Thursday, April 11, 2013

President Obama's budget and his priorities

In his last weekly address, President Obama talked about his North Star.
Our top priority as a nation, and my top priority as President, must be doing everything we can to reignite the engine of America’s growth: a rising, thriving middle class. That’s our North Star. That must drive every decision we make.
Matt Yglesias noticed how the President's budget addressed the inequality that is plaguing the middle class.
Obama expands Medicaid, increases EITC and Child Tax Credits, makes the Opportunity Tax Credit permanent, and spares the poor from the cuts involved in adoping the chained CPI. How does he do it? Well, he does it in several ways, but one big part of the story is reducing tax deductions for rich people.
Annie Lowrey noticed the same thing.
The Obama budget proposal released Wednesday, like other White House budgets before it, also emphasizes the problem of inequality and the failure of the American economy to promote a thriving middle class...

The budget includes several proposals to tackle inequality and wage stagnation.
  • Increasing the federal minimum wage to $9 an hour from its current rate of $7.25, and indexing it to inflation. The White House asserts that this would lift the wages of about 15 million low-wage workers.
  • Creating a “Preschool for All” initiative to provide early childhood education to 4-year-olds from low- and middle-income families. The big idea is that this might improve economic mobility in the future.
  • Increased taxes on wealthy Americans, including taxing carried interest as ordinary income. Hedge-fund managers and the like use the carried interest loophole to pay preferential rates on their earnings.
  • Increased support for manufacturing, which the White House argues might be an important source of middle-class jobs.
  • Making permanent the expansion of the earned income tax credit and child credit, which were due to expire in 2017. The proposal also makes permanent the American Opportunity Tax Credit, which helps families with students pay for college.
We all know that Congress is currently making some progress on a couple of President Obama's other priorities - immigration reform and reducing gun violence. His budget addresses those items both directly and indirectly. Here's an important bit about the latter from Ezra Klein.
But the budget — and the way it’s been rolled out — is playing a more subtle purpose, too. It’s meant to help pass gun control and immigration reform.

As Karen Tumulty writes, “For the first time in a while, members of the two parties — at least some of them — appear to be talking about getting things done.” Immigration and gun control really are grinding forward. But as everyone in those negotiations will admit, it’s touch-and-go. The key is to keep members of the two parties talking about getting things done.

The budget could have interrupted that. For the last three years, at least, the annual budget has heralded a period of angry polarization as Republicans mass to assail the president and Democrats counterattack. It’s been a moment for the two parties to recall why they can’t stand each other.

This budget was built to be different.
As I suggested yesterday, the inclusion of chained CPI upset the dysfunctional status quo that had emerged in recent battles over the budget. That opens the door for change.

3 comments:

  1. SP I see your point as clearly as I have ever seen anything other than "ruthless strategy". If you are right, this move is brilliant as usual. Im betting you are right!
    Thanks again for your mighty pen!
    Smilingl8dy

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  2. I like the idea of the minimum wage being tied to the rate of inflation. Most wages are effectively already tied anyway. Why not the minimum wage too?

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  3. Love your work lately, SP. I know how hard fought this reflective kind of thinking and analysis is, the way it demands both intellectual and emotional discipline, and I LOVE you for it. At least Ezra is getting it. That's about it, and then of course Booman who had a kind of hilarious influx of hair on fire people commenting yesterday, and then there's Steve Benen's solid but not very daring analysis. Most places have a meal ticket attached to their writing, and that means massaging the poutrage of their cliental, or at least tip-toeing around it. Not you, not Booman.

    I can see the way Obama is systematically shepherding this country out of the madness of Nixon's Southern Strategy, and building a much stronger future for us all. Amazing guy, and OF COURSE people don't realize it now. That's par for the course for people ahead of their time.

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