As the House and Senate Budget Committees begin work this week on their versions of the Congressional Budget Resolution, the usual suspects are lining up to oppose proposals that would pay for health care reform, reduce global warming, create more jobs and improve our education system. Beyond the expected Republican opposition, however, some key Democrats are also calling for changes that would seriously weaken Presidents Obama’s groundbreaking budget.
Although the chairs of the House and Senate Budget Committees are expected to craft resolutions that remain faithful to the President’s priorities, many of the revenue sources proposed by Obama are being called into question. Further, the skittish-on-spending Blue Dog Democrats in the House and similarly inclined Senate Democrats are urging reductions in domestic appropriations, which pay for education, job training, housing, child care and child welfare services, public health, and other family and community services.
Last week’s significantly increased deficit projections from the Congressional Budget Office (pdf) have provided further ammunition for those waving the banner for reduced domestic spending. In large part because the economy worsened dramatically since the Obama Administration prepared its budget, CBO projected a deficit of $1.4 trillion for fiscal year 2010 compared with the Obama budget estimate a $1.17 trillion.
As serious as the deficit is, cutting domestic appropriations is not the answer. These programs contribute minimally to the deficit, and are crucial to pulling our country out of the deepest recession in decades and creating long-term economic stability for all Americans. And while cutting waste in such areas as Medicare, military contracts and farm subsidy programs are important sources of potential savings, they won’t provide enough to fund the desperately needed shift in priorities called for under President Obama’s budget.
Instead, those who criticize the President’s proposals must come up with fair and responsible alternatives for increasing revenues and reducing the deficit over time.
The President’s budget provides a blueprint for doing just that. To pay for health care reform, for example, Obama proposes funding his $634 billion expansion of health care, which would take a giant step towards quality care for most Americans, in part by lowering the value of income tax deductions for the wealthiest households (those making more than $250,000 a year) from 35 cents on the dollar to 28 cents. This change, which brings the rate back to what it was during the later part of the Reagan Administration, would produce $318 billion in savings over the next 10 years. When combined with the Obama budget’s $316 billion in projected savings from reduced payments to expensive private plans, it would cover much of the cost of the health care reform plan.
Although 98.8 percent of tax payers would be unaffected by the change, opposition in Congress has been swift, much of it claiming that reducing the itemized deduction for a very small segment of wealthy households would lead to a reduction in charitable giving. However, the Center on Budget and Policy Priorities found that there would be little impact, with charitable giving dropping by an estimated 1.3 percent. It also found the lower deduction rate would have a minimal effect on home-buying and home construction.
Many of the same Congressional leaders who have expressed opposition to reducing the deduction rate are also supporters of health care reform. Yet few have suggested a better way to pay for it.
Similarly, critics of the President’s proposal to reduce global warming by auctioning off permits to businesses that pollute have yet to explain how they would come up with the needed revenue. In addition to limiting greenhouse gas emissions, the plan would raise $65 billion in revenue to pay for permanent expansion of tax credits that reach the lowest-income families. These credits would reimburse families for the increasing costs of energy that will accompany efforts to reduce greenhouse gases and provide an important financial boost for the poorest families.
It is no longer acceptable for our political leaders to avoid making the tough choices when it comes to supporting government programs that make a difference to millions of people in need. Short term political gain may come to some of those who rail against increased domestic spending. But the price will be a bleaker economic future for all Americans.
Deborah Weinstein is the executive director of the Coalition for Human Needs, a Washington, D.C.-based alliance of national organizations working together to promote public policies that address the needs of low-income people and other vulnerable populations.