Five years after the onset of the worst financial collapse in our history, we still have not recovered. President Obama used the fifth anniversary of the financial collapse to remind Americans of the “perfect storm” he inherited, and of the steps he took to save the economy from free fall, rescue the auto industry and save the financial system.
He would understandably like a little credit for the 7.5 million new private sector jobs, the passage of comprehensive health-care reform and the changes in the tax code that left those earning over $450,000 paying a bit more in taxes.
Much was done, but in the end, far too little. The economy has not recovered the jobs that were lost in the Great Recession. The rate of job creation has barely been able to keep up with new entrants into the labor force. Over 20 million people are still in need of full-time work. The top 1 percent has captured virtually all of the rewards of growth coming out of the collapse, while the majority of Americans have been left out of the recovery. Wages for most Americans aren’t keeping up with costs. The big banks are more concentrated and larger than ever. Derivatives remain a largely unregulated weapon of financial mass destruction.
In his statement Monday, President Obama acknowledged this reality. The trends that were undermining the middle class before the Great Recession, he noted, have grown worse since the downturn. “We’ve cleared away the rubble,” the president said, but we have yet to build “a new foundation” for growth, good jobs and widely shared prosperity.
Obama used this backdrop to set the terms of the coming debate on the budget. The Republican right is once more gearing up to hold America hostage, threatening to shut down the government or default on our debts to get its way.
The House and Senate Republican leaders want more deep cuts in spending that will cost jobs, and cut investments vital to our future in everything from education to R&D. For the tea-party right led by Texas freshman Sen. Ted Cruz, that’s not sufficient. Backed by deep-pocket outside groups like the Club for Growth, they are calling for shutting down the government unless Obamacare is defunded.
This is simple madness. President Obama once again laid out out a common sense, modest agenda on the budget. Make investments in education and infrastructure vital to our competitiveness. Don’t let immediate cuts sabotage our faltering recovery. Get our books in order with a balanced plan that combines asking corporations and the rich to pay their fair share with cutting wasteful programs and bloat.
House Republicans spurn these proposals out-of-hand. They want deeper cuts, all from domestic programs like education and clean water. They want more, not less money for the military. They oppose any increase in taxes, even objecting to closing down the tax dodges that reward companies for stashing money and reporting profits abroad. They want to repeal Obamacare without replacing it. They even are moving a bill to cut billions out of food stamps, a program that protects families in trouble from going hungry. And they are so divided among themselves that they have rejected their own leadership’s proposals to keep government open.
To date, Republicans have gotten the best of each of the budget crises they have manufactured. They’ve succeeded in slashing government spending at a time when the economy needs a boost. They preserved most of the Bush tax cuts, still skewed to the affluent. They’ve protected the subsidies and tax dodges of the rich and corporations, insuring a continued flow of money to their coffers.
But this week also marked the anniversary of Occupy Wall Street. And the realization that, as Elizabeth Warren put it, the rich and powerful “rig the rules” is increasingly widespread. As the liberal revolt against the potential nomination of Larry Summers to head the Federal Reserve revealed, President Obama faces increasing pressure from a wing of the Democratic Party no longer willing to sign onto the conservative economic policies of Wall Street.
President Obama announced that he would not negotiate on raising the debt ceiling. That he would not sign on to the delay or defunding of health-care reform. That he wanted the harsh and mindless across-the-board cuts known as sequestration repealed in exchange for a longer-term, balanced program combining cuts in wasteful subsidies and revenues from shutting down tax dodges. This time his “bright red lines” might mean something, because increasingly restive progressive legislators in the House and Senate will hold him to his promise.
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