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Tuesday, July 17, 2012

Robert Greenstein: Agreeing to a Budget Deal: How Democrats can get a Deal with Republicans on New Revenue



Robert Greenstein the head of the Progressive Think Tank the Center for Budget and Policy Priorities. Is correct when he says that its more critical for the Federal Government to reach a deal on the Federal Budget in 2012, then it was back in 1995 and 1997. When Democrats and Republicans shut down the Federal Government and then a year and a half later passed the Balance Budget Act in 1997. And for this reason, in 1995 and 1997 the economy was very good both years, we were booming in 1997 and reached a Balance Budget by 1998, with somewhere around 4-5% Economic Growth, unemployment around 5%, creating 200K plus jobs each month. Thats clearly not the case in 2012, where we are still struggling to recover from the "Great Recession, that officially ended three years ago. Where our economy is barely growing at 2%, where we still have over 8% unemployment, where we've failed to create even 100K jobs for two straight months and if Congress can't come together with the President. A Republican House with a Democratic Senate and a Democratic President, which makes things a little more interesting then in 1995 and 1997, if they can't come together. We are looking at automatic Tax Hikes on the Middle Class of 50% and essentially across the board Budget Cuts as well.

Democrats have an opportunity if they play it right, which is never a safe bet, the old joke, is that the Democratic Party. Is not a Political Party but they are Democrats instead with wide ranging views both politically and ideologically and a lot of time are brought together by having the same goals. Even when they have different idea in how to accomplish them but again if they play this right, they could force Congressional Republicans to compromise on new revenue. And they would be smart to start in the Senate where there now seems to be Republican Senators that have acknowledged that new revenue must be on the table in order to get a Deficit Reduction deal. That would solve the problem even though they would prefer not to raise taxes on anyone and if they had all the power, they wouldn't raise taxes on anyone either but understand that we have Divided Government right now.

Senate Democrats would be smart to start to work with Republican Senators Tom Coburn, Lamar Alexander, Olympia Snowe, Susan Collins, Johnny Issakson and others. Led by Democratic Senator Kent Conrad the Chairman of the Budget Committee and work with these Senators on accomplishing a deal on closing wasteful Tax Loopholes or come out in favor of Bowles-Simpson. In exchange for closing these Tax Loopholes, this could be the agreement needed to solve, the so called Fiscal Cliff at least in the Senate.