The deal struck early this month to keep the country from defaulting on debts already incurred, includes $1 trillion in spending cuts over ten years and a special commission of 12 legislators to “recommend reductions to shrink the deficit by another $1.5 trillion by 2021.” It also includes “triggers,” that would automatically slash Medicare and Pentagon spending should the commission fail to produce the additional cuts.
An agreement to raise the debt ceiling, historically, little more than a congressional house-keeping matter, was seized by Republicans and employed as one more tactic in their forever-war against the efficacy of government. But after all the sturm and drang, the point was reduced to whether or not the nation’s financial standing was “taken as a hostage.” Some said “yes,” and bragged about it. Some cried “foul” and protested their victimization by those who declared them “terrorists.” Terrorists or hostage-takers? – the critical issue left unaddressed. Our system is truly broken. And the underpinning, the flawed premise upon which all of this manufactured drama was built: cut spending to create and promote prosperity, proves it.
An honest discussion about our zombified economy would have to include revenue increases – the Republicans don’t want to talk about revenue increases. It would have to include infrastructure; it would have to include facts and data – the Republicans contend the jury’s still out on whether or not such things exist. It would have to include the voices that insist data shows the “don’t tax the job-creators,” supply-side remedy has already been debunked. And, we would have to revisit how our particular form of capitalism is working for the country – that is, most particularly, a discussion Republicans and some Democrats do not want to have.
So we must present systemic remedies in the form of spending cuts or saves, like some perverse game-show. Instead of facing the fact that health-care costs are the actual driver behind our Medicare issue, we insist it go “on the table,” or be saved by sacrificing something else like unemployment benefits or education spending.
A greater share of Medicare costs has, up until recently at least, been financed through payroll taxes not general revenue, however due to the recession and increasing costs, this dynamic is changing. An aging population and new technologies will adversely affect an already difficult funding situation. And with the modifications of the Affordable Care Act, a complicated socio-economic challenge grows more so. We can, however use available data to determine this: Medicare administrative costs are lower and Medicare does a better job of controlling costs overall than private insurers.
A similar effectiveness argument can and should be made for enlarging food stamp programs and extending unemployment benefits. The stimulative nature of this investment, not to mention the moral component, should far outweigh the outcry about cost. The Congressional Budget Office has scored “increasing aid to the unemployed” as having “the greatest effects on GDP per dollar of budgetary cost and the second highest cumulative effect on employment of the policy options considered.”
Under the influence of perhaps the most short-sighted, wrong-headed notion of all, we have witnessed cuts in education funding for K-12 grades nationwide. That same thinking has Congress looking to put the $17 million currently allotted for Pell grants through 2013, on the chopping block again. States fire teachers, cut programs and raise class sizes in order to fund incentives to woo business to their state or cut taxes for existing businesses, sacrificing the future for uncertain present gains. And, students that manage to graduate must face increased college tuition armed with decreasing aid.
The slash-spending, tax-cut-our-way-to-prosperity crowd never offers empirical evidence this method works, especially in a recession. In fact, data shows exactly the opposite to be true on the state and federal levels. Analysis of our fiscal situation is frightening. And the often cited, zero-sum analogy to an individual’s bank account is disingenuous unless that individual is also expected to be a growth inducing, job creator. The stimulus did work, in that it saved some jobs that needed saving. There is a general consensus that it wasn’t big enough.
We don’t have a spending problem; we have a revenue problem . “Americans are paying the lowest percentage of their income in taxes since 1958. Corporate taxes which brought in over 6% of GDP in 1950 are now near historic lows of barely 1%,” according to Robert Borosage at Campaign for America’s Future. While the budget deficit may be serious, it can’t hold a candle to the job deficit our nation faces in real crisis terms. The fact is, a plan embracing higher revenues created by an increase in jobs and taxes, shrinks the deficit.