Here is Dean Baker's response to the president's speech.

[EFerrari]

April 13, 2011

For Immediate Release: April 13, 2011
Contact: Alan Barber, 202-293-5380 x115

Washington, D.C.- Dean Baker, Co-Director of the Center for Economic and Policy Research (CEPR) released the following statement on the President's deficit-reduction plan:

“President Obama’s statement was about as encouraging as could have been hoped for in the context of an agenda committed to deficit reduction. He rightly stressed that the wealthy, who have been the big winners in the economy over the last three decades, can afford to pay more in taxes. He also correctly pointed out that Social Security is an essential program for the nation’s retirees and workers, and that it does not contribute to the deficit. He also pointed out that the way to fix Medicare and Medicaid is to fix the private health care system, not to privatize Medicare as the Republicans in Congress have proposed.

“On the negative side, it is unfortunate that President Obama accepted a formula that cuts three times as much from projected spending (including interest) as he proposes to increase taxes. It is also striking that he proposes to cut twice as much from domestic discretionary spending (the portion of the budget that includes most investment spending) as he does from defense spending, especially since defense spending is projected to be about 20 percent larger than domestic discretionary spending over the 10-year budget horizon.

“More importantly, a deficit reduction agenda 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.

“Even at the pace of job growth we saw over the last three months, the best three months in the recovery to date, we will not get back to normal levels of unemployment until almost the end of the decade. The decline in the unemployment rate that we have seen over the last year was entirely the result of workers dropping out of the labor force, as the employment to population ratio did not rise at all.

“As recent analyses from Mark Zandi, Goldman Sachs and others have shown, deficit reduction in the current environment will cost jobs. While the President’s plan does not call for immediate deficit reduction, the Republican Congress is likely to add to the cuts agreed to last week. Furthermore, the unemployment rate is still projected to be above 7.0 percent in the 4th quarter of 2013, when the President’s cuts would begin to take effect.

“It is worth remembering that the first stimulus package was passed in February 2008 (and signed by President George W. Bush) when the unemployment rate was 4.7 percent. It is striking to see a Democratic president that is apparently prepared to accept an 8.8 percent unemployment rate that is projected to fall very slowly back to more normal levels.
“Jobs should be the top priority for policymakers right now. The people who are out of work are not the ones who gave us this recession. It is the fault of the people who design economic policy.”

http://www.cepr.net/index.php/press-releases/press-releases/statement-on-presidents-budget-plan?utm_source=CEPR+feedburner&utm_medium=feed&utm_campaign=Feed%3A+cepr+%28CEPR%29&utm_content=Twitter

[Liberal_Stalwart71]

1. Any well-respected economist will tell you that jobs are typically the last of the economic

indicators to improve when there has been a downturn.

[sabrina 1]

2. Maybe if there were conditions on the Bush tax cuts

such as, 'you only get these cuts IF you keep the jobs here in the U.S. the job situation would improve. But when the wealthy are trusted to just 'do what is right' after they get a handout, they interpret that to mean 'what is right for our bottom line' and as the ten years of Bush tax cuts showed, not a single job was created in return for over 2 trillion dollars worth of tax cuts.

Our problem is NOT SS or Medicare or Medicaid, it is the Welfare for the Wealthy which when you add the bailouts and the tax cuts adds up to trillions. Trillions for which we the people get nothing in return.

[xchrom]

3. Well said. Nt

[Liberal_Stalwart71]

6. I can't argue with that. +1,000,000!!! n/t

[mike_c]

10. egg-zactly!

+1

[leftstreet]

14. +1

[joshcryer]

15. We don't agree on much, but that was nice. +1

[sabrina 1]

18. In principle, we probably agree on a lot more than it seems.

But that's a whole other topic ~ :-)

[hifiguy]

36. You only forgot one thing:

The $1.2 TRILLION poured down the sewer of the Military-Intelligence(?)-Industrial Complex every year. But otherwise you nailed the issue squarely.

[EFerrari]

5. So, what does that mean to you in terms of deficit reduction?

[MannyGoldstein]

8. In FDR's first term, unemployment dropped almost in half

Not bad, eh?

[mmonk]

12. But if you tackled jobs first, deficit reduction can begin on its own.

[Liberal_Stalwart71]

17. Tried to do that in the stimulus bill. Tried to do that with cap n' trade.

Tried to do that with small business bills. Remember the various jobs bills that were blocked by the Senate. Even Reid's jobs program was blocked.

All blocked in the U.S. Senate.

How soon we forget... :)

[Jackpine Radical]

23. Too bad we didn't have a Democratic Senate, I guess.

[Liberal_Stalwart71]

33. We had a Democratic Senate with a bunch of milquetoast Blue Dogs and Corporatists.

That's why we failed. We needed more Russ Feingolds. We had more Joe LIEberman's.

You know this. Why are you acting as if all Democrats vote and think alike. They don't.

We need to work to get MORE progressives in Congress.

[Jackpine Radical]

35. I meant we didn't have a majority in the Senate

who came from the Democratic wing of the Democratic Party.

[Liberal_Stalwart71]

38. That's right. :)

[eridani]

20. Except that for 20 GODDAM FUCKING YEARS, there will not have been

--even one single NET job added to the economy. I am getting so fucking sick and tired of this drooling simpleminded Panglosssian drivel! What is it about 3 (or 4 or 5) fucking JOBLESS recoveries in 20 years that you are so fucking cheeful about?

[Liberal_Stalwart71]

22. Calm yourself down, dude. You're going to blow a blood vessel. I answered the question

down thread. Chill out and go have a class of Red or something. Geez...

[eridani]

27. How silly of me to be upset that 8% of our housing stock is empty and

that there were a record number of foreclosures last year. And that real unemployment + underemployment is 20%. Just kicking back and enjoying the leisurely dribble of new jobs will bring us back to where we were in 2000 by 2020--what's not to like?

[Liberal_Stalwart71]

34. Nobody said that you shouldn't be upset, but you're directing your anger at the wrong person.

I work for HUD and have seen the tragedy firsthand. I work with homeless here, victims of foreclosures. Trust me, it's very depressing.

[malaise]

4. He's on Rachel now

:hi:

[MannyGoldstein]

7. Self delete

Sorry

[ProSense]

9. This is good

“President Obama’s statement was about as encouraging as could have been hoped for in the context of an agenda committed to deficit reduction. He rightly stressed that the wealthy, who have been the big winners in the economy over the last three decades, can afford to pay more in taxes. He also correctly pointed out that Social Security is an essential program for the nation’s retirees and workers, and that it does not contribute to the deficit. He also pointed out that the way to fix Medicare and Medicaid is to fix the private health care system, not to privatize Medicare as the Republicans in Congress have proposed.

“On the negative side, it is unfortunate that President Obama accepted a formula that cuts three times as much from projected spending (including interest) as he proposes to increase taxes. It is also striking that he proposes to cut twice as much from domestic discretionary spending (the portion of the budget that includes most investment spending) as he does from defense spending, especially since defense spending is projected to be about 20 percent larger than domestic discretionary spending over the 10-year budget horizon.

As for the cuts versus tax increases (revenues), specifics in the tax code reform, closing loopholes and strengthening Social Security will make the plan more balanced. For example, increasing the income cap for Social Security and ensuring that corporate loopholes are closed and these entities actually pay taxes.

Here is what the President proposed, from the WH Fact Sheet:

<...>

6. Tax Reform

The President is calling on Congress to undertake comprehensive tax reform that produces a system which is fairer, has fewer loopholes, less complexity, and is not rigged in favor of those who can afford lawyers and accountants to game it.

He believes we cannot afford to make our deficit problem worse by extending the Bush tax cuts for the wealthiest Americans.

He also supports efforts to build on the Fiscal Commission’s goal of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit. Reform should be designed to ask more of those who can afford it while protecting the middle class and promoting economic growth.

In addition, as he explained in the State of the Union, the President is continuing his effort to reform our outdated corporate tax code to enhance our economic competitiveness and encourage investment in the United States. By eliminating loopholes, reducing distortions and leveling the playing field in our corporate tax code, we can use the savings to lower the corporate tax rate for the first time in 25 years without adding to the deficit.

7. Social Security

The President does not believe that Social Security is a driver of our near-term deficit problems or is currently in crisis. But he supports bipartisan efforts to strengthen Social Security for the long haul, because its long-term challenges are better addressed sooner than later to ensure that it remains the rock-solid benefit for older Americans that it has been for past generations. The President in the State of the Union laid out his principles for Social Security reform which he believes should form the basis for bipartisan negotiations that could proceed in parallel to deficit negotiations:

• Strengthen retirement security for the low-income and vulnerable; maintain robust disability and survivors’ benefits.
  
  
• No privatization or weakening of the Social Security system; reform must strengthen Social Security and restore long-term solvency.
  
  
• No current beneficiary should see the basic benefit reduced; nor will we accept an approach that slashes benefits for future generations.

<...>

Progressives in Congress should be pushing to define the most progressive outcomes in these areas.

Then there are the savings from reducing health care costs and ending the Afghanistan war and pulling all troops out of Iraq.

[sabrina 1]

16. Hell may have frozen over, but I mostly agree with you.

However, he needs to be much stronger on the issue of SS and the deficit. It did not in any way contribute to the deficit and that needs to be said plainly, every day if necessary as Republicans have done such a good job of making that a 'fact', that even many democrats believe it.

Overall, I was far happier with his speech than I expected to be. But I wish he would refrain from admonishing his own party just once. The democratic leadership has asked him to refrain from doing that. He gets no credit from Republicans for it and it doesn't help the Democratic Party in any way.

[MannyGoldstein]

26. Social Security is already solvent, long term

Unless the economy gets much worse than it is today, then stays that way: http://fdrdemocrats.org/the-common-sense-guide-to-social-security/2/

[Honeycombe8]

11. Well, I'm no expert. But it seems to me that if the economy gets healthier overall....

the jobs will come.

Common sense (to the extent that I have it) tells me that part of the holdback on jobs is the rising deficit of historic proportions. Businesses are uncertain of the future.

But even the experts get it wrong, consistently. It's probably a crapshoot.

[kenny blankenship]

25. Congratulations, you just bought the Reagan Revolution hook, line and sinker

[sad sally]

30. Yeah, just watch those stock market gains, bonuses for the CEO's,

caviar and french wine for all, and then, then those jobs will start trickling down to the little people.

Businesses are waiting for their next tax break - get rid of all those pesky corporate taxes, give them a freebe on no taxes if they just bring some of their money from their island one-person corporate offices, and then, then the jobs will start trickling down to the little people.

[quaker bill]

32. If you have not noticed

Businesses have not been concerned with the future since the Reagan restructuring of the tax code. Since that change, businesses have been concerned nearly exclusively with the next quarterly report, as this is where stock options pay off.

Businesses are always uncertain of the future, it is the whole risk/reward thing. You manage uncertainty by building the "better mousetrap" and selling it well, and adapting when sales don't meet expectations. If you are not up to taking daily risk and playing the game live with real money, you need to find another line of work.

[kentuck]

13. But as Robert Greenstein noted tonight on Last Word...

tax expenditures (tax spending) costs more than Social Security and Medicare combined!

These are programs like mortgage deductions, corporate deductions, etc. These "tax spending" programs cost us more than a trillion dollars per year!

Coupled with the military expenditures, it is possible to see how 3 times as much spending could be cut as taxes. It depends on what is cut.

[kenny blankenship]

19. "...deficit reduction in the current environment will cost jobs."

Awesome. Let's do the Republicans' work for them, and when it "works" we get the blame.

[mmonk]

31. It's a reminder that we are working under Republican ideology.

There is no need to concentrate on deficit reduction while the economy is sick and wanting for additional capital spending. It will contract further.

[kenny blankenship]

37. And Republicans will just become more extreme in their demands & rhetoric

instead of bearing any blame. They will say "See, this proves how much further we have to cut Medicare, Social Security, EPA, OSHA, and Welfare spending - just like we always said!"

[inna]

21. kr

[Cleita]

24. K&R

[Tx4obama]

28. And here are a dozen more Statements released regarding The President's Fiscal Poliicy Speech

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x887060

[whatchamacallit]

29. K&R (nt)