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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

a dysfunctional Washington « Previous | |Next »
March 2, 2013

The $85bn automatic cuts to the federal budget are going to take place after the White House and the Republicans could not agree. Republicans won't agree to raise taxes--ie., rich people do not pay a penny in additional taxes through closing some tax loopholes.

The background to the deficit reduction was the need to avoid default on the public debt. The White House and House Republicans agreed to harsh and arbitrary sequestered” spending cuts if they couldn’t come up with a more reasonable deal in the interim. The idea of the sequester was to force both sides to go back to try at a big or grand bargain with a mix of entitlement [cuts] and revenues

There is no possibility of compromise with this kind of stubborn partisanship. The Tea Partiers had no intention of agreeing to anything more reasonable. They knew the only way to dismember the federal government was through large spending cuts without tax increases. The Republican strategy is starve the state by slashing Social Security and Medicare, ending worker protections we’ve had since the 1930s, eroding civil rights and voting rights, terminating programs that have helped the poor for generations, and making it impossible for the government to invest in our future.

Half the sequester cuts are cuts in the military whilst the other half are cuts in domestic discretionary spending, which will largely affect lower-income Americans. There will be sharp reductions in federal aid to poor schools, nutrition assistance, housing assistance, and the like. That will will cut economic growth.

The Republicans take their stance on austerity economics – the claim that the budget deficit is the nation’s biggest economic problem--and on trickle-down economics – the claim that we get more jobs and growth if corporations and the rich have more money because they’re the job creators, and job growth would be hurt if their taxes were hiked. The austerity crow ignore the fact that austerity causes more austerity, and that additional deficit spending would more than pay for itself with higher growth, producing a reduced debt ratio down the road.

As Paul Krugman points out this has led the House Republicans:

to take everything that’s bad about the sequester and make it worse: canceling cuts in the defense budget, which actually does contain a lot of waste and fraud, and replacing them with severe cuts in aid to America’s neediest. This would hit the nation with a double whammy, reducing growth while increasing injustice.

Their rhetoric is extreme---eg., Speaker Boehner uses the theft language, again and again. He said the dispute with the Democrats amounted to a question of “how much more money do we want to steal from the American people to fund more government.” They are engaged in ongoing trench warfare to make more spending cuts and to increase the decline in social spending.

American voters, however, have made it clear that they don't want this kind of dumb economics--they want to preserve the social safety net while raising taxes on the rich.

Professor Dr. Heiner Flassbeck of Hamburg University (recently with UNCTAD) provides a cogent overview of why the impact of the sequester and any budget deal will be to weaken an already-struggling economy:


More at The Real News

The Tea Party conservatives continue to impose politically toxic positions on the GOP and a string of manufactured crises. John Boehner doesn't have enough power to put a stop to their refusal to compromise with Obama.

The politics of budget austerity has left Obama with no real capacity to offer the public investment that the economy needs for a robust, broadly-based recovery. That leaves Obama with the prospect of a weak economy between now and the end of his term and an economy even more unequal than the one that he inherited.

| Posted by Gary Sauer-Thompson at 8:35 PM | | Comments (4)
Comments

Comments

The last four years of dysfunctional government in the USA have dramatically illustrated the shortcomings of the constitution they venerate so much. In parliamentary democracies, deadlocks like these usually trigger fresh elections sooner or later - in Australia, a double dissolution would ultimately resolve terminal gridlock. In Washington there are no safety valves, so the Republicans can just posture endlessly in Congress and hope voters blame the President for the problems - which hopes have often been well-founded.

Meanwhile the media is already starting to become preoccupied with the 2016 presidential election. The US experience is the best argument imaginable against fixed term parliaments.

The Republicans are becoming a party that’s more interested in rigid ideological confrontation rather than a party that’s focused on getting things done?”

Obama has a propensity for giving ground on core issues (Social Security, and Medicare) and getting almost nothing in return from the Republicans in terms of tax hikes.

In this interview Saskia Sassen, the American sociologist, says that too much of American taxes now goes to bail outs of banks and luxury projects... and that is why the social contract between the liberal state and the middle classes is broken.

She refers to the masses of homeless middle class people now living in camps around the US, all sitting in front of their neat little tents, properly shaved and nicely dressed, ready to take a new job – "literally waiting for the system to take them back in".

But, says Sassen, that's not going to happen, because the system is finished, "the liberal project has ended". Now that the American economy is faltering and the supply of fresh new jobs has stagnated, consumers are completely incapable of actively creating their own ways of living.