The Long-Awaited Speech

President Barack Obama, in his eagerly anticipated major speech on the Federal budget deficit, proposed $4 trillion in cuts and revenue increases over the next twelve years – about $2.2 trillion less than the reductions proposed by the House Republicans. The President's proposals are more in-line his own deficit commission, the Simpson-Bowles commission, which proposed $3.8 trillion in cuts when it was unveiled last December but the mix of cuts is far different. The critical difference is that the President's plan calls for the expiration of the Bush tax cuts.

Speaking at the George Washington University just blocks from the White House, the President attacked Rep. Paul Ryan’s deficit plan, saying: “I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry.” President Obama countered Republican budget plans with what he said was a more balanced approach that relies in part on tax increases for the wealthy as well as on spending cuts. “To meet our fiscal challenge, we will need to make reforms,” President Obama said. “We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m President, we won’t.”

The New York Times has more on the President's speech but the major key goals articulated by the President include:

* Reducing the deficit by $4 trillion in 12 years or less

* Curbing deficits to 2.5 percent of GDP in 2015, 2 percent toward the end of the decade

* Ending Bush-era tax rates for the wealthiest Americans

* Seeking $770 billion in savings by 2023 in cuts to non-security discretionary spending

* Saving $480 billion in Medicare and Medicaid by 2023 and at least $1 trillion more by 2033.

I'll have more later but for now here is the full text of the speech as prepared for delivery beneath the fold.

There's more...

Weekly Audit: A Progressive Deficit Fix?

by Lindsay Beyerstein, Media Consortium blogger

The co-chairs of the 18-member deficit commission issued a preliminary presentation two weeks ago that favored tax breaks for the wealthy and left open the possibility of deep cuts to Social Security, Medicare and other social programs. But there’s still time for the commission to radically reshape its message before it issues its final report.

Jan’s plan

That’s exactly what progressive Rep. Jan Schakowsky (D-IL) is trying to bring about. Schakowsky is a member of the commission and she has an alternative, progressive plan to rein in the deficit, as David Moberg reports for Working in These Times:

It would not go into effect until 2015 or after unemployment subsides, and it provides for $200 billion of job-creating investments during the next two years, in addition to reducing the deficit by $441 billion in 2015, nearly double Obama’s target. Slightly more than a third of Schakowsky’s proposed deficit reduction would come from new revenue (mostly tax changes hitting the wealthy and corporations but also from cap-and-trade carbon emission controls), 30 percent from ending or reforming tax expenditures (again, mainly benefiting rich taxpayers), a quarter from defense cuts, and 9 percent from mandatory programs (like offering a public option for health insurance and requiring Medicare to bargain over drug prices). Though Social Security does not contribute to the deficit, Schakowsky plans to secure future payouts without benefit cuts by increasing how much the wealthy pay into the retirement program.

A public option for health insurance would keep rising health care costs in check because insurers would have to compete with non-profit, government-administered insurance. Instead of cutting Social Security benefits for the needy, Schakowsky would simply eliminate the arbitrary payroll tax ceiling on high earners. Sounds like common sense, doesn’t it?

A coalition of progressive groups calling itself Our Fiscal Security unveiled its own alternative proposal for cutting the deficit on Monday, Luke Johnson reports for the Colorado Independent. Key planks of the platform include repealing the Bush tax cuts, reinstating the estate tax for married couples with assets greater than $4 million, and capping itemized deductions at 15%. Coalition members include Demos, the Century Foundation, and the Economic Policy Foundation.

Generation Recession

Young adults have the highest unemployment rate of any demographic. At the National Radio Project, Rina Palta examines the impact of joblessness on the nation’s 80 million “Millennials.” (Audio) Palta talks to young people who are weathering their first layoffs mere weeks or months after landing their first professional jobs.

Mark Kirk: Tax Cuts for the Rich “No Matter What”

The day before 2.5 million Americans stand to lose their unemployment benefits, Sen. Mark Kirk (R-IL) went on TV to insist that unemployment insurance is misguided and that the government must cut taxes for the rich “no matter what,” Julianne Escobedo Shepherd reports in AlterNet.

Oddly enough, Kirk fancies himself a moderate by Republican standards, according to Steve Benen of the Washington Monthly. Kirk believes that extending unemployment insurance would “just add to the deficit.” In fact, as Benen notes, extending unemployment benefits would be a very efficient way to infuse billions of dollars into the economy. Unemployed people will spend their extended benefits on food, gas, rent, and other necessities. That money doesn’t just disappear into the ether, it feeds local businesses, who in turn keep other Americans working.

The Republican Party line is that the rich need tax cuts because they create jobs. If tax cuts for the rich created jobs, we should already have a full employment economy. As the Bush tax cuts are set to expire, taxes for the rich are at all time lows and unemployment is at historic highs. It is crazy to assume that allowing these tax cuts to continue will magically produce jobs that have yet to materialize, or even bring back the jobs that have disappeared since the Bush tax cuts went into effect.

Ireland’s Billion Dollar Bailout

Over the weekend, the world’s financial institutions agreed to spend $90 billion to bail out Ireland. Tim Fernholz of TAPPED worries that this sum is too small to bring Ireland back from the brink of its sovereign debt crisis. He argues that the world financial community is making the same mistake it made in the 1990s when it forced debtor nations into fiscal austerity without forcing creditor nations to restructure their loans on more sustainable terms.

Once again, bondholders are being spared while Irish taxpayers are being expected to shoulder the heaviest burdens. The economic argument for saving the bondholders is that a bond is an ironclad promise, and that if you start expecting bondholders to accept less than 100% of what was promised to them (no matter how ill-advised they were to take that promise), the entire system will fall apart. It’s ironic that the promises that governments make to their citizens are endlessly renegotiable while bond deals are ironclad. Worldwide, citizens outnumber bondholders. Having citizens lose faith in their government seems far more dangerous than expecting bondholders to take a haircut.

 

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