The unfounded, yet enduring confidence of the American people in conservative budget dogma reminds me of Charlie Brown’s equally misplaced trust that Lucy will someday hold the football for him to kick instead of yanking it away.
Good grief! Has history taught us nothing? In the past half century, six federal budgets have been in balance or surplus, two in the 1960s and four at the end of the last century. What connects those two decades is a pattern of sustained and balanced economic growth. In other words, if you want a strong federal budget, you need a strong economy.
Deficits occur when the economy drags: think of the Reagan Recession of the early 1980s and today’s Great Recession. That’s because federal revenue falls at the same time that vital safety net programs such as unemployment compensation and food stamps increases.
Repairing our budget really starts by repairing our economy. And that repair begins with increased demand. But consumers are unable to spend if they are burdened by debt and millions are out of work _ or worried they soon will be. Companies are unwilling to hire or invest in this uncertain economic environment. There’s only one entity left to prime the pump: the federal government.
The seeming paradox of the government needing to spend more to balance the budget is not really all that strange. Short-term and long-term prescriptions are often at odds. Think about it: exercise is generally a good idea, but not when you’re flat on your back with a broken leg. Once the economy is back on its feet again, spending can be addressed as part of the effort to control deficits - deficits which, not so incidentally, will be lower because of the tax revenue being generated by a robust economy.
But even when we consider federal spending, we shouldn’t accept a false equivalence of budget benefit and pain. That erroneous theory - pushed hard by conservative zealots - imagines everyone has gained equally from the spending and tax policies of the past 30 years, so all should suffer equally from deficit reduction. Nothing could be farther from the truth.
Wealthy investors, international corporations and defense contractors have been the big winners since budgets got out of whack in the Reagan administration. Rates on upper incomes have fallen precipitously, and unearned income - dividends, interest and capital gains - have been taxed more lightly than earned income, which results from working for a living. Tax and trade policy has encouraged shipping jobs overseas, and a ballooning Pentagon budget has swelled the coffers of the Haliburtons and Blackwaters of the world.
Meanwhile, working families - who derive much more benefit from rising wages than from tax cuts - have seen their income stagnate in real terms. And unlike the defense budget, spending on social services is always viewed with suspicion and has been the frequent target of budget cutters.
So a deficit reduction package that demands more of the hard-pressed middle and working classes and relatively little of the economic elite should be rejected out of hand.
Flat on his back is where Charlie Brown always winds up when he buys what Lucy is selling. And that’s the position the American people will continue to find themselves if they accept the bait-and-switch plan to cure the recession by federal budget-cutting. We might as well wait for the Great Pumpkin.
• Michael J. Wilson is the national director of the progressive Americans for Democratic Action, 1625 K Street NW, Suite 102, Washington, D.C. 20006; website: www.adaction.org.
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