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Rappelling Down the Fiscal Cliff: A Proposed How-to Guide for Progressives

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Well, the "negotiations" are going on over dealing with "Fiscal Cliff" (which is more like a fiscal slope). Given the Republican intransigence and acting as if they, not the Democrats, had won the election, President Obama is starting to sound as if he is negotiating with himself. (Not surprising. After all, this is precisely what the DLC-led Democrats did over the Bush tax cuts when they were first introduced back in 2001, which adoption began the downward fiscal and monetary slope to the present situation. And on most of the major issues, especially on war and foreign policy, the President is still acting very DLC-like.) But there is another approach that could be taken, which is what the column below is about.


If one started from the position taken here, which is essentially the few-have-ever-heard-of-it-because-it-has-received-virtually-no-exposure "People's Budget" of the Congressional Progressive Caucus, plus a few other features, there would actually be some stuff that one could bargain away and still come up with a progressive solution to the problem. But since the President has already started from the middle (to be generous about it), it is likely that we are going to end up with a bad bargain, e.g., raising the Medicare eligibility age to 67 (which would actually increase overall health care costs [1] and is the first step on the road to the destruction of Medicare). This is especially true since the Federal debt ceiling "crisis" is once again just around the corner. (Of course, it is only a crisis because the GOP insists on making one out of it --- never seemed to be a problem when the debt limit had to be raised continually to pay for Bush's wars.) At any rate, here is a proposed progressive guide, with much credit due to the Progressive Congressional Caucus and Sen. Sanders, for how to effectively deal with the GOP and the "Fiscal Cliff" without giving away the whole store in advance.

The United States does have a serious Federal debt/deficit problem, and it is important for progressives to recognize that fact. There is no danger of the United States, with its enormous productive power and its enormous borrowing power, "becoming Greece" at any time in the foreseeable future. But the two problems are important, and must be dealt, not for the reasons the "small government" GOPers give, but for two very real ones: interest payments are taking up an ever-increasing portion of total Federal expenditures, and thus less and less money is available for national domestic spending, whether it be for infrastructure, education, research, or, let's say, the National Weather Service and the Federal Aviation Administration. (Just wait for some Republican to propose that the FAA be given just enough funds to put only every other flight under Air Traffic Control and for the NWS get along with being able to track only every other hurricane. After all, Romney proposed a major defunding of FEMA.) That the current problem is largely the result of George W. Bush's unpaid-for wars and Medicare expansion, and his tax cuts for his "you are my base" rich folks, needs to receive even more mention.

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The GOP actually just loves "big government" when it comes to, for example, the criminal enforcement of religious determinism in the outcome of pregnancy and loves big spending on the military, the prison-industrial complex, and etc. But they do want to use this manufactured crisis to pursue Grover Norquist's true agenda (2): "shrinking the Federal government [that is the parts they don't like] to the size of a bathtub and then drowning it in the bathtub." Their immediate targets are, of course, those announced by Romney/Ryan: Social Security, Medicare and Medicaid.

Social Security happens to be funded completely outside of the Federal annual budget and can be fixed easily by, for example, raising the upper income limit on payments-in. Medicare and Medicaid do pose threats to Federal spending capabilities, but only because a) health care is so expensive in the United States and b) precisely because of the existence of Medicare, spending is so heavily tilted towards the elderly when the same services if provided to people at a younger age could serve to, among other things, reduce the costs of care when they get older. This situation, however, cannot be rectified without a major overhaul of the US health care delivery system (as in single-payer), but that is not going to happen anytime soon. So where do we go from here, in a way that makes sense for the whole of the American people?

We hear a lot about "Simpson-Bowles," actually a failure, which happened to focus heavily on major reductions in the paid-for-benefits programs (mis-named "entitlements"), Social Security and Medicare, and Medicaid. (The latter is actually as much a subsidy for the health care system as it is a health care benefit for the poor, because without it hospital emergency services would be even more overburdened with the un-insured than they are now.) Interestingly enough, Erskine Bowles is an old right-wing, DLC, Democrat, a former banker who was once Mr. DLC-er himself, Bill Clinton's, Chief of Staff. The chief claim to fame of Alan Simpson, a former far-right wing GOP Senator from Wyoming, is that he was the mentor of Dick Cheney. And boy do they get publicity, as the pressure builds and builds to use the "fiscal cliff" to indeed start taking aim at the paid-for-benefit programs, even, apparently, reaching to the White House. But there is another way, and it is what progressives should be rallying around.

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What has received virtually no publicity (although it has received from very nice endorsements, including one from the aforementioned Bill Clinton, see the document on the web) is the "Peoples' Budget," first released in 2011 (3). It was produced by the Congressional Progressive Caucus under the leadership of Cong. Raul Grijalva of Arizona and supported by other Congressional figures like Sen. Bernie Sanders and presumably the newly re-elected Cong. Alan Grayson. The US is fortunate as compared with many other advanced capitalist countries that came a cropper during the 2007-2009 blow-up of finance capitalism in that it has some very deep pockets from which all kinds of money can be drawn (given the political will). And many of those pockets would be dug into with some form of the following measures (many of which appear in the People's Budget, but some of which have been drawn from other sources over the years).

1. Raise personal income taxes on the rich and raise the collected taxes on the large corporations, embracing "tax and spend" under the slogan "Tax the rich; spend for the Nation." (On paper, US corporate tax rates rank fairly high; however as collected [the corporations employing many accountants] they rank rather low.)

2. Close all the tax loopholes for the same parties. (We are not talking about the charitable deductions and mortgage interest payments here, of course. But such measures would put lots of accountants out of work.)

3. Restrict the export of capital so that employment and the tax base here could expand.

4. Tax overseas profits.

5. Create a separate national capital expenditure budget like the state and localities have, funded by specific bonding authority. This would take all infrastructure spending off the Federal budget, and allow the nation to really deal with its rapidly deteriorating roads, railroads, mass transit, water supply, electrical grid, and internet systems.

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6. End the so-called "drug war" which commits billions of dollars annually to law enforcement and imprisonment of non-violent "drug offenders," which would significantly reduce the size of the US prison-industrial complex (highest number of incarcerated people in the world, by proportion overwhelmingly non-white) and tax the sale of the formerly "illicit" drugs (a potential biggie).

7. Create a Medicare-for-all/single-payer health care financing system that would save several hundred billion dollars per year in administrative costs.

8. End the subsidies for the agribusiness and the extractive industries.

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Steven Jonas, MD, MPH, MS is a Professor Emeritus of Preventive Medicine at StonyBrookMedicine (NY) and author/co-author/editor/co-editor of over 35 books. In addition to his position on OpEdNews as a "Trusted Author," he is a Senior Editor, (more...)

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