Despite the media’s “fiscal cliff” hysteria and relentless propaganda from the monied interests, their “big lie” politics has lost. The people won. At least the people did not lose. This result is a promising sign for the political conflicts that lie ahead—another indication that “big money” does not always have its way. Liberal-labor progressives must make the most of this opportunity, mobilize folks for the next round of battles and force their progressive values upon the often ambivalent President Obama and other hesitant Democrats.
The phony drama over “fiscal crisis” was always designed to punish the wrong people for the nation’s economic ills. The establishment’s goal was to demonize the federal programs most valued by ordinary citizens, Social Security and Medicare, blaming them for Washington’s soaring deficits and debt instead of the collapsed economy that Wall Street produced. Most politicians, including President Obama, fell in line with this view. Every leading newspaper blindly accepted it as fact and blanked out contradictory evidence. How could these important people all be wrong? Because it turns out they were wrong.
Despite this supposed unanimity, the politicians choked, perhaps because they knew most citizens were not buying the lie. In the end, Congress and the president resolved the so-called crisis by not changing much and by avoiding harm to the people themselves. Pundits, take note: you lost this argument because people at large understood what you didn’t understand. After all the brave talk and scary warnings from fiscal scolds, elected politicians declined to damage the government programs that matter most to everyday Americans. The “big money” guys will be back again with the same fallacious claims, but they clearly lost this time.
The “big lie” was this: Social Security was portrayed as the great drain on American prosperity—old geezers robbing the young—but the opposite is the case. Social Security does not borrow from the federal treasury; the federal treasury borrows from Social Security. Working people pay their FICA contribution with every paycheck deduction and the money goes into the Social Security Trust Fund, where it will be used eventually to pay their future retirement benefits.
But in the meantime, the federal government borrows this money and spends it on other things—fighting wars, tax cuts for billionaires and many other supposedly public purposes. Working people know this, and they expect to get their money back. Right now, the federal treasury owes $2.7 trillion to those future Social Security recipients, but political elites think they can slyly escape this obligation by cutting the future benefits. Many working people correctly suspect they have been set up for a colossal game of “bait and switch.”
President Obama, nonetheless, has talked about doing injury to Social Security in various ways—cutting benefit checks, raising the retirement age—in the name of reducing federal deficits. Republicans have been far more duplicitous in criticizing so-called “entitlements.” In the 2010 election season, the GOP “defended” Medicare against Obama cuts. Yet in 2012 they attacked Obama for not wanting to cut Medicare more severely. The entire debate on the “fiscal crisis” has amounted to slippery double-talk.
The real economic problem is not debt. It is the sputtering economy that doesn’t create enough jobs and tax revenue. Shrinking the federal budget will make that problem worse and may make the federal deficits even larger, as Federal Reserve Chairman Ben Bernanke has repeatedly warned.
The moment of truth arrived for politicians, however, when they finally had to vote on something real and with real consequences for the folks. The elected pols lost their nerve en masse. They ducked on the hard stuff. That is the good news of New Year’s Eve. You may want to call it cowardly politics, but by defending the people’s true interests the pols have actually spared the country from worse consequences—the possibility of another crippling recession. The people can claim this accomplishment for themselves but should also thank those defiant progressive voices in and out of Congress who stood up to the propaganda and alerted the broad public to express their rage.
We might eventually learn to celebrate this moment as the beginning point for new politics—grounded in the reality of our injured condition rather than stale right-wing ideology. Instead of Republicans versus Democrats, this might become the time for Democrats versus Democrats in which liberal-labor progressives push the president and their party leftward and toward a more aggressive and ambitious agenda for rebuilding the country and the economy. The president remains surrounded by bean counters from the Clinton era who portrayed themselves as “new Democrats” moving rightward. Now the country needs new new Democrats who can revive the party’s imagination and thirst for governing.
Obama, in a sense, has been liberated by these events, and maybe that is what he has had in mind. But if he simply remains focused on the empty discussions of fiscal rectitude, his second term is bound to look stale and ultimately empty of larger purposes. Fortunately, he now faces a new Congress that includes many new players with fresh thinking and the courage to break free of the past. They can create a front of supportive dissent that pushes Obama further left than he wants to go. By rallying the public, these new Dems must oppose the president if he persists in making too compliant compromises with the corporate-financial conservatives.
The “fiscal cliff” may have established the opposite of what its original sponsors had in mind. The conservative era is over. The problem is, most politicians don’t yet get it.
For more on the fiscal cliff, read John Nichols on "Why Tom Harkin and a Handful of Other Progressives Opposed the Deal".