The budget deal is a disgrace.
With unemployment at its highest level in decades, the president and Congress have reached a preliminary deal to fire federal employees, cut essential support for the middle class and the victims of the recession, and destroy jobs. All in order to finance a deficit that is largely the result of tax cuts for the rich, bailouts of a bloated financial sector, profit-driven rises in health care costs, and unnecessary wars. What we need is precisely the opposite.
Wall Street and its enablers led us into a decade-long orgy of lost opportunity, upward income redistribution, and waste. The financial sector expanded enormously, charging us all for the privilege of having it direct our savings into building pointless speculative houses in the Nevada desert and bonuses for hedge fund managers. With the collapse of the housing bubble, the economy plunged into a demand deficit recession: ordinary Americans, their pay squeezed by three decades of supply-side economics, could no longer borrow to buy, and as a result business can?t sell and doesn?t see any point in investing or hiring.
The central mission of the federal government should be to get people working again while beginning to fix the disastrous mess the banks and financial markets have made of our economy. We need a government commitment to fill the holes that the private sector is unable or unwilling to repair. The pundits seem to think this is beyond America?s capacities. But now, more than ever, we can take control of our future.
The private sector isn?t providing jobs, because it has destroyed its customer base with two decades of cuts to ordinary employees and bonuses at the top. This gives us an extraordinary opportunity: with resources and people sitting idle, the government can put them to work without crowding out or cutting back anything else. We get to benefit from our fellow citizens? work for no social cost. More than that: for profit. Getting an unemployed person back to work helps both the worker and the rest of us. All we need is for the democratic branch to step in where the market branch has failed.
In the short run, the federal government needs to hire directly and spend the money necessary to get the private sector hiring again. We have desperate needs?schools that are losing teachers, courts that are closing down, roads and railroads that aren?t being built, unemployed workers who have no jobs, energy infrastructure that isn?t being rebuilt to keep us safe from the threats of global warming and Middle Eastern instability, medical and technological research that isn?t being done as our university budgets are squeezed to the breaking point, students who can?t afford the education they need to compete. Right now filling these needs is as close to a free lunch as possible: we can borrow the money to pay for it at near zero percent interest and pay the loans back later from the growth that these productive investments will themselves create.
In the medium run, we need medical care that doesn?t cost double what it costs in every other advanced capitalist country. This is going to require either a single-payer system or a single-provider system; our current private insurance system is both theoretically and practically absurd. It is going to require a new system of financing research, based on science?and taxation?instead of patents and monopoly profits, with sufficient power to redirect the greed of the pharmaceutical industry and the inefficiency of the insurance industry into producing health instead of profit. We need retirement plans that are secure and adequate and neither depend on the vagaries of stock market fluctuations nor pay a tithe to the high priests of finance?we should be doubling Social Security, not cutting it. We need a new system to finance higher education, not dependent on saddling our children with crippling loans or selling our research birthright for private profit and a mess of porridge.
We need a fair tax system that charges our corporations and their executives and shareholders for the enormous services they receive from our government instead of encouraging them to view Americans as colonial subjects to be exploited. It is time to restore the Eisenhower income tax?marginal rates of 90 percent for incomes more than 100 times the average. No one could earn that much money if pay were related to one?s social contribution, and no one needs such pay as an ?incentive.? The only thing pay that high is useful for is to corrupt our political system by buying public opinion or compliant politicians. We need a wealth tax as well, perhaps at a level similar to the charges of the investment industry?1 or 2 percent of all financial wealth over $1 million?both to require the ultra-wealthy to pay more of their share of the costs of government and to give them a small incentive to shift financial assets into the real economy.
We need structural changes to make it possible for ordinary people to be paid for the productivity they contribute to our economy. This means making unionization easier, not more difficult, and allowing organization by industry rather than plant to reduce the perverse incentives executives have to attack employee self-governance. We need to complete the republican revolution of the eighteenth century by forcing our large corporations to respect basic democratic ideals: any firm with more than 500 employees should be required to have some measure of internal democracy, including directors elected by employees, and no corporation should be permitted to use funds derived from consumers or employees for lobbying without their explicit consent.
And if we are to survive as a people, we need to reduce the power of predatory wealth in our political system. We need to be able to debate how to rebuild after the failures of the medical industry, the energy industry, the transportation industry, the finance industry, and the homebuilding industry?without every proposed step toward a just or sustainable future being stopped by status quo economic incumbents demanding payoffs.
The budget, and even more so the budget debate, are long strides in the wrong direction. It is time for our president to stop positioning himself as the compromiser?compromise with the forces of destruction is no virtue. It is time for him to enter the fray, to use his bully pulpit to change the course of politics, to argue for justice and prosperity against those who, knowingly or not, take the crony capitalism and failed government of the former Soviet Union as their model. The sin of Sodom, according to the Talmud, was that the citizens of Sodom were worse than selfish: they delighted in hurting others even when there was no possible benefit to themselves. This budget is worse still: it hurts others, including our fellow citizens, at enormous cost to ourselves.