Downturn Blunting Jewish Fight Over Obama Budget Proposal

The budget proposal President Barack Obama submitted to Congress last week, a call to dramatically change U.S. spending priorities in the face of the worst economic downturn in generations, will touch off political trench warfare in Congress — and possibly new conflict between Jewish organizations that welcome the plan and influential major donors who could get hit with big tax increases.

“There’s a lot of enthusiasm about the shift in priorities to needs like health care and education, but some of our big donors are not going to be happy,” said an official with a major Jewish group who spoke freely on condition of anonymity. “Some of them see this as class warfare against the rich.”

But the gap between conservative big donors and rank-and-file members, which loomed large in fights over big tax cuts during the George W. Bush years, could be narrowed some by the dire shape of the U.S. and world economies and the growing threat to Jewish social service providers as demand rises and funding sinks.

“During a severe recession you don’t get a lot of political traction arguing about protecting the interests of the wealthy,” said Johns Hopkins political scientist Benjamin Ginsberg. “So opponents will have a real problem. In 1936, Franklin Roosevelt’s opponents accused him of a soak-the -rich strategy. He said, well, yes, so what? We know what happened to FDR.”

Jewish groups responsible for channeling funding to local health and social service agencies are enthusiastic about the main thrust of the budget outline — which still has to be fleshed out with details before Congress sinks its teeth into it.

“The economic situation has changed a lot of calculations,” said William Daroff, vice president for public policy of United Jewish Communities (UJC). “This budget is a very dramatic change in budget priorities for the nation — and it’s what the American people voted for.”

Even as it fights one element of the plan — the call to limit tax breaks for charitable contributions by higher-income Americans — UJC will be backing most of it, he said.

One group doesn’t plan to go with the Jewish flow: Jewish Republicans. They say they will fight what they see as a reckless budget that will just deepen the nation’s economic woes.

Raising taxes on more affluent Americans — defined by the Obama administration as those making more than $250,000 a year — “puts an undue burden on taxpayers, which is exactly the wrong thing to do in a severe recession,” said Matt Brooks, executive director of the Republican Jewish Coalition.

But Brooks conceded that the depths of the current crisis may be muting opposition to the president’s plan in the Jewish community.

“I know that privately, people have expressed real concerns,” he said. “But a lot of people want to give the president the benefit of the doubt right now. Others don’t want to use up their political capital now, when it’s still very early in the administration. There’s a lot of thrust and parry going on now.”

Not surprisingly, Jewish progressives are thrilled by Obama’s budget proposals.

“As far as we’re concerned, it’s a great budget,” said Sammie Moshenberg, Washington director for the National Council of Jewish Women (NCJW). “We are very pleased that it includes placeholders for health care reform and that there are substantial investments in education. Even without all the details, it shows a real shift in priorities that, in this time of great economic need, is critical.”

The 10-year budget plan proposes effective tax increases for those earning more than $250,000 per year by allowing Bush-era tax cuts to expire, but allowing the cuts to continue for those earning less.

That money would help create a “health reform reserve” that would help bankroll health care proposals that have yet to be formulated. The budget also proposes pouring more money into prevention and the quest for more cost-effective treatments.

Robert Reich, a Labor secretary under President Bill Clinton, wrote that the budget is “audacious — not because it includes several big, audacious initiatives (universally affordable health care, and a cap-and-trade system for coping with global warming, for starters) but also because it represents the biggest redistribution of income from the wealthy to the middle class and poor this nation has seen in more than 40 years.”

It is that redistribution that is certain to cause fierce resistance from congressional Republicans, especially in the Senate, where the Democrats do not have enough votes to stop GOP filibusters without help from the dwindling number of Republican moderates.

It is also likely to generate resistance from some of the wealthy Jewish donors who comprise the financial backbone of Jewish philanthropy.

Some major players in Jewish organizations “will not be happy” with the tax and spending proposals, said Brandeis historian Jonathan Sarna.

Sarna said that in some cases these affluent individuals were able to keep the organizations they supported from opposing earlier tax cuts — “but I’d be very surprised if they will have a huge impact on the organizations this time. The truth is, Jewish organizations are reflecting a much bigger trend in the country, which has seen us move away from the policies of Ronald Reagan and the idea that low taxes and less government is the be-all and the end-all. Now there is a sense that we need more programs, more oversight, and we probably need more taxes to support that.”

And with the nation reeling from financial scandals, off-the-charts Wall Street greed and shortsighted policies by critical financial institutions, “frankly, I don’t think these people want the news bandied about that they are opposing the president’s policies for selfish reasons, not at time like this,” Sarna said.

“The situation has changed,” said Kean University political scientist Gilbert Kahn. “The Jewish community has to recognize that there will be a dramatic drop off in philanthropic giving that the government can replace through some of these initiatives. Otherwise the capacity of our system will be greatly diminished.”

Even well-off donors who take conservative positions on tax-and-spending issues and who are unhappy about possible increases in their taxes may end up supporting the dramatic budget proposals because critical functions of the organizations they support are at stake at a time of soaring demand and sagging philanthropy — and because, for the first time in years, they are watching their own wealth evaporate because of the recession, Kahn said.

UJC and other groups will actively work on behalf of major portions of the administration proposal when Congress begins its own budget deliberations.

“People on the ground can’t help but see that their communities really need help, and that only the government, through a shift in priorities, can address those needs and make sure that any economic recovery we have is a shared recovery,” said NCJW’s Sammie Moshenberg.

Hadar Susskind, Washington director for the Jewish Council for Public Affairs (JCPA), said the budget is “not perfect — we would like to see an increase in funding for child nutrition, for example. And we are concerned about the charitable deduction piece.”

But on the whole, he said, “the community is reacting incredibly positively.”

JCPA activists who swarmed over Capitol Hill on Tuesday as part of the JCPA plenum included support for the increase in health and social service funding as part of their congressional talking points.

A new progressive Jewish group hopes to tap the grassroots network it created to support Obama’s candidacy among Jewish voters to build support for the big spending shift.

The Jewish Grassroots Action Network (JGAN) is preparing a flier to distribute to participants across the country that it hopes will stimulate local activity on behalf of the administration budget proposal.

The flier “outlines the Jewish principles behind the various programs in the budget package along the lines of the Jewish philosophical, halachic, and historical reasons that these issues are important for us as Jews,” said Yocheved Seidman, a co-founder of the group.

Why is the budget battle a priority for the fledgling group?

“The times really are quite horrible,” she said. “The Jewish community was hit hard by the Madoff scandal, and then by the economy. It’s affecting all of us. When we’re talking about the budget, we’re talking tachlis.”

Analysts say that while the congressional battle will be fierce, Obama is likely to get much of what he called for in the budget outline.

“The country is terrified,” said Johns Hopkins political scientist Benjamin Ginsberg. “At the same time, President Obama’s party has solid majorities in both Houses of Congress. So he has a lot of leeway to press for what is a substantial shift in spending policies. It marks Democratic thinking that New Deal-like entitlement programs really are possible now.”