Earlier today at presidential town hall hosted by CNBC, President Barack Obama called on Tea Party leader to offer more than anger:
The challenge I think for the Tea Party movement is to identify specifically what you would do.
It’s not enough just to say, “get control of spending.” I think it’s important for you to say, “I’m willing to cut veterans’ benefits” or “I’m willing to cut Medicare or Social Security benefits” or “I’m willing to see these taxes go up.”
What you can’t do — which is what I’ve been hearing a lot from the other side — is saying “we’re going to control government spending, we’re going to propose $4 trillion of additional tax cuts and that magically somehow things are going to work.”
In fairness to the Tea Party, some of their favorite candidates have specified some cuts — like cutting Social Security altogether, eliminating unemployment insurance and abolishing the EPA and Education Department.
They just happen to be cuts almost nobody wants.
Meanwhile, 300 economists last week released a statement laying out a range of options for responsible long-term deficit reduction, to be undertaken only after we invest to create jobs and grow the economy. From DontKillJobs.org:
Any effort to cut spending should address the military budget, which consumes over half of discretionary spending … Defense experts estimate we could achieve significant Pentagon savings – in the range of $100 billion per year – while still sustaining the most powerful military in the world…
Second, we should cut back the massive amounts wasted on outmoded subsidies – billions to the oil industry, to wasteful farm subsidies, and tax loopholes benefitting a few, with little productive return.
On the revenue side … Revenue for reducing deficits and increasing investment can be raised by making taxes more progressive and by taxing activities we want to discourage. Some examples:
* A small tax on financial transactions (e.g. 0.025 percent on credit default swaps) would reduce high volume speculation and would produce revenues of about $100 billion per year.
* The Wyden-Gregg corporate loophole-closing proposals produce $1.078 trillion over ten years.
* Taxing hedge fund mangers’ “carried interest” income as regular income gains $3 billion per year.
* End special tax treatment of capital gains income. Revenue: $480 billion over ten years.
* A 5.4 percent surcharge on high incomes (passed by the House) produces $500 billion over ten years.
* A carbon tax would help reverse climate change. Revenue: $500 billion over ten years.
* End Bush tax cuts for people making more than 250k. Revenue: $37 billion per year.
* One version of a progressive estate tax on large fortunes would generate $50 billion per year.
The Tea Party is continually demanding respect from the traditional media and the political establishment. President Obama is offering a way: give us some policy ideas and make sure your numbers add up.
There’s an interesting debate to be had about the next steps for America: do we invest to broaden and modernize America’s foundation, or do we dismantle long-standing institutions and pursue austerity?
The President just asked the Tea Party to have the debate. I know 300 economists that would love to have it too.
The ball is in the Tea Party’s court: do you want a serious debate or not?
