11/21/2011 03:10 pm ET Updated Jan 21, 2012

The Super Committee Should Go Really Big and Turn Against the One Percent

It looks like the super committee is about to throw in the towel. Since the potential deals that had been discussed would have meant large cuts to Social Security, Medicare and other programs that the 99 percent depend upon, we should all be thankful.

In the world of the 1 percent that the super committee types inhabit, the big villains in the U.S. economy are not the rich who are pulling down an ever-larger share of national income, but rather the country's older workers. Whenever the Washington 1 percenters raised the cry of "go big," it invariably meant large cuts to Social Security and Medicare, the country's two largest social programs that provide essential security for the elderly.

Most of the near-retirees who would be the primary targets of super committee cuts to these programs struggled with stagnant wages over most of their working lifetimes. Few have defined benefit pensions meaning that they have only the little amount they have been able to save in 401(k)s and other retirement accounts, plus the equity in their homes to support themselves in retirement. The latter was largely destroyed by the collapse of the housing bubble.

The Pew Research Center recently published a study showing that the median wealth, including home equity, of the 55-64 age group was just $162,000. The median home sells for roughly $170,000. The Pew study implies that if the median household in this age group used all its wealth, it would still be $8,000 short of paying off their mortgage. And, they would then be entirely dependent on their Social Security check (which averages $13,000 a year) to support them in retirement.

And remember, this is the median. Half of retirees have less.

In Washington, "going big" meant whacking these near-retirees yet again. The 99 percent can instead propose going really big, which would mean getting the economy back on track. It means attacking the 1 percent who have the real money and who have been calling the shots.

Let's start with something really simple. Beating up on federal government employees has become a sport enjoyed by politicians of both political parties even though a recent study by the Bureau of Labor Statistics found that they were on average underpaid by more than 20 percent.

Since politicians have so much fun beating up on government employees, how about having a little fun beating up on the most highly paid government contractors? Senator Barbara Boxer proposed a cap of $400,000 (twice the salary of a cabinet secretary) on what the government will pay top executives at defense department contractors. Note that this cap only applies to what the government pays, the companies can pay their honchos whatever they feel like. This one should be a no-brainer if we're talking about shared sacrifice.

But, if we want to go really big we have to remember that the real problem is the 26 million people who are unemployed, underemployed or out of the work force altogether. If the super committee wants to go really big, how about a youth jobs program, aid to state and local governments to stem the layoffs and serious funding for rebuilding the infrastructure. We could also use funding for work sharing. We could encourage employers to keep people on the job working shorter hours rather than lay people off to collect unemployment benefits.

Yes, this agenda costs money, but a super committee that goes really big will know that this is not a problem. Financial markets are willing to lend the U.S. government money at very low interest rates, close to 2 percent on 10-year bonds. The economy's problem is too little demand, not government spending crowding out private business.

Over the longer term there will be budget issues, but they mostly stem from our broken health care system. If the United States paid the same amount per person for its health care as people in other wealthy countries we would be looking at huge budget surpluses, not deficits. There are simple measures that we can do to start to get our costs in line, like paying the pharmaceutical companies less money for prescription drugs and allowing for people in the United States to take greater advantage of trade in health care services. These steps would be easy, if the supercommittee is prepared to challenge the 1 percent.

We can get a huge amount of saving from cutting what we spend on the military. If defense spending were the same share of GDP over the next decade as it was in 2000 we would save $2 trillion over the next decade. And, we could tell the Federal Reserve Board to just hold the $3 trillion in assets it bought as part of its quantitative easing policies. That should save the government close to $800 billion in interest over the next decade.

And, if we want some more tax revenue there is no better place to start than by directly taxing the 1 percent's trade on Wall Street. A modest financial speculation tax can easily raise more than $1 trillion over the next decade.

There is plenty of potential for the super committee to do some serious good if it is willing to go really big. But that would mean confronting the 1 percent, and it just isn't very likely that this committee would be that super.