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Budgeting for the Great American Train Wreck

August 1, 2011 ·

Our economy needs a new stimulus package, not a poison pill.

It's Aug. 1, 2011. Does President Barack Obama know where House votes for that last-minute budget deal are?

The pact he forged primarily with Republican leadership in Congress after months of wrangling is no compromise. The GOP got just about all the cuts it wanted. The Democratic Party didn't get hardly anything it sought, such as a deficit-shrinking revenue boost or a firm commitment to leave Medicare, Medicaid, and Social Security funding unscathed. If it becomes official, deep social spending cuts will deepen the nation's growing economic woes.

It did sound virtually official when the news broke yesterday. But as of 11:30 a.m. today, the political forecast for passage in the House "is much more cloudy." The Hill is reporting that only 21 representatives are likely to back it and 11 have asserted that they will vote against the deal. That leaves more than 400 House lawmakers undecided with one day to go before the debt-ceiling deadline.

That means there's still hope the nation won't have to eat what Missouri Democrat Emanuel Cleaver, the Congressional Black Caucus chairman, called a "sugar-coated Satan sandwich." Wall Street is blocking efforts to shut down overseas tax-dodging havens that could restore $1 trillion dollars to U.S. taxpayers within a decade, notes Institute for Policy Studies expert Chuck Collins. And a task force led by Miriam Pemberton, another IPS expert, found that trimming just nine military programs could save $77 billion in the 2012 fiscal year alone.

In these difficult financial times our government should perform two basic tasks:

  1. Stimulate the economy to create jobs.
  2. Ensure that everyone pays their fair share including the wealthiest Americans.

The budget deal Obama struck primarily with Republican lawmakers does neither. Instead, "the very wealthy will continue to receive taxpayer handouts, and corporations will keep their expensive federal giveaways," Congressional Progressive Caucus co-chairman Raul Grijalva (D-AZ) said. "Meanwhile, millions of families unfairly lose more in this deal than they have already lost."

As Grijalva and many others have wisely noted, Obama has the power to raise the debt ceiling without caving on spending priorities. He could invoke Section 4 of the 14th amendment. Or, even though it sounds outlandish, simply order the mint to produce two platinum coins, both worth $1 trillion. That sounds kooky, but some scholars say it would technically work. And it wouldn't damage the U.S. economy.

This deal will only make things worse for millions of unemployed Americans. Plus, it protects "every single loophole, giveaway and boondoggle in the tax code as a matter of fundamental conservative principle," Republican David Frum argued in a startling commentary.

Our economy needs a new stimulus package, not a poison pill.