US

Budget Cuts for Workers and Poor, Tax Cuts for the Rich

www.socialistworld.net, 21/01/2011
website of the committee for a workers' international, CWI

Deficit Commission’s Bitter Medicine

Teddy Shibabaw, Socialist Alternative (CWI USA)

One week after the midterm elections, the Co-Chairs of the Obama-appointed bipartisan Deficit Reduction Commission released their so-called “recommendations:” More tax cuts for the rich and corporations while Social Security, Medicare, Medicaid, and many other important social programs for workers and the poor are to go on the chopping block.

In order to deal with the ballooning deficit, which according to the Associated Press the Obama Administration projects will grow by $1. 4 trillion in 2011 and by $8.47 trillion over the next decade, the commission proposals included a gradual increase in the Social Security retirement age to 69 as well as a cruel reduction in retirement pay; a 15-cent increase in the gas tax; increased co-pay as well as benefit cuts to Medicare and Medicaid; and cutting 200,000 federal jobs while freezing pay for those remaining.

The Commission also recommended $100 billion to be cut from the hugely bloated military budget and the return of the capital gains tax from the current 15 % to the regular tax rate for top income earners. However, the top income tax rate (as well as the corporate income tax rate) is proposed to be cut from 35% to 28%.

Record profits

The proposed tax cuts for the wealthiest, would be in addition to the Bush tax cuts that will now remain in place as part of the rotten deal Obama struck with the Republican Party in exchange for their agreeing to extend unemployment benefits that keep millions of people from facing outright hunger. It’s very puzzling that a commission tasked with “cutting the deficit” has included massive tax cuts for the rich and big business which will reduce government revenue. This idea is based on the false claim that somehow they will “increase private investment.” In reality it is a blatant attempt for upward transfer of wealth.

But the rich and big business are already making massive profits. The third quarter of this year saw record corporate profits of $1.66 trillion. Wall Street paid out billions in record bonuses while we continue to languish at almost 20% real unemployment and crushing budget cuts on the state and local levels.

These proposals, if implemented would not only widen the already obscene level of inequality in the US, but will also endanger the prospects of a recovery from the stagnating economy as government spending is one of the few things keeping the economy from slipping to a double dip recession.

The Commission recommendations represent the current outlook of the capitalist ruling class around the world. They have decided that the phase of stimulus programs to fight the economic crisis is over and a policy of savage austerity against workers, pensioners, the poor and students is now the name of their game. This can be seen most clearly in Greece and Ireland.

The bipartisan commission

Reflecting the difficult road ahead of pushing their agenda, the recommendations failed to meet the 14 vote requirement by the 18-member Deficit Commission. Their outrageous proposals are intended to prepare the ground for eventual legislation to further cut Social Security.

The Deficit Commission appointed by Obama included co-chairs Erskin Bowles, a former investment banker for Morgan Stanley, and Republican Alan Simpson, known for his extreme hatred for social programs like Social Security, two multimillionaire CEOs and a senior fellow at the Brookings Institution, a conservative think tank.

The participation of liberal Democrats like Rep. Jan Schakowsky and former president of SEIU [Service Employees International Union] Andy Stern, who shamelessly now sits on the board of SIGA, a major pharmaceutical corporation, is intended to create the illusion of a “fair and balanced” team on the deficit commission. Stern, who voted against the proposals, could have used his inside position to expose the sham anti-working class nature of the commission and to call on the trade unions and workers across the country to reject and protest the recommendations. Stern’s attitude epitomizes the role of the generally conservative labor union leadership and their complete failure to mount a serious defense to the ruling class attacks against living standards.

The attempt by Obama and the ruling class to use a “blue ribbon” bi-partisan commission to deal with the huge deficits reflects the huge unpopularity of many of these provisions. By creating a bipartisan commission, both parties seek political cover from the anger of voters for pushing through these blatant pro-big business corprate policies. While not all these proposals will be passed in the next session, they represent the broad program of policies big business wants its two parties to implement in the next period.

Defeat these proposals

Workers, poor people and youth should absolutely reject these proposals and the Commission itself. Ordinary taxpayers have already paid dearly for the economic crisis. We should not accept any budget cuts or layoffs!

We should instead demand a massive increase in taxes on the rich, an end to the wars and a massive cut to military spending as a real way of immediately reducing the deficit. Also, eliminating the insurance companies with single-payer healthcare would save $400 billion (according to the Physicians for a National Health Program) while providing coverage for all.

Furthermore, we should demand an immediate end to the massive bail out of banks and Wall Street which led to the huge ballooning of the debts and deficits. If they threaten to go bankrupt, they should be taken into public ownership and we should use the resources to create a democratic plan in renewable energy, clean up the environment, rebuild the infrastructure, and fund a massive expansion of public services. Such measures and policies would go a long way in creating millions of jobs and eliminating the debts, crisis and speculation of capitalism.

The labor unions, students, unemployed and progressive social movements should unite in anti-cuts coalitions across the country to educate, agitate and build mass protest and strike action against the savage attacks planned by the ruling class. If this system cannot afford to provide a decent living for all, we can’t afford this system.