Washington Disconnect Perpetuates Wealth Shift Upward

Instead of presenting a grand vision for job creation and economic stimulus, President Obama has consistently capitulated to Republicans' faux deficit narrative.
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Constituents who carried a message to members of the Colorado congressional delegation the week of December 1st (I was one) told them that Washington has been engaged in the wrong conversation. Rather than a "deficit crisis," ours is a jobs crisis that demands immediate action. The best deficit reduction and economic growth plan according to many economists is to put people back to work. Job creation will increase spending money that stimulates employer hiring and jobs growth, and in turn, reduce the long-term debt to GDP ratio. Deficit reduction before unemployment is lowered to 4 or 5% will exacerbate the economic downturn, warn the same economists.

Professor of Political Economy Jack Rasmus judges Barack Obama's $447 billion Jobs Plan "too little, too late," noting that 60 percent of the jobs bill consists of non-job-creating corporate tax cuts. Constituents continue to urge legislators to get behind Rep. Jan Schakowski's "Emergency Jobs to Restore the American Dream Act," a roadmap for putting people to work in a recession, and The People's Budget. Unlike all of the previous committee proposals, The People's Budget would restore truly fair and balanced fiscal policy that does not unduly burden the working class or reward the wealthy for not paying their fair share. Both proposals have been willfully ignored by a Congress in thrall to big money.

Rather than create jobs, the Democratic administration, willingly or clumsily, has played into the hands of Republicans whose concerted efforts to grow the deficit for 30 years has set the stage for cutting New Deal, Great Society and social programs that benefit the working class. Domestic programs are being offered up to pay for the ten-year $4 trillion in tax breaks for the wealthiest. Decades of wage suppression and wealth shift upward has resulted in ever-widening disparity of wealth.

Instead of presenting a grand vision for job creation and economic stimulus, President Obama has consistently capitulated to Republicans' faux deficit narrative. Much of his time in office has been spent dealing away Democratic Party principles and positioning himself center-right on the political spectrum, whether extending Bush tax cuts for the wealthiest, yielding to corporate and political right objections to clean-air regulation, overruling the Food and Drug Administration's decision for over-the-counter sales of emergency contraception to teens younger than 17, or offering to compromise away Medicaid, Medicare and Social Security -- positions he professed before he was inaugurated.

Every commission, from Simpson-Bowles Deficit Commission to the Gang of Six and Supercommittee of 12 has promoted a "Washington consensus" for a minimum $4 trillion in budget cuts disproportionately taken from programs benefitting the working poor. Seventy-five percent of spending cuts have typically been assessed to Medicaid, CHIP, students loans and assistance to schools, Medicare and Social Security. The remaining 25 percent of deficit reduction is tentatively to be achieved by "closing tax loopholes," not from any progressive taxation of the wealthy.

What passed for "shared sacrifice" in the "Gang of Six" plan actually increased net tax cuts for the wealthy by $1.5 trillion, notes Professor James Galbraith. The "sacrifice" is borne by working people who would experience a diminished Social Security Cost of Living Allowance (COLA) cumulatively over time. The "Gang" also sought to eliminate existing taxes on offshore profits, encouraging more offshoring of jobs.

Even as Senator Mark Udall resurrected the old neoliberal salve of a balanced budget amendment, both of Colorado's Democratic senators and all Colorado House Democrats urged Supercommittee Democrats to "go big" for broad budget cuts, in support of committee Democrats' proposed $400 billion in cuts from Medicare, half each from benefits and provider reimbursements. Ironically, only a short time ago Democratic health care reformers refused to heed studies demonstrating $400 billion in annual savings achievable with an improved Medicare-for-All model of health care.

Many economists note that the U.S. long-term debt problem is not a spending problem, but rather an inflationary health care problem. Instead of cutting Medicare benefits and provider reimbursements by $400 billion, Robert Reich notes that Medicare extended to all, and including negotiation of bulk drug rates and medical equipment, could save $400 billion annually. The biggest debt driver, observes economist Mark Weisbrot, is the government-subsidized private sector of health insurance, and the long-term budget deficit can be turned into a surplus by adopting health care reform modeled on that of other countries, e.g., Medicare-for-All.

Another proposal by some Washington stalwarts to change the age of Medicare eligibility from 65 to 67 is also bad economics. A Kaiser Family Foundation study reveals that such an action operating in 2014 would result in a net total increase of annual health care costs in America of $2.5 billion, mostly borne by seniors and employers paying for retiree health care (not counting an additional projected 3% premium increase for remaining Medicare recipients and those insured through proposed exchanges). Some forecast cost shifts for increased emergency room visits by under- or uninsured, as a significant number of seniors even today put off medical care until they are eligible for Medicare.

The two political parties are disconnected from Main St., providing cover for the continued wealth shift upward. Their "solutions" of budget cuts and balanced budgets are grounded in false economic premises calculated to best serve Wall St. Constituents visiting legislators in early December offered alternatives to further burdening the working class to pay for $4 trillion in tax breaks for the wealthy:

  • Raise the cap on Social Security earnings subject to tax from the current $106,800
  • Reverse $4 trillion in tax breaks to the wealthy over the past decade
  • Tax the $4 trillion that multinational/big corporations/banks are sitting on instead of investing in jobs.
  • Tax $4 trillion of investor wealth stashed in offshore havens.
  • Tax Wall St. speculative transactions to slow risk-taking speculation -- raise at least $100 billion annually.
  • End corporate welfare (subsidies & tax breaks) to agribusiness, oil, pharma, and health insurance -- save $100 billion annually.
  • End weapons systems that don't work and stop wars we shouldn't be fighting -- save over $300 billion.
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