The ‘Fiscal Cliff’: A Primer for Socialists Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Source: Phillips, Matthew. “Fiscal Cliff Will Drive the U.S. Into Recession,” Bloomberg BusinesWeek, May 17, 2012,

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Contents What is the Fiscal Cliff? Why Should we Care? Debts, Deficits & Capitalism Progressive and Socialist Alternatives The ‘Transitional Program’ for a Deficit Fight The ‘fiscal cliff’ is embedded in larger political debates about the deficit, debt and role of government, but the net effect of the cliff can have profound effects on overall fiscal stimulation. Sources: TOP - randysroundtable.blogspot.com, 2012; BOTTOM – American Enterprise Institute, 2012

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists The Fiscal Cliff Is: Limitation of the Alternative Minimum Tax Provisions of the “Job Creation Act of 2010” and Stimulus, End of the Payroll Tax Cut Included in the Job Creation Act of 2012, Ending Expensing of Investment Property “Budget Sequestration” will End Unemployment Insurance, Drastically Reduce Payments to Doctors Under Medicare, and Reduce Discretionary Spending by $54 billion $390 Billion in Revenue Increases $100 Billion in Spending Cuts

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists The Fiscal Cliff Is: The Result of Public Policy Republicans in the House and Senate Democrats and the White House Agreed to Budget Sequestration as an Alternative to a Deal Over the ‘Debt Ceiling’ in Summer A Sign of the Crisis of Neoliberal Ideology The Leadership of Both Parties are Trapped by The Prevailing Neoliberal Ideology and by the Legacy of Debt and Deficits A Significant Economic Threat The Congressional Budget Office Predicts a Recession in 2013 with Unemployment Going Above 9% and GDP Growth Below 2% TOP: Entitlement spending has crowded out investment as a Percentage of GDP Since the mid MIDDLE: President Obama and Speaker Boehner Meet During the ‘Debt Ceiling’ Debate. BOTTOM: Republican Presidential Candidates pledge to Reject any Deal on Tax Reform that Included $1 in Tax Increases even if Matched by $10 in Spending Cuts.

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Structural Characteristics Elite Fragmentation Power of Finance Capital Weakness of Labor Are Expressed in the ‘Fiscal Cliff’ As Political Gridlock Dependence on Debt and Deficit Spending and Reliance on Cuts Absence of Alternatives Producing Stymie Ongoing Deficits and Debt with only Limited Reduction Continuing Fragmentation

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Why Should Socialists Care? 1)‘Fiscal Cliff’ is Already Being Used an Excuse for Cuts 2)A Recession is Bad for Working Class People and Increases ‘Flexibility’ of the Labor Market Further 3)The ‘Fiscal Cliff’ is Indicative of Broader Ideological and Functional Crisis of Neoliberalism

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Political Economy of Debt “Asset Price Keynesianism” (Brenner) Politically Empowered the Financial Sector Mitigated Effects of Deindustrialization Supported Disruptive Behavior in Financial Markets Over Time, Undermines Social Change and Social Justice

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Selling Out the Most Vulnerable Payroll Tax Reduction Expiring with Bipartisan Support New York Times 09/31/2012 Current Debt Deal would Include Significant Cuts to Medicare Atlantic Monthly 10/2/2012 Pete Peterson ‘Grand Bargain’ Group Active on Capitol Hill Salon.com 10/8/2012

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists No “Mandate” for the Protection of Social Safety Net will Emerge from the Nov. 6 Election, Even if the President is Re- elected.

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Progressive Alternatives Economic Policy Institute: Retain Emergency Unemployment Insurance Extension, Payroll Tax Cut and Lift Mandatory Sequestration (i.e., Protect Spending) Congressional Progressive Caucus: ‘Fair Budget Fix for All Bill’ Includes Raising Taxes on High Income Earners, Unilateral Reduction in Nuclear Forces, Closing Corporate Tax Loopholes; and the Congressional Progressive Caucus 2012 Budget for All Democratic Socialists of America: ???

Socialist Education Program, Fall 2012 Boston Democratic Socialists of America/Young Democratic Socialists Emergency Program Protect Social Security and Medicare from Cuts Absent significant tax reforms for the rich to pay their fair share, Seniors and the most vulnerable should not be asked to accept cuts. Protect Unemployment Insurance UI is an important lifeline to the millions still longterm unemployed as a result of a global crisis of capitalism in which they played no part. Defend Education and Training Do not sacrifice future generations to achieve a false ‘Grand Bargain’ on deficits and debt. Any long-term solution to the debt problem should ensure: 1)The maintenance of Medicaid, Medicare and Social Security as Federal Entitlements 2)The recognition of Lifelong Education and Training Programs as the Cornerstones of a Just and Competitive Economy 3)The Urgent Need to Democratize our Fiscal Policy, bring the Federal Reserve under Democratic Control and Empower People in the Budgetary Process