Rudy Perkins: The debt reduction shell game
AMHERST — It’s that time of year again. It’s the time when politicians of both parties, under cover of the holiday season, get together to Scrooge the poor and working people.
It’s ghosts of Christmas past, just like back in December 21, 2000, when Democratic President Bill Clinton joined with Republican Sen. Phil Gramm to enact the Commodity Futures Modernization Act. That law deregulated credit default swaps and other financial derivatives and helped propel us into the 2008 economic collapse. The collapse took homes, jobs and wealth from millions, and mushroomed the federal debt in the process. Wall Street cheered the law (reciprocated by Sen. Gramm, who called Wall Street “a holy place”), but the Bob Cratchits and Tiny Tims of our country paid dearly for it.
This time the Christmas mischief is likely to be a bipartisan budget deal that again takes more than a few farthings out of the pockets of the Cratchits of the world, nearly all to pay for the sins of an avaricious elite. The Scrooges and Marleys running Washington skyrocketed the national debt over the past decade with not one, but two, exorbitant wars on the national credit card, massive tax cuts favoring the very wealthy, and a financial system so deregulated by the White House and Congress it nearly crashed the world economy, and with it federal tax revenues.
As even the Simpson-Bowles bipartisan report on debt reform noted, the escalation of the federal debt “was driven in large part by two wars and a slew of fiscally irresponsible policies, along with a deep economic downturn.” Now they want us to forget all that and blame the debt crisis on spending on the social safety net — programs like Medicare, Medicaid and Social Security that are keeping millions of Americans’ heads above the water.
Aside from Medicare Part D — widely criticized for subsidizing prescription drugs while prohibiting the government from negotiating the best price for them (a bipartisan holiday goodie for the drug companies, enacted Dec. 8, 2003) — these programs played no major role in the recent ramp-up of the federal debt.
Let’s hope President Obama doesn’t acquiesce in the coming round of holiday skullduggery. But he’s apparently considering a “deal” to solve the debt crisis that would make cuts to a number of social programs, including effectively lowering cost-of-living increases on Social Security benefits. According to the New York Times, this cost-of-living cut for Social Security benefits and some other programs would save $122 billion over 10 years.
This means that what Obama could save over 10 years by these cuts to Social Security will be significantly less than what Obama will likely spend on the Afghanistan war in the next two years.
Put another way: if Obama ended the Afghanistan war now, he wouldn’t have to attack Social Security.
Maybe it’s time we went back to the root causes of the debt escalation — particularly war, tax breaks favoring the wealthy and financial deregulation leading to speculative ruin — and looked there for solutions. Let’s end the war in Afghanistan now, saving about $75 billion to $100 billion a year, stop spending more on our military than most of the world’s nations do combined, increase taxes on the wealthy, strongly regulate the financial industry and maybe even clawback some of the profits improperly made during the mortgage bubble.
We also need to help grow the economy, with jobs programs in infrastructure, research, education, alternative energy, housing, mass transit and the like, ultimately growing tax revenue along the way. That way we wouldn’t have to go after Medicare, Medicaid and Social Security — none of which had that much to do with the recent debt escalation.
This progressive budget approach is essentially what over 600,000 voters in 91 Massachusetts cities and towns just voted in favor of, by a 3-to-1 margin, in the non-binding “Budget for All” ballot question. It’s time our business and political leaders listen.
Over the long run, in a demand-driven economy, the wealthy can’t do well unless we all do well. So, we can hope that, like Scrooge himself, the wealthy and governing classes, or at least a lot of their members, are going to come around to this kind of thinking.
But it may take a lot of loud wailing and rattling of chains by Jacob Marley, or better, by rank and file Americans, before they do.
Rudy Perkins lives in Amherst.