Liberal excuses for a budget bloodbath

YOU KNOW official politics have moved to the right when a plan to cut $4 trillion from the U.S. budget over 12 years can be passed off as "liberal."

In speech on April 13, Obama called for cuts on a catastrophic scale that would, if enacted, dramatically weaken what remains of the U.S. social safety net. But because Obama was challenging the scorched-earth proposal outlined by Republican Rep. Paul Ryan of Wisconsin, the president was able to pass off his budget bloodbath as a defense of Medicare, Medicaid and Social Security from an even worse attack by the GOP.

Obama also called for the wealthy to bear a higher tax burden. "In the last decade, the average income of the bottom 90 percent of all working Americans actually declined," he said. "Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That's who needs to pay less taxes?"

Obama's speech will have seemed refreshing to tens of millions of people rightly horrified by the Republican assault. Ryan's plan would roll back federal spending to levels last seen in the early 1930s, while slashing taxes for both wealthy individuals and corporations. He proposes to turn Medicare into a voucher program, in which seniors would have to buy substandard insurance on the free market--if they can find it at all. Medicaid funding would become a block grant to states, effectively ending it as a federal program and inviting further cuts by state governments.

Ryan seemed to have all the momentum in Washington, especially after the White House reached a deal with Republican House Speaker John Boehner on the budget for the current fiscal year. The "compromise" amounts to the biggest single-year budget cut in U.S. history--$38.5 billion, half of which comes from education, labor and health care programs.

Obama's speech was aimed at taking back the political initiative. Since neither the Republicans nor Obama have the political leverage to make their proposals law, they are positioning themselves for the 2012 elections.

OBAMA'S PLAN may seem humane compared to the Republican monstrosity. But Obama's deficit reduction proposal relies on cutting $2 in spending for every $1 dollar raised in additional taxes. That's even worse than the dollar-for-dollar cuts-for-taxes proposal made by the deficit commission that Obama appointed last year to provide a blueprint for austerity in the years to come.

According to Robert Greenstein of the Center on Budget and Policy Priorities, the Obama plan "calls for $360 billion in cuts in mandatory programs other than Medicare, Medicaid and Social Security. The large budget-cut target for this part of the budget risks leading to substantial cuts in core programs for low-income Americans, our most vulnerable people."

What's more, Greenstein notes, Obama sets up Medicare for future reductions by limiting annual growth in costs per beneficiary to the per capita increase in Gross Domestic Product, plus an additional 0.5 percent. But since Medicare costs have historically increased about 2 percentage points faster than GDP growth per capita, this will almost certainly lead to slashed benefits.

Then there's continued bloated spending on the military to fund two--or is it three?--wars in the Arab and Muslim world. Ryan's plan would leave the Pentagon gravy train undisturbed, but Obama's call for a $400 billion reduction in military spending over a decade will require "just a small real drop in planned spending over a decade," according to Defense News.

Other commentators spotted the gap between Obama's liberal rhetoric and his budget-slashing policies. Liberal Washington Post columnist Harold Meyerson noted that Obama's proposed reductions in discretionary spending "will, if enacted, lead to cuts in the very programs Obama's poetry extols."

Nevertheless, Meyerson claims that "Obama's vision was compelling not only in itself but in contrast to Paul Ryan's punching bag of a budget proposal, which, by slashing taxes on the rich and transferring the burden of rising medical costs to seniors and the poor, could not have been better calibrated to discredit the plutocratic libertarianism that dominates current Republican thinking."

Really? By embracing a budget-cutting program to the right of the already conservative deficit commission, Obama has conceded huge amounts of political ground to "current Republican thinking."

Meanwhile, Nation editor Katrina vanden Heuvel wrote that Obama's "approach continues to legitimize the inside-the-Beltway consensus that spending cuts must lead the way toward achieving fiscal responsibility."

But like Meyerson, she downplays the devastating impact of his policies in order to take solace in Obama's liberal sound bites. Obama's speech, she writes, "was a clear rebuke to the GOP's Robin Hood in Reverse agenda--taking from the poor and middle-class in order to preserve tax breaks for corporations and the wealthiest Americans."

But the tax increases proposed by Obama are really just a rollback of the George W. Bush tax cuts, not a shift to a genuinely progressive tax structure--and as was made clear by Obama's agreement at the end of last year to extend those very Bush tax breaks for the rich, it's far from certain that he'll follow through on his rhetoric.

The problem is that the liberal establishment shares the assumption common to both Obama and the Republicans that deficit-cutting must be a top priority. For example, Mary Kay Henry, president of the Service Employees International Union, stated, "We agree with the president that sacrifices must be made if we are to tackle our financial challenges. These sacrifices must be shared by all and not directed at those among us who can least afford it."

IN ANY case, Obama's rhetorical return to liberalism won't do anything for working class people already suffering as the result of his austerity budget.

And besides, we've already heard this "progressive" side before--during the 2008 elections, when he campaigned on the promise of "change we can believe in."

But once in office, the Obama administration kept trillions of dollars flowing to the Wall Street bankers--meanwhile, the vast majority of distressed homeowners was unable to get any help from the government. Obama's economic stimulus program was underpowered, and a jobs program never materialized, despite the worst long-term unemployment rate since the 1930s. The administration's health care reform was a giveaway to pharmaceutical and health insurance companies, with the extension of coverage to the uninsured postponed for years.

All this paved the way for a roaring Republican comeback in the 2010 elections and the bipartisan embrace of austerity.

Thus, Obama, by continually retreating and offering concessions to the Republicans, has collaborated in the shift of mainstream politics further and further to the right. It's not because he's a bad negotiator, as some liberals would have it. It's because both the Obama administration and the House Republicans share a common agenda dictated to them by big business: a permanent and deep cut in working class living standards in order to overcome the problems of U.S. capitalism.

Yet most people want to see the country go in precisely the opposite direction.

Opinion polls conducted by the New York Times/CBS News and ABC News/Washington Post both showed that 72 percent of adults want to see higher taxes on the rich. And the three-week mass mobilization in Wisconsin against anti-union legislation--justified in the name of budget austerity--was further evidence that working people are prepared to fight back. Paul Ryan himself was the recipient of that anger when he visited his home district in Wisconsin a few days after announcing his budget plan.

There's plenty of money available--not only to eliminate the deficit, but also to extend social programs rather than eliminate them.

Consider, for example, the proposals outlined in the Institute for Policy Studies document "Unnecessary Austerity, Unnecessary Shutdown." The authors argue that five tax reforms could raise $4 trillion over the next decade: raising taxes for millionaires and billionaires; eliminating overseas tax havens, imposing a financial transaction tax, instituting progressive tax rates and ending preferential treatment for dividend and capital gains income.

But those proposals won't fly in today's Washington, where the politicians of both parties compete to carry out the business agenda. The call to tax the rich, support the poor and vulnerable, and create jobs will have to be pressed forward by labor, social movement organizations and activists who organize to draw the line against austerity--and demand that corporations and the wealthy pay their share.