David Coates

Budgets to the right of us, budgets to the left of us: budgets, budgets everywhere!

 

            It’s been quite a month for budgets – both here and, as it happens, in the U.K. too. In London in March, the coalition government provided another round in its continuing pursuit of economic growth through fiscal austerity[1] – an economic growth which continues to elude it – while here in the U.S. different sections of the Republican Party offered varying versions of that same strategy, and the Democrats countered with entirely different budgets of their own.

So there is currently a lot of choice around – at least as far as budgets are concerned – a choice in Washington between the Paul/RSC budget, the Ryan budget, the Murray budget and the budget offered by the Congressional Progressive Caucus. These budgets have one thing at least in common. They share similar names.[2] They all promise prosperity. Nobody, after all, is going to label their budget “the route to yet more unemployment.” In truth, however, the proposals they contain are, to put it mildly, rather different. These are not just different budgets. They are entirely different route-maps to our collective future.

  • The Rand Paul[3]/RSC[4] budget, defeated in the Senate but supported there by a slew of Republican senators up for re-election in 2014, would close four federal departments (Education, HUD, Energy and Commerce) and fully privatize the TSA en route to returning the federal budget to surplus in just five years (the Ryan budget takes 10 years). It would repeal the Affordable Care Act and Dodd-Frank, establish a low flat tax for individuals and corporations, and return welfare provision to the states. The Republican Study Committee budget in the House – the Rand Paul equivalent – would put the retirement age up to 70 for workers not yet 50, and cut Social Security benefits for current recipients by tying their growth to the chained CPI. It would freeze discretionary spending at 2008 levels until 2017, and lower non-defense spending in total by $6 billion by 2023. The Rand Paul budget would return to the Pentagon over a ten year period only $126 billion of the $492 billion[5] cut from the military budget by the sequester.

 

  • The Ryan budget,[6] passed by the Republican majority in the House but rejected by House Democrats and the Senate,[7] leaves the sequester cuts in place, and has the federal budget in balance by 2023, cutting the spending side by $4.6 trillion in the process. In the Ryan budget, savings are achieved by turning Medicare into a voucher plan by 2024, and by handing provision of Medicaid and food stamps back to the states – the federal government simply providing a block grant that will not grow at the same pace as demand for those programs. If implemented, the Ryan budget would repeal the Affordable Care Act and Dodd-Frank, take discretionary spending down to nearly 2% of GDP, and cut top tax rates for both individuals and corporations to 25%. Half of the Ryan budget savings ($2.7 trillion) would come from cuts in spending on Medicare, Medicaid and the Affordable Care Act. Pentagon spending would go up by $500 billion. The Ryan budget aims to get government spending down to 19.2 percent of GDP by 2021. The Murray budget, as we will now see, has that target as 21.8 percent.

 

  • The Murray budget[8], the first from Democratic senators in five years and passed by them in the Senate,[9] includes a $100 billion targeted jobs and infrastructure package designed to boost employment quickly, to strengthen the economy’s infrastructure, to protect vital R&D, and to fund/protect school budgets, college loans and new training programs. It replaces the sequester cuts with a $975 billion program of cuts of its own: half on domestic spending (including health savings), and a quarter each on defense spending and interest payments. It balances its new spending with an equivalent increase in tax revenue – adopting a one-to-one ratio between spending cuts and revenue hikes – the nearly $1 trillion addition to total tax revenues to be achieved over ten years by eliminating tax loopholes used by both the super-rich and the largest corporations. It eschews any cuts in (or privatization of) Medicare, Medicaid and Social Security, and it protects funding for programs supporting low-income families. It anticipates a $4.25 trillion reduction in the federal deficit by 2020.[10]

 

  • The budget[11] of The Congressional Progressive Caucus begins with a huge stimulus program of $2.1 trillion between 2013 and 2015, focused on infrastructure spending and public works programs, aid to states and localities for the rehiring of teachers and public sector workers, and middle-class tax cuts. It avoids cuts to Social Security, Medicare and Medicaid, and strengthens the cost-cutting measures already enacted in the Affordable Care Act. It reverses cuts in public spending agreed in the 2011 debt ceiling deal and in the sequester, and commits the federal government instead to an anti-poverty program that would cut poverty numbers in half in a decade. It takes $939 billion off defense spending, and it raises $4.2 trillion in higher taxes over the next decade: by imposing higher marginal rates on the super-rich and the corporate sector, by closing tax-loopholes, and by taxing financial transactions and carbon pollution. The CPC budget promises 7 million new jobs in its first year of implementation, and federal deficit reduction of $4.2 trillion by 2023.[12]

 

These differences reflect, of course, entirely incompatible understandings of our present condition and routes to its improvement. The two Republican budgets differ only in degree, not in kind. Both see the deficit in federal spending as the key problem. Both insist that federal spending is a barrier to private sector economic growth; and both compete only on the scale, speed and mechanisms by which federal spending can be cut. The two Democratic budgets are similarly linked. Both see unemployment as the key problem. Both see federal spending as an essential trigger to private sector job creation; and both – to varying degrees – look to tax hikes and stimulus packages as progressive ways of bringing down the long-term debt-to-GDP ratio. There is middle ground between the various packages on either side of the political aisle, but literally a chasm between the two Republican budgets and the two Democratic ones. Even the two budgets closest to the center are still far apart. The Murray budget aims to reduce the federal deficit by $1.85 trillion over a decade through an equal mix of tax increases and spending cuts. The Ryan budget aims at $4.6 trillion in savings over the same decade, with no tax increases at all. The Murray budget invests in clean technology. The Ryan budget defunds clean energy technologies[13]…..and so on.

Several things therefore follow. One is that some kind of bipartisan compromise between positions that are so polarized would simply give us the worst of both worlds. It is not possible to be half-pregnant. What we need as a country, and as a political system, is the full implementation of one package or the other. Yet another grubby compromise will simply bring out the worst of each: eroded public provision without compensating private sector economic growth. That miserable outcome is what the sequestration compromise is now slowly delivering[14] – a genuine policy mess from which voters will take lessons – hopefully lessons about the undesirability of any more last-minute horse-trading between political opposites. It is a miserable outcome that damages Democratic Party aspirations more than it damages Republican ones. The sequester is poised to erode still further the number of people employed by federal and state agencies – a number already reduced by previous state and local government budget cuts[15] – which is all the more reason for progressives to focus now on a long-term strategy to win back full political control in Washington DC, and thereby undo the damage that currently cannot be stopped.

The second consequence is that the proper job of political leadership in conditions such as these is not one of seeking common ground between incompatible positions. It is rather one of campaigning effectively for the creation of a political coalition in both Houses of Congress that can eventually deliver a coherent program of economic and social reform. The Republican leadership knows this, and they are not taking their 2012 drubbing as the last word in what is ultimately an ideological struggle for the hearts and minds of the American electorate. So nor should the Democrats take the present balance of political forces as fixed and immutable: on the contrary, the electoral tide moved back towards the center-left in 2012, and that tide needs to keep going in the same direction in 2014. The American electorate moved back towards the center-left in 2012 because they were given a clear choice, and they need to be given that choice again the next time round.[16]

The third consequence is this: that this vital deepening of the progressive tide will not happen unless the White House changes its political strategy now. It will not happen if the President chooses to play bipartisan politics for the rest of this year, and then goes partisan only immediately before the mid-term elections. Elections are not won that way – certainly not by parties of the center-left. Progressive electoral coalitions have to be built slowly and solidly if they are to last. A quick sprint to mid-term victory for the Democrats will not occur in 2014 if, by then, all we have experienced is a further eighteen months during which every example of Republican intransigence was countered only by yet another White House charm offensive. So no more Mr. Nice Guy from the President: because the fight for 2014 is already underway, and because the Administration has another important opportunity looming in which to make the case for progressive economic change. It is an opportunity that must not be missed.

Next month it will be the President’s turn to present a budget. He must use that opportunity to lead from the center-left, and not from the center. After all, everyone else is using budget presentations to make their own particular case, so why should he be any different?

 

For commentary on the first Obama term, see

David Coates, Pursing the Progressive Case: Observing Obama in Real Time[17]



[1] See Martin Wolf, “UK Budget 2013: Osborne’s shrewd politics but dismal economics,” The Financial Times, March 20, 2013: available at http://www.ft.com/intl/cms/s/0/240a9dca-90b8-11e2-a456-00144feabdc0.html#axzz2OfiDsKpY

 

[2] The Rand Paul budget is entitled A Clear Vision To Revitalize America. The RSC budget is called Back to Basics. The Ryan budget is called The Pathway to Prosperity. The Murray Budget is called Foundation for Growth: Restoring the Promise of American Opportunity. The Congressional Progressive Caucus budget is called Back to Work.

 

[7] Republican Senators Rand Paul, Ted Cruz, Susan Collins, Dean Heller and Mike Lee voted against it – though for very different reasons. For Paul and Cruz, the Ryan budget does cut spending far enough.

 

[9] Four Democratic Senators voted against it, all from red-leaning states and all up for re-election in 2014: Mark Pryor (Arkansas), Kay Hagen (North Carolina), Mark Begich (Alaska) and Max Baucus (Montana).

 

[10] For the bizarre list of amendments then tagged on to it by predominantly Republican Senators, see Suzy Khimm, “Here’s the insanely long list of amendments filed to the Senate budget,” The Washington Post, March 23, 2013: available at http://sunsetdaily.wordpress.com/2013/03/23/heres-the-insanely-long-list-of-amendments-filed-to-the-senate-budget-i-think-anyone-could-attached-anything-on-to-this-budget/

 

[12] See Andrew Fieldhouse and Rebecca Thiess, The ‘Back to Work’ Budget, Economic Policy Institute, March 13, 2013: available at http://www.epi.org/publication/back-to-work-budget-analysis-congressional-progressive/

 

[13] Daniel Weiss, The Clean Murray Budget Versus the Dirty Ryan Budget, Center for American Progress, March 19, 2013: available at http://www.americanprogress.org/issues/green/news/2013/03/19/57148/the-clean-murray-budget-versus-the-dirty-ryan-budget/

 

[14] See Zachary A. Goldfarb, “As Obama signs sequestration cuts, his economic goals are at risk,” The Washington Post, March 24, 2013: available at http://www.washingtonpost.com/politics/as-obama-signs-sequestration-cuts-his-economic-goals-are-at-risk/2013/03/24/110f7104-9096-11e2-9cfd-36d6c9b5d7ad_story.html

 

[15] See Sudeep Reddy, ‘Government Payrolls Are Facing New Pressures,” The Wall Street Journal, March 25, 2013: available at http://online.wsj.com/article/SB10001424127887323466204578380241558191324.html?mod=rss_Politics_And_Policy

 

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David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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