What “Shared Sacrifice” Means

obama financial advisors

President Obama meets with heads of financial regulatory agencies in the Roosevelt Room of the White House to receive an update on implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (Photo: Pete Souza)

President Obama spelled it out for us last Saturday. During his weekly radio address, he said the country needs “a balanced strategy” with shared sacrifice, and for “everyone to be willing to make decisions that are not popular.”

The President’s remarks underscored the contention of some observers, including leading economists, that the White House has bought into the Republican argument as to what is wrong with the economy – why there are 14 million people looking for work at the same time. His reference to the employment crisis was this: “Through cooperation and a bipartisan approach, we can get our economy on firmer ground and give our businesses the confidence they need to create more jobs across the United States.” The reason for the jobless level is not “confidence” on the part of capitalists, critics say, but rather the fact that people aren’t buying enough of what their companies make or the services they render.

Former Administration economic advisor Jared Bernstein wrote in his blog Sunday that “consumer spending is way down and it’s not getting much of a boost from jobs and paychecks, which means that fiscal stimulus is about the only game in town, or it would be if policy makers weren’t spending practically every waking minute on budget cuts.”

“To get our fiscal house in order, we must cut spending, but we must also close tax loopholes for special interests and ask the wealthiest Americans to pay their fair share,” the President said.

“We shouldn’t put the burden of deficit reduction on the backs of folks who’ve already borne the brunt of the recession,” the President said. “It’s not reasonable and it’s not right.” He then went on to propose precisely that. “If we’re going to ask seniors, or students, or middle-class Americans to sacrifice, then we have to ask corporations and the wealthiest Americans to share in that sacrifice. We have to ask everyone to play their part. Because we are all part of the same country. We are all in this together.”

The problem is that working people are already making big sacrifices, and closing tax loopholes and ending the tax cuts the Bush Administration bestowed on the wealthy is only “fair” in a relative sense.

Take, for instance, education. If tax write-offs for corporate jets are eliminated and those making a quarter of a million dollars a year have to pay taxes at the rate they did only a few years ago, and hedge fund managers start paying taxes at the same rate as their secretaries, the already well-to-do will still have little trouble paying their kids’ tuition bills. But it’s getting harder and harder for the children of working class families.

The Center on Education Policy reports that 70 percent of school districts nationwide endured budget cuts in the school year that just ended, and 84 percent anticipate cuts this year,” wrote New York Times columnist, Nicholas Kristof, last Sunday. “In higher education, the same drama is unfolding. California’s superb public university system is being undermined by the biggest budget cuts in the state’s history. Tuition is set to rise about 20 percent this year, on top of a 26 percent increase last year, which means that college will become unaffordable for some.”

In short, the children of working families are being priced out of the system.

“The immediate losers are the students. In the long run, the loser is our country,” wrote Kristof.

Meanwhile, all across the country social services, which largely benefit lower income women, men and children are being cut back and people who made them function are being added to the ranks of the unemployed.

The Administration is proposing to reduce federal spending by something in the neighborhood of $4 trillion; the Republicans want cuts amounting to about $9 million. Both have Medicare – and possibly Social Security – in their sites as areas for possible savings as part of what Obama calls a “grand bargain.” Grand it might be but for seniors and the disabled it would be anything but a bargain.

Leading left activist, Carl Davidson, called my attention last week to the view expressed back in 1954 by Former President Dwight David Eisenhower. In a letter to his brother, Edgar Newton Eisenhower, of Tacoma, the general who warned us about the growing power of the “military-industrial-complex,” wrote, “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”

Back then, the right wingers – with whom brother Edgar identified — didn’t have Medicare to kick around but they went after Social Security and they haven’t let up their efforts until this day. Substitute the Koch Brothers or the Peterson Foundation for the oil moguls and you get a sense of historical continuity. They don’t give up.

Democracy is supposed to be the expression of the will of the people. The high drama debt ceiling machinations in Washington these days is anything but that. All the politicians go about declaring that they were sent to Washington to do “big things.” “So I’ve put things on the table that are important to me and to Democrats, and I expect Republican leaders to do the same,” says Obama. “You sent us to Washington to do the tough things. The right things. Not just for some of us, but for all of us. Not just what’s enough to get through the next election – but what’s right for the next generation.

“So I’ve put things on the table that are important to me and to Democrats, and I expect Republican leaders to do the same.”

The idea behind the failed report of the National Commission on Fiscal Responsibility and Reform (commonly referred to as Obama’s “own deficit commission”) was that representatives of the country’s political elite would come together and accomplish big things – like “reforming” Medicare and Social Security on a “bipartisan” basis, meaning nobody would take the blame. Now it seems Democratic and Republican Senate leaders are considering a “fall-back position” that is being looked at by Obama.

Carl BloiceThe scheme would set up a new 12-member congressional panel that would, by the end of the year, seek to come up with a way of reducing the deficit through cuts in entitlements and new tax revenue sources over the next 10 years. Such a commission would, according to one report, “circumvent parliamentary hurdles more easily than regular legislation.” This would probably involve a straight up or down Congressional vote without the possibility of amendment.

Doesn’t sound very democratic to me.

Carl Bloice
BlackCommentator

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Comments

  1. Bill Gibbons says

    Obama spents 3.2 trillion dollars in three years – on what? And now he wants to spend another trillion on socialized healthcare? And this in a nation that has 44.5 million people who use food stamps with another 30 million are on welfare. Over 70% of black children are born out of wedlock, with 1.5 million abortions performed each year. There is over 8.7 million illegal immigrants in the country (with more arriving each year) Healthcare costs have doubled and millions of jobs have gone overseas.

    America will implode socially and economically if an answer to the looming debt crisis is not found – and soon. But, I’m not holding my breath.

  2. says

    As the author’s examples illustrate, ‘shared sacrifice’ is a phrase which SOUNDS FAIR but – as usually tacitly meant – IN FACT is UNFAIR.

    You cannot have a credible program of genuine shared sacrifice unless those who have more – and moreover were the most recent beneficiaries of massive federal largesse – lead by BEING FIRST AND FOREMOST – NOT MERELY EQUAL – IN SACRIFICE.

    Over the past OBushma decade it was the haves that got the goodies – big tax cuts. It was the top-bracket wealthy that got less federal supervision of their corporate mismanagement – leading to market crashes, and bursting of hi-tech and housing bubbles – and moreover federal bailout from the consequences. Meanwhile, to add further insult, the federal government at their behest or blessing invested less in productive factors for the economy and more in elective wars overseas.

    So the economy is bad, government revenues are down, federal bailouts are up. Instead of calling for genuinely useful temporary extra deficits – to keep the states afloat and prime the consumer economy and thereby keep millions at work and get millions more back to work – the shameless beneficiaries and deficit-creators are suddenly after all these years staging an alarm about deficits and for the allegedly-sky-is-falling deficits are blaming the rest of us – not for what we are actually costing, but for our potential eventual entitlements.

    Mr In-Awe may be right about eventual unsustainable costs of entitlements, but these costs are not massively here yet and won’t be for decades: we have time to gradually phase in a sustainable schedule of entitlements. And it’s happening, at least in fits and starts. For instance, even my much-maligned insurance company (Anthem) has lately taken one key step that was long long overdue to control health-care costs: it has started to promote urgent-care clinic visits as an alternative to the extremes of emergency-room visits or do-nothing.

    We have far less time to lose, to keep people at work and get people back to work. What’s costing the country now is the lost productivity of the jobless, and what will cost the country more in the near future is the under-education and under-training of the capable majority of the next generation of workers.

  3. says

    When leaders gather to resolve a crisis, they must all be willing to forsake favorite things: favorite agenda, favorite ideologies, favorite slogans and histories. It is no longer about them as leaders, as individuals or as touted groups. It is now about something much, much larger than themselves. And this larger “something” is often THE PEOPLE, the mass of humanity that awaits critical decisions with bated breath, without much individual power, without much influence or wealth of their own.

    The people have, in good faith, turned over their voices and wills to their leaders with fair expectation that these leaders–in a crisis, at least–will have the backbone and wisdom, the courage and commitment to work as a unified group to do what is best for the larger humanity, for the larger population, rather than for themselves. When this fair expectation is betrayed, as is happening now in Washington, it is an abomination of the highest order.

  4. in_awe says

    Let’s say that class warfare is warranted in order to “share the burden”. What tax rates do you propose should be imposed on the 51% of workers that actually pay federal income taxes? It has been widely shown through videos like “Eat the Rich” and analysis of levels of confiscatory policies that you could strip the “rich” (those earning $250K and over) of 100% of their income and 100% of their assets, tax the Fortune 500 at 100% of their profits, close all the “loopholes” and you would gather just enough in taxes to barely cover the spending of the federal government at it current run rate for a single year.

    Then what?

    A year or so ago I did some analysis of what it looks like for a worker who retired at age 65 in 1995 after a lifetime of work earning exactly the median income every year and paying into social security at the required rate and the fund earned interest at the then current 30 year Treasury bond rate. Then I showed how what that worker contributed to the social security trust fund was exhausted through monthly payments from the system in something like 4-1/2 years. So, the mantra that you can’t touch entitlements because “they paid for them” is simply silly. Since most retirees live longer than 4-1/2 years after retirement, the social security system becomes a welfare system with no means testing and a transfer of wealth from current workers to retirees. You can argue with the numbers I presented, but even if I am off by 100%, the system breaks down after 9 years of payments to retirees – still far short of the average post-retirement lifespan of retirees.

    At the current rate things are going 100% of taxes will be spent on entitlement programs and interest on borrowed funds. That is certain. We must face that reality.

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