America is on a collision course with itself. This month's deal between President Barack Obama and the Republicans in Congress to extend the tax cuts initiated a decade ago by President George W. Bush is being hailed as the start of a new bipartisan consensus. I believe, instead, that it is a false truce in what will become a pitched battle for the soul of American politics.
As in many countries, conflicts over public morality and national strategy come down to questions of money. In the United States, this is truer than ever. The US is running an annual budget deficit of around $1 trillion, which may widen further as a result of the new tax agreement. This level of annual borrowing is far too high for comfort. It must be cut, but how?
The problem is America's corrupted politics and loss of civic morality. One political party, the Republicans, stands for little except tax cuts, which they place above any other goal. The Democrats have a bit wider set of interests, including support for health care, education, training, and infrastructure. But, like the Republicans, the Democrats, too, are keen to shower tax cuts on their major campaign contributors, predominantly rich Americans.
The result is a dangerous paradox. The US budget deficit is enormous and unsustainable. The poor are squeezed by cuts in social programs and a weak job market. One in eight Americans depends on Food Stamps to eat. Yet, despite these circumstances, one political party wants to gut tax revenues altogether, and the other is easily dragged along, against its better instincts, out of concern for keeping its rich contributors happy.
This tax-cutting frenzy comes, incredibly, after three decades of elite fiscal rule in the US that has favored the rich and powerful. Since Ronald Reagan became president in 1981, America's budget system has been geared to supporting the accumulation of vast wealth at the top of the income distribution. Amazingly, the richest 1 percent of American households now has a higher net worth than the bottom 90 percent. The annual income of the richest 12,000 households is greater than that of the poorest 24 million households.
The Republican Party's real game is to try to lock that income and wealth advantage into place. They fear, rightly, that sooner or later everyone else will begin demanding that the budget deficit be closed in part by raising taxes on the rich. After all, the rich are living better than ever, while the rest of American society is suffering. It makes sense to tax them more.
The Republicans are out to prevent that by any means. This month, they succeeded, at least for now. But they want to follow up their tactical victory -- which postpones the restoration of pre-Bush tax rates for a couple of years -- with a longer-term victory next spring. Their leaders in Congress are already declaring that they will slash public spending in order to begin reducing the deficit.
Ironically, there is one area in which large budget cuts are certainly warranted: the military. But that is the one item most Republicans won't touch. They want to slash the budget not by ending the useless war in Afghanistan, and by eliminating unnecessary weapons systems, but by cutting education, health, and other benefits for the poor and working class.
In the end, I don't think they will succeed. For the moment, most Americans seem to be going along with Republican arguments that it is better to close the budget deficit through spending cuts rather than tax increases. Yet when the actual budget proposals are made, there will be a growing backlash. With their backs against the wall, I predict, poor and working-class Americans will begin to agitate for social justice.
This may take time. The level of political corruption in America is staggering. Everything now is about money to run electoral campaigns, which have become incredibly expensive. The midterm elections cost an estimated $4.5 billion, with most of the contributions coming from big corporations and rich contributors. These powerful forces, many of which operate anonymously under US law, are working relentlessly to defend those at the top of the income distribution.
But make no mistake: Both parties are implicated. There is already talk that Obama will raise $1 billion or more for his reelection campaign. That sum will not come from the poor.
The problem for the rich is that, other than military spending, there is no place to cut the budget other than in areas of core support for the poor and working class. Is America really going to cut health benefits and retirement income? Will it really balance the budget by slashing education spending at a time when US students already are being outperformed by their Asian counterparts? Will America really let its public infrastructure continue to deteriorate? The rich will try to push such an agenda, but ultimately they will fail.
Obama swept to power on the promise of change. So far there has been none. His administration is filled with Wall Street bankers. His top officials leave to join the banks, as his budget director Peter Orszag recently did. He is always ready to serve the interests of the rich and powerful, with no line in the sand, no limit to "compromise."
If this continues, a third party will emerge, committed to cleaning up American politics and restoring a measure of decency and fairness. This, too, will take time. The political system is deeply skewed against challenges to the two incumbent parties. Yet the time for change will come. The Republicans believe that they have the upper hand and can pervert the system further in favor of the rich. I believe that they will be proven wrong.
Originally published on Project Syndicate.
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They have succeeded to a large extent and are very pleased with their efforts over the last 30 years. Globalization helped as they could still create wealth without paying the outrageous wages that western workers demand. Remember that in the 19th century - before unions and collective action forced employers to pay decent living wages - workers in factories in the US were paid rather like those in Indonesian factories are today, creating the fortunes that are household names today. The Mont Pelerin Society wants to return to those halcyon days and pretty much seems to have achieved this
Everything liberals, Progressives and Democrats do now seem to benefit the neo-feudal lords of Washington, the plutocrats of Wall Street and the privately owned FED and China.( our major Creditor) No one makes loans without terms, conditions and collteral. THE EPA is Beijing's operative to destrot competitive American companies in exchange to loans to the Obama administration
Scary numbers there. [Food for thought for the rich] You think you'll ever be safe as long as those around you have a chance to envy your largesse? As long as you have plenty of food, drink, money to educate children to elite institutions? It is much harder to redistribute your wealth, but far more gratifying.
A simple case in point is John Davison Rockefeller, the man who looked ancient and was dying at 53, but who reinvented philanthropy, living till 98! Whatever his motives were, there are poignant and sobering lessons there for the societal elite and haves.
Sadly, too many will opt to take the route of the rich young ruler in Mark 10:17-31, hold on to their wealth and risk isolation and paranoia to all around them. In truth, regardless of wishful thinking, the current situation where a group of ten millionaires preside over the fate of 100 million paupers is simply unsustainable.
Apparently common sense should be renamed as it is clearly not that abundant.-
Entering the military is one way to get college paid for but it has its own perils. The US is now embroiled in 2 big wars and possibly 4 other actions around the world. Suppose they end up in one of them when all they wanted was a decent education? I'm sure many in the service now went in to get college but all they got was numerous tours of duty in foreign countries with no purpose.
The rich do not send their kids to war. They pay for their college.
When the circle is complete and there is no middle class, who will pay the bills?
This will make for a society of a sort, but not the sort Americans are used to.
The poor need opportunities, not D.C. paternalism. Simplify taxes so we can do productive work instead of filling out forms. Simplify regulations and make them bankruptable so we can do work instead of waiting in offices. Divide education dollars among parents to be used anywhere we want so competition will force education to improve.
The Institute for Justice does more good on $3 million a year than D.C. on half its budget. Jesus is libertarian, as I like to say.
It takes those in power to "betray" their class and effect progressive changes that work in the interest of the middle class. Even Dems are prdictably self-interested when it comes time to raise their Congressional salaries and don't address progressive tax reform.
Can the Obama Administration step on a third rail and effect measures that will cut back fat cats advantages and give the middle class the breaks that will put the money back in their accounts so they will spend and fuel the economy again?
Let us pray!
... like slavery?
how about facing reality.
the welathy/corporate elite OWN ALL the politicos...BOTH party's...PERIOD.
the politico's will continue to do thier bidding, no matter what.
the middle/working class has been DUPED into a Blue team/ red team GAME, by the elites.
they know that IF the Middle/working people would ever stand up for their own (and their childrens)economic interests, the eleites will be "put down".
so they devised this "pick a team" game to divide us and we ALL follow along like good little sheeple.
"my team is GOOD and wants the best for the America, the other team is evil and wants to destroy america."
all the while Rome burns folks.
the middle/working class will not "wake up".
the middle/working class will not start a "third party" and wrestle control form the elites.
the Middle/working class is DONE
but at least we have a TEAM!!!