Saturday, March 2, 2013

The Bipartisan Gift: Budget Cuts

By Reginald Johnson

The budget “sequester” --- complete with $85 billion worth of discretionary spending cuts ---- is now kicking in.

A lot of vital services around the country will take a hit from this round of automatic budget cuts, which started on Friday. They include funding for teachers and teachers’ aides, Head Start, airport traffic controllers, national parks, the IRS, nuclear safety, Medicare reimbursements for hospitals, and the military.

The purported aim of the cuts, agreed upon by both Republicans and Democrats, is to start bringing the federal deficit under control, and in the long-run, bring down the national debt. It’s one downpayment on a 10-year plan which will see something in the neighborhood of $1.2 trillion in government spending cuts. The reductions will help to ease the deficit and chip a way at the debt, but it will come at quite a price. More automatic cuts will kick in as the years go by.

There’s been a lot of talk in recent weeks that these hurtful cuts should be avoided, and the plan for automatic reductions be scuttled. President Obama, in a public relations campaign, has been faulting the Republicans for not being willing to agree to a more humane deal, where instead of many cuts, the deficit would be reduced by raising more revenue, by closing tax loopholes for the rich and corporations. Many leading congressional Democrats and liberals in the media are sounding a similar theme, and blasting the GOP for creating unnecessary suffering for the American people.

But Obama is being duplicitous here. At the same time he has chided Republicans for being cruel in their approach to the budget, the White House released a statement last month on their website entitled “A Balanced Plan to Avert the Sequester and Reduce the Deficit” that proposed, along with modest increases in taxes for the wealthy, $400 billion worth of cuts in Medicare and Medicaid, $200 billion in cuts in mandatory domestic spending, $100 billion in cuts in discretionary domestic spending, including a $35 billion cut in federal retirement programs and a $50 billion cut in unemployment insurance.

Won’t cuts in Medicare, Medicaid hurt people? Of course. And is slashing jobless benefits somehow nice?

It has to be remembered as well, that it is Obama who really has been the primary driver in recent years behind getting a deficit control program underway --- one which focused heavily on cuts in social programs, not cuts in defense or tax hikes for the rich and the corporations. In the first year of his administration, it was his idea, not the Republicans, to set up the Simpson-Bowles deficit control commission. The panel’s members, after studying spending issues for a year, never reached a consensus on what to recommend to Congress.

But the group’s chairmen, Wall Street investor Erskine Bowles and former conservative Republican senator Alan Simpson, put out their own report proposing some $4 trillion worth of deficit reductions. Those would be accomplished in part by cutting Social Security benefits, raising the Social Security eligibility age, cutting social spending and lowering income tax rates.

While Obama never fully embraced that proposal, he never totally rejected it, either. He’s made clear all along he is open to cuts in “entitlements.” The use of that term alone is a slap in the face to all retired Americans, who paid a portion of their earnings throughout their career to earn Social Security and Medicare at the end of their work years. The term “entitlement” implies these benefits are something people really don’t deserve. But Americans paid for these programs, and they absolutely deserve to get their benefits, in full.

In 2011, when Republicans in Congress insisted on draconian cuts to the budget in return for agreeing to the president’s request that the nation’s debt ceiling be raised --- so the nation could borrow enough money to keep government operations going --- Obama caved in, and agreed to the plan for cutting $1.5 trillion over 10 years. This is the plan, with the built-in automatic cuts, which we are starting now.

But many political and legal observers noted at the time of the “debt-ceiling debate” that Obama did not have to submit to the GOP demands --- he could have raised the debt ceiling on his own, by signing an executive order. Former President Bill Clinton was among those who said he had that power.

The sad truth is that Obama wants to see a smaller government, and agrees with the Republicans in good part about cutting government spending, and that includes the safety-net programs like Social Security. He is strongly influenced by the business community, which wants social programs reduced to keep corporate taxes down and head off the possibility that corporations pay for the rising debt.

Some Wall Street investment houses, I believe, also see the cuts as a way to deliberately weaken the Social Security program, thus paving the way for privatization --- creating a bonanza for them.

It is true that Republicans, particularly the tea party faction in the House, have been pushing irresponsibly for deep spending cuts, without any tax hikes and they have been unwilling to negotiate on any reasonable terms about how to reduce the deficit. So they are very much to blame for the fiasco that is now unfolding.

But the idea that Obama has been boxed in by the GOP and been “held hostage” by this intransigent group, is really wrong. It was Obama who let the horse out of the barn on the issue of reducing the deficit, and indicating early on, he was willing to entertain cutting social programs, including the Big Three --- Medicaid, Medicare and Social Security.

Just imagine, a Democrat, suggesting that these landmark programs --- which past generations of liberals and Democrats had worked so hard to build --- should be cut!

If Obama had never brought up the deficit and been firm from the get-go in terms of defending the social safety net, and insisted that the discussion be about creating jobs, not budget cuts, I don’t think the nation would be going through this fiscal war today.

I know some people would maintain that times have changed, but I can’t help but think that a Lyndon Johnson, Jack Kennedy or certainly a Franklin Roosevelt could have torn these tea party Republicans to shreds. Their positions are so backwards, so moronic and so at odds with the popular will that they are easily open to attack. But that attack has to be strong, relentless, and based along class lines. The theme has to be: which side are you on? The side of the big corporations, banks and the rich, or working people?

Have you heard this kind of broad-based class attack by Obama or leading Democrats? Except for a few references here and there by Obama during the presidential campaign against Romney, no.

Have you heard Obama saying it’s high time for a stock transaction tax as a way to raise revenue, in light of soaring Wall Street profits? No. (This despite the fact that many Democrats in Congress are lobbying for a “Robin Hood Tax.”) Has he suggested raising corporate tax rates? No, in fact just the opposite.

A successful attack against those who want to slash the deficit by cutting “entitlements” would point out that the deficit has been caused in good part by a drop in income tax receipts due to a collapsed economy. Who caused the collapse? The banks with their reckless and sometimes criminal investment and lending practices. Now these same institutions, which got huge taxpayer bailouts and are now profitable again, want their taxes protected from increases, while you, the American people, pick up the budget tab and suffer reduced services.

Several economists such as Paul Krugman have pointed out recently that the deficit is really not that serious enough of a problem, that it warrants sharp spending cuts.

To the extent that the deficit has to be reduced and the long-term debt slowed down, the best and fairest approach is a combination of increased taxes on the rich and corporations, a Wall Street transaction tax and sharp cuts to a bloated military. (Why in heavens do we still have troops in Europe 70 years after the end of World War II and troops in Korea 60 years after the end of the Korean War?)

Finally, a major federal jobs program would do wonders for the economy, and get revenue flowing back to the government in a big way. Yes, that would take some serious spending in the beginning to do that, but the outlay would be more than offset in the long run by revenue coming back.

Given the corporate mindset of Obama and leading Democrats, who rely heavily on campaign contributions from the business sector, I am skeptical as to whether a more progressive approach will ever be taken by this president on budget matters. But the people have to demand it.

Cuts in Social Security, Medicare and Medicaid, as well as other important domestic programs, are unacceptable.

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