The Federal Deficit: First, do no harm

Here are "Eight Keys To Addressing The Deficit" offered to the White House National Commission on Fiscal Responsibility and Reform, a presidential advisory body that has the Obama administration has stacked with Wall Street apologists, by AFL-CIO president Richard Trumka,

First, stabilizing the national debt is a means to an end, not an end in itself. "...stabilizing the debt is simply a means to achieve our goal of sustainable, broadly shared prosperity, and we should reject approaches to debt stabilization that take us away from that goal."

Second, we should be honest about will cause deficits over the next ten years: The tax cuts enacted under President George W. Bush, the wars in Afghanistan and Iraq, and the economic downturn (and not a crisis of entitlement spending generally, caused by the retirement of the Baby Boomers).

Third, premature withdrawal of economic stimulus threatens to throw the global economy into a double-dip recession, or worse. "By withdrawing economic stimulus, we run the risk not only of prolonging the jobs crisis for several more years, but also of bringing about a “double-dip” recession—or even what Nobel Laureate Paul Krugman calls 'a third Depression.'”

Fourth, stronger economic growth, job growth, and wage growth are needed to stabilize the debt. "...[W]e must have a job-centered approach to stabilizing the national debt, which would bring us closer to our goal of sustainable, broadly shared prosperity."

Fifth, Wall Street should pay to build a 21st century infrastructure that will lead to long-term economic growth by investing heavily in public infrastructure that has been badly neglected over the past 30 years, not only to roads and bridges but also to airports and air traffic control systems, urban transit, high-speed rail, schools and university facilities, national laboratories, national parks, ‘smart’ electric grids, broadband networks, green generating plants, and health information networks.

We believe it is only fitting to ask Wall Street to pay to rebuild the economy it helped destroy. One way to do that would be through a Financial Speculation Tax (FST) — a tiny 0.05% tax on transactions of stocks, options, futures, credit default swaps, and other derivative instruments. The $100 to $300 billion in additional tax revenue per year that this tax would generate could be used to fund higher levels of public investment, and the tax itself would curb unproductive speculation that is harmful to the economy.

It would also be fitting to ask the wealthiest Americans who benefited most from the failed economic policies of the past 30 years to pay their fair share for rebuilding the 21st century economy and stabilizing the national debt. For example, a surtax of 1%-5.4% on earnings over $350,000 would raise close to $600 billion over 10 years.

Sixth, efforts to stabilize the national debt should not include approaches that increase income inequality, such as prolonged unemployment, which would permanently cripple the earnings potential of millions of workers, exert downward pressure on workers’ wages, and condemn millions of children to poverty unnecessarily; cuts to Social Security benefits; and cuts to Medicare benefits.

Seventh, we must reduce health care costs even further—without cutting benefits or compromising the quality of care. "Reducing excess cost growth can and should be accomplished without cutting benefits. Approaches that should be considered include (1) Medicare drug price negotiation; (2) easing restrictions on imports of prescription drugs; (3) expanding proven Medicare payment and delivery reforms; and (4) offering the choice of a public health insurance plan option that would offer premiums 10% below private insurance and would reportedly reduce the federal deficit by $110 billion over 10 years."

Eighth, Social Security benefits are not the problem and must not be cut. "In fact, Social Security should be strengthened to compensate for the decline of traditional pensions and for the stock market losses of retirement savings plans. Social Security benefits are about one third lower than the average of 30 OECD countries.

In the short term, we have a jobs crisis—not a debt crisis. The best way to improve our fiscal situation is through stronger job growth. However, given the massive shortfall of aggregate demand, additional deficit spending is necessary in the short term to bring down unemployment and avert a double dip recession, which would only make deficits worse.

After the jobs crisis is behind us, we will need more tax revenues to pay for the higher levels of public investment in 21st century infrastructure that are necessary to create good jobs, ensure long-term economic growth, and improve our global competitiveness. Additional health reforms will also be necessary to further reduce excess health care cost growth.

Stabilizing the national debt over the long term can be a means of achieving sustainable, broadly shared prosperity. But exaggerated fears of deficits and the debt should not be used as a pretext to increase inequality and thereby repeat the mistakes of the past that brought us to the precipice of global depression.

Drawn from Eight Keys To Addressing The Deficit by Richard Trumka (Campaign for America's Future 2010-06-30).

See, also, commission testimony Dr. Margaret Flowers for Physicians for a National Health Program: "The alternative scenario of a national improved Medicare for All will save lives and save money. National improved Medicare for All will place our nation on the path of becoming one of the best health systems in the world - something of which we can all be proud. This commission has the ability to recommend creating a financially sustainable universal health system. I urge the members of this commission to recommend addressing the deficit through adopting this most popular approach: national improved Medicare for All. Don't cut Medicare. Protect it, improve it and expand it to cover everyone." -- Improve and strengthen Medicare by expanding it to all (PNHP 2010-02-01).