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A Progressive Approach to the Deficit

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With the event at the White House today, and the outlines of Obama's budget about to be delivered to Capitol Hill, the federal budget deficit is in the news this week.

I agree with other progressive folks that squawking that our Social Security "crisis" is a hoax, that the solution to soaring entitlement cost is to reform and cut costs in health care, and that a reasonable amount of deficit spending -- as long as it goes into needed public investment -- does not overburden the economy. I would add that way too many of the so-called deficit hawks in the blue dog caucus have no problem defending excessive military spending along with big corporate loopholes and subsidies, which tends to make one take their arguments less seriously. But I also believe that the deficits run up by George Bush combined with the new deficit spending we have to do to save the economy from total collapse are a big problem, both policy wise and politically. I think it is important for us to come up with a strong progressive plan for reducing the deficit while continuing to make the investments we need in public purposes. I think the plan should adhere to the progressive values our movement embraces, the values that motivated the thinking of Jefferson, Paine, and Lincoln. Roosevelt, Martin Luther King and other great progressive leaders of our history: equal opportunity for all, fairness, a sense of community, and investing in a broadly prosperous middle class instead of trickledown for the rich. Such a budget proposal would include the following elements.

1. Ending tax loopholes for big business. The tax code is riddled with special tax loopholes. David Cay Johnston has laid out one after another on every level of government that serves no public interest at all. If we cracked down on wealthy tax cheats, stopped allowing businesses to have one set of books for the IRS and another for stockholders, blocked financial transactions with foreign governments with secret bank accounts, ended tax shelters for offshore investments, ended unfair utility writeoffs, and stopped subsidizing corporate jets, the federal government would have hundreds of billions of dollars per year in more revenue.

2. Ending federal subsidies for big business and corporate agriculture. Aside from the mess that is the TARP, there are hundreds of millions of dollars of direct federal subsidies going into all kinds of business enterprises. One big example is agribusiness: according to the Environmental Working Group, the top 10 recipients- massive agribusiness corporations- got 72% of the $143.5 billion US taxpayers paid to farmers over the past ten years. And just seven states took in half of that money, because only those states produce the corn, wheat, rice and cotton crops that account for 78% of the subsidies. Meanwhile, two-thirds of American's farmers and ranchers receive no direct government support.

3. Rein in defense spending. Hopefully we really will be spending less and less money in Iraq, which is of course a great start; and I pray that we aren't heading into another long term and incredibly costly quagmire in Afghanistan, but only time will tell. Beyond those two areas of expenditures, the military is still wasting all kinds of money on expensive weapon system boondoggles that have little value; spending $100 billion a year maintaining and warehousing thousands of nuclear weapons, most of which are not needed to safeguard us; and just the everyday waste that comes with having no serious oversight of their spending requests for a very long time. Back in 2007, the Institute for Policy Studies and Foreign Policy In Focus put out a report called "Just Security," which proposed $213 billion in cuts, including $99.1 billion from the war on Iraq, $45.9 billion in cuts to overseas bases, $10.8 billion in overseas military "aid," $7 billion in waste and fraud, $5 billion in force structure, $2 billion in recruitment, and $43.9 billion in unnecessary weapons.

4. Driving down health care costs. True health care reform is going to drive down the health care costs of Medicare and Medicaid by negotiating on drug prices with pharmaceutical companies, stopping insurance and drug company profiteering, investing in prevention and other quality improvements, brining medical records online, and getting better information of which treatment methods are most effective. All of these reforms will drive down government spending because of health care inflation significantly over the long run. Health care inflation has generally been 2-3 times that of general inflation over many years. But it is also true that progressives should not shy away from two simple words in health care: price controls. Free market economies in health care have been badly broken for a long time, and by putting price controls on drugs and insurance costs, we don't endanger anything in health delivery other than the obscene profits being made in recent years by drug and insurance companies.

5. Increasing taxes on the wealthy. Our country's most sustained period of economic prosperity started once FDR lifted us out of the great depression and continued through the early 1970s. In those years, we had steep progressive income taxes on the wealthy. After massive tax cuts for the rich in both the Reagan years, and then again under Bush over the last eight years, it's time to go back to a system of progressive taxation where the wealthy actually pay more in taxes than the poor people.

These progressive principles on a plan to bring the budget deficit back under control adhere to the progressive policies and values of the best in American history, and achieve fiscal sanity without hurting the poor and working families who have been most hurt by the conservative economic policies of recent years. The numbers add up.

I get extremely tired of hearing Blue Dog Democrats and hypocritical Republicans yammering about the need for everyone to make sacrifices in terms of entitlements and the budged deficits when the policies that they have supported in the past have required sacrifices mostly of the poor and middle class, while doing almost nothing to cause the same kind of sacrifice from their corporate and wealthy donors. There is a progressive way to bring fiscal responsibility back to our federal budget, a path that embraces progressive values of taking care of the poor and investing in a prosperous middle class and equal opportunity for all. Let's choose that kind of path, for the first time in a very long time.

Mike Lux is the author of The Progressive Revolution: How the Best in America Came to Be.

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