Killing the Economy Without Even Trying

Dr. Errington Thompson

Massive protests in Wisconsin will soon enter their fourth week. In this fight, it seems to me, unions are in a battle with Governor Scott Walker for the future the middle class. Governor Walker asserts that the state of Wisconsin is broke; in order to get its fiscal house in order, he says, the legislature must balance the budget and cut the size of government. Among his budget-cutting proposals, and by far the most controversial, Governor Walker proposes ending collective bargaining for public workers.

On the other side of this titanic argument sit Wisconsin unions. They have unequivocally stated that they’re willing to take salary cuts and pay more for their health insurance and pensions, but they are not willing to give up their right to collective bargaining. So the unions have met Governor Scott Walker more than halfway, yet we still have an impasse. Who’s right?

The governor claims that his state is facing a $137 billion shortfall. As it turns out, within days of taking office in January, the governor and his new Republican majority in the legislature passed an approximately $140-million tax giveaway to special interest groups. Doesn’t this sound familiar?

We know that Republicans like to cut taxes, but they don’t like to pay
for them, and big tax cuts don’t pay for themselves. Reagan’s big tax
cuts did not pay for themselves, nor did George W. Bush’s. Why should we
expect Wisconsin’s tax cuts to do the impossible?

They won’t; big tax cuts for wealthy special interests are to be paid
for by the working middle class: teachers, police, nurses, firemen.
That’s the real crime, that Governor Walker wants to pay for his tax
cuts by demanding that workers sacrifice more. As I’ve chronicled, time
and time again, the middle class faces increasing expenses (utilities,
housing, and education costs) and stagnant or decreasing wages. It is
being squeezed like never before, and Governor Walker is applying the
vise.

This is part of a conservative agenda that started decades ago, of
enriching friends and punishing enemies. Unlike straightforward graft,
conservatives enrich their friends through tax cuts and punish their
enemies by busting unions—because union support, for the most part, goes
to Democrats. Governor Walker is only following the well-established,
well-funded conservative playbook.

But make no mistake: Wisconsin is just a microcosm of what’s happening
in Washington, where House Republicans are insisting on a $60+ billion
budget cut because “America is broke.” So let me ask them: Weren’t we
already broke back in December when we gave the rich $800 billion in tax
cuts we couldn’t afford and that, as usual, weren’t paid for?

In arguing for continuing Bush’s tax cuts, Republicans insisted that
because we were in the middle of a recession, increasing taxes on the
richest Americans would slow economic growth by taking money out of the
economy—money they would be spending on goods and services (and maybe
even hiring more). By their logic, then, increased spending—by rich or
poor, or even the government—spurs economic growth, right? Government
spending equals approximately 25% of our GDP, which makes it crystal
clear that taking $60 billion out of the economy will slow economic
growth.

To conservatives, that’s the point: higher unemployment means cheap,
available labor and even more money in the pockets of the very wealthy.
Look at the almost $3 TRILLION in cash being hoarded by Wall Street
banks and corporations—money that could be lubricating growth on Main
Street. But for Republicans, slowing the economic recovery has the
additional benefit of making Democrats look ineffectual, increasing
Republican chances of taking over the Senate and defeating Obama next
year.

So what will be the real effect of $60 billion in spending cuts? In
addition to further impoverishing the poorest Americans and making life
more difficult for the rest of us, economists estimate that somewhere
between 200,000 and 700,000 jobs will be lost by those proposed
Republican cuts.

America is looking at a $1.25 trillion deficit. Conservatives
continually point to this number and hope that Americans will reel at
its size. But look at it in context: We are a country of more than 300
million people. Therefore, if every man, woman and child forks over
$4,000, the budget deficit is solved. $4,000. That’s it. Not $40,000 or
$4 million, we are talking about $4,000 per person to save programs that
help the poor, like the low income heating energy assistance program
(LiHEAP) and Head Start.

The December tax cuts gave the average millionaire an extra $100,000. If
all we do is require that those who have benefited the most from our
stable economic environment pay their fair share, we could fix the
budget in no time.

Conservatives are using a ginned-up “financial crisis” to push through a
reactionary agenda of destroying unions and killing government spending
on social programs: this is a fullbore attack on the American way of
life. We must fight back.

The Wisconsin Democratic Party has started a petition to recall eight
state senators in accordance with the Wisconsin Constitution. Winning
three of these eight seats will shift the balance of power. This is
direct democracy. This is the way that we take back our government from
corporate special interests that have the undivided attention of our
politicians. This is what the franchise means—the right to vote for
representatives who serve the people.

Those who love America, including our essential social safety nets,
should and must take to the streets as they are doing in Madison,
Wisconsin. It is a fight to save every progressive program of the past
two centuries: programs that offer every citizen the opportunities and
means to improve their lives and give their children chances they never
had. And that is what America is, and always has been, all about.