I read the Democratic Party platform last night, a 40-page document that mostly repeats the message from past Obama budgets and State of the Union addresses. Party platforms from the incumbent defend the past four years as much as they set an agenda for the future, and this one is no different. “We knew that renewing the American Dream wouldn’t be easy – we knew it would take more than one year, or one term, or even one President,” it says, downplaying the current state of the economy and playing up the forward motion and progress. And it definitely paints the election as a choice; in almost every plank, it contrasts positions with Mitt Romney’s.
There are a couple sections I want to break down, but let’s start with those related to the grand bargain, because this is probably the one thing you’ll see action on immediately, due to the fiscal cliff. That particular issue doesn’t appear in the party platform; there is no opinion on whether to allow the “trigger,” which would cut defense and discretionary spending over the next 10 years by about $1.2 trillion, to go forward. In fact, in the section on “Cutting Waste, Reducing the Deficit, Asking All to Pay Their Fair Share” (p.8), it assumes away the trigger by highlighting that “President Obama has already signed into law $2 trillion in spending reductions as part of a balanced plan to reduce our deficits by over $4 trillion over the next decade while taking immediate steps to strengthen the economy now.”
There’s a conceit there that you don’t normally see – that the $2 trillion in spending cuts are PART of the $4 trillion in deficit reduction. Most of the fiscal scolds pretend that the debt limit deal never happened, and they seek an ADDITIONAL $4 trillion in cuts and tax hikes. This platform assumes that the spending cuts already passed are integrated into the plan. For the plan to be balanced, you would have to add $2 trillion in tax increases and be done with it.
And indeed, that’s the focus of the rest of the deficit reduction plank. There’s no talk of additional spending cuts, or cuts to social insurance programs. There’s some bragging about bringing “annual domestic spending to its lowest share of the economy in 50 years” – not actually a good idea! But the rest of the plank criticizes Republicans for demanding tax cuts for the rich, touting the fact that the President has cut taxes for all Americans during his first term, and vowing not to raise taxes on anyone making less than $250,000 a year.
This promise will immediately be broken when the payroll tax cut expires, adding roughly $110 billion a year to the Treasury’s coffers, coming out of the paychecks of all income earners. But assuming that doesn’t count – it was a benefit granted under the knowledge of its temporary status – what the platform says here is that the rest of their deficit reduction will come from tax increases on the wealthy. “We support allowing the Bush tax cuts for the wealthiest to expire, and closing loopholes and deductions for the largest corporations and the highest-earning taxpayers,” it says.
I don’t believe there’s $2 trillion in that pot, to satisfy the stated goal of $4 trillion in a “balanced” deficit reduction plan. Letting the Bush tax cuts expire over $250,000 would take in around $950 billion (including savings in interest on the debt) over a ten-year time frame. I highly doubt you could get the rest in closing loopholes and deductions. Especially because you can throw the corporate tax increases out the window. Later in the document, the platform says “We are also committed to reforming the corporate tax code to lower tax rates for companies in the United States… while closing loopholes and reducing incentives for corporations to shift jobs overseas.” And the document highlights the 18 small business tax cuts the President has enacted over his first term. If the corporate tax overhaul is revenue-neutral, it would be a miracle.
There’s also a commitment to the Buffett rule in here, but in a scenario where the Bush tax cuts increase on the wealthy, that becomes a very small revenue gainer.
Social insurance programs don’t show up at all in this plank, but in a separate plank earlier in the document (p.4). “America’s seniors have earned their Medicare and Social Security through a lifetime of hard work and personal responsibility,” the platform says, and it doesn’t commit to a whole lot in the way of changes. “Unlike the other party, we will find a solution to protect Social Security for future generations… we reject approaches that insist that cutting benefits is the only answer,” it reads. The only thing is definitively rejects is privatization, “to subject Americans’ guaranteed retirement… to the whims of the stock market.” On Medicare, it rejects the Republican voucher program to “end Medicare as we know it.” It doesn’t even mention the looming expiration of the Medicare Trust Fund by 2024, and does not hint that much of anything needs to be done to Medicare. It concludes, “Democrats believe that Social Security and Medicare must be kept strong for seniors, people with disabilities and future generations.”
Obviously, Democrats are running this year on that strong contrast on social insurance programs with Republicans. But there isn’t a thing in the platform to suggest that any of those programs would be on a menu for cuts, nor that deficit reduction would entail anything but tax cuts for the rich, along with what I assume is the imposition of the trigger cuts (the defense section makes no mention of the trigger, just the initial round of slowing growth for the military budget from the spending cap).
There could be worse options out there.