Economy

Why Obama’s Big Inequality Speech Missed Out on the Political Realities That Stand in the Way of Progress

Obama's powerful rhetoric didn't get into how Democrats can regain control of the Federal budget and stop a decade of draconian cuts.

On Wednesday, President Obama gave a major speech on reversing America’s growing inequality. Congress and the federal government should do far more to foster economic opportunities and security, he said. And “when it comes to a federal budget, we should not be stuck in a stale debate from two years ago or three years ago.”

“It is important that we have a serious debate about these issues,” Obama told a friendly audience at a Center for American Progress event, saying Washington had to free itself from gridlock. “If Republicans have concrete plans that will actually reduce inequality, build the middle class, provide more ladders of opportunity to the poor, let’s hear them.”

If Obama really wanted to tackle inequality, it would have been far more useful to hear his ideas on retaking control of the federal budget process. Instead, he spent nearly an hour touting the agenda that progressives love—better schools, safety nets, opportunity—that is now being dismantled by a draconian 10-year federal budget process law that he helped write in 2011, and has begun to starve almost every need that he cited.

“Even if we get a deal, and that’s debatable based on what you and I have been reading in the media, it’s not a triumph for sanity,” said Matt Dennis, spokesman for Democrats on the House Appropriations Committee, speaking of the House-Senate negotiations on the 2014 federal budget. “There are huge holes to fill, this year and next.” 

Contrary to the president’s big inequality speech, the current budget fight isn’t governed by a debate. It’s following a law, the Budget Control Act of 2011, whose contours Obama proposed and was passed by House Republicans and signed by him. It is turning into his biggest domestic miscalculation. Why? Unlike every federal budget law before it, which only concerned the next year’s spending, it locked Congress into a 10-year framework where spending will be specifically capped each year or automatically cut.

Obama and other top Democrats didn’t think that Republicans would ever go along with automatic cuts threatening cherished local projects or Pentagon operations. But they have been proven wrong. Today’s GOP, especially in the House, are driven by the Tea Party and want to shrink government by starving it. The first year that the BCA took effect, in FY 2012, it only cut $22 billion. But now it’s looking at $100 billion a year, without much push back from the Democrats on raising revenues to offset most of the cuts.

“Policymakers in both parties have criticized sequestration as shortchanging important domestic investments—including scientific research, public health, law enforcement, education, and environmental protection—and forcing significant defense reductions,” the Center for Budget and Policy Priorities said this week, offering a dozen charts that show how the brunt of the cuts are making American inequality worse. 

Most Americans—and pundits were were misty-eyed over the president’s equality speech on Wednesday—do not realize or have forgotten that the 2011 law is what is driving the House-Senate negotiations over the FY 2014 budget, which began on October 1. When there was no budget deal or a bill to extend the prior year’s funding levels, the 15-day government shutdownensued. The negotiators are now working toward a December 13 deadline to come up with a deal, but the next hard deadline is January 15, when the funding that ended the shutdown expires.        

“The Budget Control Act of 2011 created spending caps for ten years,” explained Dennis, the House Appropriations Committee’s Democrartic spokesman. “If there is no budget deal, then the sequester kicks in. There’s a $1,058 billion cap for 2014… or $967 billion if there’s no law.” 

Many news organizations are reporting that negotiators are edging toward a small deal to maintain current spending levels and replace the sequester for the next two years. They’re calling this progress. But they are missing the big picture—which is a Democratic White House helped to create and perpetuatea series of structural deadlines and a narrative that keeps returning to cutting programs, facing deficits and debt. Until Democrats retake both chambers of Congress and the White House and can revise this law, this 2011 Act keeps framing and reframing the budget process on GOP terms. 

“Voters should be wary of politicians who substitute gimmickry for governing,” the New York Times said in its August 2011 editorial sharply criticizing the Budget Control Act, but even the paper did not imagine at that time that the GOP would see the law as their historic opportunity to dismantle federal programs in a way that Ronald Reagan, Newt Gingrich and their other anti-government champions only dreamed about.

How bad is this? The absolute best that progressives can hope for in the FY 2014 budget is that House-Senate negotiators evenly split the spending cuts between military and non-military programs, taking $54.7 billion from each. But keep in mind that the House GOP passed a human services and education budget that is $40 billion less than what Obama wanted. Even under the best of circumstances, schools and safety nets are going to lose billions—with painful real world impacts. Take another area, such as the food stamps—which is set to lose several billion a year for the next decade. Or unemployment, where earned benefits are likely to be scaled back, shrinking by a third or more, and abruptly end for a million people, the Center for Budget and Policy Priorities estimated.   

Dennis noted that the Appropriation Committee doesn’t deal with government revenues; they just figure out the spending. The panel that raises or cuts taxes is the House Ways And Means Committee. There has been some talk of raising new revenues via federal fees in the current budget negotiations, he said. But the GOP not only opposes any new taxes, he said, they also oppose ending most tax breaks for businesses.

When Obama turned in his inequality speech to solutions, he began by saying, “We have to relentlessly push a growth agenda.” All he said about new federal revenue was, “That means simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas.”

That is not likely to happen in today’s GOP-controlled House. Yes, he renewed his call for a higher minimum wage. And for more educational opportunities. And for a lot more on a progressive to-do list. But in politics you also have to pay attention to what’s not being said. “We’ve got to revamp retirement,” Obama said. But he didn’t propose raising taxes on Social Security, where people only are taxed on the first $117,300 of income. Instead, the president said, “We’re going to have to do more to encourage private savings and shore up the promise of Social Security.”

There’s something badly out of synch here. Obama is talking in progressive platitudes while the GOP has taken control—with his help—of the federal budget process for the next decade. Every step in this annual process is turning into a predictable multi-act play where cuts are discussed ad naseum, and there’s little or no substantive debate about the real needs of Americans, what fair taxation looks like, and who can afford to pay more. 

If you want more proof that House Republicans have the upper hand, look at who scares them when it comes to 2014’s elections. They’re afraid of Republican primary challenges from Tea Party right wingers, not defending needed services. And if the FY 2013 budget isn’t passed and the sequester kicks in, that boosts their standing for slashing spending.

 Under Obama’s decade-long deal with the GOP, the Budget Control Act of 2013, this will keep happening until 2021—or Americans, who will be hurt, demand otherwise. 

Steven Rosenfeld covers national political issues for AlterNet, including America's democracy and voting rights. He is the author of several books on elections and the co-author of Who Controls Our Schools: How Billionaire-Sponsored Privatization Is Destroying Democracy and the Charter School Industry (AlterNet eBook, 2016).

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