This is a very welcome development as in the past the Senate Democrats have seemed very squeamish on tax hikes and Obama had worried they'd cave at the first opportunity. Indeed, this is a big part of the point to all their kvetching about the Senate Dems not passing a budget in 4 years. Of course, there's no actual requirement that the Senate pass a budget as it's just a blueprint, it isn't binding-which is why they were able to pass it now with only 50 votes.
The reason they hadn't passed one during this time was because of the real divisions in the party where many more red state Dems weren't too excited about voting for a tax hike. Republicans had hoped that forcing the Dems to pass a budget would exacerbate these divisions and make them public. Instead the Dems demanded more tax hikes than even the President has recently:
This fulfills a key demand of Republicans, who’d come to view the Senate Democrats’ failure to pass a budget as one of the key impediments to a fiscal deal. Remember that forcing Senate Democrats to pass a budget was the deliverable that persuaded House Republicans to sign onto a three-month delay of the debt ceiling. They cared about the Senate’s budget that much.
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/25/wonkbook-what-we-learned-from-the-senate-democrats-budget/
However, now that Dems passed their budget, the GOP is not so excited about it:
"And now that they’ve got a budget? When Rep. Paul Ryan, the top Republican on the House Budget Committee, saw the document, he said, “Their budget never balances—ever. It simply takes more from hardworking families to spend more in Washington. It ignores the drivers of our debt. It continues the raid on Medicare. And it imperils the health and retirement security our seniors need.”
"When the budget passed, Sen. Jeff Sessions, the ranking Republican on the Senate Budget Committee, said, “The Democratic Caucus has produced a budget here that won’t work. It does not meet the challenge of our time.”
There are two observations to make to this:
1). The GOP budget only balances due to some pretty questionable assumptions. One of the most glaring ones is that ObamaCare will be repealed-while still leaving in place the $716 billion in "Medicare cuts" that is part of ObamaCare and is the part that Ryan and his running mate spent so much time running against during the campaign.
2). Why do we want to budget to balance, much less in some arbitrary period like in 10 years? The GOP only cares about this when a Democrat is in the White House.
http://diaryofarepublicanhater.blogspot.com/2013/03/democrats-and-republicans-different.html
The one point that Woj makes I agree with-I haven't heard from him lately; I hope I didn't turn him off with questioning him so much; I'm assuming he's just busy-is that you have to look at distributional issues as well as matters of growth. Both are important to be sure. When MMTers preach the Gospel of deficits I think they're largely right. However, I wonder if some might get the wrong impression. After all, a deficit, even a large one, is not a panacea. This is obvious when you look at the last 30 years. Reagan and the two Bushes gave us humongous deficits; the one big difference between Obama's and theirs is that their deficits were structural whereas Obama contribution has been due to the recession.
The trouble with Reaganism was not that it led austerity-at least during Republican administrations it led to unprecedented deficits. What the GOP achieved-until Obama went the other way and survived to tell about it-was a framework where Republican Presidents ran up bug deficits on Republican priorities: tax cuts and a military buildup; in that sense GOP policy was "military Keynesianism" when they were in the WH. Austerity is demanded under Democrats.
Regarding the budget, the Dems stood tall this time:
If there was a surprise in the Senate Democrats’ budget, it’s that Harry Reid and Patty Murray got so many of their colleagues to sign onto a framework, however vague, that sits to the left of the deal President Obama is currently offering the Republicans.
"A key thread of the past few years is that the White House has believed Senate Democrats have little spine on taxes. In fact, quite a bit of the White House’s negotiating strategy has been driven by the worry that in a crisis situation, Senate Democrats would take a deal with very little revenue, undercutting the White House’s leverage."
"This was also part of why Republicans were so eager to see Senate Democrats produce a budget. One of the working theories was that conservative Senate Democrats couldn’t possibly support the administration’s approach, and the deep fissures in the party were being papered over by Reid’s refusal to actually release a budget. If Senate Democrats had to release a budget, the uneasy consensus would crack, and the moderate rejection of Obama’s radical priorities would be clear for all to see."
"On Friday, however, Senate Democrats stood up and voted for almost a trillion dollars more in tax hikes — and that’s on top of the tax hikes in the fiscal cliff deal. That’s about $375 billion more in tax increases than even Obama has been asking for lately. Republicans always said Senate Democrats needed to show the American people where they stand on the budget, and now, they have. To the GOP’s disappointment, it’s to the left of Obama, and far from them."
It's hard to see where the sweet spot of common ground might be between the House budget-Ryan's plan to balance in 10 years by making Medicare a voucher system, devolving Medicaid and food stamps to the states, while ending ObamaCare giving the rich a 40% tax cut. However, the Dems by standing tall have at least move the area for reasonable compromise considerably to the Left.
P.S. Nanute called me shortly after I started this piece and asked me if he gets a HT. As you can see I led off with it. You know I'm not stingly with the hat tips. It even makes up for him postponing Popeye's. Kidding of course. As much as I love Popeye's I guess even I have to admit Nanute keeping his job is more important than going to Peopeye's. I guess-LOL.
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