Galbraith: Is This the End for the Deficit Drones?
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In wars, sometimes there comes a moment when the tide turns. The collapse of Ludendorff's offensive in 1918 presaged the Armistice; failure in the Ardennes meant the end for Germany in 1944.
Today we have two drone wars in a similar state. One is mainly in Pakistan. Built on a gee-whiz technology that can't do what it promised, this war has claimed too many victims for too little effect. It is a diplomatic disaster and its days are numbered, almost surely, for that reason.
The other drone war is in Washington. The drones are in groups with names like the Committee for a Responsible Federal Budget and Campaign to Fix the Debt. They drone on, and on, about the calamities that await unless we cut Social Security, Medicare and Medicaid.
That the goal of the deficit drones is to cut Social Security, Medicare and Medicaid has been plain for years to anyone who looks at where the money comes from. It comes largely from Peter G. Peterson, a billionaire former secretary of Commerce under Nixon, who is Captain Ahab to Social Security's Moby Dick. And when one trick, such as privatization, falls flat, his minions always have another, whether it's raising the retirement age or changing the COLA. But a cut by any other name is still, and always, just a cut.
Peterson's influence is vast; practically the entire DC mind-meld has bought his line to some degree.
The other day I was on CNBC, supposedly to discuss the debt ceiling, but the topic was Social Security all the way. My host, Andrew Ross Sorkin, was very blunt: “If now isn't the time to cut entitlements,” he asked, “when would be?” My answer – in a word, never – is not one he seemed to have thought possible before.
Yet there is no good reason to cut Social Security, Medicare or Medicaid. These are insurance programs. They keep the elderly, their survivors and dependents, and the disabled, out of dire poverty. We can afford this. There is also no financing problem; if there were, investors would not be buying 20-year US bonds at 3 percent. These days when some economists say that cuts are needed, they say it's only for show – to establish “credibility.” Old-timers may remember, that's what DC insiders once said about the war in Vietnam.
And like Vietnam, this war is getting old. We're beginning to realize, we don't need it. If the United States really faced some sort of deficit or debt crisis, something would have happened by now. Simpson and Bowles – those brave men who were going to lead us toward budget balance – who remembers them? The super-committee? The fiscal cliff? All gone. Yet Social Security, Medicare and Medicaid are still here. The economy is still stable. And interest rates are still low. The debt ceiling? On that, the president stood up and the Republicans gave way.
It's true that the sequesters and the continuing resolution lie ahead. But if you are going to refuse blackmail over the debt ceiling, why yield to it on anything else? The blackmailers must know by now which side the public will take.
And then on Monday we heard from President Obama. As part of his great speech, which settled so many questions, he gave a little economics lesson. Here's what he said:
“The commitments we make to each other — through Medicare, and Medicaid, and Social Security — these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.”
This is exactly right. Social Security, Medicare and Medicaid are not merely a transfer from the young. They are part of the fabric of our lives. They free us all – every single one of us, young and old – to be less worried, less fearful, a bit more independent, and a little less cautious than otherwise. Certainly old people are better off when they have a regular income and health insurance. But working people are also better off, directly and indirectly, every day.
There are some, like Mr. Peterson and his allies, who don't like this. Their motives are plain. But now the president seems to have made his choice. The word he used was “commitment.” Again, exactly so. That's what Social Security, Medicare and Medicaid are. President Obama took a great step, when he said so.
Now it's time for Congress to stand with him, to say no to blackmail, no to fake fixes, no to disguised cuts, no to fear -- and no to those deficit drones.
James K. Galbraith is the author of “Inequality and Instability: A study of the world economy just before the Great Crisis.” He teaches at the University of Texas at Austin.