Interesting math from Sam Stein in a story on the latest offer from President Barack Obama in negotiations over the so-called fiscal cliff. The president now
proposes $800 billion in savings, including $290 billion in interest savings, $100 billion in defense cuts, and $130 billion in savings that would come from an adjustment to the inflation index for Social Security benefits. The administration insisted that there would be “protections for most-vulnerable populations” perhaps by indexing the changes so that they don’t affect those with low-income.
That leaves $280 billion in cuts unremarked upon.
The answer probably lies with the across-the-board cuts to social programs already included in the sequestration plan approved last year — cuts to heating assistance, food aid, Head Start, housing aid, etc., that will leave the nation’s most vulnerable in an even more precarious position.
Any deal that leaves these cuts on the table cannot be called a good deal, even if it ends up generating some revenue from higher taxes on the better off.
Forget for a second the humanitarian reasons for providing a sturdy safety net; there is an economic reason, as well, for protecting it. Social safety spending, which tends to rise during recessions, has a stimulative effect because it puts money in the pockets of the people who will spend it.
Rather than cutting these programs, we should be expanding them, while treating investment income like regular income, returning the inheritance tax to its earlier, higher rate, and letting the Bush tax cuts expire for those making more than $250,000 (I could live with $400,000)
Instead, however, we are focused on marginal tax rates and are ready to let European-style austerity wreak further havoc on our economy.
Hank Kalet 