Progressives Warn Left’s Aversion To Tackling Deficit Issue Puts Its Entire Agenda At Risk

Reluctance on the Left to respond to the federal budget deficit as a serious political issue leaves progressives not only at a political disadvantage today, but this aversion also carries potentially dire future consequences for survival of their entire agenda, according to a growing number of liberal scholars and analysts.

Even a prominent progressive leader who opposes President Obama’s creation of a bipartisan commission as a solution to help rein in future deficits believes some action is needed.

“Now before I get pegged as a liberal who doesn’t care about the fiscal health of my nation, let me make it clear that I am in favor of getting the deficit under control,” says Roger Hickey, co-director of the Campaign for America’s Future, which is one of many progressive groups that objected to a deficit commission due to worries that following the advice of such a panel would weaken Social Security and other key federal programs that vulnerable Americans rely upon to get by.

Those on the Left who urge a more coherent progressive response to the deficit issue readily acknowledge that many of the same conservatives who happily spilled red ink during President George W. Bush’s tenure are now using deficits as a political bludgeon.

“I do get a little bit tired of being lectured about how serious the deficit crisis is today by, in many instances, the exact same people who caused the deficit crisis,” says Sen. Bernie Sanders, a progressive independent.

Republicans in recent years, he notes, backed two wars without paying for them, slashed taxes on the wealthiest Americans without making up lost revenue, pushed repeal of the estate tax on the very wealthy, and passed a prescription drug plan that Sanders says was “rigged to keep prices high for pharmaceutical companies by barring Medicare from negotiating lower prices.”

Yet despite the political gamesmanship of so-called “deficit peacocks” — those who “prefer scoring political points to solving problems” — Sanders says he remains committed to honest deficit reduction by scrutinizing waste at the Pentagon and other federal agencies, and by eliminating Bush-era tax breaks for the wealthy.

Sanders is not alone. Two prominent Washington progressive think tanks, the Center for American Progress (CAP) and the Center for Budget and Policy Priorities (CBPP), last fall held a high-level joint conference specifically to develop a progressive approach to the national deficit.

Standing ‘Truth On Its Head’

In debating deficits as a political issue, liberals have the facts on their side, a number of progressive analysts point out.

“Some of President Obama’s critics and political opponents have launched a line of argument that Obama is mostly to blame for the large federal budget deficits projected for the coming decade and that his Administration’s role in swelling deficits and debt dwarfs that of the previous administration,” say James Horney and Robert Greenstein of CBPP, which focuses on issues of low- and moderate-income Americans.

“The critics cite what they present as proof: the fact that the deficit this year and in the years ahead will be much larger than the average deficits under President George W. Bush and that the increase in the national debt thus will be much larger under Obama than Bush,” Horney and Greenstein write in a new brief. “But asserting that the deficits that lie ahead are primarily the result of policies enacted since President Obama took office is Orwellian. It stands truth on its head.”

The deficit for fiscal 2009 was $1.4 trillion and, at 10 percent of Gross Domestic Product (GDP), was the largest deficit relative to the size of the economy since the end of World War II, note Horney and Kathy Ruffing, of CBPP.

The events and policies that pushed deficits to these high levels in the near term, however, were largely outside the Obama administration’s control, Horney and Ruffing say. If not for the tax cuts enacted during the Bush presidency, the cost of the wars in Iraq and Afghanistan that were initiated during that period, and the effects of the worst economic slump since the Great Depression — including the cost of steps to combat it — the nation would not be facing these huge deficits in the near term, they say.

Just two policies dating from the Bush administration — tax cuts and the wars in Iraq and Afghanistan — accounted for more than $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs, Horney and Ruffing say.

“Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade,” they say. “That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.”

Progressives agree that Obama’s stimulus plan was necessary when enacted, continues to help the U.S. economy, and should continue.

“While some would use short term deficits as an excuse to stall strategies to get the economy going again, this conference’s sponsors believe it would be a mistake to take actions to reduce the deficit immediately while the economy is recovering from the worst recession since the Great Depression,” says John Podesta, president and CEO of CAP. “It is the long term structural deficits and debt that pose the true challenge, not the numbers in the current year or the next fiscal year which resulted from responding to the current crisis that the current administration inherited.”

A former chief of staff in the Clinton White House, Podesta points out that George W. Bush actually inherited a federal budget in surplus.

“President Bush, in fact, inherited surpluses that was supposed to last for over a decade,” Podesta says. “But his insistence on giving massive tax cuts to the very rich while waging two wars drove the federal budget into a giant hole, turning a $236 billion surplus he inherited into a $459 billion deficit, from a surplus of 2.4 percent of GDP in 2000 to a steady stream of deficits culminating in last year’s shortfall.”

Without changes to current policies without change, the debt held by the public rises to somewhere around 300 percent of gross domestic product (GDP) by about 2050 and deficits looks like they’re in the range of 20 percent of during this period, according to Greenstein, of CBPP. By far, the largest driver of these deficits is the rising cost of health care, which is why deficit-conscious progressives agree healthcare reform must happen.

” … What’s often not recognized is that all federal spending other than Medicare, Medicaid, Social Security and interest payments on the debt, has actually declining as a share of GDP for several decades and is actually projected to continue to do so,” Greenstein adds.

Shape A Response, Or ‘Have It Imposed Upon Us’

Progressives, as well as more impartial analysts, observe that in a political environment that recently has turned more toxic for Democrats that the Left could see some purely political benefits by becoming more proactive with the deficit issue.

Greenstein and others also see more substantive reasons for progressives to engage more fully on the issue, as well.

Greenstein acknowledges disagreement among progressives about the harm that running budget deficits can cause, but cautions, “in a broader political sense, I’m afraid it doesn’t matter because financial and international markets, and as a result the political system, are not going to let us stay on the course forever.”

If, eventually, federal deficits and debt does trigger some crisis or perceived crisis that prompts a hasty response, liberals will want to be part of the conversation so as to protect their priorities, he says. “In a nutshell, we can either try to shape the inevitable response or we can have it imposed upon us,” he says.

If progressives aren’t at the table, Greenstein warns that “the risk is high for the people with the least political power in this country bear a disproportionate share of the burden even though, by and large, they’re lower on the income scale.”

The bottom line, says Greenstein, is that deficit reduction and a progressive agenda are not mutually exclusive, pointing to two major deficit-reduction packages enacted in 1990 and 1993.

“In both years, the political system produced a balanced deficit reduction package; both packages had progressive tax increases, health care savings, other savings; both set roughly a $500 billion over a five-year target for deficit reduction. Both were designed in a way to produce gross savings of more than 500 billion, take the additional amount and plow it back into things like the two largest expansions of the Earned Income Tax Credit for low income working families in history,” he says. “The two largest expansions were part of those two deficit reduction packages. Those packages showed that it is possible in this country to reduce deficits and reduce poverty and inequality at the same time.

“Deficit reduction is not antithetical to moving a progressive agenda and progressives should not be afraid to step up to the plate and help tackle this issue,” Greenstein adds.

The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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