Barack Obama and Third Way: Nature of Deficit and Debt is Complicated; GOP Stance for No New Taxes Untenable, Unfair

With the collapse of the debt and deficit talks between President Barack Obama and House Speaker John Boehner, the focus again is getting the debt limit raised. Although there is a strong attempt to equate debt with deficit, the terms have quite different meanings. Boehner and the GOP are trying to develop a package of cuts without any revenues; chart 22 shows the futility of that move. The middle and lower classes must not be made to lose services to maintain the extravagant lifestyles of the wealthy. On another note, given the makeup of the group called “Third Way,” I am not surprised that their Ivy League educated analysts do not clearly explain the true reality of debt and deficit.

MPR711_F22

On the chart numbered 22 (charts 22 and 24 are from the Federal Reserve’s Monetary Policy Report , the revenues (receipts) and spending (expenditures) are reflected by line graphs. The deficit is the gap between the two lines on the far right. In terms of revenues, the contributions to federal pensions by employees and agency employers are counted as current revenue (and debt) (see CSRDF, 5 U.S.C. section 8348(b)); the same is true for Social Security. The difference between the lines also directly contributes to the debt.

The use of federal pensions and Social Security FICA funds as current income questions the legitimacy of any tax cut pledges by the GOP because monies from other groups are used to give money back to the rich while leaving the government without sufficient revenues to satisfy is obligations to repay its debt (chart 24). Also, because of the composition of the revenues, it is unacceptable for the nonwealthy classes to be hit with the numerous service cuts so that the status of the rich (subsidized by the lower classes) can remain unchanged.

MPR711_F24
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