Obama's Reaganomics on Steroids (2-25-11)

I notice my titles are getting longer and more bitter. I found I lacked the space, but this one should have read:

OBAMA’S REAGANOMICS ON STEROIDS: “Entitlement Reforms” a/k/a Ruthless Back-stabbing of Middle and Lower Income Americans by Raping and Disabling Their Social Safety Programs and Forcing Them To Postpone Retirement (Pretending They Could Manage to Stay Employed, Anyway)

I have just read a distressing article on Obama’s toxic Reaganomics sensibility by Eric Laursenin the indypendent.

The ever-hurtful coalition of what Laursen labels deficit hawks and free-market conservatives are having a field day during these dark and dirty Obama years. Obama and his administration amiably talk the talk of bipartisanship as they ruthlessly continue the Reagan and Bush devastation of the non-elite classes. Laursen calls out Obama for engineering us into a fatal economic direction that will damage Social Security for decades to come.

Laursen:

During this time of economic suffering, it shouldn’t have been impossible to win the battle for public opinion by emphasizing that Republicans were holding the tax cuts of ordinary Americans hostage to gain tax breaks for billionaires. But Obama ducked that fight before it began, and it appears many Democrats will follow the same path of least resistance.

At that rate, the program would be well on its way to irrelevance for a great many Americans. On the road to extinction, that is.

Laursen paints a grim picture:

Social Security Works, a research and advocacy group in Washington, calculates that under Bowles-Simpson [Catfood Commissioners], a 25-year-old worker who retires in 2050 at age 65 with a career-average wage of $68,934 would see her Social Security benefit cut by more than one-third. Social Security is not that generous a system to begin with.

and this:

Bowles and Simpson go even further. Besides eroding Social Security’s inflation protection feature, they would gradually raise the retirement age. The objective is partly to lower the long-term cost of Social Security — the later you retire, the smaller your lifetime benefit — by motivating Americans to keep working past retirement age. But it wouldn’t be that simple. More elderly are staying in the workforce already, because the value of Social Security benefits is eroding while the cost of healthcare for seniors skyrockets. But many employers shun older workers, fearing they will demand more money and possibly boost health insurance costs. Those who can find jobs frequently have to settle for low-wage, temporary, often physically demanding positions. The net result is to swell the ranks of the minimum wage and casual workforce, helping keep wages low.

And what about workers who spend their whole careers at hard physical labor and can’t keep on working after retirement age? Bowles and Simpson recommend creating a “hardship exemption,” allowing them to start receiving benefits according to the current schedule. But they don’t spell out how this would work. How would “physically demanding” work be defined? Would each and every individual have to be evaluated before being allowed to collect benefits? And who would do this? The Social Security Administration and other agencies that administer the Disability Insurance program would be the logical choice. But they are so overwhelmed that workers applying for disability often face a years-long ordeal just to find out if they are eligible.

Bowles and Simpson also propose to means-test Social Security, cutting benefits for higher-wage workers. While that might sound progressive, the definition of “higher wage” would have to extend deep down into the middle class in order to save significant money. Members of the middle class, who no longer enjoy lifetime pensions from their employers, are in much more danger of ending their lives in poverty than they used to be.

It was actually Republican Senator Coburn, Laursen reveals, who heralded the latest extension of the Bush tax cuts as “Reagan on steroids.”

The economy is clearly not in recovery as Obama and his Reaganomics doom the chances of it. Laursen compares now to the 1930s and the attempts at recovery then. Washington responded to the recession by actually creating jobs, focusing on goods and services. That cut unemployment in half.

This is not the Obama way. The elite, Wall Street-loving conservatives are banging the drums incessantly about the federal budget deficit and the national debt and are demanding demanding demanding even further tax cuts especially for owners of capital -- corporations and the wealthy -- at the expense of Social Security, Medicare and Medicaid. Domestic programs for the struggling majority of the citizenry are expendable to them, as are tax credits that actually help working households.

Reagan’s administration in the 1980s pushed through drastic tax cuts to spur on the affluent to invest and create jobs and economic growth. The alliance of deficit hawks and free-market conversatives was forged then. The partnership has vastly shifted our system of taxation. Corporations and the wealthy pay a smaller proportion of their income in taxes, while the middle class and lowest-income households pay relatively more.

Laursen on Obama’s “Catfood Commission”:

The deficit commission’s report — actually, it failed to get the 14 votes needed to be sent to Congress for a vote, so it’s really just the report of the co-chairs, Erskine Bowles and Alan Simpson — calls for close to $4 trillion in deficit reduction. Three-quarters of this would take the form of drastic spending cuts and elimination of a host of “tax expenditures.” Many of these benefit working people, including the earned income tax credit for low-income households and deductions for employers who offer healthcare plans to their workers. Medicare premiums would be hiked and Social Security would adopt a less-generous inflation adjustment formula, lowering benefits for both current and future retirees.

But the centerpiece of the plan, hailed by the Washington policy elite when it was announced as a courageous attempt to focus politics on deficit reduction, is actually a package of tax cuts. Bowles and Simpson propose to lower the top tax rate for individuals from 35 percent to 28 percent, while those making up to $210,000 would see their top rate drop from 28 percent to 22 percent. Corporate taxes would drop, too, from 35 percent to 28 percent, and companies would no longer pay taxes on foreign profits when they brought them back into the country.

Bowles and Simpson say this generosity will “make the United States the best place for starting and building businesses” and help U.S. companies compete overseas.

Less than a week later, the White House announced a deal that seemed to go in the opposite direction. The handshake agreement with Republican leaders calls for spending some $900 billion over the next two years, none of it offset by spending cuts or increases in other taxes — meaning it would add to the deficit. Instead, Obama and Senate Republican leader Mitch McConnell packaged it as a way to stimulate the flagging economy.

I guess "entitlement reform" is the real serious target for their psuedo-budgetary hysteria.

As for the Reaganomics on steroids deal that extends the Bush tax cuts another two years, the Republicans are confident that is long enough to get a Republican in the White House who could thereupon ensure the tax cuts be made PERMANENT. Betrayer Obama and the passionless Dems have been most generous in helping with the foundation building for the Republicans and their collectively mentoring elites. Do middle and lower income Americans really think they have any watchdogs any more for their welfare in Washington?

Laursen:

It would also keep the tax rate for capital gains and dividends, which is how the rich receive most of their income, at a maximum of 15 percent — less than half the top income tax rate — for two more years. And it would bring back the estate tax — but at a much lower level than Democrats had sought.

To balance this — sort of — the agreement calls for extending unemployment benefits another 13 months, which means that the Democrats will have to push for another ex¬tension at the end of next year, when they’re getting ready for another election and again vulnerable to being held up by the Republican leadership to get it. It would extend the child tax credit, increase the earned income tax credit and create a new tax credit to help cover college tuition. These are the best things in the bill for working people.

The Democrats, always willing to get a little for the now and give away the store for the future and, after all, despite the kabuki rhetoric, for the same corporate sponsors bribing the Republicans.

The deal would also provide a one-year, 2 percent reduction in the payroll tax, which funds Social Security. This is meant to put money in people’s pockets and stimulate the economy to the tune of $120 billion. But this temporary reduction would replace the Making Work Pay tax credit in the stimulus package Obama pushed through Congress last year. Making Work Pay was targeted to help middle- and lower-income workers; the payroll tax credit would provide much bigger savings to high earners, who are less likely to spend it.

[snip]

Are there any silver linings here? The problem with the meager package of measures working people would get in the Obama-McConnell deal is that they are very temporary. And while the Bowles-Simpson plan would eliminate a lot of tax breaks in exchange for those lower rates, the reality is that getting rid of “loopholes” has always been a bit of a fool’s game in Washington.

Temporary political payoffs for the Obama team while the social safety net is dismantled. Why are we surprised any more?

As Bob Borosage, president of the Institute for America’s Future, a leading progressive-Democrat organization, pointed out in the Huffington Post recently, the bipartisan 1986 tax reform act did the same thing Bowles and Simpson are proposing: lowered rates while eliminating egregious tax loopholes and deductions. “Only while the deductions were eliminated, the lobbies that created them were not.” The loopholes and other dodges came back, and “by 2006, the top 1 percent of Americans (average net worth of about $15 million) pays rates fully one-third lower than they did in 1970.”

The top 1 percent pays one-third lower taxes than they did in 1970. That is worth pondering, now isn't it?

Daniel Henninger of The Wall Street Journal notes, tellingly, that “words found nowhere in the deficit commission’s draft include ‘fairness,’ ‘the wealthiest,’ and ‘the top 1 percent.’” The explicit purpose is to make the United States the safest possible place for capitalists. McConnell said, “It is my hope that this effort will serve as a catalyst for achieving the spending and entitlement reform that our country so desperately needs.” Note that McConnell never mentions tax increases. But he does mention “entitlement reform,” which means Social Security and Medicare.??The temporary 2 percent payroll tax holiday in the president’s deal would significantly reduce the money going into the Social Security trust fund. That means the program could run out of money to pay benefits a lot earlier than it’s currently projected to (which may be why a number of Republican lawmakers have suggested such a move in the past). The Obama-McConnell deal calls for the government to fill the gap with other tax revenues. But that would place Social Security in competition with everything else the government does, robbing the program of its fiscal independence.

So, clearly the slippery slope is set for the dismantling of “entitlements”, or what used to be referred to before the Reagan, Bush and Obama wars on empathy as programs for the “common good” ... for the "public trust." HAH!

What will the Democratic Party do about the fiscal raping of social safety programs? LET IT HAPPEN!!!! LET IT HAPPEN!!! LET IT HAPPEN!!!

Laursen:

Congressional Democrats are mad at being left out of the deliberations while Republicans and the White House concluded their deal. Sen. Bernie Sanders of Vermont said initially that he would “do everything I can to defeat this proposal,” including staging a filibuster. As The Indypendent goes to press, other leading Democrats, including House Speaker Nancy Pelosi, are signaling that they would end their opposition to the measure in return for minor concessions.

[snip]

The deficit hawks, meanwhile, will be looking for a deal on Social Security. Much of this is possible because in the spring the administration will be asking Congress to raise the national debt limit, enabling the Treasury to borrow enough to keep government functioning. The price of cooperation in the Republican House will no doubt be high.

I tend to dislike sports metaphors, but in this case I can’t resist: The deficit hawks have pitched a fast one right across the plate. Unless someone steps in quickly to stop them, the free-market conservatives are about to hit it out of the ballpark.

Eric Laursen includes a list of what he calls the SOCIAL SECURITY WRECKING CREW, starring, among others, Obama and Reid. Geez, and yet the intentional predator, sell-out Prez is having such a politically successful week, enjoying so much good will from a majority of his doomed citizenry. Go figure.

To those paying attention, from Laursen:

Meet the Social Security Wrecking Crew

ERSKINE BOWLES
Co-chair of the National Commission on Fiscal Responsibility and Reform, he was chief of staff in the second Clinton administration, where he pushed for deficit reduction and cutting entitlements. Bowles has spent most of his career as an investment banker and is a director of Morgan Stanley & Co., for which he reportedly receives $335,000 a year. One widely discussed idea for reducing the federal deficit that his commission didn’t consider was a tax on financial transactions.

MITCH MCCONNELL
Senator from Kentucky and Republican minority leader, he was also chief negotiator in the talks with the Obama administration that recently ended in a deal to extend the Bush tax cuts. His importance as a Republican leader has grown steadily since the Democrats retook control of Congress in 2006, as he has consistently organized his party to oppose every major Obama initiative. Earlier this year, he said, “The single most important thing we want to achieve is for President Obama to be a one-term president.”

BARACK OBAMA
He charged his deficit commission with developing a plan to balance the budget over the next five years and “propos[ing] recommendations to the President that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending.” It went further than that, proposing a tax-reduction scheme and a full-fledged plan to slash Social Security and Medicare. While Obama defended Social Security against privatization during his presidential campaign, he never explicitly rejected cutting the program. “We’re going to have to take on entitlements and I think we’ve got to do it quickly,” he said in an October 2008 debate with Republican candidate John McCain.

PETE PETERSON
A Wall Street legend, Peterson co-founded and made a large fortune at the Blackstone Group, one of the world’s largest private equity firms. For nearly 30 years, he has campaigned to cut the deficit, principally by slashing Social Security and Medicare. The Concord Coalition, the Committee for a Responsible Federal Budget (CFRB) and his own Peter G. Peterson Foundation are just a few of the groups he has bankrolled. The president’s deficit commission is another, since the Peterson Foundation and the CRFB supplied two senior staffers free of charge to help keep the commission’s expenses down.

Peterson generally uses conciliatory language, stressing that he wants to restore Social Security to fiscal solvency, not destroy it. But every now and then a different intention peeks through. In 1996, he wrote in a magazine article, “I have concluded — reluctantly — that a fully funded, privately managed, and portable system of personal retirement accounts should be mandatory. The system I envision would initially supplement Social Security — and over time might increasingly substitute for it.”

HARRY REID
As Senate minority leader in 2005, Reid — along with House minority leader Nancy Pelosi — was instrumental in sending President Bush’s campaign to privatize Social Security down to humiliating defeat, paving the way for the Democrats to regain control of Congress the next year. Still in command of the Senate, Reid will play perhaps the leading role as Congress works through the president’s tax-cut deal with the Republicans and considers adoption of the deficit commission’s recommendations.

ALAN SIMPSON
Bowles’ co-chair was a longtime Republican senator from Wyoming who co-sponsored his first bill to cut and partially privatize Social Security in 1995. He has also campaigned against organizations that defend the program, such as the AARP. Simpson is a popular figure in Washington, where he tends to make off-the-wall, insulting statements. He ran into trouble early in the commission’s existence, when he told an activist, “We’re trying to take care of the lesser people,” a gaffe he compounded a few days later by calling Social Security “a milk cow with 310 million tits.”

Eric Laursen is co-author of Understanding the Crash, an illustrated history of the policies that led to the 2008 economic collapse, and author of The People’s Pension: The War Against Social Security from Reagan to Obama (AK Press, spring 2012). His writings are available atpeoplespension.infoshop.org/blogs-mu.

 [cross-posted at correntewire and sacramento for democracy]