Hidden in the tedious language of “sequestration,” which is guaranteed to lull Americans into disinterest, is an epic battle between the interests of the rich and the poor. Since the rich tend to chronically have the upper hand, having the fiscal cliff conflict come out favorably for the poor seems improbable, though there’s always hope. When the poor come to the government for welfare, they are stigmatized and degraded. When the rich come to the government for welfare, they convince everyone they earned it.
Many of the same individuals who received billions of dollars from the government in the bank bailouts, such as Lloyd Blankfein and Jamie Dimon, are currently spearheading a campaign to demand billions of dollars in cuts to social programs while billions more are requested for corporate “incentives” like tax breaks. These men, and many other CEOs of companies ranging from TimeWarner and Honeywell to Boeing and General Electric, are all part of Campaign to Fix the Debt, a project of the Center for a Responsible Federal Budget. Fix the Debt is really just an advocacy organization for people who deeply believe in disaster capitalism and austerity measures. Their solutions for resolving the debt “crisis” always revolve around funneling more money toward the wealthy through tax breaks for both corporations and upper income people while making dramatic cuts to the social safety net.
Naomi Klein called the ideology practiced by Fix the Debt, “the shock doctrine,” albeit this time the disaster is being generated in the form of a “fiscal cliff.” Across the world, powerful financial interests like the World Bank or the IMF have declared countries, regions, or other localities “disaster zones” where they could go in and impose “restructuring.” This was always a conservative’s fantasy come true: 1) cut off government services, 2) sell off government assets 3) privatize remaining government services, and 4) focus the entire economy on paying off debt. If you follow up with the countries or other localities that endured disaster capitalism and its austerity measures, they are decimated societies that have fallen to the bottom on nearly every measure of well-being. Now, organizations like the Center for a Responsible Federal Budget want to impose the shock doctrine with the most ambitious target yet, the whole American government.
Corporate CEOs are pushing for austerity, knowing there is a payoff for them. Government services will become privatized, and the corporate class is ready to move in and provide these services at a profit. Tax rates will be kept low for corporations and individuals making millions of dollars. They may have lost some power, but Republicans still have the House, and right on cue, they have been representing their core constituency. They have been pushing austerity, and holding out for those with incomes over $250,000 to receive tax cuts.
On the other side, the Democratic Party, not always known for holding their ground in negotiations, is carrying the mandate of a solid electoral win, a strong endorsement of their policy to tax the rich. The most liberal wing of the Democratic Party and Bernie Sanders have been very vocal about protecting Social Security, Medicaid, and Medicare, as well as trying to scale back on the cuts to other social and educational programs that already occurred with the Budget Control Act of 2011, but this is where everyone waits pensively to see what compromises Obama and the Democrats will make now that Boehner has exercised some political muscle by again holding the threat of the debt ceiling over Obama.
Progressive advocates for society’s most vulnerable populations have been getting time with President Obama and other White House officials. Unfortunately, at the same time, the Fix the Debt campaign has also had sit-down time with top officials in the White House. The next few weeks will include a great deal of political wrangling and it remains to be seen who will win the stand-offs between forces for and against austerity.
Nobel-prize award winning economist Paul Krugman has not been shy about his contempt for austerity policies or his belief that these policies were causing a recession in the European Union. He’s been using his New York Times column to track how their cutbacks in government spending have led to contracted economies with subsequent high unemployment. So, when Krugman saw that powerful allies were joining forces to bring austerity to the United States, using the upcoming “fiscal cliff” as an excuse, he decided it was time to go on the offensive. Picking up on a phrase by Brian Beutler at Talking Points Memo, Krugman is asking everyone to start calling the “fiscal cliff” what it actually is, “an austerity bomb.”
Conservatives have been allowed to get away with defining the conversation, which is something they frequently manage to do. They have been successfully manufacturing this “impending debt disaster,” pushing the language of a “fiscal cliff.” For a decade, Republicans oversaw government spending that reached hemorrhaging levels with wars that were not paid for and an unfunded prescription drug benefit. They saw no problem with running deficits as they watched tax revenues drop rapidly following the Bush tax cuts. Yet, according to Republicans, the nation must suddenly address the debt crisis that they created, despite the fact that doing so threatens to stall our economy. Even the conservative think tank, the American Enterprise Institute, agrees that austerity would harm the U.S. economy right now.
Come January, the austerity measures that congressional committees already negotiated will be enacted; we will have been handed an austerity bomb. In addition to the elimination of tax cuts, a significant portion of the $500 billion sequestration includes automatic cuts to spending. There will be across the board cuts to dozens of social programs for the elderly, disabled, and the poor while public education budgets will be similarly slashed. Head Start programs will soon begin shutting down, so low-income families will no longer have access to pre-school for their children. Many college students will not be getting Federal Work Study. Fewer people are going to be admitted to substance abuse treatment programs. Children are going to go without vaccinations.
Most of the money spent on government services goes to paying labor, so reductions in government spending will represent tens of thousands of public sector jobs eliminated. Obama’s first term already included major job losses in the public sector, which was unprecedented. During every other recession, the government has responded by hiring more people, but during the recovery from the Great Recession, the government actually shed jobs. In fact, just at the state and local level, 636,000 government jobs have been lost. Already under siege, public sector workers will face dire consequences as austerity pressures continue to sap their labor rights. Just ask the entire police force of Camden, NJ, which has been fired to be replaced by a cheaper, non-union force.
As it stands right now, there will be significant cuts to social programs no matter how fiscal cliff negotiations go. There is an austerity bomb going off in January. The question is only how big will it be and what it will hit hardest.
Deborah is a former social work professor who taught social policy, mental health policy, and human diversity. Proud to be called liberal, she happily pays her taxes after being raised in a home that needed long-term welfare. Contrary to the opinion of many, she is living proof that government investment in children leads them out of poverty having received services from Head Start to Pell Grants. Deborah works with low-income, first generation, and disabled college students who are at high-risk for dropping out of college in a program designed to help them graduate. She lives with her husband, stepson, and an aging cat.