by Randolph T. Holhut
Chief of AR Correspondents
December 10, 2010
OBAMA WAVERS, AND DEMOCRACY HANGS IN THE BALANCE
DUMMERSTON, Vt. -- The National Commission on Fiscal Responsibility and Reform disbanded last week, which is good news for the nation.
There's a reason why the left-wing blogosphere called them "The Catfood Commission." If the various proposals for reducing government spending by cutting Social Security, Medicare and Medicaid were enacted, many of us would be dining on Friskies for supper.
While 11 of the 18 members voted for this austerity plan, the commission needed 14 "yes" votes to send the package for Congress to vote on.
Who were the seven who voted no? Three key House Republicans - incoming Budget Committee chairman Paul Ryan, R-Wisc.; incoming Ways and Means Committee chairman Dave Camp, R-Mich.; and incoming Republicans Conference Committee chair Jeb Henserling, R-Texas - rejected the plan because they wanted more tax cuts for the wealthy and corporations and deeper reductions to entitlement programs.
Two House Democrats - Trps. Xavier Beccera, D-Calif., and Jan Schakowsky, D-Ill. - and Senate Budget Committee chair Max Baucus, D-Mont., and former Service Employees International Union president Andy Stern all voted "no." As Schakowsky, the most vocal critic of the commission's austerity approach, said last week, the proposed benefit cuts would have meant that "those who have not joined the prosperity party the last couple years are being asked to pick up too much of the tab."
But it's too soon to breathe a sign of relief. The idea of soaking the middle class to benefit the wealthy is gaining traction, and President Obama - who formed the deficit commission back in February - and conservative Democratic members of Congress are walking right into a trap.
One sign that Democrats don't realize they are walking into a trap was seeing a normally reliable liberal like Sen. Dick Durbin, D-Ill., vote for the commission's plan. While he justified his vote as making sure that here are "progressive voices at the table to help protect the most vulnerable," Durbin's vote merely gave the conservative majority on the panel to protective cover to claim that their plan is bipartisan.
Bipartisanship still remains a goal of President Obama, even though the Republican Party has made it crystal clear that they do not intend to compromise on any piece of legislation and will devote all of its efforts toward making Mr. Obama a one-term president. That's why it makes absolutely no sense for the President to jump on the austerity bandwagon, while at the same time seeking a compromise on the Bush tax cuts that are due to expire at the end of this month.
Many Democrats want to extend the Bush rates only for those earning under $250,000. Republicans want to make the Bush rates permanent for everyone, including the wealthy. President Obama wants to extend the rates for everyone for the next two years.
The President is being totally disingenuous when he paints his compromise as being good for the American people. As most reputable economists have saying for the past two years, the economic downturn that we have been in for more three years and counting will end only when we see more public investment, more progressive taxation and more regulation.
Additionally, with unemployment at nearly 10 percent and economic growth limping along at less than 2 percent a year, the biggest thing our economy needs right now is more jobs and more spending and investment by businesses. Worrying about the deficit must take a back seat to recovery. Increased government spending, not spending cuts, is what's needed to end the worst recession since the end of World War II.
But here's where the politics get tricky. To continue the Bush tax rates for the rich will cost about $700 billion over the next 10 years. Since Republicans have made raising taxes on the rich a political impossibility, this sets the stage for big cuts in Soclal Security and Medicare in the name of deficit reduction.
The trap lies in the proposal for a "temporary" cut to the Social Security payroll tax. Since there is no such thing as a temporary tax cut, there is virtually no chance - especially going into an election year - that the rate will return to its original level.
But a long-term cut in the payroll tax will immediately lead to lower reserves for the Social Security trust fund. This amounts to a slow-motion de-funding of Social Security, and will help make it easier for Republicans to demand cuts in the program lest the funding needs to be made up elsewhere.
Defending Social Security and Medicare and opposing continued low tax rates for the wealthy should be absolute no-brainers for Democrats. However, despite virtually every reputable poll over the past year showing that the American public is overwhelmingly opposed to any cuts to Social Security and overwhelmingly supportive of tax hikes for the rich, President Obama has surrendered to the Republicans.
Even with this compromise, some Republicans are balking at Mr. Obama's compromise because they want to extend the Bush rates and eliminate the estate tax. Others are balking because the White House deal will add to the deficit, since the proposed tax reductions aren't paid for.
But the argument boils down to this. If Mr. Obama and the Democrats cave on this issue, they will assure defeat for the President in 2012 and an even more solidly-Republican Congress. They will succeed in permanently marginalizing the Democratic Party as a political force, and in putting this nation even further down the path toward oligarchy.
This is the line in the sand. And if the President and the Democrats allow the Republicans to win, progressive governance dies, and the hope for any end to the politics of greed and inequality dies with it.
Chief of AR Correspondents Randolph T. Holhut has been a journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.