The meaning of deficits

Tell Us Something We Didn’t Already Know Watch

Something that I’ve been meaning to write about for some time now is actually getting into the news, and that is the effects of our federal budget deficits and debts. Dick Cheney has been famously quoted as saying that what he learned from Reagan is that “deficits don’t matter”. He was right. Politically, it doesn’t seem that voters vote with or against politicians based on how they deal with deficit spending.

But people are wrong to take Cheney literally. Deficits and the national debt do matter, and in a way that would have our xenophobic countrymen quaking in their boots if they knew how. To put it simply, our debt means that other people, and to a large extent foreign countries, own us. The continuing existence of the USA depends on the good graces of countries like Japan, South Korea, France, Germany, and others that have bought our debt. They hold the mortgage on America, and if we don’t put our economic house in order, they may very well put their money elsewhere.

A word here about the Clinton era. Clinton spent a great deal of political capital in 1993 to alter the tax structure so that people of wealth would also have to take some responsibility for paying for running the country. He passed his plan in 1993, without a single Republican vote. Al Gore broke the tie in the Senate to pass that plan. And Clinton paid for it, by losing the House to the Republicans and with the continual witch hunt against him after that. Aided by the booming economy (which was probably also helped by the fact that Wall Street recognized that someone who was serious about the national debt was in the White House), the deficit was eliminated in about 4 years, with continuously rising surpluses after that. Clinton had a lot of faults, but he was an excellent steward of our economic house.

This is why when “Old Europe” tells us not to break international law and invade a sovereign country, we shouldn’t give them the finger and a raspberry. We are like the town drunk, violent, armed, and itching for a fight. The rest of the world is our banker, and they own our home, our cars, and everything else we have, all of which is mortgaged to the hilt. If there is a better reason that we should listen, politely, when the rest of the world speaks, I cannot think of it.

As I said, this view is finally getting some airtime. And who should be putting it out there for the masses to understand, but Alan Greenspan, tool of the very wealthy. As he warns us, weeks after the election (naturally), how dangerous it is for us to have such massive debt, one has to wonder where he was in all of those months before the election. Thanks for crawling out of the woodwork to tell us that, Alan, now that it is again too late.

Reverse Robin Hood Watch

And speaking of Greenspan, and how every time he opens his mouth you should hold on to your wallet, I note that he is starting to go on and on again about the need for Social Security reform. Remember this, whenever you hear it: Social Security reform now is a sham. It is the “2” in the 1-2 punch of stealing from the poor and giving to the rich that has been going on now for some decades, and is only possible because our press corps and national memory only go back about 2 years.

The reason this bit of theft is even possible is that in order to see it happen you have to be able to remember all the way back to the Reagan era. In those days, people were very worried about the strain that the approaching retirement of the Baby Boomers would cause on the Social Security system. (Remember the days when our leaders perceived problems and actually pretended to do something about them? Good times, good times.) The solution they came up with at the time was to massively increase the amount of wage taxes they would take out from working people’s paychecks to keep Social Security solvent, even through the retirement of the Baby Boom. People’s wage taxes went way up, and they sacrificed to preserve the safety net for older citizens, for themselves, and for future generations. Social Security is solvent and funded through 2044 because of those changes.

This little bit of history is never mentioned in the GOP- and Corporate Media-Officially Sanctioned Hagiography of Reagan because Reagan must always be associated with tax CUTS, ad infinitum nauseum, ad astra, amen. This move essentially solved the Social Security issue, at the cost of much sacrifice by the working class, and was also part of the widening gap between rich and poor that really built up steam during the Reagan era. At this point, massive new revenue streams from the working class are pouring into Washington’s coffers. This money is supposed to be used to fund Social Security, but it is spent immediately on current spending, as is all Social Security money. The wealthy begin thinking how nice it is to have all of that wage tax money coming into the government, and wouldn’t it be nice to have it fund more and more of the government? All that would be required is to get rid of Social Security. Then all that money could be used to pay for other government spending, and the rich could lobby for lower taxes for them. The con would be ruined, however, if people remembered that the money was for Social Security.

Fast forward to the Clinton years. Gore is campaigning for president in 2000, and he can hear the wealth and corporate class clamoring for tax cuts and he knows that most people have forgotten what was up with their wage taxes. After all, there hasn’t been talk about a Social Security crisis for years, and the government is flush with revenues. He endeavors to remind voters that the US now has the means to not only continue paying current Social Security, but to really put the money earmarked for Social Security aside to make sure we can pay for the Baby Boomers and their strain on SS. He talks about a lockbox, so that the extra money coming from their wage taxes can be put to the use it was originally intended for, keeping Social Security solvent until 2044. The whorporate press, in their glee at having something else besides GOP slander and calumny with which to mock and ridicule Gore, now use this phrase as part of the Atomic Media Wedgy they are applying to him. “Ha ha ha”, they laugh. “Gore said ‘lockbox’. What a loouooser.”

Fast forward to 2004. The money earmarked for Social Security is long gone, and then some. The working class is still paying higher taxes, and the money is being spent to buy tax cuts for the extremely wealthy, and to run the government. Even though people thought they were paying higher taxes in the 80’s to save Social Security, that goal has disappeared under a walnut shell. Once again, Alan Greenspan crawls out of the woodwork to start talking about the ‘impending crisis’ in Social Security, how everyone should expect to have their benefits cut (and also talks about how dangerous our deficit and debts are, see “Why You Shouldn’t Act Like an International A-Hole”, above).

Now, Greenspan is no dummy. He remembers perfectly well that the much larger payroll tax that people are paying already saved Social Security until 2044, if our leaders would use other revenue sources for other expenses. Social Security will take care of itself. But “other revenue sources” includes taxes on wealth, and gee, wealthy people are tired of paying taxes. Wouldn’t it be better to just get rid of Social Security, lower the benefits, just kill it quietly in the corner, and continue to get those payroll taxes?

The only thing that could stop them from doing this is a media which is not lazy, ignorant, foolish, and in the pocket of corporations. In others words, we are screwed. And Greenspan, apparently, is happy to help.