Voices of the 1% are dominating the media and congressional discourse regarding the “fiscal cliff” by offering a “compromise” which justifies significant cuts in the safety-net “entitlements” by promising economic growth as a mask for their own self-interest. Their claim of the need for an economic environment offering more “certainty” for Wall Street and Corporate America is merely cover for establishing new rules and tax breaks to further enrich themselves.
This pole of the debate has recently been articulated by Lloyd Blankfein, CEO of Goldman Sachs and a key leader of the Fix the Debt coalition of 95 corporations. Blankfein holds out this tantalizing prospect: “There is a huge amount of investible cash that is now sitting on the sidelines, waiting for sensible reforms,” Blankfein stated in a Nov. 14th Wall Street Journal editorial. All of this job-creating investment will be unlocked, once President Obama and the Democrats simply accede to “sensible” changes in Social Security and Medicare, such as raising the eligibility age for both programs.
Wealthy executives like himself—Blankfein hauled in $16,164,405 in 2011—are willing to pay somewhat higher taxes so long as there is “flexibility and “shared sacrifices.” Blankfein and his Fix the Debt allies are quite prepared to be “flexible” in agreeing to pay a 4% increase in his income above $250,000, “but only if they are joined by serious cuts in discretionary spending and entitlements”. He apparently perceives an equivalent level of “shared sacrifices” betweent his modest tax increase and a new two-year delay in a 65-year old worker with meager income waiting to receive a Security check and the same two years to obtain healthcare coverage through Medicare. When he calls for ordinary Americans to “lower their expectations,” Blankfein seemingly believes that if you are a multi-millionaire or billionaire, you are entitled to have unlimited expectations and continued massive financial returns from society.
Meanwhile, even as Blankfein and his allies demand harsh sacrifces from those living in already-precarious cirucmstances in the name of lowering the government’s deficit, Blankfein and the Fix the Debt coalition are busy promoting the notion that US coprorations should no longer be obligated to pay taxes on their plants and other operations located outside the US. This proposed "territorial tax system" would exempt their companies' foreign profits from taxation, saving them $134 billion in taxes, according to a new report from the Institute for Policy Studies titled "The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks." Some cynics who question the depth of Blankfein’s commitment to deficit-cutting will surely suggest that the estimated $134 billion could help pay off the federal budget deficit.
Despite the obvious effort by Fix the Debt coalition to exploit the fiscal cliff crisis mentality, hasty calls for compromise are artificially setting the contours of the debate in terms that are favorable to the 1% agenda. In addition, the false urgency adds to the impetus to cede permanently hard-won social programs that have created security for tens of millions of ordinary citizens.
The set of programs that are called "the safety net" are guarantees that are undisputed in other western democracies. To compromise the guarantees provided by Social Security, Medicare, Medicaid, food stamps, and many other programs critical to the well-being of our most vulnerable citizens is to lose the foundations of a modern, humane democracy in our nation.
Before Democrats submit to this ridiculously lopsided “compromise” of a few tax dollars in exchange for major sacrifices in the safety-net, they need to consider the impact of any substantial changes to these programs on real working Americans. Workers that have expended considerable physical well-being by executing the demands of their jobs such as waitresses, auto workers, construction workers, etc. already must wait until 65 to receive comprehensive medical care for ailing bodies. In addition, many older workers have lost their insurance coverage due to unemployment or underemployment.
Consistent with the elite’s desire to divorce the discussion from uncomfortable realities, the debate is taking place without any reference to the mounting inequality in U.S. society today. Over the past thirty years, America has experienced a massive transfer of income and wealth from the lower and middle classes to the top 10%, primarily to the top 1%. This top 1% now earns 24% of all annual income, more than the bottom half of American society. In addition, in 2010, this 1% garnered 93% of all income gains in the U.S.
In the recklessness and greed enabled by this bonanza, we were dragged by the investor class into an economic collapse when the housing bubble burst in 2007 and Wall Street melted down in the fall of 2008. As economist Dean Baker has pointed out, “the indisputable reality is that the large budget deficits of recent years are due to the economic downturn following the collapse of the housing bubble,” exceeding even the costs of needless wars in Iraq and Afghanistan and the unproductive Bush tax cuts. It is this economic collapse that has directly created the current deficit that drives the call for cuts in government spending.
With millions unemployed and underemployed, tax revenues from workers are low while the costs of unemployment insurance, food stamps, other government transfer, etc. are high. The deficit has been deepened by Corporate America’s intensified efforts to limit its contributions in tax revenues since the 2008 onset of the crisis. Crorporations paid an average of 22.5% from 1987 to 2008. But since then,, corporations have paid an annual rate of just 10%, causing federal revenues to plummet annually by $250 million.
The deficit situation was not brought about by the greed of working people; rather, they have been its victims. People faced with survival needs are frankly not worried about the federal deficit on a daily basis, and are far more concerned about the deficits in their bank accounts caused by a shortage of income from family-sustaining jobs.
The deficit has been the obsession of Congress, corporate leaders, and President Obama, and the business community. Therefore, asking people to face cut-backs in Medicare, food stamps, education, public safety (police and firefighters), and physical infrastructure to help millionaires and billionaires have a better “less uncertain”, since that’s investment climate is not much of a “tradeoff” to ordinary Americans.
Not only is the general concept of a “compromise” between the most vulnerable parts of the lower and middle classes and the investment class incompatible with the realities faced by citizens living in increasingly precarious conditions our citizenry inherently unequal in this era of vast disparities in political influence, but the compromise being proposed is close to absurd. In order to avoid returning to the tax structure of the last growth period in recent history, corprorate CEOs, with the approval of much assistance of the corporate media—especially, the Washington Post-- want minor tax changes for the rich in exchange for undoing the Great Society and even the New Deal
Finally, the “certainty” that the “job creators” demand-- as a precondition for investment-- carries the price tag of the 99% living in increasing uncertainty and falling living standards. Lurking beneath the slogan of making the United States “the most competitive place for investment” is the further proliferation of low-wage, no-benefit jobs which have spread since economic “recovery” got rolling .
How can competition on the current “free trade terms” be fair for U.S. workers invited to compete with workers in Mexico and China denited fundamental union rights as well as other essential human rights? How can it be good for the environment to be competing with China and their environmental standards?
Somehow, in recent years, we have bought into the idea that American wealth stands for all of America, regardless of who owns and benefits from that wealth. Instead, we must return America to a vision where its citizens must share this wealth to make it meaningful.
But we need to look again critically at the question: “Who is America?” We have been sold a bill of goods--that even many liberals buy into--that the U.S. is merely Wall Street, business success, and profits. We have been far too quick to equate the well-being of the elite with the health of all America, and to surrender to greed and profits as the organizing principle of our society.
Acceptance of the shameful “compromise” touted by Blankfein and the Fix the Debt corporations would only destroy America’s most vital social protections, deepen insecurity among the vast majority, and reflect the nation’s increasingly hollowed-out democracy.