Get this: Republicans on the Deficit Commission aren't just refusing to consider any tax increases. Now they're proposing tax decreases designed to help the rich while taking benefits from everyone else. Dealing with people like that is like negotiating with somebody who's high on drugs.
Most members of the Commission seem to want a deal -- any deal -- so they've decided not to address the real causes of current and future deficits: health costs, tax cuts, war spending, runaway bankers and the growing inequality between rich and poor. Instead they're going after something that doesn'taffect the deficit: Social Security retirement benefits.
Why? Apparently, because they can.
Today's GOP is so extreme that it's rejecting a framework for Social Security endorsed by Ronald Reagan and Alan Greenspan. (They'd probably call Reagan a socialist if he were alive today.) And some Democrats are playing along.
The Deficit Commission was designed to show the world's financial markets that the US is serious about cutting its debt. Some of its members certainly offered chest-thumping, near-simian displays of "seriousness" when they met today. "It's not going to be easy, it's not going to be fun, and in many cases, it's not going to be popular," said Co-Chair Erskine Bowles. "It is going to require sacrifice."
In response, the markets yawned. They're not worried about US debt. (Only the politicians are.) What's more, the "market" -- usually so beloved by conservatives, but not in this case -- understands that the Commission's unlikely to propose anything that would seriously affect the deficit. When the radical right's driving the fiscal Crazy Train, it can't. So it's Social Security cuts or nothing. (The latter's not impossible. Commissioner Andy Stern said, "There has been absolutely no formulation" of recommendations.)
The reality is the Commission's not going to affect future deficits much either way. But if they're able to push their benefit cuts through Congress, they'll try to have it both ways politically. One the one hand, they'll insist that they're "only doing this to protect the program for future generations" and not to reduce the deficit. On the other hand, they'll also try to take credit for... reducing the deficit. Then they'll wait in vain for the financial markets to reward them for it.
Despite the fiscal illogic, Social Security cuts will in fact be both "easy" and "popular" in the high flying world where commissioners like Erskine Bowles reside. For Alan Simpson, they may even be "fun." And only the people they never see -- the ones who worked all their lives and paid their payroll takes -- will be called upon to "sacrifice."
To understand how wrongheaded they are, it's important to know what's really driving the deficit and what created the current mild imbalance in Social Security.
This is your budget. This is your budget on drugs.
Most people (even skeptics like me) assumed that, even in the worst-case scenario, the Budget Commission would try to temper the impact of its proposed cuts with a few symbolic tax hikes. Even if the increases were so tiny they were practically homeopathic, they'd have to do somethingfor appearance's sake. That's what makes reading a news report like the one in today's Talking Points Memo so... so... hallucinogenic.
I know, I know: That's hardly a somber, analytical word. But, honest to God -- if you understand the numbers at all, reading a sentence like this will make you feel like your coffee's been laced with peyote. From Talking Points Memo:
"Republicans have not even said that we should get any revenue from taxes," the source said. "Even tax expenditures. They appear to want to use the savings on tax expenditures to cut corporate taxes."
You read that right: "Deficit" commissioners who won't allow any new tax revenues. Oh, they'd cut benefits for the elderly, alright, but they'd use the money to reduce corporate taxes -- and capital gains taxes, too. That will make the deficit worse and it will widen income disparity, further enriching the wealthy by cutting benefits that lower- and middle-income people paid taxes to provide all their lives. That's what passes for fiscal sanity in the econo-millenarian saucer cult the Republican Party has become. And that's how a nation that's already radically redistributed its wealth upward could do it even more.
Here's what Republican Sen. Judd Gregg, a member of the Commission, said today: "I think everybody understands that the majority of the issue is on the spending side, and so this commission, to the extent that it reports, I suspect is going to have a heavy tilt toward controlling spending."
But the GOP has ruled out cuts to the military or homeland security. That narrows the "spending" side of the equation down to about one-seventh of the budget. That brings us right back to raising taxes. The GOP response? "We need to change the conversation," said Sen. Bob Corker, "and I think that means focusing on the big picture first... agreeing on the amount of spending we can sustain."
"Changing the conversation," aka "changing the subject," is probably Corker's best bet. Because the deficit was really caused by this:
(source: Center for Budget and Policy Priorities)
That's two wars (which the GOP wants to continue), Bush-era tax cuts (which the GOP wants to expand to benefit the ultra-wealthy even more), and the direct and indirect costs of a crash brought on by inadequate banking regulation that enriched many of the same ultra-wealthy (the GOP is resisting all attempts to increase banking regulations.)
When it comes to deficits, the GOP is the problem, not the solution.
Sure, Social Security's a big-ticket item. But it's self-funded. If we went back to Reagan era principles, it would be fine. There's not much out there to cut, proportionally, except health-care spending. Our health-care costs are far above those of other developed nations and give us much poorer results. What if we could get our health spending in line with countries like Canada, the United Kingdom, or Germany? Thanks to Dean Baker at the Center for Economic and Policy Research, we have the answer:
