Obama ’s blueprint for austerity

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Consumption tax, benefit cuts
Obama’s blueprint for austerity
29 April 2010

The National Commission on Fiscal Responsibility held its inaugural hearing on
Tuesday, launching the process through which the Obama administration plans to
introduce drastic attacks on social spending and living standards to make the
working class pay for the crisis of American capitalism.

The commission, consisting of 10 Democrats and 8 Republicans, is charged with
discussing ways of slashing trillions of dollars from future federal budget
deficits and making recommendations to the White House and Congress six months
from now. The December 1 report-back deadline, four weeks after the next
congressional election, was chosen to ensure that the American people have no
say in the process. (In Washington-speak, this is called “insulating the
commission from politics.”)

In his statement formally opening the commission, President Obama declared,
“Everything has to be on the table.” This is a lie, since the commission will be
barred from considering cuts in military spending, rescinding the bank bailouts,
or forgoing massive interest payments on the federal debt—one of the principal
means of enrichment of the financial elite.

“Everything on the table” is another Washington code phrase, meaning that cuts
in Social Security, Medicare and Medicaid, the major entitlement programs, will
be among the measures to be considered and proposed. Obama is also abandoning
his election campaign pledge not to raise taxes on people making less than
$250,000 a year, giving the commission a green light to propose a Value Added
Tax, an across-the-board federal tax on consumption that would in large measure
replace the income tax and end the last remnants of progressive taxation.

The deficit commission is co-chaired by former Republican Senator Alan Simpson
of Wyoming and Democratic former White House Chief of Staff Erskine Bowles of
North Carolina, two individuals long identified with advocating fiscal
austerity. Every one of the 18 members of the commission is a proven defender of
the profit system, and nearly all are multi-millionaires, including the longtime
president of the Service Employees International Union, Andrew Stern, the lone
representative of “labor” on the panel.

The initial session of the commission featured a series of high-profile
witnesses, beginning with Federal Reserve Board Chairman Ben Bernanke and White
House Budget Director Peter Orszag, who both declared that the trillion-dollar
federal deficits now projected by the administration are unsustainable. Bernanke
said, “The reality is that the Congress, the administration and the American
people will have to choose among making modifications to entitlement programs
such as Medicare and Social Security, restraining federal spending on everything
else, accepting higher taxes, or some combination thereof.”

Congressional Democrats sounded the same theme. Senator Richard Durbin, the
Senate Majority Whip and a member of the commission, said that “bleeding heart
liberals” had to be open to cuts in entitlement programs as part of a deficit
reduction plan.

The most categorical call for austerity came from House Majority Leader Steny
Hoyer, in an op-ed column published Wednesday in the Wall Street Journal under
the headline “Shared Sacrifices Will Solve the Debt Crisis.” Declaring that “the
greatest driver of our long-term deficit is rapidly growing entitlement and
health-care spending,” the Democratic congressman said the commission “could
recognize that Americans are living longer and raise the retirement age over a
period of years.”

Both Hoyer and Budget Director Orszag cited the budget crises in Europe—with
Greece, Portugal and now Spain having their debt ratings downgraded and credit
drying up—as a warning to the United States. Hoyer wrote, “Americans may be
wondering whether the Greek financial crisis could happen here. It will—unless
we change course.” Orszag said in his testimony to the deficit commission, “The
goal is to get ahead of an adverse financial market reaction.”

This is part of a concerted effort to blame the ongoing financial crisis and
economic slump on “excessive” and “profligate” spending on the needs of ordinary
Americans, rather than on financial speculation and plundering by Wall Street.
The Greek events are being used as a pretext to justify austerity policies
within the United States that would supposedly preempt a similar crisis.

Obama sounded the theme of “equal sacrifice” in his own remarks to the
commission, in which he blamed the crisis, in the final analysis, on the
American people, citing “the reality familiar to every single American—it’s a
lot easier to spend a dollar than to save one. That’s what, at root, led to
these exploding deficits. And that is what will lead to a day of reckoning.”

The gargantuan federal deficit is not, however, the product of poor decisions by
“the American people.” It is a product of the worldwide crisis of the profit
system and the drive by the American ruling elite to secure its global
domination, both against capitalist rivals in other countries and against the
working class at home.

Hoyer was compelled to admit in his Wall Street Journal column that the rapid
increase in the US national debt is the product of the wars in Iraq and
Afghanistan (launched by Bush and continued by Obama), the bailout of Wall
Street (begun by Bush and continued by Obama), and the ongoing recession (which
began under Bush and continues under Obama). In other words, corporate America,
not the working people, is responsible for this crisis.

The Socialist Equality Party rejects the calls for austerity and sacrifice. We
say, make the financial elite pay for the crisis, not the working people! We
oppose all plans for cutting Social Security, Medicare and Medicaid, and for
consumption taxes that will hit working people the hardest.

Against the ruling class claims that “there is no money” for needed social
services, we say there is plenty of money—on Wall Street and in the fortunes of
hedge fund billionaires and the rest of the super-rich who have seen their
wealth increase even as the economic slump has devastated jobs and living
standards for the vast majority of the population.

We call for the confiscation of the assets of the hedge funds and other big
speculators, the nationalization of the banks, insurance companies and other
financial institutions, the shutdown of the stock exchange and commodities and
derivatives markets, and the reorganization of economic life on the basis of a
rational plan, developed democratically to serve the needs of working people.

This must be combined with the transfer of the vast resources squandered in the
military/intelligence budget to meet social needs, and the establishment of a
genuinely progressive tax system that targets the incomes of the wealthy, not
the wages and consumption spending of the people.

Patrick Martin

http://wsws.org/articles/2010/apr2010/pers-a29.shtml

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