OpenLeft: Real budget deficit comes from out-of-control oligopolies, not middle-class entitlements

[marmar]

The real budget deficit comes from out-of-control oligopolies, not middle-class entitlements
by: Paul Rosenberg

Tue Dec 07, 2010 at 18:00


In the aftermath of the mid-term elections, there's one enormous glaring contradiction in the GOP's economic agenda: Their prime long-term objective is deficit reduction. It's so important, in fact, that it overshadows doing anything about the ongoing Great Recession . But their prime short-term goal is tax cuts for the rich and the super-rich. It's so important, in fact, that it overshadows deficit reduction, since it would add $700 billion to the deficit, just in the first decade.

And yet, this is not the biggest contradiction out there. No, the biggest contradiction is a "bi-partisan" one: Long-term deficit cutting is focused on broad middle-class entitelements, but the deficit itseld is caused by powerful oligopolies. This is one of the key insights in the paper, "A World Upside Down? Deficit Fantasies in the Great Recession" by Thomas Ferguson and Robert Johnson, which I first discussed in my earlier diary, "'A World Upside Down?'--a field biology approach to economic chaos"

In the paper's abstract, the authors write:

Our analysis of threats to the budget finds that not entitlement spending or Social Security, but the excessive costs of oligopoly in health care and defense spending play a large role in current concerns. So does the contingent liability of another financial crisis. In an era of unbridled money politics, concentrated interests in the military, financial, and medical industries pose much more significant dangers to U.S. public finances than concerns about overreach from broad based popular programs like" Social Security, which is itself in good shape for as many years as one can make credible forecasts.

In the paper, they further explain:

The real nature of the problems is almost entirely lost amid all the handwringing in the academy and the media: In the money-dominated U.S. political system, problems of out of control expenditures rarely arise from programs that confer benefits on large numbers of ordinary Americans. Political leaders responsive to major investors normally take extreme care to design such programs so that the burden of financing them falls heavily on precisely the people who receive the benefits. The famously regressive Social Security taxes, with their caps on incomes subject to any tax at all are a case in point.

In contrast, they describe where the real vast costs lie:

The nature of what we take to be the real threats to deficits - the budgetary "whales, as former Senator Simpson calls them - is quite different. It is that powerful blocs of corporations and investors have extensively captured the process of making public policy in key areas and used policy to reinforce oligopoly or even monopoly, while promoting demands for service that defy rational assessments. Such areas require wholesale regulatory reform, serious anti-trust restrictions, and cost-benefit systems that are not shaped by big money; controlling them by simply cutting expenditures, as deficit hawks usually propose, is like shooting at pigeons with a blunderbuss.

..............(more)

The complete piece is at: http://www.openleft.com/diary/21051/the-real-budget-deficit-comes-from-outofcontrol-oligopolies-not-middleclass-entitlements

[msongs]

1. and the out of control military/pentagon nt