Austerity is Dead. Stop Pushing It, Drop the Chained CPI and Increase Social Security.

Richard Eskow

Deficit projections have already by $200 billion for this year alone, so why do Republicans keep lunging for ever-more radical spending cuts like they were corn dogs at a barbecue? That’s more in deficit reduction than President Obama’s proposed cut to Social Security would “save” in ten. So why hasn’t he withdrawn the proposal?

It would make more sense to dial back on the sequester, which is the biggest driver of these revised deficit figures, and work on the fundamental weaknesses in our economy that are prolonging the recession. In the long run this approach would do more to reduce deficits, too.

Instead of cutting Social Security, they should be strengthening the country’s social safety net. A good start would be the passage of Sen. Tom Harkin’s bill to increase Social Security’s benefits. (If I were you I’d contact our Senators and Representative and demand that they support it. I already have, by signing this petition.)

The Mother of All Crises

You wouldn’t know it from listening to most politicians, but there’s a crisis going on. In fact, there are a few of them going on – including the crisis of un- and under-employment, the crisis of wage stagnation, and the crisis caused by lost social mobility.

Each of these unaddressed problems feed into the Mother of All Economic Crises, the one that our mothers and fathers are facing and we’ll all confront ourselves someday: the retirement crisis. Sen. Tom Harkin has a bill that starts to address that crisis, in a bill that should be passed immediately.

Harkin’s bill would increase the typical Social Security benefit by roughly $800 per year. Since most seniors depend on Social Security as their primary source of income, most of that money would be spent immediately. That means the Harkin bill will also have a modest but genuine stimulus effect. And by providing added protection for lower-income retirees, which would protect more seniors from falling into poverty while increasing the stimulus effect.

And it’s all paid for. Harkin’s bill would pay for this benefit increase and ensure Social Security’s solvency by removing the tax cap which currently exempts income above a certain level (currently about $110,000) from taxation.

Passing this bill would be a good move, and would be a first step toward the national conversation we should really be having – the one about restoring the middle class, educational opportunities, and social mobility.

Austerity’s corpse won’t stop dancing.

And yet some politicians are still obsessing instead about the phony crisis over government deficits, which has been ginned up by the corporate interests and billionaires, especially deficit-increasing corporations like defense contractors and deficit-increasing individuals like undertaxed hedge fund billionaires. (We’re looking at you, “Fix the Debt” and Pete Peterson!)

The deficit situation of the last five years was never urgent, and which was only going to be exacerbated by the austerity ideology that’s currently devastating Europe. This misplaced priority has extended the recession, prolonged the jobs crisis, shut down educational opportunities, and allowed wage stagnation to go on killing the middle class.

It’s time to say it: Austerity is dead. The results out of Europe prove it. The complete discrediting of its economic hocus-pocus proves it.  As John Carney observes, even Wall Street knows it’s dead. Memo to Washington: When you’ve lost Goldman Sachs, you’ve lost Oligarch America.

But austerity’s corpse is still engaged in a grotesque St. Vitus’ Dance, a dance that has Republicans shrieking about more spending cuts. That’s not surprising, since the GOP is the party of corporate prostitution. They’re a lost moral cause. But why are Democrats like President Obama still playing Ginger Rogers to austerity’s desiccated but still dancing corpse?

In the name of all that’s decent: Won’t somebody stop the music?

No Cuts, Mr. President

It’s the President, not his Republican counterparts, who have proposed the madly punitive “chained CPI” cut to Social Security benefits. We’re told that cut, which will take money from America’s seniors and disabled, will reduce government deficits by $120 to $130 billion over ten years. But the Congressional Budget Office’s projected deficit for this year has already fallen by $200 billion since February, when Obama was presumably preparing the budget which includes this chained CPI cut.

That bears repeating: The projected deficit for this year has already fallen by $200 billion, way more than the “chained CPI” cuts, since last February when those cuts were being prepared.  And that’s for only one year, as opposed to Obama’s ten.

Mr. President: Please remove this unkindest cut of all from your budget.

Without a leg to stand on.

Economists have always spoken of retirement security as a “three-legged stool” made up of savings (including assets like a home), pensions, and Social Security. But Wall Street’s greed and criminality shattered the balance sheet of middle-class America, causing Americans to lose trillions in real estate assets and much of their hard-earned savings.

Corporations have also improved their bottom line at their employees’ expense by shifting from defined-benefit pension plans to 401(k) programs and other plans that over very little security to retired Americans.

In other words, corporate profits have kicked two legs off that three-legged stool. The third – Social Security – is splintered and cracked, thanks to Wall Street. Banks convinced Americans to sink their fortunes and their destinies into real estate in order to fuel a bubble that made bankers rich and left Americans bereft.

The resulting crisis drained even more from taxpayers’ resources, and the result “recovery” exists in name only for most people – except for corporations and the wealthy, who have captured all of its growth and a little extra besides.

Benefit cut? No, thanks, just had one.

Americans who lost their jobs because of the recession, and the others who aren’t earning as much as they did, will already see a cut in Social Security benefits, since those benefits are calculated based on lifetime earnings.

So will a generation of young Americans who are entering the worst job market in history. (That’s what reveals the utter cynicism are moral bankruptcy of the austerity crowd’s claims that they’re fighting “greedy geezers” on behalf of the young, who’ll suffer the most if they succeed.)

That means that the wage stagnation that’s afflicted the middle class will also lead to a benefit cut for most Americans. So will Congress’ refusal to act on raising the minimum wage, which is less than half of what it was in 1968 (in real dollars).

Leadership, not phony “savings”

It’s even a misnomer to suggest that Obama’s “chained CPI” cut will even “save” what it claims to save from the Federal budget. That kind of thinking reveals a lack of understanding about economies as a whole. If you take money from the pocket of struggling seniors and disabled people, they won’t be able to spend that money on goods and services that grow the entire economy.

That means less prosperity for all. It also means less tax revenue for the Federal government and more demands for its resources to help the needy. The “savings” figures thrown around in Washington aren’t real – but the pain these cuts will cause is very, very real.

Can’t anybody around here read a spreadsheet? Leaders of the nation, please show us that our entire capital hasn’t gone insane: Drop the chained CPI. Stop the austerity talk. Pass the Harkin bill.

Stop the Republican march toward austerity madness. And for God’s sake, Democrats: More of you should take a cue from people like Sen. Harkin and Sen. Warren, and lead for a change.

(The wording of this post has been changed slightly in a couple of places since it was first posted this morning, for clarity’s sake.)

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