by Warren Davis, for the Political Committee
Is it the stupidity of dysfunctional bureaucrats? The tactical
blundering of a likeable president facing an irreconcilable
congressional divide? Or is this the cleverest maneuver yet from the
self-proclaimed defenders of democracy and the American quality of life?
My vote is for clever.
For the moment we are talking about the Sequestration crisis,
just the latest of what president Obama himself called many manufactured
crises in his inauguration speech. Though it may seem like he is
distressed by the perceived gridlock on Capitol Hill, the actual agenda
for the long series of bought-off Congresses and corporate-friendly
presidents is moving along quite nicely. Across the board discretionary
spending cuts amounting to $85 billion have taken effect as of March 1
and will need to be absorbed by the end of the fiscal year on September
30. A total of $4 trillion in cuts are mandated over the decade so far.
To be sure, this “crisis” is not a crisis at all for the
president and the congress, since they’ve been intending to see these
cuts enacted in some form all along. As Jeffrey Sachs observed in his
recent Financial Times op-ed: “The administration is now vigorously
blaming the Republicans for the pending cuts. Yet the level of spending
for fiscal year 2013 under the sequestration will be nearly the same as
Mr Obama called for in the draft budget presented in mid-2012.” Of
course, the president won’t be entirely pleased until Congress
legislates authority to agency heads to redistribute and prioritize
spending, but that will be as easy as the last – or the next --
continuing resolution to keep the government operating. Not a problem.
This is really a continuation of the now-permanent campaigning
that consumes Washington’s politicians. Virtually all federal
legislation has taken on a public relations character, a contest between
party spin doctors for points toward the next election. The supposed
“fiscal cliff”, off which no sane politician would dare jump, has been
neatly turned into the new plateau. Instead of dramatic congressional
debates or presidential addresses, we see campaign speeches lamenting
the failure of bipartisanship followed by the president treating
Republican leaders to dinner at the luxurious Jefferson Hotel in D.C.
One supposes having the dinner hosted in-house would have been a bit
rich after cancelling the White House tours for American school children
on account of the sequestration cuts. By the way, to watch the ABC
Evening News with Diane Sawyer, we might guess that these school
children are facing the worst of it.
So what will the sequestration really cost America’s working and
poor folks?
Estimates vary widely, but none of it is good for the 99%,
and all of it is good for the 1%. In a nation of TV addicts, crises take
on a surreal character: our political storms are like our weather
reporting. The reporters breathlessly describe the storm of the decade
or the century, or more like the month, devastating to millions. But
typically most viewers “escape” the worst effects, as the trees happen
to fall on neighbors’ cars, or the power goes out in another
neighborhood; all of it will be restored sooner than later by those
trusted companies and contractors who apply good old American ingenuity
and know-how to end the crisis, and private enterprise hums along. Of
course, odds are that everyone will be affected by a crisis sooner or
later, but the sense of security, knowing that American commerce will
fix the problem and keep the economy working, is enough to sooth all
nerves.
According to the Congressional Budget office, GDP growth would be
0.6% slower under sequestration, and Austin Goolsbee, former chairman
of Obama’s economic advisors, told Congress that the impact of the
sequester would “put us back in the circumstance where growth is not
fast enough to shrink the unemployment rate.” In other words, not enough
new jobs would be created to keep up with new workers entering the job
market, and unemployment rates would again rise as the mid-term election
campaigns get under way. Incidentally, a key part of the electoral
calculation is the new demographics. One thing will certainly happen
before then: passage of immigration reform. Latino voters put Obama over
the top in 2012. Republicans would like to have a bipartisan reform
under their belts as they enter the midterms, so they can claim a remedy
to fix the rising unemployment that disproportionately hurts Latinos in
lower paid jobs.
The effects of sequestration will not appear to be catastrophic
to those still with jobs – somewhat like an overdone weather report –
unless you are the one affected personally. The FT explains: “[M]any
federal agencies plan to handle the cuts by sending staff home, without
pay, for one day a week or fortnight. Such workers will not show up as
unemployed because official jobs data include anybody who did any work
in the past week. Nor will figures for hours worked or average earnings
fall as a result of such lay-offs because the Bureau of Labor Statistics
does not collect those numbers for the salaried federal workforce.” As
usual, the effects are wider than reported, but the crisis quickly
recedes from the newscasts and the brief attention span of public
consciousness.
The next “crisis”? Recently government economists have begun to
point out that the legislation making tax cuts permanent has been a
major factor in a further trillion-dollar shortfall. It just so happens
that the bipartisan Bowles-Simpson commission, designed to market cuts
in Social Security and Medicare, has come up with another trillion or
two in savings. Expect the eventual “grand bargain” among Republicans
and Democrats to be something like the shared sacrifice we’ve been
promised by Democrats all along, chief spokesman among them, president
Obama. But if all goes according to the usual formula, Republicans will
demand a revised tax code, “giving up” favored loopholes in exchange for
lower rates (a net lower tax bill, of course); and Democrats will trade
off “small but fair” cuts in “entitlements” (what was a cut in
cost-of-living increases could now include a raised retirement age for
Social Security; Medicare rates will rise but so could the age of
eligibility to match longer life spans, etc). If true to form, Obama’s
Democrats will offer their concessions at the beginning of negotiations
before even being asked to give them up, showing us all what decent
sports they are.
The real crisis is systemic and politically unsolvable. The Fed,
like the European Central Bank, will continue its “quantitative easing
infinity” (another term for printing money because they have no other
answer); corporations will be forced to continue to shake out,
eliminating or absorbing competitors, lowering costs and shedding jobs;
banks, reluctant to extend credit to businesses in a shaky economy, are
looking more to currency speculation and higher yields on money they
lend to debt-saddled governments; and the 99% will continue to bear the
burden of bankers’ debts gone bad, the decimation of labor institutions,
a drastically lower standard of living and dismantlement of the social
safety net, in short the end of the New Deal.
As we publish, Europeans were shocked to hear that the citizens
of Cyprus will have a substantial portion of their bank savings deposits
stolen (“taxed”) by the government to qualify for billions of euros in
bailout funds for their failing banks. After Greece and anticipating
Italy, the Germans and Finns (the two highest rated European economies)
especially are worried that politicians can no longer be relied upon to
impose the worst of austerity measures in failing European economies,
and that the financial system faces complete collapse. No longer
confident that governments can buy off the total debts of their banks
with privatizations, more taxes and cuts in pensions and wages, now
almost half the losses will be directly withdrawn from the bank accounts
of ordinary citizens.
The sales pitch is that depositors can take the
tax bite or face total losses when the banks go under. As it is, the run
on the Cypriot banks is likely to spread as other European investors
realize their own governments don’t have the cash to guarantee their
bank deposits either. The Irish prime minister, currently serving as
rotating chair of the European Union Council (heads of government), told
Russian TV that Italy, next in the bailout line, “is too big to be
saved and too big to fail.” There is no plan B. Meanwhile, in a
corporate state as culturally hegemonic as the United States, the
consequences of this crisis will be visited on the working class mostly
by stealth. But sooner or later, all of us will be affected by the
storm’s effects, and the catastrophe will be unfixable.
Conclusion? There is a choice. Either we accept the looting and
pillaging, dysfunction and mendacity, of the corporate class as they
destroy the system that feeds them, or the 99% can make the capitalist
system dysfunctional on its own terms, by stopping payment of the debts
of the rich and demanding the fruits of our own labor. Tell that to your
neighbor next time there’s a storm.
Warren Davis is a long-time labor activist living in the
Philadelphia area, recently most active in the Occupy movement and the
struggle against austerity. He joined Solidarity in 1987.
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