To understand why the centerpiece initiative of President Obama’s budget makes so much sense, imagine that U.S. corporations decided to bring home – in cash – the estimated $2 trillion in profits they are stashing overseas to avoid paying taxes.
If they shipped the money by air, cargo planes stuffed with dollar bills would land at aging airports that no longer measure up to international standards. If they sent it by sea, the cash would arrive at ports too antiquated to accommodate the newest and biggest container ships. Either way, the money would eventually be loaded onto trucks that headed for their final destinations via crumbling, traffic-choked freeways and rusting bridges.
So the president’s idea is hard to argue with: Impose a one-time 14 percent tax on those foreign profits to partially fund a multiyear, $478 billion program to renew the nation’s sagging infrastructure. The rest of the money would come from the existing gasoline tax.
Corporations would surely squawk – since at present they are paying no U.S. tax on that offshore money – but in return they would get permanent cuts in corporate tax rates, with the levy on overseas profits slashed nearly by half. And Republicans have long maintained that they want corporate tax reform and recognize the need for new infrastructure spending.
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Therefore, given the Mad Hatter’s logic that holds sway in Washington, GOP leaders immediately announced their opposition to Obama’s budget and everything it stands for.
A joint statement by the chairmen of the budget committees in the House and Senate accused the president of advocating “the same tired agenda that has failed to deliver for American families.” Is it just me, or does that sounds like the same tired criticism that has failed to comport with reality?
It’s not just me. Obama has an economic track record that Republicans are going to be hard pressed to ignore. Unemployment is down to 5.6 percent, the economy continues to grow at a healthy pace and deficits have plummeted. If the GOP wishes to have any credibility, the party will have to stop pretending we live at a time of unrelieved doom and gloom.
It is ironic that now, with neither house of Congress in his party’s control, Obama is able to propose what looks like his most progressive budget to date.
Overall, the president’s budget proposes a 7 percent increase in federal spending. This reflects the sensible view that the $18 trillion federal debt – admittedly, a lot of money – is quite manageable as a percentage of gross domestic product. Relative to the size of the economy, the debt will actually shrink over the next 10 years, according to White House budget projections.
The budget seeks an end to what the White House calls “mindless austerity” and gives concrete shape to all the rhetoric – gushing from both parties – about the need to create new opportunity for the struggling middle class.
The time to spend on domestic priorities is when deficits are falling, interest rates are at historic lows and key sectors of the economy would sorely benefit from an infusion of cash. That would be now.
Obama proposes doing away with the budget caps imposed by sequestration. Republicans may balk at giving up hard-won limits on domestic spending, but at the same time they are eager to relax the sequestration limits on defense spending – and Obama’s budget would give an extra $38 billion to the Pentagon.
The budget would raise new revenue from the wealthiest taxpayers and the largest banks. Republicans have already attacked such proposals as “redistributionist” and representative of “the politics of envy.” A better description would be “progressive taxation” – the basic idea that those who earn more should pay a higher percentage of their income in taxes. If this is a battle the GOP wants, Democrats should welcome the fight.
If Republicans were clever, they might critique Obama’s budget for focusing too much on the middle class and not enough on the poor. They might propose a new effort to create opportunity and upward mobility for those at the very bottom.
What about a partial tax holiday for corporations that invest their overseas profits in low-income communities? Come on, GOP, get in the game.