Obama deficit plan met with praise, criticism

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President Obama's policy speech on lowering the government deficit by $4 trillion in 12 years drew both praise and criticism from labor and liberal circles.

The president firmly stood for maintaining the nation's major social programs, Medicare, Medicaid and Social Security, and not allowing Republicans to eliminate and privatize them.

He also vowed to raise taxes on the wealthy, thereby increasing the government's revenue stream and ability to reduce the deficit.

"Thoughtful people are breathing a sigh of relief that President Obama has signaled he understands the federal budget must not be balanced on the backs of those who rely on Social Security, Medicare and Medicaid," said NOW President Terry O'Neill.

The president's promise to stand up to the radical right-wing agenda is an essential commitment for working families, said AFL-CIO President Richard Trumka.

The labor leader urged a re-commitment to job creation as the main engine for cutting the deficit, and cautioned that unions would oppose any cuts to Medicare, Medicaid and Social Security "no matter who proposes them."

The president's plan includes $360 billion in cuts to mandatory programs other than Medicare, Medicaid, Social Security and Defense. Cuts come to about two-thirds of the plan while revenue increases (tax hikes on rich) are only one-third.

This over-reliance on cuts "risks leading to substantial cuts in core programs for low-income Americans," said Robert Greenstein of the Center on Budget and Policy Priorities.

In contrast, he said, the bipartisan [and conservative] Rivlin-Domenici deficit reduction plan offers "a more balanced approach - with half of its deficit savings from budget cuts and half from revenue increases."

The president's plan "represents an important step forward in the debate," but, he added, it is "a rather conservative one, significantly to the right of the Rivlin-Domenici plan."

Many economists question the need for deficit cutting at this moment. Economist Dean Baker of Center for Economic and Policy Research said the speech was "as encouraging as could have been hoped for in the context of an agenda committed to deficit reduction."

However, a deficit reduction agenda, he said, is a "serious problem in the context of an economy that badly needs additional demand. While the economy is much healthier today than it was two years ago, the pace of job growth is not acceptable."

Political momentum from the right wing has grown significantly on the federal deficit and debt issues since the tea party/GOP victories in the 2010 midterm elections. Threats of government shutdowns, possible defaults from insufficient debt ceilings and House GOP leader Rep. Paul Ryan's recently proposed scorched earth budget have added to the political fury.

The president vigorously challenged Ryan's budget, which among other things eliminates Medicare and Medicaid, slashing education, clean energy research, college Pell grants and transportation, and tied it to the larger struggle of the role of government, and squarely stood on the side of that struggle which requires the government to provide and keep a "social compact" for its people.

"From our first days as a nation, we have put our faith in free markets and free enterprise as the engine of America's wealth and prosperity.  More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government, " the president said.

"But there's always been another thread running through our history -- a belief that we're all connected, and that there are some things we can only do together, as a nation.  We believe, in the words of our first Republican President, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves," he said rhetorically capturing tensions and contradictions in American democracy.

Obama said Ryan's plan presented a cynical vision of America. 

It says "even though we can't afford to maintain our commitment on Medicare and Medicaid, we can somehow afford more than $1 trillion in new tax breaks for the wealthy. Think about that," he said.

Obama said the wealth gap has grown over the last decade and to ask seniors and others to pay for tax cuts to the rich, is not right.

"And it's not going to happen as long as I'm president."

Sam Webb, chair of the Communist Party USA, said the president has "ceded ground to the Republicans on the deficit. Deficits in the short-term don't present the same danger as some suggest. The country is not broke."

Webb added, "There is lots of space to agree with the president on issues, and to express deep differences, as long as it's not in a way that ends up in the camp of the far right and has a negative impact on the elections. It has to strengthen the broader labor and people's movements."

These movements are essential for any pro-people reforms, he said.

"If you take the movement out of the equation, the right-wing goes on the offensive, the Democrats waver and cave, and the whole political landscape shifts to the right."

Photo: (Fibonacci Blue/CC)

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