Today’s anemic jobs report has sparked a new round of demands — including one from the Plum Line’s own Ryan Cooper — for Dems to insist that the coming budget talks focus on jobs, jobs, and jobs.
But what would that look like? What should Dems push for that has a chance to succeed? I put the question to Robert Greenstein, the head of the Center on Budget and Policy Priorities, and a leading advocate for balanced fiscal policy.
To begin with, it’s likely any deal would cover only one or two years. The primary goal is of course to replace the sequester, which is basically a wet blanket over the economy and the recovery that is limiting the country’s ability to invest in its future. Greenstein suggests policy-makers push to replace it with a combination of new tax expenditure curbs and better spending cuts — which Dems will do — but the former will run into a wall of GOP opposition. And so, on the cuts side, the focus should also be on rolling sequester cuts deeper into the future, via carefully designed entitlement cuts (which don’t have to necessarily target benefits), getting the immediate cuts off the back of the recovery and shifting them to a time when the economy is stronger.
“The single biggest goal is trying to undo as much as you can of the immediate sequestration,” Greenstein says. “Trade the meat cleaver type cuts that hurt the economy for cuts that would occur later in the decade.”
Greenstein says he’s okay with replacing non-defense sequester cuts — but not defense ones — with careful entitlement cuts. “For the next couple of years, I’m comfortable in replacing some or all of non defense cuts with well designed savings from mandatory programs like entitlements, but not on the defense side,” he said. “One doesn’t want to create a precedent for undoing defense sequestration with domestic entitlement cuts.”
So Dems should make a big push to curb what Greenstein called “tax entitlements,” i.e., loopholes such as carried interest. It’s the defense cuts that give Dems their leverage, so that’s probably a good place to demand they be replaced by the closing of loopholes that benefit the rich.
Second: Policymakers should push for an extension in unemployment benefits set to run out at the end of the year, possibly an easier get from Republicans than new taxes. Greenstein noted that unemployment benefits are one of several things that “give the biggest bang for the buck in economic activity per dollar of federal cost. Republicans will demand a price, but it’s important to do.”
Third: Infrastructure spending. Of course, it’s at least as unlikely that Republicans would agree to that as they would to closing tax loopholes.
The other day, President Obama said the following about the coming budget talks:
“The issue is not growth versus fiscal responsibility — we need both. We need a budget that deals with the issues that most Americans are focused on: creating more good jobs that pay better wages. And remember, the deficit is getting smaller, not bigger. It’s going down faster than it has in the last 50 years. The challenges we have right now are not short-term deficits; it’s the long-term obligations that we have around things like Medicare and Social Security…So the key now is a budget that cuts out the things that we don’t need, closes corporate tax loopholes that don’t help create jobs, and frees up resources for the things that do help us grow — like education and infrastructure and research.”
That’s the right template — good jobs first; fiscal responsibility over the long haul — for the priorities Dems should push for in the coming talks. Today’s Post/ABC poll found a plurality agrees that Obama, not Republicans, has the “right balance” between cutting unnecessary spending and keeping needed spending, and a solid majority wants a the deficit reduced through a combination of tax increases and spending cuts. So the public’s priorities are aligned with those of Dems.
Of course, with today’s GOP being what it is — impervious to national opinion and economic evidence; unremittingly hostile to increasing spending levels or taxes on the rich — if Dems actually do insist on the right priorities, we probably aren’t going to get any budget deal.