A Bad Budget Deal for the People

President Obama has struck a deal with the Republicans that is reminiscent of the policies associated with George HW Bush and Bill Clinton, that is, to reduce public spending in major areas while in a less direct way, taxation.

These policies were essentially what was called fiscal conservatism in the pre Reagan era.  Under GW Bush, increased military spending for the Gulf War and a recession which reduced general tax revenues saw a significant increase in deficits.  Under Clinton, spending cuts and increased taxation, along with the reduction in military spending(very limited but still not insignificant) made possible by the collapse of the Soviet Union, did lead to sharp restrictions on the deficit, even the first budget surplus since the 1950s.

But, while times were generally better than the 1980s or the first decade of the 21st century, the income inequality, increased economic insecurity, and assault of lower income people of the Reagan era was not reversed  but continued.   Conditions if anything worsened for the bottom 20% of income earners as the federal welfare system was devastated and public sector cutbacks undermined education and vital social services.
Clinton's policies did not produce "change we can believe in" or change at all.  GW  Bush's massive tax cuts for corporations and the wealthy and massive increase in military spending following the 9/11 attacks saw skyrocketing deficits which Clinton's policies had contained.  Earlier,  Clinton's abject failure to reverse deregulation(it actually increased thanks to the Gingrich Congress) played a major role in the collapse of 2008. 

Now, is this dejavu all over again?  First, given the anarchic nature of capitalist production, no one can seriously estimate what effect these policies will have in a decade, whatever the President, the Republcians or anyone else says about 2023.  

We can say that these policies  fail completely to address the major problems, i.e., stagnating incomes, high unemployment, crippling consumer debt which limits mass purchasing power. 
What should be done?

1. Instead of appeasing the Republicans crackpot scheme to privatize Medicare through a voucher system by calling for Medicare cutbacks, the administration should explain to the public that the costs of health care in other developed countries are around half of what they are in the U.S. thanks to systems of public health care which work like medicare, with the exception of course that a public agency buys prescription drugs at nearly half the cost  to Americans. 
A Medicare based national health care system and a "single payer" public agency [purchasing prescription drugs rather than cutting Medicare as it is, would sharply reduce spending for health care and make coverage universal. 
2. The public sector the President should say,  is as necessary to economic well-being as the private sector.  And trade unions are necessary in both to protect workers rights, living standards, and purchasing power.

The administration can and should explain to people the necessity of absorbing at least part of the state debts in order to maintain jobs and services and also reduce regressive property taxes and fees, from licenses and highway tolls to college tuition, in order to maintain mass purchasing power and maintain revenues
3. Increasing the taxation of capital (corporations of all kinds) and rewarding those private enterprises which produce high paying quality jobs as against those which export capital and create cheap labor jobs should be the foundation of tax reform. 
Explaining to the people the differences between progressive and regressive taxation, making it clear that progressive taxation is associated with high income advanced economies and regressive taxation, which has ballooned in the U.S. over the last three decades, with low income backward or declining economies can be done and in effect must be done if the downward economic spiral is to be halted.

These are three fairly modest proposals in line with what non reactionaries know about modern economies.  They are a progressive answer to the Friedmanite "supply side" anti-regulation, anti-tax, anti-public sector ideology and policies that are te source of our crisis.  They are not a fiscal conservative answer, which the budget deal is as I see it--fiscal conservatism which under Clinton postponed the  worst of the crisis but politically set the stage  for its further development under Bush.

Post your comment

Comments are moderated. See guidelines here.


  • Is it really any surprise, that the capitalist class, which dominates the government, sets budgets that are bad for the people?

    We can't rely on the capitalists to manage capitalism for everyone's benefit!

    The founders of the Party knew this very well:

    From the constitution of the CPA, 1919:

    III/6: No person who is a member or supporter of
    any other political organization shall be admitted to

    From the CLP's 1919 constitution:

    VIII/9: No person shall be nominated or endorsed by any subdivision of the party for candidate
    for public office unless he is a member of the party
    and has been such for at least 2 year

    Posted by D. Bester, 04/13/2011 10:25pm (11 years ago)

RSS feed for comments on this page | RSS feed for all comments