Hillary's Middle Class Tax Cut Plan Is A Non-Starter

In Europe, citizens of high benefits nations (Germany, France, Denmark, Norway, Sweden, Finland)  understand one doesn't get something for nothing and that higher taxes are the price paid for state social support. Thus, citizens need not worry about health care, higher education debt and daycare - like those in the U.S. 

However, in this country, people are baited again and again by "tax cuts"  when they ought to know by now they don't work and will only force cuts to their most desired social benefits later, e.g. Social Security, Medicare and VA health benefits.  That tax cuts, including middle class, don't work has already been proven by a detailed (Sept. 15, 2010) analysis appearing in the Financial Times.

That analysis (p. 24) showed the earlier Bush tax cuts engendered "the weakest decade in U.S. postwar history for real, non-residential capital investment".

The FT analysis also observed that “during each decade from the 1950s to the 1990s, growth in real gross non-residential investment averaged between 3.5 percent and 7.4 percent a decade. During the 2000s it averaged a mere 1%”

This is evidence enough that the Democrats have to stop playing politics with these god damned tax cuts!

Yet on reading The Wall Street Journal (Nov. 21-22, 'Clinton Proposes Middle Class Tax Cuts', p. A4) one sees Hillary is ready to pander again, hoping enough Americans are stupid enough to bite in order to give her their votes.

A Clinton campaign aide quoted in the piece insists her plan:

"would inject hundreds of billions of dollars into middle class households enabling them to better cope with expenses."

But this is total snake oil. As we've seen with the Bush tax cuts, later unwisely extended by Obama and Co., a huge push was initiated in 2010  to also cut Social Security under Obama's "Debt Commission". This was no coincidence. Obama's advisors knew something would have to give because the extension of those cuts - especially to the middle class (since on the rich alone they don't pay the freight) would otherwise create $1.2 trillion in deficits over the total time employed. The only way to offset them would be to cut "entitlements" - and the 'Chained CPI" was proposed  before Democratic forces inveighed against it forcing Obama-ites to back down.

Now, Hillary wants to resurrect this baloney, not telling Americans that if they accept these tax cuts they will pay the piper later - likely in future cuts to much more valuable Social Security and Medicare benefits. But Hillary is determined realizing that Bernie Sanders' plan for REAL benefits to the middle class, including free college, expansion of Social Security and single payer health care, can only be paid for by at least a nine percent increase in taxes (though at this level defense cuts will also have to be considered).

So, in order to further separate herself from Sanders, she proposes middle class tax cuts  The outfit behind this scurvy plan is likely the Third Way bunch which we (on the Left) like to call "Republican Lite".    This is because instead of pushing progressive values and populist economics, they call for welfare "reform," talk about how cutting Social Security, and support awful trade deals like NAFTA and the TPP. And if that wasn't bad enough, they also take in millions of dollars in donations from the fat cats on Wall Street, big Pharma and the so-called "defense" industry.

According to the WSJ piece "Third Way, a centrist think tank said Mrs. Clinton is outlining an approach that should lift sagging middle class fortunes".

But they don't say it would only be for a time. Then the hammer of other benefits cuts would fall on these middle class folks to avoid deficits busting the nation.

Anyone who can do math would instantly see, as Clive Cook pointed out some 6 years ago in an article in the Financial Times, that middle class tax cuts are insanity. You simply can't get enough revenue with tax on the wealthiest alone, even the upper one percent. He argued it needs to go as low as the upper 40 percent which includes the upper middle class and the "middle middle class".

Obama didn't heed the repeated warning, not just from the FT but elsewhere, so no surprise barely two years after extending the Bush cuts for the middle class he began proposing Social Security cuts.

Ultimately the backlash and outcry forced Obama to take stock and realize he was batting on a losing wicket, see e.g.

http://www.smirkingchimp.com/thread/richard-eskow/54446/yes-the-left-killed-the-chained-cpi

Excerpt:

“As for the president and his supporters, it is clear that the chained CPI is well-liked by both the White House's key economic players -- and by many of the commentators who support them. That's unfortunate, because it is inaccurate, unjust, and economically unwise. But like it, they do.

It appears that both the Republicans and the White House like it, but neither wants such a politically unpopular measure hung around their neck -- especially in an election year.”

Hillary, should she get elected next year and try to push her misbegotten tax cuts through,  will also get the same reaction if she subsequently tries to cut "entitlement" programs to offset the cost of  the tax cuts.

Hillary's middle class tax cut plan is bad for another reason. As reported in The Economist (Nov 24), such "expensive" tax cuts "would require a squeeze on public investment. That would sap productivity, especially given the shoddy state of America's infrastructure."

The article adds that the "burden of shoddy roads, airports and energy infrastructure will cost every household $3,100 a year according to the American Society of Civil Engineers".

That, along with later Social Security and Medicare cuts, ought to convince any sensible American not to bite on Hillary's tax cut snake oil. Bernie Sanders' proposed increase in taxes -including on the middle class- is the only one that makes mathematical or policy sense - if salvaging the middle class is a priority.

Bottom line: You can't get something for nothing!

Social Security Expansion: Americans Need It NOW !

I just received in the mail yesterday news on a Social Security Expansion bill (S. 567) which I believe is desperately needed. But more on the reasons why a bit later. (Which I only learned about myself from a new book on Social Security I've been reading,   )

This expansion bill called the "Strenghthening Social Security Act" was actually introduced in the last congress by Sen. Tom Harkin. This landmark legislation would:

1) Gradually increase benefits by approximately $70 a month by changing the way the Social Security benefits are computed.

2) Ensure all retired Americans get a fair and larger Social Security COLA - one that truly reflects the cost of living, including medicines, food and fuel.

3) Extend the long term solvency of Social Security by almost two decades simply by finally making millionaires pay their fair share into this program (since most millionaires still demand their own .S.S. cut).  The change would be to the payroll tax cap and would mean someone making $3 million a year would pay the same percent as an ordinary bloke earning $30,000 a year.

Why the need for this expansion? Because we are already suffering from cuts that are working their way toward rendering every ordinary senior on a track to cat food. I wasn't aware of this until reading the book, Social Security Works by Nancy J. Altman and Eric R. Kingson.  A few of the findings that blew my mind (pp. 60- 61):

1) The 1983 Social Security enactment -amendment effectively phases in a two year increase in the full retirement age from 65 to 67 and has already lowered benefits by about 6.5 percent.  When fully phased in, the delay of 2 years to defined "full retirement"  will effectively cut the benefits to those born in 1960 or later by around 13 percent.

2) It does not matter whether you claim benefits at 62 or 70 or somewhere in between you can never 'catch up" and the cuts will wreak their havoc over time year by year.

3) Decisions made in 1983, 1993 to treat a growing portion of Social Security benefits as taxable income will effectively lower benefits by 9.5 percent in 35 years.

The last is especially nasty. Prior to 1983, Social Security benefits were tax free. Since 1984, up to 50 percent of Social Security benefits have been counted as taxable income for individuals in excess of $25,000/ yr. and couples in excess of $32,000/ yr.

Since 1993, additionally up to 85 percent of Social Security benefits have been taxed for some individuals with incomes in excess of $34,000, $44,000 for couples. It is almost as if the benefits are given with the right hand and taken away with the left hand of gov't!

Worse, because the above thresholds are not adjusted for inflation,  the reduction in benefits increases over time. The effective cut was, on average,  6 percent in 2012  and will be 8.8 percent by 2030 and 9.5 percent by 2050.

Did you know about any of these existing cuts? I didn't - other than the first threshold for benefits cuts via taxes.

How bad it can get was recently described in an article in MONEY magazine (March, p. 42). They use the example of a retiree in the 15% tax bracket who is taxed 50 % on his Social Security. If he earns another $1,000, his "combined" income rises that much too, subjecting another $500 of Social Security to income taxes. So, the tax bill on that $1,000 will not be $150 (15 percent of $1,000) but $225 or an effective tax rate of 22.5%.

All of this in concert screams for an expansion of Social Security and the sooner the better. Otherwise seniors will be subject to an ongoing "race to the bottom" - and that's assuming the billionaires like Peter G. Peterson don't get their way in cutting it further via a "chained CPI".

How The Word "Entitlement" Got Debased to Mean "Handout"

To the deep politics maven, one of the recurring themes of interest is the multiple ways our fellow citizens are continually "mind-fucked" for lack of any better, more apt term. Much of this is accomplished via the disinformation of political ads, but also via the media itself - i.e. when the corporate media trashed all truth and objective history in its presentation of the JFK assassination during the 50th anniversary of that event, see e.g.

http://brane-space.blogspot.com/2013/11/frequently-asked-questions-on-jfk_22.html

Much of this sort of mind-fucking or gutting has already been well explicated in books such as Chris Hedges' 'Empire of Illusion' and Benjamin Barber's 'Consumed'.  Hedges also touches on how language is used to create mind viruses that wreak havoc in our political landscape once they colonize vulnerable brains. Some examples:

"death taxes" implemented by the GOOps to protect the estates of the rich which had been rightly subject to estate taxes.

"tax increases" - used to describe the repeal of the Bush tax cuts that were never intended to remain in place beyond 2011.

"liberal" - turned into a dirty  word by its  incessant misuse by Reep-tards and their fellow travelers, often to mean someone who would endorse child rapists and traffickers, supporting "welfare queens", and being soft on criminals - letting them go free (Google "Willie Horton" ad). All that when liberal actually means one who inveighs against child labor, exploitation of workers, denial of reproductive choice for women.

But the most recent example, "entitlement" - as described by the authors of  'Social Security Works'  - is startling to behold - including who the culprits are.  Why change the meaning of what was once a wonky reference to a word associated with the tax code (in terms of the child tax deduction entitlement, the mortgage deduction entitlement, the earned income tax credit etc.)?

As the authors note (p. 150), entitlement was turned into the proverbial 4-letter word:

"to suggest the benefits Americans had and were earning were less than deserved and to obfuscate the goals of those who sought to radically diminish social protections."

This term was most directly applied to Social Security - which has been in the sights of the Neoliberal elites for over three decades now. This despite as Altman and Klingson observe (ibid.):

"Focus groups indicate that most people equate the word 'entitlement' with a government handout- receiving something for nothing. But here's the catch that pollster Celinda Lake uncovered: when the focus groups were told the word 'entitlement' included Social Security, they vigorously disagree.

Social Security can't be an entitlement, the focus groups say, since they have earned their benefits just as they earn their compensation for work performed. When told that in Washington 'entitlement' does indeed refer to Social Security they become angry and insulted."

As they should be! However, that hasn't stopped the despicable, propaganda-based corporate media from jumping on the bandwagon to push this abominable association. To reinforce this Altman and Klingson  cite one LA Times headline which hysterically trumpeted:

'Entitlements Seen Taking Up Nearly All Taxes by 2012'.

But, of course, 2012 has come and gone and no such parlous 'takeover' has transpired. But the media monkeys who uniformly believe in "monkey see, monkey do" haven't let go of it despite the fact most Americans aren't amused at how they're being portrayed. Altman and Klingson  again (ibid.):

"The American people do not like change in language, but the media loved the storyline that entitlement spending on the old was crowding out spending on the young and ruining the country."

A virulent, despicable meme I've referenced and skewered before, e.g.

http://brane-space.blogspot.com/2013/05/cfr-prez-richard-haass-names-elephant.html

The authors then note how the actual name for Obama's deficit commission was known to the particulars and honchos as "The Entitlement Commission". Obama himself is actually blamed as being the prime culprit (p. 151) since "in the Executive order to form the commission, Obama lumped together Social Security, Medicare and Medicaid under the rubric of entitlement spending"

Once the media got wind of the misbegotten language use-   disgusting Neolib vermin that they are- more invested in PR and propaganda than truth, they pushed it ceaselessly.

Why did a Democratic President, Barack Obama, fall into this mind virus trap? Had he no deep insights into the history of attacks on Social Security?  Or did he simply lack the balls to fend off the mounting pressures ?(From long time Social Security opponents like Peter G. Peterson and his foundation, e.g.  www.petersonPyramid.org

To be fair to Obama, he didn't originally pervert the meaning of "entitlement" to include Social Security, Medicare etc. That was due to Peterson, who has had a boner to gut all the social insurance programs since 1981, when he "helped to form the Committee for a Responsible Federal Budget"

Then, in 1992, unsatisfied with the pace of change (and disappointed that the Reaganites didn't really cut S.S. as much as he wanted - only raised the retirement age to 66) he formed the Concord Coalition "whose mission - according to its website- includes 'educating the public about the long term challenges facing America's unsustainable entitlement programs."

His Foundation also made and promoted a propaganda movie entitled I.O.U.S.A. especially intended to fuck the minds of the young and anyone else dumb enough to believe Oldsters are wrecking the country with mounting debt.

The authors note that Peterson has been "omnipresent in most of the deficit debates that have occupied Obama's presidency" and even worse, "his son Michael, who is president of his Foundation is on the board of directors together with Alan Simpson and Ernest Bowles of  an organization called 'Fix the Debt"

Again, these were the same two luminaries Obama appointed to head his commission. As for 'Fix the Debt' - I already skewered these assholes in a previous post, e.g.

http://brane-space.blogspot.com/2013/01/fix-debt-cover-to-undermine-your-future.html

As for Altman and Klingson, their take on this pack of miscreants and liars is most enlightening (p. 154):

"The hypocrisy of Fix the Debt is remarkable. Fix the Debt claims to want to reduce the federal deficit but nearly half of its board and steering committee members have ties to companies that lobby hard to preserve corporate tax breaks. Among its leadership are seventy-one CEOs heading publicly held companies.

Fifty-four of them, according to a 2012 report, had personal saving in their firms retirement plans totaling $649 million or an average of $12 million each, which annuitized at age 65 would provide each with $66,000 a month in retirement benefits."

So, it's okay for these pigs to live high on the hog, but meanwhile they wish to brand Social Security as an "entitlement" and reduce its benefits to one single small stipend of about $400 a month. Can you say disgusting?

Keep track of this word and how often it's bandied about in the weeks and months ahead as the same parasites reprise their roles and renew their efforts to make sure you eat cat food - or dog shit - in your old age.

You've been warned!

What PEW's Paul Taylor Doesn't Get: NO Social Security or Medicare Cuts Are Needed!

  Paul Taylor is a scribe and authority attached to the Pew Research Center. Taylor is conferred a rousing set of kudos in a recent AARP Bulletin piece (April, p. 12, 'Battle of the Ages')  noting Taylor's role in babysitting for his grand kids, and his wife providing elderly care for her parents - not to mention having one adult child live at home until 30 - and the thrust is that Taylor is "living the next American life".

That is, one in which the generations are actively involved in caring for each other rather than warring with each other for scarce societal resources. Taylor himself is quoted as saying:

"A lot of this is the fruit of good news. More Americans are living longer, healthier lives. Who can be against that?"

Hmmmmm......well, perhaps Taylor himself!

Because when we then turn to the PARADE magazine of this past Sunday we behold the article 'Bridging the Generation Gap' in which Taylor has no problem -  not one - proposing benefits cuts that could hurt ALL generations whose cooperation he so lovingly extols in the AARP piece.

While praising the inter-generational connections (emphasized in the AARP piece) he then goes on to write:

"All those intergenerational good vibrations might help with the hard political bargaining ahead. Social Security and Medicare are the purest expressions in public policy of the idea that, as Americans, we are all in this together. But the programs need to be brought into synch with the new demographics of the 21st century-  and that means some combination of benefits cuts and taxes. Every generation will have to share in the pain."

But this is a false conclusion, since NO generation needs to "share in the pain".  In addition, if Taylor's proposal to cut Social security and Medicare benefits was to get legs, all generations would be in a world of pain! Consider: as the AARP piece notes (ibid.) those benefits monies support nearly a quarter of preschoolers cared for by a grandparent and 1 in 10 who live in a household headed by a grand parent.  Those benefits also help to support 4 in 10 Millennials who - for whatever reason - have to live at home because their job (if they have one) doesn't allow independence.

What the hell does Taylor think will happen if benefits cuts go through? What does he think will happen additionally to the 33 million receiving S.S. benefits who also are caregivers for sick or disabled children, or elderly parents? 

In fact, Taylor has his "bringing in synch to the 21st century"  prescription exactly opposite to what it ought to be: expanding both Social Security and Medicare benefits!

"But wait! Where's the money gonna come from?"

It's going to come from where neither Taylor or the other nattering Neolib nabobs like Robert Samuelson (pilloried in the AARP piece)  have looked: The Military- Security state. While the nabobs bitch that Social security and Medicare are "gobbling" 38% of the annual budget, they are oblivious to the military-defense - security state gobbling up 58%.  A graphic excerpted from an AARP April 2012 issue encapsulates what I am about:

Now, focus on that figure! With seven fewer F-35s that is what could be delivered:  a tablet for every 1st grader. Now consider that the militarists want to build 2,335 of those F-35s at an individual cost now estimated at $150m each and rising - because of cost overruns.

Imagine - if you will - just the money we'd have available if assorted administrations, both Dem and Reep, hadn't plundered the Social Security Trust Fund the past ten years to conceal the size of deficits, so they could squander it on military bullshit (or the security state).  In a previous blog post I did a year by year accounting from 2001 on the monies raided each year-  up to 2008, e.g.

2001    -  $163 billion

            2002   - $159 billion

2003   -$155.6 billion

2004   - $151.1 billion

2005   -$173.5 billion

2006   -$185.5 billion

2007   - $186 billion

2008   $180.2 billion

-----------------------------

TOTAL:  $1.353 trillion

 

 

It is estimated that over a trillion bucks of that went just for the neocon-inspired wars in Iraq and Afghanistan,  with the Bushie architects trying to conceal the size of the actual deficits by raiding Social Security. NO, he (Bush) didn't think of this tactic on his own, he took a page out of Ronnie Reagan's play book.   The total cost for both occupations, meanwhile, will likely come to $4 trillion. Think of what that money could have done! 

 

It would not only have ensured the longevity of Social Security and Medicare through the end of the century, but enabled us to expand benefits to more effectively help all the generations that depend on it.  Think also of the money (perhaps $800m) that will  get wasted if the U.S. remains in Afghanistan for another ten years - and then contemplate the savings if the national security state was paired down.

 

All of this constitutes the sharpest rebuttal to Taylor's claim that the generations need to "sacrifice" via benefits cuts.   It also exposes his next comment for the codswallop it is:

 

"The longer political leaders shrink from this challenge the more the burden of any solution will fall on the young, who are already fated to get the worst deal of any generation from Social Security and Medicare. In tomorrow's America yesterday's math won't work."

 

Really, Paul?  If that is so why are you not processing the cancerous malignancy of military spending run amuck, even as it uses Social Security monies to hide the size of deficits?  Not to do so, is to portray a dishonest solution - that the only alternative is benefits cuts to seniors who are already struggling with multiple demands, including caring for preschoolers as well as college students who must live at home.

 

Taylor is correct that in tomorrow's America yesterday's math won't work, and by that I mean the math for military spending - as the inset box above shows.

 

Basically then, Americans have one of two choices: continue supporting a massive military interventionist and security state, or preserve future social insurance benefits. The math simply doesn't cover both unless Americans are also prepared to bring back tax rates of 50 percent or more.

 

As for the math as it pertains to Millennials and Social Security - Medicare, the solution to change the negative outcome is simple: stop raiding Trust Fund monies to spend in general revenues - and what you have taken,  pay back!

 

And don't use it for the next ten years to support a stupid extension of U.S. presence in Afghanistan!  

NO Thanks! No “Bipartisan Budget Deals”!

"The cost of one modern heavy bomber is this: a modern brick school for more than 30 cities, …two finely equipped hospitals, or 50 miles of concrete highway. We pay for a single fighter with a half million barrels of wheat. We pay for a new destroyer with new homes that could have housed 8,000 people…Under a cloud of threatening war it is humanity hanging from a cross of iron.” - Dwight Eisenhower, April, 1953.

Call me a curmudgeon, or just plain cynical at the whole U.S. monied political system and distrustful of the two parties that amount to two sides of the same corporate party lobbyist coin. But I do not want any “grand” debt deals especially designed in any “bipartisan” way (which Grover Norquist once described as “date rape” by Reepos, of the Demos.) as espoused four days ago by Sen. Michael Bennett and his “gang of six” in The Denver Post.

Yet every where you turned the channel, including this morning, you heard monied Goombahs- like Warren Buffet- blabbing that, oh yes, we must ‘deal with entitlements”! Says WHO? The Neoliberal yappers and their political nabobs mostly in the pocket of billionaire Peter G. Peterson (who’s had a boner to gut Social Security since the end of the Reagan era). .

As blogger William Rivers Pitt put in his smirking chimp.com post today: .

A bunch of billionaires are working hammer and tong with their bottomless pockets, their hired Congressional stooges, their idolaters in the press, and all those useful idiots who hate government but love Medicare and always vote, to destroy Social Security and Medicare because government programs that actually work really well are the enemy, and must be scourged. .

At the forefront of this crusade is the Peter G. Peterson Foundation, which has already spent a billion dollars trying to convince Congress to come together on a "Grand Bargain" that eviscerates the social safety net represented by Social Security and Medicare, which are only the two most successful and important government programs besides the GI Bill.”.

Pitt went on to call out Peterson's “wingman” - billionaire Stanley Druckenmiller,( formerly of Duquesne Capital), who’s plowing millions of smackeroos into trying to convince young people that Social Security is the prime reason they're looking down the barrel at an increasingly grim economic future. According to a Wall Street Journal columnist (James Freeman), Druckenmiller "has been touring college campuses promoting a message of income redistribution you don't hear out of Washington. It's how federal entitlements like Medicare and Social Security are letting Mr. Druckenmiller's generation rip off all those doting Barack Obama voters in Generation X, Y and Z."

Unmentioned by Drucko is the real reason the Millennials are looking at an impoverished future: the massive and bloated war-national security state which can afford to piss $800 billion a year away on F-35 bombers, killer drones, and a spy structure to peek in on every American and every other government on the planet – including the emails of the other nations' leaders. One security moron quoted in The Guardian actually had the chutzpah to assert: “Well, the FRENCH do it too to our people!” Hey dumbo, you actually have the balls to obscure the fact that the NSA security budget – including black operations – dwarfs the French spy system by several orders of magnitude!
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Millennials and those who love and value them would be better served by focusing on Robert Kuttner’s take on Drucko in The American Prospect :

”Where to start? If you itemize all the reasons why recent college graduates face a wretched economy, Social Security doesn't even make the list. What does make the list are unreliable jobs that pay lousy wages, the aftereffects of a financial bubble created on Wall Street, and unaffordable college that leaves graduates starting life with more than a trillion dollars worth of debt.

The biggest lie in Druckenmiller's crusade is the premise that the income distribution problem is somehow generational and that he, as a billionaire, has anything whatever in common with most college students or most recipients of Social Security. One of his pitches to students is that Social Security is excessive because he, a very wealthy man, receives it but doesn't need it.

But for the vast majority of the elderly, Social Security is a lifeline, and a meager one at that. Some two-thirds of all seniors depend on Social Security for half of their income. Fully 46 percent of elderly widows and other unmarried seniors depend on Social Security for at least 90 percent of their income. The entire projected 75-year shortfall in the Social Security trust funds that conservatives make such a big deal about is around one percent of GDP per year. We could make it up with modest tax increases on wealthy people like Druckenmiller. "

We could also stand to cut back on our bloated military! I mean, come on, does the U.S. REALLY need 702 military 'installations' in 63 foreign countries (it has 4,471 bases altogether), according to the Defense Department's annual budget statement? ( Figures that don't include bases in Iraq and Afghanistan.) We're talking about our military presence in nations like Germany, South Korea, and Japan. ALL of these represent redundant costs since the wars that incepted the bases are now more than a half century over! While the total cost of these bases is kept secret, the best analysis I've seen estimates their ten-year cost at approximately $1 trillion. Cut that fat and waste, and Social Security and Medicare can easily be left alone – apart from the fact they haven’t contributed to the existing deficits! The wars and tax cuts have!

Yet the Neolib pro-market uber Alles rats keep beating the drums for a new “deal” to appease the Tea Baggers – who now have the lowest favorable ratings (according to recent polls) since their inception.
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As opposed to stealth cuts, like the Chained CPI to Social Security, what we really need is an INCREASE in the COLA based on the fact the existing index is predicated on a lowballed estimate of inflation (it excludes fuel, food and meds). Ask any senior, seriously, if he believes the forthcoming COLA increase (based on the supposed 1.6% inflation increase) is real and he will say, “Yeah, about as real as Santy Claus or elves!”

Real inflation, factoring in costs like prescription drugs, food, energy and housing is more like 4% which means that is what the COLA ought to be. And the thought of cutting it even more via chained CPI? Let Peter Peterson and his rogues try to live off it! Since when did billionaries start running this country and determining its budgetary priorities? Well, maybe since we turned into a corporate-billionaire Oligarchy, as Sen. Bernie Sanders puts it in the November 'Playboy' interview!

Could Cuts to Social Security Lead To Another Recession? Probably!

While the Neoliberal, free market hacks (like Robert J. Samuelson and John Kass) continue to harp on "entitlements" - and the Tea Bagger terrorists holding the gov't up to ransom have made it clear Social Security and Medicare cuts are on their chopping blocks too (along with the ACA) it appears none of them realize what would happen if granted their wishes. That is, if they get their cuts we could see a progressive reversal of economic growth leading to another recession, or even depression.

How so? First, know that we remain in a parlous, low aggregate demand economic environment which means too little spending to support the financial flows, markets and overall economic vitality. This was made clear in a new report published by the AARP Public Policy Institute and appearing in The AARP Bulletin ('Social Security's Impact', Oct., p. 34).

The report notes that contrary to some myths circulating, seniors receiving Social Security aren't hoarding their money or saving for a rainy day. Instead, they're spending it on goods and services- which means pumping it right back into an ailing economy. They're buying groceries, prescription drugs, paying the 20 percent for medical treatments that Medicare won't, purchasing the dental care that Medicare won't, buying airline tickets for vacations, as well as booking hotel rooms - and helping put grand kids through college. If they have enough left over, they also remodel assorted rooms in their homes, like kitchens or bathrooms (as we just got done doing).

Given this, businesses then use this influx of income to purchase more goods and services, and to hire more employees. These employees, in turn, spend their wages on more goods and services which creates more aggregate demand by more and more people. In other words, Social Security money doesn't just terminate its effect at an elderly person's bank, it has a multiplier effect with ramifications throughout the whole economy.

How much of an effect? The AARP report found that for every dollar in Social Security benefits paid out, roughly $2 in output is generated for the whole economy. In hard numbers, that translates to roughly $1.5 trillion in economic output (adding in the derivative spending by businesses.) This in turn supports more than 9 million jobs in the national economy, with 4 million of them created in ten industries with the major impact accruing to: food services, real estate, health care, and retail industries.

As the author of the AARP piece notes, given Social Security inputs also helped 21.4 million Americans  including 1.1 million children, and 5.8 million adults under 65, it means lawmakers in D.C. can't look at the program through a narrow lens of "spending cuts". Indeed, even imposing something as seemingly benign as a chained CPI could have devastating corrosive effects down the road. Major cuts or privatization, meanwhile, would likely usher in a new recession or depression.

Are any of our "patriotic" legislators aware of these stats? Do they even care? Will the Tea Baggers, who purport to be so very concerned about the economy process them? We will have to wait and see.

John Kass Better Hope He Never Gets Old

Chicago Trib hack John Kass has shot another round to try to launch an inter-generational war with his piece 'Geezer Zombies, Soon to be a Reality' (Denver Post, Oct. 6, p. 5D) While comparing Senate "geezers" (let's recall the Senate is the biggest, most elite millionaires' club in the country) John McCain and Dick Durbin to zombies and even extending the comparison to "the old woman crawling across the ceiling in the hokey horror film 'Legion') he then loses his way entirely by conflating the example with ordinary seniors.

According to Kass:

"The prospect of McCain and Durbin scurrying on the ceiling followed by Mitch McConnell and Harry Reid is horror indeed. So it's a guaranteed money-maker. And that hit will prompt others like 'You Better Kill Everyone Over 30 Before They Drink Your Blood'.

Really, Kass? Why everyone over 30? I can think of select subsets right now that - with stakes driven into their hearts - would make this nation a whole lot better, but you neatly skirt the issue. But you expose your crappy hand when you claim "the real conflict isn't partisan, but inter-generational" then add this claptrap:

"Establishment pols continue bickering over crumbs while refusing to do much about those fiscally ravenous and unsustainable entitlement programs like Medicare, Social Security and Obamacare"

And thereby he places himself in the same category of other Neoliberal rats trying to make us believe seniors can easily do without essential social insurance - thank you very much - while turning a blind eye to the military -industrial- spy complex which is gobbling up massive chunks of the treasury each year.  This Military malignancy has already drained us of over $4 trillion via 2 unpaid for occupations  and it may well be much more, when all the medical needs of the returned Iraq and Afghanistan vets are tended to, as well as their future disability benefits finally paid for.

But does Kass even try to impute the defense -spy state nuts? Oh no, that's off base. But let's take aim instead at ordinary seniors who can end up destitute with one fall, or god forbid, Alzheimers. Instead, Kass piles it on even more, scribbling:

"Unfortunately, the unsustainable federal spending ...will drain today's teenagers and 20-somethings of vital nutrients like cash and jobs. Among the young unemployment rages, job prospects are poor and many figure they will never own a home. Young people know this, or at least feel it as Washington continues to print money."

While Kass appears obsessed with the Federal Reserve's quantitative easing policy ("printing money") he takes his eyes off the real ''ball': vast defense contracts (for toys like the F-35 at $600m each, to build 2,400 of them) and a surveillance state whose budget has now grown to a half trillion a year, including to pay thousands of private contractors to compile meta-data on Americans, and with black budgets.

How can any columnist be so patently blind? Perhaps he willingly does so and wants an inter-generational war on top of the new Civil War brewing now between Southern Tea Party types and northern style liberal governance where all get a piece of the pie.  To confirm this he goes on to spew nonsense about the "baby boomer undead and the teenage zombie hunters" then - to make sure we know he's as crazy as shit house rat, he writes:

"Less than 50 years ago, nearly 30 percent of America's elderly lived below the poverty line. No more. They've switched places with the young and the young don't get it yet. But they will. And if that's not a recipe for conflict, I don't know what is."

So wait, Kass,  you really want to return us to the era of thirty percent elderly poverty?

In fact, the poverty rates for those over 65 and the younger set (21- 34) are nearly exactly the same: 15.6% vs. 15.4% (according to 2012 Census stats) so it's not as if they've "switched places".   Kass' narrative is that greedy seniors are robbing the young blind, but the truth is that the military-industrial spy state is robbing both blind. Rather than put the tail on the military-surveillance expansion it's much easier not to rock the boat of the Neolib paymasters - and blame oldsters instead. Never mind, whatever the predicament of the Millennials now they are much more resilient than the elderly. They have much more TIME and opportunity to bounce back from a setback - economic or physical (especially if they have the sense to sign up for the ACA) than the elderly do. They aren't looking at a prolonged death from Alzheimers, after all, or being confined to a nursing home after a fall. (Or paying more than $4,000 a month to stay under nursing home care!)

Given this, we need to be aware of how the entrenched Neoliberal political Elite continues to make up lies as it attempts to destroy our social insurance infrastructure. If you want to see the real swine behind it go to www.petersonPyramid.org )

The next time Kass or any other overpaid, self-important hack thinks of playing the "generational war" card they need to be reminded of the following:

Seven million children currently live with grandparents - who depend on Social Security to care for them

- 8.5 million other children (including college kids that find themselves jobless and live at home) who live with elder parents that depend on Social Security to make do.

- The tens of millions of 50-plus Americans who, through their tax dollars and Social Security monies, pensions, provide voluntary contributions to support public schools, child health programs, grandparent guardianship programs as well as other charities that care for homeless kids (e.g. Covenant House).

 Concocting war between the generations, pitting young against old, therefore serves no useful or moral purpose. It is merely a cheap, malicious tactic to take attention from the REAL problem: the malignant growth of the Military Industrial Complex to the detriment of all of us outside it!

Meanwhile, the best strategy for right thinking Americans is to fight on for a single payer, Medicare- for- all system, which ultimately would save us at least a trillion over ten years, and eliminate the 120 Americans per day who perish for lack of health insurance. 'Socialized medicine' ? Not any more than the healthcare provided by the VA! 

Why Young People Are Losing Out on Jobs: Too Many Old Farts Still Working!

Question: In a low aggregate demand environment, where companies continue to sit on over $1.5 trillion in capital, and young people are struggling to find jobs, is it: a) better for the over 60 citizens to work longer, or (b) deliver more generous Social Security and other support benefits (i.e. earlier Medicare) to enable an earlier retirement so young people can get jobs?

Hint: It's not a trick question! The stats presented in a detailed article of the Business section of the Sunday Denver Post show that young people in the age range from 19-24 are being clobbered in the employment game, and because oldsters are staying on longer - presumably because they are (or feel) financially insecure.

According to the Post ('Young, Old Poles Apart in Shrinking Workforce', p. 1K), referring to Colorado (which stats are also shown to be extrapolated to most of the nation):

"Back in 2000, nearly half of 16 to 19 year olds were employed, and 8 of 10 of those from 20-24 worked. But in 2012, fewer than 3 in 10 teenagers worked and only 64.2% of those in their early 20s, according to the U.S. Bureau of Labor Statistics.

At the other end of the demographic curve, employment among 55 to 64 year olds went from 60.8 percent to 64.8 percent over the same time period. Among those 65 and older it went from about 12 percent to 18.8 percent in 2012."

The Post piece goes on to note that since jobs bottomed out in 2009, after the financial meltdown a year earlier, "workers age 55 and older have claimed nearly 3 out of every 4 new jobs created in the U.S. according to the Center for Economic and Policy Research."

Wow! Anyone not see a connection here? I do. Let's see what sort of model is this? How about a zero sum game?  Given a limited (or shrinking) number of jobs, then every job claimed or gained by an elder person is a job not attained (i.e. inaccessible)  for a younger person. In general. Yes, there will be some exceptions, mainly is certain elite areas like software engineering where new college grads may have an edge over any oldster. But given that the overall quantity and quality of jobs has decreased in the whole country, it is clear that those employers are more likely to hire the older, more experienced lot than the younger. This means, again - in a shrinking or limited 'pie' of jobs, the young don't have a chance.

Well, not unless we can get the oldsters to retire earlier. But to do that they need to feel more secure about their chances not less secure!  This means more generous Social Security benefits, earlier access to Medicare, and absolutely NO cuts including the 'Chained CPI". Oh, it obviously also means dropping this rot about "working until 70". In that case, look for even more kids sitting in their parents' basements playing SIMS or whatever as they while away their time, interspersed by a few part time gigs if they can get them.

To see the Neoliberal press for working to 70, check out:

http://www.cnbc.com/id/100385655

Where one reads:

"Executives of the Business Roundtable are urging Congress to raise the Social Security and Medicare age eligibility to 70, from the current 67, and to adopt means testing for wealthier retirees, in order to keep the entitlement programs solvent longer-term"


Well, if you think that's unique see:

http://money.usnews.com/money/retirement/articles/2012/07/09/why-you-should-plan-to-work-until-age-70

Quote:

"I think everybody needs to aim to work longer," says Alicia Munnell, director of the Center for Retirement Research at Boston College. "If everybody works about five years longer than they had planned, most people would find themselves with adequate retirement income."

But what is "adequate retirement income"? It isn't defined! (And note most Neoliberal sources - many fueled by the Pete Peterson gang, suggest $1 million needed to retire.)

Then, of course, there's the one percenters' favorite medium, FORBES:

http://www.forbes.com/sites/kerryhannon/2012/07/11/why-you-should-plan-on-working-to-age-70/

"The Center for Retirement Research at Boston College reports in a new study titled: “National Retirement Risk Index: How Much Longer Do We Need to Work?”  that a whopping  85% of households would be prepared to retire by age 70."


The true fact is there'd be no need to demand or insist that the older citizen "work until 70" IF:

1) Congress stopped pilfering Social Security monies and using it for other nefarious purposes, like NSA spy "black budgets", or to appear to lower the amount of military spending

2) Congress paid back what it already pilfered, well over $2 trillion since 1983.

3) Congress ceased using wars and tax cuts as an indirect means to bleed down domestic social insurance.

If all the above were done, then Social Security benefits could be increased, as per the current left-base initiative to do so, e.g.

http://thehill.com/blogs/on-the-money/budget/313207-liberals-defy-obama-push-to-increase-social-security-benefits

and

http://www.huffingtonpost.com/rj-eskow/increasing-social-securit_b_2659768.html

Also, the potential for offering Medicare earlier - say to seniors aged 63 -64 could be considered. I cite these ages because they highlight the two years many near seniors need health insurance but the private market offers only outrageous choices, such as paying $15,000 a year for a high deductible policy you can't invoke until after you've spent $5,000.

IF these things were done, more seniors would feel comfortable leaving the work force earlier - thereby opening the way for younger adults to get jobs they otherwise wouldn't. In a shrinking jobs landscape, where technology alone is rendering tens of thousands more workers redundant each year, this is the only near solution feasible.

The tragedy is that any such changes, thanks to our bought and paid for (by Peter G. Peterson et al)  austerity politicians, are about as likely to pass as the chance aliens will intervene at the last moment and stop the U.S. from attacking Syria and instigating WWIII. (Yeah, and that attack - along with probably many more - will chew up even more "borrowed" Social Security monies!)

 See also: http://www.smirkingchimp.com/thread/tom-engelhardt/51415/and-then-there-was-one-delusional-thinking-in-the-age-of-the-single-superpower

Austerity Economics Is Triggering Unsustainable Economic Weakness

The news in today’s Washington Post that the middle class is barely keeping it’s head above water should come as no surprise to anyone paying attention. As the Post lead story (Middle Class Still Left Behind in U.S. Economic Recovery – Data Shows) notes:


“The economic recovery of summer 2013 is playing out in an all-too-familiar way for poor and middle-class Americans: Gas prices are up, growth is slowing, and there still aren’t nearly enough new jobs to employ the almost 12 million people seeking work.

An improving housing market and rising stock prices appear to have done little to increase the take-home pay of the typical U.S. worker. And while the economy continues to heal faster than that of almost any other Western nation, evidence remains strong that the recovery has done little to boost the fortunes of people in the vast economic middle.  The Labor Department reported this month that average earnings have barely grown faster than inflation over the past year. Data from spring show that median earnings — those of the worker smack in the middle of the middle class — have fallen 4 percent since the recession ended, after adjusting for inflation.”

Why is this? Basically, it’s because we have - or at least our political and media class have – accepted economic myths while allowing the government to become hamstrung by the GOP opposition via absurd filibuster rules. At the core of these myths is the mainline economists’ acceptance of the Pareto distribution,e .g.
http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html


Let's bear in mind also, that the same (Neoliberal) political class has "bet the farm" that Pareto optimality delivers more if spent on "wars" (actually overlong occupations that inflame overseas passions) and massive surveillance than domestic needs. So no wonder that our domestic infrastructure is cratering at a rate while too many remain mesmerized by the numbers (on assorted tube  'crawlers') for the DOW. Can we use this to define national insanity? Yes, I believe we can!

Another sign is the yen to cut Social Security and Medicare! But as a recent Bulletin of the National Committee to Preserve Social Security and Medicare has pointed out ('Debunking Media Myths'):

"Contrary to what you might read in the headlines or hear on the evening news, Social Security and Medicare are not to blame for our nation's fiscal woes or our deficit."

Indeed! It is the unending wars and domestic spy state amassing of precious tax dollars to spy on all of us that is contributing most to deficits and woes!  Another important point for the pointy-headed Pareto-ists:

""Without these vital programs our economy would be in even worse shape and millions more American families would face economic security".

How so? Because we are in a low aggregate demand environment - since the recession (which many, including  economist Thea Lee believe is still going on). In this environment cuts to social insurance programs mean lower spending by recipients and FOR them (e.g. via insurance to cover procedures from Medicare) hence demand is lowered, adding to the woes. What we need then is MORE spending, not less! Less austerity (and an end to the absurd sequester) not more! 

But the political class and its favorite economic tools (fools?) don't want to hear it. As one former Fed economist put it two years ago ('Economists Win Nobel for Focus on Real World', WSJ, Oct. 11, p. A3) in regard to making substantial cuts to “entitlements”:


"If you made a credible committment to do this now and the markets saw that, this theory would predict that you have a much more positive impact on the economy today".

But that is bollocks, and those are the words of a delusional guy who tacitly accepts the Pareto. In other words, as standard for Pareto optimality BS, we must sacrifice citizens' security for a generic market benefit, available only to the elites, mainly the 1%. Incredibly, these economic shysters actually believed a ramping up stock market (pumped by Bernanke’s cheap money crack) would also feed the middle class – unaware that most of them are(wisely) not exposed to the equity markets, especially after the disastrous 2008 collapse.


But they still echo the refrain: “Let them eat stocks!” (Or mutual funds) as opposed to actually paying real livable wages that trump phantom money that expands or diminishes on any given day. Meanwhile, if Medicare and Social Security benefits are cut this would be "Pareto efficient", reinforcing the old Pareto Parable that if a sheep and a wolf form a collective, it is always preferable for the wolf to eat the sheep for the "collective" to be maximally optimal. In like manner, it is always preferable that the economy give preference to the dollars of the wealthy because they are worth more than dollars simply given to the elderly out of “entitlements”. After all, the latter are merely getting economic largesse for breathing every day!


Epitomizing this sort of deranged thinking is Thomas Sargent, an Econ Nobel winner from two years ago- who along with Christopher Sims, poured bollocks on Keynesian stimulus from governments, which - let's face it - has seen a rash of attacks in the wake of the onset of the austerity virus. Sargent's "rational expectations" model posited negative "rational" reactions of people to events like the Fed loosening the money supply, "a conclusion at odds with the Keynesian model". For example, he claimed that people woould adjust their "wage demands" higher if the Fed increased the money supply (as it has recently been doing by buying back hundreds of billions of treasury securities, under 'quantitative easing'). Then, by increasing the wage demands unemployment will increase, rather than decrease.

But in truth, as the WaPo released stats show, this is nonsense. The true fact is even though the Fed has poured hundreds of billions into quantitative easing it hasn’t made a dent in wages, or unemployment. But it has increased inflation (never mind the Federal Reserve’s bogus index) and merely enriched the speculators. But that is what it intended to do. All this crap about helping the vast Middle to regain its footing via stock returns is just that, crap.


Sargent also argued that people will "make decisions now" based on how they rationally believe the government will deal with Social Security and Medicare. Thus, according to the Pareto Distribution basis, if government were to act for cuts now (including Obama’s proposed Chained CPI) then people might invest more in the stock market (for higher returns) instead of depending on government. But again, this is nonsense as the WaPo piece shows. Since “rising stock prices appear to have done little to increase the take-home pay of the typical U.S. worker.”


The reason is a dirty little secret amongst the political –economic elites: corporations are still sitting on over $1.7 trillion stash and not using it to enhance wages or increase jobs. Instead they are mostly practicing economic equity incest and buying back their own shares at odd intervals. Meanwhile, unemployed college grads waste away in their parents’ basements with no future economic prospects and unable to repay their monumental student loans. Thus, stock values aren't increasing because more people are purchasing the goods companies have in their inventory (they can't afford to with their meager wages) but because the stock prices are being artificially inflated, via Bernanke's 'crack' and corporate buy backs.  Those few middle classers into stocks and especially equities are in for a very rude awakening when the rubber meets the road. Likely next year after the Fed pulles the QE plug.

Sargent's own bias in his development of his mathematical models to support his rational expectations "theory" confirms his pro-Pareto bona fides. For example, in one of his theoretical models Sargent arrives at a set of "competitive equilibria": C = {(x,y)! x = h(y)}, such as shown on the accompanying graph where "welfare" is plotted vs. "tax rate". Entering into the basis for generation of such equilibria is what is called a "utility function" framed for example as: U(L, c,g) where L denotes "leisure", c is the rate of consumption, and g is the per capita government expenditure. From this, Sargent purports to obtain some parameter 'alpha' spanning a range in a limited set from 0 to 1/2.


At some point later then, one also will find the tax rate τ, enter. Thus, he claims a government will in general balance its budget if: g = τ (1 - L). Meanwhile, he poses "welfare" within the constraints of competitive equilibria as defined by:


W(τ) = L(τ) + log {alpha + (1 - τ) [1 = L(τ)]} + log (alpha + τ[1 - L(τ)}


He argues that a "benevolent government" chooses L = 0, c = g = ½

while a "dictatorial" outcome yields: W = 2 log (alpha + ½)

This is nonsense, given that any true benevolent government would never ever require a leisure L = 0! However, a dictatorial "slave camp" government, such as under Chairman Mao in the 1960s, would! So what the hell is he getting at? The graph shown sets it in perspective assuming an alpha = 0.3 or just past midway in the set {0, ½}. Thus, he argues that the "government problem in a "Nash equilibrium" is defined by a limiting maximum tax rate, max(τ) such that: L = log [alpha + (1 - τ)(1 - L)] + log (alpha + τ(1 - L)]


Then, if L < 1, the option is τ = 0.5  However, as the tax rate moves beyond this limit, the welfare crashes! Well, by that I mean it reaches a Nash equilibrium lowest value of around -1.2.

Stripping away all the math and balderdash, what do we have? Well, a curve that fits perfectly within Pareto Distribution parameters of Pareto optimality or efficiency! (Notice the line marked "unconstrained optimum, which is really an optimum for maximal Pareto effciency). What we are being warned against here, is the use of too many government expenditures or resources for the common good, whether in Medicare, Social Security or even unemployment insurance. Any time one seeks to maximize a putative welfare within these limits, one ends up in a crash pile. The welfare drops and so does everything else.

Beware then of all those who wish to stimulate the economy by too high a tax rate?

 Hmmmm....wonder then why our unemployment was lowest during the 1950s when the marginal tax rate was 91%.?  Oh, these latter day anti-Keynesians will argue it was the aftermath of the war production, the lack of global competitors or some such rot, anything to deny any consistent Keynesian approach. But they ignore how solid the economy was with relatively low unemployment as JFK regularly used deficit spending! (See e.g. http://brane-space.blogspot.com/2012/07/thats-right-now-blame-60s-jfk-for.html  )

The conclusion the truly rational person must draw is both cynical and realistic: our political elites and their corporate media are using the Pareto narrative to protect massive military and surveillance spending as they wreck domestic security and infrastructure. In other words, these rats don't care about us little guys. They only care about propping up an "empire" and using that to justify minimal domestic security - REAL security!

To get a further handle on our misbegotten, military industrial complex fueled austerity economics check out Jeff Cohen's blog piece: "The Elephant in the Room: Militarism":

https://www.commondreams.org/view/2013/04/09-1

A New Insult: Expanding Means Testing for Lower Middle Income Seniors

The notice in the Newsletter from the National Committee to Preserve Social Security and Medicare was blunt and to the point. A new “proposal” before congress- hell bent on appeasing the Fix the Debt parasites- is to expand the means testing of Medicare to lower middle income seniors. According to the Newsletter:

"The proposal would shift billions of dollars in additional costs to beneficiaries by further expanding means testing for Medicare Parts B and D – until 25% of all beneficiaries are paying higher, income related premiums. A recent study found that this proposal would eventually impact individuals with annual incomes equivalent to $47,000 in today’s money.”


Let’s make it clear here that $47,000 /yr. is not a princely sum for an annual income, especially for seniors who – unlike younger folks- are burdened by additional health care costs including more medications, as well as the possibility of having to enter a nursing home for everything from a broken hip, to Alzheimers. The nursing homes are not cheap at $3,000 a month or more. Hence, this expanded means testing is nothing short of deplorable. The fact that the richest 1% will still make out like bandits while lower middle income seniors suffer is even more disgusting.


The NCPSSM Newsletter went on to note that this expanded means testing along with a chained CPI for Social Security, and possibly higher eligibility age for Medicare would:


“generate a tsunami of seniors living in poverty”


Setting the cuts in stark contrast to the wealthy tax payers, the Newsletter goes on:

"The benefit cut resulting from the chained CPI proposal alone would result in Social Security beneficiaries losing about 2 percent of their income, while the 2013 tax increase on wealthy Americans earning $500,000 results in a negligible 0.6 percent loss’


Process that difference! For the half million a year wealthy guy his piddling 0.6% loss is barely equal to the current cost of one share in his favorite hedge fund or a 1/10  kt blood diamond. For the senior it would equal a month's worth of blood pressure and diabetes meds. Do the rich Neoliberals who make up most of the Beltway's blabber set care? Of course not!

In other words, the confluence of benefits cuts is designed to increase inequality and poverty rates dramatically (already 15% of seniors live at or below the poverty line)


Note also that all those talking heads, Neoliberal hacks and flacks, including Joe Klein and Fareed Zakaria of TIME, and “legal” leaker Bob Woodward, who advocate “entitlement cuts” – are themselves sitting pretty and have no need for “entitlements” at all. They neither see or care about the fact that half of seniors barely get $22,000 a year in benefits, and that the U.S. is amongst the stingiest of developed nations in terms of social insurance. In other words, these Neoliberal twerps essentially support ‘Fix the Debt’ and Pete Peterson who insist the weakest and most vulnerable in the nation take the hit so the Neoliberal free marketeers and speculators can continue their fun run with the DOW – and expand their takings.


The NCPSSM solution will be to bombard congress with petitions from millions of its members. The message is firm and unambiguous: there must be NO willingness to compromise in any September debt ceiling showdown such that seniors’ lives and well being is sacrificed. The rich will have to pay their fair share and that must mean higher taxes, as opposed to socking it to the elderly!

For the link to see who's really behind such savage cuts and means-testing, go to: www.petersonPyramid.org

"Chained CPI" Would Mean Back Door Tax Hike

It's been said that the GOP never met a federal income tax that they actually liked. Well, given that so many of them are drooling at the prospects of Social Security benefits cuts via Obama's proposed "Chained CPI", why aren't they also aware that enabling that to go through will induce a tax hike? And by $127 billion over ten years?

This according to an article 'A Backdoor Tax Hike' in the recent issue of the AARP Bulletin (June, p. 30).

While the article notes the chained CPI is a "new way of calculating cost of living adjustments' - it also notes too much attention has been paid to the consumer price index aspect, that naturally would translate into lowered benefits for Social Security. Given the chained-CPI reduces the cost of living adjustment by 0.3 percentage points annuall, that translates into a cut in benefits of 3 percent for those who have been retired ten years, 6 percent after 20 years, and 9 percent after 30 years. The poorest seniors and those retired the longest would therefore be hit the hardest.

But evidently, from the AARP article, while people had their eyes fixated on the benefits cuts they didn't take into account or lost sight of the accompanying tax increases - IF the chained CPI ever goes into effect- which would affect about 80 percent of all taxpayers.  How could such a tax increase have escaped scrutiny? Well, mainly because too many in the media were too mesmerized by the benefits cuts that they missed it.

But think about it! Every year income taxes aren't fixed. Each year the Internal Revenue Service makes adjustments, based on the rate of inflation, to all income tax brackets, standard deductions, personal exemptions and more. This is why one year you may see a higher or lower standard deduction than what you saw the previous year. Ditto with the personal exemptions.  All these adjustments help prevent the default bumping of taxpayers into higher tax brackets - thereby making them pay more taxes because of inflation.

But.....for those conservos who salivate at the chained CPI imposing some austerity on "entitlements" - that's a double edged sword. Because the chained CPI yields smaller increases than the current formula used (under standard CPI) MORE of your income will then come into play to compensate, so more of your income would be taxed at a higher rate.

Alas, however, the tax increase isn't fair with the highest tax increases applied to the lowest incomes and the least to the highest. This may well be why the GOOprs aren't kicking up too much of a storm over it, as they'd get a 'two fer': more austerity for entitlements, plus more taxes for lower income earners. Isn't that what Herman Cain and Rick Perry were thumping about during the 2012 campaign? That too many of the 'takers' didn't pay 'nuff in taxes?

How would that work? According to the AARP Bulletin, those taxpayers currently earning $10,000 - $20,000/year would see their taxes increase by 7 percent over 16 years, citing the Tax Policy Center in Washington. The least increase would be 0.2 percent over 16 years, for those earning more than $1 million per year.

As the Bulletin notes:

"So in addition to cutting Social Security by $142 billion over 10 years, the chained CPI wouild raise income taxes by $127 billion.

 True, but the same low income group is taking the hit each time - for the cuts, and for the taxes. No wonder the richest Americans are wetting their panties at the thought of a chained CPI! It's a win-win proposition for them. They get to see austerity imposed on poor seniors while they get richer on that austerity and not having to give up much in the way of taxes.

Former Defense Analyst Chuck Spinney Predicted ‘War on Social Security, Medicare’ as Long Ago as 2005

"The cost of one modern heavy bomber is this: a modern brick school for more than 30 cities, …two finely equipped hospitals, or 50 miles of concrete highway. We pay for a single fighter with a half million barrels of wheat. We pay for a new destroyer with new homes that could have housed 8,000 people…Under a cloud of threatening war it is humanity hanging from a cross of iron.”

-  President Dwight D. Eisenhower in an April, 1953 address

In August, 2002, former Defense Analyst Chuck Spinney – appearing on a Bill Moyer ‘NOW’ (PBS) segment- examined how the Pentagon had somehow ‘misplaced’ (couldn’t account for) $1.2 trillion of taxpayer money. He noted that this reckless, careless bookkeeping miscue disclosed the U.S. was no longer a democracy or even a Republic, since a key branch of gov’t had become totally unaccountable.

Three years later, after the Bushies had ramped up defense spending to dramatic new heights, what amounted to 2.4% of GDP as opposed to 1.2%, Spinney predicted it would incept a “war on Social Security and Medicare”. He predicted the total costs of military spending, including in Iraq, and Afghanistan and a de facto perpetual ‘war on terror’ (as well as a burgeoning national security state) would become so great that the major social programs would be slashed to pay for the deficits engendered. How large is the military money pit?  What sort of monster must it ‘feed’?


The United States currently maintains 702 military 'installations' in 63 foreign countries (it has 4,471 bases altogether), according to the Defense Department's annual budget statement. These figures don't include bases in Iraq and Afghanistan. We also spend more on military weapons than the next 25 nations combined. No wonder seniors’ and disabled vets are now on the chopping block – despite what Neoliberal mouthpieces like Jonathan Alter and David Axelrod bloviated night before last (on ‘All In with Chris Hayes’ and on Rachel Maddow). Maddow, give her credit and kudos,  did give Axelrod fits in his defense of the Chained CPI, noting a better path is simply to raise the payroll taxes threshold and that S.S. didn’t contribute to the deficit – good for her!.

One more thing, Lawrence O'Donnell was totally, absolutely wrong in the last segment of his show last night, trying to depict one of Social Security's founders - Frances Perkins - as favoring any COLA cuts now via the Chained CPI. Neither she nor FDR would be in favor of such an atrocity if they knew how much of our budget we were squandering on military bullshit, wars of choice and national security! So Lawrence, you need to consult more with your colleague Rachel on this! (And NO! For the nth time, I do not believe Obama is playing 'three dimensional chess" with the Repukes via his budget!)

With the planned cuts to Social Security, revealed Wednesday in Obama’s budget, we see that at the very least Spinney’s predictions have partially materialized. (They are merely in the ‘proposal’ phase so far, not let voted on by either Senate or House, and fortunately, it appears the Repukes will never accept it anyway – so seniors and the Left live to fight another day)


Media expert Jeff Cohen has shown this is not merely a coincidence: the U.S. having metastasized into the most extensive military empire the world has ever known- needs ever more money, from whatever sources, to keep its monstrosity going. As Cohen observed in a recent smirkingchimp.com blog:

"Today there’s an elephant in the room: a huge, yet ignored, issue that largely explains why Social Security is now on the chopping block. And why other industrialized countries have free college education and universal healthcare, but we don’t. It’s arguably our country’s biggest problem – a problem that Martin Luther King Jr. focused on before he was assassinated 45 years ago, and has only worsened since then (which was the height of the Vietnam War).

That problem is U.S. militarism and perpetual war."

While Cohen has emphasized the “perpetual war” meme (born after 9/11) he’s not the first to point it out. Gore Vidal, for example, belabored the way dozens of minor conflicts, interventions since WWII have weakened the U.S. – especially domestically- in his  book ‘Perpetual War for Perpetual Peace- How We Got to Be So Hated’.  See, e.g. http://www.meaus.com/perpetual-war-gore-vidal.htm

Though the willfully naïve “consumer” mutation of the citizen and paper patriots will dismiss it as “anti-American” it ought to be required reading for the real citizen and REAL patriot, who isn’t so dumb or gutless as to ape what too many Germans did in the 1930s, parroting:  “my country, right or wrong”.  The Real Patriot and citizen never agrees with his country when he sees it’s going wrong.

The Rev. Martin Luther King, Jr. was such a man, as Cohen notes.  In 1967, King called the United States “the greatest purveyor of violence in the world today” – and said, “A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

We may have well passed that point, probably soon after the Bushies adopted the Nazi “Blitzkrieg” template of “pre-emptive war” to invade Iraq ten years ago.

Sadly, while real journalists – night after night – helped expose the waste and destruction of the Vietnam War, that has not been the case with the more recent conflicts. The Pentagon has basically kept the ‘lid on’ by conceiving of the “embedded journalist”. This is the paper copy of the real one, but gutted by virtue of having to follow a set of phony rules as he gets to ride along with the troops. Rather than showing the realities of the Iraq and Afghan conflicts, these mock journalists helped to fabricate an unreality which explains the current disconnect between a majority of Americans and the military. Since most Americans never really see what’s going on – except what the Pentagon’s manipulators want them to see- and have no skin in the game (either with a son or daughter over there, or paying taxes to support the conflicts waged) they really don’t give a damn.  

As Cohen observes:

“I know something about mainstream journalists being silenced for questioning bipartisan military adventures because I worked with Phil Donahue at MSNBC in 2002/03 when Bush was revving up the Iraq invasion with the support of Democratic leaders like Joe Biden, John Kerry, Hillary Clinton and Harry Reid. That’s when MSNBC terminated us for the crime of JWI. Not DWI, but JWI – Journalism during Wartime while Independent.  JWI may be a crime in mainstream media, but it’s exactly the kind of unauthorized, unofficial coverage you get from quality independent media today and from un-embedded journalists like Jeremy Scahill, Dahr Jamail and Glenn Greenwald.”

Of course, the images night after night of the carnage and loss in ‘Nam helped to fuel the push to end that conflict. Little wonder that current conflicts like Afghanistan are still going on, given how few reality-based (as opposed to confected) images, Americans have been exposed to. With its “embedded” (read: compromised) journalists the Pentagon now stage manages everything as a rule, only letting American viewers' eyes see what they want them to. But if Americans don’t see all or most of the the images, such as innocent villagers being blown to bits by rockets, off-target bombs or drone attacks, how can they know what they are opposing, if they opt to oppose that conflict at all?


And when a source like Bradley Manning comes out of ‘left field’ to help us see what’s going on, via the Wikileaks, he’s mercilessly persecuted, treated like a 3rd rate traitor. Meanwhile, Nazi-level arch war criminals like Bush, Cheney, Rumsfeld, Wolfowitz and Co. (a few still wanted in European nations, like Italy) are allowed to run free. It’s little wonder this nation is now approaching the shitpile-dumpster of history and 61% in a recent ABC-WSJ poll believe the country is “on the wrong track”.

 

As Cohen notes at the end of his blog piece:

“What our mainstream media so obediently call the “War on Terror” is experienced in other countries as a U.S. war OF terror – kidnappings, night raids, torture, drone strikes, killing and maiming of innocent civilians – that creates new enemies for our country. Interestingly, you can easily find that reality in mainstream media of allied countries in Europe, but not in the mainstream media of our country. Needless to say, it’s our country that’s waging this global perpetual war.

In a democracy, war must be subjected to questioning and debate”


Bingo!