Who won and who lost?

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This article is excerpted from The Green Shadow Cabi­ net website, greenshadowcabinet.org, with permission of the author.

Last month the U.S. House of Representatives voted 332 to 94 in favor of changes to the federal budget for 2014. The House vote in effect adopted the proposals of the “Joint Congressional Committee,” chaired by Tea Party House leader Paul Ryan and Senate Democrat Patty Murray, set up in October as part of the interim agreement between the two parties to end the more than two-week shutdown of the federal government that month.

The October interim agreement called for the RyanMurray committee to provide budget change propos­ als by December 2013 for a Congressional vote on Dec. 13. Last month 169 Republicans and 163 Democrats in the House voted for the Ryan-Murray proposed chang­ es to the 2014 budget; 62 Republicans voted no, as did 32 Democrats. The measure now goes to the Senate for what will likely be a formal vote of adoption, and then in January to the Congressional Appropriations Committee in time for meeting the mid-January 2014 deadline date agreed to last October.

The official “spin”

The deal agreed by both wings of the single Party of Corporate America (POCA)—aka Democrats and Republicans—has been hailed as a pragmatic, albeit “narrow” agreement that shows the two wings can once again agree on fiscal changes and deficit cut matters, thus ending an era of dysfunction that has characterized U.S. government since 2010. The nar­ row budget deal, amounting to only $85 billion over the next two fiscal years, 2014-2015, is also being de­ fined as the end of efforts to reach a “grand bargain” on taxes and deficit cutting, as well as the end of the Republican wing Tea Party faction’s ability to disrupt government to promote its own interests, and Tea Party candidates in Republican primaries. However, none of these arguments “spinning” the budget deal are accurate.

The dysfunctionality may have ended for the inter­ ests of corporations, investors, and wealthy Ameri­ cans, i.e., the 1%, but it hasn’t for the remainder of households, as the details of the recent deal clearly illustrate. The Ryan-Murray deal clearly promotes the interests of defense corporations, the Pentagon, and the wealthy—at the direct expense of millions of U.S. government workers, millions more unemployed, vet­ erans, retirees, and tens of millions of Americans on food stamps.

The deal furthermore represents not the reversal of “austerity,” as is claimed, but rather a clever restruc­ turing and continuing of austerity in new forms. It reflects a “grand bargain,” but a bargain achieved in 6 SOCIALIST ACTION JANUARY 2014 stages, piecemeal, rather than in an “all in” form that might generate more severe and resentful public po­ litical reaction.

Not least, the deal just concluded represents not the “taming” of the Tea Party faction in the Republican wing, but instead the realization by the rest of the two traditional wings of POCA that, in the 2014 midterm Congressional election year about to begin, they had better go slower on austerity in 2014—as they had done previously during the 2012 national elections year. The deal is thus a “politicians deal,” and neither a fiscal stimulus nor a deficit cutting exercise. Restoring the sequester defense cuts In 2011 House Republicans and the Obama adminis­ tration agreed to cut $1 trillion in discretionary social spending programs, mostly education, plus another $1.2 trillion of discretionary cuts deferred until 2013 called the “sequester,” about half of which represented defense spending cuts.

The 2012 election year that followed was a hiatus in terms of austerity and new deficit cutting. However, once the November 2012 elections were over, both wings of the POCA immediately proceeded to the “fis­ cal cliff” deal of Jan. 2, 2013, which raised taxes on wage earners while allowing $4 trillion in Bush tax cuts to continue for another decade.

However, the fiscal cliff deal conveniently left the matter of the “sequester” spending cuts for a later date, including the $600 billion in defense cuts. That segmenting of tax issues from spending issues, and especially defense spending, was necessary to en­ able the full passage of the $4 trillion in tax cuts for the rich. A more complicated deal, including spending reductions, would have risked the passage of the tax cuts.

Beginning March 1, 2013, the $1.2 trillion “seques­ ter” spending cuts were allowed in 2013 to take full effect for non-defense spending, while defense spend­ ing cuts called for in the sequester were shielded and offset in various ways by the Obama administration, with the concurrence of Congress, during 2013. Pen­ tagon spending this past year continued at the $518 billion level (not counting another $100 billion or so for “overseas contingency operations”—i.e., direct war spending).

That both the House Republicans and Senate con­ trolled by Democrats had every intention throughout the past year to restore the Defense spending cuts called for in the sequester, was evident in the House Budget and Senate budget proposals, both of which called for increasing Pentagon spending to $552 bil­ lion in 2014, according to a New York Times front-page article of Dec. 11, 2013.

The just concluded Ryan-Murray budget deal is also primarily about addressing (and reversing) those de­ fense spending cuts and continuing to shield defense from current and future spending reductions. Were rich with last year’s fiscal cliff deal), the cuts to discretionary non-military spending programs have not fared as well.

The budget deal calls for restoring $63 billion in total scheduled sequester cuts for the two years, 2014-15. Non-defense program spend­ ing restoration is reportedly $31 billion of that. It thus appears that a $31 billion increase in non-defense spending is part of the deal. But domestic spending the past two years, 20112013, has declined from a total of $514 billion to $469 billion, or $45 billion. The budget deal raises that to $492 billion. That’s $23 billion, not the reported $31 billion.

Moreover, the $31 billion restoration is predi­ cated on the continuation in the budget of the reductions in payments to Medicare doctors and health providers. If the reductions in payments are rescinded, as they have been every consecutive year thus far for more than a decade, then the $31 billion non-defense spending restoration might very well also be taken away or significantly reduced.

Moreover, what Congress and Obama appear to re­ store in the $31 billion discretionary social spending on the one hand, they are taking away—plus more— with the other. This will occur two ways: first by rais­ ing $26 billion in fees (i.e., de facto taxes) on consum­ ers and by taking money from federal workers and veterans pensions; second, by taking $25 billion from the unemployed. So the net effect is a reduction of $20 billion, not a restoration of $31 billion.

Some $6 billion of the $26 billion in additional fees comes in the form of raising federal employees’ pen­ sion contributions, and another $6 billion by cutting military cost of living increases for military pensions. Another $12.6 billion comes from raising government taxes on airline travel. Thus retirees, government workers, and middle-class households will pay $26 billion more as part of the budget deal. But that’s not all.

The budget deal cleverly does not include the $25 billion in cuts to unemployment benefits in its calcula­ tion of spending $31 billion more in domestic spend­ ing. When deducted from the $31 billion, it’s only a net $6 billion in domestic spending. And when the $26 bil­ lion in fees (taxes) are added in, that’s a total of -$20 billion in domestic spending.

Another way of looking at it is that the $25 billion in cuts to unemployment benefits is just about the same amount of restored defense spending cuts. The unem­ ployed are effectively paying for the defense corpora­ tions’ continuation of defense contracts at prior levels More than 1.3 million workers will immediately lose their unemployment benefits on Dec. 28, 2013. Anoth­ er 1.9 million who were projected to continue benefits in 2014 will also now lose them. Emergency benefits that up to now included extended benefits from 4073 weeks, will now revert back to only 26 weeks. This occurs at a time when 4.1 million workers are consid­ ered long-term unemployed, jobless for more than 26 weeks.

Knocking millions off of benefits will likely result in 2014 in even more millions of workers’ leaving the labor force, which will technically also reduce the un­ employment rate. That’s one way to manipulate sta­ tistics to formally reduce unemployment, but it’s not a true reduction of unemployment by actual jobs cre­ ation, the latter of which is increasingly a problem of the U.S. economy for more than a decade now.

The failure of the budget deal to extend unemploy­ ment benefits, and the net -$20 billion in unemploy­ ment benefit cuts plus fee hikes, is an indication of the (continued on page 11, in “S. Africa’s Democratic Left Front comments on NUMSA initiatives T here is a spectre haunting the ruling”)