Feb 152011
 
Social Security Poster: old man

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President Obama sent his budget proposal for 2012 to Congress yesterday, and before the ink was even dry, Republicans were swarming like piranha. According to Rep. Paul Ryan (R-WI), “It would be better doing nothing than if we were to actually pass this budget.” Sen. Jeff Sessions (R-AL) said that the budget was based on “gimmicks,” and claimed that passing it would “be a national tragedy.”

White House estimates put the savings of the proposed budget at $1.1 trillion over 10 years, with two-thirds of the savings coming from spending cuts. Republicans have unanimously rejected that total, with Sen. Richard Shelby (R-AL) labeling it a “timid response to a grave challenge.” Shelby added that the proposal “ignores the will of the American people,” which is more than a little odd coming from somebody who supported the extension of the Bush tax cuts for the rich and openly shared his lunatic idea to fix Social Security by increasing the retirement “age every several years” — both positions being opposed by the majority of Americans.

But it’s easy to understand why Republicans are so vehemently opposed to the President’s budget proposal. While it does make substantial cuts, actually eliminating or reducing the funding for 200 federal programs, the spending reductions total only $33 billion for 2012, which is far less than the Republican’s draconian proposal to cut $60 billion in 2011. But more importantly, the White House budget also ends the Bush tax cuts for the rich, increases taxation on multinational corporations, eliminates $46 billion in subsidies for oil, gas and coal interests, and cuts $78 billion from the right’s most sacrosanct bucket — the Pentagon.

There is a choice to be made regarding the future of our nation, and the American people need to wake up and pay attention. Our national debt is currently over $14 trillion. The interest alone on that debt amounts to around $250 billion per year. The simple truth is that it doesn’t matter if we cut the deficit by $30 billion or $60 billion, or even the $100 billion promised by Republicans, or more — we will still be diving deeper into debt.

Take your pick, the President’s budget or whatever counter is offered by the Republicans — it doesn’t really matter, the spending cuts you’ll find will be largely symbolic. Arguing the merit of either proposal based on the depth of cuts is pure political theater. Either option will be kicking the can down the road. The substantive difference, the criteria upon which the proposals should be judged, lies in their differing methodologies.

Republicans contend that our economic problems are all the result of excessive spending, and their budget proposals reflect that belief. Democrats counter that the issue is more complex and propose a solution that addresses both revenue and expenditure. The result is that, while both parties talk about the sacrifice that will be needed going forward, only the Democratic position strives to ensure that it’s shared.

The fact of the matter is that adherence to the Republican method for addressing the debt will place ALL of the sacrifice on those who can least afford it. Their solitary focus on spending cuts combined with their unwillingness to address a bloated defense budget leaves no alternative. Those fortunate enough to remain wealthy in post-Recession America will not suffer from the proposed federal spending cuts. They only share in the sacrifice by paying higher taxes. And with military spending off the table, cuts to the remainder of the discretionary budget will only harm the poor, impede upward mobility and further weaken the middle class.

President Obama’s budget proposal may not go far enough, but at least it presents a method for shared sacrifice that can be expanded. It combines cuts to social programs with a slight trimming of defense and adds a bit of revenue through modest tax increases. The Republican alternative is more an effort best represented by an M.C. Escher impossible reality. The bottom line being that the budget simply cannot be balanced solely within the proposed Republican framework.

The situation may be complicated, but the math really isn’t. With a $14 trillion hole, only about $440 billion in discretionary spending outside of defense, and annual interest payments of $250 billion, the Republican plan set forth by Rep. Ryan doesn’t balance the budget until the 2060s and piles on $62 trillion in debt during the process. Republican fiscal responsibility is a fairy tale, sort of a contemporary version of the Goose that Laid the Golden Eggs.

But as insane as this GOP plan may appear, like an iceberg, there’s more to it than what we see on the surface. As House Majority Leader Eric Cantor (R-VA) promised, the Republican budget will be “a serious document that will reflect the type of path we feel we should be taking to address the fiscal situation, including addressing entitlement reforms.” In GOP parlance, that means more pain for everyone but the wealthy, pain that will include a full frontal assault on our nation’s social safety nets.

The writing is on the wall. Because the Republicans refuse the responsible path of both increasing revenue and putting ALL spending on the table, they must attack the entitlements. This is possibly the GOP’s most egregious tactic and without doubt one of their favorite arenas for yarn spinning (a euphemism for telling bald-faced lies). Republicans would have everyone believe that Social Security is seriously broken, and that it’s partially to blame for the deficit — sadly, it doesn’t matter to them that both assertions have no basis in reality.

Republican spin on Social Security is nothing but more fable peddling. As evidenced in economist Dean Baker’s letter to Sen. Richard Shelby, sent after the Senator told a nice whopper about the program, even “if nothing is ever done, then Social Security would pay full benefits through the year 2037.” It would also be able to pay around 80% of benefits well into the second half of the century. With small tweaks, the program will remain vibrant for its entire 75-year horizon and beyond. But this narrative doesn’t fit the GOP model for fueling Wall St. profits through privatization, so the truth must be set aside and a tale must be spun.

Part of that Republican tale is the myth of a broken system, but even more disingenuous is their contention that we must fix Social Security in order to address the deficit. This is pure, unadulterated hogwash — grade-A falsehood — a freaking lie! The fact of the matter is that Social Security is not included in the deficit. It is both funded and expensed outside of the budget; it is an off-budget program, and it has a surplus balance of some $2.5 trillion. The truth of the matter is that Social Security hasn’t negatively impacted the deficit — it’s actually helped to mask its true magnitude.

Medicare is another story. Being included “on-budget,” shortfalls in Medicare funding do impact the budget, and program solvency will require much more than tweaking. But even in the case of Medicare, the Republican position is fraught with dishonesty. The problem with both Medicare and Medicaid is not inherent in the government programs but rather a function of the rising cost of healthcare. With Medicare the problem is exacerbated by the increasing number of elderly Americans, but unless we’re okay with just denying them medical services, we still need to seek a real solution.

Of course, a real solution for skyrocketing healthcare costs runs headlong into the Republican priority of maximizing corporate profits. So, never mind that nationally our spending on healthcare is approaching one-fifth of our GDP; forget about the fact that we spend more than double the OECD average yet achieve far worse health outcomes — and whatever you do, please ignore the man behind the curtain — the one atop any of the 10 largest medical insurers who saw their profits leap by 250% during the past decade. This is all SOP for the GOP. Their response to this upside-down scenario is not to reduce costs but to limit access with Medicare vouchers. Hurray for the red, white and blue!

Americans need to pull their heads out of the sand, open their eyes and come to grips with the fact that we’re being plundered by our nation’s economic elite. The Democrats are definitely complicit, but the Republicans are the soothsaying demons of the illicit extraction. Regardless the issue, they have but one position: protect the monied interests. Healthcare costs are soaring, so limit access. The defense budget expands 250%, from $333 billion under Clinton to $847 billion in 2010, and it’s off the table. Federal revenues drop from 21% of GDP in 2000 to 15% in 2010, and the answer is to cut taxes.

The Republican position is always simple because it is single-minded. It doesn’t have to consider the complexities of the economy, the nuances of trade policy, the impact of spending cuts, the most effective means to stimulate job growth, or the ethical implications of any of the above. No, the Republican Party’s laser-like focus on fending for the wealthy makes all decisions easy.

If they were truly concerned about cutting spending, they’d put their knife to defense: the largest and most wasteful of discretionary programs. If they really cared about healthcare costs, they strive to create competition with solutions like a public option. If they were truly concerned about jobs, they’d drop the nonsense about job-killing taxes and admit that tax cuts don’t create jobs. If they gave a flying flip about the average American, they’d drop the charade about having “a spending problem” and tell the truth about taxation.

That truth would include sharing the fact that in spite of a record $1.66 trillion in profits for 2010, revenue from corporate taxes was a meager $191 billion — a rate of around 11%. In full honesty, the GOP would also have to fess up about how overtaxed we aren’t. They’d have to admit that federal taxes are at historic lows. In fact, as a share of our nation’s economy, they’re at their lowest level since 1950. And if they really sought to inform instead of manipulate, they’d make sure that everyone understood that we have the third lowest total tax burden of all OECD nations, higher than only Mexico and Chile.

But honesty is far from being the GOP’s strong suit, and the wellbeing of average Americans is low on their list of priorities. So, we can all expect more distortion of facts, more narrowly focused policies, and more pain for the American people. But cheer up, there is a bright side: so long as you’re in the top 1 or 2 percent of Americans, you can rest assured that the GOP has your back. Of course, if you belong to the other 98%, watch out — because your back makes a real nice target for their budget knife.


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Feb 132011
 
Federal Spending

Image by Mike Licht, NotionsCapital.com via Flickr

If somebody told you that they wanted to lose weight, but they wouldn’t increase exercise or cut their caloric intake, would you believe they were being earnest? How about a friend who says he seriously wants to get out of debt but has no plan to increase income and is only willing to trim the most marginal of expenses? If these cases seem to be obviously insincere, then why does anyone believe that House Republicans have any real interest in addressing the deficit?

Reuters reported shortly after 4:00pm EST on Friday that House Republicans have sharpened their pencils with further slashing in their spending-cut plan that will now total $60 billion. But even at this higher level, which is nearly double their total announced earlier this week, how serious is a plan that will trim the $14 trillion debt by only 4-tenths of 1%? The Republicans are already patting themselves on the back, but since $60 billion in cuts amounts to less than 3 months of interest payments on the debt, should Americans really join the celebration?

The specific problems with the Republican plan are many, but they really all emanate from the conservative framework on which the plan is based. First, and most obvious, is their ridiculous premise that the deficit must be addressed while simultaneously lowering taxes for everyone, including the very wealthy. This is analogous to that person who claims they want to lose weight but won’t exercise — they’ve cut the options in half and in turn doubled the stress on what’s left. With all trimming reliant upon appetite control, dieting starts to look a lot like starvation.

This is far from the way America handled this issue in our glorious past. While climbing out of the Great Depression, our country was hit with the expense of World War II. The economy was invigorated (from forced government spending) and unemployment turned to overemployment. But the national debt, which had been around 43% of GDP, did climb to more than 121% by the end of the war. Undeterred, a united America shared the burden and that debt was steadily paid down post-war, with the debt reduced every year through 1974 (except a slight bump in 1949).

Federal debt bottomed in 1981 at below 32% of GDP, and the remarkable recovery was achieved almost entirely without cuts in spending. In fact, federal spending has increased in all but 4 years since 1947. The solution to the huge debt brought about by WWII was not austerity, but exactly that which Republicans have removed from the table — high top marginal tax rates. The 24% rate in effect when the market melted down in 1929 was raised to 63% in the early 1930s and sat at 81% when the nation went to war. It spent many years over 90% and never dropped below 70% until 1982.

The notion in post-war America was that those who benefited most from our society should give back accordingly. It was an ethic based on the premise of unity, of patriotism and the greater good. The wealthy were taxed heavily on their top marginal dollars, but contrary to the scary scenarios of economic ruin predicted by contemporary Republicans, the economy flourished.

Our economy boomed into the mid 1970s, bringing about a sort of golden age of American capitalism. During that period the GDP multiplied many times over, the middle class swelled, unemployment remained low, and prosperity was shared by most Americans. The rich still got richer, but not at a rate significantly faster than the rest of the populace. Massive concentration of wealth was avoided, and the bottom 90% of Americans enjoyed their peak income year in 1973. Through it all, we remained a country united.

But the sense of unity that had thrived for more than 30 years was lost in the early 1980s. The oil crisis of the 1970s, coupled with a massive influx of imported goods, brought about extremely high inflation and resulted in the heavy loss of jobs. This confluence of events caused the American people to lose faith in the government programs that had given us decades of prosperity, and laid the groundwork for the presidency of Ronald Reagan.

Reagan was elected president by running on a government-is-the-enemy platform. He cut taxes, slashing the top rate first to 50% and later to 38.5%, while also dropping the bottom rate from 14% to 11%. Unemployment was slowly improved, averaging 7.5% for his eight year term, and the economy did recover. But before Reagan left office, he made the unprecedented move of lowering the top tax rate to 28%, while simultaneously raising the bottom rate to 15%.

So began the era of Reaganomics. Hacking the top tax rates while raising the bottom, along with huge increases in military spending and cuts to Medicaid, food stamps, education and the EPA, the pendulum had swung. America became a nation divided between the haves and have-nots, and the national debt began to swell. While the federal deficit had never climbed over $80 billion prior to Reagan, it never dropped below $128 billion during his term. After decades of paying down the debt, it soared from $1.1 trillion under Reagan’s first budget to $2.9 trillion for his last.

Deficit spending had existed under previous presidents, but for Reagan, it was the core of his budget policy. When Reagan left office, he left behind the budget framework for the new Republican Party. That framework is still being followed by John Boehner’s Republican House: lower the top rate, feed the corporations, cut the estate tax, deregulate anything and everything, protect defense spending, and cut whatever else remains. It is under the umbrella of these mutually exclusive objectives that Boehner’s House has created their plan to address the deficit.

The problem with the Republican budget planning process is not just that it exacerbates the deficit problem by insisting on tax cuts for the top 2% of Americans; it’s also the narrow slice of expenditures that they will even consider to subject to their budget knife.

Our federal budget for 2011 amounts to $3.64 trillion. That total is split between $247 billion of interest payments on the debt, $2.1 trillion in mandatory spending (consisting mostly of Social Security, Medicare, and pensions), and $1.2 trillion of discretionary spending. Since the vast majority of mandatory spending comes from entitlements, which are by definition funded outside of income tax revenues, this leaves the substantially smaller discretionary pie from which to cut — and once the Republicans protect their sacred cows, few slices are left on the table.

At approximately 58% of discretionary spending, the price tag for the military accounts for the lion’s share of the pie. This includes around $550 billion for the Department of Defense and another $170 billion for the Nuclear Security Administration, Homeland Security, Veterans Affairs and related programs. Add another $159 billion for “Overseas Contingency Operations” (our Middle East wars), and the Republicans have stashed away all but 4 pieces of that 10-piece pie before it gets served up for cutting.

So, using the Republican framework for deficit reduction, the process starts with tax increases and military cuts pulled completely off the table. That leaves around $441 billion in government spending that’s subject to the Republican axe. Remove from that other Republican pet pots, like the $20 billion or so in oil company and other corporate subsidies, and it becomes evident how much the Republicans are like that person who allegedly wants to lose weight but won’t exercise. It is true that they’re willing to do some dieting, so long as they don’t have to give up any carbs or fat.

The result is a Republican budget proposal that leaves their campaign benefactors happy and instead cuts deeply into programs that benefit the needy and the nation as a whole. Their latest plan cuts billions from education and HUD, slashes more than $3 billion from the EPA, cuts from the FBI, reduces state and local law enforcement assistance, cuts from the FDA, trims nearly a $1 billion for energy efficiency efforts, cuts into science funding, NASA, the GSA, IRS and Treasury, trims the Army Corp of Engineers, slashes over $1 billion from FEMA First Responders, takes nearly $2 billion from job training, and drains billions more from the DOT. At a time of high unemployment and a decaying national infrastructure, over half ($33 billion) of the Republican’s planned cuts are at the expense of  labor and transportation/housing.

This is Republican economics at its finest. Their practices seem more consistent with some sort of Bizarro World Robin Hood, where the hero is actually a villain, and he steals from the poor to give to the rich. This is not the ethic upon which America was conceived. It is precisely the evil of elitist selfishness that the Founding Fathers strived to defeat.

Our present economic woes are not the result of over-taxation or excessive regulation. No, the causes of our nation’s ills are exactly the opposite. Our ailment is rampant greed and a steady decline in the middle class that stems largely from the massive concentration of wealth that’s occurred over the past 30 years. Today, the top 1% of Americans holds more financial wealth than the bottom 95%, and this Republican budget plan is nothing but another dose of the poison that brought us this disease.

Americans do need to be concerned about the federal debt, but the way to address it isn’t on the backs of the poor, working and middle classes. Our shared debt has been much larger as a portion of GDP in the past, and the formula for recovery and prosperity has already been proven. The Republicans refuse to follow that formula because their plan isn’t about the debt. If it was, tax increases and cuts in military spending would still be on then table.

The wellbeing of our nation is at stake, and the Republican House has proven itself to be either disinterested or completely incapable of prescribing the necessary action. It’s time for the American people to stand united and tell these thieves that we’ll no longer stand for their hypocritical nonsense. If they believe the deficit to be a major issue, then address it in earnest. If not, then abandon the false focus and help with the programs we need to create jobs and restore prosperity to the middle class.

Whatever the case — it’s time for all of our elected officials to cease their infernal shell game, stop the finger pointing, and for once dispense with the snow-job and TELL THE FREAKING TRUTH!


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Feb 092011
 
Sgt. 1st Class Vivienne Pacquette, supply serg...

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On Sunday, President Obama honored the tradition of presidential interviews being given to the network broadcasting the Super Bowl. Rights for the 2011 edition were held by Fox, and Bill O’Reilly was selected as the interviewer. As might have been expected, the interview that aired before the game was an irritating showcase of rudeness, where Pompous Bill spent 15 minutes interrupting the President (43 times in all) and trying to trip him up.

O’Reilly’s questions started on the topic of Mubarak and Egypt, and the President fielded each of them adeptly, in spite of O’Reilly’s repeated interruptions and attempts to box him into a corner. Having failed to get a reaction on Egypt, O’Reilly moved seamlessly to health care, but only after quickly planting his own opinion on the Muslim Brotherhood: “Those are tough boys, the Muslim Brotherhood. I wouldn’t want them anywhere near that government. Federal judge in Florida said, your health care law is unconstitutional.”

After a brief back and forth on the fate of the healthcare law under the review of the Supreme Court, Mr. Bill took the conversation where he really wanted to drive a stake. Loosely quoting the Wall Street Journal that depicted President Obama as a “determined man of the left whose goal is to redistribute much larger levels of income across society,” O’Reilly asked for a reaction. The president tried to dodge the question, but O’Reilly pressed, “Do you deny that you are a man who wants to redistribute wealth?”

Amazingly, President Obama stepped into BillO’s snare. “Absolutely,” he answered, denying that he wanted to redistribute wealth, and he supported his denial with the fact that he had lowered taxes. O’Reilly pressed again, “But the entitlements that you championed do redistribute wealth in the sense that they provide insurance coverage for 40 million people that don’t have it,” and rather than reframing the issue, the President accepted the pat conservative spin and went directly to defending “Obamacare.”

Make no mistake about it, even though the President held his ground from that point forward arguing certain points regarding healthcare, he missed the opportunity to reassert his previously stated position on taxation of the rich and actually helped to fortify the notion of taxation as redistribution of wealth. As relaxed and articulate as he seemed, President Obama allowed himself to fall into the favorite trap of conservatives — to be cast as a “big government liberal.”

Why Democrats never reject this framing with a legitimate picture of reality, one that’s based on facts and consistent with history, is beyond me. One would think that their only problem would be which conservative myths to refute, and in what order.

Taking on the charge “Big Government” first, it would be a simple task for Democrats to start by offering any one of a number of factual arguments. Each would prove that, to the extent there is a party of fiscal irresponsibility and huge deficits, it’s the Republican Party.

They might base their argument on the debt to GDP ratio resulting from each presidential administration. Going back to the 1970s, that effort would show that Nixon/Ford increased the ratio by .2%; Carter decreased it by 3.3%; Reagan ramped it up by 20.6% and Bush Sr. by another 15%; Clinton brought the ratio back in the right direction, improving it by 9.7%, and GW Bush gave it all back, skyrocketing debt upward and increasing the ratio by 27.1%. The truth of the matter is that all presidents from Truman on have reduced the gross federal debt, except Reagan and both Bushes.

Perhaps pure budget discipline would be a better meter, thereby eliminating the general economy as a variable. Using that metric, one would only have to point out that over the course of the past 100 years, of the 6 presidents presiding over the largest increases in federal spending, 5 were Republicans. Reagan grew the federal budget by 21.9%, and Bush Jr. by 32.2%, both while reducing federal revenues through huge tax cuts — which tends to amplify deficits.

The inescapable truth is that hanging the label of “Big Government” on Democrats is possibly the most unbelievable public relations coup of modern times. It has absolutely no basis in fact. The records show clearly that the Democrats have consistently been more fiscally responsible, and that any connection between the Republicans and small or efficient government is pure myth.

But as flawed as President Obama’s defense of the record was in allowing O’Reilly to paint him as a “big government liberal,” it pales when compared to accepting the paradigm of “redistribution of wealth.” This is classical conservative framing of an issue in order to paint their distorted view of reality.

According to conservative dogma, wealth is earned through the market and later redistributed through taxation and government spending. It has sort of a common sense ring to it, as does the extension of the paradigm — that when the government taxes, it takes what belongs to citizens. Of course, as with all simplistic arguments designed to promote a given agenda, the model presented is fundamentally flawed.

The fact of the matter is that ALL monetary exchanges represent redistribution of wealth, and the government plays a part in each and every one. The issue isn’t whether or not the government should make rules that impact the redistribution of wealth; it does so by default. The question is “should the rules favor upward or downward redistribution,” and on that topic there is a distinct, if shrinking, difference between the two major parties.

Government policies that allow tax advantages for multinational corporations that offshore jobs are every bit as much about redistribution of wealth as programs designed to subsidize the cost of education for low income Americans. The only difference is that the former benefits the wealthy while destabilizing the economy, and the latter benefits the less fortunate while enhancing our national capacity. Republicans are quick to label education spending as “redistribution” but hold tax loopholes as something entirely different — which it’s not.

Instances of this distorted spin on reality are virtually limitless. Healthcare reform, energy policy, mining and drilling regulations, campaign finance, monetary policy, military spending, banking regulation, the list goes on, and in each and every case, government policy will impact the redistribution of wealth. For Republicans, so long as the flow of wealth upward is not impeded, distribution has occurred, not redistribution. This holds true even if it means reductions in compensation for workers, elimination of social safety nets, high unemployment, an under-educated populace — whatever the case may be.

President Obama would have been well served by responding to Bill O’Reilly’s question about redistribution of wealth with a heart felt “Hell yes! But no more than my Republican colleagues — just in the opposite direction” The truth is that government policy over the past 30-plus years has significantly redistributed the wealth of America — straight to the top.

Americans suffered the first decline in median household income since 1967 under George Bush, and meanwhile the average annual income of the top 1% grew by 73%. This is not the result of a free market but rather the result of a rigged market, one that is designed to redistribute wealth in ever increasing concentration amongst the most elite.

Since President Obama didn’t turn the inquiry back on Bill O’Reilly, I’ll ask the question here: how sustainable is an economy that continues to establish policies that have already concentrated more financial wealth in the top 1% than is held by the bottom 95%? I’ll even give Mr. Bill a clue — think Hosni Mubarak.


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