Mass political persuasion involves simplification. So metaphors are extremely important. “Fiscal cliff” is a tendentious metaphor. It illegitimately implies very rapid, disastrous fall. Despite blow-by-blow coverage and TV countdown clocks, a much better metaphor is presented in an online paper titled “A Fiscal Obstacle Course, not a Cliff.” The New Year’s deadline is only to begin the obstacle course.
Worse, “Fiscal Cliff” rhetoric is hype, a bipartisan hustle, a bum’s rush to severe austerity. Austerity would be just for millions of middle class and poor Americans, not the rich. All the media, including the liberal ones, are using this tendentious metaphor. But it’s no “compromise” to give up constitutional general welfare, Social Security, and Medicare, to keep low taxes for the rich. It’s extortion. Social Security needs nothing more than to take the cap off contributions. Costs of health care can be controlled by Congress passing single-payer health care for all in place of Medicare, Medicaid, and ObamaCare. It was only months ago that progressives were vigorously promoting it.
But to attend to the “cliff” debate today, you’d think nobody ever heard of it. That’s lame media coverage.
Our national election having just occurred, there’s no electoral pressure on Republicans or Democrats to settle immediately. They can keep acting out their stall, the Gridlock Unemployment Fix Stall, for an indefinite time, letting we the people twist in the wind. But paradoxically, they can intensify the Fiscal Cliff hustle by turning advent of the deadline into a Hostage Jobs Crisis.
Remember the National Lampoon advertisement ““If You Don’t Buy This Magazine, We’ll Kill This Dog”? The magazine ad photograph featured a cute dog looking up at a revolver pointed toward its head. The reader must remember, President Barack Obama already agreed last summer to very deep, long-term cuts. The trillions of dollars in spending cuts agreed to in principle will prolong stagnation, and very likely cause recession and possibly even depression.
So letting the deadline pass and having employers start laying off hundreds of thousands of additional workers per month would be powerful stimuli to stampede the public and resistant Congressmen. But surely that’s extortion, isn’t it?
Let us cut your medical and retirement benefits or we’ll kill these other guys’ jobs. Note that the Bowles-Simpson (BS) recommendation, which may become the basis of a deal, was defeated even by the full Bowles Simpson Commission. The reason is that it was extremely severe, enough to keep us stagnant for the decade of its operation at best, likely to produce recession and maybe even a new Great Depression.
It’s all so risky and so unnecessary. Millions of us are still reeling, unemployed, underemployed, and/or underwater from the collapse of 2007 to 2010. The preceding pump-and-dump of real estate and then securities values was just the latest blow in the Great Cramdown, the class war campaign we’ve been losing for four decades. But Republicans have spent a lot of money on delegitimizing Obama and turning “deficits” into the new “Weapons of Mass Destruction.” Obama’s political capital from 2008, victory by about 10 million votes, was degraded to November’s victory by only about 4 million votes.
It’s of course unverifiable and absurd to have claimed “Obama’s a Muslim,” “socialist,” “foreign born,” “Food Stamp President of the Takers,” etc. But given the size of the decline in his margin of victory, it would be hard to maintain this propaganda campaign had no effect on turnout. I googled “obama secret muslim” and just “obama muslim.” The first got about 48.5 million hits, the latter 218 million! So Republicans are still trying to get something out of their efforts: degrading our Social Security and Medicare benefits.
It’s totally unnecessary because, first, every debt is also an asset. A lot of our national debts (bonds) are assets owned by and owed to ourselves. We can easily cash them when they mature. Also, foreign nations e.g., China, etc. would not seek to sell them all at once because that would lower their value. Nor could they buy anything with our bonds that we do not consent to sell.
Our Treasury and Federal Reserve loaned trillions of dollars to bail out the banks. Could they have done this, if they were broke? And despite extremely low interest rates, the U.S. easily rolls over, refinances, our national debt every month. National banks around the world, and private dealers, oversubscribe Treasury auctions, i.e., they request to buy several times as much Treasury debt as Treasury offers for sale. With a gross domestic product many times our nearest rivals, with resources far in excess of others, and military superpower, the truth is that Uncle Sam is by no means broke. He has currency sovereignty, and so is NOT like Greece.
There is an old racist verse called “Rufus, Rastus, Johnson Brown” that reflects a sad racial reality. “Rufus, Rastus, Johnson Brown, whatcha’ gonna’ do when the rent come ‘roun?” Rufus is poor and so can be kicked out when the “rent [due date] come ‘roun.’” But Uncle Sam is not like Brother Rufus. Uncle Sam has currency sovereignty. That means he can create his own money.
Our Constitution grants the powers to our Congress, not the Treasury or Federal Reserve, “to coin money and regulate the value thereof” (Constitution, Art. 1, Sec. 8, sub 5.) That overrides later inferior laws.
Greece and Brother Rufus cannot do these things. Uncle Sam is more like the self-financed owner of Rufus’ building. Do a computer search for “United States Notes debt free.” A few bills of such money, called “greenbacks,” can actually still be found for sale as rare U.S. currency. Congress could authorize new debt-free currency, in any amount needed to reflate employment, establish a large program of long-term, low interest loans to private businesses to subsidize wages for new hires. It didn’t and won’t do so because both Democrats and Republicans are totally dependent on wealth concentrations, corporations, led by private banks. Those banks currently profit obscenely from lending us “our own” money (whose allocation they control for their profit.)
Keeping money scarce keeps “free labor” working while workers are required to give up portions of their surplus to become owners’ capital. This scarcity practice has functioned successfully in hundreds of free labor market nations since Capitalism emerged in Europe several hundred years ago. By being less coercive, this practice surely beats slavery and serfdom. But scarcity of our current magnitude in a primarily credit money and fiat (i.e., paper) currency system is severely outmoded and dysfunctional!
We have 10-times more credit money (money in banks, in account records only) than we have actual cash in our money system. Transfers of credit by direct deposit for restricted purposes is somewhat “sterilized.” It does not have the inflationary potential of cash that has a physical “half-life” called a money velocity, a number of times that a physical paper dollar changes hands. That’s how the Fed and Treasury could promise up to $29 trillion credit support to bail out hundred of banks, including foreign-central ones, and yet the liquidity could still remain trapped. Instead of inflation, housing prices continued to dive and job creators destroyed 8.5 million jobs.
Consider First Principles actually in the Preamble of our Constitution. Our national government is not a private profit making business. It’s not supposed to be about “budget balancing,” and “deficit reduction.” In addition to providing for the common defense, and securing liberty [for the pursuit of happiness,] the Preamble says our Constitution is about establishing Justice, insuring domestic Tranquility, and promoting the general Welfare.
Bankers and “Goldbugs” (monetary theorists) claim that the “best” or “least inflationary” money must be based on gold or some other naturally scarce highly useful or prized commodity. Often they hold or sell gold themselves. They hate inflation because if wages and transfers keep up with it, this means debtors get to pay off debts with cheaper dollars. So they offer an apocalyptic warning about creating money. A social agony, a convulsion of deathly hyperinflation will result!
It is just a taboo. Hyperinflations only happen in extremely weak, undeveloped, or destroyed economies, or defeated regimes and periods of extreme scarcity. The U.S. can ‘regulate the value’ of our money, create billions or even trillions to stimulate and re-inflate employment.” Controlled and targeted, the consequence would be a large increase in millions of strapped Americans happiness, general welfare and security.
While thinking about these first principles, resist the hustle to sacrifice your Social Security and Medicare, even if the threat is “Give them up or we’ll cut off spending and sequestration of spending will cause businesses to kill all these hostage jobs.” Illegitimi non carborundum!
[i] An extensive, excellent article with similar conclusions but somewhat different emphases and concerns is Robert Borosage, “The Grand Betrayal?” to be found in The Nation, 12.3.12
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