The ‘Fiscal Cliff’: A Primer for Socialists Socialist Education Program, Fall 2012 Boston...

The ‘Fiscal Cliff’: A Primer for Socialists

Socialist Education Program, Fall 2012Boston Democratic Socialists of America/Young Democratic Socialistswww.dsaboston.org

Source: Phillips, Matthew. “Fiscal Cliff Will Drive the U.S. Into Recession,” Bloomberg BusinesWeek, May 17, 2012, http://www.businessweek.com/articles/2012-05-17/the-fiscal-cliff-will-drive-the-u-dot-s-dot-into-recession

http://www.businessweek.com/articles/2012-05-17/the-fiscal-cliff-will-drive-the-u-dot-s-dot-into-recession


Contents• What is the Fiscal Cliff?

• Why Should we Care?

• Debts, Deficits & Capitalism

• Progressive and Socialist Alternatives

• The ‘Transitional Program’ for a Deficit Fight

The ‘fiscal cliff’ is embedded in larger political debates about the deficit, debt and role of government, but the net effect of the cliff can have profound effects on overall fiscal stimulation.Sources: TOP - randysroundtable.blogspot.com, 2012; BOTTOM – American Enterprise Institute, 2012


The Fiscal Cliff Is:• Limitation of the Alternative Minimum Tax Provisions of the “Job Creation Act of 2010”

and Stimulus, End of the Payroll Tax Cut Included in the Job Creation Act of 2012, Ending Expensing of Investment Property

• “Budget Sequestration” will End Unemployment Insurance, Drastically Reduce Payments to Doctors Under Medicare, and Reduce Discretionary Spending by $54 billion

$390 Billion in Revenue Increases

$100 Billion in Spending Cuts


The Fiscal Cliff Is:The Result of Public Policy

Republicans in the House and Senate Democrats and the White House Agreed to Budget Sequestrationas an Alternative to a Deal Over the ‘Debt Ceiling’ inSummer 2011.

A Sign of the Crisis of Neoliberal IdeologyThe Leadership of Both Parties are Trapped by ThePrevailing Neoliberal Ideology and by the Legacy ofDebt and Deficits

A Significant Economic ThreatThe Congressional Budget Office Predicts a Recession in 2013 with Unemployment Going Above 9% and GDPGrowth Below 2%

TOP: Entitlement spending has crowded out investment as a Percentage of GDP Since the mid-19702. MIDDLE: President Obama and Speaker Boehner Meet During the ‘Debt Ceiling’ Debate. BOTTOM: Republican Presidential Candidates pledge to Reject any Deal on Tax Reform that Included $1 in Tax Increases even if Matched by $10 in Spending Cuts.


Structural Characteristics

Elite Fragmentation

Power of Finance Capital

Weakness of Labor

Are Expressed in the ‘Fiscal Cliff’ As

Political Gridlock

Dependence on Debt and Deficit Spending and

Reliance on Cuts

Absence of Alternatives

Producing

Stymie

Ongoing Deficits and Debt with only Limited

Reduction

Continuing Fragmentation


Why Should Socialists Care?

1) ‘Fiscal Cliff’ is Already Being Used an Excuse for Cuts

2) A Recession is Bad for Working Class People and Increases ‘Flexibility’ of the Labor Market Further

3) The ‘Fiscal Cliff’ is Indicative of Broader Ideological and Functional Crisis of Neoliberalism


Political Economy of Debt “Asset Price Keynesianism”

(Brenner)

Politically Empowered the Financial Sector

Mitigated Effects of Deindustrialization

Supported Disruptive Behavior in Financial Markets

Over Time, Undermines Social Change and Social Justice


Selling Out the Most Vulnerable

Payroll Tax Reduction Expiring with Bipartisan SupportNew York Times 09/31/2012

Current Debt Deal would Include Significant Cuts to MedicareAtlantic Monthly 10/2/2012

Pete Peterson ‘Grand Bargain’ Group Active on Capitol HillSalon.com 10/8/2012


No “Mandate” for the Protection of Social Safety Net will Emerge from the Nov. 6 Election, Even if the President is Re-elected.


Progressive Alternatives

Economic Policy Institute: Retain Emergency Unemployment Insurance Extension, Payroll Tax Cut and Lift Mandatory Sequestration (i.e., Protect Spending)

Congressional Progressive Caucus: ‘Fair Budget Fix for All Bill’ Includes Raising Taxes on High Income Earners, Unilateral Reduction in Nuclear Forces, Closing Corporate Tax Loopholes; and the Congressional Progressive Caucus 2012 Budget for All

Democratic Socialists of America: ???


Emergency Program

Protect Social Security and Medicare from CutsAbsent significant tax reforms for the rich to pay their fair share, Seniors and the most vulnerable should not be asked to accept cuts.

Protect Unemployment InsuranceUI is an important lifeline to the millions still longterm unemployed as a result of a global crisis of capitalism in which they played no part.

Defend Education and TrainingDo not sacrifice future generations to achieve a false ‘Grand Bargain’ on deficits and debt.

Any long-term solution to the debt problem should ensure:1) The maintenance of Medicaid, Medicare and Social Security as Federal Entitlements2) The recognition of Lifelong Education and Training Programs as the Cornerstones of

a Just and Competitive Economy3) The Urgent Need to Democratize our Fiscal Policy, bring the Federal Reserve under

Democratic Control and Empower People in the Budgetary Process

The ‘Fiscal Cliff’: A Primer for Socialists Socialist Education Program, Fall 2012 Boston...

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