As Holy Week approaches, the poor are being nailed to a cross of austerity

Yes, the United States has a public debt problem. No, it was not caused by runaway spending, or by stimulus, or by bailouts. It was caused by the recession, which led tax revenues to plummet (a lot)and automatic spending like unemployment benefits to increase (a bit). The secondary cause was the poor starting point, from three major unfunded deficit expansions in the Bush years – war, Medicare part D, and upper-income tax cuts. All across the world, stimulus and bailout accounts for no more than 10 percent of the rise in debt, and the US is no different.

Republicans like to claim that the deficit is their number one priority. But it isn’t. If we move from rhetoric to action, their main priority is upward redistribution of income. After three decades of rising inequality and real wage stagnation, the answer is…to keep on going, even to speed it up. Back up a little bit. Remember last year’s budget deal. What did Republicans insist on? Two things – the extension of tax cuts for high earners, and a massive estate tax cut. When offered a compromise on thresholds, they would not budge. It was all or nothing, the super-rich or nobody.

That was then. Flash forward to today when the Republicans now control the House.

The issue is once again the budget. But the past is not irrelevant. We could easily halve the deficit over the next decade by doing nothing – letting the Bush tax cuts expire. In other words, restore tax rates to the level of the prosperous Clinton years, already a postwar low. But no, this is off the table. In fact, under the Ryan proposals that are galvanizing Republicans, the Bush tax cuts would stay, and the top rate would actually be cut further – by a whopping 10 percentage points to 25 percent. This is simply stunning for a party that emphasizes austerity.

Oh, but the austerity is there. Just look at the various proposals – $1 billion off Head Start, $1.1 billion off the Public Housing Capital Fund, $752 million from the Special Supplemental Nutrition Program for Women, Infants and Children, or WIC, and $5.7 billion from Pell Grants. And possibly worst of all, $1 trillion from Medicaid, the safety net health care program for the poor. At the same time, Ryan seeks to privatize Medicare – this would actually increase costs, but the individual would bear a greater share.  Leading health economist Uwe Reinhart summarizes it as follows: “most of the risk of future health-care cost increases would be shifted onto the shoulders of Medicare beneficiaries”. And the Affordable Care Act gets repealed, and with it, the promise of health coverage for millions.

These austerity measures, directed at the very poor while at the same time increasing the wealth of the very rich, are deeply immoral. They are profoundly anti-life. They are anti-Christian.

Oh, and one of Ryan’s “budget” proposals is the repeal of the Dodd-Frank (weak) financial regulation bill. Just in case you needed any more evidence that protecting the super-rich was the ultimate goal here.

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  • Mark Gordon

    Bravo, MM. Ryan and his party really need to be exposed on their cynical, budget proposals. I’m reminded of what Jim Wallis says all the time: the budget is a moral document. By that criterion, Ryan’s proposal is deeply immoral.

    Of course, it would be helpful if the Democrats offered some alternative. It was they, let’s remember, who while they still controlled both houses of Congress joined with Republicans to preserve the Bush tax cuts. They could start with a 50% reduction in defense spending over the next ten years, but that’s a non-starter. Democrats are as committed to the national security state and its wars as are Republicans.

    • Fr. Rob Johansen

      Start with 50% cut in the defense budget! Yeah, that will do the trick!

      Hell, let’s cut it altogether – 100%.

      The Defense budget for FY 2011 is 530 Billion dollars.

      So, cutting it 100% would leave us with a deficit of… about 1.1 TRILLION dollars.


      • Henry Karlson

        So, what do you have to say about this:

        The U.S. will ultimately spend $1 trillion for these fighter planes. Where’s the outrage over Washington’s culture of waste?


      • Mark Gordon

        I wrote “start” with the Defense spending, Father. S-T-A-R-T. I also wrote “over the next ten years,” which would obviously have more effect than a one-year reduction. Also, we don’t have a FY2011 budget, which is what the fight in Washington is about this week. Moreover, “defense spending” encompasses more than just the budget for the Department of Defense. It includes the costs of fighting two simultaneous wars (not part of the DoD, plus our global intelligence apparatus, plus much of our “homeland security” budget. All totaled, “defense spending” – or national security spending, if you prefer – ranges as high as $1 trillion annually. But don’t let the facts get in the way of ideology, Father.

  • Cindy

    The sad part is, if this all happens, what am I going to do when I get old? What are we all really going to do? It’s not like anyone wants disease to come to them, but as you get old, it’s a fact of life and bound to happen to each and every one of us. Dispicable. I suppose no one feels it’s their responsiblity to take care of our people in this nation of our’s. So when you get old and get sick and you can’t pay, it’s just simply time to die eh?

    • digbydolben

      In America? If you’re not rich, and therefore are not a “success” (that is, failed to achieve the “American Dream”)?

      Yes, of course it’s time for you to die–and quietly, without making a fuss.

  • Cindy

    At this point the Republican party should just run Koch/Koch 2012 for President and VP. It might be the most honest thing they could actually do.

  • Michael

    The most amazing part is what a fraud Paul Ryan is. I would venture the man has never done a day’s worth of hard labor in his life (maybe a college summer job at daddy’s business) and ever a man of mind and liesure – telling the poor and retired working people to pound it. And the man advertises that he is a Catholic. Did any of it EVER sink in? I venture not. He says that Ayn Rand (contrast to Mother Teresa) was his inspiration to get into “public service”. Can you belive that? She was a twisted sociopath. Alan Greespan got the country and finances all mesed up for us as her disciple as well. And all he could say later was “oops sorry” as he is retired in the lap of luxury. Haven’t we had enough of these charlatans? I guess not. As the Gospel says “We are legion”. The public seems to eat it up. Which brings to mind the old P.T. Barnum adage. No one ever went broke understimating the intelligence of the American public. Public fraud and idiocy is becoming the death rattle of the American Republic. And as always the least among us pay the price.

    • Morning’s Minion

      I didnt know he was an Ayn Rand acolyte. Terrifying.

      • Paul DuBois

        It is truly amazing how many of the conservative Christians in congress follow her. She was not only an atheist, but mocked the basic tenants of Christianity. Her entire philosophy was built on the opposite of the sermon on the mount. It would be hard to imagine a person with more distain for everything Christianity stands for.

  • Fr. Rob Johansen

    Do you believe that the trends in federal spending, as they were before the recession, were sustainable in the long run had the recession not happened?

    • Michael

      Yes. …but the point is how the austerity is being “managed” and who is bearing the burden. This current course is taking it from the weakest so the strongest can be left alone…and even get more.

    • Morning’s Minion

      There is onky one aspect of spending that is truly unsustainable over the long term, and that is Medicare. But is simpy becuase medical costs are skyrocketing, and even here, Medicare costs grow quite a bit less than private costs. So, get health spending under control and your long term budget looks a lot better. Ironically, the Affordable Care Act tried to do exactly that, at least a bit, but this was lambasted by the so called party of low deficits.

      • Fr. Rob Johansen

        This is (most fundamentally) where we would disagree. The fact is that the federal deficit was increasing under Bush, and the rate of increase was itself increasing. Under Obama the deficit has increased further, but that is only accelerating an already intractable problem. The federal deficit could not and cannot continue increasing indefinitely.

        It seems to me that the recession didn’t cause the problem, it revealed the problem. The recession brought the inherent weakness of our fiscal house of cards to light. Even governments are ultimately constrained by reality: resources (money, property, goods and services) have to come from somewhere, and since governments do not create resources, they can only get them by confiscating them (polite word – taxation) from the citizenry. Those resources are, at any moment, finite.

        We are seeing played out now what may be the final reckoning of the State coming up against the iron law of Scarcity.

  • Kyle R. Cupp


    What’s your take on getting rid of medicare and replacing it with an extension of medicaid for those who cannot afford their healthcare costs?

    • Michael

      I personall favor a “single payer” system because I think that is the most direct way to keep it all honest…but could be convinced of something like a “multiple payers, but common national standard” approach that several european countries have variations of…and all of which have better overall health outcomes than us. In this latter approach private mutual companies/plans complete on service and coverage for their members and not on reimbursement and basic coverages which are mandated. Customers can go from one company to another without penalty. No denials for real or “found reasons”. The government subsidizes the premiums for the poor and the unemployed…but ALL people are in the same basic system. I think that this model could actually work here. I would require that all the “for profit” companies be converted to mutuals, with mandatory coveregae standards and universal enrollment..and let everyone compelete based on service and coverage for their members…not stockholders. Tax to subsidize the poor and the elderly but keep them in the same boat as the healthy and wealthy. Ironically what Ryan has kind of suggested with his Medicare for the future along with aspects of ObamaCare could start this debate. But it will take honesty, good will and compromise…all of which appear in short supply.

    • Morning’s Minion

      I would have a problem with it, as it would force people to pay for their own individual risk. Basically, the situation today of dramatic lack of insurance and underinsurance would be extended to the elderly.

  • Dominic Holtz, O.P.

    Of course, it would be helpful if the Democrats offered some alternative. It was they, let’s remember, who while they still controlled both houses of Congress joined with Republicans to preserve the Bush tax cuts. They could start with a 50% reduction in defense spending over the next ten years, but that’s a non-starter. Democrats are as committed to the national security state and its wars as are Republicans.

    I try to avoid partisanship as a matter of principle, at least on a public forum. It is not suitable for a priest. However, I think Mark’s point here is crucial. While I am no economist, and I am sure that there are complexities to economics that will make much of what I think naïve or unhelpful, it is not too much to suggest that the national security state, to which both major political parties are absolutely committed, is the greatest threat to the American economy (and thus, to the material flourishing of the American people). So long as we do not meaningfully and radically rethink our military spending, it seems as though the options provided by both parties actually fail to respond to the needs of society at large, and the needs of the poor in particular. After all, how virtuous is it if one’s spending on behalf of the poor so devalues the economy (because one has refused to cut military spending in a meaningful way) that the poor simply cannot be helped?

    I would be happy, of course, to be corrected by trained economists, but I suspect they would agree that our military spending is ultimately unsustainable, surely in the long term, quite possibly in a much shorter term than feels comfortable. Am I wrong?

    • Mark Gordon

      Since total national security spending has doubled in just over the past decade, it should be possible to cut it dramatically without any damage to our real security. But that would also involve a substantial dismantling of the American imperial project, which neither party is willing to do. And so, year after year, we pour more money into “national security” than the rest of the world combined; 10 times more than our next global military rival, China; 20 tmes more than our last global military rival, Russia. It is unsustainable and immoral.

  • Paul DuBois

    The deficit is caused by the reasons MM mentions above, but also by the fact that we are currently being taxed at the lowest levels since before the great depression. When you add this to the greatly expanded things our government is doing (SS, Medicare, Medicaid, CDC, protection of the environment, increased border security, aid to foreign nations and policing the world) how could we not have a large deficit? Many of these things make our lives less expensive to live and are performed better than the free market could deliver. The true solution to the deficit is to merely return to the tax rates that existed during the Clinton administration. Or better yet the Eisenhower administration. With those rates we would be generating a surplus, and I do believe both times were rather prosperous.

    On healthcare, it boggles my mind that someone is proposing the same system that most businesses are trying to abandon to replace Medicare. The health care system in this country is particularly poor in two areas, quality of service and cost. Any changes made should address these. The trials run by other countries and by the VA in this country show the best way to improve both of these areas is to go to a single payer system. If anyone can point to any other model that has been tried and shown to bring down costs as significantly as a single payer system I would like to see it (that is not a rhetorical comment, I really would like to see it). It is time to move the healthcare discussion past arguing economic theory and begin looking at practical examples of what has and has not worked.

  • Morning’s Minion

    To Fr. Rob Johansen:

    I agree that the deficit is a problem. But there are a number of nuances to consider. First, sustainability means something very precise. It means that the real interest rate is higher than the real growth rate – this is when debt spirals out of control as the cost of debt is outpacing the ability of the economy to pay for it. We are not there yet, not even close, mainly because of the US reserve currency status – people are still willing to buy US government debt very cheaply (look at Greece as an example of what can happen without this great privilege). So, the urgency is a bit exagerrated. The country is not “broke”.

    Second, if it hasn’t gone off a cliff just yet, it is certainly running quickly in that direction. Public debt increased by 40 percentage points during the crisis. I repeat – mainly because revenue collapsed. We see this all over the world. It was certainly made worse by coming into the crisis in a bad state, caused by the fiscal misadventures of the Bush administration. You certainly cannot fault the Obama administration, unless you think they should have been cutting deficits during the deepest recession in 60 years.

    The answers are, I think, not too hard – restore taxes to where they were in the 1990s, cut immoral military spending, tax the financial sector, tax carbon emissions. Oh yes, and do something to stop rising health care costs, and the ACA is a major step in the right direction.

  • Paulus

    “Our problems stem from our acceptance of this filthy, rotten system.”
    — Dorothy Day

  • Dale Price

    No, the debt nightmare shouldn’t be balanced on the backs of the poor. I haven’t read Ryan’s proposal in any depth, but it really doesn’t get us anywhere anyway, given its unspoken presumption that our debt level will rise to 100% of GDP anyway. That’s uncharted waters for our shaky status as the reserve currency.

    I’d be more comfortable with our admittedly low bond rates if the Fed wasn’t the biggest purchaser of them. The Japanese are sure to dump theirs to finance their own reconstruction.

    Ultimately, the response of the political class to the near depression of 2008 was to reinflate the same bubble (QE) and to legally and financially insulate those responsible for it. That’s not surprising given that the Dodd act got the seal of approval from those whose “oversight” delivered us to the precipice.

    The fact is, neither party will seriously address the problem. From the polls, it’s pretty clear that *we really don’t want them to.* We like cuts and taxes affecting other people, but for ourselves? Not so much. Not so much.

    Our country is one good energy shock from repeating 2008, and there are no more bullets in Bernanke’s gun.

    The poor and middle class are really going to hate default. Our children and grandchildren are going to hate us even more.

  • Michael Denton

    The answers are, I think, not too hard – restore taxes to where they were in the 1990s, cut immoral military spending, tax the financial sector, tax carbon emissions. Oh yes, and do something to stop rising health care costs, and the ACA is a major step in the right direction.

    I think ceasing to fund immoral wars and immoral organizations might also help. Good thing Obama hasn’t started any of those wars or insisted on funding those groups…

    However, I’m really interested in the position of “we needed to give lots of money to the financial sector via TARP and now we need to tax the heck out of them to get the money back.” How does that make sense? Shouldn’t we have just saved the money to start off with?

    • Morning’s Minion

      “we needed to give lots of money to the financial sector via TARP and now we need to tax the heck out of them to get the money back.”

      Well, in a nutshell, yes! Remember, TARP was to stop a system-wide meltdown. Without it (and its equivalent throughout the world), we would have seen an economic collapse unlike anything since the 1930s. Unemployment rates would have exceeded 20 percent.

      Here’s the funny thing – TARP is actually likely to make the government money (or at least cost very little). So it was a good investment.

      But we still have the greater problem. The actions of the financial sector – and I’m talking mainly about huge banks – created this recession, a recession that led 30 million lost jobs, a 40 percent increase in public debt, and countless misery all over the world. Taxing the banks would do two things: (i) it would recoup some of the broader costs of the crisis; (ii) it would make them less likely to do it all over again.

      • Thales

        Well, in a nutshell, yes! Remember, TARP was to stop a system-wide meltdown. Without it (and its equivalent throughout the world), we would have seen an economic collapse unlike anything since the 1930s. Unemployment rates would have exceeded 20 percent.

        I know that I’m going to disagree with M.Z. on this, and that’s fine. But I remain skeptical about TARP saving the sky from falling. The same experts who talked about TARP talked about the stimulus that way, and I’m inclined to think the stimulus didn’t work.

  • Cindy

    For Catholics, if you consider what life would really be like in the future, with a little voucher plan and having to buy your own insurance plans. I think you are leading into a future where people that are terminally ill will be looking for a Dr Kevorkian style of treatment. They will be suffering with no help in site. People better be careful what they wish for in a budget. You never know what this could spur, as loved one’s are watching their parents suffer with the inability to get proper care.

  • http://NA John

    It’s truly sad that the author would condemn all “Republicans”. There are no sources to support the authors opinions and the article is almost cut-pasted from DNC talking points. How shallow to not be able to see there are right and wrong people on both sides of the issue! For shame.

  • Mark Gordon

    At Baseline Scenario, James Quak has posted an excellent critique of Paul Ryan’s Medicare-Medicaid phase out plan: At Baseline Scenario, James Kwak has posted an excellent critique of Paul Ryan’s proposed Medicare-Medicaid budget:

  • Dale Price

    Oh, and not so by the way: if the title is a hat-tip to William Jennings Bryan, bravo! A genuine American statesman, unfairly lampooned in the “Inherit the Wind” mythology.

    • Morning’s Minion

      It’s definitely a nod toward Bryan, and yes, I do admire him!

  • Matt Bowman

    Meanwhile, Harry Reid is going to cause a shutdown because he wants to keep having DC pay for abortions with tax dollars. He says “talks are at an impasse over restrictions on abortion funding.” Funding that didn’t start, since 1996, until Reid and Obama passed it a year and a half ago. A shutdown would “nail people to the cross,” no? So are the Republicans worse, or the Democrats, in your estimate?

    • Matt Bowman

      “It’s all down to women’s health,” a Reid spokesman said.

    • Cindy

      Explain to me how Title X works? Did that not already cover the tax payer funded parts of aboriton coverage? Being that it said no funds would go to abortions? I don’t understand that. That is what loses me? If that was already there, and the Republicans wanted to get rid of Title X, they are getting rid of the part that says no tax payer funds would go to abortions, correct? I really just don’t understand that part. I need it explained to me.

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