After the passage of the $787 billion stimulus bill in mid-February, the Obama administration entered what we might call its second phase in that month’s final week, when the President spoke to a joint session of Congress on February 24 and, two days later, unveiled his first draft budget of more than $3.5 trillion. Rudolf Goldscheid, an early-twentieth-century Austrian Jewish sociologist and reformer, once said, “The budget is the skeleton of the state stripped of all misleading ideologies.” Although we don’t really talk that way anymore, the remark’s meaning still holds true today: the budget is the document through which an administration announces just what sort of polity it envisions, and which fights it is willing to take on to realize that vision.
The Obama vision, in sum, is for a much more activist government that would spend large sums on health care—chiefly, at first anyway, to reduce costs—and preventing climate change, and would finance those ambitions through higher taxes on the wealthy and the elimination of some tax breaks for certain categories of powerful interests: insurers, oil and natural gas companies, large farmers, and banks, to name a few. Although Republicans spoke of tax increases on “hardworking American families,” in the words of Senate Minority Leader Mitch McConnell the day the budget was released, the budget proposal would raise taxes only on American families earning more than $250,000, and even then only starting in 2011, when the Bush tax cuts are set to expire.1
Republicans can be counted on to conflate the wealthiest 2 percent or so of households2 with the more generic and universal “hardworking American families.” That rhetoric constitutes the usual sophistry we’ve heard since Ronald Reagan’s time. But their coming defenses of their corporate benefactors will be in earnest. The Obama budget really does take on several of them. For example, the plan would levy an excise tax on Gulf of Mexico oil for an anticipated $5.3 billion in revenue over ten years. It would impose a fee on nonproducing energy leases, bringing in another $1.2 billion during the same period. It would also close several other smaller oil and gas loopholes.
In proposing to spend $634 billion over ten years on various health care provisions, billed as a mere down payment on larger reform to come perhaps this year, the budget calls for $316 billion in Medicare and Medicaid savings. A significant amount of this would come from reduced government payments to private insurers serving the elderly (many analysts over the years have argued that these insurers have padded their bills and received inflated reimbursements). The plan also calls for the establishment of a so-called cap-and-trade system…
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