Five reasons for progressives to like Obama’s Super Committee proposal

President Obama outlined a fairly progressive federal budget proposal for the Super Committee this morning, calling for upfront job creation, more revenue from high-earners, and preserving our commitments to children, the disabled, and the elderly. The proposal represents a balanced and progressive approach that addresses the root causes of our budget deficits, namely the Great Recession, a decade of ineffective and unfair tax cuts, and a decade of unfunded wars. Here’s a quick summary:

– $447 billion for the American Jobs Act
– $1.2 trillion in discretionary cuts (already enacted under the Budget Control Act)
– $1.1 trillion from drawing down troops overseas
– $577 billion from cuts to mandatory programs: about 40 percent are Medicare savings (mostly reducing overpayments), 10 percent are Medicaid/SCHIP savings, and the rest are from agricultural subsidies, federal employee benefits, and recalibrating government fees and program oversight
– $1.6 trillion, including $900 billion from allowing the Bush tax cuts to expire for high-earners and capping tax subsidies
– $436 billion in interest savings

There are many things in here for progressives to like. First, it focuses on job creation, including in the proposal the American Jobs Act that the president released last week. That’s as it should be—a continued downturn makes fiscal balance near impossible. The first step of the Super Committee must be getting the economy back on track, and the AJA is a good start.

Second, the proposal moves toward a more fair and equitable tax code. The guiding principle for reform is the so-called “Warren Buffet rule,” which holds that middle-class Americans shouldn’t be paying a higher tax rate than high-income Americans. Beyond addressing fairness, the proposal acknowledges that considerably more revenue is needed; the alternative spending-cuts-only approach would unacceptably force the brunt of deficit reduction on the backs of poor and working families. Furthermore, the president also issued a veto threat against any legislation that affects Medicare benefits without also including additional tax revenue from high-earners and corporations, a welcome sign that the president actually intends to use his constitutional powers as leverage in the coming negotiations.

Third, the proposal includes savings from winding down the wars in Iraq and Afghanistan. This reflects the fact that the wars in Iraq and Afghanistan are extremely expensive (nearly $1.3 trillion has already been appropriated for these wars over the last decade), and drawing them down entails substantial savings.

Fourth, the proposal generally takes the right approach to reforming health programs, doubling down on the health care reforms in the Affordable Care Act. On Medicare, it focuses on health provider savings while maintaining the commitment to seniors. The Medicaid savings are less positive, as they could shift costs to states and even undermine health care reform. But these proposals stand in stark contrast to the House Republican plan to turn Medicare into a voucher program—leaving seniors to fend for themselves in predatory, broken insurance markets—and cut Medicaid in half over the next two decades.

And fifth, the proposal does not cut Social Security, a recognition of the fact that the program does not impact the deficit over the long run. The president took a firm position that any Social Security reform must be done on a separate legislative track, one that focuses not on deficit reduction but rather on protecting it for future generations.

The outlined budget proposal would provide a counterweight to the lopsided discretionary spending cuts from the Budget Control Act and flip federal fiscal policy from being an obstacle to a force for economic recovery. This budget outline would also stabilize deficits and begin to reduce debt as a share of the economy in a balanced manner consistent with commitments to a fair tax code and economic security programs for children and seniors. Hopefully, the Super Committee will mirror this dual focus of strengthening the economy today and improving the long-term fiscal outlook in a balanced fashion.


  • Norman Danzig

    We are probably stuck supporting this thing, but I don’t think it’s that good.  In particular on your number 5:  this is the mousetrap on destroying Social Security.  The government will continue to buy bonds to make up the difference in the loss of the Soc. Sec. contributions, but it opens the door for de-coupling the program from a dedicated tax.
    Because it’s been a seperate tax it’s been very hard to touch social security in any dramatic way.  Once we are dependent on general revenue to make up any shortfalls, guess what the Republicans will do?

    Isn’t it ironic that employers pay a “payroll tax” rather than their share of a national pension fund?