Friday, February 21, 2014

Liberals Are Such Easy Sells, or How the War Against Austerity Has Long Since Been Lost

Austerity (noun): "a form of voluntary deflation in which the economy adjusts through the reduction of wages, prices, and public spending to restore competitiveness, which is (supposedly) best achieved by cutting the state's budget, debts, and deficit."
~Mark Blyth, Austerity The History of a Dangerous Idea
Two days ago, when poring through the Nation's website, I came across an article entitled "How Pro-Austerity Groups Lost the Deficit Wars."

The piece celebrates the commendable efforts of grassroots activists in fighting the "Grand Bargain" push of Fix the Debt and its astroturf youth group The Can Kicks Back.

It argues that the pro-austerity forces are losing, highlighting the following examples:

(1)    That a clean debt ceiling hike just passed both Houses of Congress
(2)    That several members of the Democratic caucus are now calling to expand Social Security, trying to go on offense rather than just defense
(3)    That the Murray-Ryan budget deal did not include cuts to Social Security or Medicare
(4)    That Fix the Debt failed to get Congress to pass a “Grand Bargain” in which Democrats agree to cut Social Security and Medicare and Republicans agree to raise taxes very slightly on the rich
(5)    That the 2014 State of the Union address contained less deficit-mongering than past addresses, with only one reference in the presented speech

These grassroots activists may have won temporary battles against cuts to Social Security and Medicare (temporary because, as the author admits, the forces working against the New Deal never relent---and because the chained CPI "offer" is still on the table and Medicare cuts will be in the President's budget). But they've already lost the war against austerity.
Part of the problem is equating "austerity" with "cuts to social insurance programs," rather than (correctly) cuts in general across programs. We've managed to save Social Security and Medicare--for now. But we've lost quite a lot.

When most people think of the Budget Control Act of 2011 (if they even do), they think of the Supercommittee and sequestration. However, in addition to setting the stage for the $1.2 trillion in indiscriminate cuts enacted by sequestration, the Budget Control Act established binding limits (“caps”) on annual appropriations bills for the next ten years, reducing projected funding for discretionary programs by more than $1 trillion through 2021, relative to August 2010 baselines. Discretionary spending covers education, national parks, the EPA, low-income housing assistance, medical research, and many other programs. (Remember that the Senate Democratic caucus voted to pass this legislation 46-7. The House Democratic caucus split 95-95.)

And President Obama has been proud of this, claiming that bringing discretionary spending to the lowest level as a share of the economy since Dwight D. Eisenhower was President as an accomplishment. He used that line throughout the 2012 election. I remember hearing it at two different events in Philadelphia. I cringed both times.

Lest you think he's changed his mind, the White House touted that statistic in the fact sheet supplement to the State of the Union address.

A year ago, John Conyers introduced the Cancel the Sequester Act of 2013 to repeal the line in the Budget Control Act that authorizes the sequestration cuts. He had 38 co-sponsors, all Democrats. Although they wanted to repeal—and not replace—the sequestration cuts, they did not seem to care about undoing the other deep cuts of the Budget Control Act. Democrats have already accepted those as part of the new status quo.

The Murray-Ryan budget deal spared Social Security and Medicare, but it can hardly be considered a success.

First and foremost, the budget deal failed to extend unemployment benefits for the 1.3 million long-term unemployed Americans, a morally wrong and economically misguided decision especially given the fact that long-term unemployment is at its highest level since World War II.

At current growth rates, the US will not see full employment until 2020 (if then). The budget deal did little (if really anything) to change that. It ended the benefits to the long-term unemployed but didn't put any effort into helping them get jobs.

The budget deal continues the war against public workers happening in states across the country, raising the amount that federal workers have to contribute to their pensions (the equivalent of a payroll tax increase). And this came after federal workers' salaries had been frozen since January 2010.

The budget deal also left the sequestration cuts largely in place. It only undid $63 billion of the $240 billion in cuts. And it extended sequestration cuts for an extra year, to 2022.

Last July, the CBO estimated that sequestration cuts could cost up to 1.6 million jobs in FY2014. With only a partial rollback, many of those jobs will still be lost. And that's only one year.

The budget deal only provided the partial sequestration relief for two years. When those two years are done, the path of sequestration cuts will begin again. Austerity today. Austerity tomorrow. Austerity forever.

And although Obama did not focus on the deficit during his State of the Union address, he did push deficit reduction as a goal in the complementary White House fact sheet:
Investing in Growth While Continuing to Strengthen Our Nation’s Long Term Fiscal Position. Over the past four years the deficit has been cut in half as a share of the economy, falling by 5.7% of GDP, the largest four-year deficit reduction since the demobilization from World War II. The long-run deficit outlook has also improved considerably due to slowing the growth of Medicare while improving solvency and benefits in the Affordable Care Act, a fairer tax code enacted in the 2012 fiscal cliff deal, and discretionary spending which is on track to be the lowest as a share of the economy since Dwight Eisenhower was President. The recent bipartisan Budget agreement undoes some of last year’s damaging cuts to priorities like education and research, and clears the way for Washington to avoid setting back our economy this year with manufactured fiscal crises. The President wants to build on this progress with a growth and opportunity agenda that includes a commitment to strengthening our long-term fiscal position. This entails a commitment by the President to not only pay for all of his new, ongoing initiatives but also to support additional deficit reduction in a balanced manner from pro-growth tax reform that levels the playing field for the middle class and further efforts to reform and strengthen entitlements. This approach will accelerate growth and ensure that the debt is on a downward path as a share of the economy over the next decade and the debt and deficit are stabilized over the longer term.
The largest four-year deficit reduction since the demobilization from World War II is apparently not enough for Obama.

Over the ensuing two weeks, the House and Senate passed a Farm Bill with $8.7 billion in cuts to food stamps. Some liberals liked to count this as a victory because, although it was clearly sadistic, it was not as sadistic as what the Republicans wanted. What standards! 46 out of the 55 members of the Senate Democratic caucus voted for the bill. Thankfully, the majority of the House Democratic caucus voted against the bill, but 89 Democrats (close to half of the caucus) did vote for it. In his remarks before signing the bill, Obama ignored these cuts and praised the bill as "a bipartisan..bill that is going to make a big difference in communities all across this country." Yes, it will make a difference--but not in the way he's implying.

Obama's FY2015 budget, per the Associated Press, will include $56 billion in expanded programs (half social, half military). The FY2015 spending levels contained in the Murray-Ryan budget only undo $18.4 billion of sequestration cuts, out of the roughly $120 billion set to take place. Even with Obama's Opportunity, Growth, and Security Initiative spending, sequestration cuts will remain deep.  And the BCA spending caps will, of course, remain, regarded with their usual silence.

You aren't winning when the knife isn't going in faster and deeper. You're only winning when it gets taken out.

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