Military Spending, Strategic Deficits, and Other Crimes: Five Things We Need to Know About the “Fiscal Cliff”
“The key fact in the new development of plutocracy [government controlled by wealth] is that it will use its own blunder as an excuse for further crimes.”
The first thing we need to know is that the fiscal cliff is an aspect of a larger false narrative that focuses on deficits and debt without addressing actual causes, including both militarism and the role and intent of deficit politics.
The fiscal cliff has little to do with deficits and everything to do with politics, particularly a thirty year strategy by Republicans from Reagan on to intentionally run-up debts and deficits (they call them “strategic deficits”) in order to gut social programs. Economist Paul Krugman writes that “the deficit-scold movement was never really about the deficit. Instead, it was about using deficit fears to shred the social safety net.”
And economist Joseph Stiglitz writes that “the deficit reduction agenda, at least in the United States,…is an attempt to weaken social protections, reduce the progressivity in the tax system, and shrink the role and size of government-all while leaving established interests, like the military-industrial complex, as little-affected as possible.”
Second, we hear constantly that there will be dire consequences if our leaders don’t act promptly to avoid the fiscal cliff and sequestration but an even greater threat is that enough Democrats, including President Obama, will act based on faulty narratives.
This would allow previous blunders (disastrous wars, inflated military spending, tax breaks for the wealthy, and other policies intended to drive up debt and deficits) to serve as pretexts for additional crimes (cutting Social Security, food stamps, and Medicare).
At present, Social Security contributes nothing to the deficit and runs a surplus that will allow it to pay all promised benefits through 2038. Even if we do nothing at all Social Security will be able to pay 81 percent of promised benefits after 2038 into the indefinite future. Full benefits could be paid indefinitely if we simply raise the amount of income subjected to the social security tax above its present threshold of $106,800.
The budget implications of Medicare are more serious but the solution isn’t to keep seniors out of the system by raising the eligibility age requirement and pushing them into more expensive private care. The solution is to allow Medicare to bargain over drug prices, and to establish a Medicare for all system that would dramatically reduce health care costs, improve health outcomes, and solve many of the “budget problems” that are in fact projections based on continuation of our dysfunctional for profit health care system..
Third, in order to avoid “solutions” and “compromises” that amount to future crimes it is necessary that we address the actual causes of present and longer term budget problems.
Some of the main causal factors that have led to the fiscal cliff include: Republican use of strategic deficits; war costs; inflated pentagon spending, unfair tax policies, corporate subsidies, a broken health-care system, inequality, and a deep recession caused by Wall Street speculators.
Fourth, although debt and deficit issues are challenging, with better priorities and better policies it would be relatively easy to resolve the nation’s short and long term fiscal issues in ways that improve quality of life.
There are many scenarios that make it clear that our task is a lot easier than you might think given the doomsday rhetoric surrounding the fiscal cliff and sequestration.
• “America Is Not Broke,” a policy paper from the Institute for Policy Studies (IPS), examines a combination of budget cuts and revenue increases totaling $824 billion a year. Addressing what it calls the “misplaced obsession with our national debt and austerity” the IPS report identifies savings and revenues of $197 from taxing pollution and cutting environmentally damaging subsidies, $252 billion in military spending cuts, and $375 billion in revenues from taxing Wall Street, corporations, and the wealthy.
• “The People’s Budget” from the Congressional Progressive Caucus eliminates the deficit in ten years by ending wars, reducing military spending, enacting meaningful health-care reforms, and implementing fair taxation (www.thepeoplesbudget.org).
• Eliminating tax breaks for the wealthiest Americans would increase revenue by more than $80 billion a year ($800 billion over ten years).
• Congressman Keith Ellison’s bill, HR 6411, (the Inclusive Prosperity Act) would place a small tax on financial transactions and would raise $350 billion a year, with the added benefit of discouraging damaging speculation.
Finally, we can move from deficits and managing austerity to real policy solutions that build a high quality of life on a fiscally sound foundation if we dramatically reduce wasteful spending for militarism and war.
There are three good reasons to do so. First, significant cuts would enhance national security. Second, Jessie James said he robbed banks because that’s where the money was. In a similar way, there are hundreds of billions of dollars squandered each year on reckless, wasteful military spending. A third reason to cut the military portion of the budget is because military spending is bad for the economy. Military spending creates relatively few jobs per billion dollars spent and military budget cuts have fewer negative economic social impacts than equal cuts in non-defense programs. Economists at the University of Massachusetts concluded that $1 billion devoted to military production creates about 11,000 jobs whereas $1 billion spent on education creates 29,000 jobs.
Economist Jeffrey Sachs offers a brief summary of the benefits and possibilities of significant cuts to the military budget:
“We are squandering trillions of dollars in useless wars, breaking the budget and the national morale in the process. By ending these futile wars and redirecting our energies to the core reasons for conflict-widespread insecurity, extreme poverty, a scramble for resources, and rising environmental stresses-we will enhance our security at a tiny fraction of today’s military outlays. By 2015, we should be able to slash the military budget by at least half, from 5 percent of GDP to between 2 and 3 percent of GDP, and redirect a part of those savings to better investments in global stability.”
The Minneapolis City Council on Friday December 7, 2012 passed the Minnesota Arms Spending Alternatives Project Resolution (www.mnasap.org) to shift spending priorities from war and militarization to meeting essential needs. Join our efforts by bringing the resolution to your city council or other group.