Tea party politicians are denounced for their dangerous antics, but their doomsday warnings about profligate government spending are the conventional wisdom of the so-called “moderates” of big business, the mainstream media and too many politicians of both parties (including Colorado Sens. Bennet and Udall and Rep. Jared Polis).
The shutdown/debt ceiling deal preserves “sequestration,” which mandates across-the-board budget cuts. A committee to negotiate further budget cuts is being created.
In economics, this is called “austerity” and involves government cuts to social spending, health care, education, pensions, etc., in order to balance the budget. This has led to high unemployment, falling wages and increasing inequality.
Recently, conservative establishment types have concluded that these policies are a failure. That includes the manager of PIMCO (the largest bond-buying outfit in the world), top figures at Blackrock (one of the most influential investment banks in the world), European Commission President Jose Manuel Barroso and Martin Wolf, the highly respected finance commentator for the Financial Times. Even the International Monetary Fund has become a critic.
We need to go in the opposite direction. Our biggest deficit is of jobs. More than 21 million Americans can’t find full-time work. Big business is sitting on enormous profits (the richest 1 percent have gotten 95 percent of the income gains since 2009) but isn’t creating jobs. The public sector has to do it.
Josh Bivens of the Economic Policy Institute says we have had an “extreme cutback in public spending” since 2009, which can “entirely explain why the recovery from the Great Recession has been so sluggish compared to recoveries following previous recessions.”
There is no fiscal crisis, argues progressive economist Dean Baker: “Contrary to the widely repeated stories of out-of-control deficits and spending, deficits have plunged in the last four years, falling from 10.1 percent of GDP in 2009 to just 4 percent of GDP in 2013. The Congressional Budget Office projects the deficit to be just 3.4 percent of GDP in 2014. The latest projections show the debt-to-GDP ratio falling for the rest of the decade.”
More and more people are waking up to the lies. So the right wing has to distract us with a scapegoat and, just incidentally, create some money-making opportunities for themselves.
So public employees are becoming the new welfare queens. Matt Taibbi (in a lengthy piece in Rolling Stone) and David Sirota (in a report for the progressive think tank Institute for America’s Future) describe a secretive national campaign against the pensions of municipal and state workers by politically active billionaires such as former Enron executive John Arnold, Wall Street think tanks like the Manhattan Institute, and foundations viewed as centrist, such as the Pew Center on the States. They are attempting to cut public workers’ guaranteed retirement income, transform pensions into 401(k)- style individual accounts, and turn over the management of pension money to people like the hedge-fund tycoons on the board of the Manhattan Institute.
They like to pretend that the modest retirement benefits of public workers caused the shortfalls in pension plans. That’s nonsense. Pensions took a hit due to Wall Street fraud and greed during the equity and real estate market meltdown in 2008 and 2009. Indeed, public pensions were 85 percent funded (on aggregate) in 2007 before the meltdown.
In Colorado, right-wingers persistently attack the Public Employees’ Retirement Association (PERA), which provides a pension for workers in more than 400 government agencies and public entities (including CU, the state, cities, K-12 schools). In 2010, a law was passed that reduced the cost-of-living increase PERA retirees receive. A lawsuit was filed charging that the law is an unconstitutional breach of contract. It is now before the Colorado Supreme Court.
When people in the general public hear about a PERA pension, many think that it’s an add-on to Social Security. But it is a substitute. PERA members do not earn Social Security.
According to the Census Bureau, pension expenditures account for just 3 percent of all state and local government spending.
If you want to find wasteful spending, look at corporate welfare. According to The New York Times, “states, counties and cities are giving up more than $80 billion each year to companies in the form of subsidies and tax expenditures.”
How about some austerity in that department?
This opinion column does not necessarily reflect the views of Boulder Weekly.