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Hawk Nation: A Guide to the Catastrophic Debt Ceiling Debate
President Obama’s proposed debt ceiling deal is a disastrous solution to an imaginary fiscal crisis, but the pain it causes will be all too real.
News reports hold that President Obama scored a political victory by agreeing to put Medicare and Social Security on the chopping block to achieve a “go-big” $4 trillion deficit reduction. Speaker Boehner had to concede that Republicans won’t vote for any package that includes tax increases – and the deal died. So the gambit worked and the President emerged with a solid image as the alpha deficit hawk.
To which one can only say: how nice for him.
We’re in a summer that only Salvador Dali could paint, a reality so twisted that one almost yearns for the simple verities of the War on Terror or even the invasion of Iraq. Then as now, to be serious one must be a “hawk.” (The dove is a weakling, a loser, and the owl for practical purposes does not exist.) So let’s review some of the strange and mysterious faces of this ugly, vicious bird.
The debt ceiling was first enacted in 1917. Why? The date tells all: we were about to enter the Great War. To fund that effort, the Wilson government needed to issue Liberty Bonds. This was controversial, and the debt ceiling was cover, passed to reassure the rubes that Congress would be “responsible” even while the country went to war. It was, from the beginning, an exercise in bad faith and has remained so every single second to the present day.
Today this bad-faith law is pressed to its absurd extreme, to force massive cuts in public programs as the price of not-reneging on the public debts of the United States. Never mind that to force default on the public obligations of the United States is plainly unconstitutional. Section 4 of the 14th amendment says in simple language that public debts, once duly authorized by law and including pensions, by the way, “shall not be questioned.” The purpose of this language was to foreclose, to put beyond politics, any possibility that the Union would renege on debts and pensions and bounties incurred to win the Civil War. But the application is very general and the courts have ruled that the principle extends to the present day.
What is going on in Congress at this moment already violates that mandate. It is an effort to subvert the authority of the government to meet and therefore to incur obligations of every possible stripe. It is an attack on the concept of government itself – as the “Tea Party” by its very name would no doubt agree. It therefore paints those deficit hawks who are using the debt ceiling to take budget hostages as enemies of the United States Constitution.
The President, though supposedly a constitutional expert and though sworn to “preserve, protect and defend” the Constitution, will not say this. Instead he appears to treat the Constitution as an optional matter, to which he will not resort, in the hope that by negotiating with the hostage- takers he can reach some reasonable outcome that will preserve everyone’s good name. (The great Harvard legal scholar Laurence Tribe recently argued that the President cannot defy the debt ceiling on his own. That’s a debatable point.) It is as though Lincoln in 1861 faced with the siege of Sumter had sat down with Confederate commissioners to see what could be worked out.
In Washington it appears that this assault on government has a large measure of elite and media support, if not on the crass details or vulgar personalities but because it could conceivably force the parties to do “what they should do anyway” – namely come to a long-term deficit and debt agreement. Such an agreement would cut spending, raise some taxes, put the projected debt-to-GDP ratio on a declining track, and solve the “government’s fiscal crisis.”
What fiscal crisis? The great unasked question in this summer of sound-and-fury is “why?” The United States has many problems at the moment: a high-and-stubborn unemployment rate, a foreclosure catastrophe, a slowing economy that has not recovered and will not recover from the Great Crisis, and the ongoing challenges of infrastructure, energy and climate change. Fiscal crisis? The entire thing is a figment, made up of wise-men’s warnings repeated endlessly and linked to the projections of technicians at the Congressional Budget Office and elsewhere.
The projections, as I’ve written here, are made up of two economically impossible arguments. One is that there will be a big economic rebound, restoring near-full employment by 2013 or so. We’re already off that track, as some of us warned from the beginning. Of course, a recovery would reduce the deficit even if nothing were done. But CBO then recreates the exploding debt by assumptions, which include steady growth and low inflation, but sharply higher health-care costs and much higher short-term interest rates. These lead the projected debt to compound skyward, soon surpassing all previous records in relation to GDP.
Is this possible? No it is not. The Federal Reserve would never raise the short-term interest rate as CBO projects, without a prior increase of inflation, which CBO assumes will not occur. If they did, the economy would collapse! And if they don’t, the debt does not compound out of control. I have presented these simple numbers here. For what it’s worth, if you believe the capital markets signal anything, they signal their disbelief in doomsday forecasts, in the long-term interest rate on US government bonds, every single day.
Is it possible that cutting government is, by some other path, the way to economic recovery?
There are many people who believe fervently in the resilience of the private sector and for whom government is just a burden. Some of those people are pure predators: resource magnates, media magnates, banking magnates. Others have blinded themselves to the role government actually plays in sustaining the advanced networks, human protections and social systems that make up our lives, and imagine that one can go back to the world of subsistence farming, church charity and credit from the corner store. But there were many fewer people in that world, they didn’t do what we do, and they didn’t live nearly so long.
In broad terms, today’s government does four major things:
- it provides for the national defense.
- it purchases goods and services from the private economy for a wide range of public purposes, most of them individually quite small-scale in relation to GDP.
- it regulates a wide range of private-sector activity, for safety, health, environmental and other purposes, including financial stability – or so one should hope.
- it administers Social Security, Medicare and Medicaid, as well as other pension and health benefit programs.
On what grounds are any of these functions too large? As an economist concerned with peace and security issues, I do believe we would be better off ending the wars in Iraq and Afghanistan quickly, that we could dispense with the real resource costs of many foreign bases, aircraft carrier groups, fighter aircraft and submarines and nuclear weapons left over from the Cold War. But these are security judgments, not broad economic ones. In other words, I would not cut a single dime of Pentagon spending that was actually necessary to defend the United States, in order supposedly to lower the interest rate on federal debt.
By the same reasoning, why should we cut transportation, or public health, or environmental protection, or scientific research, or bank inspectors or funds that support the public schools? One can argue these matters program by program - and one should. (I would happily cut ethanol subsidies and oil company tax breaks, for starters.) But there is no economic case for placing an overall limit, and it is obvious that the 500,000 public sector workers – including many teachers, police, fire and park rangers and librarians – who have lost their jobs since 2009 were doing good and useful things that are now missed. If sacking them had been good for the economy, we would be having a stronger recovery than we are.
Finally there are Social Security, Medicare and Medicaid. Unlike the military or the transportation program, Social Security is not a government purchasing program. It therefore takes nothing directly from the private sector. What it does, is provide insurance: it protects workers from poverty in old age, whether or not their families would otherwise be willing and able to support them. And it taxes all workers, whether or not they would otherwise be burdened with elderly parents, or survivors, or the disabled, to support. Along with Medicare and Medicaid, Social Security is a powerful protector of the entire working population – young and old. It redistributes purchasing power, in loose relation to past earnings, in a way that meets the basic needs of a large number of Americans who would otherwise, in many millions of cases, be destitute or medically bankrupt.
What economic purpose would cutting such programs serve? To do so would again redistribute incomes. Many of the future elderly would be much worse off, and of course many would die younger than they otherwise would. Survivors and the disabled would suffer as well. In return, what would the federal government and the country gain? A release of real resources to the private sector? Social Security does not take real resources from the private sector! Lower interest rates? The idea is absurd, and not just because interest rates are low today. The notion that cutting Social Security would help keep interest rates down is absurd because interest rates are set in a way that has no relationship at all to the scale of Social Security, Medicare or Medicaid.*
This argument has nothing to do with the trope, oft-repeated and perfectly true, that the Social Security system does not contribute to the deficit. It would not matter if it did. The important question is: are benefits too high? Obviously not. How about payroll taxes - are they too low? There is no case for that either. One of the very few bright spots in recent policy was the decision to reduce payroll taxes on employees, temporarily, while leaving Social Security benefits alone.
If you wanted to build on that, the right steps would be to lower – not raise – the Social Security early retirement age, permitting for a few years older workers to exit the labor force permanently on better terms than are available to them today. This together with a lower age of access to Medicare would work quickly to rebalance the labor force, reducing unemployment and futile job search among older workers while increasing job openings for the young. It is the application of plain common sense. And unlike all the pressures to enact long-term cuts in these programs, it would help solve one of today’s important problems right away.
Instead of this, what do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds.
In the Daily Beast on Sunday, Howard Kurtz wrote in optimistic terms of the prospects for a deficit bargain: “But away from the cameras, even sharp-tongued politicians recognize the imperative of avoiding the fate of Greece. It is a sign of the times that the Kabuki players of Washington may take a bow simply for averting catastrophe.”
Kurtz did not say that the big Kabuki here was his own notion that somehow the United States might face the fate of Greece – a small and overmatched member of a currency zone it cannot control. He did not say that the catastrophe he fears – a default on US government obligations – was entirely the product of treacherous politics, abetted by an irresolute President who seems not to grasp the danger of allowing the Constitution to fail.
And he did not say, that the deal he would applaud, with cuts to Social Security, Medicare, Medicaid and all the legitimate and necessary functions of government — would be for millions of Americans the catastrophe itself.
* Short-term rates are whatever the Federal Open Market Committee dictates they should be. And if the Treasury wants to pay low interest rates on the debt, it can always issue short-term debt only — or it can issue long bonds and the Federal Reserve can buy them back, maintaining the structure of interest rates it prefers. There is no market default risk, no threat to “solvency” from a “loss of confidence” – nothing the private sector can do to make the US government pay more than it wants do – a point that should be obvious from the fact that the Federal Reserve’s interest rate decisions are never overruled by the market. The only way the United States government can default is if it makes a political decision to do so – which is what the debt-ceiling hostage-takers threaten and what the Constitution forbids.
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42 Comments so far
Show AllBoth corrupt parties are working towards the same goal of screwing the average person in order to appease the big donors to their campaigns and everything else is secondary. The United States is an intellectual and moral backwater that is polluting the planet with its ideology of extreme inequality and permanent war.
I just read the full article linked in paragraph 10 to the word "warned." Mr. Galbraith was spot on in 2009 when he predicted current events. I'm sure he would fully agree with your position, Thalidomide, however he'd do it in a much longer form! I highly recommend that link to anyone who would like more than a 10 second sound-byte understanding of the issue and why we are where we are today. I saved in my computer's "Favorites."
The current Consumer Price Index (CPI) already significantly understates the real rate of inflation, experienced by nearly all Americans. The "adjustments" proposed by Obama and other DC electeds will result in the rate of inflation being further understated.
Ever since Republican Gerald Ford and Democrat Jimmy Carter were blamed for high unemployment and high rates of inflation, and subsequently lost elections, both parties have revised the way unemployment and inflation rates are calculated, resulting in the CPI and other indexes understating the rate of inflation for the past 30 years.
Understating the rate of inflation has resulted in 1) lowering COLAs for workers and retirees, exacerbating the already diminishing wages and benefits, and 2) keeping interest rates low, thereby fueling housing bubbles, commodity bubbles, etc.
Americans would be outraged if they knew the basic truths outlined in this article. But they don't, and won't.
Not only are these things not being discussed, at all, in the MSM, they're not even being discussed in places like HuffPo. (Yeah, I know, AOL bought 'em and they can be considered MSM, but you get the idea.)
The President was recognized as a sellout and a DINO by those paying attention as soon as he sold us out on healthcare. So his latest cruelty is not unexpected.
What is unexpected is the silence of Democratic leaders.
God bless Bernie Sanders, but ask the average American about what he's been saying and... "Bernie... who?"
Candidate Obama was recognized as a sellout in September 2008 when he zealously promoted TARP to unconditionallly bail out the banksters that caused the economic meltdown.
Galbraith states "In broad terms, today’s government does four major things". He fails to understand the most crucial role of the capitalist state and that is to maintain the capitalist economic system - in today's world - the global capitalist system.
Because of this shortcoming in his analysis he can say, "I would not cut a single dime of Pentagon spending that was actually necessary to defend the United States".
The hegemonic role that the USA assumes in the world mandates that it use its military might for more than defense of the homeland. It must use its state terrorism to make sure that no one in the world deviates away from the global capitalist system. It must challenge those who seek and work for alternative economic systems.
Galbraith does seem to grasp one truth when he says, "a slowing economy that has not recovered and will not recover from the Great Crisis". This general crisis of capitalism, with all it's contradictions and hence inabilities to truly deal with things like climate change, environmental degradation, rising poverty, increasing inequality, etc. will never recover. It is a slippery slope to barbarism. The only solution is to adopt a new economic model. But Galbraith, being the good little capitalist economist wouldn't and couldn't suggest the doing away with the capitalist economic system. Therefore, all his suggestions amount to nothing, as they don't challenge the fundamental problem of a system that is unsustainable in the long term unless we're prepared to watch the whole world collapse with the death of civilization itself.
The only solution IS the collapse of the fascist amerikan empire ! The killing machine, amerikan imperialism, has made the collapse a sure thing !
Richard Wolff
http://www.commondreams.org/author/richard-wolff
Can't find any articles by the other authors you requested but I'll check some more.
Yep.
UNDER THE TABLE
A radical historian's viewpoint adds to these views. I recommend
THE ROOTS OF AMERICAN FOREIGN POLICY: An Analysis of
Power and Purpose, by Gabriel Kolko (Beacon Press, Boston,1969,
currently out-of-print but available at your public library).:
"...The failure of most of an entire generation of American intellectuals
and scholars to make the phenomenon of power a central concern has
permitted a fog of obscurantism and irrelevance to descend upon
the study of American life in the twentieth century..." (p.3)
Galbraith will always remain one who sees but doesn't see.
I don't see the adoption of "a new economic model" as any kind of
solution. Rather, I take the radical historian's careful dissection
of the capitalist state which the US has long protected.
(Note: The references to the Viet Nam War in the cited work are
out-of-date. The war in Indo-China had not yet "ended" and the
twenty-first century had not been entered. This last is probably
of lesser significance. Kolko's analyses go back to the 19th century.)
email:peterloeb@yahoo.com
It is unbelievable that no one in Congress or the White House understands that a healthy economy depends on the flow or exchange of money. Seeing everything that has been done and is being proposed, one can only conclude that the intention is to starve the "beast," in this case, the average American. The real question is "Why?"
From reading many thinkers such as Chris Hedges and Sheldon S. Wolin (Democracy, Incorporated), I believe that the general strategy is to so decrease and further weaken the already-weakened and demoralized U.S. middle class that we will cease to function as a significant political force opposing the Robber Class (as Cindy Sheehan accurately categorizes them) now controlling the government.
That would eliminate the need for the Robber Class to use brute military force against us, especially since so many USans are already armed and delude themselves that they can violently fight a government armed, by OUR OWN TAXES, with tanks, drones, and other weapons of mass murder already used against unarmed civilians around the world over the last 70 years.
Once any remnants of significant political opposition are so weakened that they are virtually non-existent, then the Robber Class can proceed with little hindrance to accumulating more wealth and power than any humans ever dreamed of.
Climate chaos and global weirding will devastate most of us in the next 30 years, but the Robber Class believes it will prevail in its elite sanctuaries while the rest of us suffer and perish.
Chickenhawk nation, that is. Notice how most conservative cowards are the ones that dodged the draft in past wars and want to send your children to fight the scary "enemies" they see everywhere, to kill them and steal their resources.
If Republicans want to pay down the debt, how about some restitution from the oligarchy and their banks and corporations that stole the public's money and are sitting on the 4 trillion not knowing what to do with it?
Amen to that! We never talk about who our debt is actually paid to. It is the strangest thing to me. Everybody that has debt knows and deals with the entity that underwrites the debt. The Fed. Will someone please tell me who The Fed actually is? Don't tell me a group of 12 Private Banks located in different parts of America. No. Private Banks? OK, Who owns these private banks? It surely couldn't be the banks we bailed out with TARP, right? Can't we negotiate terms with them? Could they re-structure our debt? Could they declare an interest-free holiday for the US?
Does anyone know the answers to these questions?
While I agree with Struggle that Galbraith does not attack the central issue of Capitalism itself, this article makes assertions about the cynicism of the debt/"entitlement" Kabuki dance I have not seen elsewhere. The MSM have been repeating the same falsehoods now for weeks, including Boehner's position that we should not re-tax rich people to anything approaching previous levels because they are the "job creators," a big fat lie.
Perhaps most important, though, is the quote also noted by Struggle: "...a slowing economy that has not recovered and WILL NOT RECOVER from the Great Crisis". (my emphasis.) The "no new taxes" stance of the GOP is not merely a tactic here. It is a Take No Prisoners strategy that could not be better designed to destroy the Middle Class based on a myth that all deficits and debts are bad. The economics of governments are NOT like the economics of households, and if assholes like Boehner actually believe what they say, they do not deserve to hold public office, while if they do not believe what they say, they do not deserve to hold public office.
Galbraith is correct: "We’re in a summer that only Salvador Dali could paint, a reality so twisted that one almost yearns for the simple verities of the War on Terror or even the invasion of Iraq." This "debate" is a new low in American political discourse, and it is making older people like me literally ill. What Galbraith calls the Great Crisis I feel as a Great Unraveling. It is as though the Congress has become a massive circle jerk of maddened, drugged, screaming barbaric loonies staring into a giant bonfire (of the vanities...) that crackles every time a new corpse explodes in the heat and sends black smoke into the night sky. The thin patina of "civilization" is stripped away as the last scenes of Sartre's "No Exit" are played out. (Apologies for mixing metaphors...)
-30-
" The economics of governments are NOT like the economics of households, and if assholes like Boehner actually believe what they say, they do not deserve to hold public office, while if they do not believe what they say, they do not deserve to hold public office."
Actually, what Boehner said is also what Obama also said last week. How much stupidity (or trickery/mendacity) is going around in DC would be quite astonishing if I hadn't lost the capacity for astonishment years ago. But you are right in your comment.
This is absolutely despicable. The fact that the President has allowed the Republics to frame this entire "debt crisis" debate, and question whether or not the debt ceiling can be raised at all is RIDICULOUS. This proves, as if many of us need any more proof, that this President is not fit to lead. If this President is willing to gut the backbone of the New Deal Democratic principles that have held since 1933, then he needs to go. And there needs to be an insurrection in Congress.
But that won't happen because we have no leaders. We have elected followers. We have elected those who allow the largest corporations, powerful lobbyists,the richest Americans and the Washington press corps to set policy. And they have determined that it's time to deal the final death knell to what used to be the working class in America.
Keith Olbermann was right tonight in his special comment: This nation will be judged by how it impacts the lives of its' citizens. It does not bode well. We're soon a failed state.
This is not really a comment on your comment, PP, but your comment provoked my agreement in this respect: the president is, indeed, not fit to hold the position of president or, for that matter, the position of dog-catcher in one of the far West Texas counties with a population of 36 or so. He is a so totally worthless an SOB that generations yet to come (should there be any) will be studying his role in the End of America and how he came to be in charge and able to precipitate it.
The author says: "The only way the United States government can default is if it makes a political decision to do so – which is what the debt-ceiling hostage-takers threaten and what the Constitution forbids."
Well, that just makes my prediction that this is all a bluff more real since all the politicians are acting as "debt-ceiling hostage-takers".
I believe that Debt is a huge problem and if I am wrong about a bluff, then Obama would be required by the constitution to declare emergency powers over the economy and debt.
The Republicans would not like what is inevitable if they are not bluffing so Obama has the upper hand in this confrontation on the debt.
If Default happens, Obama would not need to compromise with the failed Congress on the debt and we might see once and for all what he would do if he had real authority to change things.
We'll See
I really don't know much about the current debt-ceiling debate. I tracked this curious disinterest down to the way I ignore three year-olds throwing a tantrum in the supermarket. As with the three year-olds, once you realize why the fit is being staged you know what you must do.
You must be a professor. You are totally missing or choosing to leave out many important facts. I assume you got most if not all of your education from text books and not the real world. You make some valid points but with the facts you chose to leave out only takes away your creditability.
Speaking of "creditability": did you notice that the gravamen of your complaint-- "You are totally missing or choosing to leave out many important facts"-- is expressed in a comment that is itself entirely fact-free?
Just sayin'.
Struggle hits the nail on the head.
Gailbraith's strange list of the modern state's supposed primary functions omits by far the most important purpose, namely the maintenance -- not, repeat NOT -- the diminution of large wealth disparities. That the capitalist state has historically created programs to help people is also due entirely to this purpose -- a fear that if wealth disparities were not reduced that they would be reduced even further, or eliminated entirely.
You don't have to take my word for it. Madison stated quite clearly in the Federalist papers that a primary (he didn't say THE primary -- that would have been uncouth) purpose of the new state was to "protect the minority of the opulent against the majority". What we see today is simply the natural end-product of this sort of thinking.
I did enjoy one aspect of this article, which was the author's suggestion that the financial crisis is largely imaginary; indeed it is far more imaginary than the author dares to suggest.
There was a great piece in the Onion a way's back entitled "U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion". Excerpt --
WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct....
"You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."
"It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."
According to witnesses, Finance Committee members sat in thunderstruck silence for several moments until Sen. Orrin Hatch (R-UT) finally shouted out, "Oh my God, he's right. It's all a mirage. All of it—the money, our whole economy—it's all a lie!"
Screams then filled the Senate Chamber as lawmakers and members of the press ran for the exits, leaving in their wake aisles littered with the remains of torn currency.
U.S. markets closed as traders left their jobs and resolved for once to do or make something, anything of real value...
Likewise, the real estate industry has all but vanished, with mortgage lenders seeing no reason to stop people from reclaiming their foreclosed-upon homes.
"I don't even know what we were thinking in the first place," said former banker Nathan Collins of Brandon, MS, as he jimmyed open a door to allow a single mother and her five children to move back into their house. "A bunch of people sign a bunch of papers, and now this family has no place to live? That's just plain ludicrous."
http://www.theonion.com/articles/us-economy-grinds-to-halt-as-nation-realizes-money,2912/
--
Here's a wonderful quote from The Disposessed by Ursula K. Le Guin on this subject --
"He tried to read an elementary economics text; it bored him past endurance, it was like listening to somebody interminably recounting a long and stupid dream. He could not force himself to understand how banks functioned and so forth, because all the operations of capitalism were as meaningless to him as the rites of a primitive religion, as barbaric, as elaborate, and as unecessary. In a human sacrifice to deity there might at least be a mistaken and terrible beauty; in the rites of the money-changers, where greed, laziness, and envy were assumed to move all men's acts, even the terrible became banal.
Eek! How did Ursula K. Le Guin get inside my head?
DURRUTIX: Great post! Love the part about the fake money. I think we all know the satire is actually TRUE. Plus money has been further decoupled from any sane semblance of meaningful worth as a result of the way it's been mangled into the inflated illusion of derivatives and swaps.
So Wall street makes money on money, Hedge Fund sociopaths invent formulas for profit based on NOTHING OF SUBSTANCE, nothing actually created (or labored for)... and sadly, these faux semblances of wealth are traded against very real things like other nations' livelihoods, natural resources, and the composite well-being of their citizens.
It's probably the most impressive and equally dangerous farce ever known unto man.
In the funny British film, "Bedazzled," a charming devil played by Peter Cook laments that it took centuries to come up with an 8th sin... which he deemed Advertising. I'd suggest that #9 recently rang in as those derivatives and swaps. The misery linked with its chain reaction (think home prices and equity plunging, and entire nations defaulting on the ersatz bets linked with these numbers) has gone round the world. Devil Made me Do it... style?
Thanks Sioux. Hey, I'm a supposed "Scorpio", born on Halloween to boot. 31 October.
I'd be very interested in your reading my palm, as it were.
BTW, just click on "contact" at metanoia-films.org
We are being scammed by all this ugly politics and what I call one of the worst Governments we have ever had in Washington DC. They all should be thrown out of office. We the people are being blackmailed by having no Leaders in Washington but scoundrels on both sides of the aisles in Congress.
Then today the President warns that no SSA Benefit Checks, Veteran Checks would be sent out if the Debt Ceiling is not raised by August 02, 2011. What an insult and outrage to millions of citizens of all party affiliations. SSA and Medicare should not even be a factor now or in the future. I propose that these two Agencies be made private but run by a board made up of civilians and government and remove the ugly politics that now exits.
By the way may be when a tragedy strikes FEMA or SSA or any other Agency says sorry we are closed at present so fend for yourself. Remember Katrina in New Orleans when the Government did not respond. Well the GOP was in charge then and who are calling the game plan now.
It's now time to act as adults and remember we all or some vote in 2012..
Nicely outlined. I could not have summarized the situation any better. I'll simply say that this crisis is complete bullshit. There will be no default, ever. It simply will not be allowed to happen by any political faction, beginning with the banks!! and then with the rest of the financial fortress. This is a smoke screen. There are thousands of actual issues that have immediate resolutions — they are never reported upon, except obliquely if at all. This debt ceiling "crisis" requires no solution; it isn't real. You can bank on that.
My letter to my Senators and Congressman, all Democrats:
If a Republican President, Palin, Bachmann, Romney, whoever, proposed cutting Social Security and Medicare, would Democrats in Congress be as silent as they now are when it is Obama who calls for the cuts?
With Medicare and Social Security under attack by both Democrats and Republicans, will concerned voters have anyone to vote for in the next election?
PROPOSED LEGISLATION THAT WOULD PRESERVE SOCIAL SECURITY INTO PERPETUITY
By John Bachar
See the analysis of Social Security (SS), not to be found anywhere else, for the 16 year period, 1993 through 2008. The central result is that easy structural changes can be made to the SS taxation system by an act of Congress that will easily provide for sufficient annual contributions and Trust Fund assets growth to take care of the retirement needs of the increasingly aging population into perpetuity, as well as the replacement of the existing 73-year old regressive SS taxation system (only salaries/wages are taxed below a certain amount called the “cap”) by a progressive one (i.e., the taxation of all income, not merely salaries/wages, at a rate that increases with increasing income), and without reducing retirement benefits nor increasing the retirement age. Please click on:
1. Complete analytical version (November 2010) http://www.absentlinks.com/uploads/6/6/4/2/6642350/four_analytical_papers_on_preserving_and_strengthening_social_security_by_john_bachar.pdf
2. Comprehensive updated version (July 2010)
http://www.absentlinks.com/uploads/6/6/4/2/6642350/july_2011_comprehensive_version_social_security_exposing_the_destructive_fixes_and_showing_how_to_preserve_it_into_perpetuity.pdf
3. Brief version
http://www.absentlinks.com/uploads/6/6/4/2/6642350/social_security_taxation_system_revision_from_regressive_to_progress_on_all_income_november_2010.pdf
John M. Bachar, Jr.
Emeritus Professor of Mathematics
California State University Long Beach (CSULB)
Bio
I am a Mathematician with a 50+ year record of research and university teaching (to summarize; Ph.D. UCLA, 1969; M.S. Northwestern University, 1955; 36 years teaching at CSULB; dozens of research conferences; director of research conferences; research papers). In addition to the world of pure mathematics in academia, I have analyzed and written about dozens of issues that are in the Public Interest, with particular emphasis on the inherent mathematical content of such issues.
Stop the war spending. Tax the rich to pay off the bill.
Acuerdo; amerika IS slaughtering its way into oblivion !
I am so very thankful that we have economists like James and John Galbraith, the author's father. Both have served this country and its' citizens well. To get a good general idea of how US economics (should) work, go to youtube or google the Galbraith name and it will give you a list of their most popular works. The father, John, was influential during the the Great Depression.
Of all the scurrilous scum-bag operations in the corporate "mainstream" mass media who unquestioningly parrot bipartisan neo-liberal Big Lies and pose as being concerned about job creation in America, ABC News with Diane Sawyer (a former Nixon speech writer) is the absolute worst.
She squawks about the "game of chicken" the political parties are playing over "the debt ceiling crisis" and daily touts her "Made in America" news segments that constantly admonish people that "if everyone in American bought just $3.00 dollars worth of things made in America it would create 10,000 more jobs!" But she NEVER mentions "free trade" and the number of jobs it costs us every year that far and away exceeds her bogus "made in America" math.
The MSM and political class treat "free trade" without labor or environmental protections as a historical norm--AND THE PUBLIC IS IGNORANT AND BRAINWASHED ENOUGH TO BUY IT.
THERE WILL BE NO U.S. ECONOMIC RECOVERY AS LONG AS NEO-LIBERAL "FREE TRADE" TREATIES ARE IN EFFECT AND THE WTO STILL SECRETLY ADJUDICATES TRADE DISPUTES.
I am so very thankful that we have economists like James and John Galbraith, the author's father. Both have served this country and its' citizens well. To get a good general idea of how US economics (should) work, go to youtube or google the Galbraith name and it will give you a list of their most popular works. The father, John, was influential during the the Great Depression.
JK's commentary is all well and good, but, it is still grounded in the incomprehensible game playing of "the present system". We need a new game changer capable in fairness and economic justice, of eliminating all the present "warts".The Universal Economy cost's nothing,takes nothing from anyone, yet it solves all of our present economic woes.
Please consider: The response to The global Financial crash, every where, has been to literally "print or keyboard" money estimated to be in the hundreds of trillion of dollars, in order to "rescue" the big Banks and financial institutions, those responsible for creating the crash. However, the correct response should have been "bankruptcy" for the financial gigolos, and implementation of my long-time proposal for THE UNIVERSAL ECONOMY.
The main purpose of THE UNIVERSAL ECONOMY, is to create "Social" capital in order to eliminate Poverty, deprivation and unemployment; as you read you will understand that the rich and powerful already have their version of THE UNIVERSAL ECONOMY but it only serves those who need it least."Please now read and judge for yourselves; whereas bailing out the financial and banking institutions is certain to create hyper-inflation, money "printed" and spent into the grass-roots of domestic economies will not.Please read it all.
All Nations of the world must take back their Sovereign rights that enable them to create their own supply of domestic, Interest free, Debt free, Social Capital and to create a State Bank, to create and issue all Democratically mandated "Social Capital" ; one American State (North Dakota) does this and is free of the financial woes depressing the rest.
This first step eliminates untold quanta of inflation and Government debt.
Every Sovereign independent Nation, or co-operating group of Nations, will then use this Social Capital to totally eliminate Poverty and deprivation in their communities by issuing to all that need it a Social Wage, structured to provide a basic break even living standard, a wage that will continue until death. This forms the basis, the bed-rock of a stable, consistent, trickle-up economy.
The Government will finance all conceivable Public Support and Infrastructures, Health, Housing, Education, etc.
The Social Capital so created will be the sole means of financing the Nations Money Supply, it adjusts automatically to population levels. This will become a "trickle Up" economy, replacing the nonsense of trickle down.
No Capital or subsidy will go to Private Enterprise directly, for if it did it would cause serious inflation.Capital issued and "spent" into circulation, as described above, would not create inflation.
There would be no interference with Private Enterprise. The Private Sector could employ those in receipt of the Social Wage by offering wages and hours of employment capable of inducing people to do the work offered; the wage so earned would supplement the Social Wage, not replace it. Thus inducing mutually agreed conditions at much lower wage costs to employers.Will this not help negate the export of jobs to China etc.?
Thus far none or very little taxpayer money has been expended. The burden of support for the poor and the provision of social and community infrastructure has been lifted from the backs of Corporate enterprise and the wealthy.
Control of Social provision has passed out of the hands of those not willing to vote for higher taxation to facilitate it.
Working people are no longer at the total mercy of Market force gambling, that all too often deprive them of livelihood and take away hard won assets such as homes and pension funds. Working people can also more easily change employment to escape unsatisfactory masters and conditions.
Price and cost inflation will be substantially reduced by ceasing tax collections from wage and salary earners, to include abolition of any sales taxes, G.S.T., and V.A.T.. Instead individuals will pay tax only once, and that when they are deceased, when the taxman will be empowered to asses deceased estates for tax liability. Avoidance will place the whole estate in danger of confiscation. Is there a better, or more equitable, system or time to pay tax, other than when we are dead?
Corporations and all other commercial enterprise will pay an annual flat rate tax levied against total net profits. Avoidance and imaginative minimisation schemes will not be allowed. Tax allowances will be strictly limited to running, operating,overheads and development expenditures.
Government will not subsidise free enterprise, this great engine, by it's own rules, must stand or fall on it's own merits.
The value of Sovereign currencies, exchange rates, for international purposes will be decided by co-operating Governments, taking into account the requirements and relativities embedded by consent in trade agreements, indicated by Supply and Demand and moderated to avoid damaging competitive pressures or disruption to home markets. Exchange rates will be fixed, stable, out of the influences of manipulators and traders.
There is much more to be said in explanation, however your own knowledge and experience will enable you to foresee the many attributes such a system delivers. My title for it is "THE UNIVERSAL ECONOMY" for it will work anywhere and for every person, fairly and equitably.
A very small "coterie" of Bankers and money power people is holding the world to ransom, they spend untold quanta of money spreading lies about the evils of Social Capital, for their own narrow purposes, populations around the world are in mortal danger, somehow the money power must be defeated.
This defeat will come about when we elect independent politicians who will change our system from being representative to being participatory, and we return the Economy to one operating on "sound money", ( with no private entitlement to create money) circulating in THE UNIVERSAL ECONOMY. This formula, most importantly,takes care of the constantly increasing costs due to population growth and other demographics.
Have you read this far? then you have my thanks, your commentary would also be most appreciated.
Regards, Thomas W. Adams.
No job, No homes, No medical care, No social security.
No need for government at all.
Actually its the government that has no need for people.
The USA does not have a government, it has the Federal Reserve banking system, and from them we have the Council on Foreign Relations who occupy every key position in all administrations. The people of the USA work for the Federal Reserve bankers of the world. The purpose for which the Federal Reserve System was adopted (illegally) is entirely for the purpose of making money easy to borrow, (not by taxes) so that Congress could fund endless wars. Wars are the most efficient way for the transfer of masses of wealth to the bankers, who finance all sides of all wars. They sell hardware, they fund provocateurs, they create false flag events, and they trigger depressions, all for the control and transfer of wealth to them and their dream of world domination through a NWO, with them in control of a feudal society. Please read G. Edward Griffin's book, "The Creature from Jekyll Island" to see the financial history of the USA and the control the Federal Reserve has through their minions, the Council on Foreign Relations, which is the true government in the USA. Congress is a paid participant, prospering from their corrupt association with the bankers. Kill the Federal Reserve, do not extend the debt ceiling, be ready for depression, and in a not too distant future we will have a truly free and prosperous nation. The real problem is the debt based financial system and its corrupt control of our government, and the wars that they create.
PROPOSED LEGISLATION THAT WOULD PRESERVE SOCIAL SECURITY INTO PERPETUITY
By John Bachar
The analysis of Social Security (SS), not to be found anywhere else, for the 16 year period, 1993 through 2008, has been done. The central result is that easy structural changes can be made to the SS taxation system by an act of Congress that will easily provide for sufficient annual contributions and Trust Fund assets growth to take care of the retirement needs of the increasingly aging population into perpetuity, as well as the replacement of the existing 73-year old regressive SS taxation system (only salaries/wages are taxed below a certain amount called the “cap”) by a progressive one (i.e., the taxation of all income, not merely salaries/wages, at a rate that increases with increasing income), and without reducing retirement benefits nor increasing the retirement age. Please click on:
1. Complete analytical version (November 2010) http://www.absentlinks.com/uploads/6/6/4/2/6642350/four_analytical_papers_on_preserving_and_strengthening_social_security_by_john_bachar.pdf
2. Comprehensive updated version without analytical tables (July 2010)
http://www.absentlinks.com/uploads/6/6/4/2/6642350/july_2011_comprehensive_version_social_security_exposing_the_destructive_fixes_and_showing_how_to_preserve_it_into_perpetuity.pdf
3. Comprehensive updated version with analytical tables (July 2010)
http://www.absentlinks.com/uploads/6/6/4/2/6642350/july_2011_with_tables_social_security_exposing_the_destructive_fixes_and_showing_how_to_preserve_it_intp_perpetuity.pdf
4. Brief version
http://www.absentlinks.com/uploads/6/6/4/2/6642350/social_security_taxation_system_revision_from_regressive_to_progress_on_all_income_november_2010.pdf
John M. Bachar, Jr.
Emeritus Professor of Mathematics
California State University Long Beach (CSULB)
Bio
I am a Mathematician with a 50+ year record of research and university teaching (to summarize; Ph.D. UCLA, 1969; M.S. Northwestern University, 1955; 36 years teaching at CSULB; dozens of research conferences; director of research conferences; research papers). In addition to the world of pure mathematics in academia, I have analyzed and written about dozens of issues that are in the Public Interest, with particular emphasis on the inherent mathematical content of such issues.
We have had debt. We have paid debt. We have incurred debt that needs to be paid. Yes, we do need to look at what government spending is and make it more in line with what outcomes we actually want. These are separate issues.
My government has entered into contracts with various suppliers and agents which included promises of various payments. We get a good credit rating to allow us to continue paying off our creditors at a low interest rate, and which encourages further credit because we are known as a good risk. When key members of the family/government get all up in a curmudgeon and imply we have no obligation to pay these debts or that we will just pay what we want, oops. Now there is real suspicion that we are not going to continue to be a good risk. Who would want to lend to us without a much bigger rate of return to offset the risk? Meanwhile, we have a great number of dependents whose lives are based on getting what was promised from the government. Maybe there are ways we could save, have fewer obligations, get better deals for our dollars. Certainly, that ought to be looked into, discussed, better options adopted. That has nothing to do with the debt we have already incurred, and the need to continue borrowing to meet those obligations we have already committed to.
If the money isn't there to pay all the bills, there will be prioritization which may not prioritize what we may think are the real priorities. These are foolish political games with real consequences for real people. Perhaps we need to tell our reps that we didn't hire them to play on our dime?
Many ordinary women do the practical work of budgeting for families, and learn to keep the creditors paid and the kids fed, clothed and otherwise provided for.
These jerks in DC, rather then do the work they are outrageously paid for, insist on raging dramatics (what? to make themselves seem relevant?)
Oh, right, the country is in economic crisis so of course what we need from Congress is that they waste our time and resources on a dog and pony show. I guess if you can't give the people bread, give 'em a circus.
This whole debt/deficit thing is all smoke and mirrors. Next boom and with even the slightest sensible management we're back. With all the world changes -- physical, political, every which way, the markets and new technologies are ready to rock and roll. It is only idiocy or old power desperately striving to hang on that gives rise to this whole "share the pain" mantra, when instead we ought to be reaping the benefit.
I, and many others, keep saying: There is no way to save ourselves out of the deficit/debt. The only way out is up. Big new industries with excitement and job growth are on their way every day. The route is not shared pain, but shared endeavor. We need to be educated and open to the new.
The only sacrifice to be shared is a manufactured fabrication of the media fog. Rather, it is an abundance of possibility for shared success that we could be working toward, if only we would.
If anyone in DC were serious about deficit reduction and debt payment, they would insist that funding for alternative energy research, start-ups and education be in the mix.
One big way we can improve both lives and funds: prison time ought to be confined to those who have acted violently or who are flight risks during investigation. It ought to, for those who are confined to protect others from their uncontrolled violence, be a place where rehabilitative programs flourish. Nonviolent crimes deserve payment as actual payment -- whether cash, service, a combination, or some other method of extraction.
Social Security is not causing any part of our economic problems, and is in fact ameliorating many of them.
Everyone says: "Medicaid and Medicare are not the problem. They are part of the bigger problem of skyrocketing health care costs. " This is, of course, true. So, what is being done or proposed to solve the actual problem?
If people want services they can get together and charge each member of the community to create a pool from which to pay contractors to provide said services. Wait a minute: we already do that -- we call it taxes.
Of course the real fix on the revenue end would be to totally revise the tax code to a streamlined, clear, concise, user friendly set of instructions for giving our social structure its cut. Not a job that can be done in under a month, though.