• Home
• Personal Finance
• Economy
• New School
• Asked & Answered

• ABOUT
• FAQ
• RESOURCES
• ADVERTISE
• CONTACT

Class War: Who is on your side?

Short Answer: Neither legacy political party. Republicans, with the release of their federal budget proposal this week, go on the offensive in the Class War against poor and working class families. Democrats, via President Obama’s budget proposal, already set the stage for attacks on poor and working class. It doesn’t have to be this way.

Budget proposals are essentially policy statements. They reflect the priorities of the proposing party.

Republican Proposal

Republicans are calling their budget proposal “The Path to Prosperity” - (here it is PDF). More like the “The Path to Debt Servitude” for poor and working class families. Wow, the policy statement is very clear in this proposal: it’s ‘survival of the fittest’ for poor and working class families while people with top incomes are safe.

This republican proposal claims to cut $4 Trillion over 10 years from the federal budget. But who is bearing the burden of this cuts? According to Center on Budget and Policy Priorities, the republican proposal gets two thirds of its $4 trillion cuts from programs that help lower income Americans. These cuts are huge - we are talking the elimination of medicaid (health insurance program for poor families particularly children) and privatization of medicare which will result in seniors paying much more for a lot less coverage.

But there’s more. While the cuts are targeting poor and working class families, the tax benefits totally favor top income people. It calls for making the Bush tax cuts that favored top incomes permanent and under the guise of “tax reform” it consolidates the income tax brackets (currently six) and cuts even more the top income bracket from 35% to 25%. Talk about going ‘all in’ for trickle down economics.

Oh, yeah. As if it wasn’t enough to completely try to decimate two socio-economic classes and totally favor another with spending and tax cuts - how about eliminating the (already weak) rules of the game. For no other reason other than to help the financial oligarchy on Wall Street, the republican proposal calls for the complete repeal of financial regulatory reform that was passed last year. That’s right let’s go back to way it was for Wall Street - even weaker rules that lead to the global financial crisis.

The republican budget proposal reminds of a quote from Albert Einstein:

Insanity is doing the same thing over and over again and expecting different results

Democratic Proposal

Remember, the republican proposal is a response to the budget proposal offered by the White House in February. President’s proposal claims to reduce the deficit by $1.1 trillion over the next decade. At best, the president’s proposal can be described as the “goldilocks proposal” - not too warm or not too cold. But the onus of deficit reduction is still on spending cuts (and a lack of tax cuts/benefits) that affect poor and working class families.

Big Problems

We are still dealing with high unemployment/underemployment - last report U6 (unemployment + underemployment) was 15.7%. And unemployment projections by various agencies and economists expect relatively high unemployment/underemployment for several years - heck, even the White House is projecting unemployment rate to be 7.5% in 2013. But yet all we hear about is deficit reduction.

But this budget debate will get worse for poor and working class families. With the republicans on the offensive and Democrats typically scared of their own shadow - the question or issue will be how much to cut - cut - cut from programs that affect poor and working class families. And forget about any programs/investments that would address high unemployment. Hints of this are already in the air. From Ezra Klein (Will Ryan’s budget revive Simpson-Bowles?):

I wouldn’t be surprised if, a year from now, it’s broadly agreed that the main thing Paul Ryan’s budget did was persuade Democrats — and perhaps some Republicans — to adopt something pretty close to the Fiscal Commission’s recommendations (which are currently being turned into legislation by a bipartisan group of senators).

There are real similarities between the two plans. Perhaps most importantly, the Ryan budget and the Fiscal Commission rely on similar mechanisms to reduce the deficit: They both cap stuff. But the Fiscal Commission’s caps are more flexible and fair than those in the Ryan budget; the Fiscal Commission makes revenues part of the solution, where the Ryan budget includes a deficit-busting tax cut; and the Fiscal Commission doesn’t try to sneak an ideological wish list into law under the cover of deficit reduction.

This what they call a trial ballon in Washington DC-speak. Funny how Klein says that the Catfood [Fiscal] Commission’s proposal “doesn’t try to sneak an ideological wish list into law under the cover of deficit reduction.” Yeah, right - like Simpson and Bowles (co-chairs of the Catfood Commision) were not ideologically driven. Both are deficit hawks and their plan accomplishes the same thing - stick it to poor and working class families but save top incomes from pain.

Republican proposal will move the ‘goal posts’ in Washington. The budget debate will not be between a blatant attack (republican proposal) on poor and working families and a backhanded slap (White House proposal) at poor and working families. Instead, we’ll get a debate about how soon to economically subjugate poor and working class families - republican proposal vs. catfood commission.

We have a situation where those who didn’t cause this Great Recession but who have paid a heavy price in the form of joblessness, foreclosures and the related heavy (often ignored) social costs are being forced by both legacy political parties to pay/sacrifice even more. Welcome to the Class War. We have no allies in Washington.

It doesn’t have to be this way. What the republicans understand very well and it shows in their budget proposal is that issue is not the size of the deficit but who benefits from it. It’s a matter of priorities. Most democrats don’t understand this and others quietly agree with republican’s trickle down economics.  Maybe it’s time to shut it down and start over.

Good luck.