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Curbing the Deficit, Cat Food, and You

Curbing the Deficit, Cat Food, and You

The deficit commission released its much anticipated list of helpful money-saving tips for the federal government last week. These tips include tax cuts for the rich, reducing unnecessary printing costs, and cutting the jobs of federal contractors.

The recommendations are more like a menu than a program. As Mark Schmitt of The American Prospect notes, there’s no coherent vision, just a list of possible tax increases and program cuts with projected savings attached.

The commission was dubbed the Cat Food Commission by critics who see the project as an attempt by the Obama administration to provide political cover to gut Social Security, thereby forcing the elderly to subsist on cat food.

Officially, the commission is charged with making suggestions to balance the budget by 2015. Kevin Drum of Mother Jones is surprised at the hype the presentation has attracted, considering that it’s not a piece of legislation, or even proposed legislation, or even the actual report by the deficit commission, but rather a draft presentation by “two guys in a room” (co-chairs former Sen. Alan Simpson (R-WY) and Erskine Bowles).

Hope is not a plan

Drum has trouble taking the draft seriously because its main focus is cutting discretionary spending, which according to the Congressional Budget Office, only accounts for about 10% of our projected deficit. The secondary focus of the report is Social Security, which only accounts for a small share of the projected deficit, and moreover, is easily fixable with very small tax increases and tiny decreases in benefits phased in over a long period of time.

Rising health care costs account for the lion’s share of our projected deficit, but as Drum notes, the draft doesn’t get into detail about how to contain those costs, the authors simply stress that someone had better get on that. No kidding. The authors assert that the government should never take in more than 21% of GDP in total taxes. Drum dismisses this suggestion as completely unrealistic seeing as the authors have no plan to slow the growth of health care costs.

Note to workers: “Drop dead”

Roger Bybee of Working In These Times takes aim at the presentation’s suggestion to cut taxes on the rich. The deficit chairmen urge legislators to cut the top tax rate from 35% to 23%, which as Bybee notes, would actually add to the deficit. The presentation also favors cutting corporate taxes and taxes on American expatriates. Hardly deficit-friendly stuff. Bybee argues that the real goal of this commission is to deflate public expectations about the role of government:

This draft report was thus not about slicing the deficit, but shrinking those portions of the government on which the poor and working class depend and shoveling new benefits to corporations and wealthy, at a time when the richest 1% already rakes in 23.5% of all U.S. income.

According to AFL-CIO head Richard Trumka, whom Bybee quotes, the message to the American worker is: “Drop dead.”

Gawker vs. the Cat Food Commission

Astute commenters at the media gossip blog Gawker discovered, via a New York Times interactive feature, that the entire problem could be solved by rolling back the Bush tax cuts and ending foreign wars. John Tomasic of the Colorado Independent explains how they did it:

The Gawkers simply let the non-job-making Bush tax cuts expire (because they were never meant to be permanent and because most Americans don’t want them extended) and they ended Bush’s (now Obama’s) overseas military adventures, which cost more money every week ($2 billion!) than the Rolling Stones have made in the last forty years, our contemporary version of the Cold War space race taking place not in space but in Afghanistan and Iraq, where the United States is racing only against itself to borrow and spend as much money as possible every single day– almost none of that money spent on the troops who come home wounded and sad and totally screwed up.

Nine out of ten grandmas prefer the fiscal policies of the Clinton administration to Meow Mix.

Extending unemployment = Jobs

Ed Brayton of the Michigan Messenger argues that extending long term unemployment insurance benefits would benefit the economy to the tune of half a million jobs. The unemployed still have to eat. Their children still need shoes. If unemployment benefits are extended, the unemployed will spend their benefits quickly in order to live, which is exactly what an economic stimulus is designed to do. Grocery stores and shoe stores employ people. Checkers and shoe salesmen also spend their wages in their communities, thereby sustaining the jobs of still more people.

Pension plan bets green on green

Investing in green jobs is sound economic policy, but governments can’t do it alone. The private sector has to help finance the greening of our economy, too. One California pension plan is stepping up and betting big, investing $500 million on green projects, according to Mikhail Zinshteyn of Campus Progress. The California Public Employees’ Retirement System (CalPERS) has a green portfolio worth $2.5 billion, which it has amassed since 2006. CalPERS is betting that low carbon energy programs and other clean energy initiatives will be a lucrative place to park their members’ money.

Hopefully, these investments will also benefit the economy in the short term by creating jobs, including jobs for some California public employees. However, some analysts are skeptical that these investments will yield the handsome dividends that CalPERS analysts are projecting.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. 


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photo credit: thanks to alancleaver_2000 via flickr
by Lindsay Beyerstein, Media Consortium blogger

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73 comments

+ add your own
7:48PM PST on Jan 4, 2011

Noted....thanx

7:04AM PST on Dec 1, 2010

Martha;

Yes! Those that paid into Social Security are entitled to a return. But the program as designed has not been working. That is clear!

While it may not have been a Ponzi in the beginning it quickly became one after WWII. When that realization hit Congress should have begun working on it instead of kicking the "can" down the road. There was an offer on the table to begin the process some 10 years back, but the Dems (& Progressives) demonized and fearmongered until the plan was still born. The problem, on the Dem side is the mind set of the likes of Rep. Jan Schakowdky. By her the program is self-sufficient UNTIL 2037 and can pay out @ 80% after that! Does that sound self sufficient to you? This swan song for SS's black ink has been known for decades.

Further, as to fairness, I've been cheated by the system. Being given less than others citizens drawing SS becase of who I worked for my benefits were cut in half. As a result there are things I can not pay for.

You mention Rep. Jan Schakowdky's plan to end the deficit. Won't work! All she has is tax increases! Congress will hear tax increase look at the projection and spend it before it even exists and there you are DEFICITS again! Washington needs to be taught that the money in this country is not theirs that they give to the people as they see fit but the other way round.

9:11PM PST on Nov 30, 2010

Hopefully people who read Care2 are on lots of progressive lists. Before you do one other thing, CALL (don't email) your Senators, Representative, the White House, and tell them in emphatic terms that you, as an American citizen and taxpayer, have EARNED your Social Security, that it has been paid for with your wages, that it is a 75 yr old PROMISE from the federal government to its people. The middle class, workers did not create the deficit, and we should not pay it back. There are a myriad of ways to pay down the deficit by the very people who caused it. One of the Commission's members, Rep. Jan Schakowdky, has a plan that works and is fair. She has guts, but in order to have it enacted, their must be public pressure. Today, get on the phone and make your voice heard.

5:46PM PST on Nov 28, 2010

""How is Military Spending bloated"? (Michael Cunningham)

I was an auditor in military defense procurement. How about $400 million (unjustified) out of a $ 2 Billion procurement?
Major ripoffs exist in this favored industry......what do you know about it, like I do? HUH? Defense Spending is full of corruption. I know and I uncovered it, pal."

Not so sure that qualifies as a bloated budget. Sounds more like fraud and malfeasance. But then it was part of your job to assist in preventing it. Me, I kept control of my departments budget quite well. Following regs and contracts so well I kept costs for services at the same level over at least six years.

9:02AM PST on Nov 22, 2010

"How is Military Spending bloated"? (Michael Cunningham)

I was an auditor in military defense procurement. How about $400 million (unjustified) out of a $ 2 Billion procurement?
Major ripoffs exist in this favored industry......what do you know about it, like I do? HUH? Defense Spending is full of corruption. I know and I uncovered it, pal.

2:03AM PST on Nov 22, 2010

I agree that deficit reduction is simply an excuse being used by right wing governments to destroy the public sector. Much the same policy is being pursued in the UK by the Tories, using the deficit as an excuse to make swingeing cuts in public expenditure and public services, while simultaneously making a mockery of this excuse by lowering taxes for the rich and engaging in costly exercises elsewhere.

In fact, reducing public expenditure isn't an efficacious way of reducing the budget deficit anyway because, as this article suggests, it has a recessionary affect by lowering spending activity and increasing welfare payments.

The banking crises, which aren't going to go away, are overwhelmingly the fault of irresponsible bank lending and a problem with the capitalist private sector, and right wing governments are now using their own problem as an excuse to destroy the public sector. In fact this is only going to exacerbate the problem by reducing the capacity of the responsible part of our economy, the public sector, to pick up the tab for the irresponsible part, the private sector, in future banking crises.

5:25PM PST on Nov 18, 2010

"Never shoulda been started in the first place..."
--Perhaps! But the intel at the time made sense.
"now they've cost us unbelievable treasure!"
--I guess how you define "unbelieveable" and who you are talking to.
"So g bush, in addition to being a war criminal"
--Which can not be proven. Doubt there is any evidence either.
"swimming in the blood of 1,000,000+ wrongfully dead,"
--This figure is unsupported. The study is seriously flawed.
"is also the guy who bankrupted this country,"
--Patently untrue!
"causing untold suffering with the withdrawal of essential human services and civic perks"
--Civic perks are not something that should come from the Government dime. Which "essential" services have been withdrawn? Again a serious question since I suspect our definition of "essential is not the same.

2:46PM PST on Nov 18, 2010

Michael Cunningham. I very surprised that you want to be given some "Human Standards of Living." The mere asking of that question is proof that modern day civilization has been DEMORALIZED, into an ANTI-CIVILIZATION.
==================
Four Thousand (4000) yeras ago, a nation of people called the Children of Israel were the first (and only) people to bring the cannons of law and order to PLANET EARTH; and all civilized societies have been based these BASIC cannons, they are called the TEN COMMANDMENTS, if you have never heard of them, then that is why you have to ask such an elementary question; and, if you cannot perceive how they have been implemented over the course of 4000 years, then you need a history lesson; and, if these TEN COMMANDMENTS have been abandoned, then that is what is WRONG with modern day society.... I don't wish to go backward and spin my wheels here, it's too late for that, if you need these lessons, then that responsibility is your own....
----------------
By The Way - The Ten Commandments are NON-Denominational, and does not endorse any religion.
-------------

2:29PM PST on Nov 18, 2010

It's all academic - the Bush tax cuts theoretically, being money, could be thought to stimulate the economy. Unfortunately, when given to the ubber wealthy, that money is possibly ending up in a bank rather than purchasing goods that would create jobs and stimulate the economy.

But, as Michael so aptly pointed out, unless the government gets a grip on its spending habits (I think if we knew the extent of the spending abuses, we would be horrified) anything else we do will likely be for naught. It is a problem with the basic attitude in our government departments. They all work separately, and for their own interests. There is no view of the big picture. Everyone is vying to get the biggest piece of the pie for themselves - oblivious to the fact that there will still be a price tag that we will all have to pay. I have no experience on the federal level but I did see what was happening on the state level (exhausting a budget whether it was needed or not, for fear that if they did not use it they would lose funding the following year). Again, it is a basic flaw in our philosophy. We are rewarding the wrong things. Instead of penalizing departments for saving budgetary dollars, we should be giving them incentives.

I am not a fan of big business, however, I think that it would be nice to see the government focus just a little bit on operating for a profit instead of just spending willy nilly with no concern for if and when the well will run dry.

2:27PM PST on Nov 18, 2010

"loans that collect interest that REDUCES the national debt, social security that YOU may collect someday,"

Interest on loans does nothing to lower the debt! Social security has always operated on using income to pay current benefits.
As the number of workers decline it take more money from fewer workers to cover benefits for those retiring.
That is what makes it a Ponzi scheme.

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