Wall Street, Main Street and the Debt Deal

The debt deal cuts roughly $2.4 trillion in federal spending over the next decade without any new revenue streams. It slashes social services like education and health, and threatens to weaken the vital entitlement programs of our frayed social safety net. It is far from representing the shared sacrifice that an overwhelming majority of the American people had demanded of their elected officials in the days and weeks leading up to the debate and negotiation.

This deal forces all the sacrifice onto working families who are already struggling to make ends meet. None of it will be borne by the nation’s wealthiest Americans and most profitable corporations. After years of record-breaking increases in military spending and a badly skewed military profiteering budget, the Pentagon will only be asked to manage the same ratio of cuts that already slashed social service programs will endure. Is this fair or logical?

When it became apparent that a final debt agreement did not satisfy even the basic standards of fairness, Rep. Raúl Grijalva (D-AZ), co-chair of the Congressional Progressive Caucus, released a statement which read in part, “This deal trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals…does not even attempt to strike a balance between more cuts for the working people of America and a fairer contribution from millionaires and corporations…[and] is a cure as bad as the disease.”

House member Rep. Paul Tonko (D-NY) referred to the bill as “job-destroying” and as a plan that protects “tax breaks for millionaires and billionaires, subsidies for big oil, and corporate tax loopholes…threatens to weaken Medicare and Social Security benefits…calls for cuts in domestic spending that will send more people to the unemployment line and weaken the economy…bows to the will of ideological extremists and wealth special interests…[and] ignores the will of the American people”.

Senator Bernie Sanders (I-VT) called the debt bill “grotesquely immoral” and “bad economic policy” which “balances the budget on the backs of struggling Americans”.

According to Nobel Prize-winning economist Paul Krugman, “We currently have a deeply depressed economy…The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further…Make no mistake about it, what we’re witnessing here is a catastrophe on multiple levels”. Another Nobel laureate in economics, Joseph Stiglitz, argues that “more stimulus, not austerity, is needed” and that “the recent debt deal is a move in the wrong direction”.

The unemployment rate is currently 9.1 percent. This rate doubles when involuntary part-timers and labor market dropouts are calculated in (a.k.a. the “real” unemployment rate) – about 25.3 million people in total.

Since 2008, millions of American families have lost their homes to foreclosure. School budgets everywhere have been drastically cut and arts and athletic programs dismantled. Teachers are being laid-off and class sizes increased substantially.

Real wages (wages adjusted for inflation) have been stagnant or in decline since the 1970s. The federal minimum wage is insufficient to provide for the basic needs of a single person’, let alone a family’. In 2009, almost 44 million Americans were living in poverty, including nearly 13 million children. An unprecedented number of Americans are currently on food stamps.

Income and wealth inequality in the U.S. is at an all-time high – the richest 10 percent control nearly 75 percent of U.S. wealth, with the richest 1 percent accounting for 35 percent. In contrast, the bottom 90 percent control barely 27 percent of the nation’s wealth (note: these data reflect conditions prior to the Great Recession that began in 2008, the most recent available). Meanwhile, several states have been actively engaged in union-busting campaigns—most notably Wisconsin and Ohio—to strip the collective bargaining rights of public employees.

The debt legislation only adds to the failed trickle-down economic policies of the past three decades, and social stratification and economic inequality will grow worse as a result – the middle-class will continue to shrink, the poor will get poorer, the rich richer, and the wealth gap will widen.

Washington has abandoned investment in our consumer-driven economy at a time when GDP barely grew in the first half of the year and many economists are warning of a so-called double-dip recession. The U.S. has lost its top-level triple-A credit rating for the first time in history, which may drive interest rates higher on home mortgages, credit cards and student loans. The financial markets are in turmoil and in territories not seen since the beginning of the financial meltdown of 2008. Americans’ retirement and college savings are being erased.

The debt deal is tragic on many levels. It will have a devastating impact on ordinary people and further damage our fragile economy. It is the latest crushing blow to America’s most vulnerable populations, and it increases the likelihood that this will be the first generation in American history to leave its children worse off financially.

Brian J. Trautman is a U.S. Army veteran and a peace educator/activist. He is an instructor of Peace and World Order Studies at Berkshire Community College in Pittsfield, MA, and active with organizations such as Veterans for Peace and the Peace and Justice Studies Association.

Brian J. Trautman is an instructor of peace studies at Berkshire Community College in Pittsfield, MA, a peace activist with Berkshire Citizens for Peace and Justice, and an Army veteran. He is also a member of Veterans for Peace. On Twitter @BriTraut.