Unemployment and Taxes

In the face of crisis, Obama seeks to achieve a balancing of social costs.

As Barack Obama faces the last phase of his mandate to fix the economy, he is experiencing enormous political difficulties thanks to Republican obstructionism in Congress. However, his actual proposals are sane and balanced.

A little over a week ago, although with some slack, he managed with his jobs plan to square the circle of what was desired and possible. What is desirable, from his progressive position, is to once again make fixing unemployment the chief priority, thereby sidelining the more technocratic debates of July and August about the size of the deficit. The aim is to produce legislation helpful to the most disadvantaged segments of society, which includes not only workers, but also much of the middle class. The secret of the plan’s success is that it is more ambitious than anyone had expected, but, at the same time, it contains measures (such as some selective reductions in taxes on the productive economy) acceptable to intelligent conservatism.

The second round of the wager was played on Monday with his proposal to reduce the budget deficit in 10 years by $3 trillion. The proposal serves two purposes: to reduce the debt as promised in the August deal that raised the debt ceiling, and to make room for the expenditures forecast by his $325 billion job creation plan.

No one can deny that the scheme will be difficult to pass, given the rhetoric of the Republican right wing. But if the proposal has any chance of passing, it’s because of the balance that it strikes: It reduces the deficit by $3 trillion, with savings coming from reductions in military spending in Iraq and Afghanistan, reduced social spending and an increase in taxes on the wealthy, eliminating the benefits that George Bush gave to those whose incomes exceed $250,000. And, of course, there is the possibility of raising public support, which, according to polls, amounts to 63 percent.

The proposal to raise taxes on the wealthy is helped along by the support of some of the wealthy themselves, such as billionaire Warren Buffett. Although the proposal is reviled as though it were Bolshevik, it is actually a centrist proposal, not unlike those that allowed Clinton to recover from the disadvantages of his first term and thus achieve multi-party support in winning a second term. If it seems leftist, it is because it aims at tackling decades of counter-social reforms, whereby wages have declined substantially in respect to gross domestic product, and higher incomes have substantially reduced their exposure to taxation.