After Republicans sustained enormous political damage from their idiotic 16-day federal government shutdown in October, we might have expected the Democrats to capitalize on their momentum in the budget negotiations that followed.
But Senate Budget Committee Chair Patty Murray (D-WA), in negotiating a budget deal with House Budget Committee Chair Paul Ryan (R-WI), which was announced last week, threw away these political gains to allow the Republicans to continue waging class warfare on the behalf of the rich against the rest of us, with the only Republican concessions being no cuts to Social Security, Medicare and Medicaid.
First, let’s look at the numbers. This deal covers both the current 2014 fiscal year and the following 2015 fiscal year, which begins next Oct. 1, meaning that there will be no government shutdowns for the next two years if approved by Jan. 15. Fiscal year 2014 spending is set at $1.012 trillion, increasing to $1.014 trillion for the 2015 fiscal year.
The 2014 fiscal year deficit is set at $23 billion, decreasing to $22.3 billion for fiscal year 2015. While $85 billion in spending has been cut over the next two years, $63 billion in previous sequester cuts have been restored in such areas as education, medical research, infrastructure investments and defense jobs, with $45 billion in fiscal year 2014 and $18 billion in fiscal year 2015. The remaining $140 billion in sequester cuts stays in place. Repealing all the sequesters would increase the Gross Domestic Product (GDP) by $113 billion and create 900,000 jobs.
The worst part of the budget deal is its unconscionable failure to extend the Federal Emergency Unemployment Insurance program, which expires Dec. 28, cutting off benefits to 1.3 million Americans suffering from long term unemployment. The job shortage is much more severe than the official 7 percent unemployment rate, for there are still fewer jobs than when the Great Recession began in 2007, with no jobs available for two out of three job seekers. With state programs running out in 2014, an additional 3.6 million Americans will lose their benefits.
People collecting unemployment benefits spend nearly all that they receive, keeping billions of dollars circulating in the economy. A one-year extension would thereby create 200,000 jobs. No extension would cost 300,000 jobs and slow economic growth by 0.2 percent. Congress is expected to take up the long term unemployment benefits extension when it returns from its holiday break in January.
Other class warfare aspects of the deal include cutting military retiree pensions; requiring new federal government workers to pay more for their pensions, amounting to a 1 percent pay cut; increasing the security fee for airline passengers from $5 to $11.20 on a round-trip ticket; and a premium increase for companies whose pensions are insured by the federal government.
Meanwhile, there is no tax increase for the rich, which won’t hurt the economy even if the rate were as high as 80 percent on the richest 1 percent; no closing of corporate tax loopholes for such economic treason as shipping jobs overseas and reporting profits abroad; no corporate welfare cuts; and no Wall Street Transactions Tax, which would amount to 3 cents per $100 traded on the stock market, raising $352 billion over 10 years.
The budget deal amounts to continued short-sighted austerity in the face of a $17 trillion national debt, which stalls economic recovery and job growth. Spending in such areas as rebuilding infrastructure, energy efficiency retrofitting of homes and businesses, and improving health care and education would create jobs and increase consumer demand, thereby generating more business investment. The deficit was 9.2 percent of GDP when President Barack Obama took office in January 2009. It has decreased during his White House tenure, and is expected to be down to 4.1 percent of GDP in 2017, but would shrink faster with more rapid economic growth.
The budget deal passed the House last Thursday by a 332-94 vote, with both bipartisan support and opposition. Democrats supported the bill by 163-32, with Republican support at 169-62. Some Democrats objected to the failure to extend unemployment benefits, while Republicans opposed the lack of safety net cuts. This split was seen in the Michigan delegation, with Democrats voting in favor by 3-2 and Republicans by 7-2. Democrats voting in favor were John Dingell, Dan Kildee and Gary Peters, with John Conyers and Sander Levin opposed. Republicans voting yes were Dan Benishek, Dave Camp, Bill Huizenga, Candice Miller, Mike Rogers, Fred Upton and Tim Walberg, with no votes from Justin Amash and Kerry Bentivolio.
The Senate is expected to take up the bill tomorrow, with a close vote expected and a Republican filibuster attempt likely. Happy holidays.