Obama's Economy: Recovery for the Few by Jack Rasmus

Author:Jack Rasmus [Rasmus, Jack]
Language: eng
Format: epub
Tags: Economic Conditions, Political Economy, Political Ideologies, Political Science, Business & Economics, General
ISBN: 9780745332192
Google: OzJHXwAACAAJ
Goodreads: 12633681
Publisher: Pluto Press
Published: 2012-04-04T00:00:00+00:00

7

Deficit Cutting on the Road to Double Dip

‘Economic Recovery Policy in Reverse’

Prior to his official swearing-in as president, in early January 2009 Obama had made it perfectly clear he was intent on cutting the federal deficit, and that this would include reductions in entitlement (Medicare, Medicaid, Social Security) spending. As the Wall Street Journal noted on January 8, 2009, “President elect Barack Obama said Wednesday that overhauling social security and Medicare would be a central part of his administration’s efforts to contain federal spending.”1

OBAMA’S DEFICIT COMMISSION

On February 18, 2010 Obama issued Executive Order 13531 establishing a National Commission on Fiscal Responsibility and Reform (hereafter called the Deficit Commission).2 The Commission was composed of 18 members: six appointed by the president, six by the House and six by the Senate. Eight were Republicans and the majority of the eight from the extreme-right Tea Party-leaning wing of the House and like-minded Senators. On the Democratic side, at least five were conservative-leaning Democrats—like Baucus and Conrad in the Senate, Spratt in the House, as well as Erskine Bowles, a former chief of staff for Bill Clinton and now a board director for the investment bank, Morgan Stanley. Completing the Obama appointees was former corporate CEO Ann Fudge.

The administration also appointed ultra-conservative, ex-Senator Alan Simpson as co-chair with co-chair Erskine Bowles. In short, the Deficit Commission from the beginning had a strong conservative-leaning composition, especially with regard to its two co-chairs, Simpson and Bowles. New York Times columnist, and Nobel Prize-winner in Economics, Paul Krugman, questioned the appointment of Bowles and Simpson as co-chairs, noting that “Erskine Bowles, the Democratic co-chairman, had a very Republican sounding small-government agenda. Meanwhile, Alan Simpson, the Republican co-chairman...described social security as being ‘like a milk cow with 310 million tits’.”3 Why the president would appoint such a pair to chair the Commission has often been queried. But it was no accident or oversight.

The Commission created three internal committees: tax policy, mandatory (entitlements) spending, and discretionary spending. The core battleground within the Commission was clearly going to be entitlement spending. While 9 of the 18 Commission members sat on the tax and discretionary spending subcommittees, 15 of the 18 members ensured they were all on the mandatory-entitlements spending subcommittee. The Commission in general was tasked with recommending tax hikes and spending cuts that would result in a balanced budget by 2015. Both within the Commission and outside it, the battle over the next two years would be over how much deficits might be reduced via raising taxes—especially the Bush tax cuts of 2001–04—and how much reduced as a result of spending cuts—especially entitlements. The composition of spending cuts would become another major contentious issue—whether deficit reduction via cuts in entitlement programs such as Medicare and Social Security or in defense and other discretionary programs’ spending.

An early indication of the main focus of the Simpson-Bowles Deficit Commission was revealed in June 2010, six months before the Commission was to complete its work. While the Republican appointees refused to consider any

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