The "conservatives" do not now and have never opposed increasing the Federal debt. Ron Reagan tripled the debt. Dick Cheney famously told advisers that deficits don't matter. George Bush took a balanced budget and set it on fire, doubled the debt, and left the Obama administration such fiscal shambles that further debt increases were inescapable. Conservatives support increased government debt for several reasons:
- Treasury bonds are a safe investment for wealthy people and interest payments on Treasury bonds are tax free government income for the better off. They are a direct transfer of taxes from working people to "investors".
- High federal debt normally pushes up interest rates which makes it easier for people who have money to make more money from usury. This is why the Conservatives have been so very angry at the Federal Reserve Bank for fighting to keep interest rates down
- Conservatives want to be able to spend lots and lots of Federal tax money to subsidize oil companies, banks, the arms industry, and other parts of their constituency. They don't care if that spending causes budget deficits (on the state level, Conservatives are open handed with tax money for contractors, privatizers, and every other business seeking state money).
- Conservatives have spent 40 years marketing the story that Federal deficits are due to excessive spending on black people, immigrants, foreign aid, and welfare cheaters. A perpetual debt crisis is necessary to keep the anger hot. Racial animosity is the basis of right wing power in the United States and " liberals are giving our money to minority welfare cheaters" is a successful marketing message.
- Conservatives understand that the real source of Federal deficits is a massive hidden tax subsidy of the wealthy and of wealthy corporations. They understand that any serious effort to close off the deficit will mean that the government will no longer be in the business of subsidizing oil companies, outsourcing, hedge fund managers, and mansions - not to mention an end to government subsidies for giving money to right wing "think tanks" and political machines.
This is why Paul Ryan and the GOP did everything they could to prevent the government from acting to close the deficit. Any real effort to close the Federal deficit will take away the Republicans source of patronage and the unfair advantage their wealthy supporters get from government support. Not only did they block President Obama's proposal for a Congressionally chartered debt commission, but when the President set one up unilaterally, they sabotaged it, refused to negotiate, and phoned in "no" votes to prevent the issue of a formal report.
That's why when the President supposedly even offered to accept cuts in Social Security and Medicare, Republicans were still absolutely petrified. Remember: cutting the deficit or the budget is not something they care about at all, protecting Welfare for the Wealthy and maintaining their ability to go to to the public with a blame immigrants/blacks/the-poor game are their objectives. And, to be fair, they understood that the cuts the President offered were ones that would substantially protect Medicare and Social Security. They were not willing to sacrifice their priorities especially if they were not going to be able to impoverish millions of people.
And just for the "progressives" who continue to hyperventilate about the grand bargain. We know what policies President Obama pushed when he had a Democratic majority in Congress: expanding access to medicare, strengthening medicaid, and reducing the tax inequity of Social Security.
Originally publishedSep 7 2012 in Krebscycle.