This article is part of a Huffington Post series on the global impact of austerity -- "A Thousand Cuts" -- from affordable housing funds lost in San Francisco to increasing class sizes in New York, food inspector cuts in Canada, disability benefits taken away in the United Kingdom, decimation of France's solar industry, and more. Click here for information on how you can help people affected by these measures.
WASHINGTON -- The poor and middle classes have shouldered by far the heaviest burdens of the global political obsession with austerity policies over the past three years. In the United States, budget cuts have forced states to reduce education, public transportation, affordable housing and other social services. In Europe, welfare cuts have driven some severely disabled individuals to fear for their lives.
But the austerity game also has winners. Cutting or eliminating government programs that benefit the less advantaged has long been an ideological goal of conservatives. Doing so also generates a tidy windfall for the corporate class, as government services are privatized and savings from austerity pay for tax cuts for the wealthiest citizens.
U.S. financial interests that stand to gain from Medicare, Medicaid and Social Security cutbacks "have been the core of the big con," the "propaganda," that those programs are in crisis and must be slashed, said James Galbraith, an economist at the University of Texas.
Advocates of austerity measures have sold their proposals as a means to improve the economy.
"It is an error to think that fiscal austerity is a threat to growth and job creation," declared European Central Bank President Jean-Claude Trichet in July 2010.
"We're going to cut spending to get the debt down, help create jobs and prosperity, and reform government programs," vowed Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, in a February 2011 commentary for Real Clear Politics. Ryan would later declare that his budget plan, with far more aggressive austerity measures than those ultimately enacted by Congress -- including $6.2 trillion in spending cuts -- would have spurred $1.5 trillion in economic growth and created 2.5 million jobs.
As for the 2010 Simpson-Bowles deficit reduction plan, it is often described by Beltway insiders as a "centrist" proposal that could "bring the country together" and improve the economy. In fact, Simpson-Bowles is yet another austerity program that would cut Medicare and Social Security while securing tax breaks for corporations and the well-off, according to an analysis by the Center on Budget and Policy Priorities.
Erskine Bowles, co-chairman of the bipartisan commission that worked on the plan, is a director at Morgan Stanley, the sixth-largest American bank and a financial institution for which the United States made huge commitments to help it weather the economic downturn. Morgan Stanley took $10 billion in bailout funds under the Troubled Asset Relief Program and received more than $100 billion a day in cheap loans from the Federal Reserve at the height of the past financial crisis. For weeks, Morgan Stanley borrowed more money from the Fed than the company's stock market value.
That solicitude for the profits of big corporations shows up in Simpson-Bowles too. The plan offers multiple corporate tax reform proposals, but one, which calls for shifting to a so-called territorial tax system, would be especially advantageous to Morgan Stanley and other Wall Street banks. It would allow U.S. companies to permanently avoid paying U.S. taxes on overseas income, including money stashed in offshore tax havens like the Cayman Islands. According to a 2008 report by the Government Accountability Office, Morgan Stanley operates 273 sub-companies headquartered in such tax havens.
While Social Security advocates have attacked the plan, the Business Roundtable, a lobbying group for corporate CEOs, has praised Simpson-Bowles. So has Peter Peterson, who served as Richard Nixon's commerce secretary before founding Blackstone Group, a major private equity firm. Peterson has long advocated cuts to Social Security and Medicare, and he started a think tank devoted to federal debt reduction in 2008.
"I'm a great fan of Erskine Bowles and Alan Simpson," Peterson told Bloomberg in 2011. "I think they're American heroes."
As many economists predicted, however, the austerity policies implemented after the financial crisis have proved to be a losing proposition for the global economy. The strong economic growth that austerity advocates predicted has not materialized, with the United States showing only anemic improvements, and European countries sliding back into devastating recessions.
At the same time, corporate profits in the financial industry remain above even the levels reached at the height of the housing bubble, according to Commerce Department data. And elites on both sides of the Atlantic have secured generous tax breaks, made possible in part by cuts to social services.
In the United States, President George W. Bush's tax breaks for the wealthiest citizens were extended, while unemployment benefits and even food stamps have gone on the chopping block.
This tradeoff is even more apparent at the state level. In 2010, New Jersey Gov. Chris Christie (R) opted not to make the $3 billion annual contribution to the state workers' pension fund, instead securing $1 billion in tax cuts for the state's better-off residents. Wisconsin Gov. Scott Walker (R) has similarly proposed budgets that provide tax breaks for corporations and the rich while demanding pay and benefit cuts for middle-class state workers.
"Austerity policies are literally a redistribution from the bottom of the income spectrum to the top," said Dorian Warren, a professor of political science at Columbia University and a fellow at the Roosevelt Institute, an economic policy think tank. "In Wisconsin, both wealthy people and businesses got tax breaks, while middle-class and working-class employees of the state essentially got crushed."
Warren emphasized that there are political dimensions to the austerity push. Efforts to curb collective bargaining rights -- and thus pay and benefits -- for state employees cut to the heart of the American labor movement. With only 7 percent of the private-sector workforce unionized, public-sector unions are a critical component of labor's political influence and an important bloc in Democratic Party operations.
Governments in Europe, most notably the United Kingdom, have also pursued tax cuts for the rich while imposing austerity measures on the working classes. And the European financier class has benefited even more directly than their American counterparts from these budgets.
Every time the European Union has reached a crisis point on the debt carried by Greece or Spain, EU leaders, especially German Chancellor Angela Merkel, have come to the rescue with bailout funds. That money goes to the banks that own Greek and Spanish debt, whose holdings would take a hit if either country were unable to repay. But the bailout comes with harsh austerity requirements intended to encourage budgetary discipline, so it's ordinary citizens who end up taking the hit. The most vulnerable populations are harmed by the bailouts, while the well-paid financial professionals who made the deals to finance Greek and Spanish deficits in the first place continue profiting handsomely.
"Imposing pain on Greeks is ... a blood price for the ever-repeated bailouts whose actual beneficiaries are said to be Greeks, but are in fact French and German bankers," said Galbraith.
The consequences have been dire. In Greece, HIV/AIDS infections have soared 1,500 percent since the end of 2010, as public health programs and anti-drug campaigns have been decimated. Unemployment has risen above 20 percent in both Greece and Spain.
Yet none of this has slowed the bipartisan American political movement for greater austerity. The U.S. budget will reach the so-called fiscal cliff at the end of the year, when a number of tax breaks expire and harsh budget cuts under the 2011 debt ceiling deal kick in. Republicans in Congress are calling for additional slashing of federal spending, and they have been joined by Wall Street Democrats. Former Rep. Harold Ford Jr. (D-Tenn.), now a managing director at Morgan Stanley who supported the American bank bailout, advocated for austerity during a June appearance on NBC's "Meet the Press."
"Obviously, we hope that things go well there in Greece," Ford said. "And when I say, 'well,' I mean that the austerity camp wins out."
Austerity Measures Devastate Communities Around The World
<a href="http://www.huffingtonpost.com/2012/07/12/austerity-measures-a-thousand-cuts_n_1666309.html">CLICK HERE to read the full story.</a> The austerity budget, conservatives' favored response to the Great Recession, is more than just simple belt tightening. It's not one cut or 10, but a thousand. City and neighborhood essentials like bus service become expendable, and things that we have come to depend on as part of our daily lives are slowly erased. Those teachers and firefighters <a href="http://www.washingtonpost.com/blogs/plum-line/post/mitt-romney-we-dont-need-more-cops-firefighters-or-teachers/2012/06/08/gJQAvOgDOV_blog.html" target="_hplink">Mitt Romney doesn't want</a> to pay for? They're already part of austerity's disappeared jobs. This austerity mindset is taking hold not just in cities and states across the United States, but around the world. While conservatives have championed austerity as eat-your-peas necessity, these massive cuts often have unintended consequences.
Fire Department Cuts
<a href="http://www.huffingtonpost.com/2012/07/13/fire-department-cuts-a-thousand-cuts_n_1659671.html">CLICK HERE to read the full story.</a> "They are asking you to do more with less," Westfield, N.J., firefighters union president Mike Sawicki said. "A second-grader can figure that out. Show up with nine guys, and it is easier to save." While the number of deadly fires has declined over the last 20 years nationwide, thanks to better construction and safety techniques, fire departments are increasingly called upon to answer medical emergencies, chemical spills and more, said Garry Biese, CEO for the International Association of Fire Chiefs. Yet fire departments are going short-handed. The precipitous drop in state and local revenues caused by the Great Recession, combined with budget cuts pushed by austerity-minded politicians, has led to static or slowly dropping staffing levels across the country.
Larger Class Sizes
<a href="http://www.huffingtonpost.com/2012/07/14/larger-class-size-a-thousand-cuts_n_1659591.html">CLICK HERE to read the full story.</a> When Shania started third grade at P.S. 148 last fall, she was thrilled to be back at the Queens public school. An outgoing eight-year-old, she said she was happy to be among her friends again, and she had loved her class the previous year. Her second-grade teacher would take the time to explain tricky topics like addition and subtraction one-on-one. She had even been named "student of the month." But since 2007, as the economy has tanked and expenses for public schools have risen, New York City has made principals cut budgets by 13.7 percent. When budgets are cut, teachers are fired and others aren't replaced -- including at P.S. 148, which has lost at least $600,000 and eight teachers since 2010. When teachers are lost, class sizes balloon. Shania had 31 classmates this past school year, compared to 20 the year before.
'The Big Problem For Me Is Fear'
<a href="http://www.huffingtonpost.com/2012/07/15/austerity-measures-uk-a-thousand-cuts_n_1670711.html" target="_hplink">CLICK HERE for the full story.</a> Since birth, Lisa Egan, 33, has dealt with a rare genetic disorder called osteogenesis imperfecta, also known as brittle bone disease. The condition has caused more than 60 fractures in Egan's lifetime, including five separate breaks in 2011. "I once broke my back sleeping in an awkward position," she said. Because her disease is "wearing out her joints," doctors told Egan to use a wheelchair. "I can walk a very short distance and very slowly," said Egan, who lives in Camden, North London. "But sometimes things happen, such as my knee dislocates or I will tear a tendon out of a metatarsal and pull the end of the bone off with it. ... So I use a wheelchair most of the time." Despite her condition, Egan said she does not like to be seen as "vulnerable." Intelligent and articulate, she has written extensively on disability and politics, and has even tried a stint at stand-up comedy. As one of nearly 500,000 people in the United Kingdom who rely on welfare benefits, however, Egan now experiences fear daily: fear for her future, fear for her ability to live independently, even fear for her life.
Public Transit Crisis
<a href="http://www.huffingtonpost.com/2012/07/16/detroit-bus-cuts-a-thousand-cuts_n_1647867.html" target="_hplink">CLICK HERE to read the full story.</a> Waits have been getting longer for many of the roughly 107,000 to 117,000 daily passengers who depend on Detroit's bus fleet. The city has lost about half of its bus service since 2005, according to Transportation Riders United, a rider advocacy group. Under the Detroit Department of Transportation's new "415" plan, the city has increased service along its four busiest routes, with buses now running every 15 minutes, but the new schedule necessitated tradeoffs elsewhere. In March, the department, whose management had recently been privatized by the city, shortened hours on more than 30 routes and discontinued all service between 1 a.m. and 4 a.m. The changes, which the city anticipates will save $40 million a year, have forced an estimated 3,200 nighttime travelers to come up with alternative plans for getting around town and left others waiting longer on the side of the road. "I'm hurting. A lot of times they don't come around, and when they do, they pass you by," said George Jones, 57.
Fewer Food Inspectors
<a href="http://www.huffingtonpost.com/2012/07/17/canada-food-safety-a-thousand-cuts_n_1664579.html" target="_hplink">CLICK HERE to read the full story.</a> Frances Clark's last moments were not peaceful. Flu-like symptoms and seizures wracked her body. Her breathing deteriorated. At the end, she was "gasping, like a fish out of water," her daughter recalled later in court documents. The 89-year-old woman died on Aug. 25, 2008, the first victim of a listeriosis outbreak that killed 23 people, sickened thousands more and triggered the biggest food recall in Canadian history. A government investigation determined the cause of the outbreak: tainted meat from processing giant Maple Leaf Foods. The company apologized to the victims and settled a number of lawsuits, including one brought by Clark's family, for CAD$27 million. Following the scandal, the federal government introduced significant changes to its meat inspection program, including nearly doubling the number of inspectors from 225 to 400. But now, the government has slashed the budget for the Canadian Food Inspection Agency, the federal department responsible for food safety, by $56 million over the next three years.
Affordable Housing Gap
<a href="http://www.huffingtonpost.com/2012/07/18/affordable-housing-san-francisco-a-thousand-cuts_n_1666760.html" target="_hplink">CLICK HERE to read the full story.</a> Roman Quinn said getting clean would have been nearly impossible if he were still living on the streets. But his struggle to find a place to live proved nearly as difficult as his struggle to find sobriety. San Francisco has nonprofit groups and other programs in place to help the city's most vulnerable residents -- people like Quinn and, increasingly, families tossed out of their homes due to the recession -- find housing. In recent months, however, that system has been greatly strained. Federal housing grants and tax credit programs have decreased drastically. Last year alone, the U.S. Department of Housing and Urban Development's HOME Investment Partnerships Program, which doles out grants to municipalities for things like affordable housing construction and down payment assistance, saw its budget slashed by almost 38 percent. And changes at the state level last year cost the city about $50 million worth of tax revenue that had gone toward affordable housing. Meanwhile, the flood of individuals who have lost their jobs and homes in recent years has swelled the demand for affordable housing. It became so bad that the city's public housing authority closed the waiting list to new applicants in 2010. The list has yet to reopen. Without new sources of funding, success stories, even ones as tenuous as Quinn's, will be increasingly uncommon.
New Industry Struggles
<a href="http://www.huffingtonpost.com/2012/07/19/austerity-measures-france-a-thousand-cuts_n_1679428.html" target="_hplink">CLICK HERE to read the full story.</a> While austerity measures remain comparatively limited in France, one field has suffered considerably: renewable energy, particularly solar photovoltaic systems. Over the past few years, nearly half the jobs in the sector, a total of 12,000, have been disappeared. According to the Syndicat des Energies Renouvelables, the renewable-energy trade union, nearly one-third of those jobs vanished in 2011. Entrepreneurs like Kilian Heim, who had gone out to conquer this new market, are now restarting from zero.
Austerity's Big Winners
<a href="http://www.huffingtonpost.com/2012/07/23/austerity-wall-street_n_1690838.html" target="_hplink">CLICK HERE to read the full story.</a> The austerity game also has winners. Cutting or eliminating government programs that benefit the less advantaged has long been an ideological goal of conservatives. Doing so also generates a tidy windfall for the corporate class, as government services are privatized and savings from austerity pay for tax cuts for the wealthiest citizens.
How You Can Help
As readers of The Huffington Post, you can take action to help those affected by these austerity measures. <a href="http://www.huffingtonpost.com/2012/07/13/austerity-cuts-how-you-can-help_n_1669072.html" target="_hplink">Click here for information on what you can do.</a>