Lost in the coverage of the juvenile, perils-of-Pauline, last-hour rescue from a government closure is the substance of the deal. The great con of the Boehner-Tea Party good-cop, bad-cop negotiating pose is that it focuses attention on intra-party melodramas. The real deal gets lost in the noise.
The cuts — “79 percent of what we wanted” in House Budget Chairman Paul Ryan’s words — will be exacted immediately, despite an economy still struggling to recover from the worst downturn since the Great Depression. A Congress packed with millionaires seems more attuned to the rising stock market and record corporate profits. But 25 million people are still in need of fulltime work; home values are sinking; gas and food prices are rising and wages are not.
The most sensible American economists warn against cutting back spending and laying off workers now. Even fiscal hawks like the co-chairs of the president’s deficit commission, Erskine Bowles and Alan Simpson, opposed cuts in spending in the current fiscal year. Similarly, Fed chairman Ben Bernanke, the conservative appointee of George W. Bush, warned against cutting spending or raising taxes in December, arguing that the economy still was struggling to get going.
That’s all forgotten now. “So be it” was Speaker Boehner’s infamous response when asked if the House budget assault would cost federal jobs. Goldman Sachs and Moody’s projected the original Republican plan would cost 700,000 jobs over the next year; now we’ll lose only three-fourths of that number. Some triumph.
The priorities in the deal also offend. Originally, all of the Republican cuts would have been taken from domestic programs, with deep reductions in education spending on everything from Head Start to Pell grants for lower-income college students. Obama succeeded in limiting the damage by spreading the cuts out more. The defense budget will rise by $5 billion (less than the $7 billion Republicans wanted). But the toughest cuts will come from the departments of Education, Labor, and Health and Human Services. Our costly infrastructure investment gap will rise. A $1 billion across-the-board cut in domestic spending sets the precedent for future — and senseless — across-the-board cuts.
Although the media seldom mention it, the cuts aren’t really a “down payment” on deficit reduction. They simply are a partial payment for the $700 billion, 10-year cost of the extension of the Bush top-end tax cuts that Republicans insisted on in December.
Now Washington plunges immediately into the battle over the fiscal year 2012 budget. Tea Party tribunes — led by Rep. Michele Bachmann — are vowing to block the pro forma vote on raising the debt ceiling unless there are structural changes to the budget. Having played chicken with shutting down the government, they are now raising the stakes by threatening to shut down the world economy.
Republicans have doubled down on their reverse Robin Hood agenda. The plan put forth by House Budget Committee Chairman Paul Ryan calls for the wealthy to launch another offensive in the class war they’ve been winning. It would slash another 20 percent from domestic programs, end Medicare as we know it, cut a trillion from Medicaid, repeal protections for consumers and the environment. It would do this not to reduce the deficit — the Congressional Budget Office estimates that the Ryan plan would increase the deficit over 10 years — but to pay for extending the Bush tax cuts and further lowering tax rates on the rich and corporations.
According to aides, Obama has decided to don the mantle of deficit hawk, offering a more measured alternative to Ryan’s ruinous plan. Unlike Ryan, Obama will repeal the top-end Bush tax cuts, get reductions from the Pentagon and retain the savings from health-care reform. He plans to offer up cuts in Medicare, Medicaid and possibly put Social Security on the table, something Ryan had the good sense to avoid.
Lost in this discussion is what the country needs: a clear strategy to build the economy and revive the middle class. That requires making the investments vital to our future and figuring out how to pay for them. It requires taxing what we have too much of (financial speculation and extreme concentration of income and wealth) and investing in what we have too little of (education programs such as pre-K, 21st-century infrastructure and renewable energy). And it would address the real — and sole — source of our long-term debt crisis: not Social Security and Medicare, not “entitlements,” but a broken health-care system, dominated by powerful drug, insurance and hospital lobbies, that costs about twice as much per capita as the health systems of other industrial countries and ensures that while other systems may have bad results, our has worse.
Contrary to what the Tea Party says, America isn’t broke. The Washington establishment is bankrupt intellectually, not financially. The last bastions of middle-class security — Social Security, Medicare and Medicaid — are at risk in the class war that the right is waging for the rich. If the president offers not a defense but a parlay, citizens will have to mobilize to make it clear to Washington that it has not yet gotten the message.
Katrina vanden Heuvel is editor and publisher of The Nation. She writes a weekly online column for The Post.