It's becoming increasingly difficult for me to avoid a state of nausea whenever I turn on my television. The ongoing debate over the national deficit and the much fraught over debt default is staggering in how it has catered to conservative dogmas, in opposition to any progressive solution to the current impasse. Propagandists in the Democratic and Republican Party should be congratulated for their stunning achievement in these talks. They've managed to stand reality on its head, successfully framing the issue of corporate wealth as one of unfair and crippling “taxation,” while portraying massive “cuts” in Social Security, Medicare, and other programs as a needed and shared “sacrifice.” The taxation frame revolves around Democratic efforts by President Obama to raise a measly $1 in revenue (to be found either in closing tax loopholes or raising incomes taxes for the rich) for every $3 raised by budget cuts to social spending for the masses. That's quite a deal for working-class people!
The focus of Republicans on “tax hikes” as crippling to the economy and Democratic efforts to make such hikes a relatively small part of the deficit reduction plan, represents a tremendous sleight-of-hand trick for both political parties. When sacrifices are called for from the wealthy, they're referred to as a potentially debilitating increase in “taxes” by Republicans, while Democrats accept this distortion and insist on minimal revenue increases from changes in the tax code. When the discussion turns to Social Security, Medicare and Pell Grants, we begin to hear about the need for shared “sacrifice” and for vital “cuts,” as if working-class people taking it on the chin is inherently superior to relatively minor tax increases on the rich.
News flash to the American public: benefit cuts to Medicare and Social Security ARE a tax hike, even if Republicans and Democrats refuse to admit it. Any legislation that imposes increased costs on the public (in which the “Gang of Six” deficit plan calls for $300 billion in cuts in Medicare and between $500 to $1,000 a year in cuts for each Social Security beneficiary) effectively amounts to a tax increase against the American people. We should recognize this reality and reject the Orwellian “distinction” between “harmful tax hikes” on the one hand and “necessary shared sacrifices” on the other. This is the case for increasing taxes on the majority and we should be honest about that.
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The “Gang of Six” plan being considered in the Senate is equally audacious in that it also forces massive tax hikes onto the American public, while asking virtually nothing of America's most wealthy. From admittedly hazy preliminary reports, it looks like the plan has so far called for about $1 trillion in cuts, most of which will come from social spending. One estimate from Sen. Bernie Sanders puts the imbalance between social spending cuts and tax revenue increases at a staggering 9:1 in favor of spending cuts. To be fair, the imbalance may be even larger, as Sanders recently pointed out that there is no requirement as of yet that the $100 billion in tax revenues even come from the wealthy.
Such unshared sacrifice is outrageous at a time when the baby boom generation will require greater resources dedicated to health care, rather than less, and when the Social Security program benefits from a surplus, rather than a deficit. The effort to cut Social Security is a pet project of both parties, which are assaulting the notion of collective, government responsibility to provide for the general welfare. Need proof? Simply look to the limited “shortfall” in funding for Social Security that we hear so much about. That shortfall is not even projected to appear (in terms of the inability of the government to guarantee full benefits promised to the retired) until 2037. In other words, the Social Security “crisis” is entirely manufactured. It's a “problem” that we can deal with (and rather easily by increasing the progressivity of the payroll tax) at some point over the next two and a half decades, rather than ramming unpopular cuts into legislation over the next few days.
We should recognize that the Obama administration has pushed American political discourse to the right. Obama is effectively “out Republican-ing” the Republican Party by calling for cuts in Social Security, which were (until his overture) not even on the agenda for the Republican rank and file. We should also be careful not to scapegoat by placing all the blame on Republicans. Everyone knows that Republicans have been drooling over the prospect of gutting Social Security for decades. It's the Democratic agreement to that agenda that is the truly novel development.
Sen. Mitch McConnell essentially offered Obama a way out of the debt-ceiling impasse by proposing a three-step vote to allow the president to increase the national debt by up to $2.5 trillion, while vetoing any Congressional efforts to impose spending cuts the president saw as undesirable. It turns out that not even Republicans were so stupid as to hold Wall Street hostage in the name of cutting a few trillion dollars out of the deficit over the next ten years.
McConnell's “last choice option” plan to raise the debt ceiling represented a major concession to the Democrats. Obama could have secured a victory for the American people by refusing to negotiate social spending cuts as part of a debt-ceiling deal. This would have allowed Obama to position himself as the protector of Medicare and Social Security benefits going into 2012 against Republican efforts to gut those programs (via the Simpson-Bowles deficit commission and the Paul Ryan Medicare-privatization proposal). Obama chose to go the deficit hawk route instead, putting entitlement programs first up on the chopping block.
Obama could have agreed to a short-term borrowing increase (via the McConnell “last choice option” plan), while still pursuing deficit reduction. There were a few choices available to him: 1) Allow the Bush tax cuts, which disproportionately benefit the wealthiest five percent of Americans, to expire at the end of 2012 and collect the subsequent revenues in order to balance help “balance the budget.” Such an approach would primarily serve as an automatic collection of some of the $1.9 trillion in cash that corporate America has been hoarding and refusing to invest over the last few years (due to an anemic economy and weak consumer demand). 2) Obama could have announced a plan as commander in chief to commission a dramatic reduction in military spending, as pursued through a rapid de-escalation in Afghanistan, a cessation of violence in Libya, cuts in wasteful military boondoggles and announced closure of numerous military bases throughout the world that are largely counterproductive to the promotion of national defense (how vital are bases in Japan and Germany to protecting the US against the “terrorist threat” is a question we should all be asking). Both options benefit from strong support from the public (while cutting Social Security and Medicare are extremely unpopular).
The US currently spends about $1.2 trillion per year total on “defense,” and cutting that budget to pre-9/11 levels (to about $800 billion a year) would produce more at least $4 trillion in savings over ten years. This savings is equivalent to the total savings proposed by Obama within the same period (as a result of his debt-ceiling proposal), except his plan would overwhelmingly fall on the majority of Americans, rather than on the corporate beneficiaries of US militarism. Obama has not indicated support for either of the above options – a strong indication of where his priorities lie.
The above policies should be pursued, if for no other reason than as a basic issue of fairness in a democracy. Does public opinion matter any longer in this country? If it does, military cuts and tax hikes on the rich would be the first issue on the agenda, rather than an afterthought among those claiming to represent the public's best interests. Of course, Obama has no interest in reducing the size of the permanent US military state. His foreign policy has been implicitly predicated upon the “less talk, more bombing” approach, which further institutionalizes the Orwellian state of “endless war” introduced under Bush and with which we still suffer.
Obama and Congressional Republicans have been perfectly clear with regard to where their allegiance lies. They've chosen bloated and wasteful spending on the empire and never-ending tax cuts for the rich, while essentially declaring war on social spending. This choice may cost Obama dearly in the near future. He will no doubt curry additional favor with Wall Street with any deal that exempts the rich from sacrifice, but no post-World War II president has ever won re-election with an unemployment rate of more than 9 percent. Reducing government spending will do nothing to restore the lack of consumer demand – which is the main impediment to renewing economic growth. Obama's betrayal of the elderly and retired will likely demobilize many liberal and progressive Americans who are looking for the president to display some of that progressive “hope” and “change” he promised back in 2008. In “winning” the short-term battle over extending the debt ceiling, Obama and Congressional Democrats may very well lose the war when it comes to retaining their limited and increasingly tenuous control of government.