Thursday, August 4, 2011


Going Backwards

By Reginald Johnson
August 4, 2011

You don’t get a good feeling about what’s happening in this country right now --- not after the events of the last week.

Not after a supposedly Democratic president and leaders in Congress agreed to the demands of a group of far-right-wing zealots in signing a debt-ceiling agreement which will inflict substantial harm to the citizens of this nation.

President Barack Obama, after garnering votes of approval in both chambers of Congress, signed the deal which will allow the government to borrow hundreds of billions of dollars needed to keep regular government operations going and avoid the U.S. going into default on its obligations.

The good part of this agreement is that the U.S. will not renege on its obligations, which would likely have made an ailing world economy even worse.

The bad part --- and it’s really bad --- is that Obama agreed to some $2.5 trillion in spending cuts here at home, which were insisted on by Republicans as a condition for their support for the debt increase.

The cuts will slash everything from education to environmental protection to housing and will eventually chip away at bedrock safety net programs like Medicare and Medicaid, which hundreds of millions of Americans rely on.

Though the aim of the deal was to reduce debt, the agreement calls for no revenue enhancements in the first phase of the deal. The wealthy and corporations, who already enjoy historically low tax rates, will see no increases right now.

The no taxes provision was another key part of the package that Obama and the Democrats conceded to the GOP, during weeks of negotiations with the Republicans over what it would take to pass a debt ceiling increase. Republicans, particularly the Tea party faction, had threatened to block the increase if they didn’t get their way.

The cuts in government programs will result in over 300,000 jobs lost, according to the Economic Policy Institute. These job losses will add to the total of 14 million people already out of work in the U.S.

It was an extremely high price to pay for winning the support of the GOP for the debt hike. Obama and the Democrats did not put up much of the fight in the face of the absurd demands by the Republicans.

This right-wing attack was basically an assault on the New Deal and the whole concept that government should play an important role in helping people in need and also act as a stimulant for the economy when times are tough.

New Deal programs like Social Security and others that came later in the 1960s like Medicare, have worked well for this country and been very popular. I believe Obama could have beaten back the attack by the right and really put the Republicans on the defensive if he had used his bully pulpit as president, gone to the people and spoke passionately in defense of government programs like Medicare. He also could easily have debunked the Republican mantra the simply cutting taxes for the rich rejuvenates a weak economy. Trickle-down economics has never worked, and the record is clear.

But Obama didn’t go to the people, and didn’t speak passionately in defense of government’s role in helping people. Instead he went along, at least in part, with the idea that government debt was out of control, and social spending was a key factor in that, not the lack of revenue from a depressed economy, excessive spending on wars and from a tax system skewed in favor of the rich and corporations.

Unbelievable as it may seem, Obama appears to agree with the view --- held by both the GOP and big business --- that debt is a huge problem and the nation's economic health depends on reducing it.

Maybe that's the reason why Obama didn't stop the whole charade about whether to raise the debt ceiling, by invoking his powers under the 14th amendment and unilaterally raising the limit. He wanted major spending reductions to go through, so there was no point in ending the debate and enacting a debt ceiling increase without conditions.

When the dust settled, the right-wingers had won big time. Tea Party darling Congressman Paul Ryan of Wisconsin --- whose slash and burn budget proposal earlier this year set the tone for the debt ceiling talks --- said he got “two-thirds” of what he wanted.

So now comes the bitter fruit of this debt deal. The first part of the agreement calls for $1 trillion in discretionary spending cuts over 10 years, with no new taxes and safety net programs like Medicare and Medicaid left out. But in the second phase, a special “super committee” composed evenly of Republicans and Democrats will come up with another $1.5 trillion in deficit reductions, and those will take in cuts to entitlement programs and tax hikes. The committee will make a report to Congress by November, with legislative recommendations.

Should the committee deadlock or Congress fail to approve the proposals, automatic “trigger cuts” in spending will kick in.

While assurances are being made that the process will not entail cuts in Medicare and Medicaid benefits (nor Social Security), those programs are still likely to be hurt. The cost cutters reportedly will look to reduce reimbursement rates for providers enrolled in the programs. Doctors are already dropping out of Medicare due to low rates, and further rate cuts will drive out more. The elderly and poor will have a harder time finding doctors.

This becomes a back door way of undermining and eventually eliminating Medicare and Medicaid.

Speaking on WBAI the night after Obama signed the debt bill, Congressman Dennis Kucinich (who voted against the deal) summed up the significance of the agreement: “We’ve seen a turning of a chapter here in American history. A turning away from New Deal economics to a punitive approach, which in a sense denies the legitimacy of government itself by attacking public investment, public employees and public services.”


One other point. Mainstream media coverage of the debt deal talks and battle in Congress was predictably weak and in some cases biased. Few reports got down to the nitty gritty and showed how the spending cuts would hurt people. And few media outlets really explored how the huge debt came about, i.e., the wars, low taxes on business and the wealthy, the housing slump, etc. Instead you heard a lot of cheerleading about the need to cut social spending and so-called entitlements.