Missing the Mark on Deficits

11/29/10

The recent reports by the two deficit commissionsone appointed by President Obama (fiscalcommission.gov) and the other from the private Bipartisan Policy Center (bipartisanpolicy.org)do not lack specifics. In fact, they are so specific that they obscure the need for a more explicit public philosophy that reveals both their value biases and their establishment thinking.

The compositions of the two task forces clearly are designed to achieve a legislative consensus on Capitol Hill. There are self-styled centrists, moderates, conservatives and liberals. There are no paradigm-busters, few challengers of assumptions, no backgrounds from unorganized labor, elderly or youth activists. Even Trade Unions advocates are rare. About the only eyebrow raisers are provided by the relentlessly wise-cracking co-chair of Obama's Commission--former Wyoming Republican Senator, Alan K. Simpson.

It is true that both panels do include very modest cuts in the vast bloated military budget whose empire takes half of the entire federal government's discretionary spending (not including the insurance programs Medicare and Social Security). Already a tentative suggestion by the Commission's Co-Chairs to "save" $100 billion in the Pentagon budget by 2015 was called "catastrophic" by Secretary of Defense Robert M. Gates. The two reports make no mention of ending the Iraq and Afghanistan wars, or stopping contractor lobbies from bleeding the Pentagon dry, which would be a solid rejoinder to Gates.

That's the problem throughout these reports. They do not come to grips with the need for fundamental changes to expand the economy as if people matter first, to locate new revenues, launch long-overdue public works programs with their jobs throughout communities in America, and reduce the kind of deficits which are empty calories that create no real wealth, such as corporate welfare bailouts and giveaways.

For example, there is much reference to tax reform that rearranges tax rates. The private task force--chaired by Alice Rivlin and former Senator Pete Domenici (R- NM)--would eliminate special tax rates for capital gains and dividends. Fine. But why not also shift the incidence of some taxes from workers to a Wall Street tax or what may be called a tiny sales taxes on purchases of speculative derivatives, as well as stocks and bonds that economists Dean Baker and Robert Pollin say would raise several hundred billion dollars a year?

The Rivlin-Domenici report noted but did not recommend a carbon tax--another major revenue-raiser that would reduce pollution, greenhouse gases and advance solar energy and energy conservation. An added humane and economic benefit is that less coal burning would also save thousands of lives a year from air pollution, according to the EPA. Instead the Task Force proposed a sizable regressive national sales tax.

Under health care, both reports go for what they call medical malpractice reform. What they mean is not doing anything about the 100,000 Americans who die and many more sickened every year from hospital malpractice, not to mention adverse affects from drugs and hospital-clinic infections. No, by reform they mean cutting back on judicially-decided damages now being awarded to far less than the one-out-of-ten victims who even file a claim. Grotesque! A Business Week editorial years ago said the medical malpractice crisis is malpractice. Prevention is the way to save lives and money--a policy entirety ignored by the two commissions.

There is no mention in either report about ending notorious foreign corporate tax havens for U.S. companies that would bring in nearly $100 billion a year. And, remarkably, though some mention is made of tax compliance, they ignore the regular estimate by the Treasury Department of $300 billion a year in uncollected taxes.

Not surprisingly, the two establishment reports did not consider the enormous economic savings from adopting a single payer--full Medicare for all--health insurance system. (See: http://www.pnhp.org/news/2009/april/testimony_of_david_u.php)

Three other large areas were ignored. First is cracking down on corporate crime, including at least $250 billion dollars in annual health care billing fraud and abuse. (See: http://www.corporatecrimereporter.com/sparrow091409.htm). Both the fines, the disgorgement back to the defrauded and the deterrence to corporate crime amount to large sums of money.

Second, the commission-co-chairs and the task force avoided recommending the proper pricing of our commonwealth assets that are regularly given away free (e.g., the public airwaves and hard rock minerals, such as gold and silver, on federal land) or at bargain basement fees (the national forest timber and other minerals).

Third, although both reports emphasize the need for economic growth (which produces more tax revenues to reduce red ink), there was no reference to revising global trade agreements that have left our country's huge trade deficits and its workers in dire straits. Keeping industries and jobs from moving to repressive regimes like China for reexport to the U.S. should not have been ignored. But then, look at the composition of these Task Forces and you'll see why.