Thursday, January 03, 2013

Republicans Win the “Fiscal Cliff” Debate

By Mark Gabrish Conlanfor East County Magazine, www.eastcountymagazine.org
 
The first part of the “fiscal cliff” debate is over — and the Republicans won. That’s not the impression you’ll get from the corporate media, either the “objective” mainstream or the Right-wing media party of talk radio and Fox News. The mainstream media are reporting the swift passage of a bill through both houses of Congress continuing the Bush-era tax cuts for all Americans making $400,000 per year ($450,000 per couple) as a triumph for President Obama and at least a partial fulfillment of his pledge in both Presidential campaigns for a (slight) tax increase on the wealthiest Americans. (Ironically, the $400,000 at which the restored tax rates kick in also happens to be the salary of the President.) But the bill is actually a slap-dash scheme thrown together at the last minute to keep taxes from returning to Clinton-era levels for all Americans — and it leaves the Republicans with yet another opportunity to hold the American economy hostage and demand draconian cuts to what’s left of the social safety net when Congress next has to raise the U.S. debt ceiling in two months.
What’s more, the deal does nothing to end the Republicans’ ideological hegemony over Washington in general and tax and budget policy in particular. Ever since the Republicans of 1935 fought tooth and nail against Franklin Roosevelt’s proposal for Social Security, the very idea of a “social safety net” has been anathema to them. They came to a grudging acceptance of some social welfare spending in the 1950’s, when Dwight Eisenhower was President, the highest income tax rate was a whopping 90 percent, the percentage of Americans belonging to labor unions was at its all-time high and America was still an industrial powerhouse with a booming economy. But the 1960’s marked the end of progressive Republicanism and the beginning of the “Southern strategy,” which Richard Nixon and Strom Thurmond put together in 1968 to neutralize the third-party Presidential candidacy of George Wallace and which created the combination of lassiez-faire economic Right-wingers and social conservatives neurotically obsessed with other people’s sex lives that has run the Republican party ever since.
Did you vote for President Obama in 2012 expecting that he’d be a fighter to maintain Social Security and Medicare, and he’d raise taxes on the 1 percent to pay for it? No such luck. It seems that when Americans vote for Republicans, they get Republican policies — and when they vote for Democrats, they still get Republican policies. Obama came into the “fiscal cliff” negotiations with the naïve belief that the very fact of his re-election — the spectacular failure of Senate Republican leader Mitch McConnell’s pledge to make him a one-term President — would cause the opposition to deal with him fairly and honestly. Obama hoped for a “grand bargain” in which he and Congressional Democrats would agree to eviscerate Social Security by making people wait longer to collect it (to 67 instead of 65) and slashing cost-of-living increases in benefits by tying them to the so-called “chained CPI,” a bit of legerdemain that willfully ignores the reality of inflation on the fixed incomes of senior citizens.
But to the Republicans in Congress — especially the “Tea Party” fanatics who want to see just about every government program outside of defense and law enforcement either cut to the bone, outsourced to the private sector or eliminated altogether — Obama’s willingness to turn his back on the people who elected him twice wasn’t good enough. So what we ended up with was a bill that gives Obama a partial victory on taxes — and sets up yet another confrontation over the economy in March, when the country’s current debt ceiling expires and Republicans gain yet more leverage to force the deep cuts in so-called “entitlement” spending — Social Security, Medicare and Medicaid — that are the real point of their policy. They also won some immediate victories, like getting rid of the “holiday” that lowered working America’s Social Security payroll taxes without restoring the working-class tax credit the “holiday” replaced.
That means that every American making $113,700 or less in wages — which is 98 percent of us ­— will see an immediate tax increase. For a family making $80,000 per year, that will up the government’s bite on their salary by $1,600 — while couples earning $450,000 or more will save up to $9,200 per year. What’s more, the Republicans got their wish to keep the estate tax at 35 percent for inherited fortunes of $10 million or less (it goes up to 40 percent after that), instead of restoring the 45 percent rate on $7 million or more that existed before 2009. Since people who make — or have — that kind of money generally have excellent estate planners who take advantage of all existing loopholes, the effective estate tax on large fortunes is only 16.7 percent. According to the Tax Policy Center of Washington, D.C., over one-half of all U.S. estate taxes are paid, not by the 1 percent, but by the 0.1 percent — so cutting the estate tax is basically an enormous giveaway of public money to them.
The “fiscal cliff” deal is being sold as the first installment in a series of steps to reduce the federal budget deficit. That’s an odd thing to say about a bill that will increase the deficit by $4 trillion over the next 10 years. Thanks to the Republicans’ ability to set the threshold for tax-rate restoration at $400,000 instead of $250,000, the new tax bill will increase federal revenues by only $625 billion per year — nearly $1 trillion less than Obama was hoping for. The new bill also merely delays the dreaded “sequester,” the steep budget cuts in both domestic and military spending that were put into place to take effect automatically, unless Congress acts to reverse them, the last time Obama and the Congressional Republicans played chicken over the debt ceiling. And by slashing the amount of tax money available for deficit reduction, it gives the Republicans more leverage to demand spending cuts the next time the debt-ceiling debate happens.
What’s even more infuriating about the Republicans’ ideological triumph is how many issues are off the table. Nobody in Washington is talking about returning to the 90 percent top income tax rate under Eisenhower, the 70 percent of Kennedy and Johnson, or even the 50 percent top tax rate under that notorious Bolshevik, Ronald Reagan. The whole obsession with deficit reduction in an economy that is barely growing and is essentially on an IV drip will virtually ensure that the U.S. will meet the fate of the poorer countries in the European Union — Greece, Italy, Spain — in which “austerity” programs have essentially ended economic growth and investment. The people of those countries are caught in a vicious spiral, in which cutbacks in government spending reduce economic demand, which reduces the ability of consumers to spend, which reduces investment in production, which shrinks the economy and creates the pretext for even more austere “austerity” policies.
This is the future the Republicans envision for the U.S. Sometimes it seems that whenever the American people have the temerity to elect a Democrat to anything, especially the Presidency, the Republicans are out to impose collective punishment on us by making it difficult for the Democratic President to govern and impossible for him to do the things he promised the people who voted for him. The Republicans — especially the hard-core libertarians in the “tea party” — see government’s only legitimate responsibilities as national defense, law enforcement and a judicial system to rule on contractual conflicts between corporations. They specifically reject any government role in helping people without jobs or health care, or otherwise in need. They not only reject any attempt by government to reduce economic inequality, they believe that great inequalities in wealth and income are the sign of a healthy society that is allowing its superior individuals to reap the full benefit of their superiority — no matter how much this hurts anyone else.
This is the philosophy behind the American Right’s second-favorite book (after the Bible), Ayn Rand’s Atlas Shrugged. It’s the philosophy Mitt Romney was expressing last May when he told a roomful of his super-rich buddies in Boca Raton, Florida that “there are 47 percent who are with [Obama], who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it.” It’s what Romney repeated the day after the election when he had a conference call to his donors and told them, ““The Obama campaign was following the old playbook of giving a lot of stuff to groups that they hoped they could get to vote for them and be motivated to go out to the polls, specifically the African American community, the Hispanic community and young people. In each case they were very generous in what they gave to those groups.”

It’s what Right-wing propagandist Bill O’Reilly was talking about the night of the election, when he casually and contemptuously dismissed Obama’s victory as the work of “50 percent of the voting public who want stuff. They want things and who is going to give them things? President Obama. He knows it and he ran on it. And whereby 20 years ago President Obama would have been roundly defeated by an establishment candidate like Mitt Romney. The white establishment is now the minority. And the voters, many of them, feel that this economic system is stacked against them and they want stuff.”

Never mind that in an economy that is becoming increasingly unequal, there are plenty of rational reasons for people to believe that the system is stacked against them. According to the Congressional Budget Office, from 1979 to 2007 the share of income of the top 20 percent of Americans rose from 50 percent to nearly 60 percent, while every other group’s share fell. And though the 2008 recession touched the brake pedal in America’s long drive towards greater inequality, UC Berkeley economist Emmanuel Sainz said that in 2009 and 2010 the income of the average American family rose 2.3 percent — but the incomes of the 1 percent rose 11.6 percent, giving their class 93 percent of all increased income since the recession technically ended.

Unfortunately, the losers in this game of economic grab-and-snatch don’t have a voice in American politics. The Republican Party has become something that wasn’t supposed to be able to exist in America — an ideologically coherent, methodically disciplined major party pushing an extremist agenda in the corridors of power. The Democratic Party has edged farther and farther to the Right, so much so that former conservative author and activist Bruce Bartlett has called Obama “an Eisenhower conservative,” and last March Walter Ellis of the Daily Telegraph in Britain (http://blogs.telegraph.co.uk/news/walterellis/100142115/there-is-no-proper-left-in-american-politics-even-obama-is-more-right-wing-than-cameron/) rated Obama more conservative than Britain’s Conservative Party prime minister, David Cameron.
Meanwhile, the American Left — the mass movement that turned people out onto the streets in the 1890’s, the 1930’s and the 1960’s to demand a more equal society that protected its workers, senior citizens, women, people of color and environment — is essentially dead. Oh, it shows occasional galvanic twitches — like the anti-globalization protests in Seattle in 1999 and the Occupy movement in 2011 — but mostly it’s a rotting corpse, slain partly by three rounds of intense, vicious and violent government repression and partly by its own idiocy. What’s left of the American Left has forgotten how to talk to working people; it’s become an ever more abstruse intellectual debating society, running itself by rules of “participatory democracy” and “horizontal decision-making” that in practice render it unable to do much of anything at all.
When the Bourbons — the hereditary ruling family of France who had been overthrown in the 1789 Revolution — were restored to power after the defeat of Napoleon in 1815, they ruled as they always had: maintaining a lavish lifestyle and a ruinously expensive military establishment, throwing anyone who hinted at dissent into the Bastille, and charging the rest of France stiff taxes to pay for it all. Charles Talleyrand, the master opportunist who had served the Bourbons, the Revolutionaries, Napoleon and the Bourbons again, said, “They have learned nothing, and they have forgotten nothing.” A lot of political commentators trotted out that quote in the first two weeks after Obama’s re-election, assuming that the demographic shifts in the U.S. electorate — particularly increasing participation by young people and people of color — spelled long-term trouble for the Republican Party.

But the Republicans remain in control of the ideological agenda in Washington. As Los Angeles Times columnist Michael Hiltzik recently wrote (http://www.latimes.com/business/la-fi-hiltzik-20121230,0,966732.column), “The disagreement in Washington is no longer whether to cut, but where and by how much.” With the Democrats playing the game of Right-wing catch-up they’ve been committed to since Ronald Reagan first won the Presidency in 1980, and the absence of a truly mass Left to counteract the power of political money and push the political system in a more progressive direction, the U.S. economy will become more and more unequal, its labor movement will continue to shrink and finally disappear altogether, the social safety net will become a distant memory, and the whole idea of government as a countervailing force to corporate money and power will be flushed down America’s memory hole.