Was anyone surprised by the Super Committee failure? I have to admit I was taken aback, but not by the revelation that this Congress can’t seem to work together on anything meaningful. I knew that. Nor was it shocking that the threat of automatic across the board cuts proved insufficient - because after all, those cuts don’t theoretically occur until the next Congress. But what has amazed me about the stalemate is the general polarity of the negotiations in favor of spending cuts well beyond new revenues.
Of course, the most widely accepted reason for the stalemate comes down to Republican intransigence on taxation - they have, after all, taken vows to never raise taxes. But even as Democrats insist on at least a return to the tax rates of the 1990s, the offers being volleyed back and forth by both sides have provided for larger cuts to spending than increases in revenues. Surveying the Democratic offers from this year, we find that the targeted deficit reduction has been distributed from 56% versus 44% (spending cuts versus new revenues) all the way to an imbalance of spending cuts that are 5 times larger than the proposed revenue. So I am alarmed that, in the face of our big unemployment problem, cutting is emerging as our first-line treatment, while raising taxes is a non-starter.
If you saw my post in October, you’ll recall that I fully embrace the necessity of some cuts. Particularly within our privileged class as physicians, we should be willing to negotiate in good faith on areas where we can afford to tighten our belts. The AMA keeps emailing me to call my Congressmen, so I’ll say it again: residents and physicians of all stripes should be prepared to accept payment freezes in the coming years, and the more generously compensated specialists should be willing to go along with at least a small reduction in reimbursement. In exchange for our willingness for shared sacrifice we ought to demand a permanent fix to the sustainable growth rate, a promise to protect the current number of residency spots, and let’s try for malpractice reform while we’re at it. To draw a line in the sand and claim that we can’t tolerate any cuts to our own budgets is not only out of touch with reality, but also forfeits an historic opportunity to bargain for other things we care about.
But unfortunately our politicians are just as out of touch as our lobbyists because they think we can cut our way back to a healthy economy. To reorient ourselves, I recommend that we put aside the dogma, return to a little basic science, and talk biology for a second.
The economy is an ecosystem with a food chain and finite, albeit renewable, natural resources to sustain its cycles. And the weakness in our capitalist food chain currently resides not in the top links, but rather the bottom. So our dilemma resembles the ecological problem of desertification, where once habitable, productive environment good for both animals and humans is literally turning to sand. This is best highlighted in sub-Saharan Africa and parts of South America where non-sustainable practices like slash-and-burn farming and over-grazing leave the land unfit for use because the nutrients and top soil are all depleted and/or erode away. Of course livestock gets fat and farmers get fed with these practices initially. But eventually the bottom falls out of the system, and then the top end also suffers. The solution of course in these areas is to invest at the bottom of the food chain: plant trees, fertilize the soil, create protections against further erosion, etc. But if this Congress were tasked with solving the problem, they would say bring in more cows and de-regulate the farmers; they’re job creators you know.
Well, America’s cows are doing just fine, thank you very much…for now. But the grass is looking more than a little spotty. While CEOs enjoy record bonuses and their industries sits on $2 trillion in cash reserves, unemployment remains stubbornly high because of lack of demand at the consumer level. Consumer spending by middle and lower income families is the foundation of our economic food chain. They nurture the soil of our common prosperity with their discretionary spending. But cuts to essential services only force them to slash their own puny budgets, which hurts business, and ultimately results in fewer jobs, not more.
And yet in other ecosystems, like the European one, we see that out of control debt is also a serious threat to the economic environment. So, we are tasked to deal with debt and unemployment simultaneously. We can do it, but the bottom line is that the very wealthy top end of the food chain must lead and bear the lion’s share of sacrifice to protect the land that made them prosperous in the first place.
This is not class warfare. Rather it’s a call for responsible leadership to America’s privileged class. It is time to wake up and face the inescapable truth - that our neighbors’ prosperity is tied to our own, and their poverty eventually drags us down with them. We would do well to recognize that fact, before our homeland becomes a place none of us want to live in.