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On the Fiscal Extortion; Just Say No

By       Message Robert Borosage     Permalink
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Fix Health Care: We can't afford a broken health care system that now costs twice per capita to provide health care -- with worse results -- than other industrial nations. If we spent about what other industrial nations spend, we'd project surpluses as far as the eye can see. The needed reforms aren't addressed by depriving the vulnerable of health care -- by raising the eligibility age for Medicare or cutting Medicaid. It requires taking on the entrenched corporate lobbies -- the insurance and drug companies, the private hospital complexes that drive up prices -- and reforming how we deliver and price health care. Allowing Medicare to negotiate block discounts for prescription drugs would be an easy place to begin, saving an  estimated $350 billion over the next decade.

Stop Endless Wars: If we are going to rebuild America, we can no longer afford to police the globe, wage wars on a credit card, and coddle Pentagon waste and corruption which is the worst in the federal government. Sensible reforms, and ending the war in Afghanistan, could save hundreds of billions over the next decade. (The president's proposal apparently counts the savings from ending the war in Afghanistan as part of the package)

Lead the Green Industrial Revolution : We can't afford to ignore the catastrophic climate changes already hitting us, and we can't prosper without capturing a lead in the green industrial revolution that is already forging new markets across the world. A modest carbon tax would generate $1.25 trillion in revenue over the next decade that could be used to renovate our infrastructure and offer tax relief to those most impacted.

All of these reforms are necessary -- if not sufficient -- to getting the economy back on track. Ironically, none of them -- with the exception of those noted -- are on the table in the grand bargain discussions. Instead, what Republicans are demanding as the price of a deal is trickle down tax reform, peddling the big lie that lowering top rates fosters growth, and cuts in benefits increasingly important to family security -- Social Security, Medicare and Medicaid.

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4. A Grand Bargain Insults Our Democracy

We just had an election in which voters had a clear choice. Mitt Romney ran as the candidate by, for and of the 1 percent. He argued for lowering tax rates, closing loopholes, "reforming" entitlements and trickle down economics. Barack Obama ran against the odds of a lousy economy, calling for raising taxes on the rich to help invest in areas vital to our future.

Now the CEOs behind the "Fix the Debt" coalition are pushing a deal that tracks Romney's position -- including even the outrageous notion of using the fiscal showdown to sneak in a huge new tax loophole -- passing a territorial tax system that would exempt companies from paying U.S. taxes on profits reported abroad, essentially turning the entire world into a potential tax haven. Secure in their lavish pensions, the CEOs are ardently campaigning to curtail the retirement security vital to working Americans. This is, as Paul Krugman notes, simple class warfare from above.

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Voters expressed very different priorities for any grand bargain -- across partisan lines. Large majorities of Democrats and Republicans both want benefits for Social Security, Medicare and Medicaid protected. Large majorities want investments in education, infants and children protected. Majorities of both parties support raising taxes on the rich, shutting down corporate tax havens, saving money by ending the war in Afghanistan. Yet in their current form, Washington politicians seem intent on standing with their donors, the CEOs, and ignoring their voters.

So call the bluff of the extortionists. The president has put out a plan that already compromises more than desirable. If Republicans can't accept it, just say no. The markets will scream; the pundits will predict the end of the world; the economy may take a hit.

But if there is no deal, the structural change that occurs is the end of the Bush tax cuts. Republicans will rush to join Democrats in reviving the lower rates for the 98 percent in January. The across the board spending cuts in the "sequester" exclude most programs for the vulnerable and any cuts in Medicare, Medicaid and Social Security benefits. The Pentagon and contractors lobbies will force a rollback of the spending cuts, which can be changed at any time. That is a lot better than a grand bargain that makes structural cuts in benefits for the most vulnerable (by raising the eligibility age for Medicare or slowing the inflation adjustment for Social Security for example) that will be virtually impossible to reverse.

Just saying no has one other benefit. Instead of a big deal that is more likely to be harmful to the vulnerable than not, no deal opens the possibility of a new focus on what we need to do to get the this economy on the right track. The president could use his State of the Union to lay out a new foundation for growth that will also get our books in order. No deal might just clear the air for a new debate.

But that will open space for a serious argument about what we need to make this economy work once more. And it will do much less damage than a grand bargain that ignores the reforms we need, propagates the myths we can no longer afford, and adds burdens to the majority of Americans who are already struggling with declining wealth and increasing insecurity.

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 Crossposted at Huffington Post

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Robert L. Borosage is the president of the Institute for America's Future and co-director of its sister organization, the Campaign for America's Future. The organizations were launched by 100 prominent Americans to challenge the rightward drift (more...)

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