President Obama is framing the deficit debate around two core initiatives, winding down the Iraq and Afghanistan wars and allowing the Bush tax cuts to expire.
Both approaches are within Obama’s executive power to carry out, independent of the Tea Party, corporate Democrats or Congress factions.
Winding down the wars, which means ending the US combat role and leaving at most a minimal presence behind, will save $1.2 trillion over a decade, according to White House figures. Letting the Bush tax cuts expire for families making over $250,000 will generate $866 billion over a decade, and limiting itemized deductions for the wealthy will save another $410 billion. (New York Times, September 20)
Together the two steps will save $2.6 trillion over a decade. Since Obama already signed off on $1 trillion in savings under the August debt ceiling law, ending the two inherited wars and the Bush tax cuts means Obama easily will reach his stated deficit reduction goal of $3 trillion over ten years:
Winding down two wars, $1.2 trillion + Expiring Bush tax cuts, $1.4 trillion = $2.6 trillion
To further emphasize the new direction, the Pentagon has been ordered by Secretary of Defense Leon Panetta to slash by more than half the funding for assistance to Afghanistan’s army and police over the next three years. (Los Angeles Times, September 12)
That leaves on the table the Obama proposal for $320 billion in Medicare and Medicaid cuts as the Congressional “super-committee” labors to design a bipartisan budget fix. Those health care cuts, however, will be vetoed unless Republicans agree to a budget plan which includes tax increases on the rich or closing corporate tax loopholes, an unlikely but unpredictable scenario. Obama’s Medicare-Medicaid cuts, if adopted, will cause “a lot of pain”, according to the White House. But cuts in Social Security appear nowhere in the Obama proposal, and the health care cuts are just three percent of the government’s projected expenditures for the coming decade. The proposals include higher premiums for higher-income beneficiaries and for new beneficiaries who supplement their government insurance with private insurance, and co-payments for home health care starting in 2017. (New York Times, September 20)
Obama’s veto threat is a hardening of his position.
Republicans argue that the proposed $1.2 trillion cut for winding down the wars is somehow unreal, apparently because the wars will be winding down anyway. The Medicare-Medicaid cuts, they say, are only token trims and must not be connected to raising taxes on the wealthy, which remain sacrosanct to a majority of Republicans.
The Obama platform should be good news for his disappointed progressive base. For more on the Iraq-Afghanistan policies, see continued coverage in the Bulletin.