by Miles Dean
There’s much self congratulation in Washington these days about the “Deal.”
This represents a false solution to a misidentified problem.
What the deal actually does is to limit debt in the next year and a half and constrain spending by limiting increases in borrowing in the next year and a half to program reductions over the next ten years. Got that? In other words, “I’ll only let you borrow today what you promise to save, later.”
The theatre of the past thirty days has been a wasteful exercise of trying to equate bill paying as the cause of problems brought about by the aftermath of the Bush tax cuts for the rich, fighting two wars while borrowing from the Chinese to pay for them, and prescription drug benefits given without anyone paying for them.
It’s the spending money we don’t have, not the bill paying that is the problem. I receive Social Security and benefit from Medicare. I like it that someone is paying for part of my prescriptions. But even at my age and stage in life, I know that there’s no one behind the curtain with cash in his fist to pay for these promises.
We all remember Dick Cheney and Donald Rumsfeld asserting that the Iraq war would be cost-free to the American taxpayers. Well, it wasn’t and isn’t. To suggest that Iraq and Afghanistan were not the cause of additional debt is silly. To propose that giving tax breaks to the rich stimulates jobs and ending them will crush employment by these “job creators” is silly. To propose cutting off the ability to pay our bills is silly.
At some point, we need to look at the real problems, not just “kick the can down the road,” in the infamous words of a former president. A few years ago Alan Greenspan asserted that there was no “housing bubble,” and then it popped. It wasn’t the sole cause of this dive into the financial cellar, it was just the trigger. The guys pounding nails were called off the roof, the guys in the banks were bailed out, everyone agreed to quit being reckless, and the housing market tanked. Now, few will lend and few will buy.
To suggest that the debt ceiling was a cause of excessive spending levels is ass backwards. To give what you don’t have (tax breaks, free drugs, credit without consequences, etc.), that’s the problem. Debt doesn’t cause spending. Spending without income causes debt.
That the current deal is no solution to our problems will be reflected over the coming weeks and months. Over this time the spending savings and program reductions promised on the “deal” will not cause our economy to recover, will increase unemployment, and will not bring spring to the countryside.
In fact, spending cuts will worsen the problem. We’ve already got 9.2% unemployed, almost half out over a year. Probably an equal number are working part time or no longer looking. The private sector is not generating jobs, the public sector is losing jobs, and this Congress is congratulating itself in following the Teabaggers in their misunderstanding of the problem and its solution.
Let’s say that we cut back spending. Let’s say we bring back our troops. (What do you call a mustered out soldier without a job?) Let’s say we cut back government programs. We could do with a little less meat inspection. (What do you call an Agriculture Inspector without a job?) And fewer guys out watching for weight violations on the roads. (What do you call an inspector without a job?)
After awhile, we will be back to asking the government to stimulate jobs with spending and tax policies to get us out of the hole we are digging with the Teabaggers. We will realize, again, that only a growing economy will provide the revenues to get us out of the hole, that the government has to provide the impetus to get it going.
Leadership from our politicians, information and analysis from news sources, and clear thinking by all of us has been dismal in the current situation. All are to blame.
Miles Dean, in addition to having been a senior finance officer in several Fortune 500 corporations, also served as West Virginia Commissioner of Finance and Administration and Director of Economic and Community Development. He is now retired in West Virginia.