No Age of Austerity for the Rich

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The Guardian/UK

No Age of Austerity for the Rich

If austerity implies shared sacrifice to preserve a shared public sphere, America isn't really experiencing such an age

We are, pundits frequently inform us, living through an "age of austerity". True, perhaps; but what that means, and what community responses it mandates, vary widely from country to country.

UK chancellor George Osborne's emergency budget was stark in the cuts that it laid out - and there's obviously a good case to be made that the notion of an impending debt crisis was largely used as a foil for an ideologically motivated attack on the public sector. But, to sell the cuts, the government couldn't resort to a simplistic "government-is-bad, welfare-is-awful" rhetoric. It wouldn't have worked with an electorate that still retains some affection for the redistributive, protective functions of government vis-à-vis the nation's poor; that still believes in a societal obligation to smooth out the roughest edges of a market system.

And so, in addition to cutting many public services by an eye-popping 25%, the budget also increased taxes. Most interestingly, it significantly raised the capital gains tax, a tax that falls largely on wealthier Brits.

For all its faults, Osborne's budget was one that made some attempt, both rhetorically and in reality, to share the pain. In that sense, the language of "austerity", with its deliberate historical linkage to the dreary, but socially cohesive, post-second world war years, wasn't entirely misguided. For in the aftermath of the second world war a shared sacrifice narrative developed that, in a powerful way, served as something of a societal glue, a cross-class bonding mechanism, keeping a devastated, in some ways humbled, country from fissuring as its imperial greatness waned; paving the way, eventually, for a return to prosperity in the 1950s.

Today, David Cameron's government asserts, a stunning fiscal crisis exacerbated by a growing sovereign debt crisis threatens to similarly undermine Britain's prospects - and, to head off such a collapse in the future, a dose of unpleasant tasting economic medicine is required today.

As I wrote earlier in this article, it's not an argument that I really buy. Whatever the hyperbole, Britain isn't nearly as vulnerable as was Greece to an investor stampede away from financing its debt. It didn't have to make immediate swingeing cuts to education, to welfare, to housing benefits; instead, its new political leaders have chosen to. And yet, given these choices, I find the language of shared sacrifice, and the willingness to raise taxes on the wealthy, more honest, and more socially responsible than the equivalent language of conservatives in America today.

While the Obama administration isn't averse to Keynesian spending at a federal level, arguing that short-term deficits are necessary so long as the economy remains as fragile as it is, conservative anti-taxers elsewhere in the political system are using the economic meltdown as an excuse to roll back state government on an absolutely vast scale.

Cities, counties and states around America, faced with collapsing tax revenues and electorates hostile to any and all tax increases, are implementing slash-and-burn cuts to mental health services, drug treatment programmes, welfare aid, medical coverage for low income residents and the elderly, environmental protection programmes, child protective services, transport systems, schools, universities, community policing, fire departments and many other vital services. Collectively, these cuts diminish the quality of life for all Americans; but, disproportionately, they impact the quality of life and the already-low economic opportunities of the poorest sections of the populations.

For the podium-pounders of the American right - Rush Limbaugh, Glenn Beck, Sarah Palin, California's Republican gubernatorial candidate Meg Whitman, South Carolina Tea Partier Nikki Haley and others - "austerity" doesn't in any meaningful way imply shared sacrifice. Instead it means fewer services for the poor and also lower taxes for the affluent. It's Thatcherism, or Reaganism, on steroids, entirely divorced from the realities of the moment, entirely unconstrained by historical allegiance to an alternative economic vision. Opposition to taxes has become not a strategy - as it was with Thatcher - but more of a mantra. "No new taxes" is a simplistic sound-bite that has become an all-consuming movement.

A proposal such as Osborne's, to raise capital gains taxes from 18% to 28%, would be stillborn in the US. As for VAT, some progressives in the United States have begun, very tentatively, exploring the possibility of a federal value added tax as a way to raise revenues to keep vital social programmes solvent. But, the public doesn't support such a tax and for most conservative politicians opposing the creation of a value added tax, were one to be proposed, would become a sacred calling of even greater magnitude than their opposition to healthcare reform. It's unlikely, as a result, that America will have a VAT of, say, even five percent anytime soon. As for 20%? As Seinfeld might say, "Fuggeddaboutit."

Today's British conservatives, and their Liberal coalition partners, might be deeply sceptical of the nanny state; but they aren't anti-government per se. When push comes to shove, they have absolutely no desire to defund the basic infrastructure of governance. Conservatives in America, by contrast, have wholeheartedly embraced a destructive anti-government'ism. It is an ideology that doesn't recognise either the necessity of using government institutions to ameliorate the condition of the poor or the importance of using government's tax-raising abilities to keep social systems and public infrastructure functioning properly during economic down times.

If austerity in some ways implies shared sacrifice to preserve a shared public sphere, America isn't really experiencing such an age. Yes, it is an era of utter hardship for tens of millions of families. But, at the same time, it is a moment of great wealth for the country's upper echelon. And, if the anti-tax movement keeps its momentum, especially at a state level, there is a real risk that on the ground it will also become an age of ever-growing inequality.

Sasha Abramsky

Sasha Abramsky is a senior fellow at the New York-based think tank Demos, and the author of several books including, Hard Time Blues: How Politics Built a Prison Nation and Breadline USA: The Hidden Scandal of American Poverty and How to Fix It.  His latest book is Inside Obama's Brain.

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