The National Catholic Review
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As Congress works out the 2012 federal budget, senators and representatives should keep in mind the millions of unemployed Americans still looking for work, the families with homes in foreclosure and others living on the edge. In this fragile recovery, the nation’s fiscal health depends on timing as much as on the right mix of cuts and investments. Austerity could backfire; just look at Britain. Since last summer’s drastic cutbacks, its economy has been in decline.

President Obama’s $3.7 trillion budget contains good news. It invests in education, public transportation and green energy financed by curtailing tax breaks for oil companies; these allocations promote long-term growth. The budget also cuts spending: a freeze on discretionary expenditures saves $400 billion and grants to the states to reform medical malpractice laws indirectly reduce the costs of health care. The budget also raises $375 billion in revenue by ending some corporate tax breaks, imposing a bank tax and higher rates on capital gains and the unemployment payroll tax and capping itemized deductions for high-income filers. Over a decade this budget would shave $1.1 trillion from the deficit.

Overall, however, the budget is too cautious. It continues giveaways to the affluent, like the mortgage interest deduction on second homes, while too many of its cuts, like home-heating assistance, community development block grants, job training programs and student loans, would harm persons with the lowest incomes. That is an assault on elementary justice.

The scope of the president’s budget, moreover, is too narrow, focused on just 12 percent of the overall federal budget, a part called “non-security discretionary spending,” which excludes allocations for the Defense Department and the Department of Homeland Security. Instead, Congress must sift through “mandatory expenditures” set up by law to look for cuts that promote fairness and economic growth.

Interest payments on the federal deficit cannot be cut, of course. And Congress is debating whether Social Security even belongs in this budget process, since it is solvent and will remain so for the next 27 years. It has customarily been treated as a separate item, with its own funding, and it is not appropriate to lump it in with entitlements, as its opponents have done. Trimming defense and health care, however, could cut the deficit and leave the recovery intact.

Defense. Mr. Obama would allow future increases to the defense budget to grow no faster than the inflation rate, saving $78 billion. But that assumes increases, when defense already makes up a quarter of the federal budget. Instead, defense should be cut by at least the amount excised from the domestic budget, $400 billion, now while Congress supports reductions. Canceling the alternative F-35 jet engine project and the Expeditionary Fighting Vehicle will save around $14 billion. Other weapons projects could be canceled or postponed and the budget of each military branch made as lean as possible without jeopardizing national security. The Secretary of Defense would raise the employee portion of the health insurance premium for retirees and contractors. But health care, which equals one-tenth of the Pentagon’s budget, could be reduced further.

Health care. Medicare, under the Affordable Care Act, was cut enough to extend its life by a decade. But curbing health care costs, which are more than one-third of the federal budget and growing, is essential. The best ideas include: (1) changes in the way hospitals and doctors are paid, so that physicians are rewarded for quality treatment rather than the number of tests performed; (2) research to determine the best treatments and medicines for specific illnesses, so that the latest, newest and most expensive do not replace less expensive treatments and drugs that are as effective or better; and (3) means-testing of eligibility for Medicare and/or allowing income-related differentials in its patient payment scale. Reducing those costs, not rushing to slash the deficit, is the way forward.

Tax reform. Since austerity is counterproductive and spending cuts are inadequate, revenues must be raised. The budget rightly calls for corporate tax reform. But after a decade of tax cuts that favored wealthy individuals, progressive individual tax reform is overdue. This fact has not escaped ordinary citizens, who can make wise choices about the federal budget, despite its size and complexity. A recent study at the University of Maryland asked a sample of 800 adults to propose a federal budget. Participants increased spending on job training, the environment and education. On average, they cut spending by $146 billion for the year, with the biggest cuts (more than $100 billion) in defense; they also cut veterans’ benefits, the space program and federal highways. Most important, they raised revenue by $292 billion, almost double the amount they cut. Washington should pay attention to that.

Comments

Larry Darrell | 3/10/2011 - 12:51am
I'm surprised the article didn't mention defunding Planned Parenthood (PP) from receiving $363 million of taxpayers money to support their 21st century Holocaust through abortion.
Tom Maher | 3/8/2011 - 12:03am
Re: Lean, Not Mean

Ignoring the dire consequences of national indebtness is recklessly destructive as has been demonstrated by Greece last year when it could no longer finance its national debt. Greece's debt remains much larger than its annual Gross National Product (GDP) and may still go bankrupt from its crushing indebtedness.

THe United States' debt is now at 14 Trillion dollars and the new Obama budget will rasie that amount by another $1.6 trillion which will make the United States debt almost as large as the United States annual GDP just like Greece.  World economic and financila experts are warning of the extreme reckless danger of not decreasing United States indebteness.

Like Greece the United States is in danger of not being able to finance it's national debt.  Unlike Greece the United States has no ability to be bailed out since its debt of 14 going on 16 trillion is larger than the economies of the rest of the world.

Mean is ignoring the dire consequences of a country that goes bankrupt by its failure to stop its extreme and contiuous heavy barrowing.
David Smith | 3/5/2011 - 11:49pm
It seems odd to me that the editorial staff of a magazine that bills itself "The National Catholic Weekly" feel both that they have the competence to make specific budgetary demands of the federal government and that they ought to be making those demands in its pages.
Marie Rehbein | 3/5/2011 - 10:50am
The mortgage deduction for the second home might be necessary in order to encourage the recovery of the housing market.
John Nemia | 3/4/2011 - 3:02pm
This idea that raising taxes, on corporations and wealthy never works. If you review  who pays taxes, you will notice that top income brackets pay 70 + % of the income tax. the bottom 33 % pays little or no tax at all. Corporations don't pay taxes they collect tax from end user and pass it onto goverment. If you want stop the runaway train of spending. Balance the budget, freeze all spending at 2008 levels. Have the elected pay for there own Retirement and Medical. Pension are collected as soon they leave office even if after one term for life. There is plenty of fat in the budget, plenty of money wasted which doesn't help anyone. Mass transportation for the most part is a hole that will always be drain on states. High speed rail is not sustainable expense which sounds good, feel good but is wastefull. 
Most Goverment programs are political and wastefull which need to reworked. For evey $1 they  say it will cost, reality is it will cost 10 times that much. Are you willing to pay more to suplement something you will never use.
James Collins | 3/4/2011 - 2:49pm
The Obama budget results in a 1.6 trillion deficit!!!. His last two budgets ran over 2 trillion in deficits. You don't get it. This cannot go on. The recent GAO study confirmed what many of us knew all along that there is tremendous waste and duplication in the federal government. Obama doesn't care since his main concern is to get re-elected. He will also promote inflation to ease the debt burden and that will really harm the poor and seniors.
WILLIAM ATKINSON | 3/4/2011 - 2:17pm
One needs to do a real study of how Americas government was financed, for 1st hundred years federal income came from land grant revenues, good shelf tax and primary income from tarif on goods.  Begining with World War I income tax helped, as years went by up to World War II, was second to corporate tax, during 50's and cold war with communist nations (Primarily Russia - and enourmous arming of our nation) income tax in individuals grew to be biggest income to support world wide military.  Corporations took great advantage of new way of taxing, showed huge losses creating a environment where many corporations, especially medical, financial and insurance industries paid little or no revenues into government coffers.   After BUSH wars began many corporations begged for corporate welfare and after hugh government expense to support world military (America has troops in 131 of 196 United Nation countries).  Finally in last days of Bush administration trillions of American tax payers money was delved out to corporations who's risky and greedy behavior caused them to fail.  A 60 year debt was created and this philosophy continued into current administration where individuals are now enourmously indebted thru government to corporate interests. the country has, due to government mismanagement controlled by corporate interests, become a corporate nations supported by individuals.  It is and has become a nation of corporate magnets who have enslaved the people under a corporate government rule to satisfy their corporate greed and power.

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