The Deficit Reduction Commission and Class War

Friday, November 12, 2010 by Richard Wolff

Obama’s Deficit Reduction Commission released a remarkable document this week. Under the cover of “deficit reduction,” the document lists a host of proposed reductions in social security and medicare payments, a rise in the tax on oil products, cuts in public employment including the military, multi-year wage freezes for public employees including the non-combat military, cutting foreign military bases, reduced tax deductions (effectively raising taxes), and reduced basic income tax rates on individuals and businesses (effectively lowering taxes). This contradictory package has two basic goals.


First, the Commission document seeks to reduce Washington’s deficits, now that they have zoomed since 2007 to cover the costs of bailing out the credit system (banks, insurance companies, etc.) and the costs of at least moderating this great capitalist crisis. Second, the document seeks to place the real costs of deficit reduction on the mass of working people, leaving untouched the distribution of wealth and income and its foundation, the organization of production into a mass of workers producing profits and a tiny group of people who are directors and major shareholders of enterprises deciding what to do with those profits. This really is class war.


To achieve its goals, the vast bulk of the document’s proposed costs will fall on the middle and lower income groups, the working classes. If the documents’ proposals become the law, it means that the federal government will be swinging into an AUSTERITY program just like the Europeans are pursuing. And that will add to the state and local governments’ austerity programs that they have already been imposing across our country for two years.


The average working people will feel the bulk of social security and medicare cuts, the public employment cuts and public wage freezes, the raised regressive oil tax, etc.  To hide that fact, symbolic steps are included imposing some tax increases on the rich (partly offsetting their tax cuts), some very modest cuts in the immense military establishment, etc. And even these may be removed or moderated in the final proposal as it works its way through a US congress that is ever more dependent on capitalist enterprises and contributions from the rich.


Perhaps most importantly, the document shows not the slightest interest in any sustained raising of the basic real wages of workers, let alone altering the structure of enterprises to reduce the social power now wielded by the small minority that controls the profits generated in those enterprises. Indeed the document reflects nothing so much as that minority’s already effective use of those profits to shape politics in the US. Both major parties, the major mass media, and academic institutions – all have become increasingly dependent on money distributed from the profits available to corporate boards of directors. These dependent institutions dare not offend those who increasingly sustain them.


Thus the Deficit Reduction Commissioners never raise the possibility of new taxes on the wealthiest top 5 % such as a federal intangible property tax (levied progressively on all portfolios of stocks and bonds over, say, $1 million). They say nothing about a set of steadily rising progressive increases in the tax rates on personal incomes over $1. No word is spoken about a stiff inheritance tax on estates over $2-3 million. A new progressive tax structure on corporate profits seems unimaginable to these commissioners, and so on.


Those options are not considered. The Commission’s document keeps them off the public agenda, out of public debate. The costs and benefits of taxing the super rich and large corporate profits are excluded from the long overdue consideration that our failed system needs. That exclusion is at least as important as anything else the document does.