President Obama
Senator Reid
Senator Schumer
Senator Gillibrand
Representative Pelosi
I know you are on the verge of finally completing the 2011 budget and it would be nice to have some time before the 2012 budget battles begin - but of course it doesn't work that way.
The 2011 budget will include the largest ever cut in domestic non-security spending. I don't like it and I'm sure you don't either, but we do have a record deficit that has to be addressed. Voters demanded this in 2010 and you had to pay attention.
Now Republicans are starting to talk about $4 Trillion of spending reductions starting in the 2012 budget. This is obviously absurd. Unfortunately, the few things I have seen so far (CNN, NPR, online news) all sound like the Republicans are the party of fiscal constraint and Democrats are standing in the way by defending out of control social spending. I don't believe this story line but many people do. The media reinforces it almost every day.
The deficit problem is a revenue problem. You cannot afford to lose control of this message - you need to have the same single minded focus on taxes that Republicans have on spending. You have to get out in front of the media and the public every chance you have and hammer home the tax issues:
- US taxes as a percent of GDP are at historic lows and well below most other countries
- Huge multinationals have record profits and cash reserves but pay no US taxes
- Big oil has record profits but still gets huge tax subsidies
- Agriculture gets big subsidies - and they don't go primarily to "small family farms"
- CEO income is up 27% but median pay is only up 2% - and the wealthy don't pay their fair share of taxes
- Investment income, including hedge fund capital gains, are taxed at lower rates than wages and salaries - and do less for economic stability and growth
- Income and wealth concentration are at record levels - and last year we cut estate taxes for the wealthiest 400 families in the country
FISCAL RESPONSIBILITY STARTS WITH TAXES - DEMOCRATS ARE TRYING TO LEAD AND REPUBLICANS ARE STANDING IN THE WAY.
A defensive posture on spending is not enough - you need to go on the attack on taxes. It's too bad you had to agree to the Obama-McConnell tax cuts of 2010 - that was a bad start. It's time to reverse course and start seriously raising taxes on high incomes, on wealth (estates) and on major corporations.
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What about entitlement spending? First, social security does not contribute to the deficit and cannot be on the table as a deficit reduction item. Leave it alone for now. Second, Medicare and Medicaid are out of control - no question about it. However, the Republican plan is to ignore the problem and simply refuse to pay the bill, pushing the cost back to states and individuals - which is a big burden to the poor and middle class. The financial impact on most people will be significantly worse than a tax increase - and should legitimately be portrayed as a Republican tax increase on the middle class.
We need true medical cost control - not just a plan to push the cost back to individuals. I don't know enough to tell you how to do this - but to begin with, I'd look for the profit streams in pharmaceuticals, for-profit health care companies and health insurance companies. How much of the nation's health care bill is siphoned off as profit and given to corporations? How much more do they spend in lobbying? How much more is wasted in advertising and administration? None of these costs contribute to improved health care. How does this compare with the rest of the world? I'll bet all of these costs are significantly higher here - which means they should all be on the table alternatives to scale back costs. The second area I would look is prescription drug costs - why are US costs so out of line with other countries? The third is the general standard of care - I don't want to "send granny to the death panel", but some courses of treatment are demonstrably inappropriate and should not be funded. This would be a better outcome than no longer funding community clinics, Planned Parenthood, Title X, metal health coverage, organ transplants or HIV medications - all of which are current Republican proposals to limit medical care. PPACA needs to be expanded, not repealed.
Whatever you do, ignoring the problem by simply refusing to pay for it is a serious abdication of responsibility that you should not accept.
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What about defense spending? We cannot afford 2 1/2 wars and the weapons systems, procurement policies and defense establishment that we have today. Defense spending has to come down to an affordable, sustainable level.
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It's time, and past time, to get control of the budget message. The deficit is a real problem - but it's caused by bad tax policy, not by spending. If you can establish this message, you can fix it. If you don't, and if you only play defense on spending, you will lose. You will lose the economic battle, and you will lose the election battle in 2012. And if that happens, you will have also lost the middle class and the future of this country.
Sincerely,