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Professors reflect on budget issues

Kristen Durbin | Friday, April 15, 2011

President Barack Obama presented his plan to cut $4 trillion from the nation’s budget deficit over the next 12 years Wednesday, but American Studies professor Bob Schmuhl said party polarization will continue to be an obstacle in alleviating the country’s economic woes.

“Brinksmanship has certainly replaced bipartisanship in Washington,” Schmuhl said. “The conundrum is that Democrats don’t really want to make spending cuts, and Republicans don’t really want to raise taxes. Given that, getting to an agreement that satisfies both sides is probably beyond difficult.”

Top members of Congress narrowly avoided a partial government shutdown last week by agreeing to a deal that would cut $38 billion in federal spending for the remainder of the 2011 fiscal year. Both the House and Senate approved the budget deal Thursday, sending it to Obama for final approval.

But this short-term agreement will not achieve the country’s long-term debt goals, which includes the attainment of a national legal debt ceiling of $14.29 trillion in May, Nelson Mark, professor of economics, said.

Mark said while both Obama’s plan and Congress’ deal promise to slash federal spending, the overall budget deficit will still be nearly insurmountable in the near future.

“Most of the budget is nondiscretionary spending, so even if you cut out all discretionary spending, that still wouldn’t balance the budget,” he said. “Then you have to go after entitlements. If you’re not willing to do that, you have to raise taxes, simple as that.”

The ongoing debate over funding reform for entitlement programs like Medicare, Medicaid and Social Security has become the point of increased party polarization because it directly relates to tax reform, Mark said.

“The Republican right wing wants to privatize Social Security and Medicare while protecting corporate profits and tax cuts for the wealthy,” he said. “People are living longer now, but less people are working who can support the Social Security system, which creates a problem as the Baby Boomer generation reaches retirement age.”

Schmuhl said the entitlement debate represents a long-term economic issue that will challenge the polarized political climate of the country in years to come.

“It’s relatively easy to deal with the economic problems in the short term, but that carries you just so far,” he said. “At some point, the people in Washington are going to have to deal with [entitlements] directly. The question, of course, is whether or not this can be done with a divided government.”

Mark said America’s fiercely opposing political parties “draw strength from the mandate of their constituents” and magnify the wants and needs of those supporters, especially in relation to the changing economic climate of the country and the world.

“We just went through a severe recession crisis, so maybe, economically, the world is a scarier place than it used to be,” he said. “Geopolitical volatility, like the current unrest in the Middle East, makes it hard for working people in the heartland to see what they can do to control their own fates.”

Both Schmuhl and Mark said the politically charged budget debates in states like Wisconsin and Indiana are reflective of the general politics of the nation.

“What’s happening in Washington is not all that different from what we see in Indiana or Wisconsin with their state legislators,” Schmuhl said.

“I was looking for a bigger backlash against the new Wisconsin politics,” Mark said. “If there isn’t a backlash in the near future, then at the national level, I think we’re headed for a right-wing Tea Party, Republican-dominated agenda that will emphasize privatization of some federal programs.”

Schmuhl said this extreme political polarization cannot go on forever, but it will have a significant impact on the 2012 presidential election.

“It’s hard to see a resolution of these problems going into a presidential election year, ” he said. “Every proposal or decision from now until November 2012 will be viewed through the lens of electoral politics.”

Mark said the current focus on the country’s short- and long-term budget problems is constructive, but significantly more effort and cooperation will be crucial to solving these problems in the future.

“We need a tipping point because the problems need to be fixed, but a quick fix isn’t going to happen,” he said. “Hopefully thoughtful, useful ideas will help fix this in the long run, otherwise we might end up in a situation like that of Greece or Argentina.”