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Austerity or Debt: A False Choice

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Crossposted on Tikkun Daily

by Rick Staggenborg

By March 1, Congress will have had to face the budget cuts mandated by the failure of the Simpson-Bowles commission to come up with a plan of deficit reduction that would satisfy both Republican and Democratic leaders. The failure to come up with such a plan pulled the “trigger” of a gun that is being held to the heads of poor and middle-class Americans. They will see draconian cuts in social services if the Democrats hold true to form and compromise with a Republican Party that puts defense spending and tax breaks for the rich over the interests of the majority of Americans. Predictably, Democrats undermined their own ability to pass legislation protecting the interests of the People over those of their corporate patrons. Having vowed to protect the social safety net, Senate Majority Leader Harry Reid caved in to conservative Democrats who opposed serious filibuster reform and traded away the power to control the outcome of the latest round of the fight over how to avoid the fiscal cliff.

Now we have a situation where the majority of members of Congress on both sides of the aisle accept the fallacy that the only way out of the debt they created is to impose austerity measures that target Medicare and Social Security. These are the primary protections against the depredations of a system that puts the interests of the rich over those of ordinary citizens. Their proposed solution to the problem of their own making is to protect the wealthy individuals who fund their campaigns and neglect the needs of the people who actually elected them. While this strategy has provoked riots and international strikes in Europe, many Americans accept this as a sensible solution. They fail to understand some basic facts.

The debt that the United States has accumulated since the Reagan years is the result of a system of corporate welfare that has left the American and world economy in a shambles. Both parties have promoted globalization, shifting jobs to third world nations. They have given tax breaks to corporations and “job creators” who ship these jobs overseas, deregulated banks that taxpayers had to bail out and privatized essential government functions to profited corporations by degrading services and making them more expensive, all to maximum profits for the investor class.

The real reason for the debt “crisis” is that the US government has deeply indebted taxpayers to private banks, promoting private profits over investment in the social and economic infrastructure that made America great in the first place. In Iceland, they threw out those in Parliament responsible for transferring private debt to taxpayers and prosecuted the banksters who took illegal advantage of their privileged position. Instead of passively assuming the debt their government tried to foist on them, they repudiated much of the debt that had been assumed in their name. We can do the same here, but only by first ending the ability of special interests to buy members of Congress of their choice by financing their elections.

A look at changing US demographics shows that unregulated capitalism will inevitably fail. Developed nations always see a drop in birthrate as women are empowered to have more control over their bodies and to participate in the economy. This means that over time, a smaller and younger work force has to generate the tax base necessary to fund essential government functions and to assure that a growing number of retirees have the security afforded by Social Security and Medicare. This is the reason that we are in a real crisis with Medicare. Baby Boomers are retiring in record numbers at the same time that a generation of young Americans are facing the most dismal job prospects in American history. It is unconscionable that older Americans expect their grandchildren to provide for their retirements while denying them the same opportunities that allowed them to prosper during their working lives and to be secure in retirement.