by Erik Deckers
American Reporter Humor Writer
May 10, 2010
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DUMMERSTON, Vt. -- The National Commission on Fiscal Responsibility and Reform - better known as the deficit commission - began its work this week to try and make Americans so frightened about the federal deficit that they'll support cutting Social Security and Medicare. As with every previous attempt to scare Americans into cutting Social Security and Medicare, it's nonsense.
The commission was the brainchild of the so-called "deficit hawks" in Congress who see it as a way to cut social welfare programs without having to take a stand and vote on it. It's billed as nonpartisan and independent, but most of its members support cuts and oppose new taxes. Thus, the deck is stacked before the serious work begins.
I've written about saving social programs from the privatizers and the budget-cutters many times over the past three decades, but these three points can't be said often enough. Social Security is solvent, and will be able to pay its obligations until at least 2037. Fixing our health-care system will solve Medicare's financial problems. And a return to progressive taxation and greater social investment will benefit the nation's economy in the long run.
Let's examine these three points and other myths about the deficit in detail.
While conservatives want to blame President Obama for the huge federal deficit, it is mostly the legacy of the Bush Administration's tax cuts for the wealthy and its irresponsible penchant for fighting wars in Iraq and Afghanistan without paying for them. The current recession worsened the deficit, but even before President Obama took office, the projected deficit for 2009 was in excess of 8 percent of the gross national product.
And the massive bailouts to the U.S. financial system approved by Congress and the Bush Administration as it was leaving office didn't help.
According to economic analyst Dean Baker, "the reason that the country is projected to face enormous deficits in the future is our broken health care system. We pay more than twice as much per person for our health care as people in Canada, Germany and other wealthy countries. This gap is projected to grow even larger in future decades. We have little obvious benefit from this additional spending, since people in all these countries have longer life expectancies than we do. If our per-person health care costs were comparable to those in other countries then our budget projections would show huge surpluses, not deficits."
"A temporary spike in deficits is no reason to cap or privatize Medicare and Social Security, which is the real agenda of the deficit hawks," Economic analyst Robert Kuttner recently wrote in The Boston Globe. "With unemployment expected to stay above 7 percent until 2014, it's premature to obsess over deficits. If anything, we need bigger deficits and more public investment in the short run to bring about a stronger recovery. With more people employed and paying taxes and a higher growth rate, revenues would increase and we would not need such heroic measures to cut the deficit."
Unfortunately, voices like Baker and Kuttner are not part of the deficit commission's deliberations. No one is talking about a return to a more progressive tax structure to pay for badly needed social services. No one has bothered to note that the federal deficit didn't start to get out of control until the tax cuts and massive increases in military spending by the Reagan Administration in the 1980s, a pattern that was revived in the 2000s by George W. Bush. You won't hear anyone on the deficit commission talking about raising taxes on the wealthy and corporations and cutting defense spending to a reasonable level as the most obvious way to bring down the deficit.
Peter G. Peterson, the private equity billionaire who is a staunch deficit hawk, has been saying for years that "unfunded liabilities" like Social Security and Medicare would bring us to collapse. However, the economic collapse we're slowly pulling out of was caused by the recklessness of Peterson's friends on Wall Street.
Now, ordinary Americans are being asked accept cutbacks in the two programs that were untainted by private financial market abuses - Social Security and Medicare - to pay for the costs of bailing out the banks while suffering through the losses of their retirement savings, their home values and in many cases, their jobs. Just imagine how much worse things would be now if the Bush Administration got its wish to privatize Social Security and invest it in the stock market.
As Baker noted, "The country faces real problems. In the short-term we face the problem of re-employing people in an economy with near double-digit unemployment. In the longer term we need to rebuild the economy on a cleaner more energy-efficient path. And we desperately need to fix our health care system. How we deal with these problems will determine the well-being of our children and grandchildren."
But instead of focusing on these real dangers to the country's future, Peterson and the deficit hawks are peddling false solutions that will hurt most Americans while enriching the private sector. So next time you read, hear or see any of their pronouncements about the deficit, remember where they're coming from and who will benefit from their plans.
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 firstname.lastname@example.org.