President Obama’s decision to attack Social Security and Medicare in his recent budget is a severe warning to workers and youth of the corporate nature of his administration’s political agenda. Obama is looking to slash essential public services that working people rely on in his drive to sign up Republicans as part of the big business agenda of making the 99% pay for the present crisis.
Under Obama’s plan, Social Security benefits, which 70% of seniors rely on for over half their income, will no longer be adjusted for inflation using the Consumer Price Index (CPI) but instead the “Chained CPI.” Although the CPI is already a poor index, since it under-adjusts for the price increase of essential products like food, the Chained CPI is far worse. Using a quasi-marketing formula, it assumes if the prices of some goods go up, for example food, senior citizens will be able to substitute other products whose prices have gone down.
Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, stated: “Adopting the Chained CPI is nothing more than a political sleight of hand targeting our nation’s middle class and poor.” The White House’s own statement estimates this new inflation adjustment would allow the federal government to rob $130 billion in Social Security benefits from pensioners.
If anyone believed the income of elderly Americans is being privileged by the CPI inflation adjustment, the National Committee to Preserve Social Security and Medicare announced that the average cost-of-living increase over the last four years has been an underwhelming 1.3%.
In a speech to AARP on Sept. 6, 2008, Obama promised: “John McCain’s campaign has suggested that the best answer for the growing pressures on Social Security might be to cut cost-of-living adjustments or raise the retirement age. Let me be clear: I will not do either.”
Obama’s budget also slashes $400 billion from Medicare, the essential health program for elderly people; increases taxes on cigarettes by 94 cents, which hits working people the hardest; and further weakens public education. This comes after $1.4 trillion in federal cuts over the last two years.
Obama Serving the Interests of the 1%
Obama’s cynical decision to throw away essential gains won by working people through the struggles of the 1930s is designed to impress the 1% and pressure Republicans to complete the “grand bargain” of budget cuts demanded by big business.
The Republican Party response, typically, is that it’s not enough. They are demanding more cuts, and for Obama to drop his demand for tax increases. Having hitched their party to the right-wing economic ideologues of the Tea Party, Republicans have time and again failed to adopt the cuts in Social Security and Medicare that big business is demanding from the two political parties that it funds and expects to do its bidding.
Dysfunctional Two-Party System
Obama’s willingness to push through unpopular policies should be contrasted to the dysfunctional nature of the Republican Party. The party’s base is dominated by right-wing economic zealots who have blind faith in the power of tax cuts to magically grow capitalism, and believe capitalism will rise like a phoenix if freed from the “straitjacket” of federal policies and other regulations!
The dysfunctional nature of the Republican Party has been demonstrated by its House leadership repeatedly threatening to block a motion to extend the national debt ceiling if deep cuts are not immediately enacted, thus threatening to throw the world and U.S. economy into a new recession. The House even initially voted to refuse spending to help the victims of Hurricane Sandy!
However, the big corporations are not interested in appeasing right-wing political zealots. Their interest is to make profits, and they want U.S. capitalism to be competitive with its overseas rivals. The last thing they want is for one of their two political parties to provoke a new recession by enacting deep, immediate cuts in federal spending.
This viewpoint is expressed most clearly in the serious journals of big business. For them, improving U.S. competitiveness means both slashing long-term programs that benefit working people like Social Security, Medicare, and Medicaid things that business does not need to make profits, and boosting federal spending on things like infrastructure, new technology, job training things that boost corporate profits now and in the future.
As the British journal, The Economist, writes: “The combination of dysfunctional politics and empty coffers is preventing Congress from dealing with the economy’s obvious shortcomings… All efforts to boost America’s competitiveness are for naught if the galloping cost of Medicare and Medicaid are not reigned in – something only the federal government can do” (3/16/2013, “Special Report on American Competitiveness“).
Struggle Between the 1% and 99%
The sharp budget debate, and the subsequent breakdown of these two corporate parties working relationship, is rooted in a much deeper crisis of U.S. and global capitalism that has emerged since the 2008 financial crash. This means there is less money to go around.
This battle between the “haves” and “have-nots” – the 1% and 99% – reflects what socialists describe as the class struggle: A struggle over the division of wealth between the owners of big business and those who work for a living. The anger of the public at the 1%’s privileges, compared to their own falling living standards, failing schools, poor health care, and rising poverty has exploded in recent years. Both corporate political parties are now worried about angering those who they court to get their representatives elected.
Owners of big business want to shift wealth from the working class to their bank accounts. But they also want to do it, if possible, without provoking widespread anger in the working class that would lead to powerful movements and the working class building powerful organizations to further defend its interests. The corporate owners would prefer to implement these cuts in a more subtle way, with confusing, flowery rhetoric and the cooperation of labor leaders.
This is where Obama steps in. Unlike the ideologues in the Republican Party who want Walker- like policies as were enacted in Wisconsin, which will enrage working people, Obama is combining the attack on Social Security and Medicare with some small tax increases on the rich in order to obscure big business’s broader agenda to make working people pay for the crisis. Historically, the role of the Democrats has been to woo the leaders of social movements, and in particular the labor movement, to neutralize them as opponents of their assault on the living standards and rights of the working class.
What Socialists Say
Socialists reject the corporate agenda of cutting programs. The vast majority of these cuts affect education, unemployment benefits, the poor, women, those with disabilities, health care, funding for transportation, and other essential social services that primarily affect the quality of life of the 99%. It is not an accident that cuts to corporate welfare have been left off the agenda.
We need to ask: Who gains by channeling money that should be alleviating unemployment, low wages, poverty, and record home foreclosures towards reducing the deficit and debt? The answer is those who own the bonds, who fear their wealth will be diminished if the bonds are devalued. And who owns the vast majority of bonds? The vast majority of the national debt, $9 trillion, is held by private investors – mainly banks and billionaires.
Further cuts in the living standards of working people and the poor will not turn around the economy, but instead fill the coffers go the richest 1%. Despite the massive bailouts of the big Wall Street banks in 2008 and 2009, the economy has still not recovered for the 99%. Yet Wall Street just hit another record high. The financial CEOs who robbed the nation blind in fraudulent mortgages continue to make money hand over fist.
We need to step up and fight these attacks on Social Security and Medicare. We need to reverse the cuts. We need to demand policies that directly improve the lives of working people. We need a comprehensive jobs program that puts the tens of millions of unemployed workers back to work, that puts massive resources into retooling the economy in an environmentally sustainable way, that provides the quality jobs and lives that working people need.
We need genuine socialist policies to turn the economy and the country around, including public ownership of the big banks so that the allocation of resources can be decided in the interests of the 99% rather than the 1%.
These open attacks on Social Security by Obama will further expose the class basis of Obama and the Democrats. The Democrats think they can get away with this because we aren’t willing to challenge them from the left with a political alternative. We need to prove them wrong by running anti-corporate, pro-worker, independent candidates at a local, state, and national level as a step to forming in new, campaigning political party that can represent the working-class majority.