The “debate” is how deep to cut

March 2, 2011

We know both parties endorse the austerity agenda, but does it make any sense at all?

GET READY for the talk of a federal government shutdown to drag on for weeks to come.

The government is facing a shutdown if Congress doesn't pass a resolution by March 4 to allow the government to continue to spend money. It appeared that the Obama White House and Republicans might reach a deal in time--but for only a two-week time period, guaranteeing that the issue would return again and again. Plus, the proposal that the Republicans are making would continue to carve away at government spending for the two weeks at the same pace as their full proposal.

The White House, the Democratic-led Senate and the Republican-led House are playing a game of chicken on the budget that applies to the remainder of the current fiscal year, which ends in September.

The Democrats have themselves to blame for this predicament. Last year, when they held the majority in both houses of Congress, they didn't pass a budget for the 2011 fiscal year. Instead, they depended on "continuing resolutions" to keep the government operating.

For the most part, "continuing resolutions"--congressional actions that authorize existing government programs to go on as before--are pro-forma actions. Last year, the outgoing Democratic leadership tried to get the then-Republican minority to agree to extend government spending through September. But the Republicans agreed only to a deadline of March 4.

In the current climate of austerity politics and Tea Party chest-beating, the Republican right wants to use the authorization of spending for the rest of the fiscal year as a means to pressure the Obama administration to agree to deeper cuts in government programs.

IF THIS seems like déjà vu all over again, there's a reason why.

In 1995, after then-House Speaker Newt Gingrich and his "Republican revolutionaries" took control of Congress at the midpoint of Bill Clinton's first term, there was a major budget standoff. The Republicans thought shutting down the government would force Clinton to accept harsh cuts to Medicare, food stamps and other programs that Clinton had to that point resisted. Believing their own propaganda, the Republicans thought the shock of a government shutdown would rally a spending-weary public to their side.

But once the reality of three weeks of a federal shutdown set in--with federal meat inspections suspended, national parks closed and hundreds of thousands of federal workers forced onto unpaid furloughs--Republicans found that most Americans rejected their scheme. Right-wing House Minority Leader Tom Delay called the government shutdown Gingrich's "biggest mistake." It marked the end of whatever popularity Gingrich and the Republican right retained from the 1994 midterm election.

Given this history, Republican congressional leaders like House Speaker John Boehner and Senate Minority Leader Mitch McConnell were tamping down expectations of a government shutdown. But it can't be ruled out.

During last year's midterm election campaign, the Republicans talked casually about slicing $100 billion from government spending already authorized for this fiscal year. Once in power in the House, the party leadership proposed cuts amounting to $30 billion. But a "backbench" revolt by Tea Party favorites among the new Republican representatives pushed that figure to $61 billion.

While actually boosting spending on the Pentagon, the original House Republican proposal includes cuts to hundreds of programs, from Head Start, job training and food stamps, as well as the ideologically driven elimination of aid to Planned Parenthood and deep cuts to the Environmental Protection Agency.

"The American people have spoken," said Rep. Tim Huelskamp, a freshman Republican from Kansas. "They demand that Washington stop its out-of-control spending now, not some time in the future." John Boehner justified his support for doubling the cuts he initially proposed with the excuse that "we're broke."

In truth, these cuts would have almost no impact on the federal deficit. And of course, they come from the same deficit "hawks" who championed extending the Bush-era tax cuts, which will add between $200 billion and $300 billion annually to the deficit over the two-year extension passed in December.

The idea that the "American people" support slash-and-burn policies coming from Washington is an even more dubious proposition.

A Pew Center for People and the Press poll, released in early February, found the public split down the middle on the choice between reducing the deficit and spending on jobs. On 15 of 18 spending priorities, more Americans want to see funding increased rather than decreased. If anything, Americans want the government to spend more on essential programs for health and education than it is now.

But what the people actually want has no bearing on the debate in Washington, where politicians have already resolved that the next period will be one of fiscal austerity and government retrenchment. While Republicans posture for Tea Party cred, the Democrats are cravenly positioning themselves as the "responsible" stewards of austerity--still in favor of cuts, just not so deep.

For this reason, the White House and congressional Democrats denounced the Republicans' proposals. But they aren't standing firm against them. In fact, when the White House released its budget for fiscal year 2012 earlier this month, it tried to outdo the Republicans by proposing around $400 billion in cuts over five years, even reducing funding on a program that provides home heating assistance for the poor.

"Our nation is in deep fiscal trouble and cutting spending is part of the solution," House Democratic Whip Steny Hoyer said. "But we can't cut spending in a reckless, short-sighted way that mortgages our country's economic future."

With statements like this, along with the White House's embrace of austerity in its own budget proposal, it's clear that hardly anyone in the Washington elite will stand against cuts that will devastate hundreds of thousands of working-class people for whom the "Great Recession" is an ever-present reality.

The Democrats should feel confident that the Republicans will face a major backlash if they are blamed for shutting down the government. But as usual, they are refusing to challenge conventional wisdom to stand up for ordinary Americans. As David Rodgers reported for the political news site Politico on February 24:

[Senate Majority Leader Harry Reid] is being asked to give ground when the House GOP has shown no flexibility on restoring any of its cuts. Privately, many House Republicans concede that they overreached by doubling the initial reductions proposed by their Appropriations leadership. Republican mayors have complained angrily at some of the cuts in urban areas, for example.

But Boehner, under pressure from his right, is clearly skittish about standing up to tea party supporters until he sees more movement by Reid -- and most likely Obama, as well.

Translation: While the Republicans were having second thoughts, the Democrats were already agreeing to throw in the towel.

As of late February, press reports suggested the Democrats were prepared to accept a two-week extension of government spending in exchange for $4 billion in cuts. While this sounds like a small concession, it in fact represents the acceptance of spending cuts at nearly the rate that the Republican-run House approved.

NOW THAT both major parties have endorsed the austerity agenda, it might be worth considering if any of this makes sense at all. Apparently the investment bank Goldman Sachs doesn't think so.

In a confidential report that ABC News exposed in late February, Goldman economist Alec Phillips argued that the House cuts would slice up to 2 percentage points off expected growth in the U.S. gross domestic product in the latter half of this year. While Phillips didn't expect the full House package to get through Congress, he estimated that a program of cuts even half as large would depress the economy by 1 percentage point.

In a still-fragile economy recovering from the worst recession in 80 years, that sort of slowdown in growth will simply prolong the already too-long period of joblessness and collapsing incomes that millions of American workers have endured. As the New York Times' David Leonhardt explained by reference to the 1930s:

[N]o matter how morally satisfying austerity may be, it's the wrong answer. Hoover's austere instincts worsened the Depression. Roosevelt's post-election reversal helped, but he also prolonged the Depression by raising taxes and cutting spending in 1937. Only the giant stimulus program known as World War II finally ended the Depression.

Most likely the whole budget drama is little more than political theater. The leaderships of both major parties, already agreed on the twin goals of cutting government spending for the poor and not raising taxes on the rich, are simply acting out for their respective constituencies as they arrive at a mutually acceptable figure for the final price tag.

Whatever draconian cuts get agreed to in the end, you can be sure that Democrats will pat themselves on the back for having resisted even worse. But in pursuing the austerity agenda, they will have needlessly prolonged the misery of millions.

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