"Gut Or Shut" -- Is America Ready?

Republicans are saying they are going to either gut the government or shut it down. They mean it. It's gut or shut, and they are not going to allow a third choice.
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Republicans are saying they are going to either gut the government or shut it down. They mean it. It's gut or shut, and they are not going to allow a third choice. This is not just posturing and they are not likely to engage in bipartisan bargaining. Their rhetoric has painted them into a corner with their base. We should take them at their word and prepare.

On Sunday, Lindsey Graham, a supposedly "centrist" US senator said he is willing to let the United States default on its Treasury obligations, saying,

"I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long term debt obligations starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side I'm not going to vote for a debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending..."

Sen. Graham said the threat to destroy the economy unless Social Security is cut is "a great opportunity to change the course of America's future." Yet there is little widespread shock or outrage or calls for his resignation from the so-called "responsible" leaders among the D.C. elites. So it appears that willingness to destroy the economy of the country and the world to score an ideological victory has moved into the realm of acceptability. This tells us how much our politics has changed in recent years.

One after another Republicans -- the very people responsible for the massive debt -- have been outlining their "conditions" for a vote to prevent default and allow the country's economy to survive. They maintain they are not going to pass a budget that does not gut the government, and if the Senate and President do not go along with this they will just let the government default. They say they "can't want" for a "bloodbath." Senator Jim DeMint, for example, said today,

"We need to have a showdown at this point that we are not going to increase our debt ceiling anymore," he said. "We are going to cut things necessary to stay within the current levels, which is over $14 trillion. This needs to be a big showdown."

This "gut or shut" threat is so far beyond anything the country has experienced that the country really has no idea what is about to happen in the next few months. But this is just the next step in a 30-year plan and we should understand it that way.

The Huge Debt Was The Plan

The huge deficit and accumulated debt was intentional. It was the plan all along: cut taxes on the rich, grow the debt into an emergency and then use that emergency to force cuts in things our government does for We, the People. Do not forget this and do not let the country forget this, either. This is not an emergency, it is just the next step in their plan.

Making this very point, President George W Bush called his deficits "incredibly positive news" because the resulting debt would force a debt crisis. And he left behind a $1.4 trillion deficit in his last budget year to clinch the deal. Now Republicans are gloating that they can gut or shut the government with the debt ceiling vote. This is not an emergency, it is just the next step in their plan.

It Is About What To Cut

The huge debt was caused by tax cuts for the rich and military spending increases. But those are not what the Republicans are talking about fixing in the name of cutting the deficit. Far from it.

When they say they are "cutting spending" what they mean is they are cutting the things that government does for US - for We, the People. They are keeping the things that government does for the wealthiest 1% - the ones who got the bailouts and tax cuts. They are not talking about cutting the military even though we spend more than all other countries combined. They are not talking about cutting subsidies for big corporations - especially not for oil and coal companies. They are not talking about restoring top tax rates to where they were when the economy (more or less) worked.

They are talking about gutting the things that we do for each other and that protect us from the power of predatory corporate wealth - consumer protections, worker safety, environmental protections, health care, retirement, and the rest.

The Social Security Trap

It appears form Senator Graham's remarks, and others, that the #1 target is Social Security. While conservatives have had the program in their sights since its inception, today's focus on Social Security is also a trap aimed at the 2012 Presidential election.

Republican leadership are trying to trap President Obama into agreeing to cut Social Security and then use this to drive him from office. They plan to campaign that Obama cut Social Security, just as they successfully campaigned that "Democrats cut $500 billion from Medicare" in the 2010 midterms. In the 2010 campaign anonymous-donor organizations aligned with the Republican Party ran ad after ad after ad after ad in district after district after district claiming "Democrats cut $500 billion from Medicare." Seniors abandoned the Democratic party, and Republicans swept the election.

The Public Does Not Want Social Security Touched

This Social Security trap is one pillar of the 2012 plan, and the White House and party leadership should pay attention. Poll after poll after poll warn that the public does not want Social Security touched. Even Tea Party rank-and-file do not want Social Security touched.

Wall Street's Central Role

Wall Street is also at risk in this game, and should pressure the Republicans to stop threatening to let the country default on its debts. Economist Dean Baker, in Saving Social Security: Stopping Obama's Next Bad Deal, points out that Wall Street would be destroyed by a debt default, while the rest of us wold survive. For this reason the President should call the bluff.

The prospect of the U.S. government defaulting on its debt creates the sort of end of the world scenario in which Congress rushed to pass the TARP in 2008. Back then ... luminaries told members of Congress and the public that we would have a second Great Depression if the Wall Street banks were not immediately bailed out, no questions asked. And the money flowed.

The prospect of defaulting on the debt will create a similar outbreak of shrill warnings of disaster. ... privatization of Social Security and Medicare and major cuts and/or elimination of other important programs. The argument from the administration will be that they have no choice.

[...] not only Democrats, but also independents and even Tea Party Republicans overwhelming support Social Security and Medicare. Furthermore, the gun, in the form of a potential debt default, is actually pointed at the Wall Street banks, not the public.

... the day after the default, the country would still have the same capital stock and infrastructure, the same skilled labor force and the same technical knowledge as it did the day before the default.

One thing that would not be around the day after a default is Wall Street. The default would wipe out the value the assets of the Wall Street banks...

For this reason, the threat of a default is a gun pointed most directly at Wall Street. Given the power of Wall Street over Congress, is inconceivable that they would ever let the Republicans pull the trigger.

This means that if President Obama is prepared to take the right and popular position of supporting Social Security and Medicare, he will win. This is both good policy and great politics.

Guy Saperstein, in The Looming Debt Ceiling Shakedown, writes that the President should call the bluff,

The Republicans are running a total bluff. They don't want the government to default on government bonds anymore than Obama. It would cause economic chaos, cost Wall Street trillions and lead to a civil war within the Republican Party between the Wall Street Wing and the Lunatic [aka, Tea Party] Wing ...

Wall Street is supporting the Republicans because they want a weaker, more controllable government -- and a piece of that Social Security money. They are convinced that President Obama will cave and agree to gut government and Social Security. But, as Baker points out, this game of default threats puts Wall Street at greater risk than the rest of us. President Obama should use that to draw a line in the sand: He won't sign anything other than a clean debt ceiling bill. Gutting Social Security should never be discussed as a budget-cutting strategy, and especially not at the barrel of a gun. Back off, send a clean bill, and then let's talk about all the corporate sacred cows that members of both political parties have been protecting, that long ago needed to be weaned from the federal teat, as well as the unnecessary spending on defense and wasteful tax giveaways. And at the same time, let's embrace the common sense that only in a growing economy that pays its workers well can we ever hope to repair the damage done by reckless conservative policies.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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