The Phony Crisis
By Rep. Jim McDermott
The last few months, in the other Washington, have been all about the budget: the “fiscal cliff ” debates, the unbelievably senseless package of cuts called “sequestration,” and various budget proposals. With hearing after hearing, and bill after bill, it often seems like the budget is all we talk about anymore, or more specifically, the debt.
Ever since President Obama took office, the Representatives who voted for billions in Bush tax cuts and two unfunded wars can’t stop harping on our national debt.
Of course this is nothing new. Budget hawks and neocons have been preaching economic doom and gloom for decades. It’s the best, and maybe only, argument for their true agenda: tax breaks for big corporations and the wealthy and an end to the social safety net. Every program that helps vulnerable people has to be cut and every investment is too expensive because nothing is sacred when we’re worship- ing at the altar of the “Deficit Crisis.”
Since 2010, we have achieved $2.5 trillion in deficit reduction, and lots of com- mon-sense deficit-reduction proposals are under public debate. For example, I recently introduced legislation to end a Medicare windfall to the pharmaceutical industry that would save taxpayers over $140 billion. Despite this, we’re also see- ing, sadly, bipartisan support for damaging cost-saving measures this year, like a Chained Consumer Price Index, or “CPI,” cuts to Medicare and Social Security benefits, cuts to food-assistance programs for kids and seniors, defunding of scientific research and development and more attacks on the Affordable Care Act.
Never mind that most of these programs save us money in the long run. In-home care assistance for seniors is cheaper than nursing homes and Head Start is much cheaper than unemployment and prison costs for students who get left behind.
Never mind that the best way to get rid of debt is to increase revenue. While Republicans attack school lunches they continue to protect tax loopholes for yachts and corporate jets and subsidies for big oil and pharmaceuticals.
Never mind, because now the basis of this hysteria, the one study that debt hawks have been peddling as proof of our impending economic doom, has been entirely discredited—by a doctoral student. Reinhart and Rogoff published findings that a debt-to-GDP ratio of over 90% could slow economic growth, and, despite being impossible to replicate the numbers, it was taken as gospel by the austerity crowd. Unfortunately for their admirers, the world recently found out that in addition to some strange methods and selective data, their findings were missing something very important: rows 45 to 49 on their Excel spreadsheet. In other words, the entire austerity debate has been built on one big coding error.
So how do we craft a sensible budget?
In addition to closing the tax loopholes mentioned before, there are some re- forms that would strengthen our economy and safety net programs. One such “fix” would be raising or eliminating the cap on the payroll tax that funds Social Security. Individuals are only required to pay into Social Security up to around $113,700. If all workers paid the same payroll tax rate on all of their income, Social Security would be solvent for at least the next 75 years.
Ultimately, however, investing in our people and our workforce must be the num- ber one priority. We don’t have a debt crisis, but we do have a jobs crisis. President Obama’s stimulus plan helped slow the devastation of the recession, but our slug- gish recovery proves that we need much more. Government ought to invest when the private sector won’t. Investing in infrastructure now, in new and growing indus- tries like green energy, new technologies, and education, will bolster our current economy and build a foundation for globally competitive industries in the future.
It’s simple math. With low unemployment, more people are paying taxes and fewer people need public assistance.
Budgets are moral documents. They may not be easy to craft, but there ought to be certain principles that we hold as sacred. American families would never pay down their credit card debt with their children’s lunch money or their grandparent’s prescription funds, and neither should our government. Shifting the burden to seniors, half of whom earn under $22,500 a year, or those on a minimum wage, whose salaries can’t buy a fair-market apartment in any state, is impractical and unethical. It’s time to stop the debt-crisis mania and start rebuilding our economy.
I believe in the greatness of America. I believe we are a country that can afford to take risks and demand the best of ourselves. We just have to get past phony catastrophes and partisan bickering, but I believe we can. Otherwise, I wouldn’t be here.