Some Thoughts on the Budget Hype

I got 98% of what I wanted. I’m pretty happy.” Remember those words? The media apparently doesn’t, or they would have asked him about them at some point these last few weeks while the speaker of those words has been trying to frighten the country into giving away its hard won social safety net. The speaker of those words was, of course, the Speaker himself, John Boehner. He said them in early August of 2011 upon completion of the deal that has now brought us to what John Boehner likes to call the fiscal cliff. He liked it in 2011; he got 98% of what he wanted. Now, he is using it to try and scare us into even further redistribution of wealth upwards.For the past few years, virtually every Republican has reflexively, constantly, and passionately waxed on and on about what is not just the biggest problem we face, but to hear them tell it, really the only problem we face; the debt. On that literal level, it makes sense that Speaker Boehner was pretty happy. Because come January 1st, if nothing is done, if no agreement is reached, what happens? Taxes go up and spending cuts are made. What does that do? It reduces the debt. The very thing that all Republicans have been in our face about for years as the one single most important thing we absolutely without fail have to do to preserve America. They’ve told us in no uncertain terms that if we do not reduce the debt it will destroy America.
The big reasons they give, really the only reasons they give–usually they pretty much just say be afraid, be very afraid–are that if we don’t reduce the debt immediately we will have out of control inflation and skyrocketing interest rates. They’ve been telling us that for at least three years. We continue to have no inflation, and interest rates remain at or near zero, historic lows. Any day now, I guess.
It is true that if nothing is ever done, those could be eventual outcomes. However, while the economy is still struggling, and is it ever, reducing the debt will likely bring us a new recession and just make things worse.
It is easy to understand why polls show that a large number of Americans believe that if we go off Mr. Boehner’s fiscal cliff, the debt will increase. After all, he’s been telling us for years that is the scariest thing, the one thing we have to fix now. So why would he suddenly be trying to frighten us that bad things will happen if we go off his cliff? Doing so would bring about exactly what he has told us nearly every time he opens his mouth that we so desperately need; debt reduction. So you can see why people are confused. Thankfully, polls also show that the public trusts President Obama more than Speaker Boehner to deal with it.
If we did nothing for a full year, then the measures that will happen on January 1st could have dire consequences. All seem to agree on that. The point is that it happens over the next year and longer. There is plenty of time to fix the problem correctly. That is why we progressives believe that no deal is better than a bad deal. (If nothing is done, the cuts that will happen do not hit social security or Medicare. They hit defense and other needed government services.)
I’ve heard that the states will suffer if we go over the cliff. That is true. And if we give in to the Republican demands and cut spending further, including cutting social security and Medicare, the states and their residents will suffer even more. Because why would they suffer if we went over the cliff? Because needed services would be cut. So I don’t see how agreeing to even steeper cuts in those services would improve the situation.
What we need in the short term, until the economy is moving faster in the right direction, is more government spending, not less. If we had reached the point where the debt truly was a problem, we would have high inflation and high interest rates. We haven’t reached that point. As we did under Bill Clinton, we can work on debt reduction when the economy is growing as it should. Europe has shown us many painful examples the past few years of what happens when you focus on debt reduction and cutting spending when the economy is in recession and jobs are what really should be focused on.
And yes, Mr. Boehner, I know you will say–for this you truly are unable to open your mouth without saying–“we can’t raise taxes on job creators.” I say to you, sir, if cutting taxes on the wealthy creates jobs, why are we not living in a golden age of full employment? For taxes at the top have been at historic lows for a decade. It seems like if there was any truth to your assertion, we’d have seen some jobs by now.
Consider a few things. As Zachary Goldfarb of the Washington Post, among others, has pointed out, the total cost of the Bush tax cuts is $4.5 trillion, which is larger than the hole both sides are trying to close right now. Given that, how can it be seen as a balanced approach to redistribute even more of our national wealth to those at the top who got those tax cuts, and make the rest of us pay for it with cuts to social security and medicare, which contributed little or nothing to our problems?

CBPPpublicdebt

We have to remember where our debt comes from. This graph shows clearly that the three biggest drivers are the economic downturn, the Bush tax cuts, and the Bush wars. It does extend out to 2019 if current policies were kept in place, so just look where we are now, and the situation is the same if not quite as bad as it would become. If it weren’t for these three big drivers, the debt would be small enough that even Mr. Boehner would feel foolish trying to scare us about it.
A final note on balanced approaches. I believe it is clear that at the moment we are operating under extreme right-wing policies. Tax rates for the top are at historic lows and have been for 12 years. Government spending overall is down. Remember all the times in the campaign where Obama mentioned that we have had 39 or however many months at the time of consecutive private sector job growth? Sure you do. He said it all the time. He had to say “private sector” because we were losing jobs in the public sector. During the campaign, Paul Ryan said it was really Obama who was the bad candidate for women because more women than men had lost their jobs under Obama. That is true, and it is true because there are more women in professions like teaching, which are public sector jobs, and they were lost due to budget cuts pushed and lauded by people Paul Ryan and other Republicans.
This graph shows clearly how many fewer government jobs there are under Obama. Yes, that includes state and local jobs, and remember, states and localities receive a lot of help from the federal government, so while those jobs may not be direct federal government jobs, they certainly were affected by the loss of federal money coming to the states.
Given that we are currently operating under extreme right-wing policies–and I’m not just running at the mouth spouting opinion; the low tax rates at the top and government spending and employment are just numbers, not opinions–I maintain that any balanced approach to whatever budget problems we have, to be truly balanced, would be a move to the left, not some compromise move that would leave us with even more extreme right-wing policies. And I believe the American people agree. They reelected Obama, gave Democrats more seats in the senate and house (and overall got more votes in house races, and it only remains in Republican control because of gerrymandering by state houses, so remember, the majority of Republicans in the House actually got fewer votes overall than the minority of Democrats. Fun how democracy works, isn’t it.)
And if you hear them saying that going over the cliff will be disastrous and they say that it will hurt the states, ask yourself what the details of their compromise offer are. If there are cuts to services, to social security, Medicare, ask whether that compromise would be better for Americans, better for the states, would be more or less disastrous than doing nothing. Ask if we should stand firm and push policy back a little bit towards the center and away from the right-wing extreme we now operate under. 400 Americans have more wealth than the poorest 160 million of us combined. That is a wealth distribution equivalent to what was seen in Medieval caste societies. The right has gotten pretty much everything the past 30 years, and the very richest among us have seen all the gains. Things are out of balance. We are living in a state of Koyaanisqatsi. We will not regain our balance by moving even farther towards the extreme that already has us in its grip.

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About JP

We're two guys who met in college, in 1980. We've stayed in touch, and like to talk politics, current events, music and religion. JP is nore liberal than Sid, but not in every way. We figure that dialogue stimulates ideas, moderates perspective, and is in general friendly. These are things we need badly in these dangerous times. The blog name is taken from a song by Bruce Cockburn.
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2 Responses to Some Thoughts on the Budget Hype

  1. Jim says:

    Nice summary of your opinion, JP. So this a battle for the power of the left, or what is best for the country?

    • JP says:

      Thanks Jim. That’s a good question. The easy answer is that it is both, and maybe to put it another way, I think it is a power battle within the left between those who want to do what is best for the country and those who are influenced by monied interests. My post didn’t talk a lot about money in politics, and I have addressed that in the past, and still believe that absurd amounts of money in our politics is a huge part of the problem (the problem of keeping our legislators from doing what is best for the country), and we know that money flows to both Republicans and Democrats and influences both parties. A lot of Democrats are just as influenced by big money as are a lot of Republicans. There is some hope in that there are some good new incoming Democrats who have successfully fought against big money, like Elizabeth Warren. She joins some good incumbent senators like Sherrod Brown and Al Franken. You may agree or disagree with them politically, and I think any honest look has to admit that at least they have been fighting against the influence of big money in politics. Brown’s reelection in particular is a hopeful sign, as he was targeted by the tea party SuperPacs which spent millions of dollars trying to unseat him. I think he was outspent at least two to one, and he reminded us that it is the voters who have the last say, if they will take it.

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