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What you need to know about the “Debt Ceiling Deal”

If you’re confused by the spin coming from the mainstream media and the small army of Obama apologists in the blogosphere, here are the basic facts of today’s debt ceiling deal, which should also be called the Great Impoverishment Act of 2011.

From Patrick Martin’s fine analysis at the World Socialist Web Site comes these facts:

  • The deal “imposes unprecedented cuts on domestic social spending without a single dollar of increased taxes on the wealthy.”
  • These cuts will begin on October 1 of this year, and over the course of next year will impose $25 billion in cuts to “education, housing, transportation and the environment.”
  • By Thanksgiving, another $1.7 trillion will be “identified” for a second stage of cuts. Targets for this include Medicare, Medicaid and Social Security. (Simplistic analysis in the blogosphere makes it sound like those programs were saved from the chopping block, but in reality, those cuts are merely being delayed for political reasons.)
  • While theoretically the $1.7 trillion figure could include an end to tax breaks for the wealthy, the decision will be made by a bipartisan committee, and Republican leaders have said they will not, under any circumstances, allow an end to those tax breaks.

Any discussion of the deal should also include the costs that will be imposed on states. As AP reports:

  • This will mean wide-ranging cuts to Head Start, Meals on Wheels, worker training initiatives, and education for disabled children.

Who benefits? The extremely wealthy. Lawrence Mishel, President of the Economic Policy Institute, pointed out this morning that:

  • Last December’s tax cuts for the rich account for 1/3 of the borrowing authority at stake in the debt ceiling battle. The spending cuts listed above are literally being deployed to pay for these tax cuts.

As Mishel writes:

Tax cuts enacted last December account for roughly $800 billion (one-third) of the increased borrowing authority needed to maintain obligations to citizens and creditors through 2012; a two-year extension of all the Bush tax cuts is now being fully financed with deep spending cuts. … The spending caps do not allow the budget to meet our nation’s basic needs for public investment, regulation and other domestic needs. The spending caps will reduce non-security domestic spending to just 1.8% of GDP in 2021, the lowest level since the 1950s and the amount we now spend on public investment. Thus, this spending level will not allow us to both maintain current levels of public investment and the normal functions for housing, criminal justice, regulatory enforcement and other needs.

Writing for the New Republic, Jonathan Cohn describes the human costs of this deal:

…more people eating tainted food, more people breathing polluted air, more people pulling their kids out of college, and more people losing their homes — in other words, the hardships people suffer when government can’t do an adequate job of looking out for their interests.

And, as Cohn and others accurately point out, the deal doesn’t address U.S. unemployment. In fact, it will make it worse through the barrage of program cuts and the general level of economic insecurity imposed by these one-sided austerity measures.

All this, because both parties, and the mainstream media, have bought into a fundamental myth about deficits.

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