It’s Not About Tax Cuts: Obama Must Stand in Defense of Government

Kai Wright Dec 7, 2010

Official White House Photo by Pete Souza The distance between reality and Capitol Hill has rarely felt so large as it does this week. It reaches about as far as the unemployment lines that are stretching across cities and states, where everyone from governors to college kids await congressional leadership on jobs. That’s a gulf of 15 million people, two million of whom will lose their jobless benefits by the New Year if Republicans don’t get their deficit-building tax cut for the richest Americans. Any discussion about a meaningful job creation effort is at this point a distant memory.

Republicans and conservative Democrats have said they’re being responsible adults. Jobless benefits and stimulus efforts have to be paid for. The government, like most families, must balance its books. “I agree that they need help,” Massachusetts Republican Scott Brown insisted on the Senate floor last week. “But I look at it as: Are we going to do it from the bank account, or are we going to put it on the credit card?” The millions who’ve been out of work for more than six months probably have access to neither resource, actually.

Brown would do better to direct his tough talk at families earning more than $250,000 a year, who will keep their Bush-era tax breaks if the deal the White House has reportedly brokered with Senate Republicans holds. Last year, a record 44 million people lived below the poverty line, which is $22,000 for a family of four. Purported fiscal conservatives say we cannot afford to help them by even maintaining a robust food stamp program, let alone with a second stimulus. But we can afford to a give away trillions to a handful of people. By 2050 the Bush tax cuts will have added an amount to the deficit that is equivalent to 100 percent of the GDP.

But these are tedious details, and the debate on Capitol Hill this week is about something more—a larger fight to which Republicans eagerly rise, and from which the president continues to shrink. It’s a fight over whether government is a force for good or evil in America. That’s a strange debate for a republic, but it’s one that has defined ours since slavery. And it’s one that those of us who have benefited from government’s role as the great equalizer have been losing badly since around about 1980.

Perhaps the most exciting thing about Barack Obama of 2008 was his potential to alter that trajectory and restore government’s good name; the most disappointing thing about Obama of 2010 may well be his failure to even try. From green jobs to health care, he once spoke passionately of government’s vital role in rebuilding the economy. If ever there was a time for him to regain that voice, it is now.

As economist and columnist Paul Krugman wrote this weekend, if Republicans get the permanent extension of the Bush tax cuts they’re playing for—whether it comes now or in two years—the only way our government will be able to make up the cost is to mutilate Social Security and Medicare. The GOP leadership knows this. Its goal isn’t just to give money to rich people; it’s to kill government’s role as an economic safety net and equalizer. The Reagan revolution is reaching its grim climax.

At the same time, the anti-government crowd’s political hand—if forced—has never been weaker. A depressingly large number of middle-class and working-class Americans now know all too well what economists have long understood: You get a great deal more economic bang out of keeping lots of people from becoming destitute than you do by helping a few people horde wealth. People remain enraged about the no-strings-attached bank bailout, for instance, because they intuitively understand its ramifications. Wall Street is now enjoying a narrow, taxpayer-financed recovery while unemployment, hunger and poverty all continue climbing through the former middle class.

Obama certainly inherited the mess of the bailout. But the jobs crisis offers him an ideal opportunity to rewrite his economic and political profile by articulating why a progressive vision for government matters to everyone. The Republican leadership’s ideological purity on tax cuts for the wealthy make it a perfect foil.

The research is plain on one thing: unemployment benefits specifically and government spending broadly both stimulate consumer demand and, as a consequence, help create jobs. The Congressional Budget Office estimates that the Recovery Act had created as many as 3.6 million jobs as of September. When working people get new money they spend it on things they’ve been doing without—food, clothes, transportation and, yes, consumer goods. Tax cuts for the wealthy, on the other hand, generate only more wealth for those handful of people. Much has been written on these facts already.

The White House has even talked about them. But what it hasn’t done is court political conflict in order to focus Americans on the fundamental divide between the GOP’s view of government and that of most voters. Obama and the Democrats were wise to demand middle-class tax cuts be separated out from those for the wealthy. Now Obama must have the courage of his supporters’ convictions on the matter. He should insist we have it out, here and now, on the question of government. No compromises—at least not before a good, strong public debate on the matter.

Pundits are fond of looking to history’s great presidents—and its disastrous ones—for insight on Obama’s political choices. In this moment, we needn’t look further back than Bill Clinton’s 1995 holiday showdown over government. He arguably saved his presidency by elevating an annual budget fight into a larger war over what our republic stands for.

Our fragile economy could hardly stomach a government shutdown of that sort today. But that’s all the more reason the president would do well—for himself and for the nation—to refuse to back down as Republicans hold jobless benefits hostage to government-destroying tax cuts for the wealthy. If he caves in to their political blackmail now, he’s in for a long, hard two years (including a Clinton-esque shutdown battle when health care funding comes up). And if that grueling period ends in a permanent extension of George W. Bush’s reckless tax cuts, the future of American government looks bleaker still.

This article was originally published on ColorLines.

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