There is one thing that should strike you as you sit down to read, for the first time, President Obama's first budget. It is the title. This is not a budget for the faint-hearted, given our lamentable four-decade history of thinking we can have tax cuts for nothing, keep borrowing from the Chinese, the Brits, the Japanese and all those wealthy people from the world over who have socked their millions away in the Cayman Islands in hedge and equity funds. This ia budget for a "New Era of Responsibility: Renewing America's Promise". That means we have to face the music and realize that we have to pay for the type of society we want.
Do we want a country with a high-speed transportation system that can get everyone from one side of the country to the other with reasonable usees of resources? Then we need to build a national high-speed rail system, with intercity and intracity links that eliminate the need for private cars for most people living within a reasonable distance of the city center, and thus eliminate one of the main causes of air and water pollution and global warming.
Do we want a country that has a sustainable economy that provides a decent life to all, with medical care in those times of health crises, adequate food, that is safe to eat, adequate water, that is safe to drink? Then we have to fund our national parks, retain our national forests, beef up our food inspection, and find a way to move, over the eternally present objections and intensive efforts of the insurance lobbyists and wealthy medical doctors, to a single payer single provider health care system like most other advanced civilizations.
Do we want our inner cities to bloom again, to provide work, play, education, and culture within reach of all, without the need for long auto commutes? Then we need, perhaps most of all, to fund education, from K-12 to college. Get rid of the guaranteed loan programs that provide just another government welfare check to big banks, and put the money into direct loan programs for students. Get rid of twentieth century drug laws that make hardened criminals out of petty thrill seekers, and allow pot to be sold the same way liquor is. Quit putting so many young men in prison, where the state spends tens of thousands a year to maintain them, and start putting them in schools, and spend the tens of thousands to make the schools good schools.
End our lamentable involvement in unilateral war in Iraq, and cut military spending back to some more reasonable threshold. We have squandered billions on wasteful war and useless weaponry through the military budget. We have created a fiefdom of military contractors that have brought to life the worst nightmare of Dwight D. Eisenhower's military-industrial complex. it is time to cut the funding off, close down much of the military machine and put that money to work in peacetime projects that will protect our environment, build our economy, educate our population, and sustain our lifestyles.
Obama doesn't do all of those things, but his first budget offers a glimpse of a possible future of lower military spending; higher spending on the things that make our lives better like education, environment, health care, food safety; and an attempt at collection of adequate taxes to pay for it rather than constantly hoping to borrow beyond our means from overseas neighbors.
It's the last point that Citizens for Tax Justice (CTJ) questions. Collecting somewhat more in taxes from the wealthiest Americans simply won't be enough to pay for all the major emergency surgery on the economy that Bush wrecked, because the budget still operates "to cut taxes drastically." See CTJ, Tax Proposals in President Obama's First Budget: Budget Proposal Includes Significant Progressive Initiatives & Tax Reforms. But Revenues Fall Far Short of Needs, Mar. 12, 2009. Obama's budget makes permanent 80% of the Bush tax cuts that would otherwise expire after 2010--that, giving up on amending rather than consistently sparing taxpayers the AMT, letting most of the Bush cut to the estate tax be made permanent, and other new tax cuts will amount to $3.5 trillion of new tax cuts, offset by only $1.3 trillion of tax increases. "[O]ne might reasonably conclude that we could safely allow most of the Bush tax cuts to expire at the end of 2010, as they are scheduled to under current law, without any concern about how this will impact the economy."
CTJ points out that the economy is in a mess, and we had a full eight years of the Bush "tax cut, borrow and spend" policies that got us here. When Clinton was in office, taxes were higher than they are now, and the economy was performing better.
My take on this--I agree with CTJ. Sure, raising the capital gains rate from 15% to 20% on the wealthiest Americans is a start, but why not go on and put it back to where it ought to be--at the same rate as the rate on ordinary income. That is the only way that the superrich will ever pay their fair share. Sure, raising the top brackets to 39.6% will help--that puts them back where they were under Clinton. But with patches on the AMT planned indefinitely, those who are making lots of money (those just below the top 1% who are subject only to the regular tax, i.e., those next top 10% of taxpayers in the $200,000 to $500,000 range) still will be paying too little tax, because of all the various loopholes that allow them to reduce the income on which they are taxed. We should either restore the AMT, and quit planning regular patches, or we should acknowledge the need for much more progressive rates as taxpayers earn upwards of $200,000. Remember that the top rate was much higher through our most prosperous periods.
It's really time for Americans to quit hiding their heads in the sand like ostriches and face up to the facts of how government works. We didn't ask for the Bush tax cuts--most people did not think that tax cuts were the most important thing to be done when they were first passed, but we have an awful lot of trouble giving a tax cut up once we've gotten it. Obama needs to bite the bullet and use his charisma and leadership to engage the American population in a real discussion of taxes. We need to raise more money to fund the things that we need to fund, even if we cut the military back gradually and even if we quite paying Blackwater many times what we pay US soldiers. Taxes need to go up, and we will suffer considerably if we wait until too late to do it. When China quits buying U.S. Treasuries, we will have to learn, very quickly, what it means to live on what you have.
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