Robert Reich: Wrong Time For Budget Cuts


John King brought in former Labor Secretary Robert Reich and the Peterson Group's David Walker to discuss the president's proposed cuts to the budget. Of course King couldn't pass up the opportunity to allow Washington's resident fear monger in chief on Social Security and Medicare to have some air time here.

Robert Reich has an article at the HuffPo where he reiterated many of the same points he attempted to make here on the president's budget proposal -- The Obama Budget: And Why the Coming Debate Over Spending Cuts Has Nothing to Do With Reviving the Economy:

President Obama has chosen to fight fire with gasoline.

Republicans want America to believe the economy is still lousy because government is too big, and the way to revive the economy is to cut federal spending. Today (Sunday) Republican Speaker John Boehner even refused to rule out a government shut-down if Republicans don't get the spending cuts they want.

Today (Monday) Obama pours gas on the Republican flame by proposing a 2012 federal budget that cuts the federal deficit by $1.1 trillion over 10 years. About $400 billion of this will come from a five-year freeze on non-security discretionary spending -- including all sorts of programs for poor and working-class Americans, such as heating assistance to low-income people and community-service block grants. Most of the rest from additional spending cuts, such as grants to states for water treatment plants and other environmental projects and higher interest charges on federal loans to graduate students.

That means the Great Debate starting this week will be set by Republicans: Does Obama cut enough spending? How much more will he have cut in order to appease Republicans? If they don't get the spending cuts they want, will Tea Party Republicans demand a shut-down?

Framed this way, the debate invites deficit hawks on both sides of the aisle to criticize Democrats and Republicans alike for failing to take on Social Security and Medicare entitlements. Expect Erskine Bowles and Alan Simpson, co-chairs of Obama's deficit commission, to say the President needs to do more. Expect Alice Rivlin and Paul Ryan, respectively former Clinton hawk and current Republican budget hawk, to tout their plan for chopping Medicare.

It's the wrong debate about the wrong thing at the wrong time.

Go read the rest and thank you Robert Reich. I'm sick and tired of seeing our government officials ask us to balance our budget off of the backs of the poor and the middle class instead of the rich being asked to pay more when they can more than afford it. Transcript via CNN below the fold.

KING: Gentlemen, I want to try to do something very rare in television and get a yes or no answer to this will question first, then we'll move on.

Can we have a serious conversation about Washington's spending problems without dealing with Medicare and Social Security? Mr. Secretary, to you first.

ROBERT REICH, FMR. LABOR SECRETARY: No. Medicare especially, we have to deal with rising health care costs and that combined with the baby boomers is probably the most serious underlying issue in the budget over the long-term.

KING: David Walker?


KING: OK, that was good, a one-word answer. That is very rare in television. I appreciate it.


And so, then why are we playing this silly game in Washington? And I'll call it, who goes first. The president refuses, in his budget, to say let's deal, here's my proposal on Medicare and Social Security. Because he wants to see what the House Republicans do. The House Republicans, of course, are waiting and they say no, the president has to lead and go first. Why does Washington have to get lost every time in that same game?

WALKER: John, the president is the chief executive officer of the United States government. He is also the political quarterback. He has a responsibility to lead, but unfortunately as it relates to our escalating deficits and debt, he punted.

KING: Mr. Secretary, did the president punt?

REICH: I wouldn't go so far as to say he punted, John, but I think it is very difficult in this political climate for either the president or for the Republicans to take the lead on dealing with programs, Social Security and Medicare, that are so popular. They are the third rails of American politics, the president did deal with Medicare substantially in the health care bill, that became law, and he paid for it in terms of Republicans accusing him of cutting Medicare.

KING: But he's the president now, Mr. Secretary. I want to stay with you as the Democrat in the conversation. Should he have put forward something? Even if he took his own deficit and debt commission and put that plan forward, and said to the Congress, there are things in this I don't like, but I'm going to start the conversation by introducing this plan before the United States Congress, so that I can at least force the conversation?

REICH: Not on Social Security, but I think, on Medicare, particularly with regard to containing health care costs over the long term. The president could have gone further than he did under his health care law. And he could have continued that conversation, yes, indeed.

KING: David Walker, how do you get the conversation out of this, literally, it's a who goes first game?

WALKER: Frankly, neither the president nor the leadership in Congress is dealing with 85 percent of the problem. Which are Medicare, Medicaid, Social Security, interest on the debt, et cetera. What we need to do is have a civic education engagement program over the next couple of years to educate the American people on the facts and truth and tough choices. And we need to bring back tough statutory controls as part of the debt ceiling increase that will force these type of choices, starting in about 2013. Because right now there's no consequence for doing nothing, and doing nothing is driving us over a cliff.

KING: Let's focus now on what is before us. The president budget, Mr. Secretary, puts forward what he calls a cut and invest plan. He says he's making some tough choices, Republicans clearly, they argue he's not making many tough choices any way, if any tough choices. But you've raised some concerns that you think the president's proposal, because he has to find some cuts would hurt those who need it most.

REICH: Indeed, if he's just dealing with-as the president is, as are the Republicans-just the nondefense discretionary spending, which is a relatively small portion of the entire federal budget, then we are cutting into home heating oil. We're cutting into community service block grants. We're cutting into things that poor people, particularly the most vulnerable members of our society, now at a time in our economy when many of these people are more vulnerable than ever, are going to be hurt, and it's just not necessary. You don't want to hurt these people.

We're still coming out of the worst economy, the worst recession we have had since the Great Depression. And we shouldn't even be putting these things on the table right now.

KING: So, David Walker, how do you then, if you accept the Secretary's argument, how do you cut spending and it has to be some spending in Washington you can cut, without hurting those who at this moment maybe do need that help?

WALKER: They really need to focus on the disease, not the symptoms. The symptoms are short-term spending, we need to be able to deal with the deficits that are going to be here after economy recovers, after unemployment gets down. Bring back the tough budget controls, force decisions starting about 2013, that deal with the 85 percent plus of the budget that's the real problem.

KING: And Mr. Secretary, do you see anything on the horizon in terms of your outlook on the economy? A strong economic growth would make these conversations a lot easier to have if the government was taking it a lot more in revenue, number one, it would put the line down on the deficit a little bit. But it would make the other conversations easier. Is that going to happen over the next three or four years, or do they have to deal with this tough environment right now?

REICH: My own concern, quite frankly, is that all of this focus on the budget deficit at a time when we are still deep in the throws in the gravitational pull of the great recession-is going to distract us from the job of getting jobs back, getting the economy rapidly growing. It's not going to grow rapidly, jobs are not going to come back, if we simply cut public spending and also cut taxes. That's not the way to get jobs back.

KING: That a fair point, David?

WALKER: Yes, I think we have to separate between the short-term challenge and the structural one. We can actually have more tolerance for deficits and debt in the short-term, if it's combined with a means forward to deal with the 85 percent plus spending problem, and frankly, to reform our tax system in ways that will make it simpler, fairer, more equitable and generate more revenues.

KING: David Walker, Bob Reich, appreciate your time today.

WALKER: Good to be with you. Thank you, John.


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