‘Invest and Grow’ vs. ‘Slash and Burn’
February 15, 2011, 6:00am

The Progress Report

by Faiz Shakir, Benjamin Armbruster, George Zornick, Pat Garofalo, Zaid Jilani, Alex Seitz-Wald, and Tanya Somanader

February 15, 2011

‘Invest and Grow’ vs. ‘Slash and Burn’

The Obama administration released its fiscal year 2012 budget yesterday, even as Congress continues to grapple with funding for the remainder of the fiscal 2011 year (which ends in October). The $3.7 trillion budget makes key investments in infrastructure, scientific research, education, and job creation, while still reducing the deficit in the medium term and stabilizing the debt-to-GDP ratio, two key steps to getting the long-term structural deficit under control. “Even as we cut out things that we can afford to do without, we have a responsibility to invest in those areas that will have the biggest impact in our future,” President Obama said in a speech yesterday. Of course, Republicans in Congress immediately criticized the administration for not proposing enough in the way of budget cuts, claiming that the lack of cuts will result in job losses. “It’s going to destroy jobs because it spends too much, it borrows too much, and it increases the deficit,” Speaker of the House John Boehner (R-OH) said on Laura Ingraham’s radio show. But at the same time that they’re falsely accusing the administration of crafting budget policies that will cause unemployment to rise, House Republicans have proposed a deeply irresponsible spending plan for the remainder of fiscal year 2011 that, if enacted, would result in deep cuts to vital and popular programs that promote competitiveness and job creation, while simultaneously harming some of the nation’s most vulnerable residents.

KEY INVESTMENTS: As Center for American Progress economist Adam Hersh wrote, “If there is one point on which all economists can agree, it is that investment — in infrastructure, in research and innovation, and worker productivity — is the foundation for economic growth.” To that end, the Obama administration included in its budget proposal $556 billion for a six-year surface transportation authorization. The administration proposed $8 billion next year to invest in passenger and high-speed rail and $30 billion for a National Infrastructure Bank. The infrastructure funding drew the support of the National League of Cities, but even with those spending boosts, the nation would still be far short of fulfilling what the Army Corps of Engineers has assessed as roughly $2.2 trillion in infrastructure needs. The administration’s proposed budget would also include $8 billion “to boost electric cars, wind and solar power, [and] clean-energy manufacturing,” as well as $200 million in subsidies for energy efficiency and renewable energy loan guarantees. In the education realm, the Obama administration proposed a new round of the Race To The Top program — this time making competitive grants for education reform available to individual districts, instead of entire states — while increasing money for special education, school turnaround grants, and early intervention services for toddlers with disabilities. The budget also preserves the maximum Pell Grant, as well as the Teacher Incentive Fund and the Improving Teacher Quality State Grants. “The administration’s budget generally reflects the principle that we cannot out compete the rest of the world if we are leaving one-third of our citizens behind,” CAP’s Half in Ten manager Melissa Boteach noted. However, the proposed budget also includes some disappointing cuts, reducing both the Low-Income Home Energy Assistance and Community Services Block Grant by 50 percent. “These services both stabilize families in crisis and provide a pathway to long-term economic security,” Boteach wrote.

RESPONSIBLE DEFICIT REDUCTION: The release of the budget resulted in a predictable outcry from self-styled deficit hawks, who moaned that the administration did not attempt to reduce the deficit even more drastically than it did. “Regrettably, this budget keeps our nation on a reckless fiscal path, representing more unaffordable debt and spending,” said Sen. Orrin Hatch (R-UT). The budget also received fire from Sen. Kent Conrad (D-ND), who said we need “a much more robust package of deficit and debt reduction over the medium and long term.” Alice Rivlin, a member of the now-completed Presidential deficit commission, claimed, “I would have preferred to see the administration get out front on addressing the entitlements and the tax reform that we need to reduce long-run deficits.” However, the President’s budget does responsibly reduce the deficit. As Center for American Progress Associate Director of Tax and Budget Policy Michael Linden wrote, “The President’s budget goes exactly as far as it should, showing deficits declining from a high of 10.9 percent of GDP down to 3.2 percent of GDP by 2015.” “His deficit reduction eases in to allow the economic recovery to get more momentum before the deficit-cutting measures start to bite. And, although there are lots of spending cuts, there are lots of investments in the economy that can produce returns in job creation and economic growth,” added CAP Vice President for Economic Policy Michael Ettlinger. Even so, the administration left some big fish on the table in terms of possible deficit reduction, including plenty of wasteful tax expenditures and the bloated defense budget (from which the administration only suggested $78 billion in savings over five years, which only slows DOD’s rate of growth).

GOP’S SLASH AND BURN: As the President rolls out his budget, House Republicans are using their new majority to try to cut spending for the remainder of the 2011 fiscal year. (Currently, the government is operating under a continuing resolution that keeps funding consistent at the 2010 level.) After initially releasing roughly $30 billion in cuts (below the fiscal 2010 level), House Appropriations Committee Chairman Hal Rogers (R-KY) was forced to go back and find further reductions after a revolt from members of his own party. The roughly $60 billion in savings that the GOP found, on its second attempt, would severely undermine job creation — causing the loss of hundreds of thousands of jobs even as unemployment is at 9 percent — while also cutting vital and popular programs. According to the Economic Policy Institute, the GOP’s first round of proposed budget cuts alone would cause the loss of 600,000 jobs. With their proposed cuts, House Republicans take aim at everything from Pell Grants and special education funding to WIC, which provides nutrition assistance for infants and low-income pregnant women, and other programs benefiting women and children. They also proposed cutting half of federal job training programs, more than one billion from community health centers (which they used to call “essential”), and slashing clean-tech and energy investments by nearly 30 percent, “devastating this growing but immature industry that struggled during the Great Recession.” Programs that they propose completely eliminating range from investments in high-speed rail and weatherization assistance to assistance for homeless veterans. Finally, at the same time that some Republicans decided to criticize the President for not reducing the deficit fast enough, they proposed new, unfinanced tax cuts that would cost hundreds of billions of dollars.

Think Fast

The South Dakota House is considering a bill that could “make it legal to kill doctors who perform abortions.” The GOP-backed bill, which passed out of committee, would alter that state’s definition of justifiable homicide to allow killing if committed by a person “while resisting an attempt to harm” that person’s unborn child or the unborn child of a person’s spouse, partner, parent, or child.

ThinkProgress’ reporting on the ChamberLeaks scandal receives coverage in both the Washington Post and the Los Angeles Times. The Post’s Dan Eggen writes that the “e-mails reveal plans for a dirty-tricks-style campaign against critics of the U.S. Chamber of Commerce,” while the Times’ Tom Hamburger and Matea Gold report that the effort was intended to “monitor and discredit the chamber’s critics.”

Riot police officers in Iran beat protesters and fired tear gas yesterday across the country, “as security forces around the region moved — sometimes brutally — to prevent new unrest in sympathy with the opposition victory in Egypt.” Witnesses and reports said around 30,000 protesters took to the streets.

Yesterday, the House passed Patriot Act provisions to extend the government’s authority to conduct “roving wiretaps of suspected terrorists,” to access suspected terrorists’ business and other records, and to monitor so-called “lone wolf” suspects. After failing to pass these provisions earlier this month, the House voted 275-144 to extend these measures until Dec. 8, 2011.

Secretary of Defense Robert Gates is appealing to fiscal conservatives on Capitol Hill to scrap plans to build an alternate engine for the Joint Strike Fighter. Gates has been trying to stop funding for the project, which he has described as “emblematic of wasteful government spending.”

Common Cause sent a letter to the Supreme Court yesterday asking for a clarification: though a Court spokeswoman previously said Justice Clarence Thomas only did a “brief drop-by” to a conservative, Koch-organized event in 2008, Thomas’ financial disclosure report reveals four days of accommodations, paid for by the conservative Federalist Society. “I don’t think the explanation they’ve given is credible,” said Common Cause vice president Arn Pearson.

President Obama unveiled a $3.7 billion budget yesterday that “would trim or terminate more than 200 federal programs next year,” while also maintaining spending on a number of public investments. “The cuts target defense, heating assistance and the environment.”

An Ecuadorian court has ordered oil giant Chevron to pay $8.6 billion to clean up pollution it caused in local rain forests. Chevron denies it caused the pollution, but the judge has ordered the fine be doubled if the company doesn’t publicly apologize within 15 days.

A group of California political activists calling themselves the The Third Lantern plan to launch a website called the Issa Files where they will publish investigations into the “personal and business history” of House Oversight and Government Reform Committee chairman Rep. Darrell Issa (R-CA). The group also plans an aggressive TV advertising campaign aimed at the new chairman.

And finally: Former First Lady Barbara Bush, watching her husband get choked up talking about his affection for her, quipped that he was acting like noted weeper John Boehner. “You know what?” Barbara told George. “You could be Speaker of the House.”

Blog Watch

Mitt Romney’s dilemma.

Deficits would shrink under the Obama budget.

Why do Texans pay more for electricity? Deregulation.

Truman and the American welfare state.

George H.W. Bush’s CIA briefer reflecting on deaths of Iraqi civilians in Gulf War I air raid.

Wisconsin Gov. Scott Walker (R) threatens to deploy National Guard against labor unions.

Arizona legislature considering a bill that would require hospitals to verify immigration status.

Why the coming debate over spending cuts has nothing to do with reviving the economy.

Daily Grill

“[Cutting oil subsidies] would raise skyrocketing gas and energy prices and destroy American jobs.”
— House Speaker John Boehner (R-OH) spokesman Michael Steel, 2/08/11


“My point of view is that with high oil prices such subsidies are not necessary.”
— Former Shell Oil CEO John Hofmeister, 2/11/11