The Super Committee’s Debt Misdirection Scheme

There is no debt crisis, but there is a “super committee” appointed to fix it. If the gang of 12 Congressional appointees has its way, Medicare, Social Security insurance, and Medicaid will be decimated to placate the infamous 1 percent.

Playing on misinformation churned out by the corporate media about the debt/deficit “crisis,” the committee seeks to reduce federal deficits by up to $1.5 trillion over the next 10 years.

We know the agenda of these committees. Remember the National Commission on Fiscal Responsibility and Reform, created by President Obama in 2010? Glutted with connections to Wall Street financial institutions, the committee produced a report recommending tax cuts for corporations and the wealthy. It also recommended severe cuts to Social Security, Medicare, veterans’ benefits, and other social programs benefiting middle- and low-income people.

Already, reports are circulating that Democrats on the super committee have offered to cut Medicare and Medicaid by up to $3 trillion. Social Security is “on the table,” too. Republicans rejected their proposal because it offset some of those cuts with tax increases.

As the corporate media spins the debt, thankfully the Occupy movement is challenging conventional wisdom about who is responsible for the country’s economic woes.

Family Budget: Flawed Analogy

The alarmists assert that we must balance the budget just as most families must do. The president admonished us in July: “Every day, families are figuring out how to stretch their paychecks a little further, sacrifice what they can't afford, and budget only for what's truly important,” he said. “It's time for Washington to do the same.”

President Obama should know better.

Many families take out car loans and student loans, not to mention mortgages. They might borrow from a commercial bank in order to add a garage or a child's room to their house. Credit card debt is also a form of deficit spending. Most families do live by a form of deficit spending.

Moreover, the federal government can implement policies that families cannot. It can issue currency, levy taxes, and stretch due dates over many decades. With one exception, in 1835, the federal government has been in debt since 1776. It cannot “go broke,” despite protestations from debt-hysteria pundits.

Spending Myths

The national debt has indeed risen substantially. Consider the sources, however. They were avoidable, and they are fixable now if politicians were willing.

In 2009, the Congressional Budget Office attributed 37 percent of the increased debt to the recession and 33 percent to Bush’s tax cuts for the wealthy and his Medicare drug benefit (a disgraceful gift to the pharmaceutical industry).

Lastly, President Obama contributed 20 percent to the debt with extension of the Bush tax cuts for the wealthy, the occupation of Iraq, the corporate bailout, and his own tax cuts for those earning less than $250,000.

Here’s where the debt is not coming from: This spring, Republicans tried to slash billions from non-defense programs (though they are only about 12 percent of the federal budget) that pay for social services and other programs benefitting middle- and low-income folks.

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But after adjusting for inflation and population growth, we are spending exactly the same amount on these programs that we were a decade ago, according to the Senate Appropriations Committee.

Debt Ruse

Is the national debt a threat to the economy? Economists not tethered to the corporate agenda have shown repeatedly that it is not a threat at this time.

In theory, government debt could drive up interest rates and ignite inflation. However, that is not occurring. The U.S. finances its debt by selling treasury bonds, and investors are not worried about buying them. Even though treasury bonds have very low interest rates, investors are snapping them up. They have no doubts about the country’s ability to pay its debt.

The most important number to consider is not the size of the debt but the ratio of how much the country owes to how much it produces. While the national debt seems huge, the U.S. economy is immense. The gross domestic product (GDP) is approximately $14.7 trillion. The U.S. debt-to-GDP ratio is currently 100 percent.

Yet Great Britain's debt-to-GDP ratio was well over 100 percent for most of the 19th century, and today Japan has a debt ratio of more than 220 percent of GDP. Japan can still borrow for the long term in financial markets at interest rates of less than 1.5 percent.

Real Agenda

The debt “crisis” is designed to frighten Americans into cutting Social Security, Medicare, and Medicaid. The two public health insurance programs keep tens of millions of elderly in their homes and the poor from dying. Nearly two out of three seniors depend on Social Security for more than half their income.

The real issue is not the debt, but the ideology of politicians supported by corporate oligarchs who seek to dismantle government programs that have largely benefited middle- and low-income folks since the New Deal.

Those advocating harsh debt reductions subscribe to the petrified textbook of neo-classical economics, which advocates for an unfettered “free” market, a delusional ideology that justifies a grotesquely skewed distribution of incomes and wealth. Their ultimate goal is to privatize all social programs, resulting in more hefty fees for Wall Street.

Their strategy persists like a fungus despite the fact that Social Security has absolutely nothing to do with the national debt. Medicare is often singled out, but its rising costs are largely a result of bloated profits of the insurance and pharmaceutical industries. The same problems drag on Medicaid.

Their budget problems could be remedied by a national single-payer health care system that takes private profit out of health care, as in other industrial nations.

In other words, the debt is not a crisis—and there are ways of reducing it that would benefit the vast majority of Americans.

The super committee is working feverishly to placate the 1 percent by maintaining their lavish tax cuts.

The Occupy movement has pegged this economic and political corruption as the cancer of our times. The movement is a welcome manifestation of the festering discontent of tens of millions of Americans. It is an audacious and exhilarating democratic contrast to Wall Street and its anything but super committee.

Bruce T. Boccardy is president of Service Employees Local 888 in Massachusetts.