An investment firm named KPCB (Kleiner Perkins Caufield & Byers) has posted a lengthy presentation on YouTube that addresses the current issue of U.S. government debt and provides an ostensibly impartial analysis of the situation and how it may be addressed. This article is offered as a review and commentary of the presentation’s content:
This is one very skewed take on the federal debt issue presented by a very large global investment company with a seriously vested interest, including a major presence in China. While the slideshow pretends to be non-partisan, in reality, it’s a propaganda tool that emphasizes all GOP talking points and glosses over any mention of opposing views.
If you agree with the KPCB take, then the main problem with the U.S. economy is entitlement spending. The slideshow emphasizes this point over and over, throughout the presentation. It also distorts the truth about tax revenue, demonizes government employees, minimizes the impact of defense spending, and makes a series of unfounded comparisons backed by equally illegitimate half-truths.
The following are some specific criticisms:
They assault the growth in government spending by charting the growth starting with the Great Depression: it’s up to 24% of GDP following a 3% trend line prior to 1930 — no shit it grew — there was no prior safety net and no future for anyone but the robber barons and banksters. That’s why we had the Great Depression! The New Deal paved the way and the ensuing period of time following WW2 was the greatest sustained economic expansion in our history — all under a system of shared prosperity brought about through government programs and regulation.
They use the GOP favorite, a family example, as comparison to show what the government should do. Of course it fails to illuminate any of the distinctions between the two very different groups. You know, like one can actually address trade rules, modify tax structures, and print freaking money — or that one is focused on its own wellbeing and the other is supposed to be focused on the wellbeing of ALL the people.
They claim that entitlement costs are rising “exponentially,” which is, of course, true, but still a means of somewhat overstating the issue. Even in today’s sad state of economic affairs, our GDP is presently growing “exponentially” — at a rate of 1.6%, which is pathetic. But the fact that few Americans understand exponential growth provides an open opportunity to exploit their ignorance and make the situation sound as bad as possible. FYI, even the Heritage Foundation estimates claim that entitlement spending will “double” by 2050. I guess “double” just doesn’t sound scary enough.
They label the growth in entitlement spending as a “runaway freight train,” comparing it to the increase in tax revenues, claiming that the former has grown at 2 times the rate of the latter over the past 10 years. Of course, they conveniently leave out anything about the Bush Tax Cuts and the fact that tax rates are at their lowest mark in more than 50 years. Are low taxes really evidence of “runaway” entitlement spending?
They emphasize how large our entitlement spending is by comparing it to the GDP of India, the “world’s 9th largest economy, but they never state that India’s GDP is only $1.38 trillion, or less than 1/10th the size of our own.
They attack the entitlements, but they completely glaze over defense spending. They list it as only 20% of the total and $656 billion. Of course, the truth is that when looking at all defense spending, not just the department of defense, the number is over $1 trillion, and is pushing 30% of overall spending.
They chart a picture where defense spending is actually below the statistical average since 1948 as a portion of GDP. Based on said chart, they assert that we’re actually not spending that much on defense. Of course, they chose a period of time that does include the spike for the Korean war and also the Viet Nam war years, but conveniently omits WW2, when spending peaked at 42% of GDP, and they made sure they stopped the chart in 2003 — eliminating the final $300 billion in Bush increases, not to mention Obama’s own.
They also never make any distinction in what might be considered appropriate defense spending between peacetime/wartime, nor do they address differences between wars of necessity versus wars of choice. They also fail to mention that defense spending has actually tripled since 1997, and they leave out entirely the true financial costs of war — those which echo through many facets of the economy and include a huge portion of federal interest payments and are in total estimated to be more than three times the direct costs.
They do mention defense cuts but only the most low hanging of fruit, like the extra engine for the F-35, and certainly nothing like actually ending the wars.
They show the future unfunded costs of Medicare, Medicaid and Social Security, $35, $23, and $8 trillion respectively, but fail to mention (except in the fine print) that this is over the next 75 years. They also give nothing for comparison, like the fact that at the present rate, defense costs of over $1 trillion each year, which are taken from general revenue, would amount to more than $75 trillion over the same period.
They talk about healthcare costs and results but give only lip service to any real reform that might be made. They make no mention of soaring insurer and pharmaceutical profits, or of the fact that Medicare is prohibited from negotiating drug prices, nor do they mention the 3-6% administrative costs for Medicare as compared to the 12-30% for private insurers. They even understate total healthcare costs at 8.2% of GDP when it’s actually running over 17%.
They present a terrible view of the increase in Medicaid recipients, showing that in 1965 only 1-in-50 people relied on the program compared to 1-in-6 in 2007. Of course they present this as if it were solely an issue associated with program rules and say nothing about the impact of increased cost of living and falling median income and loss of benefits.
They present the only choices to “fixing” Social Security as increasing the retirement age to 73, increasing payroll taxes to 14.3% or reducing benefits by 12%. This paints a pretty bleak picture. But it may not be so bleak when you consider that the tax increase could come largely from lifting the salary cap, or the benefit reduction could apply only to those who are wealthy — or a combination of the two. They also never mention that the program is 100% solvent through 2037, or that it will still be able to pay 78% of benefits beyond that period without any program changes —but then that wouldn’t serve their purpose.
They also make the argument that life expectancy has increased in the U.S. by 26% since the inception of Social Security while retirement age has only gone up by 3%. Now that doesn’t seem very balanced, but of course when you consider that those who actually perform physical work are barely living any longer at all, and that the real increase in expectancy applies mostly to the high income earners who need Social Security the least . . . well, I guess it depends for whom you’re advocating.
They make assertions in pursuit of the GOP agenda item to divert attention from the impact corporate profits and reduced taxation of the economic elite have had on the economy, and they attempt to place the blame on government workers and unions. They actually choose to paint a picture that blames GM’s economic problems chiefly on retiree benefits, and then claim that the company’s recovery was achieved by removing employee healthcare benefits and focusing on quality. Oddly, they never mention the government bailout.
They assert that if a corporation fails to balance its books, they are forced to go out of business, but they neglect to say a word about Too Big To Fail — the socialization of Wall St. debt , the $16 trillion in loans made by the Federal Reserve to the nations biggest banks and corporations at near-zero rates, the auto industry bailout, or any of the billions of dollars in corporate subsidies, which were estimated by the conservative Cato Institute at $92 billion in 2006 alone.
They depict the debt picture in the U.S. by comparing it to other nations and using our gross public debt number, which unlike other nations has the added factor of including inter-government and state-issued debt, neither of which is typical of most other countries. The combination of these two categories is about 30% of the total, which puts the 86% number in a considerably different light. And BTW, even though they chose to use government spending trends from 1930, they fail to mention that the debt to GDP ratio was 122% after WW2 — a number that we paid down with economic expansion and higher taxes on corporations and the wealthy.
They totally distort the tax picture by placing blame on the 51% of Americans who didn’t pay taxes and never mention that the number increased because Wall St. had literally stolen trillions in middle class wealth and crashed the economy in the process, sending 8 million people to the unemployment lines and creating a situation where it was necessary for the Obama administration to extend $288 billion in further tax cuts as part of the much maligned stimulus program.
They assert that the number of people paying 50% of taxes had dropped by 60% between 1965 and 2005. All true, but what they don’t say is that the slice of people making enough money on which to live has also been dropping — that the share of income gouged by the top 1% had grown from 8% in the mid-1970s to 23.% in 2007, and that the median wage fell for the first time in decades under G.W. Bush. They also fail to mention that the corporate share of taxes also dropped from 20% of the total in the 1960s to under 9% in 2010 — from 4% of GDP in 1965 to 1.3% in 2009, which is the lowest of all OECD nations except Iceland.
They present an absurd picture of addressing the debt with tax increases by isolating such measures as a single-solution response. In so doing, the picture they paint is that income tax rates would have to double. Of course, they conveniently ignore any combined solution of spending cuts and tax increases; they completely skim over the potential for eliminating tax loopholes and tax havens, instead offering only the possibility of either taxing healthcare benefits or eliminating the home mortgage deduction — both obviously targeted at raising alarm in working Americans. They also leave out any possibility of limiting the increased tax rates to millionaires and billionaires — you know, like the hedge fund managers, many of whom rake in over $1 billion in a single year and are able to treat their income as capital gains, paying only 15%, while a single person making $35K has to pay 25%.
They speak about government action where “nearly all” Americans will share in the sacrifice, but they don’t want you to consider that what they really mean — when the bottom 98% of us pay the entire price, that is “nearly all” Americans.
Image by DonkeyHotey via Flickr
What do you call people who use their power to line their own pockets by taking from people who can’t protect themselves? “Bullies?” “Thieves?”
What if they also lie about it and attempt to cover their tracks with irrational nonsense that would make Jabberwocky seem like a reference manual? Would they be “liars?” “Thieving liars?” How about “lying, thieving bullies?”
Judging by what’s happening today in American politics, the answer is inescapable . . . we’d all be forced to just call them Republicans.
Congressman Paul Ryan, the new chairman of the House Budget Committee recently released the Republican budget for 2012, and it subsequently passed through the House with all but four Republican members voting in its favor. Labeled the “Path to Prosperity,” the Ryan plan is touted to cut $6.2 trillion from President Obama’s budget over the next decade. But while this may sound promising on the surface, even a cursory look at the details leaves a person asking, “To whose prosperity does this path lead?
According to Ryan, the Republican proposal is “guided by the timeless principles of the American idea,” but unless he was referring to the principles upheld by the Robber Barons of the 19th Century, Ryan must be talking about another America. If the congressman was indeed talking about the United States, a nation that was founded on the notion of a government empowered by the “consent of the governed” to “form a more perfect union” that would “promote the general welfare,” then the only explanation is that the man is either ignorant of the facts of our founding, or he’s just an unethical self-serving liar!
The fact of the matter is that Ryan’s “Path to Prosperity” is a full frontal assault on working Americans. It makes a mockery of our Constitution by subverting the federal government for the benefit of the wealthy at the expense of everyone else. In short, the proposal that Ryan refers to as the “new House majority’s answer to history’s call,” will end Medicare as we know it, replace Medicaid with block grants, make the Bush tax cuts permanent, and lower both the top individual and corporate tax rate to 25%.
Indeed, Ryan and the other social cannibals of the Republican Party like to talk about being adults while paying lip service to shared sacrifice, but as is evidenced by their budget proposal, the truth of their actions is a different matter. The Republican plan not only attempts to slash social programs to pay on the debt created by years of excess military spending, tax cuts for the rich, and banker bailouts, but it does so by first making matters worse.
In what has become SOP for the GOP, the Ryan plan will trim the tax bill of the wealthy by 29%, bringing it to its lowest level since 1931, and it will attempt to cover the loss in revenue by hacking at the discretionary services relied upon by everyone else.
So, the Republican plan is to address spending by gutting education, allowing our infrastructure to further decay, and slashing $1.6 trillion total from domestic discretionary spending, while shifting the burden for the high costs of healthcare onto seniors instead of addressing the root causes, and also ripping the heart out of Medicaid, which expends 87% of its costs to serve children, the elderly and the disabled. All told, the Ryan budget will reduce spending by $4.3 trillion over 10 years, but even though the justification for all of these draconian cuts is based on the deficit, Ryan and the snake oil peddling Republicans will actually give $4.2 trillion of that total back in tax cuts.
That’s right, according to the nonpartisan Congressional Budget Office, the Ryan plan will reduce the deficit by all of $155 billion over 10 years. But what the heck, the deficit is really nothing but a policy bludgeon created and used by Republicans anyway. Since Ronald Reagan took office, the Republicans have been dedicated to increasing military spending, while cutting taxes, and as a result consistently ignoring the deficit and adding to the debt. The Ryan budget is no exception.
Just why the beltway press has referred to Ryan as “courageous” for proposing what appears to be standard fare for the Republican Party is more than a little curious. The truth of the matter is that the release of the Ryan plan may have been much more “careless” than it was “courageous.” Like the realtor who inadvertently reveals that the field behind that bargain-priced Tudor is slated for a chemical factory, the Ryan budget leaves no doubt regarding the true motives of the Republican Party.
Fortunately, this time around, people are paying attention. Blinded by their own lack of integrity, Republicans evidently believed that by grandfathering everyone 55 and over into the traditional Medicare system, they wouldn’t receive much pushback at their attempt to screw everyone else. But they were wrong. As it turns out, seniors who have learned that the Ryan plan will replace Medicare with a voucher system that will cause future retirees to reach into their own pockets for an estimated $12,500 each year for insurance, have reacted as if the change affected them personally.
Hurray for American seniors! In one town hall meeting after another, Republicans returning to their home constituencies are getting an earful about their illicit attempt to stuff their pockets with money gained by throwing future retirees to the wolves that run the profit-rich medical insurers.
Of course, the big-money Republican damage control apparatus is already underway trying to spin the dismantling of Medicare. Spending millions on bullshit television ads, the voucher system that Paul Ryan euphemistically refers to as “premium support,” is now being presented as a Republican attempt to “preserve Medicare.” Sadly, that preservation would be in name only, preserving the program in much the same way as a classic car is preserved by sending it through a car crusher. But hey, in the Bizarro World of Republican spin doctoring — rhetoric is reality.
So, where does this go from here? Nowhere. There is absolutely zero chance that the Ryan plan will pass the Senate and be signed by the president, which makes it all the more painfully obvious how ridiculously disconnected the Republican Party is from the reality of life in America. Why House Republicans would actually reveal their true agenda, knowing that it would never become law, is anybody’s guess. It’s like a thief giving his victim advanced warning — in writing. But be that as it may, the genie is out of the bottle, and he’s got “Republican doom” tattooed on his forehead.
Milwaukee’s ordinance requiring businesses to provide paid sick leave would be voided under a bill Assembly Republicans sent Gov. Scott Walker on Tuesday.
Walker said he is likely to sign the measure. The city’s sick leave ordinance was overwhelmingly approved by voters in 2008 but has never gone into effect because of legal challenges. The Assembly voted 59-35 to ensure it would never be implemented.
Patrick Marley, Journal Sentinel
Image by DonkeyHotey via Flickr
So let’s see, Milwaukee voters use the rights given them in an American democracy to effect legislation. The initiative is passed and then immediately subjected to judicial review and is left standing, so it becomes law. But then the “small government” Republicans in Madison decide that they don’t like the law, so they scramble to pass legislation that will effectively nullify the will of the people . . .
Isn’t democracy grand?
We presently live in a nation where the “haves” have everything. They don’t worry about paying rent or putting food on the table; they have healthcare; they have the wealth, with the top 1% having more than the bottom 95%. If they happen to get sick, they’re not concerned — they will likely be paid for the time away from work, and if not they have the resources to weather the storm.
But for the 98% of Americans who are the “have nots,” those of us who essentially live month to month, the story is quite different. Our incomes have been stagnant for more than 30 years; millions of us are unemployed or underemployed, with real rates currently over 22%; there are presently 52 million of us without healthcare insurance and millions more who are covered but still can’t afford treatment. When we get sick, we are worried about any loss in pay because we need every cent earned just to make ends meet.
So, the good people of Milwaukee, Wisconsin take the initiative to use their democracy to pass a law that would at least provide a solution for one of the many issues pressing on the working people of our nation. They didn’t fight for higher pay or even for healthcare; they didn’t ask for paid time for leisure — no, they just want to be paid when they get sick, but even that’s too much too ask for in the Bizarro World of profits-over-people American conservatism.
As stated by Rep. Christine Sinicki (D-Milwaukee), “This [Republican] bill is a slap in the face to the people of the City of Milwaukee.” But alas, Darth Walker and his hoard of Republican stormtroopers don’t really give a flying flip about the people, about their democracy or about anything resembling ethical behavior. They have the power, so they will assert their rule of the land. The will of the people be damned! The aristocracy has spoken.
All working Americans will be well-served to pay close attention to what’s going on in Wisconsin and other states being overrun by newly elected Republican majorities. They all talk about small government and pay lip service to jobs and workers, but at every opportunity they use the power of government to trash the rights of the many for the benefit of the elite few.
Wake up America! Wake up and learn that in the Republican vernacular, “small government” simply means government that serves a very “small” minority.
Read the entire Article at the Journal Sentinel
