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President Obama's Big Deal: Cuts for Social Security, But No Taxes for Wall Street
The ability of Washington to turn everything on its head has no limits. We are in the midst of the worst economic downturn since the Great Depression. Even though the recession officially ended two years ago, there are still more than 25 million people who are unemployed, can only find part-time work or who have given up looking for work altogether. This is an outrage and a tragedy. These people's lives are being ruined due to the mismanagement of the economy.
And we know the cause of this mismanagement. The folks who get paid to manage and regulate the economy were unable to see an $8 trillion housing bubble. They weren't bothered by the doubling of house prices in many areas, nor the dodgy mortgages that were sold to finance these purchases. Somehow, people like former Federal Reserve Board Chairman Alan Greenspan and his sidekick and successor Ben Bernanke thought everything was fine as the Wall Street financers made billions selling junk mortgage and derivative instruments around the world.
When the bubble burst, one of the consequences was an increased budget deficit. This is kind of like two plus two equals four. The collapsing bubble tanked the economy. Tax revenue plummets and we spend more on programs like unemployment insurance and foods stamps. We did also have some tax cuts and stimulus spending to boost the economy. The result is a larger budget deficit.
All of this is about as clear as it can possibly be. The large deficit came about because the housing bubble, which was fueled by Wall Street excesses, crashed the economy. Yet, we are constantly being told by politicians from President Obama to Tea Party Republicans that we have a problem of out-of-control spending.
The claim of out-of-control spending is simply not true. It is an invention, a fabrication, a falsehood with no basis in reality that politicians are pushing to advance their agenda. And that agenda is not pretty.
According to numerous reports in the media, President Obama wants a "big deal" on the budget, which will involve cuts to Medicaid, Medicare and Social Security. The last is especially ironic, since Social Security is financed by its own designated tax. Therefore, it does not contribute to the deficit. If there is no money in the Social Security trust fund, then benefits will not be paid.
The plans to cut to Social Security also seem perverse since we know that the vast majority of retirees are not living especially well right now and the benefits already are not especially generous. If we exclude their Social Security income, more than 80 percent of people over the age of 65 get by on less than $20,000 per year.
The average Social Security check is about $1,100 a month. This would be less than an hour's pay for many of the Wall Street honchos whose greed and incompetence brought down the economy.
Yet, when President Obama preaches equality of sacrifice, it is the elderly and the poor who are supposed to do most of the sacrificing. His plan to change the annual cost-of-living adjustment formula for Social Security would reduce benefits for someone in their seventies by 3 percent, in their eighties by 6 percent and in their nineties by 9 percent.
These are huge cuts. The Republicans are screaming bloody murder because President Obama wants to raise the top tax rate by 4.6 percentage points. Imagine that he proposed raising taxes on the wealthy by twice as much. That is effectively what he is proposing for people in their nineties who are entirely dependent on Social Security.
And he is proposing to impose this tax on seniors who had nothing to do with the crisis, while leaving Wall Street untouched. A modest tax on financial speculation could raise more than $150 billion a year or $1.5 trillion over the course of a decade.
It is striking that a financial speculation tax (FST) has not been mentioned in the debt discussions. The European Union has been actively debating the imposition of a FST ever since the crisis. The European Parliament voted for such a tax by a margin of more than 3 to 1. The United Kingdom has had an FST for decades. It raises the equivalent, relative to the size of its economy, of almost $40 billion a year just by taxing stock trades. Even the International Monetary Fund has come out in support of increased taxes on the financial sector.
Presumably, the continuing power of the financial industry explains why few in Washington are discussing an FST. After all, a director of Morgan Stanley, Erskine Bowles, was the head of President Obama's deficit commission.
And this explains why we are looking to gut Social Security and Medicare in response to Wall Street's wreckage of the economy. The basic story is that the average worker and retiree will have to sacrifice because of the damage that the Wall Street crew did to the economy. That is what democracy in America looks like now.
99 Comments so far
Show AllThe time has come for all good people and commentators, good or not so good, to shout with the highest possible decibel that nobody who has any real power to negotiate and decide "debt reduction" has yet let the word "war" leave their lips and that includes our American Napoleon Obama who cannot possibly talk about war costs incurred by Congress since 2002 because these are his wars now as I predicted they would be in the spring of 2008 on this site.
And Baker doesn't mention that the only reason banksters hourly income currently exceeds the $1,100 average monthly social security check (actually, many banksters' hourly income exceeds the average ANNUAL social security draw) is that Dubya, Obama and Congress authorize government spending to fund serial bankster bailouts and other corporate welfare programs.
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The real "spending problem" is bloated military spending and other corporate welfare programs.
A modest tax on financial speculation could raise more than $150 billion a year or $1.5 trillion over the course of a decade.
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Learn how to negotiate Mr. Baker.
If your aim is for $150 billion a year then demand a tax that'd raise $300 billion a year. Heck, why not trumpet a 3% tax on transactions which could raise $600 billion a year. Then promote the tax as "The Free Healthcare for All Americans Program". Who could possibly be against that?
Additionally, you should state in your proposal that the first 100 trades would be exempt. That way, the tax would not effect 99.8% of Americans, thus gaining their support.
Then promote the tax as "The Free Healthcare for All Americans Program".
Don't call it that if you want everyone to support it. Call it American Patriot God and Country Health Care For All American Program. You will get the Tea Baggers, Repugs and religious freaks to endorse it. If they don't you can attack their patriotism and love of God.
Unless financial industry structure is changed by restoring New Deal financial industry regulations (and adding new regulation to address new "products"), the industry will continue to call the shots. Taxing an industry that is so out of control will not work because they have the means to relegislate and evade any taxation the government may impose.
Yes, and every time the name of the program is spoken, from out of nowhere, will come a recording of Kate Smith singing God Bless America.
"Free" is definitely out. It's a fightin' word, a red flag to lizard-brained yahoos who become enraged at the possibility that the gummint is reachin' into their pockets to pull out THEIR hard-earned money and give it away to some shiftless, good-fer-nothin' low-life-- and probably an "illegal" t'boot.
Just spitballin' here, but I suggest the "Health Care Only for Decent, Patriotic, Thrifty, LEGAL Americans Who Really Need It Program".
This could probably be tweaked and rearranged to form a catchy acronym, but I don't feel like wasting more time figuring one out.
greed crisis
In general, I agree with and respect Mr. Baker. BUT, I believe he has overstated his case. The US HAS BEEN overspending; We have run a deficit almost every year for many years, but the major cause of the deficit is threefold: 1. Our global military activities, 2. The Bush tax cuts on the wealthy, and 3. The financial crash, which Baker discusses. The crash is only the latest and proximal cause of our financial distress.
The fixation on our debt and deficit is likely to send our economy into another and still worse crash.
Jim Shea
The banksters themselves, Kansas City Federal Reserve Bank Chief Thomas Hoenig, and other credible sources have gone on record during the past two years confirming that unless structural changes are made to the financial industry, the US will experience ever more extreme bubbles and crashes, just like it did for 150 years leading up to the 1929 crash. Back then they called the serial crashes "panics".
Obviously the banksters consider this a plus, especially since the government now squanders taxpayers' money to fund ever larger bailouts for too-big-to-fail banks and other corporations if they don't time their bets right.
While your point well made , were all that money that is spent on the Military spent on Social programs, the US would no longer be overspending. Of the OCED countries the US is lowest next to Mexico with "Government Spending".
Another point needs to be reinforced. If Citizens of the United States of America have contributed over their lifetimes to Social Security and that money returned to them in the way of Cheques when they retire, then I do not consider it "Government Spending".
This akin to claiming the Bank spends money when one withdraws their savings from it.
Refusal to repay these funds as agreed and insisting the amount returned be less then what was agreed to is no "Saving money". It is stealing it.
That is pecisely why, if Social Security were completely abolished today, the US defcit would not budge one cent.
Since Social Security did not contribute to the deficit, it cannot reduce the deficit.
This is proof that politicians proposing to cut Social Security (including Obama) have no intention of reducing the deficit. Their intention is to attract more Wall Street campaign contributions since Wall Street knows that any cuts to Social Security are another step toward privatizing it, netting Wall Street billions of dollars in new fees each year.
Just another revenue generator ignored ... see http://www.ctj.org/pdf/grandbargain.pdf or http://ctj.org/pdf/bushtaxcuts2013to2022.pdf in re: Shea's #2 ref.
These are truly catastrophic symptoms of the corp takeover of our gov
Missing from this article is the cost of all our bombings, invasions, occupations overseas. Trillions!
But overall, thanks to Mr. Baker for his spot on and direct analysis of the recent charade being played out in our nations' capital. More change to believe in!
Amen to you but how can you thank Mr. Baker for an analysis that does not discuss "the cost of all our bombings, invasions, occupations overseas" hence misses the truth by miles or tries to protect a still favorite but war-mongering president? My feelings are closer to contempt.
The large deficit came about because the housing bubble, which was fueled by Wall Street excesses, crashed the economy.
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The large deficit came about because the elite knew that the rule of law no longer applied to them. So they engaged in massive fraud.
To simply label their racketeering as "excess" is almost to excuse it.
From the issuance of mortgages to the packaging of them as investment vehicles to their triple AAA ratings to the swaps used to bet against them the entire process was nothing but massive fraud.
The fuel for the fraud was the ultra-low interest rates courtesy of the Federal Reserve which itself is a fraudulent organization.
Yes, the bubble and bust were the result of thirty years of decriminalizing financial industry regulations (the media calls it deregulation) and revising the way inflation rates and unemployment rates are calculated, thereby understating the real rate of inflation to justify low interest rates.
How about cutting corporate entitlements/subsidies like the billions for corporate farms? Defense? Tax hedge fund guys making $2 MILLION PER HOUR!
The truth is our country is run like a colony by the secret club all admins belong to since Wilson--The Council on Foreign Relations (CFR).
Former CFR Pres, Peter Peterson, has spent $1 BILLION to kill social security & medicare. Now we know why no one is working for The People. We are under the control of a CFR junta
How about cutting corporate entitlements/subsidies like the billions for corporate farms? Defense? Tax hedge fund guys making $2 MILLION PER HOUR!
The truth is our country is run like a colony by the secret club all admins belong to since Wilson--The Council on Foreign Relations (CFR).
Former CFR Pres, Peter Peterson, has spent $1 BILLION to kill social security & medicare. Now we know why no one is working for The People. We are under the control of a CFR junta
Bring up Pete Peterson or the Council on Foreign Relations in conversation with the "average American", and maybe three in fifty has ever heard of either one. Any society with this type of information disconnect is doomed to failure.
Then those of us that are aware need to never tire in trying to inform the rest. The SPP is no more, and the Project for a New American Century has formally dibanded, and I can't count how many politicians pretended not to know of either's existance. The SPP even had a .gov website. But they pretended ignorance while abiding by the policy agendas set by both.
I know both are still operating under new guises, but the fact remains they did have to take it underground. We can make a difference.
Many members of the CFR also belong to the Bilderberg Group. Take, for example, Tim Geithner, Paul Volcker, Larry Summers, Hillary Clinton, Diane Feinstein, Ben Bernanke, Robert Rubin, Alan Greenspan, Henry Paulson, and the real bigboys Zbigniew Brzezinski and David Rockefeller. Yes, please take them.
Almost all of us accept as normal a world in which billions live on the brink of starvation and a few million own 90% or more of the planet's assets. Some families have greater income than entire nations. And the wealthiest among us have purchased all of the governments of the world (with maybe a couple of minor exceptions), including the US government. As Mr. Baker points out, the lackey in chief wants to tax the poorest among us in order to maintain the lifestyles of the richest. This whole thing will come to an explosion, and then the rich will use their military might to crush all of us.
The reverse Robin Hood model.
obummer is a nwo shill and he's doing what he is told to do
he is a vermin who lives in the bile under the sump pump
he reads a teleprompter just like bubba clinton "feels our pain"
he and his psychotic vacationing wife are living like marie antoinette and her concubine - how many is it 10 vacations this year already - and counting
let's tax the rich and end the wars
oh yeah the people who really own amerika don't give a sweet turd about how we think
that's why the arabs hate us - for our freedoms
its got nothing to do with our bombs or death machine...........
I think I've figured out Barracks Obomber's shtick, and it's as follows:
1. Cave in to the wingnuts
2. Then come out before the cameras and, looking dignified, somberly tell the sheeple it's a victory for sane governance.
Exhibit A: Healthcare "reform"
He's an invention. A manufactured celebrity picked more for his looks than his intellect (Which I've yet to see demonstrated.). Much like Sarah Palin. But he's more like Bill Clinton, a nobody who came out of Arkansas to win the Presidency based on his Kennedy looks. The citizens of the US got DADT, and NAFTA and the Sudanese got their aspirn factory bombed, but WalMart is a giant, and China was granted Most Favored Nation Status. He did the work of his masters, and Obama will do the same.
You do know using names like Obummer and putting a k in America reduces your credibility?
I think Obummer sums it up just perfectly!
Hello gardenernorcal,
Some of us would go even further. Obomber, Amerikkk, the DumbOcratic Party, General Betrayus etc. These are only a few of the things that increases credibility due to adherence to the world of reality. We will not see eye to eye but I have my feet planted in reality. I see the world as it exists and wish for something better. Those who have taken over almost the whole of the world see things as they are and wish to make "improvements" which will lead to the destruction of the globe but they don't care because those sociopaths and psychopaths desire everything whatever the cost and feel that the consequences will occur after they are gone.
I agree gardenernorcal-And I have been guilty of the same-
But these cute phrases like "sheeple" are getting old fast....Composition, good prose, accurate, relevent facts and critical thinking out trump cute word games...
At what point does selling out The People, and turning over contol of the nation to Wall Street equate to treason. That's what our government has done... all three branches. No longer of, by, and for the People, but of, by, and for the wealth class.
When the 98% of us that truly matter, vote in our own best interests against the 02%, who have no national identity or allegiance. Their only allegiance lies in personal gain at the expense of everyone else.
"Even though the recession officially ended two years ago, there are still more than 25 million people who are unemployed, can only find part-time work or who have given up looking for work altogether. "
But according to the Heritage Foundation, they are living well they have refrigerators, vcrs, coffee makers, "color" tvs, AC, adequate health care and food, and cordless phones. They are living the good life on 20,000.00 for a family of 4.
http://www.commondreams.org/further/2011/07/18-3
To quote the late Milton Friedman, "The poor in this country never had it so good."
Nice motto:
Strenthen Social Security, Don't Cut It.
Wow, inspiring.
How about:
Quit f*cking killing innocent people, murderers!!
Quit f*cking stealing our money, thieves!!
Quit f*cking destroying our planet, psychopaths!!
There's a really simple way to strength Social Security. Raise the cut off of contributions to 500,000.00 instead of 107,000.00. Imagine what a boon that would be? I doubt the rich would even feel it. Hard working manual laborers wouldn't be expected to take work until their 67. Grannies and Granpas making a little as Walmart greeters in their retirement years wouldn't have to pay taxes on their incomes and social security checks....Social Security would be solvent well into the future. And the rich could keep their jets. Hell they get to keep their inheritances and capital gains what more do they want? They don't pay taxes what exactly do they pay that entitles them to such largesse?
I saw an interesting video of Obama yesterday talking to some Harvard students. In defending himself from attacks by the Left he said that he wondered how the Huffington Post would have reported on Lincoln's Emancipation Proclamation. With this statement Lincoln only freed the slaves in 10 states. Obama wondered if Huffington Post wouldn't have been mighty upset with Lincoln's half-assed measure.
Is Obama afraid of HuffPo? I left when AOL bought it out, and Ariana refused to compensate her contributors. HuffPo will say whatever it's management board wants it to say. I imagine if they wish to portray Lincoln as half assed like Obama just did it will. They both work for the same boss.
There I go again, I guess, making my statements unclear. Obama did not say Lincoln's measure was half-assed. He merely speculated that if Huffington Post had been around in 1863, THEY would have been very disappointed in Lincoln's lame effort.
So he said what Lincoln did was a "lame" effort? Funny thing is I've never read anything about him being skeptical of the outcomes of any of Reagan's policies.
One positive is he's no longer pretending to be the is second coming of Martin Luther King Jr., now he aspires to Lincoln. Sorry if I am not buying into it. He needs to hire new consultants. Their lines aren't cutting it anymore.
The only thing he has in common with Lincoln is Illinois. A state which had it ratified ERA would have lead this country to a more equitable condition. Had Clinton and Carter done the same with their states we would have a ratified the Equal Rights Amendment. Sad that only three democrat presidents could have made a real difference but chose not to.
Obama's statement to the Harvard students presumes that Obama's achievements have been baby steps forward in a progressive direction as he and his disciples serially allege.
The 2009 stimulus package was 50% public works projects that were (and are) steps in a progressive direction. Unfortunately the other 50% was unconditional tax cuts that gave the wealthy more money with which to bribe politicians, reducing the potential for ANY progressive legislation. The 2009 stimuls was therefore tanatamount to Lincoln freeing slaves in 10 states while allowing the 10 new states in the western United States to legalize slavery.
Although 2009 stimulus may be considered a wash, all of Obama's other major achievements including Obamacare, Dodd-Frank, and extension of Bush Tax Cuts were resulted in"baby steps" in a REGRESSIVE direction (I am being charitable here, in my opinion, they were major regressive steps).
To get knit-picky on one point, saying that the stimulus package was "50% public works" is not accurate by my definition of 'public works.' A large part of that supposed 'public works' was merely aid to cash-strapped states that allowed the states to avoid horrendously awful cuts. As far as actual 'public works,' this was mainly a small amount of accelerated road and bridge work. In reality we never even tried a 'stimulus' package to help the economy.
I'd have to agree. Nothing heroic about it, only a momentary stop gap to allow the financial markets to recover and game. The only one's that got stimulated were those that got the TARP funds. The rest of us got "screwed".
gardenernorcal, your first sentence tells me that you definitely did not READ my post. You skimmed it, and badly.
No I read it in total. And I interpreted it as it was intended. As a campaign ploy for Mr. Obama. Mr. Obama is not Lincoln, he's not Reagan...he's not even close to MLK Jr., he's way less attractive than Britney Spears or Sarah Palin (if you like that type). He's a media invention working off consultant soundbytes, and he's failing miserably. He's not a great orator, he's not even a great presence. He's a failed figurehead. Gaddafi actually served his people better than this man.
http://www.thepeoplesvoice.org/TPV3/Voices.php/2011/04/19/what-next-in-libya
I hope you are not waiting for Obama's monument to be built on the mall next to or on the steps to Lincoln's. I would personally protest against that. I have a dream and it doesn't include that!
I think his memorial should be built in connection with any which might be built to glorify the memory of GW and Dick Cheney. He seems to agree with them more than anyone else. Obama should be standing up and stating his opinions on their executive orders not running down those of Lincoln. I am not sure why he fears Huffington Post more than any other site on the internet. I guess money talks for him and AOL's buy out caused him to shake in his boots.
Lincoln didn't change anything for Obama. The differences? Obama's masters moved from the plantation to Wall Street, and instead of picking cotton, he picks the pockets of working people.
Only a handful of these comments even mention Congress but most of them mention Obama. You still don't get it, and never will.
If the mention of a 4% increase in taxes brings the negotiations to a halt. What do you think would happen if Obama or any other president even mentioned one of the many Fix all Progressive ideas I read on CD all the time?
Exactly.
Oh one day, one day I hope people figure it out. Obama isn't our biggest problem.
Congress is allow to insider trade. They have no motivation to change.
http://washingtonexaminer.com/blogs/beltway-confidential/insider-trading-halls-congress