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Obama's deficit speech: One of the best and most important of his term

President Barack Obama delivering a speech on U.S. fiscal and budgetary deficit policy at the George Washington University on Wednesday.
REUTERS/Kevin Lamarque
President Obama delivering a speech on U.S. fiscal and budgetary deficit policy at the George Washington University on Wednesday.

It lacked drama, humor, human interest and poetry, but the prose of President Obama's big Wednesday deficit/debt speech was one of the best and most important of his term.

We have a choice to make about the national debt and Obama laid it out fairly clearly. And then he didn't ask congressional Dems and Repubs to sort through the choices and split their differences. He put his thumb clearly and heavily on the scale.


Over much of his term so far, liberals have complained that Obama was too reluctant to stake out a position and fight for it, or even argue for it. His former liberal base has felt that too often he caved in to Republican negotiating tactics. Republicans seem to be clearer about what they are for, and more specifically what they are against (namely tax increases on wealthy Americans). And once Repubs announce what is not gonna happen, they seem to know how to keep it from happening.

 On Wednesday, in an eerily quiet auditorium at George Washington University, before an invited audience that only once in 43 minutes interrupted his remarks with applause, Obama staked out a position, argued for it, and sounded ready to fight for it.

In fact, he gave Republicans a taste of their own medicine. He told them what is not gonna happen as long as he is president. And, knowing that he would be accused of class warfare, he talked about the rich and the poor anyway:

"In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That's who needs to pay less taxes?

"[Republicans] want to give people like me a $200,000 tax cut that's paid for by asking 33 seniors each to pay $6,000 more in health costs. That's not right. And it's not going to happen as long as I'm president."

And later, referring to the Bush tax cuts on in those with incomes above $250,000, which Obama agreed last year to extend but which are now set to expire at the end of 2012:

"We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can't afford it. And I refuse to renew them again."

Two choices
Yes, Obama gave voice to his inner liberal. But, as is his recent wont, he tried to set up a spectrum on which his own position is in the middle. Here's how he framed the choice:

Choice 1: We could do nothing, in the name of Keynesianism, and there are very smart economists who think it's too soon to start cutting back on the borrow-and-spend stimulus. There are recent polls suggesting that Americans aren't as worried about the deficit as they are about unemployment or even danger of inflation. Obama rejected the head-in-sand approach. (I've always kinda liked Tim Pawlenty's line about how you can't repeal the fiscal laws of gravity but Obama went for a more boring schoolmarmish explanation of how much interest we will have to pay to bondholders in China and elsewhere if we don't cut down on the borrowing.)

Choice 2: That would be the Republican approach, which is to rule out any tax increases, continue to press for still more tax cuts for businesses and the wealthiest individuals in the name of job creation, and cut — in the name of deficit reduction but also, clearly, to make room for the next round of tax cuts — whatever must be cut from Medicare, Medicaid and most other social spending programs that help the middle and lower classes.

One of the coolest things about Obama's speech is that he didn't ignore the House Republican plan authored by Budget Chair Paul Ryan. With Ryan sitting in the audience, he went after the Ryan plan. He described it. (Ryan considers the description unfair and inaccurate. I'll leave that to more neutral arbiters, but I feel confident that whatever unfairness or inaccuracy crept into Obama's version of Ryan's version of how to tackle the fiscal future it pales by comparison to the lies and quarter-truths some Republicans routinely tell about Obama's record, most especially about the health care bill.)

Perhaps because Ryan was sitting right there, perhaps because Obama seems so drawn to that rarefied air above the fray, the prez dropped the word "radical" from his prepared text. I'll say it was a good choice (while noting again that many high-ranking Repubs are not so cautious about word choices when describing Obama's record).

But Obama did call the Ryan plan "pessimistic" because it suggests that "we can't afford the America that I believe in and I think you believe in." He did say Ryan's "roadmap" would "end Medicare as we know it" by turning it from a guarantee to "a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs."

Hiding slightly behind a quote from former Reagan budget director David Stockman, Obama did say, of Ryan's roadmap, that "there's nothing 'serious' or 'courageous' about this plan. There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. And I don't think there's anything courageous about asking for sacrifice from those who can least afford it and don't have any clout on Capitol Hill. That's not a vision of the America I know."

The third choice
Then, of course, there was the third choice, the goldilocks neither-too-hot-nor-too-cold approach, the Obama choice, which he euphemistically called a "balanced" approach. In this case, that's code for "it has some tax increases in it," although Obama won't put the words "tax" next to the word "increase" or "hike" or "raise." He prefers to calls his revenue enhancements spending cuts, as in: "The fourth step in our approach is to reduce spending in the tax code, so-called tax expenditures."

But I don't care. He's not fooling anyone nor seriously trying to. The main point is that Obama has decided to stand and fight on the need to get more tax dollars from rich people and corporations, and he is prepared to say that the only alternative to that idea is to let the deficit devour the future or to take health care away from the poor and the elderly. He's basically right about that and is willing to make 2012 a referendum on it. And if he can't win that argument, God bless us Tiny Tim.

The full text of the speech is here.

The video is here.

And, in the interest of brevity, I'll save a post about the official Repub reaction for later today.

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Comments (27)

Obama does a great job of sounding ready to fight for things when he is a candidate as he is now. His acting abilities are quite masterful. After he is elected, he will go right back to being a water carrier for the PTB.

While it sounds like this speech was stronger and more principled, I still wish he'd stop doing everything on the Republicans' terms. He's still advocating more for cuts than revenue increases - in a country where the wealth maldistribution is spiraling entirely out of control. Why not just say the truth? 'We're not broke, we're just undertaxing those with the ability to pay.'

I thought the Wall Street Journal article on the President's speech was much more accurate and certainly less fawning. It referred to President Obama's speech on the deficit as one of the most dishonest speeches given by a President.

http://online.wsj.com/article/SB1000142405274870373010457626091198687005...

I'm all for reducing the deficit. However, the President's speech did not present a plan to tackle the deficit and cut spending. Instead, he offered platitudes, future budget cutting panels, and unspecified reductions to be identified in the future.

We don't have a revenue problem. We have a spending problem. And President Obama is spending us into oblivion.

We need across the board cuts in all current Government programs: discretionary spending, social programs, entitlements and defense. I'd start at 5% cuts every year until we get the problem under control.

That was a good article. It is about time this president stood up to the forces thast would destroy our country and support the people that elected him to office.

Mr. Obama,

Please get serious!

Instead of providing political leadership, our president continues to operate in campaign mode.

First, he offers a budget plan that all consider a “joke.”

He then offers a “campaign” speech with the “politics as usual” code words. His goal is to sound like a deficit hawk, but in reality his goal is to leave the Democratic vote and money laundering machine intact.

No reform, no new ideas – just the same old tired rhetoric that will satisfy dependent loyalist to the all powerful big government.

Finally! Obama stopped backing up.

Excellent analysis as always Eric.
Democrats need to keep it simple. "Is it OK with you to give more to the people (like me BTW) who already have the most by taking it away from YOU?"
Class warfare? Yes, and the upper $ class, as always, is winning by consistently taking it away from those who have the least.

Good to see President Obama draw a line in the sand.

I have my fingers crossed that he will not waver from it.

And I'll add that I think it's a winning message for 2012, as long as he keeps it simple and pounds home the rhetoric he used in the speech. He's GOT to keep on saying that the millionaires and billionaires are getting away scot free while they demand that the deficit be erased solely by the middle-class and poor.

He has to bring on the shame.

He has to stop every GOPer in his/her tracks whenever they use the term "job creators" to describe the wealthy. He does this by saying they've had 10 years of tax cuts and we've got 10% unemployment.

We are at a critical point in this nation, and President Obama cannot lose this battle, or the nation will fail. I say this without hyperbole.

Since he's not going to get what he says he wants, and he knew this going into the speech, this was obviously a campaign speech to stake out the "democrats want to give you stuff but the republicans only love rich people" position for 2012.

If you thought it was anything else, where are the specifics that counter the Ryan plan? He criticized the Ryan plan, which basically cuts spending back to 2008 levels, without saying what he would cut instead. Yet he says he's going to balance the budget by taxing rich people.

"In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each." That stat is only relevant to a marxist. Who cares what Bill Gates or Oprah Winfrey make? That doesn't affect my tax bill or my life one iota.

And I've got news for him. It shouldn't matter to him either because you could confiscate all the earnings in this country of people making over $250k a year, 100%!, and it wouldn't add up to the 1.6 trillion in annual deficits he's created.

This was nothing more than a campaign speech aimed at the young and the clueless and it appears some believe he hit the mark.

John C. (#3) says: "We don't have a revenue problem. We have a spending problem."

Two things.

1) Those are the exact words Rep. Boehner uttered last week. How quickly the Talking Points become ingrained!

2) When General Electric earns $5.1 billion in 2010 and pays not a single dime in taxes on that profit, then we sure as hell do have a revenue problem!

Like Bruce says, as a political strategy, if you promise to rob Peter to pay Paul you can always count on the support of Paul.

@John Clayton

The Wall Street Journal is now nothing more than Fox News for MBAs. It always has been grossly slanted toward rich, white conservative businessmen. They don't want to hear what Obama says, regardless. Ever since rich foreigners took it over it has gotten 10 times worse.

The most dishonest things in this country right now are rich people and corporation 1) whinning that they can't pay more; 2) rich people with tax breaks create jobs; 3) that government workers are underworked and overpaid.

'We don't have a revenue problem. We have a spending problem. And President Obama is spending us into oblivion. "

All evidence is to the contrary. For example:

1) Revenue is lower than it's been any time in at least the last thirty years (http://en.wikipedia.org/wiki/File:Revenue_and_Expense_to_GDP_Chart_1993_...)

2) Our last balanced budget was during Clinton, when we had higher revenue (and no Bush tax cuts)

3) Our tax rates are less progressive and our wealth disparity worse than any time since right before the great depression

But maybe if you keep repeating it, it will become true.

High time we correctly identify tax cuts what they are: spending.

Danie, tax cuts are only spending if it was your money (or the government's) to begin with. Otherwise it's giving people their own money back.

Gee whiz, it's about time.

Dennis, it's preferential spending on one group versus another--whether it's home owners, charitable donors, business owners or high-income earners.

Charles Krauthammer said all there is to say about the latest 'prompterfest.

Biden just goes to sleep.

Any objective review called the speech partisan and combative. Per Politico, "Obama’s long-anticipated speech on the deficit at George Washington University was one of the oddest rhetorical hybrids of his presidency – a serious stab at reforming entitlements cloaked in a 2012 campaign speech that was one of the most overtly partisan broadsides he’s ever delivered from a podium with a presidential seal"

Read more: http://www.politico.com/news/stories/0411/53164.html#ixzz1JWpVYbSa

Once again Minnpost delivers the Democratic talking points right down the line. How this organization qualifies as non-profit is baffling.

So if a Democratic president gives a speech in which he espouses moderate Democratic principles, it is to be dismissed as "partisan"? What's his other option, just becoming a Republican? And if it is indeed "partisan", so what? What does that make Paul Ryan's budget plan, a list of conservative wet dreams that basically calls to gut every program Republicans don't like, even if it hardly saves money?

Another reason that MinnPost is a treasure: printing the entire speech for our perusal.

I'm a liberal all right, but let's face the facts: Independents are the swing votes in this country, and if Obama is to have a chance at reelection, he has to bow to their opinions--even if they are somewhat right of center in many cases.

I am so tired of the Republican mantra, quoting "The American People want..." and then spieling off a list of REPUBLICAN wants, ignoring the Independents' views entirely. That alone gives me such hope for the Dems keeping not only the Presidency and the Senate, but glory be! Even the House in 2912.

You betcha, Marcia--Good insightful article and good comment.
I wonder if one of these days we'll ever get around to resurrecting and signing and endorsing the social contract again. That was how we got things done in the past. In fact, it's the ONLY way societies get anything useful done--with everyone pitching in.

The budget debate is simple.
//The GOP has proposed 100% spending cuts and 0% tax increases (plus a projected 98% employment situation) to reduce the deficit by $2 trillion to $3 trillion (spending is cut by $4 trillion, but corporate taxes are dramatically cut and the Bush tax cuts are made permanent, with a resulting loss of $1 trillion to $2 trillion in revenues).

President Obama has proposed roughly 70% spending cuts to 30% increases to reduce the deficit by about $4 trillion.//

And that's our budget debate.

Please notice again that even taking ALL of the money from the top earners doesn't remove the deficit (let alone the debt). This would seem to prove that we have more than a revenue problem. The same idea holds for the State, even when we "tax the rich" per the Governor's plan, we still are short of money. Again, more than a revenue problem.

I disagree that the Democrats have a good shot of regaining the House in 2912, the earth will have burned up from global climate change by then. That, or Hell will have frozen over. One of the two.

//Please notice again that even taking ALL of the money from the top earners doesn't remove the deficit (let alone the debt). This would seem to prove that we have more than a revenue problem.

Tom, We could easily get ALL the money from tax hikes on the top earners. Between 1980 and 2003 the top 10% in the country saw their tax rates drop from 70% to 31% while they captured 90% of all the additional income generated by economic growth. Just to put that in perspective the top 10% (top decile)makes more money than the bottom 8 deciles (80%) combined. In a 14 trillion dollar economy that's around $5.6 trillion dollars. A 10% tax hike on the top 10% (that would still leave them 9 points lower than they were in 1983) would raise $560 billion dollars. We just came close to shutting the government down over $30 billion dollars.

In 1944 we hiked taxes on the wealthy to 94% in order to pay off the war and Great Depression debt. That started coming down by the mid 50s. Well we have another war and recession debt to pay off, in addition to a broken revenue stream that can't provide enough revenue. If we restored taxes on the top earners to the 1983 levels of 50% we would raise $2.8 trillion dollars annually. If in addition to this we raised the social security with holding exemption limit from $106,000 to $160,000 we would eliminate the so-called "entitlement" crises.

The last time we did something like this, we didn't kill jobs, or drive the wealthy out of the country- that prediction is a product of Republican magic planning and myth. On the contrary, the last time we raised to taxes to stabilize government revenue and pay for government spending we launched the longest, broadest, and most sustained economic expansion in US history. Then we started reversing that policy and withing 40 years we created another Great Depression and returned our economy to Gilded Age disparities. Even the extremely modest tax hikes of the Clinton era balanced the budget and grew the economy.

Dennis T (#9) says, "Who cares what Bill Gates of Oprah makes? That doesn't affect my tax bill or my life one iota."

Wrong. George Bush's tax cuts for the wealthy accounted for half the annual budget deficit; his two wars financed by bond sales to China accounted for the other half. So the budget surplus Bush inherited ($5 trillion?) disappeared and the deficit we have now was born to take its place.

You, and every American taxpayer who is not among the top one or two percent of earners, have had to pay more to maintain essential government programs while Gates, Oprah and the other super-rich "job creators" (most of whom didn't and won't create jobs) get reductions that could grow the deficit faster than either the Obama plan or the Ryan Plan for the Destruction of America as We Know It can keep up.

We MUST have revenue and the way to get it is not by starving the programs that provide essential services to the poor and middle classes but from making tax policy fair once again. We must have revenue; to say that's untrue or that taxation is "theft" is to believe in the fairy tales written by Ayn Rand and Grover Norquist.

The plan Mr. Obama should have offered is the People's Budget developed by the Progressive Democratic Caucus. It's a terrific solution that does not hurt anyone while funding what works to help both people and the economy.

Standard & Poor's was impressed with the President's defecit speech. So much in fact, S&P downgraded US debt outlook from STABLE to NEGATIVE.