Deficits: Real Issue, Phony Debates

Deficits have now risen, yet again, to headline status. Conservatives inside and to the right of the Republican Party frame the national debates by attacking deficits. They want to reduce them by cutting government spending. Liberals respond, as usual, by insisting that overcoming the crisis requires big government spending (“stimulus”) and hence big deficits. Most Americans watch the politicians' conflicts with mixtures of confusion, disinterest, and disdain. Yet deficits pose a real issue for everyone, one that the debates among politicians and their economist advisors miss, ignore, or hide.

When the federal government raises less in taxes and other revenues than it spends, it must borrow the difference. Such annual borrowing is each year's deficit. The U.S. Treasury borrows that money by selling bonds, federal IOUs, to the lenders. The accumulation of annual deficits comprises the national debt, the total of outstanding U.S. treasury bonds. So the first and simplest questions about deficits are (1) why does the federal government choose to borrow rather than to raise taxes? and (2) why does it borrow rather than cut its expenditures? The twin answers are profoundly political. Elected officials are afraid to raise taxes on business and the rich because their profits and great personal wealth can then finance the defeat of officials who do that. Cutting government spending that benefits business and the rich is avoided for the same reason. As the tax burden shifted increasingly onto middle- and lower-income people in recent decades, elected officials have faced rising tax revolts coupled with demands for more government services and supports.

Class

How Class Works

The Myth of Haratio Alger: America Ranks Toward the Bottom of Social Mobility

By Jonathan L. Walton
March 18, 2010
 
The myth of American success is one of the most enduring ideals of this nation. Wrapped in the language of liberty and freedom, this myth promulgates the belief that every person born in America is afforded a clean slate of equal opportunity. Though this myth has adjusted itself to each generation, two themes remain consistent: Neither family lineage nor class can control one’s destiny. And moral virtue and personal character determine one’s success in life. This is why the narratives of self-made men and women are a central part of American culture and religious life. (But so are Santa Claus and the Easter Bunny!)

OECD Reprot

The Organization for Economic Co-Operation and Development (OECD) has released a report that should deflate this nation’s inflated sense of self and fundamentalist devotion to “free-markets.” According to their findings, social mobility measured according to earnings, wages and education across generations is relatively low in relation to other developed nations such as Canada, Denmark, Sweden, Germany and Spain.
For instance, in terms of earnings levels, nine developed countries, including France, offer greater mobility than the United States. The U.S. only tops Italy and Great Britain. And the U.S. ranks the highest in terms of the influence of parental background on student achievement in secondary education.

So what’s the moral of the story? If you want your children to have more opportunity than you, pack your bags and move to Sweden! Or maybe, as Americans, we can stop promoting the lie of “rugged individualism” and “personal liberty” and acknowledge how much our nation needs sound governmental regulations and social policies such as healthcare reform, reinvestment in public education, and a living wage to short-circuit this nation’s dash to the bottom.

See also Raj Patel:
Rich dad poor dad
Class mobility in the U.S.
Geoge Carlin:
the American Dream

United by Hard Times: Workers Organize Across Race Lines

I’m feeling relieved. For a while it seemed like the historic election of our first African American president would give legitimacy to the idea that we live in a “post-racial” America. The idea that race is no longer a part of people’s daily experience is not merely false. It’s potentially dangerous when a majority of people are struggling to understand what’s happening to them economically.
What people are experiencing is exactly what’s supposed to happen to them under capitalism and its current variant, neoliberalism. That economic system is grounded on the idea that society must have winners and losers. It has convinced people that those categories are based on race: that people of color are, in the natural course of things, losers; and that white people, regardless of class, are supposed to win.
When hard times hit, as they have recently, people who are losing their grip on their middle-class status—or those who were already poor and are getting poorer—look for someone to blame. They fall back on the official story: White people’s troubles are caused by people of color; the troubles of people of color who were born in this country are caused by immigrants. It’s a divide-and-conquer strategy that keeps people who are natural allies on a class basis from looking at who’s really causing their trouble: the people who run the capitalist system.
This moment presents both a challenge and an opportunity. The challenge is to get people with shared economic interests working together—to get them past learned racial divides. As long as poor and working-class white people remain convinced that they win by keeping people of color on the margins, all workers will continue to lose economic ground. The opportunity is to use this economic crash as a way to find common ground among those who are the real losers—regardless of race—in the existing system.