Deficit reduction is code for corporate welfare

The so-called "fiscal cliff" we are careening toward may prove to be the best of a bad set of options, but with a bipartisan group of senators talking we could be facing something that proves to be far worse -- an accelerated expansion of corporate control of our economy and the levers of power.

The cliff -- the set of automatic tax hikes and spending cuts due to take place in January because of the Congressional stalemate over long-term deficit talks -- is designed to be a massive hammer to force action at some point. They will be painful and are, in most cases, unwise, further gutting a safety net that has proven to be the weakest of backstops in our post-financial meltdown economy.

So, it would appear to be a good thing that talks are resuming. Except that framework of the talks is likely to be build around the Washington consensus -- i.e., the nation's primary social insurance programs (Medicare and Social Security) must be transformed. That is the upshot of the plan crafted by former Republican Sen. Alan Simpson, who has long been pushing to privatize Social Security, and Erskine Bowles, the former Clinton chief of staff who spent most of his life as an investment banker. (It is important to note that the commission the pair led, the National Commission on Fiscal Responsibility and Reform, could not agree on a plan and that the chairmen felt it necessary to present their own. The mainstream media -- thanks, in no small part to Bill Clinton and President Barack Obama's willingness to regularly conflate the chairmen and the commission -- rarely make this point.)

But is this the case? Are we being bankrupted by excessive spending, especially on programs like Social Security and Medicare? Let's set out the parameters of what we are really dealing with:

The economy continues to struggle, with unemployment hovering stubbornly above 8 percent and economic growth barely visible. This has not only left millions in dire straits, but cuts into tax revenues (if people are not working, they are not paying income taxes, or not as much as they otherwise might). This has contributed as much as anything to the large deficits we are facing.

Three other factors are at play here that have a much greater impact on deficits than the amount we spend on food stamps and housing vouchers:

  1. our foreign military misadventures in Afghanistan and Iraq, which are winding down, our excessive military footprint around the globe and the undeclared wars in which we are engaged;
  2. the Bush era tax cuts, which primarily benefit the wealthy
  3. and rising health costs.

These issues might be on the table, but have not been the focus of talks. Instead, deficit reduction has become code for so-called entitlement reform as the hyperbole surrounding the Social Security and Medicare programs makes clear.

The reality is that Social Security is not going bankrupt. The truth is, were nothing to be done at all for the next 25 years, the system would still be able to pay out about 75 percent of its benefits. Small changes in the program -- a lifting of the income cap, for instance -- would sure the program up without hurting current and future retirees or most current workers.

Medicare is a much greater problem. But again, the problem is not with the program; it is with the larger healthcare system, which has been designed to drive prices up rather than provide quality care. How can I say this? Simple, study after study shows that the United States is paying twice per capita than other industrialized nations for its health care, but getting inferior care. We still have millions who are without insurance and are forced to use emergency rooms or go without care. We have higher infant mortality rates, lower life expectancies and a huge racial disparity in care -- and these are not isolated issues. In nearly every important outcome measure, the United States ranks in the lower half of industrialized nations.

To summarize: Each of us -- every man, woman and child in this country -- pays twice what they pay in most European countries but we get far less in return.

Now apply this to the Medicare issue. Medicare is far more efficient than the rest of our health system -- only about 2-3 percent goes to administrative costs, which is well below the average for the private sector health insurance companies -- but its customer pool is constrained. It is forced to serve a population that uses more healthcare and more costly healthcare than the population as a whole. Expand the insurance pool -- i.e., offer Medicare to the rest of the population and the costs can be spread more evenly.

Will this require an increase in spending on Medicare? Yes. But that increase would be offset by a cut in the amount of money we give to private insurers -- and it can be plausibly argued that it would result in a net savings.

But these are not the proposals that are on the table. Rather, the grand bargain we are likely to get will probably feature some mix of the privatization proposals that have been floating around Washington for years -- plans likely to benefit the financial services industry (in the case of Social Security) and private insurance firms (for Medicare and Medicaid).

In many ways, deficit reduction has nothing to do with creating a sustainable level of government and everything to do with expansion of the corporate state. If we allow for the dismantling of regulatory structures and the privatization of the social safety net, who wins? Will it mean more jobs and better health care? Will it lead to a more secure retirement? Or, as I would argue, will it continue the decades-long redistribution of wealth from average Americans and the poor to the 1 percent and the corporations who have already come to control much of our daily lives, including our elections.

While it is clear to me that a Romney presidency -- especially if it comes with both houses of Congress held by Republican majorities -- will fatal, we should not pretend that a Democratic win on election night will avert disaster. Given the corporate proclivities of the Obama administration and many of the top Democrats in the House and Senate -- as proven by the appointment of Bowles to co-chair the deficit commission, among others -- our choice on election day appears to be between the immediate handover of power to the corporate state (via the GOP) or a slower, but no-less-certain handover (via the Democrats).

That is why the Occupy movement is so necessary. Our best chance to stop -- and, hopefully reverse -- the corporate takeover is through the energy of protesters and the creation of a mass movement that can serve as a counterweight to the corporate money that has skewed the system.

Tea Party supporters are correct when they say we have to take our country back. What they are wrong about is whose taken over.

Send me an e-mail.

Read poetry at The Subterranean.

Suburban Pastoral, a chapbook by Hank Kalet, available here.

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