Is it Austerity or Is It Theft?

In today’s New York Times, David Brooks has an extended meditation on debt that relies on one giant omission:

Recently, life has become better and more secure. But the aversion to debt has diminished amid the progress. Credit card companies seduced people into borrowing more. Politicians found that they could buy votes with borrowed money. People became more comfortable with red ink.

Today we are living in an era of indebtedness. Over the past several years, society has oscillated ever more wildly though three debt-fueled bubbles. First, there was the dot-com bubble. Then, in 2008, the mortgage-finance bubble. Now, we are living in the fiscal bubble.

Missing from this narrative is a few big things. Over the last thirty years, incomes have for ordinary people have stagnated at the same time that housing, health care, and education costs have gone up. Contrary to Brooks, Americans didn’t suddenly become, en mass, a group of irresponsible spendthrifts; by and large, Americans went into debt to afford necessities for themselves and their families. In the absence of rising incomes, debt was the means through which many people bought opportunity for themselves and their children. People became more comfortable with red ink because they had to, not because they lost “virtue.” These graphs, from the Economic Policy Institute’s State of Working America, are illustrative. Incomes for everyone but the richest Americans have stagnated:

And over the last twenty years, debt has gone up most for those in the middle:

What we’re witnessing, right now, is the failure of a social arrangement. In the 1970s and 80s, government began to pare back its commitments to decent wages, affordable housing, health care, and education, and in response, Americans took on debt to make up for the loss. This isn’t working, and the result has been widespread insecurity for American families. It’s this fact that makes Brooks’ piece even more galling; here is his conclusion, where he sets up the Wisconsin recall race as a fight over the future of debt:

A vote to keep Walker won’t be an antiunion vote. It will be a vote against any special interest that seeks to preserve exorbitant middle-class benefits at the expense of the public good. It will tell the presidential candidates that it is safe to get specific about what they will do this December, when hard deficit choices will have to be made.

“Exorbitant middle-class benefits?” Like what, exactly? If the federal government has accumulated a tremendous amount of debt over the last 30 years, it hasn’t been because of benefits to middle-class families, which are far from generous. Medicare’s problems are a more recent development, and the Social Security shortfall is (conceptually) easy to fix. Where the government has been profligate, however, is with military spending, tax cuts, and wars. It’s why Ronald Reagan and George W. Bush were responsible for the largest accumulations of debt; their priorities were lower taxes for rich people and greater military spending. The recent debt explosion has everything to do with the economic crisis–driven by an unhinged Wall Street—and almost nothing to do with the benefits given to ordinary Americans.

I have no doubt that David Brooks is sincere in his disdain for debt, and his belief that the United States is in trouble if it doesn’t shrink its commitments to health care, retirement security, and social services. But here’s what the picture looks like to me.

For years, elites drained public coffers with wars and tax cuts, cheered on by “reasonable” thinkers like Brooks (who supported both Iraq and the Bush tax cuts). But now that the bill is due, they want to pay for their fun with the money we’ve marked for ordinary people. You could call this austerity, but I have a hard time distinguishing it from theft.

Comments

And elimination of "living wage jobs" continues setting up the USPS for financial failure with passage of HR6407 which mandates that the USPS fund 75 years of retiree health benefits in 10 at 5.5 Billion a year. HR6407 was signed by G.W. Bush in2006 after which the USPS could NO longer cover it's costs with income.
This law made no sense as it's impossible to accurately calculate how many retirees will need to receive health benefits and how much health benefits will cost 75 years into the future. It is inherently unfair as no other government agency or private business is required to fund 75 years of health benefits for retirees in 10.
In addition
The USPS inspector general reported that USPS overpaid its CSRS account by $75 billion because OPM had the Postal Service fund a higher portion of the pensions than it owed. Predictably this was contested by OPM and Issa .
What is not contested is that the USPS overpaid FERS by 6.9 billion .
If the USPS were privatized these would be tempting amounts to retrieve.
At the moment 100,000 postal employees don't need to be let go,compensation for injured workers doesn't need to be cut, compensation for the few injured workers over 65 doesn't need to end, union contracts don't need to be weakened,public service doesn't need to be curtailed by loss of smaller post offices, curbside delivery encouraged, slower mail delivery by closure of 200+ Distribution centers.
The USPS is just that, a service, where income equals expenses as it has until 2008 where it was saddled with an expense at the whim of Congress that had nothing to do with mail delivery.
How to save the USPS would be to rescind the bill that caused the USPS to be 5,5 Billion in debt yearly for 10 years.

http://www.youtube.com/watch?v=09ybkkiH2Ho

http://www.youtube.com/watch?v=am4wez1ShPY

http://www.youtube.com/watch?v=dsPIY9bFFZY

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