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Empire and Inequality Win Again: Debt Ceiling “Deals” and Nation-Crushing Here at Home


Recall the conservative U.S. President Barack Obama’s televised speech to the nation on the evening of June 22, 2011 – the one where he announced the removal of 33,000 troops from illegally invaded Afghanistan by September 2012. “We are a nation,” Obama proclaimed, “whose strength abroad has been anchored in opportunity for our citizens here at home. Over the last decade, we have spent a trillion dollars on war…Now, we must invest in America’s greatest resource –- our people…….America, it is time to focus on nation building here at home.”

There is no Peace Dividend  

Ever-hopeful liberals who thought this meant the president was going to offer a long awaited peace dividend – the diversion of resources from the nation’s massive military budget to the meeting of rising social and economic needs at home (long supported by most Americans)– were wrong again. Since 2001, total U.S. “defense” spending has nearly doubled; it now represents roughly 20 percent of the entire federal budget. As Ronald Reagan’s former Assistant Secretary of Defense Lawrence Korb noted earlier this year, “U.S. defense spending is higher than at any time since the end of World War II. Over the past decade, the U.S. share of global military spending has grown from one third to one half. The United States now spends six times as much as China, the country with the next biggest budget.” The government could attain Obama’s originally proposed $4 trillion in spending cuts over ten years simply by returning to the enormous military budgets of the Clinton era.

But Obama has no intention of moving in this direction. “Defense” (military empire) spending has increased significantly under the supposedly antiwar president, who was advised and agreed before the 2008 election that (in the words of researchers at the leading financial bailout recipient firm Morgan Stanley) “there is no peace dividend.” Obama’s 2012 military budget has been projected to go as high as $1.4 trillion. The budget “deal” Obama just cut with the Republicans to permit the 173rd raising of the U.S. debt ceiling makes no serious effort to rein in the Pentagon system. “Defense” supposedly takes a $330 billion hit over ten years. But, as Tom Engelhardt recently noted in reflecting on Obama and Senate Majority Leader Harry Reid (D-AZ)’s original proposal of $400 billion in ‘defense’ reduction, however, it’s all sleight of hand: “Obama’s $400 billion in Pentagon ‘cuts’ are not cuts at all — not unless you consider an obese person, who continues eating at the same level but reduces his dreams of ever grander future repasts, to be on a diet. The ‘cuts’ in the White House proposal, that is, will only be from projected future Pentagon growth rates. …They are expected savings based largely on the prospective winding down of America's wars and, like so much funny money, could evaporate with the morning dew.” The debt ceiling “deal” lets the next president and Congress “change the formula for defense spending” in 2014. Even before that date, however, insiders know very well that Pentagon budgets are readily increased quickly in accordance with policymakers’ understanding of threats – real, perceived, and manufactured – to American “security.” (TomDispatch, August 2, 2011).

Of course, a $330 billion real world cut could be met by the continuing retraction of unnecessarily (and criminally) deployed troops in Iraq and Afghanistan and the suspension of over-budget and unnecessary weapons programs. Serious structural reductions in the military-imperial budget are completely off the table. The military-industrial-complex continues to enjoy an open-ended entitlement to tap the treasury of a government that has spent decades raiding the Social Security trust fund to offset deficits caused by the war budget and tax cuts and loopholes for the rich.

The Rich are Getting Richer  

Serious investment in everyday American working people and families is off the table too. Masses of ordinary Americans are struggling as the U.S. economy limps through the weakest “recovery” on record. Last June, the official jobless rate went back above 9 percent (real or functional employment was considerably higher) and millions of Americans faced the expiration of extended unemployment benefits. Foreclosures continue at historically high levels and food pantries are serving record numbers of people in some locales. Forty five million Americans go to bed hungry each night. Meanwhile, the top 1 percent that owns more than 40 percent of the nation’s wealth (and 57 percent of its financial wealth) sees its grotesquely outsized share of the nation’s net worth grow in the wake of a Great Recession that has played the classic role of capitalist crises – increasing the concentration of wealth and power. In New York City last year, Wall Street financial institutions paid themselves $20.8 billion in cash bonuses last year while 120,000 men, women and children spent at least one night in a city shelter, an all-time record.

Rising inequality is abetted by the federal government’s astonishingly weak and falling taxation of the rich and corporate Few. As U.S Senator Bernie Sanders (I-VT) noted in no less capitalist a venue than the editorial pages of The Wall Street Journal last week, “The rich are getting richer. Their effective tax rate, in recent years, has been reduced to the lowest in modern history. Nurses, teachers and firemen actually pay a higher tax rate than some billionaires …Many corporations, including General Electric and Exxon-Mobil, have made billions in profits while using loopholes to avoid paying any federal income taxes.”  No wonder Americans are angry, with nearly three fourths (72 percent) of the population believing (according to a mid-July Washington Post/ABC News poll) that Americans earning more than $250,000 a year should pay more in taxes. Most Americans believe that job creation should be a bigger government priority than deficit reduction, that social protections should be expanded (not contracted), that the rich are under-taxed, that wealth inequality and poverty are the nation’s leading moral issues, that big business and the wealthy exercise far too much influence over government, and that Social Security and Medicare benefits should be protected and expanded.

So what? Sanders offers chilling commentary on the American one-and-half party system’s abject service to the rich: “If the Republicans have their way, the entire burden of deficit reduction will be placed on the elderly, the sick, children and working families…. [But] although the United States now has the most unequal distribution of wealth and income of any major industrialized country, [Obama and the] Democrats have …handed the wealthy even more tax breaks. In December, the House and the Senate extended President George W. Bush's tax cuts for the rich and lowered estate tax rates for the wealthiest Americans. In April, to avoid the Republican effort to shut down the government, they allowed $38.5 billion in cuts to vitally important programs for working-class and middle-class Americans.”

Signing on to the Republican Framework  

The Republicans have just had their away again, and they’re not through. The “historic” debt-ceiling accord just agreed to by Obama, Reid and House Speaker John Boehner (R-OH) amounts to $917 billion in spending cuts with no revenue-generating tax hikes or loophole-closings of any kind. The G.O.P. is supposed to have “compromised” by dropping a proposed constitutional amendment requiring a balanced budget and by agreeing that the debt ceiling will not be allowed to emerge as an issue again before the 2012 elections. But the amendment was never anything but theater and a bargaining chip. The rightmost of the nation’s two establishment business parties will have no problem pushing for further spending cuts (exempting the Pentagon) when the 2012 budget deadline of October 1 gives them another opportunity to threaten to shut down the government in the disingenuous name of “deficit reduction.”

Defending themselves against left charges of sell out, the administration and its conservative Democratic allies boast that the “deal” does not include any major attacks on Social Security, Medicare, and Medicaid. But the real assault on those “entitlements” (funny how this term is never applied by “mainstream’ commentators to the Pentagon system and other forms of corporate welfare) has just been pushed back a little. As left economist Jack Rasmus explained on ZNet last Monday, “The bigger attack on social security, Medicare, Medicaid is still to come. The next round…is the 2012 budget negotiations that are supposed to conclude by September 23. Republicans will get another ‘bite of the apple’ in spending only cuts at that time. And Obama and Democrats will likely cave in to those demands yet again, as they have repeatedly the past year.”

Things should get more regressive in November. That’s when the August 2nd agreement’s 12-member “Bipartisan Debt Reduction Commission” makes proposals for a further $1.5 trillion in l spending cuts. Obama has announced that the commission’s recommendations will be “submitted for an up or down vote only” by Congress. If Congress fails to approve the proposals, a pre-arranged set of cuts will kick in. Rasmus elaborates: “That means some small group…will  …decide solely between themselves the composition and magnitude of cuts in Medicare, Social Security, Medicaid, how much tax loopholes will be closed, and how much Defense spending will be cut.” The reactionary composition and leanings of such commissions are well understood in the neoliberal era: “we can expect $2 in cuts in Medicare and Social Security for every $1 in tax loophole closing and Defense spending reductions…if we’re lucky.”

Don’t take it just from angry radicals and “disappointed” liberals that the debt-ceiling “deal” is a right-wing triumph. Listen to the Republican Wall Street Journal columnist William McGurn. “It’s hard,” McGurn noted last Tuesday, “to look at the debt-ceiling and see it as anything but a conservative victory…the deal has Democrats, essentially, signing on to the Republican framework for defining the problem: spending that is too high rather than taxes that are too low…Come the 2012 elections this deal will help force the debate that all conservatives have wanted all along.”

The harsh neoliberal message is clear as day in the United States: “the banks having been rescued, governments will do nothing to avert the continuing human recession. Instead, they plan to intensify their attacks on social programs and the working class” (David McNally, Global Slump [PM Press, 2011], 184).

The Real Winners 

Liberal economist and New York Times columnist Paul Krugman is right to say that the Obama-Reid-Boehner debt ceiling deal is disastrous for “a deeply depressed economy” since “The worst thing you can do in these circumstances is slash government spending…that will depress the economy even further” (Krugman, “The President Surrenders,” NYT, August 1, 2011). Yes, of course. But why does Krugman insist on accusing Obama of “surrendering?” At some point it needs to sink in with liberal and “progressive” commentators that the fake-progressive Obama has been acting in accord with his rich history of right-leaning corporate-imperial centrism. His recurrent “shifts right” (how many has the mainstream media announced since the summer of 2008?) are the predictable outcome of his own longstanding deeply conservative and neoliberal politics and of his promises kept to the rich and powerful Few, whose increasing wealth and influence are the real force behind the longstanding rightward drift of American politics in the neoliberal era.

The chattering classes are debating who won the debt-ceiling drama. Some say Obama, who gets to pose as a great “compromiser” and to woo “moderates” and Independents by countering Republican propaganda that he is a big government socialist. Others point to “the Tea Party,” credited for pushing the “debate” rightward, or Boehner, who gets to seem like a cool statesman who ultimately kept his “Tea Party lions” under control while facing down the White House. Meanwhile the rich and powerful Few – the leading sponsors of the Democrats, the Republicans, and the super-Republican “Tea Party” alike – continue to cash in on their lockdown-like control of the nation’s politics and on the continuing impoverishment and insecurity of ordinary people at home and abroad. They are as usual the real winners under what Edward S, Herman and David Peterson call America’s “unelected dictatorship of money.”

The persistent losers are the working and lower classes, whose hope for change through the America’s corporate-managed electoral process are regularly drowned in the icy, money-soaked waters of historical and political “reality.” In the harsh actuality of U.S. politics and policy, the officially “elect-able” candidates are vetted in advance by what the left historian Laurence Shoup calls “the hidden primary of the ruling class.”  By prior Establishment selection, they act safely within the narrow parameters set by those who rule behind the scenes to make sure that the rich and privileged continue to be the leading beneficiaries of the American system. In its presidential as in its other elections, U.S. “democracy” is “at best” a “guided one; at its worst it is a corrupt farce, amounting to manipulation, with the larger population projects of propaganda in a controlled and trivialized electoral process. It is an illusion,” Shoup noted in 2008, “that real change can ever come from electing a different ruling class candidate.”

Paul Street (www.paulstreet.org) is the co-author with Anthony DiMaggio of the newly released Crashing the Tea Party (Paradigm Publishers, 2011). He is also the author of Empire and Inequality: America and the World Since 9/11 (Paradigm, 2004) and The Empire’s New Clothes: Barack Obama in the Real World of Power (Paradigm, 2010.) Street can be reached at [email protected]. 

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