An Alternative to Austerity
After accepting a mini-bargain that includes tax hikes for Americans making more than $400,000 a year, Senate minority leader Mitch McConnell announced: “The tax issue is finished, over, completed.” By shutting down debate on revenues while holding the line on the debt ceiling, McConnell and the GOP hope to turn their defeat in the fiscal cliff fight into a victory for austerity in the debt ceiling and sequester battles ahead. If they prevail, Social Security and Medicare benefits could end up back on the chopping block, and other cuts to government programs could trigger a “lost decade” of American economic decline.
It is impossible to negotiate with this position; it would be terrific if President Obama took Nancy Pelosi’s advice and simply raised the debt ceiling by invoking the Fourteenth Amendment’s charge to maintain the “validity of the public debt of the United States.” But Obama doesn’t want to go there, and so it falls to progressives to develop smart, aggressive alternatives to the GOP agenda. With House Republicans in disarray, there’s an opening for progressives to lay out a set of principles along the lines proposed by Congressional Progressive Caucus co-chair Keith Ellison: (1) reject the fiscal hostage-taking that would demand deep cuts to entitlement programs or discretionary spending in return for raising the debt ceiling; (2) protect Medicare, Medicaid and Social Security; (3) focus on Pentagon cuts and new revenues, to address deficit concerns while preserving enough flexibility to make investments in America’s top priority—new jobs.
These principles must be underpinned with specifics about where to find new revenues. It’s not hard. Former Senate Budget Committee chair Kent Conrad says the government loses $1.2 trillion annually because of tax breaks—some of them valid but many others gross giveaways to the wealthy and corporations. Pelosi has expressed interest in closing these loopholes. But that alone won’t be enough to protect working Americans from austerity. As Senator Bernie Sanders has argued, it’s time to start taxing capital gains—income “earned” from wealth—at the same rate as income earned from work. Alaska Senator Mark Begich has a savvy proposal for raising the Social Security payroll tax cap in order to ensure that millionaires and billionaires pay their share. And Ellison, working with National Nurses United and other unions, is proposing a “Robin Hood tax” on financial speculation that could yield hundreds of billions in coming years.
These proposals won’t pass, however, unless GOP obstructionism in Congress is addressed. Democrats can strengthen their hand with filibuster reform, as proposed by Senators Jeff Merkley of Oregon and Tom Udall of New Mexico. But the real fight—the only fight that’s likely to tip the balance in the Republican-controlled House—will be fought outside Washington. Unions and activist groups have to seek out those House Republicans who voted to raise taxes on the rich and convince them that their political future lies in cooperating with the president. This should be part of a broad campaign to redefine the debate so that absurd fights over raising the debt ceiling are replaced with a clear vision for preserving essential programs, making smart cuts at the Pentagon rather than dumb cuts to Social Security, and implementing fair taxation. This is the agenda Americans endorsed on November 6. We hope President Obama will advance it aggressively. But we know the president will be more inclined to boldness if progressives outline a muscular program and fight for it.
Hear Nation writers George Zornick and Bryce Covert, Jamelle Bouie of The American Prospect and Pat Garofalo of ThinkProgress.org in a a Nation Conversation on “Winners and Losers in Washington's Debt Deal.”