Open thread for night owls: Seven common sense points for fixing the federal budget

At the Campaign for America's Future, Bob Borosage writes Budget Bedlam: Common Sense in the Madhouse:

Washington is careening off the fiscal cliff smack into the debt ceiling.  These mind-numbing mixed metaphors are not the currency of a well-governed nation. Once more, Washington is fixated on what and how to cut. Once more, the media is clamoring for a deal, for 'shared sacrifice.' Once more, Republicans have indicated that they are prepared to hold the full faith and credit of the United States hostage to exact deep cuts in spending, with Social Security, Medicare and Medicaid their primary targets. Once more, the president has indicated that he wants more deficit reduction, with a 'balanced' program mixing spending cuts with tax hikes. Bob Borosage 'Our government, 'wrote Supreme Court Justice Louis Brandeis, 'is the potent, the omnipresent teacher.' But in Washington's budget bedlam, reason gets lost in the din.  As we hurdle the sequester while bouncing off the debt ceiling, it's worth remembering some basic common sense about where we are. 1. The economy is still broken More than 20 million people are still in need of full-time work. Wages are falling. Family wealth'largely the values of their homes'has been decimated. The middle class is sinking.  Trade deficits are over $1 billion a day. Corporate profits are setting records as percentage of economy; wages are at new lows. Inequality is at record extremes.  Catastrophic climate change is already wreaking havoc. This economy does not work for working people. [...] 4. You can't 'recover' to the old economy This economy wasn't working for working people before the Great Recession. The middle class was sinking; the richest 1 percent captured two-thirds of the rewards of growth.  Families stayed afloat by taking on more debt. Good jobs were being shipped abroad. We can't go back to the old economy that was built on bubbles and debt, and we shouldn't want to. But a slow growth recovery won't address these challenges. More cuts in spending or token stimulus won't help. 5. You can't build by focusing on what to dismantle We need fundamental reform, a new strategy for the economy that will rebuild the middle class. That involves far different questions than what programs to cut and whose taxes to hike. A new strategy must address the real challenges we face and the opportunities we have.  Low interest rates give us an historic opportunity to launch a 10-year program to rebuild America's decrepit infrastructure, from sewers to the electric grid, and modernize it to meet the challenge of catastrophic climate change.  The global consensus against extreme trade imbalances provides the opportunity for a new strategy in the global economy that will expand but balance our trade, and make things in America once more.  With sensible policy, America's capacity for innovation provides us the opportunity to lead rather than lag in the green industrial revolution that is sweeping the world. To revive the middle class, we need to empower workers to gain a fair share of the profits they help generate, lift the minimum wage and curb perverse CEO compensation packages.  To provide our children with a world-class education, we have to invest in the basics, from pre-kindergarten to affordable college. Financial constraints should force a cutback of our commitments to police the world.  These and many other needed reforms will require new investments, progressive tax reforms and new priorities.  But simply cutting spending or raising taxes to reduce deficits won't get it done. [...] 7. Focus on the predators, not the prey As part of focusing on real reforms, Congress should address the sole source of the deficit projections that are used to terrify everyone. Instead of chopping away at the pillars of family security'Social Security, Medicare and Medicaid'fix our broken health care system. If we spent per capita what other industrialized countries spend on health care (while getting better public health results), we would right now be projecting surpluses as far as the eye can see. The good news is that costs haven't been rising as fast as expected. Understanding how to build on what is working is a sensible next step. For savings, take on the culprits'the powerful drug and insurance company lobbies, the private hospital complexes that profit from driving our health care costs up. In any case, 'shared sacrifice' is for suckers. It is neither just nor sensible to demand sacrifices be shared by the predator and the prey. It doesn't make sense to ask everyone to sacrifice when the top 1 percent has captured 93 percent of the country's income growth as it did in 2010. It makes no sense to cut spending on everything when long-term deficits are driven by one thing'our broken health care system. And it makes no sense to cut everything without being clear about what we need to build. At the end of World War II, our debt burden was about 125 percent of GDP'far higher than it is now. Yet our leaders were focused on how to put the GIs back to work and avoid a return to the Depression. So they enacted the GI bill to educate a generation. They subsidized housing and built the suburbs. They converted wartime industries to peacetime development. They launched the Marshall Plan to rebuild Europe and create markets.  They built the interstate highway system to pave way for a national market. They fought over deficits and budgets, but they did what needed to be done. And they built the first broad middle class in the world's history that made America exceptional. They fixed the economy. They generally ran deficits and added to the nominal debt.  But the economy grew far faster and by 1980, the debt was down to below 40 percent of GDP and not a concern. They are remembered as the great generation. We might learn a thing or two from them.

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