A Progressive Plan for Reducing Budget Deficits

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If a business were running at a deficit it would have two choices for shedding the red ink. It could cut costs and it could increase revenue. The GOP plan for reducing the deficit, cuts taxes even further, which forces drastic cuts in spending on social programs to balance the budget. The Obama plan is not as bad, but it does not go far enough. His plan lets the Bush tax cuts for the rich expire according to current law, but it leaves the tax cuts for the middle class. It makes small cuts in defense spending, and it includes mechanisms for reducing healthcare price inflation, but it doesn't cut spending enough to compensate for lost revenue from tax cuts to the middle class.

There is a link to a plan in this article from the progressive caucus that reduces deficits faster than the Ryan plan or the Obama plan. It raises taxes for most people, it makes the social security tax less regressive, and it makes substantial cuts in defense spending. If deficit reduction is the goal, this is the best of the lot. But deficit reduction is not the goal of the Ryan plan. The goal of the Ryan plan is to cut taxes for the wealthy, and pay for the huge tax cuts with huge cuts in social programs. The goal of the Obama plan is to make compromises with the GOP in order to keep the government running.

The Ryan plan has no chance of becoming law, yet it has been all over the media. The progressive plan has no chance of becoming law but it has received little attention. Apparently, the only "serious" way to reduce the deficits is to make huge cuts in spending on social programs. Any plan that brings taxes as a percent of national income closer the norm for the rest of the industrial world is off the table. The implication is that there is only one "serious" way to balance the budget. It must come from spending cuts, especially on programs that provide benefits to ordinary Americans. We can no longer pay for tax cuts like we did under Reagan and Bush by borrowing, but we have been sold on the benefit of tax cuts even if they are paid for by reducing the security of the average American.

There is a lesson in this analysis. The lesson is that political economy is all about values. The Ryan plan makes the values of the GOP apparent in a way that has seldom been so clear. The progressive plan makes the values of the Democratic party under Roosevelt and Johnson very clear. The Obama plan makes the values of the Democratic party since Clinton very clear. The public needs to understand these value systems and make a choice.