Luis Arcadio De Jesus R.'s List: Budget 2011 - USA

• shortsighted budget cuts in the face of high unemployment — cuts that will slow growth and increase unemployment — are actually a good idea?
• Among other things, the latest budget deal more than wipes out any positive economic effects of the big prize Mr. Obama supposedly won from last December’s deal, a temporary extension of his 2009 tax cuts for working Americans. And the price of that deal, let’s remember, was a two-year extension of the Bush tax cuts, at an immediate cost of $363 billion, and a potential cost that’s much larger — because it’s now looking increasingly likely that those irresponsible tax cuts will be made permanent.
• a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice!
• Center puts the revenue loss from these tax cuts at $2.9 trillion over the next decade
• What’s going on here? Despite the ferocious opposition he has faced since the day he took office, Mr. Obama is clearly still clinging to his vision of himself as a figure who can transcend America’s partisan differences.

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• The most immediate problem is that our largest banks and closely related parts of the financial system blew themselves up in 2007-08.  The ensuring recession and associated loss of tax revenue will end up pushing up our government debt, as a percent of GDP, by around 40 percent.  Very little of this debt increase was due to the fiscal stimulus; mostly it was caused by lower tax revenue, because of the slump in output and employment.
• financial system poses a major risk to our fiscal outlook over the next few years.
• But the problem here is bipartisan – as it was with the tax cut last year.  None of the leadership on either side is willing to talk openly about how our biggest banks caused great fiscal damage.  No one is willing to explain why our healthcare costs continue to rise.  And no top politicians currently champion real tax reform.

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