Pillage and Plunder Alert - Deficit Commission Gets Underway

Watch out, they're coming. After an election cycle in which
Republicans worked themselves into a lather in an attempt to convince
voters that the deficit was the source of all their economic woes, the
political elites and their Bankster backers are coming for the middle
class. What better time to start a new publication - "Pillage and
Plunder Alert"? And what better inaugural event than the release of the
draft report prepared by the co-chairs of the Presidential Deficit
Commission?

First, Go After the Sick and the Elderly

The two chairmen of the deficit commission, former Clinton Chief of
Staff Erskine Bowles and former Republican Senator Alan Simpson,
surprised Washington Wednesday with the release of their own draft
recommendations on federal debt reduction. They were supposed to issue a
report December 1, after the full 18-member panel had been given a
chance to vote on each item. Knowing that it would be next to impossible
to achieve a high level of support on the commission for their
recommendations, the raiders decided to go it alone. Their package
appears to be about 3/4 cuts and 1/4 revenue raisers.

High on the list of people who have "feel the pain" are the sick and
the elderly. The co-chairs want to "increase cost-sharing for
Medicare." In other words, they want seniors' copays and deductibles to
increase. Plus, they want a cap on catastrophic medical costs, tossing
the severely ill over the cliff. But in what many found to be the most
ominous development, the co-chairs navigated far outside the boundaries
of their mandate to launch a frontal assault on Social Security.

"The commission's mandate was to deal with the country's fiscal
problems. Since Social Security is legally prohibited from ever spending
more than it has collected in taxes, it cannot under the law contribute
to the deficit. Their proposal would cut benefits for tens of millions
of middle class workers who are overwhelmingly dependent on Social
Security for their retirement income," said economist Dean Baker.

The commission co-chairs also recommend raising the retirement age
for Social Security. "They're talking about raising the retirement age,
because people live longer - except that the people who really depend on
Social Security, those in the bottom half of the distribution, aren't
living much longer. So you're going to tell janitors to work until
they're 70 because lawyers are living longer than ever," says Nobel
Prize-winning economist Paul Krugman.

When millions of seniors have just seen their retirement savings go
up in smoke, is it really the time to be talking about slashing Social
Security? AFL-CIO President Richard Trumka was blunt: "The chairmen of
the Deficit Commission just told working Americans to 'Drop Dead.'
Especially in these tough economic times, it is unconscionable to be
proposing cuts to the critical economic lifelines for working people,
Social Security and Medicare."

Spare the Whales, Harpoon the Minnows

Most economists agree that focusing on the deficit during a major
economic downturn is counterproductive. But if you are sincerely
concerned about the deficit caused by endless war and a massive
financial crisis, the best way to solve the problem is to put America
back to work. Working people pay taxes. The unemployed do not.

Economist Jamie Galbraith puts it best: "The only way to reduce a
deficit caused by unemployment is to reduce unemployment. And this must
be done with a substantial component of private financing, which is to
say by bank credit, if the public deficit is going to be reduced. This
is a fact of accounting. It is not a matter of theory or ideology; it is
merely a fact. The only way to grow out of our deficit is to cure the
financial crisis."

At Wednesday's press conference Alan Simpson said, "we have harpooned
every whale and some minnows" in order to come up with their
recommendations. But it is notable that while the minnows are drowning,
those blubbery whales on Wall Street have dodged the harpoon. Galbraith
recommends that the big banks be forced - once and for all - to clear
their books of the toxic assets that are preventing them from lending.
Private lending is critical to getting the economy moving again. But it
may not be enough.

With a recession this steep, more revenue is needed to put Americans
back to work. Dean Baker notes that the "glaring omission" of the
Deficit Commission draft is that while it includes taxes on the middle
class, it does not include plans for any type of tax on the financial
sector, an idea supported by commission members. He notes that a tiny
tax on destructive Wall Street speculation alone could raise $1.5
trillion over 10 years, a hefty chunk of change that can be used to put
Americans back to work and reduce the deficit.

Despite the deficit hype, polling shows the American public is clear
that the deficit didn't crash the economy, Wall Street did. Moreover,
Americans know that the big bailed-out banks are doing nothing to
improve the situation. Nomi Prins nailed it when she wrote in her book
"It Takes a Pillage," that to stop the rampage we need to restructure
the financial system to help the many and not the few. We can start by
making Wall Street pay to put America back to work.

(Stay on top of the fight for a financial transaction tax and sign up for Pillage and Plunder Alerts at www.BanksterUSA.org.)