Hanged For A Lamb

Obama is being branded a populist by the establishment press and irresponsible by Republicans for what is really a very tame program. He should at least earn these adjectives and get the public's attention.

How about a large infrastructure program that would create a lot of middle class jobs? How about paying for it with a serious crackdown on corporate tax evasion? How about proposing a true living wage instead of having taxpayers subsidize business?

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President Obama's new budget includes a very mild provision to increase tax benefits for low- and moderate-income working people without children. The provision, the Earned Income Tax Credit, is already available to workers with children. Obama proposes to pay for the new tax benefit for workers by raising taxes very slightly on hedge-fund managers and other high-income people.

His budget also retains the existing cost-of-living adjustments in Social Security, backing off a plan to cut retirement benefits as part of a grand budget bargain, and it includes very modest infrastructure spending of about $70 billion a year (compared with what the American Society of Civil Engineers calculates as a shortfall in deferred maintenance of more like $3 trillion).

The budget's new revenues of about $100 billion a year would go substantially to deficit reduction, genuflecting to the fiscally conservative view that deficits are still a problem -- in a prolonged slump. His budget actually cuts federal spending relative to GDP from its current level of about 20 percent to about 18.5 percent over a decade.

The new money would also underwrite a modest increase in pre-kindergarten programs, an issue where Republican governors in places like Oklahoma and Georgia have actually led the way.

In all, a pretty moderate, centrist budget, right?

No, actually -- it's apparently a radical one. In the New York Times, the front-page piece on Obama's ideas, by veteran reporter Jackie Calmes, was headlined, "Obama's Budget Is a Populist Wish List and a Campaign Blueprint."

"This budget isn't a serious document, it's a campaign brochure," scoffed Rep. Paul Ryan, chairman of the House Budget Committee. Senate Republican leader Mitch McConnell termed it "a political stunt," and House Speaker John Boehner called the budget "the most irresponsible yet."

About that "populist wish list": In American political language, populist is a double-edged word. On the one hand, it means appealing to the interests of ordinary working people. On the other, it has pejorative overtones that suggest demagoguery or irresponsible class warfare.

But shame on the Times headline writer. Whether or not Obama's budget was aimed at the fall 2014 election, it was far from populist. A decade ago, it would have been considered center-right. Mainly, what has moved are the goal posts, thanks to relentless Republican pressure, weak Democratic presidents, and a credulous press.

America is steadily becoming a society of the very wealthy and a working middle class that is falling steadily behind, not to mention the poor. Obama's plan to expand the EITC -- the actual proposal would increase the maximum benefit by all of $500 a year -- is barely a blip and does nothing to address the deeper economic trends widening inequality. If this is "populism," what is moderation?

The Social Security cost of living adjustment actually understates the annual change in the expenses of the elderly, who spend far more on medical and drugs bills than working age people, and health costs actually rise faster than inflation. Reverting to normal isn't "populist". It simply jettisons a capitulation to the right that would have been radical.

As for the Earned Income Tax Credit, a measure long supported by both Republicans as well as Democrats, it is a tax-supported wage subsidy to business. Corporations can pay dismal wages and still find workers, because the government makes up some of the difference with this refundable tax credit -- "refundable" in the sense that if you are too poor to pay taxes the government still sends you a check as long as you work. The EITC has long been sold as the more moderate alternative to higher minimum wages.

By the same token, modest increases in public works, after decades of neglect, are not exactly left wing. And pre-k is one of the few public issues that commands support across the political spectrum. The Republican leadership considers the budget "irresponsible" because the GOP wants a plan far to the right of this one. But that hardly makes Obama leftwing.

To the extent that this budget is intended as a "campaign blueprint" -- to signal to working families that Obama cares about them and to force the Republicans to cast difficult votes -- it is a very small step in the right direction. But it probably will sway a few voters, because it doesn't make enough of a difference.

Obama is being branded a populist by the establishment press and irresponsible by Republicans for what is really a very tame program. He should at least earn these adjectives and get the public's attention.

How about a large infrastructure program that would create a lot of middle class jobs? How about paying for it with a serious crackdown on corporate tax evasion? How about proposing a true living wage instead of having taxpayers subsidize business?

Obama might as well be hanged for a sheep. He might as well come out for policies that would make a real difference. That would actually be worthy of the terms "populist" and "campaign blueprint".

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This has been reposted from the Huffington Post.

Posted In: Allied Approaches, from Robert Kuttner