By Kevin Carmichael, Globe and Mail, February 13, 2012
Barack Obama on Monday solidified a steady, pre-election return to the core values of his Democratic Party, releasing a budget proposal that accepts yet another $1-trillion deficit and increases taxes on the wealthy to pay for job-creation programs.
The $3.8-trillion spending plan is more a campaign document than economic blueprint, since Republicans in Congress have made it clear they will oppose any significant policy put forward by the White House ahead of the Nov. 6 presidential election. As such, Mr. Obama’s budget is mainly useful for gaining insight on his re-election strategy and, perhaps, the kinds of programs he would put in place a year from now should he retain his job
Gone is the candidate who promised in 2008 to rise above the bitterness that paralyzed Washington during George W. Bush's second term. This budget is aimed at the Democrats who accused him of caving when he agreed to extend Mr. Bush's tax cuts for the wealthy in 2010, and is a statement that his party can trust him to protect their core beliefs if they rally to help him win a second term.
Mr. Obama will fight as an unabashed liberal to retain the White House, promising to increase the taxes of the rich, the banks and the oil companies, while using much of the revenue to pay for job-creation programs, education initiatives, and rebuilding roads and bridges.
“We can’t cut back on those things that are important for us to grow,” Mr. Obama told an audience of college students in Northern Virginia Monday. “We can’t just cut our way into growth. We can cut back on the things that we don’t need, but we also have to make sure that everyone is paying their fair share for the things that we do need.”
The administration is refusing to buy into the age of the austerity, placing a clear marker between Mr. Obama and Republicans, who have sought to characterize the U.S.’s rising debt burden as a national emergency.
We can already hear the Republican cries of "Robin Hood Obama" robbing from the rich to pay the poor in their campaign ads in late summer and fall later this year. And there will be right-wing economists, one or two like Niall Ferguson, who will join the 'calamity-chorus' of doom and gloom that will be the rallying play-list for the Republican presidential candidate, whoever that might be.
Ironically, joining the "balanced-harmonies" of Obama's budget, will be people like George Soros and Warren Buffet both of whom could become prophets and mentors in their respective country clubs to their Republican colleagues. They know there must be a more fair and just tax system, in which the rich pay their fair share; both have publicly spoken to that effect.
However, this budget, and political campaign (because they are now joined at the hip forever!) will face the headwinds of an international press that may continue to call for more restraint in European countries like Greece, Italy, Portugal, Ireland, and some of that ink may spill onto the pages of the right-wing media in America.
Obama and his people will have to make the case, clearly, forcefully and using real numbers and real situations, that the United States is not another Greece, or Italy, or Portugal or Ireland. And whether a frightened electorate, many of whom are and will be still unemployed, or at least underemployed, will be able to feel comfortable marking an X beside the names of their Democratic candidates, including the President in November, is still a question waiting for its final answer.
Demonstrating that he has been willing to compromise with Republicans in Congress, (and for his base that happened far too frequently over the last three years!) without accomplishing more on the jobs file, the White House hopes, will generate support for the president among Independents whose minds are not completely cluttered with ideology and pledges and manifesto's. It is that 10-15% of the electorate who will swing the balance either in favour of or in opposition to Obama and send him back for a second term, or not.
However, it would seem that the Republicans have submitted to a one-note melody, that hits the same note while singing two different versions of the same theme....austerity and dump Obama!
Spending, even to the tune of $3.8 trillion is not going to grind the U.S. economy to a halt, nor it is going to throw sand into the gears of government. However, it could enhance the potential for growth and indirectly thereby the potential for increases government revenues and services, both of which need those new revenues if they are to have a future.
Having restored America to respectability on the world stage, after the fiasco that was George W. Bush, and having brought the U.S. economy back from the brink, on which Bush left it, with some help from his Congressional friends, Obama still has some unfinished work to do in bringing the economy back to a respectably 5-6% unemployment, and that will take enhanced research and development dollars from government, enhanced training and educational opportunities for America's young people, and for those mature adults whose intellectual capacity has not been stretched fully yet, and there will have to be a tax system which is demonstrably more fair and equitable than the current swiss cheese model, filled as it is with loopholes for the rich and for the corporate giants.
This is one election that might not hinge merely on personality, but might just provide Americans, and those watching from around the world, an opportunity for a significant decision about the way forward in the midst of a critical confluence of influences. However, a steady, predictable and balanced hand at the tiller, the kind Obama has provided over the last three years, is certainly an essential component to a successful emergence of America from this economic storm.