America's Political Class Struggle

by Jeffrey D. Sachs

The Huffington Post
December 27, 2010

http://www.huffingtonpost.com/jeffrey-sachs/americas-political-class_b_801663.html

[Originally published on Project Syndicate]. 
Project Syndicate - A World of Ideas
December 27, 2010
http://www.project-syndicate.org/commentary/sachs173/English

NEW YORK - America is on a collision course with itself.
This month's deal between President Barack Obama and the
Republicans in Congress to extend the tax cuts initiated a
decade ago by President George W. Bush is being hailed as
the start of a new bipartisan consensus. I believe, instead,
that it is a false truce in what will become a pitched
battle for the soul of American politics.

As in many countries, conflicts over public morality and
national strategy come down to questions of money. In the
United States, this is truer than ever. The US is running an
annual budget deficit of around $1 trillion, which may widen
further as a result of the new tax agreement. This level of
annual borrowing is far too high for comfort. It must be
cut, but how?

The problem is America's corrupted politics and loss of
civic morality. One political party, the Republicans, stands
for little except tax cuts, which they place above any other
goal. The Democrats have a bit wider set of interests,
including support for health care, education, training, and
infrastructure. But, like the Republicans, the Democrats,
too, are keen to shower tax cuts on their major campaign
contributors, predominantly rich Americans.

The result is a dangerous paradox. The US budget deficit is
enormous and unsustainable. The poor are squeezed by cuts in
social programs and a weak job market. One in eight
Americans depends on Food Stamps to eat. Yet, despite these
circumstances, one political party wants to gut tax revenues
altogether, and the other is easily dragged along, against
its better instincts, out of concern for keeping its rich
contributors happy.

This tax-cutting frenzy comes, incredibly, after three
decades of elite fiscal rule in the US that has favored the
rich and powerful. Since Ronald Reagan became President in
1981, America's budget system has been geared to supporting
the accumulation of vast wealth at the top of the income
distribution. Amazingly, the richest 1% of American
households now has a higher net worth than the bottom 90%.
The annual income of the richest 12,000 households is
greater than that of the poorest 24 million households.

The Republican Party's real game is to try to lock that
income and wealth advantage into place. They fear, rightly,
that sooner or later everyone else will begin demanding that
the budget deficit be closed in part by raising taxes on the
rich. After all, the rich are living better than ever, while
the rest of American society is suffering. It makes sense to
tax them more.

The Republicans are out to prevent that by any means. This
month, they succeeded, at least for now. But they want to
follow up their tactical victory - which postpones the
restoration of pre-Bush tax rates for a couple of years -
with a longer-term victory next spring. Their leaders in
Congress are already declaring that they will slash public
spending in order to begin reducing the deficit.

Ironically, there is one area in which large budget cuts are
certainly warranted: the military. But that is the one item
most Republicans won't touch. They want to slash the budget
not by ending the useless war in Afghanistan, and by
eliminating unnecessary weapons systems, but by cutting
education, health, and other benefits for the poor and
working class.

In the end, I don't think they will succeed. For the moment,
most Americans seem to be going along with Republican
arguments that it is better to close the budget deficit
through spending cuts rather than tax increases. Yet when
the actual budget proposals are made, there will be a
growing backlash. With their backs against the wall, I
predict, poor and working-class Americans will begin to
agitate for social justice.

This may take time. The level of political corruption in
America is staggering. Everything now is about money to run
electoral campaigns, which have become incredibly expensive.
The mid-term elections cost an estimated $4.5 billion, with
most of the contributions coming from big corporations and
rich contributors. These powerful forces, many of which
operate anonymously under US law, are working relentlessly
to defend those at the top of the income distribution.

But make no mistake: both parties are implicated. There is
already talk that Obama will raise $1 billion or more for
his re-election campaign. That sum will not come from the
poor.

The problem for the rich is that, other than military
spending, there is no place to cut the budget other than in
areas of core support for the poor and working class. Is
America really going to cut health benefits and retirement
income?  Will it really balance the budget by slashing
education spending at a time when US students already are
being out-performed by their Asian counterparts? Will
America really let its public infrastructure continue to
deteriorate? The rich will try to push such an agenda, but
ultimately they will fail.

Obama swept to power on the promise of change. So far there
has been none. His administration is filled with Wall Street
bankers. His top officials leave to join the banks, as his
budget director Peter Orszag recently did. He is always
ready to serve the interests of the rich and powerful, with
no line in the sand, no limit to "compromise."

If this continues, a third party will emerge, committed to
cleaning up American politics and restoring a measure of
decency and fairness. This, too, will take time. The
political system is deeply skewed against challenges to the
two incumbent parties. Yet the time for change will come.
The Republicans believe that they have the upper hand and
can pervert the system further in favor of the rich. I
believe that they will be proved wrong.

[Jeffrey D. Sachs is the Director of The Earth Institute,
Quetelet Professor of Sustainable Development, and Professor
of Health Policy and Management at Columbia University. He
is also Special Advisor to United Nations Secretary-General
Ban Ki-moon. From 2002 to 2006, he was Director of the UN
Millennium Project and Special Advisor to United Nations
Secretary-General Kofi Annan on the Millennium Development
Goals, the internationally agreed goals to reduce extreme
poverty, disease, and hunger by the year 2015. Sachs is also
President and Co-Founder of Millennium Promise Alliance, a
nonprofit organization aimed at ending extreme global
poverty. ]

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