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Wednesday, November 23, 2011

"How Occupy Stopped the Supercommittee"

Dean Baker:

How Occupy stopped the supercommittee, by Dean Baker, CIF: Congress gave us a wonderful Thanksgiving present when we got word that the supercommittee "superheroes" were hanging up their capes. ...
It is important to remember ... (by looking at the website of the Congressional Budget Office) that we do not have a chronic deficit problem. In 2007, prior to the collapse of the housing bubble and the resulting economic downturn, the deficit was just 1.2% of GDP. The deficit was projected to remain near this level for the immediate future... All this changed when the collapse of the housing bubble wrecked the economy. The story is simple... This is what created the large deficits that we are now seeing.
The $1tn-plus deficits are replacing lost private-sector demand. Those who want lower deficits now also want higher unemployment. They may not know this, but that is the reality...
While this is the reality, the supercommittee was about turning reality on its head. Instead of the problem being a Congress that is too corrupt and/or incompetent to rein in the sort of Wall Street excesses that wrecked the economy, we were told that the problem was a Congress that could not deal with the budget deficit.
To address this invented problem, the supercommittee created an end-run around the normal congressional process. ... Their strategy was derived from the conclusion that it would not be possible to make major cuts to social security and Medicare through the normal congressional process because these programs are too popular. ... The hope was that both parties would sign on to cuts in these programs, so that voters would have nowhere to go.
However, this effort went down in flames this week. Much of the credit goes to the Occupy Wall Street (OWS) movement... It has put inequality and the incredible upward redistribution of income over the last three decades at the center of the national debate. In this context, it became impossible for Congress to back a package that had cuts to social security and Medicare at its center, while actually lowering taxes for the richest 1%, as the Republican members of the supercommittee were demanding.
Now that the supercommittee is dead, Congress must be forced to address the real crisis facing the country: the 26 million people who are unemployed, underemployed, or out of the labor force altogether. This would not be difficult if we had a functional Congress...
There is a long-term issue with the deficit, but as every budget analyst knows, this is a healthcare story. If the United States fixes its healthcare system, then the deficit will not be a major problem. If we don't, then our broken healthcare system will wreck the economy regardless of what we do with Medicare, Medicaid and other public sector healthcare programs. ...

[I made many of the same points here.]

    Posted by on Wednesday, November 23, 2011 at 11:07 AM in Budget Deficit, Economics, Health Care, Politics, Social Security | Permalink  Comments (16)

          


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