WHAT!? $680 Billion In Tax Cuts? What About the Damned Deficit?

The House Tax Cuts of more than $600b will only benefit special interests and blow another hole in the budget while adding to deficits.

On multiple occasions I've posted on the economic irrationality that pervades this country, which too few seem to process. For example, the daft two year interval during which the payroll tax (which supports Social Security),  was cut in half  - described as a "payroll tax holiday"  This despite the fact every manjack knew damned well the money was needed to support future retirees. But our politicos, including Dems, were more invested in near term political chicanery and pandering  than longer term fiscal rectitude. 

The same applies after the Dems helped to extend the Bush tax cuts multiple years,  tearing another hole in the budget and adding to the deficit - then leading to the same gaggle of Dems (and Reeps) calling for cuts to Social Security. (Recall the Obama "Deficit Commission" and the promotion of the "Chained CPI"). I argued at the time this was absolute nonsense, and was only done to appease the Neoliberal elites such as Alan Greenspan who years earlier had argued before a Senate Finance Committee it was more important to extend the Bush tax cuts than to protect Social Security from cuts.

I've also belabored - using the Sept. 15, 2010  Financial Times analysis of the Bush tax cuts -  that they don't improve the economy one damned bit. Indeed, they imposed a regressive effect, to wit, they unleashed:

"the weakest decade in U.S. postwar history for real, non-residential capital investment". 

Now, however, we learn (WSJ, 'House Poised to Approve $600b in Tax Cuts', Dec. 17, p. A10) that the Repuke -dominated House is all set to pass at least $600 billion in tax cuts:

"resulting in a bipartisan agreement to play down concerns about  budget deficits and ...construct a package of tax breaks so large most lawmakers will find something in it to love"


WTF! So, in other words a monumental pork package disguised as a tax bill, which "plays down concerns over deficits".  So let me get this straight: then all the hoopla and huff and puff over the deficit and needing to cut it is all contrived political bullshit. It doesn't really matter how big the deficits are, because as the illustrious Dick Cheney once put it when asked: "Deficits don't matter."

So we are all being played every time some asshole politician or "lawmaker" makes noises about having to cut Medicare or Social Security because of "exploding deficits" or "unfunded liabilities".  Or is it that they don't regard over a half trillion of added deficits as anything to fret over?

We also learn, get this (ibid.):

"The deal would take popular tax breaks that expired in 2014 and make them permanent".

Ok, so every damned year than we will see another $600b or so in tax cuts? That's how it seems from reading the passage.

We also learn "Democrats won several policy victories"  - but it looks to me like they had to sell their souls to the Repukes to get that. As Rep. Steven Israel put it 9ibid.):

"This tax bill provides too much to people who need it least.  It's an unfunded increase in the deficit that favors special interests."

Who are some of these interests?

- Medical device manufacturers (e.g. the guys that make da Vinci robots and are making a killing with the tens of thousands of (often) sloppy surgeries done each year (See e.g. 'The Great Prostate Hoax' )

- Multinational Banks

- Manufacturers in general

- Small businesses which can now write off a half million in capital "costs" each year instead of $25,000

Oh, low income families do catch a bone in a $1,000 child tax credit but the Dems couldn't get it indexed to inflation meaning it'll be next to useless in five years.

Nancy Pelosi,  to her credit,  denounced the deal as "practically an immorality"

Well, of course, it will translate to a genuine immorality if the swine who passed it later next year call for cuts to Social Security, Medicare or the VA administration. But for now I think most of us can agree it is a very evident immorality! (Since the deficits will always then be used as a cudgel over our heads for future cuts.)

The multi-national bank provision in particular isolates the lawmaker swine given:

"it benefits companies such as Citigroup, Inc. and Morgan -Stanley Group, Inc. along with manufacturers like Caterpillar Inc" . that offer customer financing often with sky high interest bordering on the usurious.

We also learn:

"After it passes the $622 billion tax cuts will be merged with a second measure  ...which contains another $58 billion in tax cuts."

That amounts to $680 billion total in unpaid for tax cuts which will come back to haunt us (ordinary folk) at a later stage, mark my words.

Of course, the economic debauchery is in the eyes of the beholder. According to former tax aide to Obama, Lily Batchelder,  quoted in the piece:

"The deal is a historic achievement...the Democrats basically got everything they want."

Really? At what price? If this "achievement"  includes  backdoor  (or front door) cuts to social programs (which deficit hawks call "entitlements")  later they didn't get dog shit. And we can say Batchelder's take is typical of  the Neoliberal codswallop circulated every time a new spending or tax bill is passed.

See also:

http://www.smirkingchimp.com/thread/dave-johnson/65604/the-game-pass-tax-cuts-then-whine-about-the-resulting-deficits

Senate Budget Committee Takes Aim At Social Security Again!

Well, we knew it couldn't last long. That is, before the scurvy lowlifes in congress reprised their attacks on Social Security - with the objective to "save It" by cutting it.  Next week, the Senate Budget Committee is holding its first hearing on Social Security benefits. Their plan is to declare a "crisis" and insist the only way out is to cut benefits now. Of course, this is all the most transparent BS to anyone who really understands Social Security and especially that its enemies have been gunning for it for over 80 years now. 

This invented myth of impending and catastrophic insolvency is well-worn and predictable, but still dangerous. The new Republican majorities are emboldened and anxious to show their Koch backers that they are serious.  

Of course, Social Security is not going broke. In fact, it has a $2.8 trillion surplus. Yet seniors who depend on the system they paid into find their benefits failing to keep up with their real expenses. Indeed, a valid economic argument can be made that given the persistent specter of  too low aggregate demand, Social Security benefits should be increased - not cut. Those benefits, after all, pay for billions of dollars in goods and services that otherwise might never be transacted - with the result that the GDP would contract even more.
 

Hence, any successful effort at cuts is assuredly going to send the economy into the clinker again - where only the richest 1 percent will benefit. But this is exactly what the likes of the Kochs and Pete G. Peterson and other austerity fetishists want.

Of course, the enemies of Social Security - and there are many - continually go back to the same old tool box to make attacks- hoping that some of the shit will stick, and alas, a lot of it has- including that the Trust Fund is full of useless IOUs. But this is why smart people need to do themselves a favor and inform themselves on the facts. No better book can be found right now than 'Social Security Works' by Nancy J. Altman and Eric R. Kingson, which in their Chapters 8, 10 totally demolishes this "IOU" nonsense, showing these bonds carry the same weight as those dispensed to other countries, including China. In other words, they carry "the full faith and credit of the U.S. government" and - if ever betrayed - will show this nation can't be trusted to pay its just debts.

As to the staying power and importance of Social Security, we read (p. 23):

"Social Security transformed the nation. It eradicated what was once a primary anxiety for the majority of Americans: the terror of growing old penniless,  dependent and vulnerable. It provided basic economic protection previously not available to most households."

This basic economic security is exactly what drives Social Security's opponents nuts. They hate to see anyone collecting a check just for breathing. At the very least, they insist, the money ought to be "privatized" - put into special investment accounts (with the costs of administration vastly greater than the 1 penny per dollar rate for S.S.) and subject to the vagaries of the stock market. Well, we saw how that worked out with 401ks back in 2008 with the financial meltdown didn't we?

In a previous blog post I explained much of the reasoning behind Neoliberal economic thinking  (based on the Pareto distribution) and why it is convinced Social Security is a bad idea, e.g.

http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html

For example, arguing that (as former Fed Chairman Alan Greenspan asserted in an appearance before congress in 2003): "Social Security benefits need to be cut to pay for Bush’s tax cuts."

The thinking being that tax cuts leading to re-investments are more critical than social insurance.

Then there have been the outright attacks on beneficiaries - among which the most vile have emanated from scumball former Reepo Senator Alan Simpson - who Obama (in some delirious haze- maybe a leftover from his "Choom gang" days) - actually appointed to be on his deficit commission. As the authors note (p. 39) Simpson referred to older recipients as:

"those greedy geezers...old cats 70 to 80, who live in gated communities who drive their Lexus to the Perkins restaurant to get the AARP discount"

Adding:

"They don't care a whit about their grandchildren...not a whit".

And believe it or not, this pig was taken seriously by many! Yet the facts of old age are not of glitz and luxury at all, as the authors also note (p.40):

"It is false that most older Americans are on "easy street". A very small percentage are, many more are poor or near poor, while some maintain a modest, middle class life style, often struggling to make ends meet."


In the graphic shown on page 47, the authors present the actual income distribution for the elderly which shows nearly three out of four senior households have incomes below $50,000 - which is not a princely sum. Not when a senior might be one bad fall from a nursing home stay  that will suck up $70k a year. Or,  one major medical catastrophe can savage  frugal savings. (Dunned by continuous zero interest rates for years.) These are problems the young don't have, and the young always have time to get back on their feet - most seniors do not  - say after a major medical calamity.

Anyway the income distributions are indicated a follows:

- 72.5% have less than $50,000 /yr.

- 18.5% have from $50,000 - 99,000

- 5.3% have $100,000 - 149,999

- 2.0 % have $150,000 - 199,999

- 1.9% have more than $200,000

In other words, barely 9 percent of elderly - or 1 in 11, has more than what is regarded as a middle class income.

Other objections to seniors' benefits as being "too much" I already skewered in this blog post, which I invite people to read:

http://brane-space.blogspot.com/2011/11/no-oldsters-are-not-gluttonous-uncaring.html

As the authors of 'Social Security Works' put it (p. 4), our politicos may have polarized us  on just about every issue - from immigration reform to taxes-  but on one we are fiercely united: we support Social Security. This unity forges our future security and is something the Neolibs and their conservo austerity cousins dare not mess with - as they learned back in 2005 when Bush tried his privatization scheme.  It is this unity we'd all do well to remember and also cultivate in gearing up for the next wave of attacks!
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  Further facts on Social Security:

1) Social Security's  Trust fund has historically taken in more money than it pays out in benefits. Currently it is at $2.76 trillion and continues to grow.

2) Without making any changes whatsoever, current projections show Social Security will be able to pay full benefits through 2033.

3) With just a minor tweak to the payroll tax cap - raising it to a mere $300,000, full benefits would be able to be paid through 2100.

4) The system could easily be rendered 100 percent secure, even with higher disability benefits paid out, if congress would cease raiding Social Security moneys for current expenses, including wars.

See also:

http://brane-space.blogspot.com/2012/08/of-fiscal-clifs-false-narratives-and.html

http://brane-space.blogspot.com/2014/03/social-security-medicare-unjustified.html

 

"Fix The Debt": A Cover to Undermine Your Future Security!

Exposing the shameless Neoliberal, corporate, Wall Street greed mongers in our midst is an ongoing project - but fortunately inroads have been made. We now have an idea of the cabal out to undermine Social Security, Medicare and Medicaid in order to further feather their own gargantuan nests.

Most of this refuse are found in the Neoliberal orbit where banksters, Maul Street interests, business and government collude and have erected front groups to pursue their nefarious ends.  As a point of interest, SourceWatch’s PetersonPyramid.org  points out, in reality, the “Campaign to Fix the Debt” is just the latest effort by Peter G. Peterson and a bunch of his billionaire friends and corporate cronies to chop away at Social Security and Medicare, all in the name of fixing America’s “debt problem”. The tragedy is getting politicos who ought to know better to follow him in this dastardly effort.



The latest expose, reported in assorted liberal-progressive sources including smirkingchimp.com, salon.com as well as The New York Times, features Fix the Debt, a group of business executives and onetime legislators who have become Washington’s most visible and best-financed advocates for reining in the federal deficit.  These scumballs were exposed when troglydyte Jim McCrery, a former Louisiana congressman, urged lawmakers last month to "pursue entitlement cuts and tax reform", and was introduced on television as a leader of the hitherto unknown enclave.

Interestingly, McCrery made no mention  of his day job: a lobbyist at Capitol Counsel L.L.C. His clients have included the Alliance for Savings and Investment, a group of large companies pushing to maintain low tax rates on dividend income, and the Win America Campaign, a coalition of multinational corporations that lobbied for a one-time “repatriation holiday” allowing them to move offshore profits back home without paying taxes. (So, they get to diss American workers while loading up overseas on profits, then ship those profits back home free!)

Fix the Debt has succeeded in confecting a "public-spirited, elder-statesman sheen to the cause of deficit reduction" according to the Times. Like busy little bees (or maybe the Africanized mutants) during recent  fiscal cliff negotiations,  they set up grass-roots chapters around the country, met with President Obama and his aides, and hosted private breakfasts for lawmakers on Capitol Hill. In recent weeks, Fix the Debt has redoubled its efforts, starting a new national advertising campaign and calling on Mr. Obama and Congress to revise the tax code and reduce long-term spending on entitlement programs.

Obama-  for his part, seemed to have taken their "entitlement-reduction" Kool Aid, appearing on 'Meet the Press'  on Dec. 30th while most of the country was getting ready for New Year's Eve. Obama strongly indicated he'd have no problem adopting the Chained CPI to reduce Social Security, a device I have railed against before - even demanding Obama (after the Nov. 6 election) acquire some cojones, unless deep down he really wants to do the Chained CPI. (See also:  http://www.brane-space.blogspot.com/2013/01/the-left-should-not-accept-any-deal.html)

The New York Times, in an editorial yesterday, also added its voice - advising Obama that this would be a terrible move, as well as dismissing the Neoliberal notion that "it is not a real benefit cut". The Times observed:

"The administration and other proponents of switching to a chained C.P.I. contend that it is a technical fix in the interest of greater accuracy, not a benefit cut per se. But that claim does not stand up to scrutiny. The chained index is in many ways a better method of tracking price changes for the broad working population, but there is no compelling evidence that it is better for computing the Social Security COLA.


What is known is that elderly households tend to have lower incomes and lower expenditures than younger households, and that more of their purchases are for needs that cannot be met by switching to products and services in unrelated categories. That indicates that they do not have the same flexibility as younger households to respond to price changes while still maintaining their standards of living. And because of the way it is calculated, the chained C.P.I. would also result in delayed upward adjustments in the COLA in times of accelerating inflation. Such delays would translate into real benefit cuts, leaving retirees worse off."

The Times editorial concludes:

"In the meantime, there are other, well-researched reforms to Social Security that the administration and other policy makers could pursue. For instance, it is well understood that upper-income people live longer than the less affluent. The formula for determining Social Security benefits could be gradually and modestly adjusted to reflect those longer lives, while making the system more progressive and cutting spending. Another sensible reform would be to raise the level of wages currently subject to the Social Security payroll tax, so that it better reflects the income gains of top earners over the past several decades.

But prematurely forcing through a COLA cut would be unnecessary and unwise. "

Obama, take note! Please do not be a tool for 'Fix the Debt' and do their dirty work for them! Back to the 'Fix the debt' scum. According to Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a liberal-leaning advocacy group, and a former economic adviser to Vice President Joseph R. Biden Jr::

“Some of these folks who are trying to be part of the solution have also been part of the problem, They’ve often fought hard against the kind of balance that we need on the revenue side. Many of the people we’re talking about are associated with policies that would make it a lot harder to fix the debt.”

Other board members and steering committee members have deep ties to the financial industry, including private equity, whose executives have aggressively fought efforts to alter a tax provision, known as the carried interest exception, that significantly reduces their personal income taxes.  Another one of these guys, tied to investments, is former PA Governor Ed Rendell.

I used to have some measure of respect for Rendell - during the campaign - and then we watched him 10 days ago on 'The Cycle', actually demanding  progressives accept the implementation of the Chained CPI and extending the Medicare age.  I screamed out loud, as I might after Aaron Rodgers gets pick-sixed,  with wifey in earshot: “He’s a Neoliberal FUCK!!"

Wifey concurred (using the more genteel term 'rat' instead), acknowledging his frequent appearances on all the most liberal MSNBC shows had duped us. So it goes!  Rendell has since been parroting talking points from his financial-industry cronies. After all, though MSNBC did not identify the former governor as such, Philadelphia magazine  notes that he is currently a “corporate consigliere Greenhill & Co investment bank” and the co-chair of “Fix the Debt” — a “blue-chip cabal of 130-plus plutocrats who have anted up a $43 million kitty to fund a multimedia stealth campaign/public relations offensive” pushing to both preserve tax breaks for the wealthy and dismantle Social Security."

As I said before and will again, we now have TWO corporate parties and the Dems are as bad as the Reepos when it comes to kowtowing to the corporate hegemony and screwing citizens - they just prefer to use lots of lube...over a longer time. They both drink from the same corporate hog trough, and inequality is the same result whether it takes 4 yrs. under reep-turds or 16 yrs. under Demos.   This is why I earlier wrote in advocacy of a Dem schism, e.g.  http://www.brane-space.blogspot.com/2012/12/a-coming-schism-in-democratic-party.html

Let me be even more blunt: We need Neoliberal, Wall Street - Investment linked apparatchiks like Ed Rendell like a "hole in the head".  But the Neoliberal incursion doesn't end there. We now also know that Erskine Bowles, appointed to the ill-conceived Obama "Deficit Commission", was none other than a co-founder of Fix the Debt, and (according to the NY Times piece on 'Fix the debt') was paid $345,000 in stock and cash in 2011 as a board member at Morgan Stanley, while Judd Gregg, a former Republican senator from New Hampshire and a co-chairman of Fix the Debt, is a paid adviser to Goldman Sachs. Both companies have engaged in lobbying on international tax rules.

How fucked up was the recent fiscal cliff 'fix' and how many hands of 'Fix the Debt' were on it? You be the judge. Just note that the fiscal deal preserved the carried interest loophole, eliminated most of a large prospective increase in dividends taxes and preserved a tax break, known as the active financing exception, that allows G.E. and other multinational companies to avoid paying United States taxes on overseas profits.

The deal also forestalled large automatic cuts in military spending, a boon to contractors like Honeywell. The company’s chief executive, David M. Cote, is a co-founder of Fix the Debt; the group’s “core principles,” which call for retrenchment in entitlement programs like Social Security, make no mention of military spending, which constitutes about a fifth of the federal budget. Of course, the military jagoffs would call for cuts to "entitlements"! Former defense analyst Chuck Spinney warned of such back in 2005 after the GDP allocation to the Pentagon went up to 6.2%. He said it was effectively "a war on Social Security and Medicare".

Now here's an even more ironic sounding note, according to the NY Times piece:

"Yet after an election in which many industries, including Wall Street, bet heavily against Mr. Obama, Fix the Debt has also had more credibility among Democrats than some traditional business groups like the United States Chamber of Commerce."

Why more credibility among Dems? Because these "dems" are Neoliberal, brain jacked a-holes. I no more regard them as progressive brothers in arms than I would Eric Kantor or Paul Ryan. (For more of my opinions on these "dems" see the blog link above on the coming schism in the D-party which I welcome!) Sadly, the Democratic brand has been shattered by corporatist greedheads and poseurs who are really Repuke Lite. They will never admit it but that's what they are.

I have not changed my progressive-liberal outlook, stances in more than 45 years, even as the country lurched Right under Reagan, and Gee Dubya.  Sadly, many of my former Dem friends now regard me as a "commie" or "radical" because of that failure to move "center-right'  with the times like they did. But that's ok with me. I'd rather be a "commie" (actually a Socialist) than a bought and paid for corporate wussie "centrist", progressive poseur or sellout. 

So let any pseudo-progressive chime in on how terrific Ed Rendell is or the chained CPI, or raising the Medicare age. I will simply laugh in a derided way on how brains have been gutted and parasitized over the last 40-odd years! Meanwhile, for REAL liberals, progressives (which Rendell dismisses as a "tiny sliver" of the progressive populace), you best keep monitoring 'Fix the Debt' - also send letters, email to the WH if Obama remotely appears to be buying their hogswill.

As for Rendell's opinion, we will see how the Dems fare in the next two elections if that "tiny sliver" doesn't bother to show up because of having been betrayed!