Is There Really a Deficit Crisis?
By Julianne Malveaux
(TEWire) - 1/25/2011 - In the wake of the State of the Union Address there is likely to be much partisan conversation about the direction of our nation. President Obama will address the economy and jobs, and Republicans will talk about the health of the economy, and about cutting budgets in their rebuttal. Citing growing deficits, both parties are concerned that spending is out of control. Yet some spending is absolutely needed to create jobs, just as $700 billion of spending was needed to bail out banks. It intrigues me that the same folk who eagerly bailed banks out have not suddenly discovered the concept of budget cuts and are pushing them, even as they have added to the deficit by insisting on extending Bush tax cuts.
President Obama has furthered the notion that there is a budget crisis by appointing Erskine Bowles and Alan Simpson to make suggestions to manage the federal budget deficit. The Bowles/Simpson commission would trim about $4trillion from the federal budget in the next decade by increasing the Social Security retirement age, freezing federal pay, leveling Pentagon spending, and making other cost-cutting suggestions. There were 18 people on the National Commission on Fiscal Responsibility and Reform, and 14 had to approve the suggestions for them to be accepted, but only 11 went along with some of the draconian plans that were announced, so the suggestions are only suggestions.
It is important to raise questions about the nature of the deficit crisis. Is this a cyclical crisis, connected to the economic downturn? Is it more structural, something that would have occurred with our without the downturn? How should it be managed, and will there be equal pain around curtailing the deficit, or will only one or two sectors pay for the challenges the deficit creates.
For example, there has been talk of raising the social security retirement age for years, and always we have looked at an across the board age increase, whether workers are high income or low, whether they have pensions or not, whether their work is physical or not. It’s entirely different to ask a professor to work until 70 than it is to ask a waitress to do so, but these plans increase the social security retirement age do not seem to take these things into consideration, thus continuing a class based economic inequality that also creates racial inequality. Is this our goal? To widen gaps instead of narrowing them? Increasing the social security retirement age indiscriminately will do this.
Similarly, the attack on federal employees is an attack that has a differential impact by race and gender. Women and people of color are both more likely to be employed by the federal government, but also more likely to get more equal pay in the public sector than in the private sector. United for a Fair Economy released their annual State of the Dream report last week. Entitled, Austerity for Whom, the report explores the ways that so-called budget cutting measures actually hit women and people of color more severely.
White women earn 82 cents for every dollar white men earn in the public sector, compared to 71 cents in the private sector. Black men earn 80 cents to the white male dollar in the public sector, but a scant 57 cents for every dollar in the private sector. Black women earn 73 cents to the white male dollar in the public sector, but 56 cents in the private sector. Latino men earn 86 cents to the white male dollar in the public sector but just 48 cents to the dollar, while Latina women earn 71 cents to the dollar in the public sector, but just 46 to the white male dollar in the private sector.
The solution may not be to maintain a large public workforce, but any solution will include an awareness of these differences and, perhaps, a strong Equal Employment Opportunity Commission (EEOC) to enforce anti-discrimination laws. Who wants to bet that the EEOC will be another of the budget cutting casualties? In an anti-regulatory climate, the combination of federal employment cuts, and an indifference to enforcement of anti-discrimination laws is designed to increase the racial unemployment gap.
It makes sense that the deficit should rise during an employment crisis. While we should be careful with our resources, we should certainly not budget and employment significantly in a recession. The so-called deficit crisis could be a more complex crisis if we don’t put people back to work, no matter what it costs.
Dr. Julianne Malveaux is President of Bennett College for Women in Greensboro, NC . Here latest book, surviving and thriving: 365 Facts in Black Economic History can be ordered at www.lastwordprod.com