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In coming weeks the recently re-elected Barack Obama will propose trimming the vestiges of the New Deal—Social Security, Medicare and Medicaid, in the decades long effort of bi-partisan Washington to consolidate total control of Western economies in the hands of a corporate plutocracy. The technocratic rationale Mr. Obama will offer is ‘demographics,’ the fact that, class differences aside, people are living longer than we used to. And for the susceptible among us, some misdirection about ‘living beyond our means’ will be added for good measure.
However, people have been living approximately as long as we currently do for several decades now. And the canard that ‘we are living beyond our means’ dates back to the 1960s. What has changed is that the liberal Democrat needed to sell ‘shared’ sacrifice to those on the receiving end of it—labor, the working poor and the poor, has been returned to office to finish the job. Sure Mitt Romney would do the same– there is a long, bi-partisan, history here. But to be clear–this fight is over the allocation of economic resources, not ‘scarcity’ thereof.
When Democrat Bill Clinton ran for president in 1992 he did so in the midst of the first ‘jobless recovery’ caused by the massive financial looting of the Savings and Loans and the de-industrialization of America begun in the early 1980s. He ran as a corporatist Democrat under the mantra ‘it’s the economy stupid’ and promised to increase social spending and raise taxes on the wealthy to fund government.
Upon his election Mr. Clinton appointed Goldman Sachs financier Robert Rubin, first to his National Economic Council to coordinate economic policy, and later as Treasury Secretary. It was banker Rubin who ‘discovered’ the national debt ‘crisis’ that required the immediate attention of the Clinton administration. Mr. Clinton promptly abandoned his promise to increase social spending and laid the groundwork for cutting it, or as he put it ‘ending welfare as we know it.’
After Mr. Clinton left office and the budget ‘crisis’ behind, tax rates for the rich and corporations were drastically cut, two phenomenally destructive, expensive and unnecessary wars were undertaken, a massive prescription drug benefit that denies the government the right to negotiate drug prices with drug producers was passed, a corrupt, dysfunctional banking system was bailed out to the tune of tens of trillions of dollars and an infrastructure of domestic surveillance and control was built to ‘prevent’ terrorist attacks that the George W. Bush administration had been fully informed were to be carried out months before they actually were. To state the obvious: the budget ‘crisis’ was not raised to prevent any of these programs from being passed and funded.
As with Bill Clinton’s appointment of Robert Rubin to key economic posts, Barack Obama made his economic agenda known when he created his ‘deficit commission’ and stacked it with know-nothing neo-liberal hack and Morgan Stanley Board member Erskine Bowles and crusty antique Republican Alan Simpson of the public welfare dependent state of Wyoming. The hostility of both men to the social insurance programs now in their purview was a matter of decades-long public records. And in fact, Mr. Bowles had led a Clinton administration effort to ‘privatize’ a portion of Social Security for Wall Street. (The stock market return in the years since that effort was undertaken = 0%).
The coalition to cut social insurance programs runs from true believers who either don’t understand or don’t care about how national accounts work (the U.S. has a fiat currency) to Wall Street insiders who want to earn fees from privatizing Social Security to trans-national plutocrats who want to shift ever more public resources into their own pockets through corporate and individual tax cuts and through ownership and management of private insurance schemes. That a representative of all of these interests—Democrat Erskine Bowles, is Mr. Obama’s ‘lead’ in developing and pushing forward the rationales for cutting social insurance ties Mr. Obama directly to these interests.
Social Security and Medicare are funded with deductions made from the paychecks of working people. (Corporate contributions to these programs are part of the total compensation paid to labor, not the ‘property’ of the corporations). These are insurance programs in significant ways like private insurance, only more efficient and designed to provide a social benefit rather than to enrich insurance executives. Social Security can meet all of its obligations for the next thirty years and most of them thereafter with no changes or cuts to the program. The ‘crisis’ with Medicare is due almost entirely to expected increases in medical costs that a ‘Medicare for all’ healthcare system that has the ability to negotiate prescription drug prices would solve. And by providing pre and post-natal care to the working poor and poor, Medicaid means the difference between first and third world infant mortality rates.
The scare tactics being used to cut social insurance depend on the public’s misunderstanding of several related issues. In the first, the U.S. isn’t ‘broke’ because it can create money as needed—ask yourself: how were the bank bailouts funded? Next: what is an ‘entitlement’ when existing government policy overwhelmingly benefits the rich through favorable tax treatment, cost-plus government contracts, Federal Reserve bailouts and government guarantees of the banks. ‘Free markets’ have nothing to do with how the wealthy became so. The fight over ‘entitlements’ is over how government expenditures are allocated, not over their ‘scarcity.’
Social Security has an income ‘cap’ of $110,000 above which no deduction is made. A billionaire who became rich by sending jobs overseas—by firing and lowering the wages of labor, pays a smaller proportion of his or her income into Social Security than does the worker whose wages have been reduced. And by reducing the wages of labor, workers are left with less to pay in to these social insurance programs through payroll taxes. The problem with Social Security and Medicare is that a small group of connected plutocrats have ‘entitled’ themselves to far more of what labor produces. How often has the deficit ‘crisis’ been raised when there is a war to be fought for multi-national oil companies or a corporate welfare scheme like the bank bailouts to be paid for?
And this all ties back to Mr. Obama’s Affordable Care Act– if he and his corporate supporters were truly interested in fiscal discipline they would have pushed for far less costly ‘Medicare for all.’ Instead Mr. Obama pursued a deal with private health insurers that includes a ‘profit’ above the cost of a government program. Those wanting to argue the political infeasibility of Medicare for all are now confronted with a ‘liberal’ Democratic President who believes he can cut the programs that most of us have paid into under known terms for decades. If doing this is politically feasible while building a rational public health care system isn’t, we are truly doomed.
Ultimately Mr. Obama, like his ‘opponent’ Mitt Romney, is but an apparatchik in a class war launched by the rich against the rest of us. Left out of the contrived nonsense about an ‘entitlement’ society is who exactly is entitled. Were the government spending the rich live off of under the knife there would be no argument of scarcity—we have the wars, the bailouts and corporate welfare to prove it. But social insurance programs stand between over one hundred million of our citizens and destitution. And these are programs we have collectively paid for—they aren’t a ‘gift’ as the rich and their servants in government would have us believe.
Rob Urie is an artist and political economist in New York.