Obama’s Budget: With Job Growth Tepid, Is Now The Time To Cut Spending?

[ProSense]

Obama’s Budget: With Job Growth Tepid, Is Now The Time To Cut Spending?

By Travis Waldron

President Obama will release a budget next week that replaces the automatic budget cuts known as sequestration with other spending cuts while also raising $580 billion in revenue and making cuts to Social Security and Medicare. The budget plan, as the Washington Post notes, is almost identical to the offer Obama made to congressional Republicans in an attempt to reach a “grand bargain” to offset sequestration at the beginning of March, and it is aimed at reaching a similar bargain in the near future.

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Under Obama, the U.S. has already cut $2.5 trillion from the deficit over the next decade. This plan would offset sequestration with roughly $1.8 trillion in other deficit reduction, including $580 billion in revenues, $400 billion from Medicare and other health programs, $130 billion from applying a new inflation measure (chained CPI) to Social Security, $200 billion from defense and domestic spending, and $200 billion from farm subsidies and retiree programs, the Post reported.

But while Obama remains committed to deficit reduction, there is little evidence that the U.S. needs to continue cutting spending, which has plateaued since he took office in 2009. As the following chart shows, government spending has typically driven economic recoveries, but spending cuts made over the past three years have held back America’s current recovery:



With borrowing costs at historic lows and unemployment remaining persistently high — the economy added just 88,000 jobs in March, according to the Bureau of Labor Statistics — the government could be making stimulative investments into the economy to help boost the recovery. That’s the path Obama originally sought in 2009 with the American Recovery and Reinvestment Act, and it worked: the stimulus turned around the economy and put the U.S. on a faster pace of recovery than Europe, which has consistently pushed to reduce deficits, has experienced.

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http://thinkprogress.org/economy/2013/04/05/1826921/obamas-budget-with-job-growth-tepid-is-now-the-time-to-cut-spending/

[Skink]

1. Boner is not going to like this.

[ProSense]

2. Boehner: Obama is holding entitlement cuts 'hostage for more tax hikes'

Boehner: Obama is holding entitlement cuts 'hostage for more tax hikes'

by Joan McCarter

Who could have predicted this response to President Obama's proposed budget from Speaker John Boehner?

“The president and I were not able to reach an agreement late last year because his offers never lived up to his rhetoric. Despite talk about so-called balance, the president’s last offer was significantly skewed in favor of higher taxes and included only modest entitlement savings. He said he could go no further toward the middle, and that’s why his last offer was rejected. In the end, the president got his tax hikes on the wealthy with no corresponding spending cuts. At some point we need to solve our spending problem, and what the president has offered would leave us with a budget that never balances. In reality, he’s moved in the wrong direction, routinely taking off the table entitlement reforms he’s previously told me he could support.

“When the president visited the Capitol last month, House Republicans stated a desire to find common ground and urged him not to make savings we agree upon conditional on another round of tax increases. If reports are accurate, the president has not heeded that call. If the president believes these modest entitlement savings are needed to help shore up these programs, there's no reason they should be held hostage for more tax hikes. That’s no way to lead and move the country forward." (emphasis added)

Once again, Obama offers what the Republicans say they want, beginning another round of negotiations on their ground. Once again Republicans reject it, up the ante, and get the added benefit of having Obama officially on the record behind Social Security and Medicare cuts.

And the Very Serious People will now talk about how very modest Obama's offer on entitlements is, and how if he was really serious about compromising with the Republicans, he would propose some real cuts to these programs. Lather, rinse, repeat.

http://www.dailykos.com/story/2013/04/05/1199428/-Boehner-Obama-is-holding-entitlement-cuts-hostage-for-more-tax-hikes