Sequestering Hope: Washington’s Mad Hatter Budget Debate

Robert Borosage

Moderation in a madhouse is a dubious virtue.  A balanced dose of poison may mask, but doesn’t stop the damage.  Yet, this is what President Obama was reduced to in Washington’s Mad Hatter budget debate.  Here is a brief guide through the garble:

1.  We can’t cut our way to prosperity.

In a city fixated on inflicting austerity on a weak economy, the president offered some sensible caution: “We can’t just cut our way to prosperity. Deep indiscriminate cuts to things like education and training, energy and national security, will cost us jobs and it (sic) will slow down our recovery.”

Exactly.  But with the Republican Congress once more holding America hostage in order to force deep and otherwise unacceptable cuts in the pillars of family security – Social Security, Medicare and Medicaid – the president revealed how the Beltway bedlam has blinded Washington to the nation’s condition.

 2.  We have a jobs crisis.

The president touted an economy “poised for progress in 2013,” with manufacturing strong and 6 million jobs created since 2009.  But in reality, as the Congressional Budget Office reported, the anemic economic recovery is faltering, bleeding from cuts in government spending and tax hikes that cost jobs.  Over 20 million people are still in need of full time work.  Wages are falling, not rising.  The wealthy few are capturing virtually all of the income growth.  The president’s political base – the rising American electorate: the young, single women, minorities, union workers – are sinking together.

3.  The deficit is not out of control.

The president embraced the arbitrary call for another $1.5 trillion in deficit reduction through a “balanced” program of spending cuts, largely from social insurance programs and revenue from closing tax loopholes, “to finish the job of deficit reduction.”

But the deficit is not out of control.  As the CBO reports, in 2013, it will be nearly half as much as percentage of gross domestic product as it was in 2009.  It is falling faster than anytime since the demobilization after World War II.   Its decline is due largely to the slow recovery we’ve enjoyed.  People have gone back to work and thus tax revenues are up.  The biggest decline in spending comes not from the cuts, but from the decline in unemployment insurance payments as workers find jobs or exhaust their benefits.  Putting people to work is the necessary and first step towards getting our books in order.

Austerity – more cuts in social insurance or more hikes in taxes for middle income people – is the biggest threat to the growth we need.  Congress has just ended the payroll tax holiday, adding $1,000 to the taxes paid by a family with an income of $50,000.  Government spending continues to decline with the caps enforced by the last debt ceiling deal. The rise of Medicare costs has slowed dramatically.  The Congress would be wise to see if the economy can survive the austerity that is already being inflicted on it, before it administers more.

4.  Don’t reward hostage-taking.

To force unpopular and wrong-headed cuts in Social Security and Medicare, the Republican House caucus used their retreat to line up new rounds of fiscal hostage-taking.  First up on March 1 is the sequester – deep, indiscriminate and immediate cuts of about  8 percent of military spending and 5 percent of domestic services in the remaining seven months of the fiscal year.  Then comes the threat to shut down the government with the expiration of the continuing budget resolution and then another threat to default on the nation’s obligations with a debt ceiling crisis beginning in mid-May.

The president wisely denounced this reckless hostage-taking.  But instead of demanding that the Congress repeal the boneheaded sequester that was designed to be abhorrent to both parties, he called instead for it to be postponed while negotiations continue for a larger deficit reduction package.  He even suggested that Congress pay for the delay with a small “balanced” package of spending cuts and new revenue.

This is goofy. Why reward those who hold the American people and their jobs hostage to extract cuts in vital programs that Americans oppose?  It’s time to call them out, not cut them in.  The administration should be demanding the repeal of the sequester, insist that the government be funded, and force an end to debt ceiling extortion.

5.  No cuts in benefits vital to family security.

In calling for a larger deal, the president reiterated that “the balanced approach of spending cuts and entitlement reform and tax reform that I put forward are still on the table.”

He did not elaborate but the president had embraced the notion of cutting Social Security benefits overtime by adopting a lower cost of living adjustment (the “chained CPI”).  This would exact harmful benefits cuts on the most vulnerable in our society, so onerous that the administration pledged to find ways to shield the oldest and poorest seniors from their effects.

Cuts in already meager Social Security benefits aren’t an expression of “balance,” they are an indefensible retreat from “the commitments we make to each other – through Medicare and Medicaid and Social Security.” As the president said in his inaugural address, “we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.”

The president embraces a false “balance” because it sounds more reasonable and is more popular than the Republican insistence on cuts in government services only and always. But shared sacrifice is for suckers when the rewards aren’t shared.  We have an economy where the richest 1 percent pocketed more than 90 percent of the nation’s income growth coming out of the financial collapse.  Wages are falling while inequality is growing.  Billionaires pay lower tax rates than the cops that patrol their streets.  Multinationals like GE make billions in profits but pay no taxes whatsoever.

Taxpayers are getting gouged for subsidies to big oil, the most profitable companies in history.  The drug companies are charging us the highest prices for drugs in the world, even though our taxes have helped to develop most of them.   The military budget is higher than it was at the height of the Cold War, while domestic spending is headed to levels not seen since Eisenhower.  A “balanced” approach would start by focusing on the obscene imbalances, not on exacting sacrifice from both the victims and the predators.

6.  Fix the economy first.

The Tea Party strategy of holding the American people and economy hostage repeatedly is working.  They set the terms of a debate bizarrely focused on fixing the debt, rather than fixing the economy.

But fixing the debt won’t fix the economy.  An austerity program – balanced or not – will only cost jobs and sap an already anemic recovery.  Worse, it does nothing to create the foundation for growth and shared prosperity.  It distracts and detracts from the debate we need to have.

Fixing the economy is the only way to fix the debt.  We must grow our way back to prosperity.  That requires a new strategy for the economy, not simply a jolt of stimulus or a slash of austerity.

We need a strategy to rebuild America and provide  a world-class infrastructure.  We need to provide our children and workers with the best education and training in the world.  We need to boost research and innovation, and capture a lead in the green industrial revolution sweeping the world.  We need a strategy to balance our trade, insuring that we make things in America once more.  We need to empower workers to organize and bargain collectively to gain a fair share of the profits and productivity they help to create.  We need to bolster, not cut, the pillars of family security – affordable health care, excellent public education and affordable college, security in the dusk of life.  This will require progressive tax reform, a reordering of our spending priorities, and cleaning out the corrupted lobbies and special interests that now feed on the American taxpayer.

What is striking is that none of these is addressed by the inane focus on short-term austerity and long-term cuts in Social Security and Medicare.  There is no reason in the bedlam, Mr. President; you have to call out the madness.

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