Budget Wars: Europe Has the Germans; We Have the GOP

Richard Eskow

Washington’s upcoming budget battle could become the next front in the war against austerity. That’s the bank-friendly economic ideology whose forces now span the globe: Europe has the Germans, and we have the Republicans.

But who in this country will take the role of Syriza and Podemos, Europe’s new anti-austerity political movements?

The Sins of the Bankers

The German government has become the economic bane of greater Europe. It has used its dominance of the European community to force its harsh and counterproductive austerity economics on the “lesser” members of the Eurozone – to punish them for the sins of their bankers. (The bankers themselves appear to be above earthly chastisement.)

Now Greece’s newly elected Syriza government is challenging the German-led economic order’s paradoxical prescription for growth – one which might be described as “starve them until they prosper.” Greece’s new leaders insist on having a say in their own economic future – a reasonable enough position, especially in the birthplace of democracy – and they reject the failed austerity policies of the global financial elite.

It’s a war of nerves, a contest to see who blinks first. For their part, Greece’s leaders know that its economy hangs in the balance. But the German-led European community is walking a tightrope – between a hardline position that could shatter the European community and concessions that might encourage other countries to elect their own Syriza-like leaders.

Waiting for Lefty

Syriza-like political movements in other economically battered countries, like Spain’s Podemos and Ireland’s Anti-Austerity Alliance, are watching this confrontation closely. But the United States has so far failed to produce its own anti-austerity electoral movement, despite the problems caused by our home-grown GOP “Germans.”

In fact, the Republican Party’s economic agenda is harsher than anything even Germany’s been willing to propose. So why hasn’t there been a successful U.S. electoral countermovement along Syriza’s lines? There are a number of reasons, including:

Mixed messages. President Obama spent much of his presidency embracing austerity with one hand while rejecting it with the other. Upon taking office he acknowledged the need for immediate stimulus spending, but also created a “deficit commission” and overstated the need for spending cuts. This mixed messaging emboldened the austerity crowd and undercut the pro-growth, anti-austerity message.

Partial solutions. The economic measures put in place by the president and his party prevented a full-scale depression, created millions of jobs, and mitigated our recessionary crisis. But they weren’t enough to rescue the middle class, boost wages, reduce inequality, or attack some corners of the unemployment problem. Instead of explaining what else was needed, the White House acceded to “sequester” cuts that hobbled the recovery. That left us with uneven gains which benefited the rich while allowing the middle class and impoverished to fall even further behind.

A glass half-empty. Democrats, led by the president, largely failed to explain what had been accomplished. Instead of seeing an economic “glass half full” – the result of half-measures for economic growth – many voters understandably saw one that was half empty. Democratic boasts about job creation, while true, often seemed out of touch with what millions of people were experiencing.

The two-party system. Most other democracies have a parliamentary system that allows multiple parties to participate in the governance process. Ours makes it difficult for third parties to win office. And the corrupting influence of Big Money has seduced many politicians into ignoring popular (and populist) ideas in favor of wealth-friendly “compromises” that leave voters cold.

A sense of alienation. The end result appears to have been a widespread sense of alienation among middle- and lower-income Americans. The 2014 election turned into a Republican wave. Democratic losses were greater than anticipated, with record-low turnout (the lowest participation rate since 1942, when many Americans were serving overseas in World War II) that suggested deep disaffection with the political process.

That shouldn’t be surprising, given how few incumbent Democrats were offering a clear explanation for the public’s economic woes – much less a clear solution for them. They’ll certainly do better in 2016 – but how much better? That remains to be seen.

Stepping Away From Austerity

The new White House budget is a step in the right direction. The president is no longer emphasizing deficit reduction through spending cuts. His budget would end the “sequester.” It offers some tax increases on corporations and high-earning individuals, and expands middle-class tax breaks. The White House is also increasing its proposed infrastructure spending from $302 billion (over ten years) to $478 billion.

“I want to work with Congress to replace mindless austerity with smart investments that strengthen America,” said Obama.

That’s an improvement – but more is needed. If the public is to support future spending initiatives, it needs to understand government’s contribution to the gains we’ve already made. They won’t get that from “split-screen” rhetoric that simultaneously rejects and embraces deficit-fixated budgeting. Ambivalence doesn’t excite the public, and the truth is not as ambiguous as some would have us believe.

For example, the president claims that “we can now afford to make these investments” because the budget deficit has already been reduced by two-thirds. That’s a mixed message – and it’s not correct. Had we invested in a broader recovery over the past five years, the American people would be much better off today (and the deficit might have fallen as much, or more, than it has today).

The budget is a mixed bag on substance, too. It has its virtues, but its corporate tax holiday is a major giveaway. I agree with Dave Johnson, who notes that the president’s infrastructure spending is only 13 percent of the expenditure that the American Society of Civil Engineers says we need. Other measures fall short of what is needed to restore the middle class and dramatically reduce poverty.

President Obama’s budget proposal: It’s serious – but it’s not Syriza.

Getting Serious

Everybody in Washington agrees on one thing: As far as Congress is concerned, the president’s budget is dead on arrival. So why didn’t he offer larger spending initiatives or a bolder vision for revitalizing this stagnant economy? We don’t know. But that means we’ll need to look instead to the populist wing in Congress – to leaders like Sens. Bernie Sanders, Elizabeth Warren, Sherrod Brown and Jeff Merkley, and Reps. Keith Ellison and Alan Grayson.

They’ll need help. Syriza and Podemos are electoral movements second, and popular movements first. To elect more officials with an anti-austerity mandate, especially in our money-driven electoral process, we may need to recreate an Occupy-like movement – one that generates excitement, ideas and momentum from outside the political system.

Greece’s new leaders are at the forefront of a popular, democratically based resistance to the failed policies of powerful financial and political interests – the same interests we face here in the U.S. Our circumstances may differ, but our objectives are the same.

Among our country’s major political figures, the only statement I’ve heard in support of Syriza came from Sen. Bernie Sanders (I-Vt.), who said via Twitter that its victory “tells us that people around the world will no longer accept austerity for working families while the rich get richer.”

No other American leader has affirmed Syriza’s victory or Spain’s new movement, “Si, Podemos” (a phrase, incidentally, that translates as “yes, we can”).

There is a political reward waiting for the party, and the movement, that captures that message – and means it. That’s why this year’s budget battle is so important. It gives progressives an opportunity to explain why austerity economics is a failure and offer something better in its place.

To be sure, the struggle for the soul of the Democratic Party isn’t over. But the president’s dismissal of “mindless austerity” draws a useful parallel between Germany’s harmful policies and those of the GOP, while the Democratic populists offer a clear alternative to the greed-driven magical thinking of our financial elites. These developments suggest that, when it comes to economic populism, the party may be getting serious – even if it’s not yet Syriza.

Get updates in your inbox