over the next nine months.

One of the things to watch will be how often the administration makes any of its senior economic people available to testify on the budget at Congressional hearings. In addition, with former Office of Management and Budget Director Jack Lew, who was responsible for formulating the 2013 budget, unavailable to testify because he’s now White House chief of staff, the much lower-profile acting director, Jeff Zients, will be the person designated to appear on Capitol Hill. Zients will be able to claim that, as OMB deputy for management, he had limited involvement in the budget he’s being asked to defend.

The administration also isn’t likely to accept many invitations to speak or appear on Sunday talk shows if the budget is supposed to be the primary topic.

The final political consideration for the administration is also the most obvious: It’s an election year. It was clear from this year’s State of the Union address, when the deficit was barely mentioned, that the president wants to be the candidate who offers better times rather than the one who promises things such as spending cuts, higher taxes and reduced government services that cause stress or real pain for the average person.

This is hardly surprising, given that virtually everyone in the United States gets some type of tax or spending benefit from the federal government, including many of the biggest and most vocal opponents of big government.

The White House undoubtedly anticipated the criticism it has already received for not proposing to do more immediately on the deficit and has made yet another calculation that it will quickly fade as the focus shifts from what the budget includes to the pain the GOP is proposing. That actually adds up.

Perhaps the reason they are

Perhaps the reason they are not proposing to do more sooner to cut the deficit is that would be terrible economics. We have massive unemployment, slow growth and record low interest rates. The best economic policy is stimulus to get the economy going.

Cutting the deficit now would slow growth, which decreases tax receipts and increases safety net spending, increasing the deficit as a share of GDP. Austerity is counter-productive - see the recent experiences in the UK, Japan and Europe.

Also note that that the Republicans highest priorities - cutting taxes for the wealthiest and repealing the healthcare law - will increase the deficit and transfer resources from the middle class to the best off.


It is smart

This budget proposal should lead to a Democratic strategy of making the 2012 election a referendum on the tax code, and how upside down, unfair and counterproductive to job creation. Tax reform that cuts rates for the middle class who are the real job creators, and raises rates for the truly wealthy. Tax reform that will cut rates for smaller corporations, and make sure that the largest corporations pay more than smaller corporations. Lower the top corporate tax rate to 25%.

If massive tax cuts for the top 1% created tons of jobs combined with enormous deregulation as we saw in the financial sector as GOP core philosophy espoused and continues to espouse, then we should be in economic nirvana. It's a failed policy and we have a once in generation economic crisis as a result.

Obama should say to the electorate - "We will change this tax code, and a vote for Democrats in the White House and Congress will guarantee that this upside down tax code gets thrown out, and simplified. The idea that single taxpayers pay an onerous 25% tax on income earned above $35,350 and married taxpayers above $70,700, while Mitt Romney and the Koch Bros pay 14% tax rates on millions and billions in annual income is an affront to all Americans looking to get ahead and build wealth for their families. A vote for Democrats will make sure the failed policy of the Bush tax cuts which ushered in these grossly unfair tax rates gets thrown out and burned."


INEQUALITY

Since 1980 we borrowed 14,000 Billion. The Tax Book was Christmas Tree filled with goodies for the Rich and Corporations. It is a shame that they take more in Exemptions than they pay in taxes.
That is why OECD ranks Us:
#2 as Least Taxed--We pay 30% of GDP in fed---state--local taxes
#2 as Least Taxed Corporations--In 2011 They paid 1.5% of GDP in taxes
# 4 on Inequality--10% own almost 80% of our Wealth and take almost 50% of our individual income..80% get the crumbs
Suggestions:
1.Fed Fund election--6 months-3 primary- 3 general-free equal tv time-one debate a week=12-adequate to evaluate candidates no $$ no pacs
2.Members of Congress and White House can accept nothing with a financial value.
Keep them on the job not on the road
3.Progressive Flat Tax(by group)--tax to pay our way not leave for kids to pay
4.Burn Tax Book--gets enough added revenue to have a surplus to attack the debt

Yes! Simple. Yes Effective.
only bug I find is how to choose candidates.


TSUNAMI

WRECKONOMICS II REV 7-12-10
COURTESY :WALL STREET OF AMERICA
LEADERSHIP VIA CONSERVATIVE POLICIES
THANKS TO RONALD REAGAN AND G W BUSH

From 1946 to 1980 the period was known as the GREAT MIDDLE CLASS YEARS
Each President worked to reduce the Debt from WWII.
In 1980 Debt was less than 1000 Billion and Government Spending was 600 Billion per year.

Reagan boastful Cut Taxes plus Cut the size of Government was a Trojan Horse, per his OMB Stockman, to cut Taxes for very rich.

Reagan was Governor for 8 years during which he increased Taxes on many items.
He increased the state revenues more than any predecessor.
By Far. Cutting Government? Ho Hum. Blarney Baloney once more.

Reagan policies increased Spending by 80% .
Debt by 186%.
9-30-81 Debt was $999.9 Billion and 9-30-89 at $1,859 Billion
Conservatives use Spin: It was Congress.
From 1930 to 1980 we spent $6066 Billion.
Reagan 8 Budgets totaled over $7000 Billion.
Congress? Ho Hum.
Blarney Baloney.
Congress returned Reagan 8 budgets for his signature with
fewer total dollars on them.
Haynes Johnson in “sleepwalking” said Reagan administration was “most scurrilous in history”
138 were investigated /charged/fined. More than total for all preceding Presidents in 20th century.
There were scandals in 27 Departments of the Federal Government.
Most involved money fraud.
The book “Ronald Reagan-There he goes again” documents over 300 incorrect statements by good old Ron.
Each President from 1945 reduced the Debt then came Spend-Borrow Reagan
to increase government by 80%.

THEN-Here comes GHW BUSH.
No braggart here. Nice Gentleman.
He increased Debt to $4411 Billion.
A 54% Increase.
Give him credit for increasing Tax on Rich due to out of control Deficits.
He had courage to put America first over ideology and party.

THEN-Pay your Way CLINTON ARRIVES
The Debt on 9-30-1993 was $4411 Billion.
The Debt on 9-30-01 was $5807 Billion.
An increase of $1396 or 31%
He ended with a surplus.

HERE comes old King of Spend-Borrow GW BUSH
Debt was $5807 Billion and on 9-30-09 it was $11,909 Billion.
105% increase.
Reagan-186%
Bush I-54%
Clinton-31%
Bush II-105%
Reagan-Bush I-Bush II did not pay down a penny of debt in 20 years
Those Three Famous Conservatives added $10,946 Billion to our Debt.
Three so called Famous “conservatives” promoted cut government
Up = Down to them.
INTEREST ON DEBT
9-30-81 to 9-30-09 we paid $8400 Billion in Interest.
87% Interest Paid on Debt incurred by the Famous 3.

Is it not possible(no) that without Reagan + Bush Tax Cuts we would enjoy a Surplus?

REDISTRIBUTION DOWN TO MIDDLE CLASS
Increase Unearned Income Tax to 40%. Make Gamblers pay.
Increase Top Income Tax Rate to 40%
Increase Estate Tax big time big time biggie
Eliminate Loopholes on Corporate profits—Set a Minimum
2008 -16% average payment-(top rate 35%)

In 2003 distribution of corporate profits by CBO report revealed
Bottom 80% of Income earners got 8%--Top 5% got 67%---Top 1% got 49%
2009 Tax Return of Exxon pays no tax on billions in profits. Wrong. Sad.
2007—Exxon paid no tax. Got a Refund.
2010—Exxon Profit 45 Billion. Let us see if pay a tax?
Renew Revenue Sharing to return cost to rich from middle class

Clarence Swinney
Political historian since 1991 on Reagan-Clinton-Bush II administrations.
Lifeaholics Of America -- old n ugly but honest mad mad mad at Inequality in Amrica
Author-Lifeaholic-Work for a Life not just a Living—Workaholic to Lifeaholic
Author-forthcoming-- title not decided—How Democrats created a Great Middle Class and Wall Street Rich Conservatives are determined to destroy it
Many Stats from 12-6-09 polidose.com article by John Lucia “The National Debt:Betrayal and Devastation
Comments and corrections welcome at cswinney2@triad.rr.com I do err.


gridlock is NOT bipartisan

"No proposals from Republicans will be given so much as a glance by Democrats."

This is patently false: several of the bills blocked by the Republican House leadership in the past year were nothing more than an implementation of ideas proposed in Republicans' speeches of two or three years ago. The bills' only flaw? They were sponsored by Democrats.


Your insight has been greatly

Your insight has been greatly appreciated over the last year. Do you think there are any scenarios where the debt ceiling becomes an issue ahead of the election?




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