Austerity Hawks Backing ‘Fix the Debt’ Campaign

“Brace yourself,” says former Secretary of Labor Robert Reich in a recent blog post. “In coming weeks you’ll hear there’s no serious alternative to cutting Social Security and Medicare, raising taxes on the middle class, and decimating what’s left of the federal government’s discretionary spending on everything from education and job training to highways and basic research. ‘We’ must make these sacrifices, it will be said, in order to deal with our mushrooming budget deficit and cumulative debt.”

In the article “The Myth of Living Beyond Our Means,” Reich debunks right-wing claims that America has become a country of spendthrifts and cutting important programs and raising taxes on the poor and middle class are the only ways to get the country’s finances back in order.

“Most of the people who are making this argument are very wealthy or are sponsored by the very wealthy,” said Reich. “The truth is most Americans have not been living beyond their means. The problem is their means haven’t been keeping up with the growth of the economy — which is why most of us need better education, infrastructure, and healthcare, and stronger safety nets. The real median wage is only slightly higher now than it was 30 years ago, even though the economy is twice as large. The only people whose means have soared are at the very top, because they’ve received almost all the gains from growth.”

Reich attributes individuals like billionaire private equity mogul Pete Peterson and his pro-austerity “Fix the Debt” campaign, the Business Roundtable, right-wing think tanks and policy centers, and members of the Simpson-Bowles commission for creating and perpetuating the “living beyond our means” myth.

He strongly supports taxing “the vast accumulations of wealth now in the hands of a relative few” as a means for tackling the deficit and jumpstarting the economy.

“Yale Professor Bruce Ackerman and Anne Alstott have proposed a two percent surtax on the wealth of the richest one-half of 1 percent of Americans owning more than $7.2 million of assets,” said Reich. “They figure it would generate $70 billion a year, or $750 billion over the decade. That’s more than the fiscal cliff deal raises from high-income Americans. Together, the two sets of taxes on the wealthy would just about equal the spending cuts the White House has already agreed to, totaling $1.5 trillion (or $1.7 trillion including interest savings). That seems about right.”

To read Reich’s full article, click here.