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Tuesday, May 31, 2011

If there must be cuts...

As I have said before, with all the unemployment that remains a huge drag on our economy, we need increased government spending, not cuts in spending, as the congress is obsessed with doing. Every 1%  of unemployment adds about $90 billion of government debt annually. Getting unemployment down to 4% would reduce the annual deficit by half a trillion dollars. This would still leave us with about a 700 billion dollar deficit and so we will need eventually to cut spending and raise taxes.
All this considered the political environment is all about cuts and while taxes are scheduled to increase, the GOP will pull out every trick in the bag to make sure that millionaires don't have to pay a dime more. If substantial cuts in spending are inevitable and modest tax increases are doubtful, progressives have got to find a way to make sure that the cuts come out of 1.2 trillion we are spending on war, defense and security.
Ideally, electing more peaceful green progressives would get us moving rapidly forward toward the goal of a peaceful green economy. Can we find districts and states which are willing to elect progressive rather than blue dog Democrats? Realistically, I don't see many substantial gains coming our way. I wish we could get 60 progressive green and peace loving Democratic Senators. We came within 6 or 7 in 2008, arguably the best year for the Democratic party since 1964. I wish someone could show me a realistic plan to get those  60 progressive Senators we need, but until then I am going on the assumption that we have to supplement our strategy with some unconventional tactics.
If we cannot get the shift in spending from empire building and maintenance to building the peaceful green economy, then we have to find a way to at least save vital domestic programs and make sure that the cuts come from bombs rather than butter. To do this we progressives, who live in districts and states where there will be no competitive primary race between a blue dog and a progressive, must temporarily change our party registration and vote in the 2012 GOP primaries and caucuses. Our votes could be caste in one of two ways. First, if there is a viable extremist who can be nominated but can never win in the general election against the Democrat, vote for the extremist. Second, if there is a viable libertarian Republican candidate who wants to make deep cuts in defense and security spending, vote for that candidate.
After the primaries are settled, we have to size up the general election candidates. If a the GOP nominee is a lunatic, obviously vote for the Democrat. If the Democrat is a true peace loving progressive, again vote for the Democrat no matter who the Republican is. If the Democrat is a blue dog and the Republican is a true peace loving libertarian, vote for the Republican. This strategy aims at making sure that the largest majority possible will be in favor of huge reduction in the empire building and maintenance budgets. It does not guarantee that the bulk of the money saved from such a reduction will go to building the peaceful green economy but it moves the debate forward.
Next, we move on to the progressive and libertarian negotiations in the 2012 congress. Here is the worse case scenario: We get tremendous reductions in empire building and maintenance, maybe over the next 4 years, 600 billion annually; however the libertarians are able to freeze domestic spending. The result will be about a 2.4 trillion dollar reduction in federal debt over 4 years. This might even mean that interest rates can remain low and the private sector can borrow and spend a bit more. Let's say that gets us a reduction in unemployment to 7.5%. By 2016 7.5% unemployment will feel just as bad as 9% does today. In the mean time, classrooms and jails get crowded, oil prices remain high or increase, bridges fall down, Medicaid and Medicare lurches closer to bankruptcy, insurance companies have to charge more because doctors and hospitals are charging more to make up for what Medicaid and Medicare will not pay, millions of former defense workers are still unemployed and the planet is .25 degrees  F. higher than it is now. The neo-cons are aching for a comeback and wanting to fight unemployment by starting another war in the middle east and the libertarians are determined not to lose what they have gained. Progressives suddenly have the advantage with a split on the right. We then advocate investing 2 trillion over the next four years (2016-2020) toward building the peaceful green economy. In doing so we point out that we are still saving nearly half a trillion dollars during the same 4 years while libertarians are content to allow 2.4 trillion more to be spent on buying Chinese junk while investing in the same or similar economies. We would also point out that the neo-cons are content to spend 2 trillion on another war while giving a trillion in tax cuts to millionaires and billionaires. We might even have a tax plan of our own by then that is more progressive, more simple, less burdensome on middle and lower income families and less avoidable by well connected rich and powerful.
The best case scenario with a libertarian/progressive coalition is that 1.2 trillion is spent on building the peaceful green economy while the same amount is used to pay down federal debt. Under such a scenario the unemployment rate may go down close to 6%. The good news is that neo-cons are confined to to their bitter corner where they pull at their ears while shrinking but still shrieking cultural conservatives play their ceaseless, nostalgic cacophony. The bad news is we have to compete with a libertarian plurality who probably can convince the crowd more easily than we, that they deserve the credit for a renewed economy. Might have to wait 2 more years for them to run the unemployment rate back above 7% before we can get a majority in 2018 and a super one in 2020.
If however, we choose to go with the rhetoric of progress through 2016, unemployment will probably hover around 8% and the green economy will gain whatever snail's paced ground it can. More likely President Obama, wanting a legacy of 6 percent (yes we can let our expectations vanish!) unemployment,  might just decide to outflank the neo-cons and start two more wars while keeping domestic discretionary spending frozen. Do we really want to grow the grayish green economy with peace no where in sight? If we do, keep towing the party line. If we don't, then kill the conventional wisdom by sabotaging the duopoly establishment.

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