Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

26 February 2009

Obama’s Blueprint for Tomorrow

Budgets are to governments as blueprints are to houses, software to computers. They are the plans that make things run. Until today, there was a germ of truth in the claim that we didn’t really have the President’s plans. Now we do.

The Obama Budget is a comprehensive blueprint for our future. It provides for massive investment in energy independence, a slowdown in climate change, universal health care, and an educational system that can meet international twenty-first-century standards. It pays for this investment by increasing taxes on the rich, charging businesses for polluting and heating our planet, stopping payments to big farmers for not growing food, and bringing some economic discipline to health care, government procurement, and the federal government’s own use of energy. It won’t increase taxes on the middle class; they’ll go down. And taxes on the rich won’t increase until 2011, when the Bush tax cuts expire.

Not surprisingly, all this is exactly what the President promised on the campaign trail. But don’t hold your breath waiting for the folks who called him all hot air to apologize.

They’re not going to acknowledge how wrong they were about the President. Instead, they’re going to change the subject. They’re going to moan about deficit spending and higher taxes. They’re going to make up phrases like “generational theft,” which sound scary but have no acquaintance with reality. They’re going resurrect all the lies and “spin” that got us in this mess and that we’ve heard for the last eight years. They’re going to make Bobby Jindal’s flop on TV Tuesday look like opening night in a Vaudeville run.

As you watch this seedy but long-running Vaudeville show, here are three things to keep firmly in mind.

First, no matter what the Republicans tell you, the middle class and poor won’t pay for this investment. The rich will. Taxes on the middle class and poor will go down. And if having to buy carbon credits forces energy and other firms to raise their prices, then tax credits and other benefits—financed by recycling higher taxes on the rich—will help people who need help.

To the extent savings and changed priorities won’t finance these investments, families that make over $250,000 annually will pay. My wife and I are in that category, and you know what? We don’t mind a bit.

Would you rather have a bit more personal cash to spend on big houses, big cars, fancy clothes, and lavish vacations, at the cost of prolonging our national decline? Or would you take a small “haircut” to live in a nation that continues to lead the world in innovation, infrastructure, education, energy, social justice and social cohesion? My wife and I don’t need more than a nanosecond to answer those questions. Nor does Warren Buffet and anyone else, no matter how rich, who has thought them through.

The second thing that Republicans will throw at you is scary claims of “generational theft.” Borrowing heavily now, they claim, is “generational theft” because our children and grandchildren might have to pay back the loans.

But detainees are not the only things Republicans torture. They also torture the English language. “Theft” is taking from someone and giving nothing back. It’s not “theft” to borrow money to invest in your children’s and grandchildren’s future.

Real “generational theft” is something else entirely—something that’s been going on for decades. It’s depriving our children and grandchildren of the same opportunities that our generation had, mostly for free, so we can spend “our own money” on ourselves. That’s generational theft.

Here’s an example. Except for one degree, I got all my education from public schools and public universities. The public high school I went to was one of the top five in the nation. My parents paid not one dime in tuition for it. The university I went to was one of the top two or three in the country, with Nobel Prize winners galore on the faculty. I paid no tuition at all, just a fee of about $100 per semester.

Now students just as smart as I was can’t find public high schools that good anywhere in our nation. They can’t get into the same university. And even if they are admitted, they’ll end up with crushing debt of $100,000 or more when they graduate. They suffer all these disadvantages, apparently, so I can keep more of “my own money” and luxuriate in my old age. Now that’s generational theft.

The third lie Republicans will tell you is that business doesn’t want and won’t make investments like this. I don’t know what kind of businesses they’re talking about, but they’re not talking about the ones that made American great.

Take Intel Corporation, for example. It’s had the lead in microprocessors for decades. Its market share is now about 80%. It just suffered a 90% plunge in profits, and it’s facing a global retrenchment in computers as the world’s economy falls off a cliff.

But is Intel emulating our Republicans, hunkering down and refusing to invest in anything? Is it resting on its laurels, its 80% market share? Not on your life! It’s investing billions in new plants and technology, right on the cusp of recession. Here’s how its CEO, Paul Otellini, explained why:
“We’ve always believed that the best way to successfully emerge from recessions is with tomorrow’s products, not by standing still with today’s.”
I hate to sound like a modern Calvin Coolidge and say that what’s good for Intel is good for the country. But isn’t that precisely the kind of investment we should be making as a nation? Isn’t that just what the Obama Budget calls for?

When you hear Republican politicians claiming to speak for business, you need to think about where they come from. Mitch McConnell, the Senate Minority Leader, hails from Kentucky.

McConnell has a soothing, low key personality, and Kentucky produces some fine horses and whiskey. But it’s hardly an industrial state. It produces about 1.1% of the nation’s gross domestic product and has about 1.5% of the nation’s population. There were almost as many people on the Mall for the President’s Inauguration as voted in the election that put McConnell in the Senate. Do we really want the fraction of Kentucky’s 4.7 million mostly rural people who voted for him telling the other 295.3-plus million of us how to run our economy?

Then take John Boehner, the House Minority Leader. Please. He hails from Ohio, an industrial state. But either he’s an idiot or he thinks his constituents are.

As an example, read the interview he gave Judy Woodruff last June, during the presidential campaign. Boehner was pushing John McCain’s “drill here, drill now” absurdity when Woodruff asked a crucial question: what’s drilling in Alaska going to do for us when all the experts say it won’t produce any oil for about a decade? Here’s how Boehner answered:
“Well, Judy, that’s not really true. I think, if we were to have votes in the House and Senate on opening up the Outer Continental Shelf or issues such as ANWR, we’d send a real clear message to the speculators in the oil market, and it could have a very dramatic affect.”
So Boehner thinks speculators control energy prices. Not only that: he thinks they would immediately overreact to a speculative possibility a decade in the future. All I can say is he could use a good undergraduate course in economics. Maybe he should drop out of the House and take one. We’d all be better off.

When you consider Republicans’ economic prescriptions, think about this. In the presidential election, states representing 72% of our nation’s gross domestic product voted for Obama. Big industrial states like California, Illinois and New York, collectively representing 36% of our GDP—over one third!—preferred Obama by a margin of 20% or more. Those that preferred McCain by a similar margin account for less than 5% of GDP.

The most productive parts of our nation endorsed the President overwhelmingly because they understood and approved the policies and priorities that he outlined in his campaign, which his budget now reflects. Is it possible that maybe our most productive voters know some things that McConnell and Boehner don’t?

So when you hear the same tired old tunes, think. Who got us in this mess? With what ideas? And where do these folks come from? Do they represent the productive heart of our nation, or its rural outback? And who really understands what “generational theft” is and how it’s happening?

If you answer those questions honestly, you’ll take about as long to approve the Obama Budget as my wife and I took to decide whether we want a few more bucks in our personal bank accounts while Rome burns or a country that works again. I’d say about a nanosecond.


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