The President’s Fiscal Year 2014 Budget demonstrates that we can make critical investments to strengthen the middle class, create jobs, and grow the economy while continuing to cut the deficit in a balanced way.An opening platitude. Par for the course for all budgets. However, I hold to my belief that the word "balanced," when not referring to a 1:1 ratio, must be categorically banned.
The President believes we must invest in the true engine of America’s economic growth – a rising and thriving middle class. He is focused on addressing three fundamental questions: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do the jobs of the 21st Century? How do we make sure hard work leads to a decent living? The Budget presents the President’s plan to address each of these questions.Still, in the introductory platitudes stage. However, if Obama was really serious about "attracting more jobs to our shores," then maybe he wouldn't be so gung-ho about the Trans-Pacific Partnership, or "NAFTA on steroids" as it's fondly called.
To make America once again a magnet for jobs, the Budget invests in high-tech manufacturing and innovation, clean energy, and infrastructure, while cutting red tape to help businesses grow. To give workers the skills they need to compete in the global economy, it invests in education from pre-school to job training. To ensure hard work is rewarded, it raises the minimum wage to $9 an hour so a hard day’s work pays more.Oh, and remember how he promised to raise it to $9.50 and to index it to inflation back when he was campaigning in 2008? $9 is at least better than the status quo although still not a living wage.
"Cutting red tape" is politician speak for gutting regulations. Remember Cass Sunstein?
Also, you don't raise the minimum wage in a budget. That sounds more of a "deficit-neutral reserve fund" action, to use Senate speak.
The Budget does all of these things as part of a comprehensive plan that reduces the deficit and puts the Nation on a sound fiscal course. Every new initiative in the plan is fully paid for, so they do not add a single dime to the deficit. The Budget also incorporates the President’s compromise offer to House Speaker Boehner to achieve another $1.8 trillion in deficit reduction in a balanced way. When combined with the deficit reduction already achieved, this will allow us to exceed the goal of $4 trillion in deficit reduction, while growing the economy and strengthening the middle class. By including this compromise proposal in the Budget, the President is demonstrating his willingness to make tough choices and his seriousness about finding common ground to further reduce the deficit.Save me the hollow rhetoric about "tough choices." We already know that Obama wants the cuts. Boehner already rejected this offer back in December. If someone rejects an offer and you propose it again and again, it is not a concession: it is what you want. Calling it a "tough choice" and a "compromise" is just a rhetorical trick to use to avoid having to own the cuts to Social Security and Medicare that the budget entails. And I hope he's not fooling anyone. But I'm so glad that Obama wants to be "serious." I am sure that the Very Serious People of the WaPo editorial board and the Sunday shows will be thrilled for him. Whom am I kidding? The professional centrists will continue to blame "both sides" for everything and demand "leadership," which they define in the most stunningly authoritarian of terms.
Making America a Magnet for Jobs
To compete in the 21st Century economy and make America a magnet for jobs, the Budget invests in American innovation, reviving our manufacturing base and keeping our Nation at the forefront of technological advancement. And to ensure our energy security and combat climate change, it continues to focus on energy production, the development of clean energy alternatives, and the promotion of energy efficiency efforts in both the public and private sectors.
• Transforms regions across the country into global epicenters of advanced manufacturing with a one-time, $1 billion investment to launch a network of up to 15 manufacturing innovation institutes.I'd have to learn more about the "manufacturing innovation institutes" to pass a judgment, but the increased R&D spending sounds good. But let's remember, for budget-related reasons, that this spending helps to increase the profit margins of corporations, who show their gratitude by not paying taxes.
• Maintains our world-leading commitment to science and research by increasing nondefense research and development (R&D) investment by 9% above the 2012 levels.
• Continues President’s “all-of-the-above” strategy on energy – investing in clean energy R&D, promoting the safe production of natural gas, encouraging States to cut energy waste with a Race-to-the-Top challenge to cut energy waste and modernize the grid, creating an Energy Security Trust to fund research efforts that would help shift cars and trucks off oil, and making permanent the tax credit for renewable energy production.The "all-of-the-above" rhetoric always reminds me of how soda companies and sugar cereals manufacturers market their products as part of a "balanced diet." Increased oil production has no place in a sustainable future. And the methane released from natural gas makes it an insufficient--and even dangerous--"bridge fuel." And don't forget the damage to water sources from natural gas extraction. Who really needs water, though? Toxic chemicals are simply flavoring.
But, the increased energy efficiency and fuel standards and the investment in renewable energy all sound good--what may be my first unqualified bit of praise so far.
• Enhances preparedness and resilience to climate change, safeguarding communities and Federal investments, while strengthening efforts to reduce carbon pollution domestically and internationally.The details may be in the long version--I've only read the overview. The administration has avoided meaningful international action during the President's first term. However, if this proves substantive and does not come through a mix of corporate welfare and concessions, then I'd be impressed.
Building a 21st Century Infrastructure The Budget invests in repairing our existing infrastructure and building the infrastructure of tomorrow, including high-speed rail, high-tech schools, and power grids that are resilient to future extreme conditions. These investments will both lay the foundation for long-term economic growth and put workers back on the job now.Rebuilding the U.S.'s crumbling and outdated infrastructure? Good. Public-private partnerships? Not so good....and not so cheap, either.
Provides $50 billion for upfront infrastructure investments, including $40 billion for “Fix it First” projects, to invest immediately in repairing highways, bridges, transit systems, and airports nationwide; and $10 billion for competitive programs to encourage innovation in completing high-value infrastructure projects.
Boosts private investment in infrastructure by creating a Rebuild America Partnership.
----Establishes an independent National Infrastructure Bank to leverage private and public capital to support infrastructure projects of national and regional significance.
----Creates America Fast Forward (AFF) Bonds, building on the successful Build America Bonds program to attract new sources of capital for infrastructure investment
• Dedicates funding for the development of high-speed rail to link communities across the country, the Next Generation Air Transportation System (NexGen) to improve air travel and safety, and a robust long term increase in levels for core highways, transit, and highway safety programs.Remember what I said about "cutting red tape"? Now, granted, if this modernization is akin to the major overhaul that USAJOBS and GRANTS.GOV both need, then I'm all for it. But if "modernization" means ignoring environmental standards and regulations to give everything a rubber stamp, then maybe not so much.
• Expedites infrastructure projects by modernizing the Federal permitting process to cut through red tape while creating incentives and better outcomes for communities and the environment.
• Establishes a new goal of cutting timelines in half for major infrastructure projects in areas such as highways, bridges, railways, ports, waterways, pipelines, and renewable energy.
Equipping Americans with the Skills They Need To equip our workers with the skills they need to fill the jobs of the 21st Century economy, the Budget includes investments and reforms in education and training. It makes a major new commitment to early childhood education; sustains investments in K-12 schools, while ramping up innovation; redoubles our focus on science, technology, engineering, and mathematics (STEM) education to prepare our students for the jobs of tomorrow; and includes new initiatives to make college more affordable.
• To build a foundation for success in the formative early years of life, increases access to high quality early childhood education with a Preschool for All initiative.I think it's sound policy to make sure that those who want pre-school for their children have access to it and can afford it. However, this, from what I've read in the past, is just going to take the form of an array of tax credits and subsidies, another part of the American "kludgeocracy". Are we going to see privately run preschools sprouting up to take advantage of the new money? How will we ensure accountability in them without instituting a testing regime to those just learning to read? Will we pay the teachers enough to guarantee that we have highly-trained professionals overseeing the formative years of our children?
-------------In partnership with the States, provides all low- and moderate-income four-year-olds with high-quality preschool, while encouraging States to serve additional four-year-olds from middle class families. The initiative also promotes access to full-day kindergarten and high-quality early education programs for children under age four.
o The Preschool for All initiative is financed by raising the Federal tax on cigarettes and other tobacco products, which would also have substantial public health impacts, particularly by reducing youth smokingI love sin taxes. I love soda taxes, cigarette taxes, and alcohol taxes, and I'd probably create some new ones if I could. But this is a bad use of sin tax revenue. You raise taxes on cigarettes because they are damaging to personal and public health. The taxation is designed to reduce consumption as you may have learned in Econ 101. Like all Pigovian taxes, it seeks to rectify a negative externality. Revenue from sin taxes, then, should fund public health programs that address the problems caused by the consumptive habits being taxed.
Increasing the tax on tobacco products to fund schools simply does not make logical sense. From a public health perspective, tobacco consumption would ideally trend down over time, as it has for the past few decades. If consumption falls, then your tax revenue will fall. Then where's the money to fund pre-K?
Maybe the President is feeling guilty about going back to old habits and wants to assuage his guilt by saying that he's smoking "for the children." But that just doesn't work.
o The Budget makes companion investments in voluntary home visiting programs, preserving child care access, and expanding high-quality care for infants and toddlers through new Early Head Start-Child Care Partnerships.I think this belongs in the "good" category.
• Creates a new, competitive fund for redesigning high schools to focus on providing challenging and relevant experiences, while promoting and developing partnerships with colleges and employers that improve instruction and prepare students to continue education or transition into skilled jobs.This sounds like Race-to-the-Top--an awful program that just continues the sapping of teacher creativity spearheaded by NCLB--but even more corporatized. I don't care for competitive funding for schools. Isn't the essence of public education that we want ALL children to get the best education possible? Competition for funds undermines that ethos. Moreover, why should high schools be forming partnerships with employers? We are paying to educate well-rounded citizens, not to create employees. If you are designing high schools to meet employer needs alone, say good-bye to the arts, to literature, to history, etc.
• Strengthens and reforms career and technical education to better align programs with the needs of employers and higher education to ensure that graduates are poised to succeed.Aligning vocational education with employer needs makes sense. But higher ed? Colleges should have career counseling and mentorship opportunities, but we don't need a Race-to-the-Top: College Years.
• Prepares students for careers in STEM-related fields by reorganizing and restructuring Federal STEM education programs to make better use of resources and improve outcomes; and invests in recruiting and preparing 100,000 STEM teachers and creating a new STEM Master Teachers Corps to improve STEM instruction.Is this just AmeriCorps science-edition? It could be good, but I'd need to know more. Math and science teachers are in high demand, and we do need highly educated ones for our high schools.
• Improves college affordability and value with a continued commitment to Pell Grants; budget neutral student loan reforms that will make interest rates more market-based; a $1 billion Race-to-the-Top fund to support competitive grants to States that drive higher education reform, while doing more to contain tuition; a $260 million First in the World fund to spur cutting-edge innovations that decrease college costs and boost graduation rates; and reforms to Federal campus-based aid to reward colleges that set responsible tuition policy, provide a high-quality education and better serve students with financial need."Budget neutral student loan reform"? I'd need to learn more before judging this. Since we don't have free (or heavily subsidized) higher education as they do in Europe, college financing is always a mess. If this is your forte, please share your thoughts.
• Improves services for workers and job seekers by revisiting the structure of the Federal job training system, including through the creation of a Universal Displaced Worker program; drives innovation through the Workforce Innovation Fund by testing new State and regional ideas to better deliver training and employment services; and provides $8 billion for a Community College to Career Fund to support State and community college partnerships with businesses and other stakeholders.Again, not my forte. It sounds good; however, I'm always a bit hesitant about business partnerships. Also, training is good only so far as there are jobs to hire the training program graduates. The idea that all we need is better-trained workers--rather than more jobs--is a debunked bipartisan myth.
Making the Tax Code More Simple and FairIt is highly ironic that Obama is criticizing the tax code for being overly complex when he's filling his budget with tax credits, further complicating the tax process. As Suzanne Mettler eloquently and concisely displays in her book The Submerged State, the government tries to use tax policy to do what direct spending would do more efficiently and transparently, leaving us with a labyrinthine tax code as a result. Also, corporate lobbying certainly doesn't make it any simpler.
The President believes that today’s tax code has become overly complex and inequitable and that we should immediately begin the process of reforming the individual and business tax systems. As a down payment on comprehensive tax reform, the Budget offers detailed proposals to broaden the tax base, close tax loopholes, and establish a Buffett Rule that will prevent millionaires from taking advantage of special provisions to pay taxes at lower rates than many middle-class families do.
A "downpayment on comprehensive tax reform"?
• Raises $580 billion for deficit reduction by limiting high-income tax benefits, without raising tax rates.
o Implements the Buffett Rule, requiring that households with incomes over $1 million pay at least 30% of their income (after charitable giving) in taxes.
o Limits the value of tax deductions and other tax benefits for the top 2% of families to 28%, reducing these tax benefits to levels closer to what middle-class families get.
Before the bill to defer the austerity bomb, we had seen $737 billion in tax/revenue increases and $1.7 billion in spending cuts. As the Progressive Caucus displayed quite clearly in its Balancing Act earlier this year, tax cuts should provide the bulk of the replacement for sequestration, bringing an even balance of tax increases and spending cuts across the three rounds of deficit reduction. Only calling for $580 billion in new revenue is not balanced, if we work with the actual definition of balance (Think 1:1 on a set of scales) rather than the political definition.
I don't see why we can't raise tax rates either. Granted, as the economy is still in recession, it wouldn't be the best time to hike taxes too high now, but marginal tax rates are at historic lows. I personally support the (admittedly DOA) idea of a 100% marginal tax rate, an idea that has been floated around for about 130 years. In the first speech to broach the idea of a 100% marginal tax rate, Ethical Culture founder Felix Adler eloquently affirmed, "I would protect the individual in his right to the private enjoyment of all that honestly belongs to him, of all that he can truly use for the humane purpose of life; and only that which does not rightfully belong to him, only that which is to him merely a means of pomp and pride and power – such power as no individual ought to possess – would I have remanded into the general fund of society, where, in the name of justice, it belongs." A great quote, by all means. But we need to return to our century.
I also have problems with exempting the charitable deduction, which I think exists because of a set of flawed arguments.
• Provides new tax cuts to encourage hiring and wage increases and to support middle-class families.This sounds like something that will further complicate the tax code. I don't see how tax cuts will encourage wage increases. Corporate profits and wages certainly don't see direct correlation.
• Provides a 10% tax credit for small businesses that hire new employees or increase wages.So subsidizing profits and complicating the tax code again?
o Provides a new tax credit to encourage employers to offer retirement savings plans and expands a tax credit that helps middle-class families afford child care.Subsidizing profits again, eh? And we're also subsidizing 401(k)s while (as we'll get to later) cutting Social Security. Pause for a second and reflect on which one benefits Wall Street. Then think which one gets cut. Hint: they’re not the same.
o Makes permanent the American Opportunity Tax Credit, which currently helps about 11 million students and families afford college, as well as improvements to the Earned Income Tax Credit and Child Tax Credit that help millions of working families with children make ends meet.I'd much prefer direct spending, a mandated living wage, a basic income, and federally funded child care services, but in lack of that, this is probably the best for which we can hope in the interim. The EITC was, in fact, a conservative proposal, originating from Milton Friedman's negative income tax. Granted, Friedman wanted the negative income tax to replace government-run welfare programs and services, too; however, the idea of tax credits instead of direct spending remains conservative in principle.
Also, regarding the EITC, I think that it would make sense to change the way that the personal exemption works in the tax code. Our current personal exemption is only $3,900 per person, about the same nominally as it was during the short-lived income tax experiment in the 1890s. That would be roughly $100,000 in real value, accounting for inflation. That is, granted, a large exemption; however, the personal exemption should guarantee a living wage existence to everyone as a bottom threshold. A personal exemption should be set at the living wage, accounting for dependents, so that the income tax only applies to the money in excess of that which is need for the basics of existence. I'm sorry, but no one is getting by on $3,900.
However, for now, expanding the EIC works.
• Pays for middle-class tax relief by eliminating tax loopholes that benefit the wealthy and special interests.The "sticking it to Mitt Romney" part. Nothing about which to complain.
o Ends a loophole that lets wealthy individuals circumvent contribution limits and accumulate millions in tax-preferred retirement accounts.
o Ends a loophole that lets financial managers pay tax on their carried interest income at the lower capital gains rate.Is he planning to treat capital gains as income as he should? My guess is no although please correct me if the long-form budget contradicts me.
• Eliminates business tax loopholes while providing incentives for research, manufacturing, and clean energy and cutting taxes for small businesses.I completely support ending the oil and gas tax breaks and the breaks on corporate jets; those all count as unqualified "goods" as far as I'm concerned.
o Reforms and makes permanent important tax incentives for research and development, renewable energy, and energy efficiency.
o Cuts taxes for small businesses by letting them claim tax write-offs for up to $500,000 of new investment.
o Eliminates loopholes such as oil and gas tax breaks and special tax rules for corporate jets.
o Proposes reforms to prevent companies from shifting profits overseas to avoid U.S. taxes and to encourage “insourcing” and job creation here in the United States.Does this mean we’re giving you tax breaks to bring your jobs back or keep them here—what you should be doing anyway? And how will the President’s TPP (linked above) or Euro-trade deal help in this regard? However, I fully support eliminating tax breaks for those who relocate jobs oversees--that's falls in the "good" category.
Ensuring Hard Work Leads to a Decent LivingWe'll get to specifics in a moment.
The Budget builds on the progress made over the last four years to expand opportunity for every American and every community willing to do the work to lift themselves up. It creates new ladders of opportunity to ensure that hard work leads to a decent living. It expands early childhood education to give children a foundation for lifelong learning. It supports a partnership with communities to help them thrive and rebuild from the Great Recession. It creates pathways to jobs for the long-term unemployed and youth who have been hard hit. It rewards hard work by increasing the minimum wage so a hard day’s work pays more. And it strengthens families by removing financial deterrents to
marriage and supporting the role of fathers.
o Creates Promise Zones to rebuild high-poverty communities across the country by attracting private investment to build new housing, improving educational opportunities, providing tax incentives for hiring workers and investing within the Zones, reducing violence and assisting local leaders in navigating Federal programs and cutting through red tape.So we're offering new tax incentives, eh? For our "simpler" tax code.
"Promise Zones" are just another "enterprise zone" or "empowerment zone" concept: in other words, corporate welfare.
What means are being used to "reduce violence"? A noble goal often sought through ignoble means.
Ah, and the ubiquitous bête noir, “red tape.” In other words, let’s just slash and burn some regulations.
o Creates a Pathways Back to Work fund to support summer and year round jobs for low-income youth, subsidized employment opportunities for unemployed and low-income adults, and other promising strategies designed to lead to employment.This sounds too much like the UK's corporate-welfare-rich workfare system.
o Supports the President’s call to reward hard work by raising the minimum wage to $9.00 an hour.As I noted earlier, this isn't much of a budgetary issue, and he was much more progressive when campaigning in 2008. Senators, like Tom Harkin have also proposed legislation to raise it even higher than $9. However, it's better than the status quo at least.
o Strengthens families by allowing Federal programs like the child support program to implement models that get more men working and engaging with their children, and by addressing financial deterrents to marriage.Financial deterrents to marriage? Like poverty? Income insecurity? Unemployment? Address those, and you'll be set because the health of marriage correlates strongly with economic security.
Cutting the Deficit in a Balanced Way“Strengthening entitlements”? Doublespeak alert! If I cut down on your portions at dinner, I wouldn’t say that I’m “strengthening” your meal. But, then again, I’m not a politician. Also, can we please stop using the word “entitlement”? “Earned benefits” works. “Social insurance” also works.
The President is committed to continuing to reduce the deficit in a balanced way. (He is determined to do this in a way that replaces the economically damaging across-the-board cuts of sequestration with smart, targeted efforts to cut wasteful spending, strengthen entitlements, and eliminate loopholes for the wealthiest through tax reform.
The President stands by the compromise offer he made to Speaker Boehner during “fiscal cliff” negotiations in December 2012. The Budget includes all of the proposals in that offer, which would achieve $1.8 trillion in additional deficit reduction over the next 10 years, bringing total deficit reduction to $4.3 trillion. This represents more than enough deficit reduction to replace the cuts required by the Joint Committee sequestration.Which Boehner rejected. Obama, however, can't let go of his Holy Grail of a grand betrayal of a "Grand Bargain."
By including this compromise proposal in the Budget, the President is demonstrating his willingness to make tough choices to find common ground to further reduce the deficit. This offer includes some difficult cuts that the President would not propose on their own, such as an adjustment to inflation indexing requested by Republicans. But there can be no sacred cows for either party.Why wouldn't he propose them on their own if he thinks that they are worth including in the budget? If it’s good, it’s a good idea regardless. If it’s bad, you don't put it in your starting bid, especially one that just rolls right over the work of Patty Murray and Harry Reid to push the whole debate to the right. I’m sorry, but if you put s**t in a sundae, it’s still s**t. And, Mr. President, your budget plan is no sundae.
And, yes, progressive Democrats don’t want to make cuts that will affect the vast majority of the public and which are opposed by large majorities. Republicans want to preserve tax cuts for a very small percentage of the population, and they are opposed by a majority of the public, too. It always seems like a crude throwback to the religions of yore to offer up the elderly, the sick, and the poor as a human sacrifice for the gods of wealth and war.
o $580 billion in additional revenue relative to the end-of-year tax deal, from tax reform that closes tax loopholes and reduces tax benefits for those who need them leastAnd will they all get voted back?
o $400 billion in health savings that build on the health reform law and strengthen MedicareRemember what I said about the word "strengthen"? There are good ways to reduce Medicare spending like allowing the government to negotiate for prescription drug prices. Means testing, on the other hand, is simply bad policy. You have to set the income threshold quite low to get any real savings, and over time, you'll likely whittle it down into a welfare program--and we all know how much people love those. Moreover, if you want to do 'means testing,' why not just make FICA a progressive tax--means testing on the front end?
o $200 billion in savings from other mandatory programs, such as reductions to farm subsidies and reforms to federal retirement benefitsCutting farm subsidies? Good. Slashing the pensions of federal employees? Not so good.
o $200 billion in additional discretionary savings, with equal amounts from defense and nondefense programs;So here's where we see how the President reduced the defense cuts from sequestration. The Pentagon, as we saw earlier this year, is so shamefully mismanaged that it cannot be audited. Defense cuts constitute 20 cents for every dollar of federal spending. Internationally, our defense budget is 5x greater than the next largest (China's) and over 10x greater than any defense budget in Europe. We also face no existential threat and are protected well by two oceans on either side. But a rant on our defense budget would take too long in an already long post. Let's move on to find out the source of the money that softened the defense cuts.
o $230 billion in savings from using a chained measure of inflation for cost-of-living adjustments throughout the Budget, with protections for the most vulnerable;There it is! That's the money being used to soften the blow to the Pentagon. That's right: Your earned benefits and the benefits we provide to orphans, widows, and disabled veterans are being cut to line the pockets of war profiteers like Dick Cheney.
And, also, don’t tell me that you will have “protections for the most vulnerable.” If you have to make such protections, then you have to admit that you’re cutting Social Security. And you know what? You have to specify the protections, too. I have an idea! Let’s say that the “most vulnerable” incorporates those who are retired, the disabled, widows, orphans, etc.--in other words, EVERYONE ALREADY RECEIVING BENEFITS. Problem solved. Move along now.
Social Security has often been spoken of as one leg in a "three-legged stool" of retirement security--along with pensions and savings. Private sector pensions have been rapidly disappearing. In the private sector, the percentage of Americans with pensions fell from 38 percent in 1979 to 15 percent in 2010. So there goes one leg of the stool. How about savings? The Wall Street crash depleted some people's savings--or at least cost them dearly. Currently, because of a mix of bankster greed and Fed policy, interest rates for savings accounts are near zero. Before I closed my Wells Fargo account to switch banks, my interest rate was an exact 0.0%. There goes the second leg of the stool. Why kick the third?
A Democratic President unraveling the New Deal and cutting a program that doesn't even contribute to the federal deficit. And he wants to cut Social Security even though the government has been robbing the Trust Fund for decades.
Obama really wants to kill Santa Claus, doesn't he?
Oh, and one more thing: Chained CPI is also a stealth tax increase, one that disproportionately hits the lower end of the income spectrum.
o $210 billion in savings from reduced interest payments on the debt; and
o $50 billion for immediate infrastructure investments, as noted earlier, to repair our roads and transit systems, create jobs, and build a foundation for economic growth.
In addition, the Budget includes a series of new proposals to root out waste and reform and streamline government for the 21st Century. In total, it includes 215 cuts, consolidations, and savings proposals, which are projected to save more than $25 billion in 2014.I haven't read a long-form proposal, but I'm pretty sure he doesn't name every single one of the 215.