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Republican Hostage-Taking Threat Again! Guess Who Benefits?

Posted: 12/14/11 06:45 PM ET

Once again, Republicans are holding government hostage, trying to force through unpopular cuts to the things We, the People -- "the 99%" -- do for each other and our economy, while giving handouts to the 1% who pay for their campaign ads and smears. Once again they are threatening to just shut down the whole government if they don't get their way. This time the hostage is unemployment benefits for 2 million people and the payroll tax cut that is the only stimulus left to keep the economy going. Here's the thing, they say they want "cuts" but what they are really doing is shifting costs from the 1% on to the rest of us.

The current 112th Congress is the first Congress elected under the Citizens United Supreme Court decision that opened the floodgates of corporate money in elections. Remember the flood of ads accusing Democrats of "half a trillion in cuts from Medicare" that got them elected -- paid for with corporate money? Those ads swung the electorate toward Republican candidates, and now we are seeing the results -- including cuts in Medicare and even plans to privatize it entirely.

How Many Times?

To get their way Republicans have already nearly shut down our government or just shut down parts of it several times. Shutdown. Hostage. Shutdown. Hostage. Shutdown. Shutdown and hostage. Shutdown. Shutdown. Shutdown. Hostage. Shutdown. Shutdown. Hostage. Hostage. And on and on...

This Time

Here are just some of the Republican demands this time if we want the hostage released:


  • Approve the Keystone XL oil pipeline project.
  • Block rules reducing air pollution from industrial burners.
  • Drug tests for people receiving unemployment benefits.
  • Reduce the duration of jobless aid from 99 to 59 weeks.
  • Allow states to cut benefits even more.

Even Worse Than That

The National Women's Law Center writes, in, House Bill Cuts Unemployment and Health Benefits, Domestic Programs, Child Tax Credit and More that there are many other reasons to be concerned:


  • Slashes federal emergency unemployment benefits for long-term jobless workers by more than half--and hits the states with the highest unemployment rates the hardest.
  • Makes permanent, mean-spirited changes to the basic unemployment program, such as requiring claimants to have a high school diploma or GED and making unemployed workers pay for re-employment services offered by the government.
  • Reduces health benefits by reducing financial protections for low- and moderate-income families purchasing health insurance, cutting funds to providers serving low-income populations, and slashing prevention and public health funds.
  • Denies the refundable Child Tax Credit to low-income immigrant families by requiring a Social Security number to claim the credit.
  • Cuts funding for non-security discretionary programs by over $26 billion--on top of the cuts already imposed by the Budget Control Act.

The European Lesson

Republicans claim that cutting back government is good for the economy and creates jobs. (Note -- they always claim that anything for the 1% is good for the economy and creates jobs, whether or not it really is good for the economy and creates jobs or not.)

But is it really good for the economy to cut back on the things government does for the people and the economy? Let's look to Europe, where they have been cutting back on government in a grand experiment to see if that helps the economy. (Hint: it has really, really, really hurt the economy.) Reuters: Analysis: Europe's austerity zeal risks killing the patient,

Europe's "no pain no gain" attitude to solving its sovereign crisis risks exacerbating the bloc's problems, choking off the very growth needed to raise the money to pay down the debt.

... The austerity zeal risks tipping the continent back into recession and a downward spiral of austerity as pitiful growth prospects undermine budgetary targets and ramp up debt burdens, meaning further austerity is required.

"The expansionary fiscal contraction story says that you cut, you show you are serious about cutting and then the confidence fairy will come along and she will start pulling in private investment," said Stephen Kinsella, professor of economics at the University of Limerick.

"The expansionary fiscal contraction story is a lie. You don't cut your way to growth."

Shifting Not Cutting

Do cuts in government spending actually cut spending? Consider what happens when you cut health care spending. The need for the health care certainly doesn't go away, but the cost of it is shifted away from government and on to individuals. Since iIndividuals do not have the economy-of-scale bargaining power and ability to protect themselves from scams and schemes that government does, their own individual cost is often much higher. So when these costs are shifted from government the cost to the larger economy is actually increased dramatically.

The things government does are done because they need to be done. So if government doesn't pay for them, does the need go away? No, when you cut government the need is still there. The costs are still there. But the power to bargain and to protect is gone. By cutting the 99%'s ability to protect themselves from scams and schemes, the 1% are better able to prey on them.

So, no, cutting government does not cut the costs of the things government does, it just shifts those costs from government onto the larger economy -- the 99% -- and even increases them, to the benefit of the 1%.

Who They Are Protecting And Who They Are Hurting

Why else do the 1% push so hard for government budget cuts, even though they really just shift the same costs onto the larger economy? Because this cost-shifting takes the tax pressure off of the 1%. Government collects taxes to cover the things regular people need, the cost of maintaining and modernizing infrastructure, etc. Of course, these are all good for the economy, the country, and the people. But since the 1% make most of the money and hold almost all of the wealth these prime beneficiaries of the economy are the obvious people to collect taxes from. So by cutting back on government they cut back on government's need for taxes -- from them.

And they get the added benefit of cutting back on government interference in their schemes and control.

In the long game of cuts and consequences, a society cannot win. In the 1980s we cut taxes and started cutting government. As a result we now have crumbling infrastructure, bad schools, unaffordable universities, etc. This is because government cuts do not cut the need out of the larger economy, they shift the costs of needed things away from causing tax pressure on the wealthy.

They don't care if the larger economy suffers as a result, they're already the 1%.

What To Do

Tell Republican leaders to stop sabotaging the economy. Renew the payroll tax cut and long-term aid for the jobless.
Sign the petition.


This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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