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.