The politics on the deficit commission are predictable, but they are another sign of how far removed DC style centrism is from where the American public actually is. The DC establishment loves this plan, is demanding that politicians embrace it, but it is the worst kind of policy and politics, and should be rejected out of hand. Deficit commissioners should instruct the chairs and staff to come back with a plan that cuts the deficit without attacking the middle class.
You could write a deficit reduction plan, as well as a plan to shore up Social Security (the two are very different things) that would garner pretty broad support from the American people. On Social Security, a very minor adjustment- raising the cap on payroll taxes- would keep Social Security solvent through the end of this century. On the deficit itself, there are a whole set of options to dramatically reduce the deficit that garner clear majority support in the public polling on economic issues, including:
1. Increasing taxes on millionaires and billionaires.
2. Imposing a financial transactions tax on Wall Street speculation.
3. Ending a wide array of corporate tax loopholes for things like overseas investment.
4. Ending corporate agribusiness subsidies larded into the farm bill.
5. Ending loopholes and subsidies of various kinds to the big energy companies.
6. Reforming the government contracting process to end no-bid contracting, impose penalties on cost over-runs, and cut down on excessive bonuses.
7. Allowing Medicare to negotiate drug prices with the big pharmaceutical companies.
8. Having a vigorous public option to provide competition for health insurers.
Depending on the level you did them at, all of these items would bring in or save tens of billions of dollars a year, some of them hundreds of billions. There are plenty of ways to lower the deficit without screwing the middle class: people who are better budget experts than I could find plenty more if you gave them this simple and singular mission: find all the ways you can to lower the deficit without hurting the poor and middle class people who have been the ones most hurt by the economy in the last ten years. But that is clearly not what this deficit commission was looking to do. DC centrism in fact demands that you look first and foremost to targeting the middle class. The political assumption is that if you nick the defense budget a little here and there, include a few revenue increases along with the cuts, and don't do the most obvious egregious slashes to programs for poor people, that it will be okay with lefties because, hey, they only care about the poor and won't mind if the middle class gets hurt.
So let me clear, because goodness knows I don't want to be seen as ungrateful: thank you, honorable co-chairs, for the defense cuts you put in- they are a good start. Thank you as well for not slashing the heart out of food stamps and Head Start and certain other poverty programs. I also am delighted that you guys listed the public option on health care as something to consider. I really am sincerely happy about all that. But in spite of those good things, I think you will find the progressive movement will fight you every step of the way on this proposal, because we do actually believe in fighting for the middle class. My friends at Third Way think progressives will happily go along: "The recommendations on Social Security fall well within the mainstream of what most progressive organizations that care about Social Security solvency think should be done to save it," said Jim Kessler, vice president for policy at Third Way, a centrist Democratic think tank. "Everyone believes there should be increases in the retirement age, some adjustment to the cost-of-living-adjustments and some increase in revenues." Jim and his colleagues don't get it: this stuff about shared sacrifice that the DC centrists keep talking about is a nice theory. But the document Bowles and Simpson produced doesn't have shared sacrifice: it takes dead aim at the things that matter the most to the working and middle class. It asks them to work longer before they retire at the demanding and sometimes physically hard jobs many people in the working class have, if they can find work at all. It asks them to pay dramatically more in health care through the elimination of the deduction for insurance. It asks of them that they make the dream of home ownership far less affordable by eliminating the mortgage deduction. It asks them to pay higher fees, on whatever brief vacations they might be able to afford, to our national heritage of the park system.
It is this same middle class who have had no net increase in their household incomes over the last decade. It is them who keep having to pay higher regressive sales and property taxes at the state and local level while having less teachers, cops, and firefighters because of budget cuts. It is them who have seen higher gas and utility and grocery prices over the last few years, and who have seen their kids' college tuition and their health care costs soar through the roof. Since very few upper income kids go into the armed services, it is the sons and daughters of the working middle class who have gone to fight our wars over the last seven years. It is their homes that have lost their value and in far too many cases are underwater in terms of their mortgages. And it is far too many of them who have lost their job or are now being forced to work in lower wage, part time, or temp jobs.
These are the people that out of touch Washington elites who are embracing these deficit recommendations, who mostly don't have these problems, want to make sacrifices. They aren't asking sacrifice of higher income folks- in fact, the income tax rates are being flattened so the tax system is less progressive. They aren't asking it of corporate execs, whose corporate tax rates will go down. They aren't asking it of the Wall Street bankers, who once again escape a financial transactions tax. But boy are they sharing that sacrifice all the way around that American middle class.
This kind of DC centrism is a political nightmare of the first magnitude. It hurts the people who have borne the brunt of the excesses of the upper class in the last decade, and it hurts the people who are angriest at both parties- who swung against Republicans in 2006 and 2008, and swung against Democrats in 2010. When the full commission votes on this, they should send it down in flames. And if they do vote yes on it, Obama and Congressional Democrats should vigorously stand against it.