[THS] Edward S. Herman: Big Government, Budget Deficits, Entitlements...

[Peter Webster]

http://www.informationclearinghouse.info/article25105.htm

Big Government, Budget Deficits, Entitlements and the “Centrist” Ploy

By Edward S. Herman

March 30, 2010 --  These are words that come into prominence whenever the right-
wing and business community go on the offensive. Big Government was not featured
by the right-wing or business during the recent (2001-09) Bush years because
although the federal government and budget were growing it was via an
enlargement of the military and police budgets and an attack on the privacy and civil
rights of ordinary citizens in the alleged interest of “national security.” In the Reagan
years also the size of government grew, but this was not objectionable to the elite
establishment because the growth was in military expenditures, with social budgets,
organized labor, and environmental protections under attack. During George W.
Bush’s term, there were a number of encroachments by the federal government on
“state’s rights”; e.g., allowing the feds to override state authority on matters such as
environmental rules (the EPA disallowed California’s attempt to limit auto tailpipe
emissions in 2007) and medical practice (the Department of Justice sought the
overturn of an Oregon law legalizing physician-assisted suicide in 2002 and later).

There were no Tea Party-like campaigns to protest this growth in government and
attack on constitutional (and state’s) rights in the Bush years because the growing
and encroaching government was in the right hands. It is only when it gets into the
wrong hands and there is the threat that government will serve the undeserving
poor, or even the middle class, and neglect the corporate community and National
Security that business, the military-industrial complex (MIC), and right-wing protest
cadres get agitated about Big Government. I refer back to my old definition of
Conservatism: “An ideology whose central tenet is that The Government Is Too Big,
except for the police and military establishment.”

This differential treatment naturally also applies to concern over budget deficits. Bush
inherited a $230 billion budget surplus from Clinton, which he quickly turned into
large deficits. But he did this by cutting taxes in a highly regressive way and
generously servicing the MIC, so the business-financial-MIC communities were happy,
and this fed into the Free Press keeping expressions of concern over budget deficits
at a low key. With Obama, there has been a new surge of worry over budget deficits.
Admittedly these deficits are large, but their large size results mainly from the effects
of the severe recession and the inheritance of tax cuts and wars from the Bush years
(although the wars continue and even expand under Obama). And they don’t really
worry the financial community much, as evidenced by the very low rates of interest
on government securities.

Reagan’s deficits almost tripled the national debt, but the outcries from the
establishment were muted in light of his service, and there were no Tea Parties. The
Congressional Budget Office estimated in 2004 that a continuation of Bush’s policies
would triple the national debt by the end of fiscal 2013, with a ten trillion dollar
increment, matching the performance of  “conservative” Ronald Reagan. But like
Reagan he was an effective class warrior, hence the muting of deficit fears.

In a classic illustration of the double standard based on fear of positive Democratic
responses to the needs of ordinary citizens and faith in Republican commitment to
the business-financial elite, back in 1978, in the Carter years, former Citibank CEO
Walter Wriston said that federal deficits were “diverting available capital from
productive private investments to finance public expenditures. Only a reduction in the
federal deficit would reverse this trend.” But with Reagan in office in 1988, Wriston
said that we must distinguish between capital and operating budgets, and that the
normal household does not treat its home as a current expense, so that we need not
worry as  there is “near balance in the operating budget.” There had been no
distinction between operating and capital budgets with Carter. The business-
trustworthy Reagan could run deficits, Carter should not, and the rationalizations
followed accordingly..

Obama, like Carter, or Clinton, is not trustworthy, even though, like his predecessor
Democrats he leans over backwards to prove his reliability to the election-funding
community and rejection of “populism” and any substantial action that meets the
needs of his popular base. But this never suffices, as a Clinton or Obama will have to
do something for their base beyond feeling their pain and vowing real action,
however skimpy that something and promised action may be. With a George W. Bush
or a Reagan in office the service to what Bush, speaking to an elite fund-raising
audience of “Haves and Have Mores” that he only half-jokingly called “my base,” is
more assured. So is the neglect of, and systematic attack on, the underlying
population. Hence, the renewed focus on the threat of government deficits.

“Entitlement” is another word that has taken on negative connotations, suggesting
claims that may be excessive and at the expense of hard-working tax-paying real
Americans. Money for the varied components of the MIC is never referred to as an
entitlement even though a very large part of it is wasteful, fraud-ridden, and
pointless or even perverse in relation to any supposed “defense” function. It
represents capture by a segment of the powerful — the real and important “special
interests” — in the same fashion as does the TARP money that flowed so quickly and
massively to the banksters who engineered the current economic crisis. But the
phrase “national security” is a marvelous protective cover that rules out the use of a
word with negative connotations like “entitlements.” Welfare mothers got
entitlements, but not military contractors, fat-cat military officials, or bailed-out
bankers.

The current prize entitlements demanding attention are Social Security, Medicare and
Medicaid. Of course, the Social Security “entitlements” were paid for by those who
are currently, or will be later, getting payments, but those surpluses were used by
the political elites to fund ordinary expenses, including vast outlays for MIC weapons
purchases and wars, not to build an infrastructure that would enhance future
productivity and help provide the resources for entitlement payouts. But the main
reason these social programs are entitlements is that they service the general
citizenry, not just the elite, and in the evolving system of class war the elite targets
such programs for cost savings to themselves (and profits to Wall Street with the
hoped-for privatization of Social Security).

Another choice word linked to these politically loaded word usages is “centrist.” A
centrist may be defined as one who recognizes and presses establishment
perspectives on Big Government, Government Deficits and Entitlements. A centrist
regularly supports de facto MIC entitlements, and any wars in hand or contemplated,
but worries about the solvency of Social Security and the need to get it and the
Medicare-Medicaid programs under sound fiscal management. Of course, the centrist
will not support a single-payer health care financial program, or even a public option,
because government is not a good manager and such proposals are not politically
feasible. We must curb Big Government, but not at the expense of National Security.
We must work hard on eliminating the Budget Deficit, but not by raising taxes — and
the centrists uniformly supported the great Bush (regressive) tax cuts of 2001-3.

The mainstream media love centrists and constantly call on the Democrats to move
toward the center in order to win elections (notoriously, after they have lost them) or
to get legislation passed in a bipartisan fashion. The media did not press Bush to
move to the center; presumably he had a “mandate” (from the Republican majority
of the Supreme Court). Could it be that what Bush’s “base” wants is the “center” that
the media also want? And that the “centrists” they love struggle to achieve those
same Bush-base ends, fending off or just ignoring whatever the underlying
population wants?

Obama recognizes this call and has behaved accordingly. One of his responses to the
threat of Big Government, Deficits and Entitlements has been to support the
establishment of a commission to study entitlements. Not the massive and nationally
debilitating and unaffordable entitlements of the MIC, but those benefiting the
underlying population. The class war goes on.

Edward S. Herman is an economist and media analyst with a specialty in corporate
and regulatory issues as well as political economy and the media.

Originally published in the April issue of Z Magazine.