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An Alternative Take on Deficit Reduction

Americans on Austerity

by ANTHONY DiMAGGIO

The public rebellion against the bi-partisan campaign to cut entitlement and welfare spending appears to be gaining steam among the American public.  Nothing close to the rebellions in the streets against austerity that we’ve seen throughout the rest of the world has materialized in the U.S.  Still, opposition is now apparent at the policy level, at least as measured in a variety of public opinion polls.

Recent studies from the New York Times and the Pew Research Center put public opposition to the budget cuts officials are calling for into better perspective.  At first glance, the public appears to have swallowed neoliberal propaganda about the “need” to sacrifice public education, Medicare, and Social Security hook, line, and sinker.  A CBS-New York Times survey from this January finds that 56 percent of Americans find it “necessary to act immediately” to “lower the budget deficit,” while 56 percent feel it will “not be necessary” to increase taxes to do it.  Fifty-five percent feel it will be “necessary to cut back on government programs.”  Similarly, the Pew Research Center finds that 70 percent of Americans feel the budget deficit is a “major problem” that “we must address now.”  In that survey the largest segment of Americans – 65 percent – say that some combination of budget cuts and tax increases will be needed to deal with the issue.  The CBS-New York Times poll finds that, of the two options, cutting spending is preferred to raising taxes by a two-to-one ratio.

Conservatives and neoliberal Democrats will no doubt cite the numbers above as proof that their mandate to gut education and social welfare programs enjoys a public mandate.  The problem is that this claim is utterly false.  A closer look at the polls done on deficit reduction finds that the opposite is true: the public is increasingly rejecting the notion that they should be forced to pay the price for reckless speculation on Wall Street, which created the economic crisis and collapse.  Americans reject claims that they must sacrifice education, unemployment benefits, and other welfare programs in order to reduce budget deficits that have resulted from the Wall Street crash and corporate greed.  At the most general level, the Pew Research Center reports that Americans are twice as likely (as of December of 2010) to say that the “job situation” in the country is “the bigger concern” when compared to the “budget deficit.”  CNN polling also finds that, as of mid to late 2010 (the last time the question was asked), 57 percent of Americans supported  “stimulating economic recovery, even if it might mean less deficit reduction,” compared to just 42 percent who support “reducing the deficit” as their first priority.

One has to look closely at public opinion to see the progressive leanings of Americans.  Americans often voice strong support at the most general level for conservative-sounding platitudes such as “balancing the budget” and “cutting spending.”  Look at their specific policy attitudes, however, and one sees a radically different picture.  The most popular proposal for ensuring the solvency of government programs over the long term is to raise the Social Security contribution cap (a tax that will fall overwhelmingly on the affluent).  This initiative is supported by 64 percent of Americans, according to Pew.  This proposal, if passed, would ensure the stability of Social Security into the indefinite future, and guarantee that taxpayers do not have to run up yearly deficits to pay for the program.  This proposal would also shift more of the tax burden to the wealthiest of Americans – those who have benefitted disproportionately from massive tax cuts under the Bush and Obama administrations. 

The second most popular proposal for stabilizing government spending is one of the least draconian of all those proposed – freezing the salaries of federal workers.  This proposal – supported by 59 percent of Americans – is far less severe than the alternatives, such as massive cuts in Social Security benefits, Medicare and Medicaid spending, and mass layoffs of public sector workers. A freeze in salaries would most certainly amount to a cut in pay in light of inflationary pressures on the dollar, but it is a far more preferable solution than the alternatives that are being promoted – such as massive layoffs of public workers or the gutting of government employees’ pension funds.

Continue examining public policy attitudes on the budget and one sees that the most severe “solutions” to “balancing the budget” on the backs of the working class are strongly unpopular.  The Pew Research Center finds that just 48 percent of respondents support reducing Social Security benefits for seniors; only 38 percent support raising the Social Security retirement age; 32 percent support raising individual Medicare contributions; a mere 25 percent support cutting federal road and education spending to the states.  When asked “if you had to choose one, which would you be willing to change in order to cut government spending?,” just 21 percent and 13 percent of respondents respectively choose Medicare and Social Security as the programs to cut, according to the recent CBS-New York Times survey.  Far more popular is the bloated Pentagon and military budget, costing about $1.2 trillion for 2011 according to the Office of Management and Budget.  Fifty-five percent of Americans now favor cutting military spending over spending for social welfare programs, although one would hardly be aware of this after listening to political commentary coming from Washington and the mass media. 

Military spending has increased drastically – by approximately 50 percent – over the last ten years since 9/11, from a low of $800 billion, to nearly $1.2 trillion annually.  While much of that spending increase took place under the Bush administration, military allocations remain at Bush-era highs under Obama, and even increased according to various estimates by as much as 15 to 20 percent in the last three years.  Total spending on the wars in Iraq and Afghanistan under Obama is on track to reach nearly half a trillion dollars by the end of fiscal year 2011, totaling $478 billion from 2009-2011.  In short, Obama will have spent more in his first three years in office than Bush spent in the first five years of his “War on Terror” (from 2002 to 2006, Bush spent $405 billion for wars in Afghanistan and Iraq, compared to Obama, who will have spent an estimated $478 billion). 

Spending on foreign wars cost the U.S. approximately $1.1 trillion over the last ten years.  This staggering amount accounts for nearly ten percent of the entire U.S. debt.  The national debt was greatly exacerbated under Bush, with unfunded wars and massive tax cuts for the rich accounting for a staggering increase in what became the largest growth in the national debt (measured as a percent of total debt) in post-World War II history. 

The dirty secret of Republican politics is that it has nothing to do with “balanced budgets,” “small government,” and “limited spending.”  Quite the opposite is true.  Republicans habitually spend like drunken sailors while in office, while leaving growing budget deficits to fiscally conservative Democrat candidates (of the Clinton-Obama variety) to clean up when they finally take office.  Total growth in debt increased by 38 percentage points under Bush – the highest ever of any post-World War II president.  The second and third highest growth in debt as a percent of GDP took place under Reagan and George H. W. Bush – who presided over 20.6 and 15 percentage point increases in the debt during their administrations.  Compare this to fiscally conservative Democrats such as Clinton, who saw debt decline by 9.7 percentage points during his two terms in office after he committed to “balanced budgets” and “ending welfare as we know it.”  Extending the analysis beyond these presidents yields similar results.  Debt as a percent of GDP grew by a total of 43.7 percentage points under Republicans in the post-World War II period, while debt declined by 75.7 percentage points under Democratic administrations (excluding Obama, whose term is not up yet, and is not calculated here).  It’s a strong sign of the deterioration of political debate in this country that the Republican Party is now successfully claiming to be the party of fiscal responsibility and limited spending in light of the astronomical and uncontrolled growth in debt under Republicans documented above.

If Americans are truly interested in controlling the growing national debt now and into the future, the military budget is the place to start.  U.S. imperialism and violence have largely alienated the United States from the rest of the world, contributing to the destabilization of the Middle East and greatly increasing the terrorist threat to the United States.  There is no better time than now to take a step back and re-evaluate U.S. military spending priorities.  According to CNN polling, as of December 2010, opposition to the Afghan war reached an historic high, with 63 percent of Americans opposing the war – a 12 percentage point growth in the last year.  CNN finds that 56 percent of those surveyed feel that the war is going either “moderately” or “very badly,” a 13 percentage point increase in the last nine months, while a December ABC-Washington Post poll finds that 60 percent feel the war is not worth fighting – a 21 percentage point increase in the last two years.

Far too much has been made of the alleged debt “crisis” in recent years, considering that the national debt-to-GDP ratio is far lower today (only half of what it was) when compared to its highest point during the 1940s.  At the turn of the decade, the current debt stood at approximately 60 percent of GDP, compared to the post-World War II historical high of 120 percent during the 1940s.  According to the Congressional Budget Office, debt is not expected to reach even 90 percent of GDP (30 percentage points less than the historical high) until 2020.  In short, U.S. debt is far smaller today than it’s been in the past, and it is in no danger of reaching historic levels anytime in the near future. 

Furthermore, the 1940s saw the highest levels of economic growth of the last sixty years, suggesting that simplistic attempts to link growth to debt are largely unhelpful and propagandistic.  Still, uncontrolled growth in spending over a number of decades (particularly on destructive endeavors such as unchecked militarism and empire) does pose a threat to American prosperity.  Such spending redirects vital resources away from productive spending on education, health care, and social welfare programs, and instead focuses it on destruction, death, and destabilization.  If Americans are really interested in limiting unchecked spending, they need to take a close look at growing military budgets as their starting point.

ANTHONY DiMAGGIO is the co-author (along with Paul Street) of the forthcoming “Crashing the Tea Party” (Paradigm Publishers) due out in May 2011.  He is also the author of When Media Goes to War (2010) and Mass Media, Mass Propaganda (2008).   He has taught U.S. and Global Politics at Illinois State University, and can be reached at: adimag2@uic.edu