Austerity is a word we don’t hear much in the United States, as business elites, politicians and the corporate media avoid saying it at all costs. Instead, they talk at great length about “deficits,” “out-of-control spending,” and the need for all of us to “share the pain.” This is a convenient dodge and an intentional one, for it shifts attention away from the Super Rich and the unprecedented upward redistribution of wealth we’ve experienced in the last forty years.

People in the rest of the world, as well as people of color here, by contrast, are all too familiar with austerity. They’ve been force-fed in large doses over many years, largely to the benefit of U.S. investors and often literally at gunpoint. Though each case varies, the general scenario is similar: to qualify for much-needed, high interest loans, states around the globe cut social programs, submit to privatization of public services, bust unions and slash wages while loosening regulations that protect the environment and workplaces.

The results invariably are the further impoverishment of the vast majority, greater profits for investors and an increase in the purchase by states of the weaponry required to quell the social unrest that generally follows (weaponry the U.S. is all too eager to supply). Never mind the misery of large swaths of the populace, the violent repression of dissent, overflowing prisons or all those dead bodies; to business elites, all are acceptable offshoots of profit-taking. Name a country in the global South and it has almost certainly been through this ringer, often more than once and sometimes with no end.

Now the same phenomenon is being inflicted on the people of the industrialized North, beginning with Europe, which was hit earlier and more harshly than the United States. With few exceptions, the people of the nations of Europe have experienced a decline in recent years in their living standards, all except for corporate and banking elites, who are wealthier than ever. Since the fall of Communism, Eastern Europe – to cite just the most extreme case – has become a huge new source of highly profitable investment opportunities for global capital, and the resulting pauperization of that part of the world has, for now, shattered the dreams of 1989-90.

The U.S. is no longer immune to austerity and President Obama’s decision to slash Social Security and Medicare benefits is only the latest blow. As living standards for most of us fall ever lower, the richest of the rich grow ever richer, far richer than any ruling class has ever been. Austerity is and will continue to be a truly bipartisan affair and liberals who think the Democrats are a significant alternative and right-wingers who believe the Democrats have been taken over by Marxist-Leninists would do well to consider that 1.) more wealth was redistributed from the 99% to the Super Rich under Clinton than Reagan and 2.) President Obama, with his cohort of Goldman Sachs advisors and GE executives, is carrying out virtually the same policies as his predecessor.

For much of the 20th century, a large portion of the U.S. population was shielded from the ravages of global capitalism and believed they had a stake in empire. Though those illusions are rapidly being shed, many turn not to resistance but to narcotics such as alcohol, pornography and sports; more ominous is the state’s incessant and intimidating call to rally around the flag in opposition to this season’s bogeyman – Saddam Hussein, Qaddaffi, Chavez, bin Laden, Assad, Milosevic, Aristide, Ahmadinejad, Kim Jong Un, and on and on and on.

The most effective and dangerous ploy, however, is the Super Rich’s trick of fomenting divisions within the populace where they might otherwise be united. Thus we get the hilarious spectacle of welfare queen Michelle Bachmann, a long-time recipient of large agribusiness handouts, rallying a segment of the population by railing against benefit programs for the poor and working class, her words received by the intelligentsia with grim seriousness rather than the derision they warrant.
From the Arab Spring to the ongoing and frequently massive demonstrations in England, Portugal, Spain, Greece and other countries in Europe to – perhaps most significantly – the Bolivarian Revolution sweeping Latin America, the dictates of the business class have been met with extraordinary resistance. Domestically, vibrant organizing in communities of color along with Occupy Wall Street and its hundreds of offshoots are leading the way. The tasks now are to revitalize the Occupy spirit, expand resistance and strengthen solidarity with people around the world who are fighting the same battle we are. Those are not easy tasks but the alternative – the rise in human misery to previously unimaginable levels – is increasingly becoming reality.

Andy Piascik is a long-time activist and award-winning author who has written for Z Magazine, The Indypendent, Counterpunch and many other publications. He can be reached at [email protected].

MEDIA ROOTS — As Republican Presidential Candidate Ron Paul seduces progressives, we take a look at some perspectives and analyses of Ron Paul’s rhetoric as well as Paul’s published political agenda, such as the $1 Trillion ‘Restore America‘ Austerity Plan— to cut the Pentagon 15%, but Food Stamps 63%, S-CHIP 44%, Medicaid 35%, WIC 33%. 

Also, the Fed; militarism bait-and-switch question; opposition to Davis-Bacon Act and its impact on trade union movements; Taft-Hartley; union-busting right-to-work agenda; states’ rights contradictions; the gold standard reality; deflation; and tax policy.

Economic historian Webster Griffin Tarpley warns progressives may be misreading Ron Paul as a progressive with compatible ideals, such as the Occupy Movement.  Recently, Tarpley offered a “Critique of Ron Paul’s Austerity Plan” on Guns & Butter.  Tarpley also elaborated upon his critique of Ron Paul’s austerity plan during a visit on The Jeff Rense Program.

Messina

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GUNS & BUTTER — “Critique of Ron Paul’s Austerity Plan with Webster Griffin Tarpley.”  December 28, 2011.  Ron Paul’s “Plan to Restore America” includes $1 trillion in cuts to the federal budget in one year.  We take a look at what this would mean for the American people.  Ron Paul is the Republican front-runner to win the Iowa Caucus on January 3rd, 2012.

“I think it’s fair to say Ron Paul’s economic policy is an immediate deflationary crash and the more severe the better.  Everything should crash down.  And then after this orgy of creative destruction, then there’ll be a recovery.  And, of course, the problem with that is, what if you starve to death in the meantime?  What if you don’t survive the creative destruction?  What if you die?  

To fight a depression, for the Austrian School, is a contradiction in terms.  You can’t do that.  You’ve gotta let the depression wash over you, play itself out.  And then there’ll be a recovery.  And, of course, if you ask where are the empirical examples, historically, of letting a depression burn itself out.  They can’t give you any.” –Webster Tarpley

“I’m Bonnie Faulkner.  Today on Guns & Butter:  Webster Tarpley.  Today’s show:  Critique of Ron Paul’s austerity plan.  Webster Tarpley is an economic historian, author, lecturer.  He is author of Against Oligarchy, Surviving the Cataclysm, a study of the world financial crisis, 9/11 Synthetic Terror: Made In the USA, and co-author of George Bush: The Unauthorized Biography.  His latest books are Obama – The Postmodern Coup: Making of a Manchurian Candidate and Obama: the Unauthorized Biography.  

“On today’s programme, we discuss the Restore America budget proposal of current Republican front-runner Congressman Ron Paul, leading up to the Iowa Caucus, on January 3rd, 2012.

Bonnie Faulkner:  “Webster Tarpley, welcome.”

Webster Tarpley (c. 2:37):  “Thank you so much.  It’s good to be with you.”

Bonnie Faulkner (c. 2:40):  “The next U.S. Presidential Election is November 2012.  Obama doesn’t appear to have any serious challenge in the Democratic Primaries, but there are quite a few Republican Primary contenders.  The Iowa Caucus is January 3rd.  What exactly is the Iowa Caucus?  And how important is it or isn’t it?”

Webster Tarpley (c. 3:05):  “Well, the Iowa Caucus, for Republicans, as distinct from Democrats, are that you show up at a caucus location, which really amounts for the Republicans to a polling place.  And you indicate your preference on, I think, a paper ballot and then you walk out.  It does not seem to imply for the Republicans the caucus building, like the horse-trading or negotiation or short speeches or other things that a caucus would suggest.  So, that’s going to be the first Tuesday of the New Year.  And it’s all very much front-loaded.

“And according to the polls, as we are recording this programme, Ron Paul seems to be the leading candidate for the Ohio Republican caucus.  And, of course, he had run there before in 2008 when, I believe, he came in third.  And now he has shown as likely to come in first.  I would just like to caveat that in two senses.  A caucus, even a Republican caucus, is not quite the same thing as an election.  If you wanna go vote, you can usually get in and out within five or ten minutes, depending on where you vote and what time.  The caucus takes a little bit longer.  So, it may not be possible for the polling to predict what’s gonna happen in that way.

“The other thing is that the recent winners in a place like Iowa have included Pat Robertson, the televangelist, in 1998.  And it included, preacher, Huckabee in 2008.  So, there’s a very strong voting block of Christian fundamentalists and they may not like Ron Paul for some reason.  But maybe we can go through at the end Ron Paul’s social policies.

“But I would suggest the following:  People who consider themselves left of centre, or progressive or anti-war or civil libertarian, may have gotten a positive impression of Ron Paul over the years because he’s been certainly a gadfly in the Republican Party opposing the prevalent Bush/Cheney/neocon warmonger line, which is certainly a merit.  And it remains, right?  Those are things that he’s done that cannot be denied.  He’s also pretty reliable, as a vote, against things like the P.A.T.R.I.O.T. Act and so forth.  Although, I must say, he did vote for the 9/11 Resolution, which led to the war in Afghanistan.  So, he’s not exactly a man for all seasons in opposing aggressive war.  He went along with the post-9/11 hysteria to that extent.  

“But I would suggest, now, that we take a look at the most detailed policy paper that he has put out for this Election Cycle, which is his Restore America programme, which is a fairly detailed economic programme, not as detailed as some, but certainly something to go on.  It’s called Plan to Restore America.  It was issued around the middle of October.  And I noticed that, in the run-up to the Iowa Caucus, scant attention is paid to this.  The news media, especially those that wanna oppose Ron Paul, are interested in his old newsletters from the 1990s and the various racist, anti-Black or other, remarks that are contained in there.  I would simply say, Ron Paul really ought to say who wrote those.  If he didn’t write them, then he should really be in a position to say who did.  

“But I would say, ‘Put that aside. Let’s go on the basis of what he says he wants to do if elected President this time around.”

Bonnie Faulkner (c. 6:57):  “Now, Ron Paul is the front-runner at this point.”

Webster Tarpley:  “22%”

Bonnie Faulkner (c. 7:01):  “Yeah.  And this caucus is gonna happen quite soon on January 3rd.  Now, what is his Restore America budget proposal that he’s actually now saying what he would do.”

Webster Tarpley (c. 7:11):  “Right.  Well, let’s take a look at this.  I think this is, by now, eminently fair game.  And fairer to him than his newsletters, as disturbing that those certainly are.  He starts off with a plan to cut $1 Trillion dollars out of the U.S. Federal Budget in one year.  And I stress the idea of one year.  You have perhaps heard during the course of the Super Committee, otherwise known as the 12 tyrants, that group of six Republicans and six Democrats I guess it was.  This came down to cutting $1.2 Trillion.  But that $1.2 Trillion was spread out over ten years.  And at a certain point they talked about a grand bargain of cutting $4 Trillion or more.  That was also spread out over 10 years.”

Bonnie Faulkner (c. 8:05):  “That whole committee never came to any agreement, right?”

Webster Tarpley (c. 8:08):  “Thank god.  They struck out.  Now, obviously, we have the automatic guillotine, the sequestering.  And it’s not clear when that will happen or if it will ever happen ‘cos the Congress may head it off.  

“But, again, let’s focus on Ron Paul because this is gonna be the big news item, I think.  He’s either gonna win the Iowa Caucus or he’s gonna come in second or third, I would think is a fair prognostication.  

“Think of $1 Trillion dollars.  That’s one thousand Billion U.S. dollars in one year.  This is, again, it’s ten times more concentrated than what the Super Committee was talking about—right?—those twelve tyrants, bad as they were.  We’re talking about something much more gradual.  For Ron Paul, it’s cut $1 Trillion of spending during the first year of the presidency and balance the budget, bring the Federal Budget into balance by the end of the four-year term.  

“Now, that’s already the most radical austerity plan of any candidate.  And it’s also the most radical austerity that any modern industrial, or even post-industrial, society has ever experienced.  If you want a comparison, I compared it to, sort of, the landmark austerity of the 20th Century—Chancellor Heinrich Brüning in Germany between 1930 and 1932.  My estimate, just comparing these things in a kind of rough proportionality is that Ron Paul’s cut of $1 Trillion dollars of the U.S. Federal budget, which amounts to 27%, something like that, a little bit more than one-quarter in one year, that this is, on the whole, four times more severe than what Brüning did between 1930 and 1932.  And Brüning did it over two years.  And that’s included in my calculations.

“So, with Ron Paul, you’re getting something four times more severe than Brüning.  And  I think that ought to give us pause because I think it’s generally understood that, whether Brüning had alternatives or not, the net effect of his austerity programme was to destroy the German economy, with rising unemployment and falling tax revenue; and to destroy the political system, such that within about six months after Brüning left office, Hitler became Chancellor.  So, this is basically what prepared the ground for the worst kind of fascism seen so far.  So, I think that ought to get us to pause.

“27% austerity in one year, the Government in Britain—Cameron and Osbourne and Clegg—they had talked about cutting spending by 25% when they came in May of 2010.  But they haven’t come anywhere near that.  So, here we have Ron Paul saying that he’s actually gonna do it.

“Now, I think what people may be interested in is, ‘where did these spending cuts occur?’  So, 27% would be the norm across the board.  Given the fact that Ron Paul has made his name as an opponent of militarism and foreign adventurism and foreign bases and so forth, we would certainly expect, I think, that if everybody’s gonna get cut 27% across the entire Federal budget, as a general rule, that the Pentagon would get cut at least as much or maybe more.  But I’m afraid we find that’s not the case.  The 27% across the board cut goes together with a 15% cut in the Pentagon.  So, the Pentagon is asked to give up about half of what the Federal Budget is as a whole is being asked to give up—a 15% Pentagon cut, not very radical.  That is not even radical compared to other proposals that are now going around.  

“But I think you can also, then, look at certain social programmes that I think raise the relevant doubt concerning what Ron Paul is up to.  Suppose we look at an area like child nutrition.  This is largely the WIC programme, women, infants, and children.  And it comes down to things like high-protein meals for pregnant women, nursing mothers, young mothers, and infants.  And it’s a very, very effective programme.  And the United States is spending all of $21 Billion dollars on that.  Right?  A few days of the Afghan War.  $21 Billion dollars is spent on WIC.  Ron Paul would cut one-third of that programme.  That is a $7 Billion dollar cut—33%.  So, again, Pentagon gets cut 15%.  Women, infants, and children get cut 33%.  And this comes down to things like cheese and dairy foods and things like this that are high-protein.  The costs incurred with such a programme, I think, allow us to ask whether this is not a false economy because you’re talking about things like cognitive impairments due to insufficient protein consumption in infancy and early childhood.  And I think that’s a very, very short-sighted cut to put it mildly.

(13:51) “And then let’s go on.  S-CHIP, the State Children’s Health Insurance Program, one of the things that Senator Kennedy had championed, well, right now, the budget for that is $9 Billion dollars.  Ron Paul wants to cut $4 Billion.  That brings it down to $5 Billion.  So, Ron Paul would cut 44% of the S-CHIP programme.  And, again, Federal Budget as a whole, 27%, Pentagon gets cut 15%.  But, for some reason, child health insurance gets cut 44%.  Now, these are small amounts, but the effect of this, I think, is quite remarkable because with S-CHIP you are dealing with parents who are so poor that they can’t afford any healthcare for themselves.  But they can get it for their children just about automatically if they meet the poverty tests for this, the means test for S-CHIP.”

Bonnie Faulkner (c. 14:48):  “I’m speaking with economic historian and author Webster Tarpley.  Today’s show: Critique of Ron Paul’s Austerity Plan.  I’m Bonnie Faulkner.  This is Guns & Butter.

“What other important programmes is he suggesting be cut?”

Webster Tarpley (c. 15:07):  “The two big things that Ron Paul would cut are also very disturbing.  One is Medicaid.  This is not Medicare; this is not people over 65.  This is Medicaid.  And this is the health programme that is run through the states for poor people, basically.  The current budget: $276 Billion.  Ron Paul would cut $95 Billion out of that.  So, that’s a 35% cut.  

“Again, Pentagon cut 15%; Medicaid cut 35%, by comparison.  And I think that is a very destructive cut because, what it goes to is, people who are on Medicaid are already at their last resort.

“The only thing that’s left after Medicaid is private charity, which may be there or may not be there, depending on where you are, and who are you are, and so forth.

“The other thing that Medicaid does is that it protects the resources, the property—and Ron Paul likes to talk a lot about property—the property of the U.S. middle-class in the age of Alzheimer’s and increasing cost for nursing home care.  This actually protects.  And I was at a party, just before Christmas, where a guy brought this up that his mother had passed away after a long illness.  And part of the care for her was covered by Medicaid, although he was firmly in the middle-class, living in a home in Bethesda, Maryland.  This protected him from going destitute with his wife and his son.  So, it’s a very, very big cut for the health of poor people where, obviously, we still have 40 or 50 million uninsured unless, and until, something else kicks in, which we’re not sure of.  And this protection for families who have an elderly parent, say, in a nursing home, so that doesn’t eat your entire asset pool that you’ve got.

“And then, probably the most extreme and maybe the most characteristic, food stamps:  Now, food stamps have been used by, I’m afraid, Republican demagogues to characterise Obama.  I think, Gingrich says, Obama is the food stamp president and Gingrich wants to be the jobs president.  Well, I think the scandal is not that the programme exists, but that it’s actually needed.  Right now about 50 million Americans live on food stamps.  And this is not a generous benefit.  If you’re one person, the maximum food stamp benefit is $180.  And that’s the maximum.  If you have a little bit of property or a little bit of savings, then it becomes less than that.

“So, Ron Paul wants to cut $50 Billion out of an $80 Billion dollar programme, in other words, a cut of 63%, almost two-thirds.  

“So, again, Pentagon 15%, food stamps cut 63%.  And if you just do the arithmetic, it means that the maximum benefit would not be in the area of $180 per person.  It would go down to something like $60 a month or $15 a week.  Now, try living, eating, anything that can keep body and soul together for $15 a week.  I think if we look at, in particular, the inherent problems of the child nutrition and child health on one side.  And then, if we look at the broad-based impact on the poor because the people who get Medicaid and the people who get food stamps are likely to be, quite a few of them, the same people.  And they’re getting cut between one-third and two-thirds.  

“I think you can see a tendency.  And what I mean by that is this.  We’ve been burned by Obama.  Obama said vote for me, I’m not Bush.  I’ll put an end to the wars and the abuses of the Bush Administration.  And, instead, he basically starts a war with Pakistan, certainly starts a war with Libya, claims the right to assassinate U.S. citizens, carries that out in one case.  He claims he can incarcerate you in Guantanamo Bay and, indeed, torture you if you have opinions that he considers dangerous.  So, instead of what we were promised, we got something quite different.

“Now, if we look at the Republicans, Boehner, and the House Tea Party majority, they ran talking about jobs, jobs, jobs.  But instead when they got in, it was tax cuts for the rich and their strange ideas about social policy.  So, I think we have to ask:  Is a bait-and-switch in progress here?  Where Ron Paul talks about peace and opposition to dictatorship and totalitarianism on the home front, but instead seems to be getting a draconian, brutal series of budget cuts.

“And one or two other things about this:  There is the Davis-Bacon Act, landmark legislation.  And what it proscribes is if you have a Federal construction project, then that has to pay union wages.  It’s called the Prevailing Wage Standard.  Prevailing wage is interpreted to mean union wages, union pay scales.  So, you’re not gonna get a Federal construction job and then be expected to work for the Federal minimum wage.  It’s significantly higher.

“If you wipe out the Davis-Bacon Act, then this, essentially, destroys a whole series of trade unions.  And the savings on this:  $6 Billion dollars.  But, at the same time, look at the social impact.  The trade unions would cease to exist.  

“The combination of Ron Paul, the father, and Senator Rand Paul, the son, Senator from Kentucky, what they both want to do is to change the Taft-Hartley law, which currently governs union policies, at least at the Federal level.  They want to change that, so that instead of having a state’s right to choose to be a union state or, to put it the other way, instead of having some states that have chosen to be right-to-work states where organising unions is almost impossible, this is the Southern belt, in general.  Rand Paul and Ron Paul, too, they want to, essentially, have a compulsion at the Federal level that everybody has to be a right-to-work state.  

“So, between the abolition of the Davis-Bacon Act and the universal right-to-work status there would be no trade union movement left.  So, I wonder about this.

“First of all, Ron Paul talks about state’s rights all the time.  But right now we have a state’s right to choose not to be a right-to-work state.  And my interpretation of Ron Paul’s policy, and his son, is that they want to change that, so that you’re no longer allowed to be anything but a right-to-work state.  So, a state’s rights in their interpretation goes out the window.  Interesting contradiction, wouldn’t you say?

“The other thing is if you wanna have resistance to totalitarianism, and we saw this, for example, in the Occupy Wall Street Movement.  Right?  The point at which that took off was the moment when the Communication Workers of America, the Transport Workers Union, the American Federation of Teachers, and others, when they showed up to swell the ranks of the protesters there at Zuccotti Park, you could see the idea that if you had a some kind of a fascist coup or if some president went over the line, bonkers in terms of crushing civil liberties, the only hope for organising a general strike and other forms of resistance against that would be a union, would be a trade union movement, even such as it is, would be the starting point.

“But, somehow, between Ron Paul and Rand Paul, they wanna wipe out the only institutions that could mount a resistance against totalitarian measures of that sort.  So, on the whole, rather strange, wouldn’t you say?

“The other thing here is if we look at Ron Paul’s tax policy that goes with this, and I’m now basically making the transition into the tax side of the ledger.”

Bonnie Faulkner (c. 23:59):  “Well, he wants to keep the Bush Tax Cuts, right?  Permanently.”

Webster Tarpley (c. 24:04):  “Absolutely, he wants to keep the Bush Tax Cuts.  And he wants to add, well, he wants to keep these Bush Tax Cuts, which everybody knows inordinately favour the rich.  He wants to keep the Bush Tax Cuts.  And he wants to abolish the Capital Gains Tax.  

“Now, if you look at the U.S. economy, you would have to say that the principal, one of the principal problems of the U.S. economy is this over-financialisation.  The extreme emphasis on financial services, non-productive financial services, speculation, moving paper around, the $1.5 quadrillion or so of derivatives, much of it focused here in the United States.  Ron Paul would, essentially, subsidise further parasitical speculation and related activities by simply abolishing the Capital Gains tax.  But if you were a full-time speculator you would pay no taxes at that level, in terms of the capital gains.  That money would be for you; you wouldn’t pay income tax on it.  But if you were a worker, you would pay a tax.  

“So, no Capital Gains Tax and no Estate Tax, he would call it ‘no Death Tax.’  So, it means that if you were a speculator that made out like a bandit in the Reagan bubbles of the ‘80s and the irrational exuberance of Greenspan in the ‘90s and into the current bubble economy of the wealth effect and so forth, that the last chance to have you contribute to the public treasury would be gone because Ron Paul wants to give you an absolute free ride.

“The interesting thing is he wants to cut the corporate income tax down to 15%.  The Corporate Income Tax is, really, not paid by a whole lot of very large entities.  Right?  General Electric, notoriously on their…paid zero corporate income tax in the most recent year that I’m aware of.  But Ron Paul says, even, bring that down.  I think the current level is 35%.  ‘Bring that down to 15%.’  

“So, this is tax relief for speculators, tax relief for those who are already rich and who wanna inherit and tax relief for corporations, including banks.  So, is there any tax relief for the average person?  The answer is no.  There is no proposal to cut anybody’s taxes beyond that.  You could imagine somebody saying, ‘Well, I’d like to increase the size of the personal deduction. The standard reduction could go up. The personal exemption could go up.  That would be the rising tide that would lift all boats from below.  But with Ron Paul, there’s absolutely nothing like that.  There’s no tax relief for anybody, except the speculator, if you are already rich, or a corporation.”    

Bonnie Faulkner (c. 27:05):  “Well, isn’t he also proposing to eliminate taxes on foreign profits?”

Webster Tarpley (c. 27:10):  “Yes!  Yes.  Of course, in other words, he wants to, essentially, reward corporations that have horded money abroad, essentially, evading U.S. Taxes.  He wants to, basically, have an amnesty allowing them to bring this home with no mechanism to be sure that this got invested in plant and equipment, as distinct from derivatives or speculation and no taxation of it.  So, this would be in addition to all these other cuts.  

“So, you’d have to look at this and say ‘If you’re the Koch Brothers, the richest man in New York City—Koch.  Or Coke, as he likes to call himself, putting on airs.  The Coke brothers, or the Koch Brothers, as I think it says in the spelling that I could see.  They would be delighted.

“Soros would be delighted.  Soros was also delighted with Ron Paul’s drug policy.  We’ll maybe get to that later on.  

“But, generally speaking, this is precisely what Wall Street demands.  And there are, indeed, reports that in the 1990s, if not more recently, Ron Paul was financed by the Koch Brothers.  Right?  The Koch Brothers, the people who founded the Cato Institute, or who made important contributions at the beginning to make the CATO Institute.  It’s possible that’s the leading Libertarian think-tank here in Washington, D.C., quite plausible that they would have given some money to a leading Libertarian candidate going back there—Ron Paul.”

Bonnie Faulkner (c. 28:47):  “I’m speaking with economic historian and author Webster Tarpley.  Today’s show:  Critique of Ron Paul’s Austerity Plan.  I’m Bonnie Faulkner.  This is Guns & Butter.

“What five cabinet departments is Ron Paul proposing to eliminate?”

Webster Tarpley (c. 29:07):  “Right.  This is his fight with Rick Perry.  Rick Perry wanted to eliminate three of them, but couldn’t remember the third.  And Ron Paul said, no, that’s not enough.  So, they had a bidding war.  Who was going to destroy more departments of the Federal Executive?

“Well, it’s basically these.  It’s the Department of Energy, goes to  zero.  The Department of Housing and Urban Development goes to zero.  The Department of Commerce goes to zero.  The Department of the Interior goes to zero.  The Department of Education goes to zero.

“Now, I should also mention this is within the framework of what he wants, a 10% cut in the total number of Federal workers.  I think the employees of the Federal Government are about four and a half million.   So, if it’s 10%, we’re talking about half a million new unemployed, which would create severe depressed areas.  Well, Washington, D.C. would certainly go.  And Maryland, Virginia would all become a depressed area.  And not just those, some other ones would, too.

“If you look at The Department of Energy, this has to do with, well, it has to do with maintaining all kinds of standards on, say, nuclear reactors, things like this.  It has national laboratories in there.  Housing and Urban Development, right?  There’s not a lot of public housing being built.  But what there is relies to some extent on subsidies coming from HUD, Housing and Urban Development.  

“The Department of Commerce:  That’s, among other things, the U.S. Weather Service and its intent to maintain U.S. exports abroad, in other words, to create jobs that way.

“The Department of the Interior:  The National Parks.  But also important things that have to do with Resource Management and part of that.

“The Department of Education:  Now, here we’re talking about things like Pell Grants, the various student loans that are offered, which, unfortunately, people have to rely on too much.  And then the Pell Grant side of it, in other words, if you’re a low-income student and you wanna go to college, virtually, you’re only hope is to get a Pell Grant, which is not generous.  I forget what it is right now.  It’s a couple of thousand dollars a year; you could check the amount.  But it’s hardly enough to get by at a community college or a public institution.  But that’s what there is.

“So, for all of that, for public housing, for Pell Grants, for poor kids to go to college, for various things to do with energy, the promotion of exports, weather forecasting, there’s nothing left.  It all goes to zero.  That would be a colossal impact on the Federal Government.  He thinks that all of these, of course, are unconstitutional and so forth.  And we’ll talk about his constitutional theories, too.

“The other thing that I would stress is all foreign aid in the State Department, the State Department takes a big hit because all foreign aid is terminated.  Now, that’s about $50 or $60 Billion dollars.  And, certainly, there are things in there.  For example, we are told that the U.S. claims that they paid $10 Million dollars to try to hijack the latest Russian elections to get people to vote against Putin, to get them to vote for candidates, in some cases, who are national Bolsheviks, anybody but Putin seems to be the idea.  Now, in reality, it’s more than $9 or $10 Million.  It might be $100 Million.

“There are things in the foreign defence budget that are reprehensible and should be cut.  But then let’s not throw the baby out with the bath water.  If you look at emergency food in the world, emergency food aid, available on Planet Earth, the United States, in spite of everything, still provides 57%, well over half, of all the food aid in this world.  And it comes down to, in particular, about two and a half metric tonnes of food aid, costing $2.6 Billion dollars a year.

“Now, in 44 countries, and you could think of some dramatic examples, in Somalia, in South Sudan, in Northern Kenya, across the Sahel Belt, go to some place like Mali where the Libyan food operations have now been destroyed by the attack on Libya where famine is presumably spreading.  Places like Bangladesh, places like Pakistan in the recent flood, Haiti, to be sure, make a catalogue of all the disaster and famine areas across the world, and you will see that the U.S. is there.  This is food for peace, as Kennedy called it.  The Kennedy Food for Peace programme would simply cease to exist.  Now, I don’t have statistics to back this up.  But I would invite somebody to consider, to score this, not in terms of deficits, but in terms of human lives, as indeed all of these, everything we’ve talked about so far has implications for morbidity, mortality, longevity, all kinds of effects on human life, all of them generally negative.

“That if you simply take two and a half metric tonnes of food aid out of a world where there’s about 5 million metric tonnes of food aid.  Or I should say a little bit less.  People will die because of that.  And maybe it’s not generally difficult to guess that more people can die through the economics of famine and epidemic that were related, than say through military operations.  That’s generally a truism.  Robert McNamara killed more people at the World Bank than he ever killed at Vietnam simply because that’s the power of economics.

“Well, in Ron Paul’s case it’s not just the five Departments, but it’s also the entire USAID and it’s also the United States Department of Agriculture Food for Peace that would simply cease to exist.  And I think this would shock the world.”  

Bonnie Faulkner (c. 38:42):  “Now, I read that Ron Paul wants to repeal Dodd-Frank and Sarbanes-Oxley.  What are these?”

Webster Tarpley (c. 35:49):  “Right.  He wants to deregulate everything.  This has to do with his ideology, the so-called Austrian School, which is that government intervention in any form in economic life is inadmissible.  It’s wrong.  He tries to argue that this is unconstitutional.  I don’t think that he has any case at all for that, given U.S. history as well as just the U.S. Constitution as a document.  But he wants to get rid of these things.

“Now, these are not good laws, in general.  On the other hand, the wholesale deregulation is what got us where we are.  Right?  Just take two examples:   deregulation and privatisation.  

“Well, privatisation of what?  The Republican debates, in general, say, ‘Oh, Fannie Mae and Freddie Mac and subprime lending to minority groups in rundown neighbourhoods, those people buying homes, that’s what caused the depression.  Well, even if you want to take that seriously, which I don’t, you’d have to say, ‘How did Fannie Mae and Freddie Mac that were founded as Government organisations, agencies, back in the New Deal, or more recently, how did they become private entities?  Well, they were privatised.

“So, you had the worst of all possible worlds.  You had a private management, for-profit, but with an implicit guarantee from the Federal Government for the agency bonds that they put up, the Fannies and the Freddies.  So, if you wanna know, even in terms of the reactionaries in an argument where the depression comes from, you’d have to say, number one, from privatisation.  

“Now, of course, Fannie and Freddie are a tiny, tiny part of the real story.  The real story is derivatives, in other words, that colossal edifice of credit-default swaps, collateralised debt obligations, structured investment vehicles, repos, and so forth, that immense castle of $1.5 quadrillion of derivatives built on top, in many cases of subprime loans, that’s what caused the actual depression.

“And where did that come from?  Well, from 1936 through 1982 derivatives were strictly illegal in the United States under the Commodity Exchange Act of Franklin D. Roosevelt.  And it was the deregulation of derivatives from 1982 to the Bush, the elder, Administration to Rubin and Greenspan and Summers, and these people in the late ‘90s.  That’s what opened the door to the derivatives bubbles.  

“So, we’re in a depression caused by deregulation and privatisation.  And Ron Paul says we need more deregulation and privatisation, which I don’t think makes any sense.

“The other thing that’s worth pointing out is, in terms of economic policy, Ron Paul was against the bailout.  And, certainly, it was a fine thing to be against the bailout proposed by Bush and Paulson back in October of 2008.  But at the same time, Ron Paul is very much against doing anything to maintain economic growth or development or, really, any kind of government intervention into economics.  And this is, once again, because of the Austrian School.

“I think it’s fair to say Ron Paul’s economic policy is an immediate deflationary crash and the more severe the better.  This people probably recognise.  This is Schumpeter’s Creative Destruction.  It’s associated in American History with Andrew Mellon, the arch-reactionary Secretary of the Treasury under whom as we say Harding, Coolidge, and Hoover served.  Andrew Mellon who’s litany was liquidate stocks, liquidate bonds, liquidate labour, liquidate the farmer, liquidate real estate, liquidate everything, in other words, everything should crash down.  And then after this orgy of creative destruction, then there’ll be a recovery.  And, of course, the problem with that is, what if you starve to death in the meantime?  What if you don’t survive the creative destruction?  What if you die?  

“This is an argument that appeals to people who have money.  And who believe that they will continue to have money because it allows them to say, ‘I’ll be sitting here with my stash of cash. And when everything else goes down, I can buy up everybody and everything at a small fraction of the current rates after the panic.’  And I think that this thinking is characteristic of Ron Paul’s inner circle.

“I think we could argue, based on some things that Peter Schiff talked about recently.  Peter Schiff was the economics advisor for Ron Paul in the 2008 campaign.  He then went to Connecticut or he went back to Connecticut where his hedge fund is located.  And then he ran for Senate and he was defeated in 2010.  And Schiff was on CNBC in the last six months or so seriously arguing that unemployment in the United States needed to go much higher, that the levels of unemployment reached in the U.S. are not enough.  Again, this is the idea that the crisis has to play itself out, burn itself out.  It has to bottom out and there’s nothing you can do about it.  

“This is one of the features of the Austrian School is that it’s practically sacrilegious to try to fight a depression.  To fight a depression, for the Austrian School, is a contradiction in terms.  You can’t do that.  You’ve gotta let the depression wash over you, play itself out.  And then there’ll be a recovery.  And, of course, if you ask where are the empirical examples, historically, of letting a depression burn itself out.  They can’t give you any.  The one that comes closest, I guess, is the Brüning one, once again, 1930 to 1932 in Germany.  

“But you’ll see that under concrete social conditions, in the presence of some kind of a state, i.e., a government, that there’ll be some form of political development that will overtake this crisis before it reaches absolute bottom.  It simply has to be that way.  It’s hard to imagine it any other way.

“So, that’s what you’re dealing with.  It’s nice to be against the bailout.  But then to say I’m against the bailout and I’m against anything that might be done.  I think this, for many people, this is maybe not so evident, but I think it is implicit in what Ron Paul is arguing.

“Austrianism basically says that it’s impossible to have a jobs programme.  And I would point to this as maybe an element of pessimism in the entire thing.  Scientific, technological, industrial progress cannot be fostered by any government activity, according to these Austrians.  Right?  It cannot be done.  And, therefore, they would say, ‘You can’t have a jobs programme; all you can do is let the market go, in other words, let the market find its own way.  So, that there’s really nothing you can do.

“And, indeed, when you ask these Republicans, in general, what’s your jobs programme?  They’ll say, ‘tax cuts, deregulation, and cut government employment, and so forth, in other words, deflation and austerity.  And you’d say, ‘Well, where’s the jobs programme in that?’  And they’d say, ‘Well, there can’t be a jobs programme because jobs created by government, in any form, are simply not allowable.

“So, it’s a very strange universe this Austrian School.”

Bonnie Faulkner (c. 43:44):  “I’m speaking with economic historian and author Webster Tarpley.  Today’s show:  Critique of Ron Paul’s Austerity Plan.  I’m Bonnie Faulkner. This is Guns & Butter.

“Now, is there anything else in Ron Paul’s Restore America budget that we should mention?”

Webster Tarpley (c. 44:08):  “Well, maybe deflation.  This is another one of his, I guess that is fair to say, he wants a strong dollar.  Sounds good, but if you think about that concretely, if you look at American history, the big social issue from about 1870 to about 1910 was deflation.  Right?  The cost of gold.  Right?  A gold-backed currency that turned out to be the worst possible thing for the farmers, for the South, for the Midwest, for the Far West, large parts of the U.S. were sacrificed on this cost of gold, as a result of the Specie Resumption Act and The Coin Act of the 1870s.  So, that when farmers looked at the world, the prices they got were going down, down, down and the dollars they had to pay back were going up, up, up ‘cos the dollar was getting very strong.  Is that really what you want?  

“If you look at the United States today, what’s the first thing you see?  The student loan debt of the current generation is about $1 Trillion dollars and its rising fast.  And you have consumer credit card and related charge plate debt, another trillion.  So, we got $2 Trillion dollars of debt plus mortgage debt plus all kinds of other things.  You got a lot of American families underwater.  So, that their net worth is actually negative and the main problem they have is debt.  

“So, Ron Paul wants a strong dollar.  He wants to have an international credit policy that would strengthen the dollar.  Then I think that’s gonna be very bad for a lot of people because you will be paying back, ultimately, he doesn’t say he wants to make the transition to a gold standard in this programme.  He’s talked about that, though.  And, presumably, he’d like to strengthen the dollar to the point that a high dollar would have an easier transition into a gold standard.

“I think a gold standard for most people in the United States would be an unmitigated disaster.  If you have a lot of debt or if you had really any debt, any significant debt at all, that would be very bad for you.

“The examples of returning back to a gold standard, just to get historical, too.  After the Napoleonic Wars, the British went back on the gold standard.  And that gives you the world of Dickensian cruelty that you’ve heard about during the holidays.  The British then went back, again, on the gold standard in the 1920s and they had three to four million unemployed.  It was the largest unemployment in any advanced, industrial country in all of history.

“The United States went back on the gold standard in the 1870s with the bad results that I’ve just said.

“So, the three examples of going back on a gold standard that we’ve had so far are bad, that deflation is bad, especially, if you do it that way.  So, the other thing is you look and see, ‘what does Ron Paul say about things like corporate welfare?  And he promises in the introduction that he will end corporate subsidies.  So, then you’d say, ‘Alright, I’m gonna look and see where we change the tax laws to change these things like the oil depletion allowance to various subsidies given to Exxon mobile and things like that.  You don’t find any details.  So, I really wonder whether there’s anything serious in there about getting rid of corporate welfare, in particular some of the more egregious examples, like the oil company.”

Bonnie Faulkner (c 47:39):  “So, then who’s interests are served by the Ron Paul Restore America budget?”

Webster Tarpley (c. 47:45):  “Well, I think you have to distinguish.  There’s a certain ideological appeal.  If you think that debt is the equivalent of original sin, and that what you’ve got do is somehow cleanse yourself of all debt as a matter of ideological purity.  If you wanna define interest in those ways, I would say it’s about a 15% slice of the U.S. population who are in favour of these programmes.  But I’m afraid that for most of them this would be destructive.  They’re buying something where the implications go far beyond what they think and would actually be harmful to them.

“I guess the easiest way, in the current ideological climate, is to say this is a programme for the 1%, for sure.  This is the interest of the 1%.  

“Again, no Capital Gains Tax, no Estate Tax, Corporate Income Tax of 15%, keep the Bush Tax Cuts, but NO tax relief for working people, for the lower middle-class, the middle-middle.

“Taking away these important—what can we call them—subsidies, sure, subsidium.  Right?  Help.  That’s all that means—help.  For example, that poor kids can go to college with Pell Grants or that there might be some public housing going on.  Right?  All of that removed.  So, you could say that this would hit the middle-class quite hard.  And the beneficiaries would, really, be the 1%.

Bonnie Faulkner (c. 49:22):  “How do you account for Ron Paul’s appeal?  What is making him so popular among his supporters?”

Webster Tarpley (c. 49:30):  “Well, it has to do with his track record, again, of being a gadfly and being very heretical concerning the orthodoxy of the Republican Party during 2007-2008 being anti-war during the era of Bush, Cheney, and the neocons.  Ron Paul was anti-war.  

“The problem with this is that we have to raise the question of election promises and then the delivery on those promises.  I don’t see how you can talk about any politician without doing this.  So, I would suggest looking into this.

“Concerning September 11, 2001, there’s a significant amount of Ron Paul’s base that somehow still have this idea that Ron Paul is the guy who’s gonna bring truth and clarity into the inside job of 9/11 Truth.  Now, I’ve written a book about this myself.  So, 9/11 Synthetic Terror: Made in USA, the Fifth Edition is pretty much my view of the subject.  

“But when Ron Paul was running in 2007/2008, speaking off the record to small groups of supporters, he made, I think it’s fair to say, some significant promises about what he was gonna do to speak up about 9/11 truth or at least to speak up for a new investigation of some sort.  And this carried on all through the 2007 season of the Republican Presidential Debates.  Right?  They had quite a few with all those candidates.  And there was always this constant subtext that Ron Paul was the 9/11 Truth Candidate.  

“Finally, in the South Carolina Debate, January 10, 2008, Fox News and I think this was Carl Cameron asked Ron Paul:  ‘Many of your supporters call themselves 9/11 Truthers. They believe that the U.S. Government was in some way complicit with the 9/11 attacks or covered it up. Are you tonight prepared to either embrace that rhetoric or ask those supporters to abandon it or to divorce themselves from your candidacy?’

“And Ron Paul’s answer is:  ‘I can’t tell people what to do.  But I’ve abandoned those viewpoints. I don’t believe that and that’s all. That’s the only thing that’s important. So, I don’t endorse anything they say.’

“And then he goes on saying:  ‘This kind of talk doesn’t do me any good.  If they care about it they should stop,’ basically, implicit in the question.  ‘I can only control what I say. I don’t endorse what they say. I don’t believe that. Can I please get back to the current debate now, rather than talking about this anymore.’  

“So, that’s I think a pretty clear repudiation of any idea of 9/11 truth.  And the thing that makes it significant is that he had made these promises, somewhat off the record, but some of them you can find in old YouTube clips made by individuals and smaller groups.

“And that goes together with some other things.  He says that he’s against earmarks.  Well, it turns out in 2009, you remember, after we had the Stimulus, we had the Supplemental.  It was about $450 Billion dollars.  Ron Paul, in the dead of night, inserted about $250 Million dollars for the renovation of the Port of Galveston, Texas.  That’s the District he represents.  So, he managed to insert that into the Supplemental, and then when the Supplemental came up, he voted against it.  And the Supplemental passed with a Democratic vote.  So, he inserted it.  And then he voted against it.

“Now, I would certainly say, ‘Don’t go through all of that strange dance. Stand up and say, ‘the Port of Galveston is an American national interest. We need it. We need Mobile. We need New Orleans. And we need Galveston, Houston ‘cos that’s part of the economic viability of a huge hinterland.  It’s a national interest to have that infrastructure up to date.’  Now, Ron Paul can’t say that because he doesn’t believe it.  But, nevertheless, he goes ahead and does this thing with inserting the entitlements in the dead of night and then voting against them in the light of noon day.   

“Another one is the Fed.  He talks about ending the Fed.  He’s written a book called End the Fed.  Well, we look in the economic programme the Plan to Restore America programme and all we have in there about the Fed is to audit the Fed.  Well, I think that’s pretty tame.  I mean, is there some confusion that what the Fed is doing is wrong?  I think that’s pretty clear.  Right?  The Trillions and Trillions of dollars that have been lent at very low rates to foreign banks, we don’t need to go through the whole list.  This stuff has come out.  It’s also, of course, outrageous that the Fed is not regularly audited.  It should really be audited every evening by some competent authority.

“But you see that Ron Paul talks a good game about doing something about the Fed.  But he’s not proposing any institutional change for the Fed.  So, that’s, I think, one of the three points—and I guess we could add more points—that allow you to ask, ‘Is Ron Paul campaigning on an anti-war and anti-dictatorship programme?  And is he gonna give you something that’s very different in the way that Obama did and Boehner did?”

Bonnie Faulkner (c. 55:22):  “And then why do you think it’s so important to go over all of the things that Ron Paul stands for?”

Webster Tarpley (c. 55:30):  “Again, because I think people need to know what they’re actually gonna get.  He has said it.  This is his programme.  I think you have to be aware of what’s coming.  

“We had those important polls that I think they were the NBC polls back in the springtime, which showed that despite everything, despite Obama, and despite Clinton, all the propaganda coming from the Koch Brothers and the Republicans, that the level of the support of the American population for the main New Deal, New Frontier, and Great Society programmes, in particular, Social Security and Medicare, that just about everybody sees themselves needing.  The support for this is somewhere in the area of 65 to 70%.  When you get down to specifics, do you support a surtax for millionaires?  Which Ron Paul would, of course, oppose.  That’s about 81% of the American people were in favour of that.  So, you’d have to say this is New Deal America, in spite of everything.  So, that Ron Paul’s ceiling, if we go by his economic programme, is really about 15 or, perhaps, 20% at the very, very most.  

“But that, of course, doesn’t rule out bait-and-switch.  That somebody would run for office saying:  ‘I will end the wars. I will liberate you from being harassed in airports by these crazy transportation people.’  You might have a situation where, under conditions of breakdown, something very surprising might happen.  A lot of people might vote for Ron Paul who really don’t favour the kinds of economic programmes that we were talking about.  So, I think it’s important to make sure that people realise what they are getting because these things are never completely secret.  They can hardly be.  And in the case of Ron Paul, he has put out now The Plan to Restore America that tells us about these things.”

Bonnie Faulkner (c. 57:42):  “Webster Tarpley, thank you very much.”

Webster Tarpley (c. 57:43):  “Thank you.”

Bonnie Faulkner (c. 57:44):  “I’ve been speaking with Webster Tarpley.  Today’s show has been:  Critique of Ron Paul’s Austerity Plan.  Webster Tarpley is an economic historian, author, and lecturer.  He is author of Against Oligarchy, 9/11 Synthetic Terror: Made in the USA, and co-author of George Bush: the Unauthorized Biography.  His prescient economic work Surviving the Cataclysm: A Study of the World Financial Crisis is now out in paperback.  Visit his website at www.tarpley.net  Email him at [email protected]

“Guns & Butter is produced and edited by Bonnie Faulkner and Yara Mako.  To make comments or order copies of shows, email us at [email protected]  Visit our website at www.gunsandbutter.org ”

Transcript by Felipe Messina

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TARPLEY.NET — “Ron Paul’s $1 Trillion of Austerity Cuts Would Ravage US, Bust Unions, but Cannot Balance Federal Budget”  January 4, 2012.  Webster G. Tarpley on The Jeff Rense Program.

Listen to this interview with Webster Griffin Tarpley.

© 2012 Tarpley.net

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MEDIA ROOTS — With the Occupy Movement rightly putting Wall Street and the ruling-class on blast, the Federal Reserve and the mechanics of our national money supply in relation to our national economic health and body politic, equally deserve scrutiny.  Despite the complexities of finance, the money supply, and Congressional budgets, we must consider such questions of political economy, and seek to understand them.  In a recent article, Ellen Brown, author of Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free, discusses the autocratic Congressional Super Committee.

The establishment insists budget cuts are inevitable, so its political servants don’t consider a necessary progressive tax code.  Ellen Brown disagrees and offers alternatives.  Brown points to the political theatre of the faux debt-ceiling crisis of 2011, as economist Dr. Richard Wolff, et al., have done.  This faux crisis led to the current incarnation of ruling-class assault against the working-class 99%.  Brown notes that the 1% have pushed for austerity before. So, if the Occupy Movement is to respond effectively to the sophistries of the 1%, they must first demystify the game of neoclassical economics.

Messina

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TRUTHOUT — It is no great surprise that with only days to go, the Congressional “supercommittee,” given the Herculean task of carving an additional $1.2 trillion out of the federal budget, has failed to reach agreement. Why should six Republicans and six Democrats with diametrically opposed views agree in a few weeks, when Congress couldn’t shake hands on it after months of wrangling, despite the guillotine blade of a federal default hanging over their heads?  

Whether the supercommittee reaches agreement or not, however, the deficit hawks win. If they agree, either $1.2 trillion gets cut from the budget or taxes go up by that amount; and the committee co-chair has categorically stated taxes are not going up, so that means the budget will be cut. If agreement is not reached, $1.2 trillion in cuts automatically kick in, split evenly between domestic and military spending. Either way, the economy will wind up with $1.2 trillion less in purchasing power. The result will be to reduce demand, kill jobs and put more people on the streets.

For the deficit hawks, however, it all seems to be going according to plan. The supercommittee is characterized as an emergency measure that was rushed through to avoid an arbitrarily imposed August deadline for freezing the debt ceiling, but it has actually been in the works for years. In 2009, it was called the “Bipartisan Task Force for Responsible Fiscal Action.” That plan died when its Senate sponsors, Judd Gregg and Kent Conrad, failed to secure 60 votes for passage in the Senate. The Gregg-Conrad bill was criticized as railroading through legislation that would unconstitutionally slash domestic services without Congressional debate, but its task force would actually have been LESS autocratic than the supercommittee, which has sweeping powers and needs only a simple majority among its 12 members to prevail.

What has been forced out of the debate is whether cutting the budget is a good idea at all. The Peter Peterson Foundation, which has been pushing “austerity” for years, has finally gotten its way. Hedge fund magnate Peter G. Peterson was chairman of the Council on Foreign Relations until 2007 and head of the New York Federal Reserve between 2000 and 2004. He made his fortune with the controversial Blackstone Group, which he co-founded and chaired for many years. The Peter Peterson Foundation was established in 2008 with a $1 billion endowment to raise public awareness about US fiscal-sustainability issues related to federal deficits, entitlement programs and tax policies. The money was used to spearhead a massive campaign to reduce the runaway federal debt. Hysteria over the debt then prompted Tea Party newbies in Congress to hold a gun to Congress’ head by arbitrarily capping the debt. 

In the campaign to educate us to the debt’s perils, we were repeatedly warned that when foreign lenders decided to pull the plug, the US would have to declare bankruptcy, that we were mortgaging our grandchildren’s futures and selling them into debt slavery; and that all this was the fault of the citizenry for borrowing and spending too much. The American people, who are already suffering massive unemployment and cutbacks in government services, would have to sacrifice more and pay the piper more, just as in those debt-strapped countries forced into austerity measures by the International Monetary Fund.

The fear mongering, however, is a red herring. A sovereign nation can always find the money to pay debts owed in its own currency. The Federal Reserve can buy the debt itself – just as it has been doing. That alternative would effectively eliminate the problem of interest, since the Fed returns its profits to the government after deducting its costs. 

Alternatively, Congress could reclaim the power to issue money from the banks and fund its budget directly. The US could pay its bills using debt-free US Notes or Greenbacks, just as President Lincoln did to avoid a crippling debt during the Civil War. Congress could do this without changing any laws. Congress is empowered to “coin money,” and the Constitution sets no limit on the face amount of the coins. It could issue a few one-trillion dollar coins, deposit them in an account and start writing checks.

Neither option need inflate prices. As long as the money is used to purchase goods and services, the result will simply be to increase demand, increasing production. Prices will not increase until the economy reaches full employment and, at that point, any excess in the money supply can be taxed back to the government, keeping prices stable.

The key to all this is that our debt is owed in our own currency – US dollars. Our government has the power to fix its solvency problems itself, by simply issuing the money it needs to pay off or refinance its debt. The US federal debt has been carried on the books since 1835. It has NEVER been paid off during that time, but just continues to grow. This has not hurt the economy, which for most of that period has been among the most vibrant in the world. The federal debt IS the money supply. All of our money except coins is created as bank debt. Historically, when the deficit has been reduced, the money supply has been reduced along with it, throwing the economy into recession.

The real problem with a growing federal debt is the interest on it, which WILL become an insurmountable burden if allowed to grow exponentially. Interest paid on the federal debt in 2010 was $414 billion, or about one-half of personal income tax receipts. That’s about as high as we dare let it go. But this problem can be eliminated either by funding the debt through the nation’s own central bank, effectively interest free; or by the Treasury issuing the money outright, interest free.

The burgeoning debt has been blamed on reckless government and consumer spending; but the debt crisis was created, not by a social safety net bought and paid for by the taxpayers, but by a banking system taken over by Wall Street gamblers. The banking debacle of 2008 caused credit to collapse, businesses to go bankrupt and unemployment to soar, drastically reducing the federal tax base. If anyone should be held to account, it is Wall Street; but the bankers were bailed rather than jailed and the taxpayers got billed for the crime.

We have been deluded into thinking that “fiscal responsibility” is something for our benefit, something we actually need in order to save the country from bankruptcy. In fact, it has simply been an excuse to impose radical austerity measures on the people, measures that benefit the 1 percent while locking the 99 percent in a dungeon of debt peonage.

This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Image by Donkey Hotey

MEDIA ROOTS- Obama’s jobs bill amounts to nothing more than a prop that his apologists will use to promote his re-election. His progressive critics, on the other hand, will bemoan its inadequacy, as they demand an FDR-like program of direct governmental employment. And so the sorry spectacle we have witnessed for the past several years will continue, all leading nowhere. Or rather, leading to further dire consequences for tens of millions.

The problem we face isn’t unemployment. The problem is that people are broke and the solution isn’t jobs, but income. With direct payments to all citizens, the government would at least begin to address the deeper problem of generalized insecurity, of which joblessness is simply one manifestation.

Enlightened government policy of this sort won’t be announced at a White House press conference. But is it delusional to contemplate revolutionary social change? Degenerating social conditions adversely affect a majority of citizens, and what is the response – to chase after neo-liberal illusions? Or to fund social entrepreneurs? Or to work towards change that addresses, without the constrictions of ideology, our real needs?

We are facing a bewildering set of catastrophes: climate change, resource depletion, and worldwide economic meltdown. It is no wonder that we are all uncertain where to start and what to support. However, if we can meet our basic needs won’t we be able to contend with all the other problems? It doesn’t take a Marxist to whisper in our ear that we are in the midst of a class struggle – we are not a country of fools some outside our borders think we are. We all understand the role of the rich who in pursuit of their gain undermine our survival. 

One hundred years ago the average person knew this too, but the difference between our great grandparents and us is that they saw the power of ordinary working people putting down tools and striking, sometimes winning and sometimes smashed by the armed might of the capitalists – the State. During the Great Depression ordinary people began taking control of their circumstances; some created combative unemployed councils that organized local, collaborative economies (California had hundreds of these groups) and others occupied factories threatening the bosses’ control and spurring FDR to legalize unions to prevent revolutionary turmoil.

Obviously, we do not live in such heady times. Who will replace the workers who once toiled in those now abandoned factories scattered across the country? The pivotal role played by the old working class finds no equivalent in our age of permanent unemployment. Is it possible for the solidarity of a previous age, based on hope and resistance, but founded on a shared commonality, to be resuscitated by recognizing our generalized insecurity? Could this become the motivating force for social change hidden in plain sight?

What unites immigrants, students, the unemployed, the semi-employed in temporary and part-time jobs and all of us in jobs who face speed-ups, downsizing and off shoring? In Europe a name exists for those in this situation of precariousness: the precariat. A dissident academic, Guy Standing, has just written a thorough examination of this new class: The Precariat: The New Dangerous Class. The precariat is dangerous because, so far, its fears have only been addressed by the demagogic Right – the neo-fascists in Europe and the Tea Party in the US.

According to Standing, this new class has a tenuous grip on secure employment, with temporary contracts, no labor protections and no benefits. Or if they have a job, there is no guarantee it will last for years. These conditions lead the precarians to continuously job-hunt as a defensive strategy. They can’t expect to gain job experience as an asset for future employment and, as a consequence, a career with a professional identity fades from their lives.

Neoliberalism’s dogma of flexibility and adherence to market demands creates a centrifugal reality for the individual, destabilizing all aspects of life that define the personality, and that previously led to self-esteem. Values dissolve into attenuated opinions, friendships devolve into text messages, and love detours into pornography. Life hollows out in an endless pursuit of escapism (epitomized by consumerism) and insecurity generates fear of an uncertain future.

Ten years ago in Europe members of the precariat were the chain store workers, but today recent graduates find those jobs are unavailable. All across Europe and the US, the financial sector extracts its homage from governments as a policy of austerity that threatens even the most secure employment of all – government jobs. Can anyone doubt the continuing decline of the old working class, the industrial proletariat, and its succession by a growing mass of fringe workers, immigrants, and unemployables – the precariat? Standing estimates that in the West one-quarter of the population falls into this category, but if only those under thirty years old are counted the category swells to over half, or more. For the young the writing is on the wall, as they all know.

Jobs are scarce and will become even more so as technology continues to replace humans not only in manufacturing, but also increasingly in services. World trends for job creation, at least in the developed world, are discernable and really not contested, and to fly against them with solutions from another era merely demonstrates our inability to imagine another paradigm.

We need to take seriously the proposition that income must be separated from jobs. While this seems absurd in the context of US politics, it received a receptive hearing in the Nixon administration. At that time the fear of growing unemployment and major social unrest, like that seen in all major cities in the late 60s, prompted Washington to introduce a negative income tax to supplement income. Instead of paying taxes, the poor would receive federal funds to stay out of poverty; the federal Earned Income Tax Credit is a lame remnant of that policy. The oligarchs didn’t approve, and at about the same time both the explosive growth of poorly paid service jobs and the rise of the industrial prison complex sidetracked a more humane alternative.

While only a few academics are thinking along these lines in the US, in other parts of the world a basic income has been gaining adherence. The largest program based on this premise is in Brazil, where a modest stipend goes to families so that children can afford schooling. This may be a baby step of a program, but there are proposals to extend it. And other countries more generous benefits are contemplated. Here in the US we have a variation of this idea with the Alaska Permanent Fund that annually pays citizens approximately $1,000 apiece as their benefit from the sale of Alaskan oil.

Most advocates of a guaranteed income premise their program on a yearly subsistence paid to all without qualification, thereby with one program saving billions by ending a multiplicity of government assistance programs. Whether the funds raised for general distribution as income come from a small tax on financial transactions, or whether these funds come from the rent paid by corporations using public resources, or some other scheme or mixture of many sources, the point is that the money can be raised. The obstacle is not an economic issue, but a political one.

The assumption is that the guaranteed income would meet basic needs and be supplemented by employment, which could be part-time or full. If implemented, no one need be tied to a job for a whole year. For the young, in school, travelling, or experimenting with life’s choices, this sum might be sufficient to find meaningful engagement with others. We need to understand that this is not a scheme to avoid work, but to search out fulfillment in work. To in fact, redefine work away from forced labor as it’s conceived by most.

The long-range implications of this transformation of life’s current goal – to search for a job – address the environmental crises we face. How in fact will we contend with a world presented as a jungle, as a struggle to attain scarce resources? The reality of a life without an endless expansion of commodities must be met by transforming our values at some basic levels. The sages of all cultures have told us that we define ourselves by freely associating with others to discover our way of contributing to the commonweal. This is wise advice. We need to be free to follow it.

Bernard Marszalek is editor of The Right to be Lazy: Essays by Paul Lafargue (Kerr/AK Press). He can be reached at [email protected]

MEDIA ROOTS- Usually the revolving door between politicians and their corporate profiteering is shielded from the public, and takes a bit of investigative digging to expose. Often times, politicians will invest millions in blind trusts to mask their investments in companies that would reveal an obvious conflict of interest tied to their legislative work. However, Congressman Issa has set a new precedent in exploiting a political standing to blatantly racketeer off the system since his election in 2000.

Abby

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NEW YORK TIMES– Even as he has built a reputation as a forceful Congressional advocate for business, Mr. Issa has bought up office buildings, split a holding company into separate multimillion-dollar businesses, started an insurance company, traded hundreds of millions of dollars in securities, invested in overseas funds, retained an interest in his auto-alarm company and built up a family foundation.

As his private wealth and public power have grown, so too has the overlap between his private and business lives, with at least some of the congressman’s government actions helping to make a rich man even richer and raising the potential for conflicts.

He has secured millions of dollars in Congressional earmarks for road work and public works projects that promise improved traffic and other benefits to the many commercial properties he owns here north of San Diego. In one case, more than $800,000 in earmarks he arranged will help widen a busy thoroughfare in front of a medical plaza he bought for $10.3 million.

His constituents cheer the prospect of easing traffic. At the same time, the value of the medical complex and other properties has soared, at least in part because of the government-sponsored road work.

But beyond specific actions that appear to have clearly benefited his businesses, Mr. Issa’s interests are so varied that some of the biggest issues making their way through Congress affect him in some way.

After the forced sale of Merrill Lynch in 2008, for instance, he publicly attacked the Treasury Department’s handling of the deal without mentioning that Merrill had handled hundreds of millions of dollars in investments for him and lent him many millions more.

And in an era when the auto industry’s future has been a big theme of public policy, Mr. Issa has been outspoken on regulatory issues affecting car companies, while maintaining deep ties to the industry through the auto electronics company he founded, DEI Holdings.

He has a seat on its board, and his nonprofit family foundation, which seeks to encourage values like “hard work and selfless philanthropy,” has earned millions from stock in DEI, which bears his initials. Mr. Issa’s fortune, in fact, was built on his car alarm company, and to this day it is his deep voice on Viper alarms that warns potential burglars to “please step away from the car.”

Read more about A Businessman in Congress Helps His District and Himself

© 2011 The New York Times

Photo by Flickr user Congressman Darrell Issa