Editore"s Note
Tilting at Windmills

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April 13, 2011

HOW OBAMA WOULD GET FROM HERE TO THERE.... OK, so President Obama offered a deeply satisfying rejection of Paul Ryan's radical Republican budget plan, and delivered a stirring defense of progressive governance. But the point of the address was to present the White House's vision for long-term debt reduction -- which, of course, is more important than the rhetoric.

There was, of course, yesterday's freak-out that the president would embrace the Simpson-Bowles plan as his agenda. Those of us who urged caution, and said it was highly unlikely Obama would actually do this, were right.

Obama's plan -- reducing the deficit by roughly $4 trillion over the next 12 years -- basically has four parts. The first is the worst: unspecified domestic cuts.

"The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week -- a step that will save us about $750 billion over twelve years. We will make the tough cuts necessary to achieve these savings, including in programs I care deeply about, but I will not sacrifice the core investments we need to grow and create jobs. We will invest in medical research and clean energy technology. We will invest in new roads and airports and broadband access. We will invest in education and job training. We will do what we need to compete and we will win the future."

The second is to find real savings in the massive, bloated Pentagon budget.

"Just as we must find more savings in domestic programs, we must do the same in defense. Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but conduct a fundamental review of America's missions, capabilities, and our role in a changing world."

The third is to pursue savings in health care spending, built on the existing savings found in the Affordable Care Act.

"The third step in our approach is to further reduce health care spending in our budget. Here, the difference with the House Republican plan could not be clearer: their plan lowers the government's health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government's health care bills by reducing the cost of health care itself."

And the fourth part has to do with taxes, including the president saying he will "refuse" to extend Bush-era tax breaks for the wealthy beyond next year.

"My budget calls for limiting itemized deductions for the wealthiest 2% of Americans -- a reform that would reduce the deficit by $320 billion over ten years. But to reduce the deficit, I believe we should go further. That's why I'm calling on Congress to reform our individual tax code so that it is fair and simple -- so that the amount of taxes you pay isn't determined by what kind of accountant you can afford. I believe reform should protect the middle class, promote economic growth, and build on the Fiscal Commission's model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit. And as I called for in the State of the Union, we should reform our corporate tax code as well, to make our businesses and our economy more competitive."

In terms of the larger ratio, the White House considers this a 2 to 1 to 1 breakdown -- $2 trillion in spending cuts, $1 trillion in savings on interest payments, and $1 trillion in increased revenue.

I'll have more on this in the coming days and weeks, but at this point, I'd consider this approach pretty reasonable. It's not the agenda I'd present were I president, but I could live with it if it became U.S. policy. The problem, of course, is that if the "compromise" between Obama's vision and Paul Ryan's is what we end up with, that'd be a disaster -- so the White House is going to have to fight for this approach.

Paul Krugman, who hasn't exactly been impressed with Obama's approach thus far, characterized the substance as "much better than many of us feared," adding, "I can live with this." Krugman soon after said the president's plan "is wonk-tested" and the numbers add up -- which is more than can be said for the Paul Ryan plan the media loves so much.

Steve Benen 4:20 PM Permalink | Trackbacks | Comments (17)

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Comments

I hope he can pull it off- there are a lot of very rich oxen that are going to be gored.

Posted by: DAY on April 13, 2011 at 4:32 PM | PERMALINK

"In terms of the larger ratio, the White House considers this a 2 to 1 to 1 breakdown -- $2 trillion in spending cuts, $1 trillion in savings on interest payments, and $1 trillion in increased revenue."

Completely ass backwards.


Posted by: Joe Friday on April 13, 2011 at 4:32 PM | PERMALINK

So when will Congressional Dems parade before the cameras to pronounce the plan "Bold! Courageous!"

That's what the GOP would do, and the pundits never fail to fall for it.

Posted by: quaker in a basement on April 13, 2011 at 4:33 PM | PERMALINK

The Villagers will always love everything GOP, including Ryan's disaster budget. Good luck seeing Obama's speech making any press - perhaps only to ge chided as undermine, where Ryan is oh-so-serious, fabulous and dreamy (swoon)!

Posted by: MsJoanne on April 13, 2011 at 4:37 PM | PERMALINK

Damn you, autocorrect! *Undermine=unserious.

Posted by: MsJoanne on April 13, 2011 at 4:41 PM | PERMALINK

Let's just cut the Bush tax cuts after this year. Then it won't be an election year fight.

Posted by: kindness on April 13, 2011 at 4:48 PM | PERMALINK

I liked it a lot.

And, from the screaming, screeching and whining I've heard from the right, I like it more and more.

Posted by: c u n d gulag on April 13, 2011 at 4:50 PM | PERMALINK

For the most part, this plan has to be the end product.

The trump card Obama holds is that it is better to do NOTHING and let all the Bush tax cuts expire than make any major compromises.

I hope he is aware of that fact.

Posted by: bdop4 on April 13, 2011 at 4:57 PM | PERMALINK

Joe Friday, @4:32PM

Go to those Krugman links that Steve has posted (Intertubes referrals don't count towards your 20-a-month limit). He does talk about that and how it's not as bad as it sounds; some creative accounting is involved vis what Obama means by "cuts".

Posted by: exlibra on April 13, 2011 at 4:59 PM | PERMALINK

Yeah - I'm sure we can count on the Republican house to make the tax code more fair - for somebody.

Posted by: UnEasyOne on April 13, 2011 at 5:21 PM | PERMALINK

Yup, compromised with himself again. Came out with a reasonable plan when he is dealing with complete lunatics.

Posted by: guachi on April 13, 2011 at 5:53 PM | PERMALINK

re Joe Friday...

I agree.

re kindness...

When Obama negotiated his agreement with the repukes last December, the wealthy got their tax cuts extended for two years and that will not elapse until December 31, 2012. Convenient? The payroll tax cuts which I believe will add to the repuke arguments for destroying social security and the extension of unemployment benefits expire at the end of this year.

My two cents...

What should be on the table for changing includes the 2002 reclassification within the tax code changing the income of a class of people from being taxable income to being capital gains taxable. It is relevant that this change in the tax law was purchased by hedge fund managers, who were among the beneficiaries of the change. For the hedge fund manager in NYC, who made almost $5B (like in billion) and paid a 20% lower rate (35%-15%) than he should have, that comes out to about a billion dollars! Buying politicians is damn cheap compared to what you can get in return.

Posted by: SadOldVet on April 13, 2011 at 5:59 PM | PERMALINK

This is not rocket science. Let ALL of the Bush tax cuts expire in 2012. They will cost the U.S. taxpayers $5.05 trillion dollars in ten years because they are paid for with borrowed money. They are an entitlement we cannot afford and tax cuts do not create jobs. Get us the hell out of Iraq, and drastically reduce our forces in Afghanistan (another $1.5 trillion - although there is no way to recover the $1 trillion already lost by George W. Bush). End corporate welfare. All of it. Exxon-Mobil does not need a charity payout from the taxpayers. End farm subsidies. Fix the tax code, especially anything related to offshore banking island hideways, and for the love of God, please put a few Wall Street investment bankers in prison. Go after Medicare fraud; not the Mom & Pop crooks in Florida billing for electric wheelchairs that were never delivered, but the big for-profit hospital chains like Columbia/HCA that rip off the taxpayers for billions every year by upcoding every admission and through laboratory fraud. Hire more IRS agents and do more corporate audits. Every agent generates $6 dollars in recovered tax revenue for every $1 dollar in salary. Cut out useless, overpriced weapons systems from the DOD budget. Even Secretary Gates said they could cut $7-$8 billion right now. Stand for something and take on the real fights with the Republicans and especially those incredibly ignorant Tea Party frauds who would ruin our economy permanently. Get mad and cut their freakin' heads off, or get the hell out of the way and let another Democrat run in 2012.

Posted by: max on April 13, 2011 at 6:05 PM | PERMALINK

There is no need whatsoever for 'long term debt reduction'. No one was worried about debt reduction during the many years of Reagan and Bush debt expansion, and there's no need to worry about it now. Instead what we need is stimulus and job creation.

Posted by: Jim on April 13, 2011 at 6:29 PM | PERMALINK

I gotta tell you, it's great to see Krugman flip-flop and embrace federal cuts. First Obama, and now the Nutty Professor himself.

Posted by: Miidle O' The Road on April 13, 2011 at 6:40 PM | PERMALINK

I just watched the first seven minutes of MSNBC's The Last Word" and turned it off. O'Donnell was ripping all parts of Obama's speech. What a cynical report. Apparently I watched another speech.

Posted by: Keith Frohreich on April 13, 2011 at 8:27 PM | PERMALINK

This is the Republicans' moment -- the one they have been eagerly anticipating when George Bush cut taxes and committed America to two simultaneous wars. They have created the massive deficits they hoped to use as leverage to cut all manner of domestic spending.

And they are in a box. Obama is a responsible steward and the economy is rebounding. In the meantime, Republican ideology has devolved into nihilistic, hyperbolic rants that turn off very blue dog democrats and RINOs they need to win the presidency. That's why they campaign so negatively against Obama -- they want people to be so upset over Obama's so-called socialism and "foreign citizenship" (read: dark skin) that they overlook or hold their nose at the GOP's fraudulent economics.

I will relish the moment a Tea Partying independent steps forward and declares he or she is a candidate for President.

Posted by: pj in jesusland on April 13, 2011 at 9:46 PM | PERMALINK
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