“Makes Absolutely No Sense”: David Cay Johnston on Budget Deal That Helps Billionaires, Not the Poor

A bipartisan budget deal to avert another government shutdown comes before the Senate this week. The vast majority of House members from both parties approved the two-year budget agreement last week in a 332-to-94 vote. It is being hailed as a breakthrough compromise for Democrats and Republicans. The bill eases across-the-board spending cuts, replacing them with new airline fees and cuts to federal pensions. In a concession by Democrats, it does not extend unemployment benefits for 1.3 million people, which are set to expire this month. To discuss the deal, we are joined by David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times. He is currently a columnist for Tax Analysts and Al Jazeera, as well as a contributing editor at Newsweek.

TRANSCRIPT:

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: A bipartisan budget deal to avert another government shutdown comes before the Senate this week. The House approved the two-year budget agreement last week in a 332-to-94 vote. The bill eases across-the-board spending cuts, replacing them with new airline fees and cuts to federal pensions. In a concession by Democrats, it does not extend unemployment benefits for 1.3 million people, which is set to expire this month. Republican Congressmember Paul Ryan and Democratic Senator Patty Murray called the deal a win for both sides.

REP. PAUL RYAN: I think this agreement is a clear improvement on the status quo. This agreement makes sure that we don’t have a government shutdown scenario in January. It makes sure that we don’t have another government shutdown scenario in October. It makes sure that we don’t lurch from crisis to crisis.

SEN. PATTY MURRAY: Our deal puts jobs and economic growth first by rolling back sequestration’s harmful cuts to education and medical research and infrastructure investments and defense jobs for the next two years.

AMY GOODMAN: That was Republican Congressmember Paul Ryan and Democratic Senator Patty Murray.

The budget deal is being hailed as a breakthrough compromise for Democrats and Republicans, but not everyone supports it. Democratic Congressmember Mark Pocan of Wisconsin said in a statement, quote, “At the end of the day, the bill abandons 1.3 million Americans who desperately need unemployment insurance, and does nothing to promote economic growth or job creation. Furthermore, the legislation is paid for on the backs of the middle class and military families, while not touching the wealthiest amongst us and allowing corporations to continue to benefit from tax loopholes,” he said.

Well, for more, we go to Rochester, New York, where we’re joined by David Cay Johnston, an investigative reporter who won a Pulitzer Prize when he was at The New York Times. He’s currently a columnist for Tax Analysts and Al Jazeera, as well as a contributing editor at Newsweek.

David Cay Johnston, thanks so much for joining us. He’s joining us from PBS station WXXI in Rochester. Talk about the deal.

DAVID CAY JOHNSTON: Well, this deal is a—actually, I think, a big win for the Paul Ryan Republicans. They will avoid the embarrassment, shame and political damage of shutting down the government, and they will obtain this from the—they obtained this from the Democrats without, as Congressman Pocan pointed out in his statement, touching at all the major issues. The corporate loopholes aren’t being closed. The tax-avoidance techniques of billionaires, who can legally live tax-free if they choose to, are not being shut down. The hedge fund and private equity managers will continue to be advantaged. And we’re going to kick 57,000 poor children out of Head Start, which means we’re going to narrow their economic futures and make all of us worse off in the future. We’re cutting a billion-and-a-half dollars from medical research to save lives. Why? Because the very richest people in America, those who have benefited most from being in this market, don’t want to pay for that kind of services. And by the way, being The War and Peace Report, the Pentagon is getting an extra $20 billion out of this deal. We already spend 42 percent of all the money in the world on our military. More money for the Pentagon? Seriously? While we are cutting off unemployment benefits and cutting medical research, reducing pensions for federal workers? This makes absolutely no sense. It will make us worse off.

AMY GOODMAN: What about the poorest Americans, David Cay Johnston? How are they affected?

DAVID CAY JOHNSTON: Well, there is a war going on in this country, and it’s on the poor. And we have all sorts of ways that we are doing this. We are restricting their access to Medicaid. We are cutting food stamps dramatically in this country, or will be very soon. There is a 90-day fix for doctors who treat people who are on Medicaid. That, I suspect, will not be continued. And why would we be cutting fees to doctors who provide healthcare to people, unless, of course, you just, as Congressman Grayson once said, want them to die?

AMY GOODMAN: The budget now heads to the Senate, where it has the backing of the Democratic leadership. This is Democratic Senator Dick Durbin of Illinois urging members to vote for it when it comes up to the floor this week.

SEN. DICK DURBIN: Vote for this. Let’s move. Let’s govern. Let’s not shut down this government again. This is an opportunity. And with this opportunity, we can have a stronger national defense, a stronger country, and we can save the taxpayers money.

AMY GOODMAN: That’s Democratic leader, Senator Dick Durbin.

DAVID CAY JOHNSTON: Well, stronger national defense—I’m sorry, what? I mean, do we not have enough nuclear submarines to kill us all many times over with weapons against which no one is threatening us? It is just bizarre that we continue to stick to these memes that we’re not spending enough on national defense. We’re spending over $900 billion a year on national defense. Now, add to that that we—most of the world consists of our allies, who have a big military, and this just makes no sense whatsoever.

AMY GOODMAN: You also talk about the U.S. government paying through the nose for contractors.

DAVID CAY JOHNSTON: Yes, well, you know, we started this movement back around the time that the New Deal ended and the era of Reagan, which we’re still living in, began, that it would be more efficient if we just got rid of those lazy, no-good, overpaid federal bureaucrats, and hired private contractors. Well, last year, contractors cost the government as much as $763,000 each. Overall, they cost twice as much as civil servants; and for Pentagon contractors, three times as much. And much of the work that is done by contractors turns out to be of little or no value. If, for example, you go to USASpending.gov, one of President Obama’s major initiatives on transparency, and put in “IRS contracts,” the total amount of money it will show is equal to 500 years of the entire IRS budget. These contractors are ripping the taxpayers off left and right. Why do they stay there? Well, the owners of those companies hire politically connected people, like former congressmen, former heads of agencies, and they make campaign contributions that make sure they keep getting paid, while the poor have their situation worsened.

AMY GOODMAN: David Cay Johnston, you write about how, actually—how the country could generate millions of jobs.

DAVID CAY JOHNSTON: Yes. There are a number of things we could do. I’ve been doing a series of columns on Al Jazeera about this very point. One of the things we can do is stop these, quote-unquote, “free trade” deals. There’s no such thing as “free trade.” Trade has rules. And let me give you an idea how big they are. The super-secret Trans-Pacific Partnership plan, in which members of Congress who want to read any part of it have to show they have no pen or pencil or paper or recording device on them and are then led into a room. In chapter QQ, it’s 30,000 words. Think about how far in you’ve got to be to get to chapter QQ. And these deals have resulted, in every case, in the destruction of American jobs. You know, one way to look at this, however, I suppose, is that the generosity of blue-collar factory workers in America, who have been willing to give up their hold on the middle class so that the rural poor of Asia can have a better life, is something to be admired.

AMY GOODMAN: I wanted to get a comment from you to respond to this quote. You talk about the TPP, the largest-ever economic treaty, representing more than 40 percent of the world’s GDP. This is Secretary of Commerce Penny Pritzker explaining why she supports the TPP.

SECRETARY OF COMMERCE PENNY PRITZKER: The TPP is a—meant to be a high-quality 21st-century trade agreement. And what we know from those trade agreements—take, for example, our trade agreement with Singapore—when we do a trade agreement of this quality, everyone’s economy grows. Trade has grown 60 percent with Singapore since we completed our free trade agreement. So this is a great opportunity.

AMY GOODMAN: David Cay Johnston?

DAVID CAY JOHNSTON: Well, trade, in theory, can make us all better off. I’m not arguing against trade. The deals we have made have been awful. Our trade deal with China has cost us 2.8 million jobs. That’s the equivalent of every job in greater metropolitan Philadelphia. We’ve had over 50,000 factories close simply because of that deal. Our trade deal with South Korea, we were told it will result in more trade. Well, it has: one dollar of exports of goods by us to South Korea for every $25 of increased imports from South Korea. The global capitalist class see to it that these secretive deals are written in a way that they benefit, that workers in America have their wages driven down.

And the Trans-Pacific Partnership is widely believed—and remember, it’s a secret agreement that they want to ram through Congress with no debate—it is widely believed it will cement current U.S. law, while allowing trading partners flexibility to alter their laws. That’s a prescription for absolute disaster. And, by the way, Penny Pritzker is a queen of corporate welfare. That she is out promoting this, that she is treasury—commerce secretary, is itself astonishing, given how much the operations that she owns have benefited and supped with a big spoon at the public trough.

AMY GOODMAN: And finally, who pushed this agenda forward, talking about this budget deal that has such bipartisan consensus? And who resisted it, David Cay Johnston?

DAVID CAY JOHNSTON: Well, that, I’m not really big on. I mean, I make it a point of not living in Washington, D.C., so I can cover what politicians do more than they say. And so, I’m not really the expert to talk about that subject, Amy.

AMY GOODMAN: Finally, David Cay Johnston, Detroit. I can’t let you leave without talking about that, because you write a lot about it, and it’s so critical, Detroit of course becoming the largest-ever U.S. municipality to qualify for bankruptcy. Earlier this month, Federal Judge Steven Rhodes ruled the city meets every criteria for insolvency, including failure to honor its debt obligations and inability to provide the bare minimum of services to its 680,000 residents. The bankruptcy ruling puts tens of thousands of retired city workers’ pension at risk, overriding protections in the Michigan state constitution. What happens to those pensions, David Cay Johnston?

DAVID CAY JOHNSTON: Well, we don’t know exactly, but in all likelihood, people who are already retired, who are too old to work, are going to have their incomes cut. The average pension in Detroit is $19,000 a year. You just go out to suburban Ann Arbor, and it’s twice that much money. Detroit, though, is an example and a canary in the mine of what’s going on in this country. Deindustrialization is making us poorer. It is benefiting the global capitalist class. And we’re going to see more of this. Detroit went from having a large tax base, with factories producing things that helped grow the economy, to being full of vacant land all over the place and abandoned buildings because of the federal government’s trade policies and anti-union policies. We need to wake up and understand and vote for people who will change these policies, or the future is very clear. And you can see it in the cuts to the Head Start program, as a good example, and medical care. It’s the policy of Congress to spend money now in ways that will make us poorer in the future.

AMY GOODMAN: David Cay Johnston, thanks so much for joining us, joining us from WXXI, the PBS station in Rochester, New York. David Cay Johnston is a Pulitzer Prize-winning journalist, formerly with The New York Times, now writing for Tax Analysts and Al Jazeera, as well as a contributing editor at Newsweek. We’ll link to your articles at democracynow.org.

This is Democracy Now! We’ll be back in a moment with the legendary poet, the distinguished professor, Nikki Giovanni. Stay with us.