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Today's Top News
The ‘Repo-Demo’ Party’s Three Phase Austerity Plan for America
Get ready for more of the same failed "job creation" policies, enacted by an increasingly unified political eilte
The Bush tax cuts are now extended. What cost $3.4 trillion over the past decade, 80% of which accrued to the wealthiest households and U.S. corporations, will now cost another $802 billion over the next two years and a projected $4 trillion over the coming decade.
But the Bush tax cut extension just passed by a political elite increasingly united on economic policy—a ‘Repo-Demo’ Party dominated by corporate interests—is only the first of three phases in a new policy offensive designed to protect the incomes of the wealthy and corporate America for another decade, to be paid for directly by middle- and working-class America. Together, the three phases represent the emerging U.S. variant of a general austerity strategy, similar in objective but different in content to other austerity programs now emerging as well in the Eurozone, Japan and elsewhere.
Phase two: draconian spending cuts
The second phase will likely be implemented in the next three months, before the ceiling on the federal debt has to be lifted. It will take the form of massive spending cuts in the U.S. budget, targeting Social Security and Medicare in particular. (A parallel draconian slash in spending will occur at the state level, targeting Medicaid and education).
Social Security has been a prime target since the Reagan years. Unable to cut it in the early 1980s, Reagan instead settled on a major increase in the payroll tax in 1984, creating a $2.5 trillion surplus over the last 25 years. However, that surplus was ‘borrowed’ every year by Congress to cover up in part U.S. budget deficits created annually since the 1980s to pay for war spending and tax cuts.
All that remains of the surplus in the Social Security Trust Fund are government IOUs promising to replace the shortfall when necessary—a replacement we’ll never see in our lifetimes.
In 2003, Bush II re-opened the attack on Social Security by trying to privatize it, but failed. Despite the accumulated surplus having been drained, Social Security was still annually producing a surplus and was thus financially too stable to convince the public it needed basic change. In contrast, today, as a result of a chronic three year long recession, there is no longer an annual surplus being created. Social Security is just breaking even.
But implementing the pending payroll tax cuts—part of Phase One—will finally put Social Security in the red, creating for the first time the net annual losses conservatives and corporate America have always needed to push a major gutting of the program. The payroll tax cut is thus the first move in what will prove a general attack on social security that will gain momentum in the coming months. Reagan conservatives have argued it would first be necessary to ‘starve the beast’ in order to dismantle it. For the first time, that scenario will exist.
Phase three: revising tax code to help the wealthy
Following the imminent draconian cuts in spending and Social Security-Medicare-Medicaid-Education about to take place in 2011, which lie at the heart of the second phase, the third phase of the new austerity strategy will follow in the summer of 2012. It will take the form of a fundamental revision of the U.S. tax code.
As part of this general revision, the Bush tax cuts will likely be made permanent for the rest of the decade to come. In addition, personal income tax brackets for the wealthiest households will be reduced to no more than three, possibly two, with a top rate for the wealthy or no more than 28%, representing a return to Reagan years.
For corporations, depreciation write-offs, a de facto investment tax credit for business, will be accelerated to full deductions in the first year—a measure already just enacted for small business this year. For multinational corporations, the foreign profits tax will be restructured to their advantage. The corporate tax rate will be significantly reduced or even phased out entirely. Not least, the new 2% cut in payroll taxes could also be extended, forcing yet another round of further reductions in Social Security and Medicare benefits and still higher co-pays for retirees.
To pay for the tax code rewrite and even more concessions to wealthy households, investors and corporations, the middle class will pay more. Adjustments to the Alternative Minimum Tax, AMT, for the middle class will be phased out. And the mortgage interest tax credit will be eliminated in stages as well.
Same wine in same bottles, with new label
Obama and the ‘Repo Demo’ Party have launched a PR offensive in the wake of the Bush tax cut extensions, proclaiming that the Bush tax cuts plus unemployment insurance extension plus payroll tax cut together amount to a ‘Stimulus 2’ package that will result in more economic growth and new jobs.
This is the same old tired song of the Bush administration. In fact, every one of the four major Bush tax cuts passed between 2001-04 was officially called ‘job creation’ bills.
The result of these ‘job bills’ was the weakest job creation following a recession of all the nine prior recessions since 1945. It took 46 months to recover jobs lost from January 2001, the start of Bush’s first recession. The second recession of the Bush II era, which started in December 2007, was followed by a $168 billion stimulus bill passed in spring 2008—about $90 billion of which was tax cuts. The result: 4.5 million full-time jobs lost in 2008. Then another $787 billion stimulus in early 2009, Obama’s ‘Stimulus 1’ package—about half of which was tax cuts. The result: Another 6.5 million full time jobs lost in 2009. In 2010, another half million lost jobs and dropped out of the labor market. Of the 900,000 private sector jobs created in 2010, more than two thirds were part-time and temp jobs.
At the close of 2010, now we have yet another tax cut heavy ‘Stimulus 2’. Again the claim is that it will create jobs. However, except for the payroll tax cut of $112 billion there is nothing ‘net new’ in the so-called ‘Stimulus 2.’ It’s the same old wine poured into same old bottles—just a new label slapped on the side and a brand new cork (payroll tax cut) added to the opening.
The key question: Will any jobs be created?
Corporations are today sitting on a cash hoard of more than $2 trillion, according to the business press, not investing or creating jobs. Why should increasing that hoard another $500 billion or so result in anything different? That’s the key question conservatives and the ‘Repo-Demo’ Party elite must answer—but are avoiding. That’s the question the media should be asking, but about which they remain conspicuously silent.
Only the $112 billion payroll tax reduction represents a ‘net new’ contribution to stimulus. But is it sufficient to generate jobs? Not by a long shot. For those earning $50,000 a year to the top payroll tax rate of $106,800 a year, the payroll tax cut will, on average, lead to no more than $20/week in real spending power after adjustments for partial saving, debt paydowns and what will be accelerating costs for food, healthcare, and gasoline coming in 2011. Those below $50,000 will actually have less to spend, since the “Make Work Pay” credit is ending for them. That’s nowhere nearly sufficient to stimulate the economy and create jobs.
Obama’s 2011 ‘Stimulus 2’ will thus prove no more effective than his 2009 ‘Stimulus 1.’ The past decade has produced repeated tax-cut heavy policies targeting the rich and corporations: Bush II and a Republican Congress 2001-06. Bush II and a Democratic Congress 2006-08. Obama and a Democratic Congress 2008-10. And now Obama and a de facto Republican Congress.
The recent Bush tax cut extensions show the corporate-dominated political elite of both parties are now closing ranks as the economic crisis continues with no resolution for all but the wealthy and corporations. The ‘Repo-Demo’ Party, newly aligned around the same old failed policies, has just begun to do its work. Get ready for more of the same.
Jack Rasmus is the author of Epic Recession: Prelude to Global Depression, published in May 2010 by Pluto Press, Palgrave-Macmillan.
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118 Comments so far
Show AllCan't see it happening. This country is far too fragmented, propagandized and glass-teated.
Yes, although it is clear that the elites already won the class war, Americans are still debating whether a class war has started.
Not even that, at least not in the "mainstream" media. The only time you'll ever hear the phrase "class war" is as a pejorative applied to those who dare question the massive upward redistribution of wealth.
You said it all. People must listen to this. And act.
I heartily second the points Jill made. Going along to get along must cease.
Both Repugs and Democrats have succeeded by rewarding the criminals and blaming the victims for so long that blaming the victims is the only reality many Americans have ever known.
Also, Rasmus' $4 trillion projected cost (over 10 years) of extending the Bush tax cuts assumes that the "temporary payroll tax holiday" only lasts one year.
Prior to Congress voting on this bill, however, the Republicans told the world that whenever Democrats attempt to end the "holiday" Republicans will scream TAX HIKE and the "holiday" and its defunding of Social Security will be permanent, thereby adding an additional $112 billion in each of the nine subsequent years, bringing the total ten year cost well over $5 trillion dollars.
Actually from all the people I talk to there is an implicit understanding that the
whole system is corrupt and the rich are getting everything at the expense of the
former middle class. But many people say "there is nothing we can do about it"
and just give up.
My neighbor, a lifelong Republican from generations of lifelong Republicans is
putting solar panels on his small shopping center and grocery store because he
sees it as the right thing to do. But he is totally opposed to the recent tax cuts
for the rich, says the claims that it protects "small businessmen" making more than $250,000 is baloney, and says all the politicians are bought out by campaign
contributions.
Besides the Internet, it is time to begin a billboard campaign - post articles
from this excellent website on every pole you can find to counter Corporate
propaganda.
I did this when our neoliberal ex-Goldman Sachs Governor Corzine slashed our
train service by 30% and got some rollbacks from a well-attended meeting with
NJ Transit.
We need to use every venue we can to organize the roiling anger to across the political spectrum against bankster bailouts,
bonuses and tax bonanzas to roll them back.
Also there is almost unanimous agreement that a key is GREEN investment in
transit, rail, solar energy, wind energy.
People have known since the 1973 oil embargos that change is needed, and as
Jon Stewart so cleverly pointed out, every President has said so.
But none of them have made the serious changes needed to challenge the
planet destroying fossilfuel goliaths. ("Clean coal" anyone?? from Obomber!)
Big changes are coming...
the economy will continue its slide into Depression with the further redistribution of wealth to billionaires and the concommitant onset of peak oil.
Oil prices are now past $90 per barrel and moving steadily upwards to $100...
This will stop any "recovery" dead in its tracks despite attempts to disguise
it by magically excluding "energy and food costs' from the official inflation rate!!
(Ah, who needs to eat or heat their homes??!!!)
So post post post!!
Make 11x17 copies of factual articles from this Website and plaster them EVERYWHERE!
That's great orbit7er,
We have to get out the truth in any way we can.
For quite some time now I've been printing CD articles and taking them with me to read at coffee shops, leaving them behind lying around in plain sight.
I would gladly take Corzine back over Jabba The Christie in a NJ nanosecond. Christie has slashed the funding for NJ transit (causing fares to go up) and killed off that rail tunnel to NYC which would have created thousands of jobs and eventually would have had the effect of taking thousands of cars off of the road. Compared to Christie, Corzine was a saint. Christie is hell bent on destroying all the public sector unions and public education in NJ. Christie is aggressively pushing charter schools, school vouchers and he's trying to do away with teacher tenure and seniority. Corzine was doing none of those horrible things. Corzine may be compared to the flu while Christie would be compared to the Ebola virus plus the Bubonic plague thrown in for good measure. Yes, I voted for the lesser of the 2 evils and Corzine was a thousand times less evil than Christie.
I agree, but the majority is just too afraid to risk anything and are all to willing to be "good Germans" as long as it's the "other" who's being destroyed and muzzled. And if they ever do wake up or conditions get too difficult, they will have even less power to effect change. The real question (and I don't have an answer since the 60's equation of protest and media coverage which I participated in doesn't work anymore) is how do we motivate the majority to undertake a general strike or even begin to start boycotting the organizations -government and corporate - that are fleecing us?
I thought the whole "take your money out of the big banks day and put it into local banks or credit unions" (Dec 7) was a great, non-threatening or no-personal risk way to make a statement and use the power of the purse that we still have to help change things or at least get attention. Fizzled out. I have for a long time, been an advocate of local economy and not funding the big corps, whether banks or chain stores, and keeping your money in your community as much as possible. But, apparently the meme of saving a few bucks by shopping at WalMart as opposed to a local store, out-weighs even that little bit that a person can do.
I don't want to be or sound hopeless and I will continue to do what I can in my personal circle of existence, but again, how do we actually wake people up to the power the masses actually have, when they mostly don't care about you or anyone else and are willing to ignore and accept any atrocity to keep themselves "safe"?
"... the general population of the U.S. may not yet realize all that is at stake."
This is the biggest roadblock to fomenting action as such understanding varies greatly from state-to-state, and even within states. It might be somewhat easy to rally teaparty-types with the call that Obama plans to rob their social security and medicare, which facts and events prove. Then there's the overbearing threat to Liberty that Obama has forwarded with his infinite detention program. As for your points 1 & 2, IMO, times aren't hard enough yet; and unions would IF they had proper leadership, which most don't.
It would be real easy to feed the Teaparty the line that Obama is going to take your social security monies and give it to the Banksters which to most would be the same as coming after their guns.
"understanding varies greatly from state-to-state, and even within states" I would go further and state understanding of the issue varies from person to person, especially related to employment. I have noticed my friends who have jobs are more inclined to think this is a temporary state of affairs. Without exception, all of my friends and acquaintances with jobs now are working more hours with less pay. Through these rose tinted eyeglasses they seem to perceive that they are not immediately in danger, and therefore direct action is not needed. Not sure how to reach these people before they too are looking through a different set of glasses.
The first general strike was in Seattle, Washington, in 1919. The history of general strikes in this country is just another 'erased' part of labor history. I know about it because my grandparents were in it, and my father passed the story down to us.
http://depts.washington.edu/labhist/strike/
How would we act if the country were occupied by a foreign power? Would we have a popular insurgency? The two previous major wars fought in North America suggest the formation of an underground resistance. There was quite a lot of violent resistence during the Depression, but such acts were seldom organized, although the well organized Dairy Strike eventually reaped gains, as did other general strikes air-brushed from the history books. I wonder if Blacks would riot today if Obama got assassinated like they did when the USG killed MLK. For some reason, I think not. I also think a large-scale Ghandian event will gain little unless it can be sustained for months with tens-of-millions of participants.
I've pondered the above and more since Obama was installed. Chomsky has stated that the way to overturn policy is to make its costs outweigh its benefits. One consideration is the severity of the impact as the Empire destabilizes and collapses from within as the several states fiscal insolvency becomes overwhelming and the dollar loses its reserve currency status. The only way to deter the former is to raise taxes on corporations and the wealthy. I think the key question is What is our goal? Is it 100% defeat of the US Empire--that foreign power occupying us--or is it something else?
At the end of the Vietnam War when Nixon said he would stop sending munitions to Vietnam yet still sent them.Trains were derailed and destroyed by other means.
Actually widespread organized Anarchists ( mostly Italians) did quite alot of bombing starting around 1900 to the mid 20's (Palmer raids).
But the non violent WWI resistors got more jail time than anarchists who did things like blow off the Governor of Idaho's legs at his garden gate.
Miners had a way with explosives.
The Coxey County War 5,000 armed miners marching over the mountains through coal country.
Around the same time some miners stole a plane and dopped bombs on a mine.
But this all started when Hamilton purposely bankrupted small trans-Appalacian grain farmers with the Wiskey Tax in order to bolster industrial Distilleries on the seaboard.
Or was it when the Rev. Vets rebelled in Mass.?
Hi Glenn,
I appreciate the additional historical insight you provided, but what about the fundamental questions I asked. At the top of the thread, I ask if the commentator really understands what comitting oneself to revolution really means, if deep and active thought was given to how to accomplish a *successful* revolution. The depiction by books and films of ordinary people just launching off to fight the forces of Evil have no relation to reality; Hollywood endings are not the norm.
Furthermore and of the greatest importance, the future will force austerity upon all societies in ecological overshot. This is a fact of the utmost importance. So any Revolutionary Program must make realistic allowances for the future's reality; it will not do to promise people more when less is what's to come.
karlof1, I love your question, "How would we act if the country were occupied by a foreign power?"
I must admit that I love your question because it comports so well with an analogy, which many CDers will note that I have been using too long and too often here, namely that of the country of France in 1940 "occupied by a foreign power" --- the Nazi Empire.
karlof1, the question of how the average, honest, patriotic, and working-middle-class Americans would "act if their country were occupied by a foreign power" (an Empire) has never been seriously presented to these American people ----- because the "power"/Empire occupying our former country is not an obvious foreign Empire, like the Nazi Empire in WWII, but is a much better disguised and internal Empire, which the people have some gnawing sense of, but don't understand, and which they are very reluctant to fight agaisnt.
If your question, karlof1, were asked to the French in 1940 many would (and did) take up arms in a resistance movement, while others would (and did) cooperate with the visible "occupying foreign power" (the Nazi Empire) --- and even cooperate in a shameless and complicit "Vichy" government, which acted as a propaganda ploy for the Nazi Empire.
However, while the Nazi Empire in 1940 employed a crude and thinly veiled one-party 'Vichy' government to disarm, discourage, and distract popular resistance to Empire, the internal ruling-elites' 21st century corporate/financial/militarist Empire that currently "occupies" our former country has employed a MUCH MORE SOPHISTICATED TWO-Party 'Vichy' facade of faux democratic government and an equally 'Vichy' corporatist MSM to use psychological warfare in disarming, discouraging, and distracting popular resistance in the US.
karlof1, as you suggest, exposure of the Empire is the first step in a multi-step recovery process the heart of which is to disarm the Empire's economic power by taxing away the false profits that the economic heart of the Empire captures through its unseen 'corporate negative externality tribute/tax' which the Empire currently imposes on us and the US.
More on the economic deceits of Empire, and how to disarm them, is contained in the following article:
http://www.opednews.com/articles/opedne_alan_mac_070324__22with_their_own_rope.htm
If such corrective actions are not taken soon the results could well be existential:
http://www.opednews.com/articles/-Empire-Elitism-External-by-Alan-MacDonald-090310-224.html
Thanks again, karlof1, for your question and your answer that "something more" will be necessary to solve our Empire problem>
Best,
Alan MacDonald
Sanford, Maine
"WHAT THEN MUST WE DO?"
The strikes of the 30's were preceded by intensive organizing. The CIO (helped by the Communist Party) created unions on a massive industry wide basis in a way that the AFL had never tried. In urban neighborhoods there were anti-eviction volunteers who carried furniture back into the apartment, and co-ops for mutual aid and survival.
So what do we do now? We organize workers and communities.
Only 8% of workers in private industry are in unions, so there is plenty of room for an entirely new union movement. Organize retail and service workers first. Those jobs can't be shipped to China to avoid unions, as has happened to so many industrial jobs; and service and retail workers can more easily collaborate with their customers and with the surrounding community.
And communities need to organize co-ops for self help - food gardening and buying, cleaning and repairs, child care, solar installation, and so on, and pledge to support local workers.
When workers and communities have begun new organizing, and have begun to co-operate with each other, people will start to educate each other away from the television set. And then you can pull off a general strike. When workers and community are entirely united, the national guard and even the army begin to be unreliable, and anything becomes possible.
Visiting Professor, an excellent initial discussion prompt, and now, with your reply, an excellent continuation of the discourse that you started.
Here you state, "Conventional forms of expression, such as street demonstrations and on-line petitions and letters to the editor--and, well, voting in general--have proven to be utterly impotent tools against the rolling thunder of the neo-conservative restructuring of our society", and note accurately that "working within the system is working for the system".
However, characterizing the oppression as the "neo-con restructuring of society" and working within "the system" as the inherent evils to be rallied and acted against by people is insufficient to convey the depth, scale, and reality of this evil.
In order for the large numbers of Americans, that you rightly call on, to be sufficiently enabled and motivated to take the scale of actions required to actually confront the present evil, this evil must be described and proven to be much more than a "neo-con restructuring" or an evil in the "system" ---- it must be named, described, and rallied against as the true evil that it is, EMPIRE.
A large number of Americans must be overtly informed and shown that their country is no longer an exceptional, or even normal, country, but that it is now (and ironically in Reagan's words) an "evil Empire" ---- albeit a disguised one, which is much more dangerous and effectively evil than the Nazi or Soviet Empires ever dreamed of achieving. More dangerous and effective precisely because it is the first "hidden Empire".
That the US has been proactively but guilefully morphed into an Empire can be shown and more importantly PROVEN on many levels (eg. war spending, foreign bases, economic oppression through vast inequality 'at home', spying and tyranny 'at home' and 'abroad', prison camps, etc., etc.), but that proof must be directly shown to the American people.
The Wikileaks are starting to dramatically show that ugly truth of Empire's hidden aggressions ---- and that is why the 'Vichy' media of the Empire, as well as the Empire's own tyranny of oppressing any truth on this pivotal topic of Empire's actions is being so ruthlessly attacked with as all emperor-presidents from Reagan to Obama universally describe as "whatever it takes" and "nothing is off the table".
The corporate/financial/militarist Empire, which now IS the former country called America, is finally being probed, confronted, and engaged by Wikileaks and many principled progressive leaders (which you and other CD posters mention herein) for the Empire which it secretly is ---- and it will terrorize these truth tellers with "whatever it takes" to silence them, until, as you say, a sufficiently large number of average, good, honest, working/middle-class Americans are informed and engaged "Against Empire" (Parenti) and begin "The Coming Insurrection" (Negri et al).
In solidarity against Empire,
Alan MacDonald
Sanford, Maine
The relationship between the 'left' and the Democrats/Obama looks similar to that between a wife and an abusive husband. The wife keeps rationalizing the abuse and even blaming herself. Meanwhile the abuse worsens, the wife deteriorates and finally gets killed. We've got to intervene before this happens.
SEC needs to change rules back to what they were pre-2004.
http://dailybail.com/home/whitewash-on-wall-street-how-henry-paulson-created-the-finan.html
I think a general strike sounds like a great idea. I am tired of people saying it is out of their hands. I am tired of feeling so angry at corporate robbery that I can't even stand to read the news anymore. We have to take it to the streets. Now is a good time. Either that, or roll over like a dog!
Exactly, Janet. I second that. No point even reading the news, here or anywhere, if we're not going to stand up against the wholesale looting of the People by the wealthy and the corporations.
Visiting Professor,
In "34" labor unions were growing, the USA was growing the industrial revolution.
FDR was trying to help the labor movement and socialism was popular and growing.
Today who has enough job security to go on strike? Not many. Who would be able to stop the shops from hiring strike breakers who don't even have unions or the unemployed who can't strike and probably wouldn't if they had jobs.
a "General Strike" is not feasible because this is not 1934 or anything like we have seen before.
What jobs does the USA have left that could not be outsourced more than now?
Anyone who went on strike would lose their job for good in most cases.
Is that what you want? I don't think you really do.
Workers have no real power today like they used to when the US was growing the industrial revolution and manufacturing but today all this goes to the lowest paid in the world markets and in many cases they are even better educated than here.
In response to your two questions, I would say "No" on (1) and "Yes" on (2) with the qualification that it isn't entirely necessary to have a strong labor union to initiate a strike if the people are sufficiently affected. I'm thinking of the Great Strikes of 1877 when a number of people - even some in the Hayes administration - thought the revolution was beginning. Labor unions were not strong at that point, but there was widespread public sympathy. In fact, the National Guard, even parts of the army, called out to help put down the strike took the side of the strikers in many instances. Trouble is, the strikers and sympathizers, in many cases, were looking at a desperate economic present and future and knew it intimately.
So, just a few points...1) There can't be an effective general strike until a large number of people are conscious. I agree with another commenter that Social Security is probably the best tool to break through to consciousness, but there could be many others.
2) We need to understand that the most sophisticated system of social control ever devised is in place in this nation. It sounds like a cliche, but it's true...People will never see their true condition while they are drugged by the tube and by celebrity. And it's not just television. The web of technology is designed to keep people busy, diverted, thinking in terms of disassociated "bites", and unconscious of the larger surroundings. We need to attack this system, even if it only means making it ridiculous. We need to delegitimize it. Some of us will have to work on this. It may not be as difficult to do as we may imagine. I think everyone knows at some level that it's phony and not deserving of respect.
3) Not everyone has to buy in to a general strike. Essential processes are most important, of course. Going back to 1877, the railroad strikes spread to other areas of life and gained popular support when it became clear that workers actually *did* have power if they chose to use it.
4) We shouldn't look at political parties as we always have. It is more important to create movements with political objectives. As Laurenceofberk points out in his excellent post, it's a time for the hard work of education as well as of developing social and economic systems to sustain allies and compatriots. As I mentioned (ad nauseum probably) awhile ago on this site, my primary focus in the Greens was to bring this about, but I utterly failed. It should probably work the other way around. The movement above all, then the party.
Wish I could say we can initiate a general strike now, but I just don't see how. The ground has to be prepared...so, we need to prepare it, and I'm afraid we need some coordination.
Visiting Professor, I think it is certainly time for a General Strike. Well past time actually. To those who "can't see it," my question is, what is the alternative? Just lie down and die? There is no point in continuing to read articles on this website if that is your attitude, i.e., that we're screwed no matter what we do.
My question is, how would a general strike work? The labor unions are pretty weak today. They only comprise at most 15% of all workers, closer to 9% of all private workers. If the theme is going to be "strike for jobs and healthcare," what exactly would that mean? I'd make the cry more specific, "Strike for Jobs and Medicare for All." We'd also need to get more specific on what "Jobs," means. One cannot get people to rally around vague goals. Any potential for success begins with clearly defined goals.
Then, how do we get the word out? We could use networking tools like Facebook, and certainly posting flyers. Other ideas?
Meanwhile, Obama has his dream congress that will make absolutley positive no progressive legislation, which he will now go on the road to 'fight for', will make it to his desk.
Act I ... the Dream Act.
A year ago I though there was NO WAY Obama could pull off completing the Bush/Cheney agenda in plain sight and still retain enough of the left to get re-elected.
I'm not so sure about that now.
He may be a sociopathic mass murdering corporatist monster, but he is OUR sociopathic mass murdering corporatist monster.
And Obamabots everywhere still love their smooth talking, hoop shooting monster with the cute kids.
There are too many variables to determine if Obama will get a second term.
There is one variable, Obama can depend on, The Black Votes. During the midterm the Black votes were near 90% and don't forget the diehard "Pastor Jim Jones" clueless Dem. that will gladly die for him. Now add up the total, all he needs are a few hat tricks, some lies and he will clinch his 4th term.
This article has several over-statements and misleading points. The only thing that truly bothers me, however, is the statement about congress "borrowing" all the money out of the SS trust fund. This is simply an idiotic republican talking point. Money comes into the government and money goes out. Al Gore and our media deserve a lot of the discredit also. Putting SS money in a "lock box" was a sadly awful way to describe the SS trust fund. What the hell does that even mean? Print up some dollars and put them in Fort Knox?
How is the article in error when it states Congress borrows money from the SS trust fund, a fund which is maintained by separate deductions from taxpayers W-2's?
see JerzyJoe 12:28pm. What I did not like was the article's pushing of a republican talking point which is deceptive as hell.
Drosera:
You are correct; the article is not in error. In fact, earlier this month, Rolling Stone political writer Matt Taibbi wrote an excellent essay regarding this very topic. Here's an excerpt:
"There's the question of whether or not to extend the insane Bush tax cuts, and paired up with this is the recent return of that unkillable Beltway cliche, the notion that Social Security is going broke and that the solution to the nation's deficit reduction problems lies there.
Let's be clear about what's going on here. Social Security was never the cause of the nation's debt problems. This issue dates all the way back to the Eighties, when Ronald Reagan hired Alan Greenspan to chair the National Commission on Social Security Reform, ostensibly to deal with a looming shortfall in the fund. Greenspan's solution was to hike Social Security tax rates (they went from 9.35% in 1981 to 15.3% in 1990) and build up a "surplus" that could be used to pay Baby Boomers their social security checks 30 years down the road.
They raised the SS taxes all right, but they didn't save the money for any old Baby Boomers in the 2000s. Instead, Reagan blew that money paying for eight years of deficit spending and tax cuts. Three presidents after him used the same trick. They used about $1.69 trillion in extra Social Security revenue (from the Greenspan hikes) to pay for current-day goodies, with the still-being-debated Bush tax cuts being a great example. This led to the infamous moment during Bush's presidency when Paul O'Neill announced that the Social Security Trust Fund had no assets.
Well, duh! That is what happens to a fund, when you spend 30 years robbing it to pay for tax cuts for Jamie Dimon and Lloyd Blankfein. It will tend to get empty. But of course this wasn't presented to the public as being the consequence of too many handouts to wealthy campaign contributors: this was presented as a problem of those needy goddamned old people wanting to retire too early and being just far too greedy when it came to actually wanting their Social Security benefits paid out.
And so in all seriousness none other than Alan Greenspan proposed back in 2004 that the "social security problem" be rectified by means of reforms that should sound familiar to those reading the news of late: raising the retirement age and cutting benefits.
I wrote about this in Griftopia, but there's one more key fact here. Social Security taxes are capped, which means that above a certain level (I believe it's $106,000 this year) there are no additional taxes. Which means that Jamie Dimon pays a disproportionately small amount of Social Security tax -- an arrangement that makes sense, if that money is only going to one place, i.e. back, later on, to the person who paid the taxes, in the form of Social Security benefits.
But if all that money is just going into a big pile to be stolen by a long line of presidents who are using it to pay for things like pointless wars and income tax cuts for their rich buddies, the Social Security cap means that this stealth government revenue source disproportionately comes from middle class taxpayers. Add in the fact that the proposed solution to the budget problem now is cutting Social Security benefits, and what you get is a double-screwing of middle-class taxpayers: first they see their Social Security taxes used to fund tax cuts for the wealthy, and then they see cuts to their benefits to pay for the fallout from that robbery. [...]"
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The entire piece is worth reading and can be found at:
http://www.rollingstone.com/politics/blogs/taibblog/matt-bais-post-partisanship-20101205
Giovanna,
Thank you for this clarification. It is very helpful information. Best of all, you didn't include any sniping or pejorative language that some on this site seem compelled to engage in. And thanks for the link to the original article, too.
All in all, your comment is a model of internet respectfulness.
The correct way to think of this situation is that the Social Security Trust Fund "Loaned" their excess money to the Federal Government. Now the government is in the awkward position of not only being unable to borrow more money, they really need to start paying some of it back. But instead of raising taxes to do this, they are preparing the public to accept the idea that they don't have to repay anything. This is in fact nothing more than the Federal Government DEFAULTING on its loan. As soon as that is realized by foreign governments our credit rating well drop like a rock, our ability to borrow will evaporate and their will be nobody with the resources to bail us out. (Need I point out that this web site needs to be renamed Common Nightmares!)
No, at this time our nation has no huge money problem, however we must soon recognize that deficit spending must be reigned in relatively soon (within a few years, in my opinion).
Greg,
What the article is trying to say is that there really is NO hard asset behind the trust fund. What the trust fund is, and by law must be, are government issued bonds. These bonds are special issue and not available for trade but like ANY government bond is supposedly backed by the full faith and credit of the federal government.
The bigger point is that Social Security doesn't face a cash problem (it has government bonds) but the GENERAL FUND faces a cash problem. One now made even worse with this tax deal.
What most people who write on this subject fail to realize or just don't say is that even if the trust fund is made up of nothing but government bonds, they still need to get paid. By telling you the government doesn't have the money to pay off the bonds, what they're really saying is the government is going to DEFAULT on the bonds.
My question is why? Why not default on the bonds sold to private investors? The bonds sold to foreign governments - mainly China? The bonds sold to our very own Banks and Wall Street firms?
Why default on the working people when we could just as easily default on the rich investors? I think we all know the answer to that one.
It also simply amazes me that whenever we talk about government not having enough money, unlike when the conservatives tell the rest of us to get a better job, they never seem to think that maybe the government should seek more income (taxes). No, their solution is the equivalent of a financially struggling family trading in a good paying job for a minimum wage one.
I wonder what "they" are going to do with all the bodies? Stack them up like cord wood behind some wally world super store?
Ever see Soylent Green?
We're caught in the grips of the financial sector. They rule. But little things might rattle them: climate changes causes low-lying Wall street area to go under water.
Unfortunately, that won't happen soon enough.
The article is quite good but I have a couple of nit picking points. I'm sorry to see the author use right wing talking points, such as Trust Fund IOUs:
>>All that remains of the surplus in the Social Security Trust Fund are government IOUs promising to replace the shortfall when necessary—a replacement we’ll never see in our lifetimes.<<
The SS Trust Fund is made up of treasury bonds that are earning interest. They are just as valid as the treasury bonds that the Chinese and others have purchased, just as valid as the treasury bonds that millions of Americans own, just as valid as the 5 dollar bills in your wallet. If the government defaults on the SS Trust Fund treasury bonds it will make a joke of the bonds held by foreign countries and millions of Americans. The US might as well resign as a functioning country. Before the tax holiday, SS could pay full benefits through 2037 and after 2037 it could pay 78% of benefits. The wage tax holiday will change all those figures for the worse.
From the article:
>>In contrast, today, as a result of a chronic three year long recession, there is no longer an annual surplus being created. Social Security is just breaking even.<<
That was only supposed to last for two years (SS paying out more than it takes in), I believe that in 2011 it will continue to take in more than it hands out (if nothing had changed). But Obama's tax holiday will probably change that equation, too. Did the author take into account that the SS Trust Fund is earning interest, which it is. Factoring in the interest, SS is still taking in more than it gives out in benefits.
Otherwise, the author is spot on.
Hello Jerzy,
It's true that the SS fund being empty is a right wing talking point. But the fact that it is empty because it has been looted to pay for millionaires' tax cuts is not something you're likely to hear on Fox. And that is what we have to help people to understand.
This "austerity" if only all would notice is always for the folks, but not for Wall Street or its equivalents else where, as the establihshed political parties are in the pockets of the over wealthy power elites with some noteworthy exceptions.
With the Irish politics at least Gerry Adams doesn't seem to have sold out. We need more like him and on both sides of Atlantic.
Were British Labor lucky enough to get a party leader such as Adams or had they just put Dianne Abbott in they would actually be looking at taking the next British general election by a landslide. The British people have had it iwth the welfare program for the big brokerga houses and big banks.
AD
The empire has gone over a cliff, its going to be a long way down.
"The recent Bush tax cut extensions show the corporate-dominated political elite of both parties are now closing ranks as the economic crisis continues with no resolution for all but the wealthy and corporations."
I wish the author would make it more clear to readers that this is a WORLDWIDE phenomenon.
That the austerity measures in the US are only part and parcel of those seen in Europe and other western countries.
That one significant aspect of a globalized economy is that these moves are not just the plotting of American elites but rather the machinations of a network of an international cabal of criminals.
In These Times should be the first to be screaming "Workers of the world, Unite!"
On the Road to Fascism, first they came for the Trade Unionists...
When they break the "social contract" and move to eliminate the mortgage tax deduction, the house payments will cease to be made, and NO, they won't be getting the house back.