The deficit's defenders
The Times' editorial board joined in the boo-bird chorus for President Obama's budget proposal, calling it "a remarkably tame response to Washington's fiscal problems" that "all but ignored the most important long-term financial challenge, which is the growing cost of entitlements such as Medicare and Medicaid."
Our complaint, like that of many deficit hawks, was that Obama didn't lay out a plan for closing the budget gap over the long term. Republicans were particularly critical, perhaps because the president's silence on Medicare, Medicaid and Social Security will force them to make the first move.
That's a thin political limb that few elected officials are willing to walk out on. But seemingly any effort to bring spending and revenues back into line comes at a political cost. A good illustration is the response to Monday's budget proposal from the National Assn. of Manufacturers. Here's the entire statement from NAM Senior Vice President for Policy and Government Relations Aric Newhouse:
We are pleased that the President recognizes the importance of research and development (R&D) to our economy. The President’s call for a strengthened and permanent R&D tax credit is critical to innovation. Additionally, proposals to support manufacturing technology and innovation by funding robust protection of intellectual property, the deployment of the next generation broadband, and an increase in basic research funding have the potential to positively impact jobs and economic growth.
Unfortunately, President Obama’s budget plan also contains higher taxes for virtually all manufacturers –- a direct threat to growth and manufacturing jobs. Increased income taxes on companies with worldwide operations, increased energy taxes and income taxes for small and medium-sized companies will make manufacturers less competitive.
We look forward to working with the Administration and Congress to advance policies that will keep the U.S. the best country in the world to manufacture.
Shorter version: Don't tax you, don't tax me, tax that man behind the tree. Oh, and make sure to keep the subsidies flowing in our direction!
I'm picking on the manufacturers' association here only because its e-mail was at the top of my inbox. Its response was, sadly, typical of the interest-group world, which exists to protect the narrow interests against the broader national one.
Obama's proposed tax on multinationals may be lousy policy -- I haven't done enough reporting on it to have an opinion. But it seems tone deaf for the beneficiaries of increased spending on basic research, broadband deployments and research-and-development tax credits to argue that they shouldn't help cover the cost. Given the enormity of the deficit and the mounting debt, we're in a you-get-what-you-pay-for environment. Or at least we should be.
-- Jon Healey
Photo: President Barack Obama. Credit: Joshua Roberts / Bloomberg