What’s at stake in the battle of the budget?

March 3, 2009

No one expected the Obama administration's budget proposal to look like ones from the Bush years. But the differences go beyond a change in administrations.

THE ANNUAL battle over the federal government budget has begun. But this one will be unlike anything the Washington political system has seen in at least a generation.

The conservative dogmas and prejudices that drove government policy during more than a quarter-century of right-wing dominance--tax cuts are good, "big government" is bad, welfare is worse (unless it's corporate welfare), deregulation spurs growth, the free market has all the answers--are in the process of being turned upside down.

In its budget outline introduced last week, the new Obama administration proposes to raise taxes on the richest Americans, increase spending on programs for the poor, set a goal of "universal" health care coverage, expand access to higher education, require corporations to pay to pollute and more.

"The budget that President Obama proposed on Thursday is nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters," wrote New York Times economics writer David Leonhardt.

Obama addresses a joint session of Congress
Obama addresses a joint session of Congress

To be sure, there are many reasons to be critical of the Obama budget. When it comes to education, for instance, the focus is on fake "reform" schemes that blame teachers for the problems of public schools. It cuts back on the billions spent every month on the Iraq war, but Obama will increase military spending overall. Another $250 billion is thrown down the Wall Street bailout sinkhole. On health care, it leaves the fundamental problems of a privatized system untouched.

Above all, the reversal of the flow of wealth that trickled up to the rich for several decades is still happening too slowly to provide the kind of help working people need to deal with a worsening crisis. The tax increases on the rich should be far greater.

But there is a reversal underway, and that's important to recognize. The Obama administration's budget underlines the fact that mainstream U.S. politics has shifted decisively.

The significance of this shift lies not only in what will happen inside Washington over the next few months, but in the effects it has outside Washington--above all, on struggles to make sure that the priorities of the past really are turned around, and on ones to fight for more than the Obama administration is offering.

NO ONE, of course, thought a budget proposal from the Obama administration would look the same as the ones during eight years of George Bush. But even the mainstream media recognize that the differences this time go beyond a change in administration.

"It took the release of [Obama's] first budget," wrote the Washington Post's Dan Balz, "to illustrate the dramatic course change he is proposing for the country after eight years under President George W. Bush and almost three decades since Reagan ushered in an era of smaller government and conservative ideas."

For starters, the new administration has gone beyond its campaign proposals in raising taxes on the richest Americans. The Obama budget would increase the income tax rate on the highest earners (though no higher than where it stood before the Bush-era tax cuts) and put a lower cap on their itemized deductions.

Though delayed until 2011, the estimated cost of these tax changes for the richest 1 percent of taxpayers would be around $100,000 a year. Meanwhile, various tax cuts and credits aimed at the vast majority of taxpayers making less than $250,000 a year would increase household income by an average of $800 a year.

On the spending side, the budget outline devotes $634 billion over 10 years to reforming the health care system and $120 billion to expanding the Pell Grant college financial aid program. Within the Agriculture Department, there are plans to cut $15 billion from subsidies to agribusinesses and big farms, and to increase spending on child nutrition programs by $10 billion.

These are just a few isolated examples, but they underline the basic point: The Obama budget represents a decisive break not only with the Reagan-Bush drive to cut government spending on social programs, but also with Bill Clinton's Republican Lite strategy of reducing spending--most notoriously, the abolition of the federal welfare system--and emphasizing so-called "micro-initiatives" over major reform.

According to David Leonhardt, the effect, if Obama's budget made it through Congress, would be "to reverse the rapid increase in economic inequality over the last 30 years."

And to the Republicans, that means one thing: Socialism.

The alleged evils of redistributing wealth and providing help for the most vulnerable have become--like during the election, when John McCain put his campaign in the capable hands of Joe the Plumber--the chief talking point for conservatives.

"Earlier this week, we heard the world's best salesman of socialism address the nation," said South Carolina Sen. Jim DeMint, referring to Obama's speech to a joint session of Congress.

Right-wing dingbat and former Republican presidential hopeful Mike Huckabee insisted that the Obama administration is in the process of establishing "socialist republics" in the U.S. "Lenin and Stalin would love this stuff," Huckabee declared.

It's a sign of the moribund state of the Republican Party that leading figures are challenging Obama on precisely the issues where the vast majority of people want him to take even more decisive action.

Case in point: The supposed "populist revolt" spearheaded by an obscure CNBC reporter, Rick Santelli, who called for "tea party" protests against Obama to supposedly follow the example of the American colonists in opposing unjust taxation by the British king.

And what was Santelli up in arms about? The Obama administration's proposal to spend $75 billion to provide help to homeowners faced with foreclosure.

The real problem with Obama's plan is that it isn't ambitious enough--it leaves out millions of people who need assistance. But to Santelli, Obama is giving aid and comfort to the undeserving.

The only people likely to be moved by this kind of rant were the sort of rabble who surrounded Santelli when he made his pitch during a report from the floor of the Chicago Mercantile Exchange--arrogant traders who cheered on his complaints about the unfairness of the government bailing out anyone but the banks.

It turns out that Santelli's supposedly spontaneous outburst was, in reality, according to liberal bloggers Mark Ames and Yasha Levine:

the launch event of a carefully organized and sophisticated PR campaign, one in which Santelli served as a front man, using the CNBC airwaves for publicity, for some of the craziest and sleaziest right-wing oligarch clans this country has ever produced. Namely, the Koch family, the multibillionaire owners of the largest private corporation in America, and funders of scores of right-wing think tanks and advocacy groups, from the Cato Institute and Reason magazine to FreedomWorks.

Obama couldn't have asked for a better chance to expose his conservative opponents--ideologues for a discredited party putting all their chips down on opposing help for ordinary people being kicked out of their homes.

And for once, a Democrat seems to be ready for a fight. In his radio address over the weekend, Obama discarded the talk about bipartisanship and compromise he used during his first weeks in office:

I realize that passing this budget won't be easy...I know these steps won't sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they're gearing up for a fight as we speak. My message to them is this: So am I.

The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don't. I work for the American people. I didn't come here to do the same thing we've been doing or to take small steps forward. I came to provide the sweeping change that this country demanded when it went to the polls in November.

AFTER 30 years of Republican ascendance in Washington and the retreat of liberalism at every turn, Obama's willingness to draw the line and promise a fight for his priorities is a welcome blast of fresh air.

But the novelty of a Washington politician supporting a tax increase shouldn't distract us from where he falls short.

Obama's budget outline seems like a dramatic departure in relation to the last eight years of Bush, but it isn't nearly so radical outside that framework--and it's certainly not "socialist," at least by any standard we at SocialistWorker.org would recognize.

For one thing, Obama's tax increase on the rich only returns the highest marginal rate to the 39.6 percent, where it stood during the Clinton years. That's not even close to the pre-Reagan era. When Richard Nixon resigned the presidency in 1974, the tax rate on the richest taxpayers was 70 percent. Two decades earlier, under Republican Dwight Eisenhower, it was 91 percent--and still the rich managed to scrape by.

If taxes on income and wealth were genuinely progressive, the federal budget deficit could be reduced at the same time that government spending was ramped up to fund a national health insurance system. Cut the military budget in half, and the U.S. could create a generous social safety net and still be the largest military power in the world.

Instead, though, the military will get a bigger share of the economic pie in order to maintain the American empire. And the hated Wall Street bankers will suck in hundreds of billions more in government bailout money.

As for the $636 billion set aside for health care reform, even Obama describes it as just a "down payment." More importantly, the final legislation is likely to contain--with behind-the-scenes approval from the White House--a "mandate" for the uninsured to purchase policies, plus sanctions to punish those who don't comply. Meanwhile, private insurance companies will remain part of the system, which means that money spent on health care will continue to feed corporate profits.

And that's only to talk about the administration's proposals. They aren't the final word on the federal budget--not by a long shot.

The Washington system is structured to whittle down the biggest initiatives and blunt their impact. Thus, the cautious response from members of Congress to Obama's budget extends to members of his own party. "Folks are a little skittish," a senior Democratic congressional aide told the Washington Post. "It's asking a lot. This is a tax-and-spend budget the likes of which we haven't seen in years."

But with this budget, Obama is creating space--whether he intends it or not--for those who want to push U.S. politics further to the left. Every speech defending the White House's stated priorities will bolster the confidence of millions of people who think that even more fundamental changes are needed in the U.S.

From before he officially took office, the Obama era has been marked by an increase in struggle and grassroots mobilization--from the supporters of equal marriage rights who took to the streets on Election Night and after to show their anger with the passage of the Prop 8 gay marriage ban in California, to the unionists who took inspiration from the occupation of the Republic Windows & Doors factory in Chicago.

As new struggles continue to emerge, some will come in the form of a defense of the Obama administration's initiatives.

Thus, when nine Republican governors, mainly from the South, announced that they would refuse money from Obama's stimulus package--in other words, defending their right-wing priorities at the expense of unemployed people who badly need the help--it sparked demonstrations, with protesters demanding that their state governments "take the money."

These struggles will also help build the basis for demanding more from Obama--of going beyond the status quo of a decade ago to make the rich pay for social programs that workers and the poor desperately need in every state of the country.

The fight shaping up between the Obama administration and its opponents--mainly Republican, but some conservative Democrats as well--will determine in part who wins and who loses in the next budget. But the fight outside Washington will also have something to say about this. And it's the job of activists to seize the opportunities wherever they arise now to organize that struggle.

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