The Serious People Are on the War Path
Fans of arithmetic everywhere know that the large deficits of the last five years are the result of the economic downturn caused by the collapse of the housing bubble. But those taking part in deficit discussions in Washington won't allow such numbers into the discussion.
The Serious People in Washington, such as the Washington Post (both the opinion and news sections), the Wall Street Campaign to Fix the Debt, and the Republican congressional leadership are in a full budget-cutting frenzy. They demand cuts to Social Security, Medicare, Medicaid and everything else that benefits middle-income and poor people because, well because the market demands it.
And we know the market demands these cuts because the Serious People told us the market demands these cuts. The fact that the cuts have the effect of redistributing income from the rest of us to the Serious People and their friends is just a coincidence.
Those of us who focus on numbers and data might see that we actually have near record-low interest rates on U.S. government debt, suggesting that the markets aren't at all concerned about budget deficits. We can also point out the obvious truth that budget deficits are supporting the economy given the loss of more than $1 trillion in annual construction and consumption demand as a result of the collapse of the housing bubble. But the Serious People in Washington don't have the time to deal with the stinkin' numbers. They have worked themselves into a full-fledged budget-cutting frenzy.
Perhaps the best piece of utter wackiness coming out of this Washington debt-cutting frenzy is a proposal from Republican Senator Bob Corker, a member in good standing of the Serious People club. Corker's plan, the Fiscal Reform Act of 2012 includes items such as cuts to Social Security and Medicare, which are described in classic Washington fashion as "reform."
But the best part of Corker's plan is his proposal for cuts in the wages and benefits of the federal government's workforce. These cuts average $180,700 for every federal employee. That is not a typo. The $180,700 figure is correct. It comes from taking the $397 billion in savings that Corker wants to come from "Federal Employee Hiring and Benefit Reform" and dividing it by the 2,197,000 employees on the federal government's payroll.
That one is worth mulling over for a few minutes. We're talking about $180,700 in wage and benefit cuts for every nurse and custodian working at the Veterans Administration's hospitals; $180,700 in cuts for every air traffic controller who keep our skies safe; $180,700 in cuts for every meat inspector at the Food and Drug Administration who ensure that our food is safe.
In Washington today proposals like Corker's pass for serious. At a time when tens of millions of people are still unemployed, underemployed or out of the labor force altogether as a result of the fallout created by the collapse of the housing bubble, in Washington it is serious to argue that our biggest problem is that custodians at the VA hospitals are getting paid too much.
In fairness, it is not only federal employees who Corker and the other deficit hawks want to whack. They also want to cut Social Security benefits, raise the age of eligibility for Medicare to 67 and to cut Medicaid, which covers the cost of most nursing home care for the nation's elderly. The basic story is that anyone who is not rich can expect to see a big hit if these deficit hawks get their way; it's just that federal employees get special treatment.
As always, the folks who were the central cause of the economy's wreckage and the large current budget deficits, escape large unscathed in the Serious People's offensive on the debt. For some reason they never consider the idea of a modest tax on Wall Street speculation. Hey, they don't even consider the idea of cutting the pensions of folks like Alan Greenspan, whose astounding incompetence as Federal Reserve Board Chairman allowed the housing bubble to grow so big that its collapse would destroy the economy.
But going after the rich and incompetent would not be Serious. In Washington, "Serious" means beating up on people without money and power. It's that simple.
Correction: This article has been amended to reflect the correct amount of wage and benefit cuts per federal worker. The calculation for the initially published figure mistakenly included postal workers.
Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.