Deficit Reduction Or Economic Destruction?

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They also want to freeze wages for federal workers, simultaneously eliminating 250,000 non-defense contractor jobs by 2015 and 200,000 federal jobs by 2020. The same people who give lip-service, about the importance of education, want to gut funding for subsidized student loans.

[Speaking Truth To Power]

For months Republicans, and the Tea Party crackpots, have railed about deficits and out of control spending. Yet, what are these exemplars of economic responsibility proposing?

Tragically, while Republicans pretend to care about the economy, they suffer from a deficit of practical ideas to help the American people. And some of the recommendations, being proposed by the National Commission on Fiscal Responsibility
and Reform, suggest some Democrats may sign on to some of the preposterous proposals being advanced by Republicans.

The 18-member bipartisan Committee has been commissioned by President Obama to draw up plans to shrink America's ballooning deficit. The Commission is comprised of eight Republicans and ten Democrats and is chaired by Republican Alan Simpson and Democrat Erskine Bowles.

On November 10, the Commission released a draft submission which, basically, proposed: A $200 billion reduction in discretionary spending; $100 billion increase through various tax reform measures; controlling healthcare costs by
changing aspects of the Medicare system; reducing farm and student loan subsidies, and shrinking civilian and federal military pensions; and, modifying Social Security.

On the face of it, this plan doesn't sound that bad right? However, when one takes a closer look, at the particulars, it becomes evident these people care more about the wealthy. Now, there are a few good elements in the proposal. For one thing, there
was mention of considering a public option, while reformulating Medicare. And the proposal to reduce military spending seems a tacit admission that we spend too much on defense.

Yet, there are many odious things in this monstrosity like attacking Social Security. They've suggested the retirement age be raised to 68 by 2050 and by 69 in 2075, this, while they increase Medicaid co-pays. They also want to freeze wages for
federal workers, simultaneously eliminating 250,000 non-defense contractor jobs by 2015 and 200,000 federal jobs by 2020. The same people who give lip-service, about the importance of education, want to gut funding for subsidized student loans. They also want to reduce the tax rate, for corporations, to 26 percent. Yet, some economics experts insist the deficit debate glosses over the primary reasons for our economic problems: stagnant growth.

Dean Baker, of the Center For Economic and Policy Research, said "Senator Simpson and Erskine Bowles appeared to have largely ignored economic reality in developing the proposals they presented to the public today," and he added, "This situation is not the result of government deficits, contrary to what seem to suggest at the co-chairs' press conference today. The downturn was caused by the bursting of a $8 trillion housing bubble. This bubble was the basis of the construction and consumption demand that drove the economic expansion through 2007."

Moreover, Baker made this interestingly insightful comment "The large government deficits are the only factor sustaining demand following the loss of the bubble wealth. If today's deficits were smaller, we would not be helping our children; we
would just be putting their parents out of work...Virtually all projections show the unemployment rate will still be over 9.0 percent at the point when the Simpson-Bowles cuts begin to slow the economy down further. This leaves the economy like a plane with one engine already out and Simpson-Bowles prepared to knock out the other engine as well."

Baker and others agree spurring growth is the essentially important issue in repairing the lagging economy. Committee member, Rep. Jan Schakowsky (D-Illinois) who serves on the commission, echoed this sentiment when she said "Fixing the
Federal deficit is not an end to itself. The goal of budget policy should be to assure long-term, widely shared economic growth." Schakowsky has formulated her own plan-which is a budget reduction of $426.95 billion. This is more than the $250
billion that the committee is attempting to cut.

Schakowsky's plan avoids cutting Social Security. "Social Security has nothing to do with the deficit," she noted. She added that there "is simply no relationship between the two and attempting to conflate them does a grave disservice to American seniors." To tackle the problem of future solvency, for Social Security, the plan would remove the payroll tax and raise the earnings cap to 90 percent. It would also create a 3 to 4 percent legacy tax on those whose earnings exceed the cap.

But, the best part of her plan would slash $110 billion from the bloated military budget, in 2015, defense budget and end the Bush tax-cuts for the richest 2 percent.

As Rep. Schakowsky and Dean Baker have said the real issue is growth. Now is truly the time for us to engage in massive projects the country needs, like building up our transportation infrastructure. Unfortunately, now that Democrats are the
minority party Schakowsky's plan will most likely die.

Republicans have made it clear they don't intend to compromise on giving the richest Americans money they don't need. The greed is obscene. Quite frankly, I believe the superrich should be taxed more.

"Speaking Truth To Empower."


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