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Coming: Big Austerity Cuts
by Stephen Lendman
Email: lendmanstephen (nospam) sbcglobal.net
25 Nov 2011
Coming: Big Austerity Cuts - by Stephen Lendman
The congressional August Budget Control Act of 2011 established the Joint Select Committee on Deficit Reduction - aka Supercommittee.
Doing so was extralegal. The Constitution's Article 1, Section 8 explains congressional powers. None of them include supercommittee authority to resolve America's debt crisis.
Article 1, Section 8, Sub-section 18 lets Congress "make all Laws which shall be necessary and proper for carrying into Execution (of its other listed Powers), and all other Powers vested by this Constitution in the Government of the United States, or in any Department Officer thereof."
Even though government authority is limited only by the boundaries of possibility, no constitutional principle gives 12 members more power than others, let alone in secret.
Composed of six House and six Senate members from both parties, Supercommittee authority ran until November 23 to agree on $1.2 - $1.5 trillion in budget cuts over the next 10 years. Consensus would have let Congress only vote them up or down without amendments, debate or delay.
Ahead of their deadline, 100 Democrats and Republicans wrote supercommittee members (the so-called "gang of 12") that "(t)o succeed, all options for mandatory and discretionary spending and revenue must be on the table." They, in fact, asked for agreement on $4 trillion in cuts.
In other words, they want deep social spending reductions, mainly Medicare, Medicaid, Social Security, and public pensions. In earlier negotiations, Obama agreed.
Nonetheless, hours before their self-imposed deadline, Supercommittee members ended negotiations without agreement. By law, automatic $1.2 trillion in cuts over 10 years will start in 2013. They're to be equally divided between defense and domestic programs.
In fact, expect sustained military spending at the expense of gutting America's social contract. Either way, lost purchasing power means less spending, fewer jobs, and greater public anger than today's high levels.
Progressive Radio News Hour regular Jack Rasmus discussed what's at issue and what's next. It's not about political disagreements. It reflects serving wealth and power interests at the expense of popular ones.
Deficit cutting always is secondary. Key is protecting corporate handouts and Bush era tax cuts, as well as expanding them for business and upper-bracket earners.
Supercommittee Democrat members, in fact, offered unprecedented Medicare and Medicaid cuts on top of those already made - at minimum, $500 billion over the next decade with increases in out-years.
They also agreed on $1.2 trillion in automatic cuts, equally divided between defense and domestic programs and about $500 billion in tax increases.
Republicans countered with $760 billion in Medicare and Medicaid cuts plus about $300 billion in taxes raised largely from middle income earners by reducing mortgage deductions and others helping less affluent households.
In return, Republicans demanded big corporate and upper bracket personal income tax cuts. Both are now 35%. Republicans want them reduced to 25 - 28%, so America's aristocracy benefits by deficit reduction at the expense of working people bearing the burden.
Rasmus said "Republicans top priority is shielding the Bush tax cuts." Over the last decade, they cost America at least $2.9 trillion in vitally needed revenue plus another $450 billion in 2010-2012 extensions. If maintained for another decade, "a projected $2.2 to $2.7 trillion" more will be lost, exacerbating today's debt problem.
"By proposing further tax cuts for the top income brackets and corporations, it is clear Republicans aren't all that concerned about" deficits and debt. They and most Democrats want corporate friends and super-rich elites protected.
They expect working Americans and seniors to bear the burden so corporations and rich folks are spared. Congressional disagreement is only about when cuts are made, not amounts, who pays, and who benefits. It's also about assuring Bush era cuts are preserved and sweetened.
Rasmus believes Republicans will have a better chance of prevailing overall by waiting until fall 2012, ahead of next year's November 6 congressional and presidential elections.
At the same time, they "see several legislative choke points" to facilitate greater Democrat concessions without sacrificing what they want most.
December will be the first test for resolving four major bills before yearend, including:
(1) extending the 2% payroll tax deduction another year. In fact, it's a stealth drain of hundreds of billions of dollars from Social Security's Trust Fund. Revenue already lost irreparably weakened its ability to pay future benefits. Lose more and the entire program may be lost, perhaps first by privatizing it.
Obama fully concurs with driving a stake through the heart of Medicare, Medicaid, Social Security and public pensions. He's no populist. He's a corporatist hard-liner.
(2) extending expiring unemployment benefits for millions of laid off workers.
(3) another one-year Alternative Minimum Tax (AMT) fix.
(4) delaying "the 29% cut in doctors fees for serving Medicare patients."
According to Rasmus, if these measures aren't passed, "it will be a major hit to GDP and the economy in the first quarter of 2012," at a time it's already faltering.
As a result, expect Republicans to "drive a hard bargain and extract more than a pound of legislative flesh" to go along. They'll demand major Medicare/Medicaid cuts. They'll also insist on eliminating mandated defense cuts.
As he's done repeatedly, expect Obama to talk tough, then cave at the 11th hour. In an election year, he and Democrats can't do less, despite Catch-22 pitfalls.
Key is that the above benefits come immediately. Cuts happen later on, after November 2012. Obama and reelected Democrats can rest easy. Later it's someone else's problem, especially for Obama if victorious and senators getting another six years to assuage voter anger.
Supercommittee negotiations ended, leaving major issues unresolved. Key is economic weakness, poor job prospects, increased deficits and national debt, reduced entitlements, and protecting benefits for corporate and super-rich Americans above all.
No wonder Republicans left Supercommittee issues hanging. They'll get everything they want anyway.
They know Democrats and Obama will oblige like they always do. Why not when both parties serve privilege at the expense of beneficial social change.
Stephen Lendman lives in Chicago and can be reached at lendmanstephen (at) sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.
This work is in the public domain