The 2011 Republican and Democratic budgets: Setting the Terms of Debate for the Bankers

The Republican budget has little meaningful difference from Obama's budget, which sets the left course of the debate. Remember that Obama is proposing a freeze on "discretionary" (widely popular safety net) spending for five years, which, w...ith inflation and population growth, is equivalent to a 25% cut. So in an orgasm of bipartisanship and unity we will see that in people's times of need the ruling parties coalesce to run up massive deficits for wars and bankers and then almost immediately begin an Orwellian genuflection before the God of imaginary inflation, i.e., they do what the bankers want. If you take an economics course in college they teach you that this is called "the free market."

Basically two factors drive the deficit: health care and defense spending.

As to health care, despite being the richest country in the world, the United States is the only wealthy nation on earth that does not guarantee health care to all of its citizens, leaving some 50 million uninsured (Rabin, Roni Caryn. 2010. “Number of Uninsured Rises, Report Says.” The New York Times. November 16.; also, “the United States spent $6,401 per capita on health care in 2005 – more than double the median per capita expenditure ($2,922) of the thirty industrialized countries” in the OECD (Anderson, Gerard and Bianca Frogner. 2008. “Health Spending in OECD Countries: Obtaining Value per Dollar.” Health Affairs 27. 1718-1727. :1718)). Consequently, the United States has the highest infant mortality among rich countries (CDC. 2008. “Recent Trends in Infant Mortality in the United States.” http://www.cdc.gov/nchs/data/databriefs/db09.htm.) and life expectancy “ranks 36th in the world for men and 42nd for women” (Marmot, Michael and Ruth Bell. 2009. “Action on Health Disparities in the United States: Commission on Social Determinants of Health.” Journal of the American Medical Association 301(11):1169-1171. :1169). The reasons for this are well known: the United States system is the most heavily privatized health care system in the wealthy world, so “30 percent of health care costs go for administration, a proportion vastly higher than in government-run systems, including those within the United States, which are far from the most efficient” (Chomsky, Failed States, 2007:246). Furthermore, “the best available evidence suggests that up to one out of every three health care dollars is squandered on unnecessary tests, unproven procedures, and overpriced drugs and devices that too often are no better than the less expensive products that they have replaced” (Mahar, Money-Driven Medicine, 2006:xviii). The government is forbidden by law from using its vast purchasing power to lower prescription drug prices, while the US government guarantees private companies monopolies over the results. As Stiglitz (Making Globalization Work, 2007:122-123) notes, “the argument that the monopoly pricing of drugs leads to more innovation is undermined by the fact that most drug companies spend far more on advertising than on research, more on research for lifestyle drugs (e.g., drugs for hair growth or male impotence) than for disease-related drugs, and almost none on research for the diseases prevalent in the poorest countries, such as malaria or schistosomiasis.”

Myriad reasons, including a few red herrings, are offered for the bizarre structure of the American health care system. It is important to note that the current health care is not the result of Americans’ personal preferences; on the contrary, the system is patently undemocratic, with a large majority of Americans consistently expressing a desire for universal health coverage:

An NBC-Wall Street Journal poll found that ‘over 2/3 of all Americans thought the government should guarantee ‘everyone’ the best and most advanced health care that technology can supply’; a Washington Post-ABC News poll found that 80 percent regard universal health care as ‘more important than holding down taxes’; polls reported in Business Week found that ‘67% of Americans think it’s a good idea to guarantee health care for all U.S. citizens, as Canada and Britain do, with just 27% dissenting’; the Pew Research Center found that 64 percent of Americans favor the ‘U.S. government guaranteeing health insurance for all citizens, even if it means raising taxes’ (30 percent opposed). (Chomsky, Failed States, 2007:225)

Quoting Princeton economic Uwe Reinhardt, Mahar (Money-Driven Medicine, 2006:81) notes that “the aging population accounts for ‘only about 10% of the recent growth in real hospital spending.’” Lawsuits are also unfairly demonized, as “malpractice payments represent less than 0.5 percent of health spending” (2006:xvi). More reasonable explanations are offered by viewing the American health care system through as an inefficient economic system. If we had universal health care, like every other rich country in the world, and in accord with the democratic values of the American people, our long-term budget deficits would almost disappear: http://www.cepr.net/calculators/hc/hc-calculator.html.

Defense spending is a similar issue, and the facts are much better known. Nearly half of our budget is spent on imperial wars ("freedom") or the debt from past ones (http://www.globalissues.org/article/75/world-military-spending). The majority of Americans do not want the military to be either in Afghanistan (http://documents.nytimes.com/new-york-timescbs-news-poll-new-york-timescbs-news-poll-mood-of-the-country-as-midterms-approach?ref=politics#document/p22) or Iraq (http://www.economist.com/node/16930683); these views have been consistent for years.

Serious attempts to address the deficit would deal with our bloated, inefficient health care system and our disastrous national "defense" policies. So the cuts in very popular social services are an attempt not to address the deficit but to use the recession to redistribute wealth from the people to the top 1%, who, despite having achieved the highest level of inequality in American history, want even more.