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Democrats Propose to Cut Medicare, Medicaid and Social Security – A Strategy …

As we move closer to the November 23 deadline for the Congressional “Super Committee” to present its plan to cut $1.5 trillion from the federal budget deficit, both major parties have put forward proposals which sharply attack Medicare, Medicaid, and other social programs. If these policies go through, it will be the most devastating attack on New Deal programs since they were first established. Massive struggles need to be organized to defeat these cuts.

The Super Committee was established in August by leaders of the Democratic and Republican parties to come up with proposals to cut $1.5 trillion from the federal budget. They are:

Details of Super Committee Proposals
The Republicans’ proposal has the deepest cuts. It would trim the debt by $2.2 trillion over the next decade and would not raise taxes. The Center for Budget and Policy Priorities (CBPP) reports it would cut $500 billion from Medicare and $185 billion from Medicaid. It also includes $685 billion in programs other than Medicare and Medicaid. The CBPP also reports that “four-fifths of the Republicans’ proposed Medicare cuts— $400 billion — would directly affect beneficiaries through higher premiums, higher cost sharing, and more restrictive eligibility criteria” (http://www.cbpp.org/cms/index.cfm?fa=viewid=3606).

The recently released proposal from a majority of Democratic Party Super Committee delegates calls for $1.5 trillion in cuts over 10 years. The CBPP reports that it would cut $400 billion from Medicare and $75 billion from Medicaid. Half of the cuts in Medicare would come from benefit cuts for the seniors, disabled and low-income people who rely on these programs. Their proposal also includes over $385 billion in cuts in as yet unspecified social programs (www.cbpp.org/cms/index.cfm?fa=viewid=3606).

The Democratic Party proposal includes $1.5 trillion in tax increases. Despite the rhetoric of taxing the rich, many of these as yet unspecified tax increases will fall on working-class people (NY Times, 10/31/11).

The liberal Center on Budget and Policy Priorities said that the Democratic Party plan “actually stands well to the right of plans by the co-chairs of the bipartisan Bowles-Simpson commission and the Senate’s ‘Gang of Six,’ and even further to the right of the plan by the bipartisan Rivlin-Domenici commission (Obama’s Deficit Reduction Commission)” (Washington Post, 10/28/11).

Since then, it has been announced that the Democrats are proposing to permanently adopt Bush’s tax cuts for the rich. Huffington Post writes: “Under their latest proposal to the deficit reduction Super Committee, Democrats would agree to undertake comprehensive tax reform that included a pledge to avoid letting Bush-era tax cuts for the wealthy expire.” It quotes “one top Democratic operative familiar with the proposal” as saying: “The Senate Democrats’ proposal would make the Bush tax cuts permanent for millionaires. More tax giveaways to the top one percent is a complete capitulation to Republicans” (11/11/11).

The Wall Street Journal reported that the Democrats, like Republicans, are proposing changing the way the cost-of-living adjustment (COLA) for Social Security is calculated, moving it to a “chained CPI.” This would result in lower payments for everybody receiving benefits, including people already receiving Social Security.

Billionaire New York City Mayor Michael Bloomberg, while promoting the views of the 0.1%, explains the similarity between the Republicans’ and Democrats’ proposals: “The good news is: there is actually much more common ground on the spending cuts than most people realize. Both parties have proposed at least $400 billion in cuts to Medicare. Both parties have proposed at least $200 billion in non-defense discretionary spending. Both parties have proposed some cuts to Medicaid. And both parties have agreed to peg payments more accurately to inflation by reducing the Consumer Price Index, for a savings of about $40 billion” (thepage.time.com/2011/11/08/transcript-bloomberg-outlines-super-committee-proposals/#ixzz1dc50IF43).

Clearly, it is not a question of the cuts coming from one party or the other. Both parties are funded and dominated by big business, and they are both united in their determination to make the poor and working people pay for the economic crisis.

Anger at Democratic Party Proposal
The scale of Democratic Party cuts has had an immediate response. Palpable anger at the proposals has been expressed by many labor leaders and others in the liberal base of the Democratic Party. The AFL–CIO union federation stated: “While working families across America struggle, Democrats on the ‘Super Committee’ are ready to give away the store on Medicare, Social Security and Medicaid, while protecting the top one percent from new taxes” (workingamerica.org 10/28/2011).

Discussion has begun on whether the Democrats have been outmaneuvered again by the Republicans, as they were earlier in the fall of 2010 and also in the budget deal of a few months ago. Richard Trumka, President of the AFL-CIO, stated he was “surprised” by these proposals from the Democrats: “These ‘Super Committee’ Democrats have put all their concessions on the table up front in the vain hope that the Republicans might reciprocate.” The AFL-CIO has reported it will work together with many other organizations that are part of the liberal base of the Democratic Party, such as the NAACP and MoveOn, to put pressure to keep Democrats in line.

We completely oppose these cuts, but we do not share this feeling of astonishment. Instead Socialist Alternative recognizes that this announcement of savage cuts in essential New Deal programs by the Democratic Party stems from the party’s financial and ideological ties to the richest 1% of the population and their commitment to loyally serving the interests of the corporate elite.

Obama Administration’s Policy on the Budget
Barack Obama signaled his support for very similar policies toward the budget deficit back in February 2010 when he appointed very conservative members to the bipartisan Deficit Reduction Commission. The commission’s recommendations, released in December 2010, included a gradual increase in the Social Security retirement age to 69 as well as a cruel reduction in retirement pay; a 15-cent increase in the gas tax; increased co-pay as well as benefit cuts to Medicare and Medicaid; and cutting 200,000 federal jobs while freezing pay for those remaining. The proposal also included lowering the top income tax rate and corporate tax rate from 35% to 28%.

While both political parties publicly rejected these recommendations, subsequent proposals by both Republicans and Obama have followed the same overall direction. As we wrote in January 2011: “By creating a bipartisan commission, both parties seek political cover from the anger of voters for pushing through these blatant pro-big-business corporate policies. While not all these proposals will be passed in the next session, they represent the broad program of policies big business wants its two parties to implement in the next period,” (http://socialistalternative.org/news/article12.php?id=1508).

In July 2011, the Obama Administration offered a proposal to reduce the deficit by $4 trillion, which included cuts in Medicare and Social Security. This proposal, which in normal times would have provided the basis for a bipartisan solution, found the Republican Party entrapped by pressure from the Tea Party and unable to close the deal.

In the end, a rotten deal was cut. Democratic and Republican leaders implemented $1 trillion in immediate cuts in programs and mandated the extraordinarily undemocratic Super Committee to decide a further $1.5 trillion in cuts over ten years from the federal budget. There were no tax increases on the wealthy, not even a limited closing of some tax loopholes.

On November 23 the Super Committee, with six members from each party, will decide where to cut this $1.5 trillion from the budget, which they will present to Congress in the form of a bill. This bill is not supposed to be amended, revised or filibustered, only passed or vetoed in an up-or-down vote by Congress. Failure to reach an agreement by December 23 is supposed to trigger automatic cuts of $1.2 trillion, with half the cuts on domestic spending and half on military spending.

While Democrats are now playing the “tax the rich” card more aggressively in order to try to maintain a base among the angry public, the central policy of the Democratic Party has been to solve the economic crisis and the budget deal by attacking social programs that benefit working people and the poor. As Obama said in his July 31 speech when announcing the debt deal: “Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required – on entitlement reform and tax reform – right now, rather than through a special congressional committee process.”

Why Cuts to Social Programs Benefit Only the Rich and Big Business
Socialist Alternative rejects the whole premise that we need to cut Medicare, Medicaid, Social Security or other social programs. These bipartisan attacks on New Deal programs will do nothing to solve the economic crisis. In fact, they will make it much worse. A key problem underlying this economic crisis is the lack of consumer demand to buy goods. And the spending power of consumers makes up 70% of U.S. economic activity. Drastic spending cuts have only added to the depth of the capitalist crisis in Europe, and they would do the same here.

The real, underlying source of the economic crisis is a long-term decline of capitalism. The so-called “job creating” billionaires have been wasting the profits they have made on speculative investments and shipping capital overseas to make extra profits by exploiting cheap labor. This has caused a decline of the U.S. economy over the last 35 years and devastated the living standard of workers, young people and most people of color.

Even now, during this ongoing economic slowdown, investors are hoarding their money, instead of using it to create new jobs. According to the Federal Reserve, U.S. corporations held a record $1.9 trillion in cash on their balance sheets in 2010. The idea that the rich are “job creators” is a lie designed to justify their wealth and take advantage of the economic recession to slash essential social programs needed by working people and the poor.

Of course, leading capitalist spokespersons are warning that failure to make a “deal” will cause a new economic crisis. Socialist Alternative rejects the idea that there is a national priority to make this deal or pay off the national debt. Over $9 trillion of the federal debt of $13.5 trillion is held by private investors, mainly banks and billionaires, looking to get rich off interest payments.

Paying off the national debt is putting the interests of rich investors first again. Yet they were the ones whose greed provoked the housing bubble and the 2008 financial collapse. If they miss their interest payments, they won’t go without heat or a meal for even one night. Yet these cuts will pull the safety net out from under millions of working people, people of color, and the poor. Working people have lost over $6 trillion in fallen house prices. They are going without a meal. Socialist Alternative says we need to bail out working people, not Wall Street, the banks and the super-rich.

The labor movement and other social movements need to demand an emergency plan for a massive jobs program to provide everyone with living-wage employment. We need an end to evictions and foreclosures. People should be allowed to stay in their homes and pay an agreed affordable rent or mortgage.

Both Political Parties in Crisis
The concept of a using a bipartisan committee to push through unpopular policies has been implemented repeatedly by the U.S. corporate elite to protect politicians from both their parties from the anger of voters. It took a bipartisan agreement to push through the massive bank bailout in 2008. The ruling elite hope the Super Committee will protect politicians enough to push through this devastating attack on New Deal programs. But mass opposition to these pro-corporate policies is growing. There is now a huge disconnect between the leaders of both parties and growing anger among the public.

Up until now, it has been the Tea Party that has complicated the process most. It was anger at the bipartisan Wall Street bailout of 2008 that sparked the formation of the Tea Party. Since then, Republicans have managed to channel that anger to gain electoral votes in 2010. However, the Tea Party is now restricting the ability of the Republican Party to make a deal that big business is demanding on the budget. Republican politicians fear that if they vote for an increase in taxes they will be placed on the Tea Party’s hit list. All Republican presidential candidates have vowed not raise taxes, even if the taxes were combined with a ten-fold increase in cuts. This creates a scenario where, despite the brutal cuts already agreed by Democrats, Republicans may be unable to sign on to a deal.

The dysfunctional nature of the Republican Party as an instrument for the policies of big business increases the possibility that no deal may be agreed to about how to cut the deficit. Divisions on the Super Committee could derail a deal, unless Democrats drop their calls for major new taxes.
Pressure on Democrats is also starting to increase. Obama’s announcement of massive cuts in Medicare and Social Security during the summer and then the subsequent budget deal sparked real anger, including among many who had supported him in 2008. This helped create conditions for the explosive growth of the Occupy Wall Street movement. The Occupy movement has sharpened the disconnect between the big-business leadership of the Democratic Party and the general public. With the Occupy movement now starting to focus on the Super Committee cuts, and labor unions and other progressive organizations vowing to protest any cuts in Medicare, Social Security and other social services, there is a real potential to defeat these cuts.

The ability of the public to pressure the two parties from the outside could shatter the normal operation of the two-party system that was established by big business. Under this system, if one corporate party is discredited, then they will present their second corporate party as an alternative. In this way, hatred at the corporate elite that exploded under Bush and Republicans was safely directed into the candidacy of Obama and the Democrats. But with anger growing at both parties, and an anti-corporate movement finding expression in the Occupy movement, the possibility is now opening up that alternative left political candidates could tap into enough anger to start to challenge this big business duopoly of power.

Already, AFL-CIO President Trumka is so frustrated with Democrats that he has been forced to make veiled threats to them. On October 28, after the announcement of their Super Committee proposal, he stated: “It would be very difficult for us to support, or mobilize for, any candidate at any level” who supported cutting Medicare, Social Security and Medicaid. If the AFL-CIO unions actually followed though by running independent pro-worker, anti-corporate candidates, this would massively boost the creation of a new political movement to represent the 99%. But the Democrats know that, in the end, the labor leaders will toe the line and mobilize their forces for Democratic candidates in the face of “greater evil” Republicans.

The potential for major struggles against these Congressional proposals – combined with concerns in the Obama administration that viciously cutting social programs that working-class Americans depend on could make them vulnerable in the 2012 elections – could lead Democrats to pull back from making the concessions necessary to appease Republicans. Instead, they may try to blame Republican “extremism” for the breakdown in budget talks as a way of attempting to avoid electoral losses in 2012.

Will the Super Committee Fail to Come to an Agreement?
In reality, both parties have already begun to do this. Each is setting up a scenario to lay the blame on the other party for a breakdown of talks on the Super Committee. This would then trigger the provision for $1.2 trillion in automatic cuts, known as a “sequester” – one half from military spending and one half from domestic programs.

Already, Republicans are talking of rejecting such cuts in the military spending. Representative K. Michael Conaway, a Texas Republican on the House Armed Services Committee, has already come out and said: “If the joint select committee does not do what it needs to do, most of us will move heaven and earth to find an alternative that prevents a sequester from happening.” After hearing dire predictions by the Joint Chiefs of Staff, Representative John Garamendi, Democrat of California, stated: “The sequester will never take place, it’s not going to happen” (NY Times, 11/4/11).

At a budget reduction committee meeting, a number of politicians from both parties asked whether anything could be done to allow Congress to change the mechanism for automatic cuts in military spending. In response, Douglas W. Elmendorf, director of the Congressional Budget Office, replied, “Any Congress can reverse the actions of a previous Congress” (NY Times, 11/4/11).

Building Resistance
By building the biggest possible movement though November and December, we have the potential to derail these cuts. A group of Occupy Wall Street protesters from New York have launched a two-week protest march from Wall Street to Washington, D.C., arriving the day the Super Committee is supposed to present its proposals. Other organizations are just gearing up for struggle in December. Students are already organizing against tuition hikes and education budget cuts. Every possible tactic needs to be used to expose how these cuts are an escalation of the class war by the 1% against the 99%.

Our movements need to build mass resistance to these cuts to Medicaid, Medicare, Social Security and other social programs. Medicaid is the health care safety net for the poor, many women, and people with disabilities. Over 58 million people are enrolled in Medicaid, almost half of them children. Further cuts in Medicaid, Medicare, and Social Security will cause massive suffering and people will literally die. That’s how serious this is.

We need to mobilize workers, young people and the poor into the streets. We need labor unions to mobilize their members to join the protests. We need to build powerful protests linking the Occupy movement with unions and other social movements. Unions should take strike action and business as usual needs to be shut down if the two parties dare to follow through with these cuts.

That‘s why Socialist Alternative, unions, community groups and individuals launched a national week of action from November 16-23, calling for “Jobs, Not Cuts!” But we need help to spread the resistance into every workplace, college and community. The campaign has mobilized around the following fighting demands:

  • Hands off Social Security, Medicare, and Medicaid! No cuts to education and social services!
  • We need jobs, not cuts! Fund a federal public works program to create millions of jobs for the unemployed.
  • Make Big Business pay! For major tax hikes on the super-rich and corporations!
  • End the wars in Iraq and Afghanistan! Slash Pentagon spending!

No Support for Democrats
With the election season beginning, Obama has been increasingly calling for raising taxes on the rich. We should not be fooled that the Democratic Party is on our side in this struggle.

Some pro-Democratic Party liberals have argued that Obama had a progressive agenda, but it was blocked by Republicans. We need to remember that Obama was elected with massive enthusiasm and huge crowds rallying behind him. He had a powerful mandate for sweeping reforms. Between 2008 and 2010, Democrats held the White House and a historically high majority in Congress, including a filibuster-proof majority through 2009. Yet they completely failed to curb corporate greed, end Bush’s tax cuts for the rich, end the expensive wars, or end the devastating pain inflicted on working people and the poor by this recession. Instead, Obama and the Democrats turned their backs on a progressive agenda and passed further bank bailouts and other policies to protect the 1%.

There is massive support among the public for a progressive, anti-corporate agenda. According to a recent CNN poll, 63% of Americans agree that any debt reduction plan should contain significant tax increases on the wealthy and big business. Initially ignored and maligned by the corporate media and attacked by police, Occupy Wall Street was able to link up with this popular anger at the rich and, in less than six weeks, to win the support of 50% of the public in opinion polls for its radical alternative.

Now, Obama and the Democrats are trying to woo the Occupy movement. Liberal forces are trying to focus the movement on small, incremental reforms that do not challenge the power of Wall Street. If the Democrats can neuter the Occupy movement and ride out the anti-budget cut movement, they are hoping to make the Occupy movement an appendage to Obama’s 2012 re-election campaign. That would be the death of the Occupy movement and derail the struggle against budget cuts. That’s why putting forward clear, concrete radical demands that clearly expose where the Democratic Party stands is a crucial task for the Occupy movement and all social movements.

For an Independent Electoral Challenge in the 2012 Elections
The deepening structural crisis of the capitalist economic system means that more cuts will be on the agenda in 2012, 2013 and beyond. In order to defeat this escalation of cuts, popular support will grow behind the idea of an independent electoral challenge to both corporate parties – Republicans and Democrats. We need genuine anti-cuts, pro-worker activists to challenge the corporate agenda of cuts and further handouts to big business. We need independent candidates to fight for working-class issues.

While the labor unions should be playing a decisive role in this, the present leadership of the labor movement are conservative and do not see the need to challenge capitalism or believe that there is any political alternative to backing the Democrats. The leaders of the Democratic Party also know this. They know that such speeches from Trumka are necessary to try to corral labor’s ranks and the broader working class.

This demonstrates once more that, unless labor and other social movements are willing to follow up their threats with running independent candidates against the Democrats, their words carry no threat at all. That’s why Socialist Alternative is linking its campaign against the Super Committee cuts with a campaign to break from both corporate parties and run independent, anti-cut, pro-worker candidates in 2012.

If anti-cuts, anti-corporate-elite candidates campaigned to represent the interests of the 99%, not the 1%, they would shake up an already discredited political system and change the political landscape. This would especially be true if the corporate elite attempted to ban them from debates, as they did with the Nader campaign and other progressive candidates in the past.

Building a Movement to Challenge Capitalism
With the capitalist system in a long-term structural crisis, more and more cuts will be coming. The dysfunctional nature of this system means that the capitalist elite have to continuously lower workers’ wages and reduce taxes that fund social welfare programs in order to maintain corporate profitability. They will not stop until we defeat them. That means building powerful coalitions that can then be strengthened and broadened after each struggle. That means conducting continual outreach to working-class people, oppressed groups, and environmentalists by campaigning on issues that affect them.

Our movement needs to ensure that we have demands that can bring new layers of dissatisfied workers and young people toward us. At the same time, we need to ensure that we don’t water down our broader vision of a transformation of society. That’s why we are also campaigning for these broader demands:

  • Free, high quality public education for all from pre-school through college. Cancel the student debt – Students aren’t to blame for the failed economy.
  • Free, high quality health care for all. Replace the failed, for-profit insurance companies with a publicly funded, single-payer system as a step toward fully socialized medicine.
  • An end to foreclosures and evictions – Let residents stay in their homes at a rent or mortgage they can afford.
  • Implement a massive job creation program to rebuild our country’s infrastructure, paid for by taxes on the profits of big business.
  • Implement an emergency plan to develop clean energy and create jobs. A plan to create jobs in education, health care and wherever socially needed can show a way out of this crises. This plan needs to be democratically discussed and based on workers’ and the public’s control and management.
  • End the wars. Slash military spending.
  • Break the power of Wall Street. Put the financial institutions and banks that dominate the U.S. economy into public ownership under the democratic management of elected representatives of workers and the public. Compensation to be paid on the basis of proven need to small investors, not millionaires.

Such a program could provide a vision of a new society where profit does not rule. By extending public ownership to all the massive corporations that dominate U.S. society, it would be possible to create a new, democratic, socialist society where the 99% make the real decisions, and where decision-making could be directed to provide for the needs of the 99%, not the elite 1% who currently rule.

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