A Question That Needs Answering: Who Will Be Hurt by Deficit Reduction?

Elites are selling this as a grand compromise: Conservatives get Social Security cuts, and liberals get a tax increase. Oh, boy. My question is: what do regular folks get out of the deal besides screwed?
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I have been arguing for a long time that progressives need to be aggressively engaged in the deficit cutting debate. I think it is a mistake for us, both policy wise and especially politically, to say that deficits don't matter, or to have an entirely defensive message about the cuts we don't want Congress to make. Voters believe deficits matter, and they want solutions - and while it is currently unpopular to cut Social Security and some other programs (thank goodness), if no alternative to that is presented, too many folks might be convinced to go along.

The progressive message on the deficit has to be very clear: first, don't do anything that will endanger our economic recovery, because the best way to solve the deficit is to improve our economic health (see: the 1990s). Secondly, when you ask for sacrifices, they shouldn't be all or mostly from the middle class and poor. This is a pretty key point, since many of the deficit hawks seem to be zeroing in on cuts in Social Security and a Value Added Tax, both of which overwhelmingly impact the poor and middle class far more than they do the wealthy.

What these proposals are is an attempt to make middle and lower income people pay for the sins of the wealthy who have benefited from the deficit. Middle class incomes have been stagnant over the last decade, while the costs of their groceries, gas, utilities, and college education for their kids has skyrocketed. Middle class housing prices have plummeted the last three years, with foreclosures and bankruptcies increasing exponentially. Middle class folks haven't gotten the big tax cuts the wealthy have over the last 10 years, and when taxes are raised at the local level, its almost always regressive taxes like the sales tax that impact poor and middle class people the most. Meanwhile, public school teachers, social services for the poor, parks, libraries, community colleges, programs to help handicapped kids - all of those programs that matter to working families are the things that get cut.

So now we have this gaping federal deficit. Economics and budget experts tell us it is caused by:

1.The massive tax cuts, overwhelmingly targeted to the wealthy, that George W. Bush gave us.

2.Two big wars, which we are still paying for many years after their launch.

3.Health care inflation caused by skyrocketing drugs, provider, and insurance rates.

4.A bloated defense budget that hasn't been closely examined for waste in at least 15 years.

5.The economic collapse of 2008 which resulted in massive bailouts of big banks, and caused unemployment to skyrocket, and housing prices and incomes to dramatically fall.

6.Offshore tax shelters, big corporate tax loopholes, and corporate subsidies of various kinds written into the budget.

7.A big farm bill with absurd subsidies to big, wealthy agribusiness interests.

So just to summarize here: the deficit is caused by tax cuts for the rich, an economic collapse caused by wealthy bankers which resulted in bailouts for those wealthy bankers plus massive pain for middle income and poor people, tax loopholes and corporate subsidies designed to help the wealthy, plus two wars and wasteful defense spending (much of which goes into the pockets of wealthy defense contractors). And the solution for the deficit hawks: target middle class and lower seniors for social security cuts, and put in a regressive tax that is a burden to low and middle income people.

Justice: American style.

Elites are selling this as a grand compromise: Conservatives get Social Security cuts, and liberals get a tax increase. Oh, boy. My question is: what do regular folks get out of the deal besides screwed?

Progressives ought to be screaming bloody murder at this phony compromise, but we also ought to have a constructive alternative on how we end the budget deficit. There are plenty of budget cuts we can live with: ending wasteful defense spending, take away subsidies to the big corporate farms, put a strong public option in health care reform, have the federal government negotiate drug prices, end the wars in Iraq and Afghanistan. There are plenty of taxes we can raise that wouldn't soak the people who have been most hurt by the economy of the last decade, including a financial transactions tax on the big banking speculators, an end to the corporate tax loopholes and offshore tax avoidance, bringing taxes on the wealthy back to the level they were before the Reagan tax cuts.

If you did all that, even waiting another year or two to let the economy get on a firmer footing, you could easily balance the budget before the 2010 decade is out and have plenty of money left over to invest in the infrastructure and schools that we so desperately need.

If you want to solve the deficit, target the folks whose time at the money trough caused it in the first place: the big banks, the defense contractors, the drug and insurance companies, the agribusiness giants, and the super wealthy that got all of those huge tax cuts in the first place.

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