Week In Review
A Weekly Column by Bill Onasch
Deficit Deal Extra, August 2, 2011
Note: Certain strange abbreviations and awkward formulations are necessary to comply with e-mail rules of some ISPs.
The deal ostensibly needed to prevent the USA from defaulting on public debt, finalized Sunday afternoon by the White House and the titular leadership of Republicans in Congress, rates a special Extra edition of our Week In Review. As I write this the Senate has not yet acted but it seems certain they will follow the lead of the House. Too often, “historic” is hyperbole to spice up the mundane. This time, for once, Chutzpah (yes, the c is silent) in the face of a defenseless foe did produce a victory for the ruling class of genuine historic proportions.
We don’t yet know all of the components initialed in meetings definitely less than transparent. Some may not be revealed until they actually kick in. But I know enough to be in rare agreement with the sentiment of a statement by my Representative in Congress, who is currently Chair of the House Black Caucus. A man of the Cloth, Rev Emanuel Cleaver is fond of spiritual metaphor, declaring the deal “a sugar-coated Satan sandwich.”
Evil it is. But the perps are corporal, not demonic. Exorcism of Washington is a job for an organized, fighting mad working class.
What do we know about this deal?
It does, of course, raise the ceiling on the national debt. That is by no means historic. Such expansions have been routinely approved dozens of times since the practice was established during the First World War. This periodic renewal of commitment allowed Treasury Notes to be used like money in many financial transactions, including stock and commodity markets. American bonds, guaranteed by the most powerful government in the world, have long been the stable foundation of global markets.
The only thing different today was the media creation of a credible threat by the cracked teapots to block extension of borrowing. Normal functioning on Capitol Hill could have easily brushed aside these 87 one-hit wonders who were only there because of the Midterm protest vote against the Democrats. But the normal road was not taken.
Typical of what has become his Crisis Management style, President Obama not only treated the tea-baggers seriously–he called and raised their bet. Let’s use this crisis, he said, not only to fix our short-term deficit but also come together for a historic, bipartisan Grand Bargain. He even volunteered to take the heat in going after once untouchable entitlements such as Social Security, Medicare, and Medicaid.
It was this stunning initiative by the President that transformed the unglamourous congressional sausage-making around debt authorization in to Rep Rev Cleaver’s “Satan sandwich.” Nothing was sacred any longer, everything is on the table. For the rich, the table is bountiful in take-aways while others, if seated at all, will be told there is nothing left for even a last supper.
We know the agreement rejects any tax increases.
We know there must be cuts of at least a trln dollars from discretionary spending over the next decade, possibly much more. As the President pointed out, this will mean the lowest level of domestic spending since the Eisenhower administration a half-century ago.
We know there will be a bipartisan special congressional committee charged with coming up with recommendations of further deficit reductions that can include even entitlements funded by dedicated payroll taxes, such as Social Security and Medicare. Their fast-track proposals must be voted up or down–no amendments. If Congress fails to adopt committee proposals substantial cuts will be automatically triggered.
We know extended unemployment compensation is gone.
Immediate budget cuts will hit programs shared with revenue-strapped states such as education, transit, infrastructure projects, Head Start, and home care and meals programs for the elderly, as well as basic Federal agencies.
The contraction of such programs will not only hit those dependent on their services. AFGE president John Gage said,
“Federal agencies will have to cut 7 bln from their current budgets under the first phase of this debt deal. This could mean cutting tens of thousands of federal jobs like Social Security claims representatives, doctors and nurses at VA hospitals, Border Patrol agents and EPA scientists. More spending cuts are just around the corner...”
These draconian cuts come at a time when even the jobless recovery is in trouble. Manufacturing growth has slowed to its lowest level in two years.
Paul Krugman, Nobel-winning economist and regular contributor to the New York Times wrote Sunday,
“ ... the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.”
This is all true enough. But Krugman ignores some inconvenient truths.
Today’s ruling class is not noted for their long road vision. More than ever, they focus on the nowcast for bottom line profits.
Even those on the Forbes wealthiest list who reside in the USA don’t give a rodent’s backside about mythical American democratic traditions. They are quite comfortable dealing with “banana republics.”
And the title selected by Krugman for the quoted Op-Ed, The President Surrenders, shows he still doesn’t get it. While, of course, Obama gave away some bargaining chips in negotiation he was the initiator and facilitator of this deal. Krugman still frets about the future prospects of this fellow Nobel laureate he once gushed over, and also the party he has always faithfully supported.
Me, I couldn’t care less about the destiny of the man who has proven to be the most reactionary President in living memory. Nor do I have any loyalty to either of the twin boss parties serving as bookends to keep this rotten deal together.
Growing numbers of American workers are coming to share these sentiments. A recent Pew Poll found 72 percent described the deficit negotiations in such negative terms as “ridiculous, disgusting, stupid, and frustrating.” They mostly assigned blame to both parties and the White House in roughly equal numbers. Our political system today is comprised of one right wing party and one loony-right wing party, neither of which has any credibility. There is nothing but a void as dense as a Black Hole in the space that should be occupied by a working class opposition.
In other countries where similar deficit/austerity deals have been imposed, such as Greece, Ireland, Spain, France and Portugal, the working class has responded with protracted resistance, including mass strikes and demonstrations. So far in our country we have seen little more than vague e-mail campaigns and visits of small lobbying groups to congressional district offices. That doesn’t cut it.
It turns out that, as we predicted, August 2 is not a Doomsday of debt default. But if we don’t soon get our act together for a real fightback, including building a party of our own, it may be remembered as the Doomsday for organized labor in the USA.
We’ll return to our regular Week In Review format later this week.
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