Reich - Why Obama's Budget Sell-Out to Republicans Threatens Our Economy

[Donnachaidh]

http://www.alternet.org/economy/149915/why_obama%27s_budget_sell-out_to_republicans_threatens_our_economy/

President Obama has chosen to fight fire with gasoline.

Republicans want America to believe the economy is still lousy because government is too big, and the way to revive the economy is to cut federal spending. Sunday Republican Speaker John Boehner even refused to rule out a government shut-down if Republicans don't get the spending cuts they want.

On Monday, Obama poured gas on the Republican flame by proposing a 2012 federal budget that cuts the federal deficit by $1.1 trillion over 10 years. About $400 billion of this will come from a five-year freeze on non-security discretionary spending -- including all sorts of programs for poor and working-class Americans, such as heating assistance to low-income people and community-service block grants. Most of the rest from additional spending cuts, such as grants to states for water treatment plants and other environmental projects and higher interest charges on federal loans to graduate students.

That means the Great Debate starting this week will be set by Republicans: Does Obama cut enough spending? How much more will he have cut in order to appease Republicans? If they don't get the spending cuts they want, will Tea Party Republicans demand a shut-down?

More at the link --

[ProSense]

1. At this point Reich and others are just

throwing out proposals that sound good. From the OP article:

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The most direct way to get more money into their pockets is to expand the Earned Income Tax Credit (a wage subsidy) all the way up through people earning $50,000, and reduce their income taxes to zero. Taxes on incomes between $50,000 and $90,000 should be cut to 10 percent; between $90,000 and $150,000 to 20 percent; between $150,000 and $250,000 to 30 percent.

And exempt the first $20,000 of income from payroll taxes.

Make up the revenues by increasing taxes on incomes between $250,000 to $500,000 to 40 percent; between $500,000 and $5 million, to 50 percent; between $5 million and $15 million, to 60 percent; and anything over $15 million, to 70 percent.

And raise the ceiling on the portion of income subject to payroll taxes to $500,000.

<...>

Reich

<...>

The alternative is to create lots of jobs with high disposable incomes.

In the short term, this means expanding the Earned Income Tax Credit wage subsidy right up through the middle class, and cutting income and payroll taxes for everyone earning less than $80,000 a year – making up the lost revenues by raising the ceiling on Social Security payroll taxes and hiking marginal taxes on the rich.

In the longer term, this means investing in a world-class education for all the nation’s kids, including college or high-quality technical education beyond high school. Here again, we’d have to rely on the top 1 percent (who now take home more than 20 percent of all income) to foot the bill.

<...>

Sure, those would be great, but while people are claiming that the President's proposal to end tax cuts for the rich and oil subsidies are never going to happen, what makes anyone think the above proposals have a remote chance?

The President has to realistic. He mades several good proposals: here, here. here and here

[somone]

2. Recommended

[OhioChick]

3. K&R

Thanks for posting.

[snappyturtle]

4. Love Reich. Wonderful article. Synopsis I got: Help those who actually

spend a larger percentage of their income into the economy. Tax the rich.

[Rex]

5. What economy? You mean that thing all beat up and sprawled out on the floor?

No thanks, I think it died last week and no one has noticed yet.

[deaniac21]

6. This is like the third Reich article I've seen this week.