The Debt “Crisis” and what it means

The debt crisis is pulling me out of my hiatus. There is much to say, but here are the basics.

1. This is a false crisis. If you yell fire, people will panic and do things they otherwise would not. The tactic has become commonplace in American politics, as we move from one “crisis” to the next, always with a sense of urgency: don’t think, act now or we’re all doomed. Recent examples include the Iraq War, the AIG bailout, and now this debt ceiling deal. Eventually, Americans will become cynical and immunized to crisis talk, but in the meantime it is still, obviously, an effective political strategy to get people to agree to things they would normally abhor (to wit: Democrats voting for an extremely regressive bill shifting debt burden onto the poor while the rich continue their wars and their tax cuts).

2. Obama and the Democrats are closet puppets for business, while the Republicans are openly puppets for business. Nothing could make this clearer than Obama’s record of legislation. Extend Bush’s tax cuts for the wealthy: check. Amp up the military industrial complex and extend the post 9-11 wars: check. Skewer the new consumer protection agency to make it impotent: check. And now this debt ceiling bill: only raise the debt ceiling on condition of cutting vital social programs on the pretense of an unavoidable crisis. Check.

3. There is no crisis, for several reasons. It is only a crisis in the way it is being imagined and talked about. Even if the bill had not passed and the debt ceiling had not been raised, this would not have been such a big deal. We’ve had a far higher debt-economy ratio before, in WWII times. And raising the debt ceiling was just a technical procedure to begin with, something that has been done 83 times since Eisenhower, on average every 8 months, something that occurred under Bush, with no noise at all. But suddenly, political opportunists use this technical and commonplace procedure to make us all think the world is going to fall. Here is former Secretary of Labor Robert Reich:

The federal budget deficit has no economic relationship to the debt limit. Republicans have linked the two, and the Administration has played along, but they are entirely separate. Republicans are using what would otherwise be a routine, legally technical vote to raise the debt limit as a means of holding the nation … . In economic terms, we will not “run out of money” next week. We’re still the richest nation in the world, and the Federal Reserve has unlimited capacity to print money. Nor is there any economic imperative to reach an agreement on how to fix the budget deficit by Tuesday. It’s not even clear the federal budget needs that much fixing anyway.

4. Obama and the top Democrats are not spineless, they just have no serious progressive vision. It is not that they don’t play hard enough when push comes to shove with the Republicans. It is merely their political function to put a nice face on the atrocities of our ruthless system, without actually addressing any of its flaws. Look who pays their campaign bills, if this isn’t already clear to you. So we should be looking not at Obama, but far afield to the left if we want to bring a serious vision of change to the nation. Here is Rabbi Lerner saying what needs to be said:

Instead of being such a wimp, Obama could even now simply announce the following plan for what will happen if the debt limit isn’t reached:

he will pay the social security, medicare and other benefits to those Congressional districts whose representatives voted to raise the debt limit and not to those which did not. And similarly all other federal services. Military installations in the Congressional districts whose representatives did not vote for the raising of the limit will be immediately shut, and all military personnel outside the U.S., starting with Iraq and Afghanistan, will be ordered to return to the U.S.  They play hardball, so could a progressive Democrat, if we happened to have one in office, which we don’t. … So lets understand, that all of this comes down to Obama’s capitulations to the Right, on almost every level (except for glbt rights, important and to be commended, but not enough to build a presidency on).

5. Why are we in such debt in the first place? This is not complicated question – we are in enormous debt because of two policies passed under the last administration: the decision to open two vast theaters of war on debt, and the decision to give huge tax cuts to the wealthy. Iraq and Afghanistan are trillion dollar wars. Giant tax cuts. What were we expecting? A big increase in spending, and a big decrease in revenue…what else could happen? And why is this point not being trumpeted back to the finger-pointing Republicans? It was the terribly foolish decisions taken by the previous 8-year administration that determined the size the current debt situation.

6. Where is our money going? It is going to war, plain and simple. We have an empire of over 700 foreign bases just draining away our money. We currently have war fronts in Iraq, Afghanistan, Pakistan, and Libya. The military industrial complex is constantly developing useless weapons. There are stockpiles of thousands of nuclear weapons with ultraexpensive maintenance costs draining, draining our money away.

Eisenhower’s wise words:

7. Americans pay among the least amount of taxes in the entire developed world. We’re just above Chile and Mexico. If you want to have stuff, like roads and hospitals and educated children, you’re gonna have to pay for it. (Although if we devoted the entire war budget over to the other things, we’d have more than enough.)

8.The plan just passed through Congress cuts 917 billion in the next ten years, in exchange for the technical procedure of raising the debt ceiling (technically allowing the government to pay its bills). Half of the the 917 billion in cuts are slated to come from “nondefense discretionary spending.” Concretely, that means the stuff that makes society good, including the following non-exhaustive list:

education, job training, air traffic control. health research, border security, physical infrastructure (roads, bridges, sidewalks, trees, lampposts, safety rails, earthquake renovations), environmental protection, consumer protection, child care, clinics of all types, law enforcement, firefighters, hospitals, and on and on.

So whatever we’ve got now, imagine roughly cutting it in half (literally, since we are going from 3.3 percent of the budget to 1.7 percent.) This will be the lowest its been in 50 years, essentially setting us back to the 1950s. So much for “winning the future.”

Did you enjoy that clean drinking water and decent air? Now we will no longer have the funds to patrol and enforce the protection policies we have in place. You know how we used to have programs for poor youths or exconvicts to learn job skills? Well, now we’ll just be kicking them back into the streets, where I’m sure they’ll do fine. You know how abused youth or pregnant teens used to have clinics where they could get free help, physical therapeutic or legal? Not any more, we’ll just be telling them to go back home and figure it out for themselves. Bottom line: no help from society any more; if you weren’t born to the upper middle class, of you had terrible parents, if you are unlucky and a hurricane washes away your house…good luck. If you don’t already have the resources, no one is going to help you up when you fall on your face.

Note: we haven’t actually done the cuts yet, so precisely which programs get cut and how much is to be seen; all we know is that in they half to get cut down by half.

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One Response to The Debt “Crisis” and what it means

  1. Andrea says:

    Great post – overwhelmingly clear and informative, helping things be seen through a clearer lens. This is the stuff public (media!) discourse should be made of.

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