Dick Durbin

Decoding the Payroll Tax Debate [radio interview - KPFK]

Richard Eskow — Wed, 07 Dec 2011 14:15:44 -0500

This morning I appeared on KPFK's Uprising program with Sonali Kolhatkar to discuss the "payroll tax holiday" debate now going in the Senate.

There's a lot of confusion around this issue. For one thing, the general public always struggles to understand numbers, finance, and taxation. In this case the confusion's even worse because the Democrats chose to use this tax, rather than other options, as the mechanism for their tax break. That creates some unfairness, makes it a less efficient form of stimulus, and endangers Social Security politically.

Cutting the payroll tax helps people earning under $106,000 or so, but it offers the biggest savings to those on the upper end of that spectrum. That tax break can come to more than $4,000 for a two-earner couple if both spouses earn a six-figure income. As a result, those savings are given to everyone above those earning levels as well. That means that, on average, the "1%" will get a much bigger tax break than the "99%" will.

And it's dangerous to target Social Security's funding source to provide any sort of tax "holiday," for reasons we outlined here. It would be disastrous for the middle class if this tax cut expired, but we need to keep a wary eye on the Dems while fighting the GOP's nihilistic approach. She quoted my line from an earlier post: "It's a choice between the inadequate and the insane."

We tried to explain this complex topic in a minute or two - let us know how we did! - and then had a good conversation with Sonali. The clip is below:

Play Uprising KPFK

The Long Game: Payroll Taxes, Hostage-Taking, and Social Security

Richard Eskow — Tue, 29 Nov 2011 22:11:48 -0500

Yesterday Thom Hartmann and I discussed the proposal to extend and expand what Democrats have called the 'payroll tax holiday.' (Video is below.) There are no heroes in this debate, but there are certainly villains. There are several different ways this could end - and most of them aren't good.

By proposing to expand and extend this 'holiday,' Democrats have bypassed more efficient ways to help the economy, and have once again endangered Social Security. And by demanding tax breaks for millionaires while blocking them for the middle class, Republicans have once again demonstrated their willingness to blow up the economy for self-serving purposes.

The choice is either to back the highly flawed Democratic proposal or let the Republicans block it, which would plunge the economy into an even deeper hole than it's in right now. Imperfect as the proposal is, the alternative is unacceptable. If it failed the already-wounded economy would suffer even more, and millions of jobless Americans would be left without the unemployment insurance they need.

Hostages

This drama's being played out against a backdrop of political terrorism. Republicans have threatened to shut down the Federal government several times if they don't get what they want, and Democrats have violated the 'don't negotiate with terrorists' principle each time. That's encouraged them to keep it up.

That means every Democratic proposal is likely to weakened considerably before passage. And like other Democratic proposals, this one is born weakened. Today the government is operating under a temporary spending measure that expires on December 16. Guess what happens then?

This bill needs to support because there'll be havoc if something like it isn't passed. But we're being given no choice. The Democrats have their hostage scenario - and we have ours.

The Frame-Up

The bill opens up several avenues for ugly compromises. It would extend the current 'payroll tax holiday' for employees, increasing it from 2% of earnings to 3.1%. It would also cut the employers' contribution in half - from 6.2% to 3.1% - for the first $5 million in payroll, and would eliminate it altogether for newly hired employees (for the first $12.5 million in payroll).

What's wrong with that? The first problem is with the framing. The payroll (or FICA) contribution should be seen as a premium, not a tax, especially for employees. Working people are paying into a social insurance program, with the expectation that they'll collect benefits (primarily Social Security, though the tax also helps fund Medicare) from it when they're needed.

By calling their proposal a "tax holiday" and a "middle class tax cut," Democrats are reinforcing the idea that this is just another burden on working people - one that offers nothing in return. That's not true, and it's bad for Social Security.

Holidays in the Sun

Yes, the middle class needs a tax break right now. And we need to put more money into people's pockets to reduce unemployment. But there were and are far more efficient ways to accomplish that, including the Making Work Pay program which the Democrats abandoned last year in favor of the "payroll tax holiday." That program was a better way to stimulate the economy - and it was fairer to the working poor.

Here's why: A payroll tax cut applies to all income up to the tax cap (which is currently about $106,000). So a person making $100,000 will save $3,100, while a person making $20,000 will only save a few hundred dollars. The switch from Making Work Pay to the payroll tax cut actually hurt lower-income working families last year. And those lower-income families are the ones who are most likely to spend that money as soon as they get it, which makes it a more efficient way to help the economy.

Democrats are being a little misleading when they boast that their proposal will save "the average family" $1,500. That's technically true - but it will save higher-earners a lot more and lower-earners a lot less.

The Bottom Line

The tax break for employers makes even less sense. Corporations are already sitting on $2 trillion in cash. The reason they're not hiring people with that money is because there's not enough demand for their goods and services. So what good will a little cash in their hands more do?

Think about it: A 3.1% tax break on people you've already hired isn't going to do much. When I was in the corporate world we typically budgeted 2.5 times a person's salary to determine the total cost of employing someone. That includes salary, benefits, office space, and other expenses. That means this tax break is a savings of 1.24% for companies like mine. That's not going to change very many hearts and minds in the executive suite.

Eliminating the tax altogether for new hires is a better idea - but not much. If a large corporation doesn't think it makes financial sense to hire someone, reducing the cost of that hire by less than 3% isn't likely to change their mind. Overhead costs are much lower for small employers, especially in the age of telecommuting, but even a 5% or 6% reduction in costs isn't going to change too many business owners' minds in this economy.

Want to know a good way to use Federal funds to create jobs? Hire people with it. You know, government workers like cops and teachers. Invest it in our infrastructure. Or if tax policy's your only option, give most of the breaks to working people who will spend what they get

So why did Democrats choose this approach, rather than another? I might as well program that into my computer as a hot-key function, since the question needs to be asked so often. Could there be a Long Game here that involves cuts to Social Security?

That's speculation. But it wasn't very comforting to watch Sen. Dick Durbin playing the class-war game against Sen. Jon Kyl, since the once-reliable Durbin has started pushing aggressively for needless and harmful Social Security cuts.

The Long Game

EIther way, this proposal opens up avenues to a lot of unpleasant possible outcomes in upcoming negotiations. Here are a few of them:

Republicans could accept the tax cuts, but refuse the tax hikes for millionaires. If the Democrats cave on that issue, Social Security's Trust Fund will be funded with even larger money transfers from the overall Federal government's budget. That's a breach of the Trust Fund's firewall, which hadn't occurred in the program's 75-year history until last year. That's when Democrats, led by President Obama, introduced the payroll tax cut.

Which leads us to the next danger ...

Republicans could accept the tax cuts but insist that the Trust Fund's shortfall not be covered by general funds.That would turn Social Security's mild, easily remedied long-term imbalance into a more urgent problem -- which is just what the anti-Social Security crowd wants. That opens the door for politicians from both parties to raid the Trust Fund's $2.6 trillion surplus for other purposes.

Republicans might insist that some percentage of the 'tax cut' be invested in private Social Security accounts. Republicans have been trying to privatize Social Security for a long time. These ~~hostage negotiations~~ budget negotiations could give them the chance to finally get their foot in the door on that topic.

Democrats might 'compromise' on the COLA reduction, a Social Security benefit cut that both the White House and some other Democrats (including Dick Durbin) have been pushing all along. They call it an 'adjustment,' but their proposed method for calculating cost of living (COLA) adjustments is a benefit cut, pure and simple, that would lower an already-inadequate formula and take money out of people's pockets. It will probably be revived in these debates.

Fit to Be Tied

Where does this all leave us, the public? It leaves us in a position where it makes sense to call your representatives in Washington to push for this proposal - because the economy can't take the hit that it would take if this 'cut' expired, because the middle class needs the break, and because the unemployed deserve an extension in unemployment insurance.

But it also leaves us - some of us, anyway - frustrated as hell with a political system that forces us to choose between the inadequate and the insane. With regrets, for the moment I'm going with inadequate and backing this bill.

But if the Democrats want applause for this, they're going to be disappointed. I think I'm going to listen to that old Peggy Lee song instead. You know the one I mean, don't you?
______________________

Here's the conversation with Thom Hartmann. He sets it up with a good overview, and we start exchanging thoughts about 2:45 in:

America's Real Radicals: The 40 Extremist Senators Who Voted Against Medicare

Richard Eskow — Fri, 27 May 2011 00:54:19 -0400

On Wednesday forty radicals in the United States Senate took an extremist position by voting to end Medicare.

That simple sentence will be challenged by a lot of political and media people. They'll say I don't understand the popular mood, and that I'm applying my own values to Wednesday's vote. But I can prove this statement is true, using only a dictionary and some polling data. They'll even say they didn't vote to end Medicare! But that can be proved, too.

When 40% of the Senate votes for a policy that's opposed by 78% of the public, it suggests that one of our political parties has been profoundly radicalized. In a two-party system, that's a serious challenge for democracy.

A radical, extremist vote

Rep. Paul Ryan's budget proposal was rejected by 57-40. All the Senate's Democrats voted against it, and so did Republican Senators Rand Paul, Olympia Snowe, Scott Brown, Susan Collins, and Lisa Murkowski. On Medicare at least, these five Republicans did not reveal themselves to be radicals or extremists on Wednesday. Good for them.

Let's be clear: Americans in all walks of life, including politics, have every right to hold radical or extremist views. Some of our best and noblest ideas have come from radicals. The abolition of slavery, a woman's right to vote, financial security for elderly and disabled Americans -- each was considered a radical or extreme position at some point in history.

What these extremists don't have is the right to pretend they're reflecting mainstream political opinion. And in the case of the GOP budget, let's be clear: their extreme ideas are selfish and destructive, not noble, brave, or wise.

Did we mention that they're radical?

The Definition of 'Radical'

The Cambridge American Dictionary defines a "radical" as "a person who supports great social and political change." That's exactly what they're doing by voting to end Medicare. As the Congressional Budget Office, economist Dean Baker, and others have shown, the GOP plan would create a great change in the lives of every American over the age of 65. They would lose their guaranteed Medicare coverage, and would be forced to find health insurance in the notoriously unreliable health insurance market. Studies show they would also forced to pay enormous sums of money to receive health care coverage.

If seniors couldn't afford these skyrocketing private insurance premiums, then they wouldn't get health insurance. That means they'd be unable to receive medical care when they need it. Studies have shown that would lead to radical increases in illness and hospitalization rates among seniors, and would lead to earlier deaths for millions.

That sure sounds like "great social and political change" to me.

Newt Gingrich was right when he described the plan that these Senators just voted for as "right-wing social engineering." Gingrich, whose "Contract With America" was a brilliant piece of political phrasemaking, is well aware that the phrase "social engineering" originated with Lenin's attempts to radically rebuild Russian society in the years that immediately followed the Bolshevik Revolution.

Say what you will about ol' Newt, but he knows his history.

Who you calling 'extremist'?

Did these forty United States Senators really take an "extreme" position? Isn't that a little harsh?

No, it's not. The dictionary defines an "extremist" as "someone who has beliefs which most people think are unreasonable and unacceptable." These Senators are now on record as supporting a plan to end Medicare. Do "most people" people think that's "unreasonable and unacceptable"? Let's take a look.

The American Majority project has rounded up data from CAF polling and other sources, and the public's opinion on Medicare is clear. According to a recent Washington Post/ABC News poll, 78% of those polled were opposed to cuts in Medicare spending and only 21% supported them.

Compare that 21% figure with the results of a recent Gallup poll which showed that 36% of those polled have a favorable view of socialism. Socialism! And socialism hasn't been promoted by one of our two major parties, subsidized by a highly-funded public relations and think-tank campaign, or endorsed by the mainstream media as a "very serious" attempt to address the country's issues.

If you think socialism's a little outside the political mainstream, then you must conclude that these forty Senators are as extreme as they come. And when 78% of the public finds your ideas "unreasonable and unacceptable," then guess what? You're an extremist.

What Medicare Isn't

Here's where it gets really loopy. Republicans, aided by sloppy "fact-checking" from the supposedly impartial website Politifact, continue to insist that they're not voting to end Medicare. I've already responded, in what may have been an overly indirect way, by turning their argument into an "Alice in Medicareland" story.

Here's the simple truth: Their plan would shut down the government's Medicare program and replace it with a system of vouchers (or "premium credits") of fixed value, which seniors could use to buy insurance. They can call that "Medicare" if they want, but it's not Medicare! At least, not by any common definition of the term.

"A federally funded system of health and hospital insurance for persons aged 65 and older and for disabled persons." (The Free Dictionary)
"... a two-part (A and B) federal health insurance program for Americans aged 65 and older and certain disabled people ..." (Bookman et al.)
"A Federal insurance program providing a wide range of benefits to providers and suppliers participating in the program." (Maryland Health Care Commission)
"Medical coverage available under Title XVIII of the Social Security Act to people 65 years of age or older and to certain disabled people under 65 years of age." (Texas State Department of Health and Human Services)
"... a Federal health insurance program that those ages 65 or older (and other excepted individuals) are eligible for." (State of North Carolina Department of State Treasurer)

Let the record show that all of the states whose websites are cited above lie below the Mason/Dixon Line (including Maryland). This is no Northern pinko plot. It's just what Medicare is. Medicare is an insurance program that provides a defined set of health benefits. It is not a voucher or tax break or government check, which can then be used in an (undoubtedly ill-fated) attempt to purchase health insurance that will provide a defined set of benefits.

We have now proved our statement. Forty [radicals] in the United States Senate did, in fact, take an [extremist] position by [voting to end Medicare.] QED.

Are we out of the rabbit hole yet?

Challenge or Compromise

What do you think would happen if forty Democratic Senators voted to nationalize all of the country's largest banks and insurance companies, or to impose strict wage and price controls? Remember, that's socialism, an ideology which polls considerably better than this anti-Medicare plan. Do you think the American media would receive such a vote with the same equanimity?

Democrats are reportedly planning to use Wednesday's vote to aggressively challenge the re-election bids of Senators Lugar and Heller, both of whom supported the plan. Well, of course they are! Why shouldn't they? These Senators voted for a radical, extremist plan. They and their party are going to pay a price for it at the polls - that is, unless Democrats are blind enough to trade away their advantage by negotiating with the radicals and coming up with a semi-extremist "compromise."

Could that really happen? Unfortunately it could. With the White Houe pushing $300 billion in Medicare reimbursement cuts (through the so-called "doc fix") and Democratic Senator Dick Durbin reportedly willing to accept $400 billion in cuts, it's entirely possible that the Democrats will squander this political windfal.

The Way Out

There's another way to fix budget shortfalls like Medicare's. Congress could impose surtaxes on millionaires, for example, which is supported by 72% of the population. But Medicare's long-term budget problems are dire, and they're caused by the overall breakdown in this country's health system.

That system's problems include excessive profit-seeking behavior by hospitals and insurance companies, our ill-managed patchwork of employer-sponsored plans, wrongheaded incentives for doctors and hospitals, and all the other weaknesses that develop when two-thirds of our healthcare is financed outside a rational and structured system. These flaws bleed over into Medicare, which must then pay excessive costs for hospitals, tests, procedures, physician charges, and unnecessary procedures.

Countries with better systems pay far less for healthcare than we do and get much better results. So why not propose a "Medicare For All" system? That would be popular with mainstream America. Polls consistently show that solid majorities - sometimes as many as two-thirds of Americans - support the idea. So why are we talking about a voucher plan, when we'd be better off with a millionaire tax and a Medicare For All system, both of which are popular with the general public?

Oh, right. I forgot. Those ideas are too radical.

(Meet the Extremist Fringe: Find out if your Senator voted to end Medicare here.)

_____________________________________________________________

This post was produced as part of the Strengthen Social Security campaign.

When Moderation Fails, Part 1: Simpson & Bowles, Standard & Poor's, and Ezra Klein

Richard Eskow — Thu, 21 Apr 2011 03:03:02 -0400

Historians of the future may one day write that the death of the New Deal began this year. If so, it goes without saying that corrupt forces like the Chamber of Commerce will be a big part of the story. So will billionaire ideologues like Pete Peterson, and greedy politicians looking for a handout. Unfortunately, so will a lot of reasonable people whose biggest problem is that they're temperamentally inclined toward being reasonable and moderate - even when circumstances don't warrant it.

The problem's become so severe that it will take more than one day to address it. It will require criticizing people that I respect, and who in some cases I've met and like personally. A great many moderately-minded individuals seem to have been lulled into accepting a Washington consensus in which the "new normal" means accepting that only remaining choice is between a radical assault on the middle class and a moderately radical assault on the middle class. In that world, a "judicious" assessment of Republican radicalism can easily turn into accommodationism. That can lead in turn to bad deals that create needless suffering.

We begin with somebody I like and respect: Ezra Klein. Ezra's become an important voice in Washington, and he has developed an extraordinary platform at the Washington Post. He's earned it through prodigious, detailed daily output over the course of years. He was highlighted by Politico as part of the Post's "leftward online shift," and he's an MSNBC regular. He's considered a liberal voice by powerful people who know and like him. That's why his approach to deficit reduction and austerity economics is potentially so damaging: people listen to him.

While I suspect he's simply trying to be reasonable and fair, Ezra's been giving credence to some very immoderate ideas lately. And by taking Standard & Poor's threat to downgrade the US government at face value, he's helped accelerate the rush to judgment on issues that will affect the future health and well-being of millions of Americans.

I have to say I feel a little bad right now, as if I'm piling on, since respected financial blogger Yves Smith just reprinted some gratuitously nasty words about Ezra from a blogger who appears to have one of those tones that revels in the gratuitously self-righteous. On the other hand, Yves was right to point out that what Ezra wrote - that banks thought their mortgage-backed securities were "safe" - was way off-base, and that it whitewashed Wall Street malfeasance. But Ezra's not somebody who makes a habit of protecting bankers. He was off, but every political generalist gets something wrong from time to time and apparently it was his turn.

But Ezra's been consistently willing to accept prevailing Washington orthodoxy about deficit reduction: that it's our nation's primary problem, overwhelming unemployment or poverty in importance, and that extremist approaches to it are really "centrist" and reasonable. Like a number of otherwise liberal-leaning observers, Ezra likes to say that "the Simpson-Bowles recommendations" - private recommendations from the co-chairs of the deadlocked Deficit Commission - were something that "many saw as a good bipartisan starting point just a few months ago."

Actually, only people who operate inside a very small circle of politicians and journalists saw these proposals as a "good starting point." Polls show that the Simpson/Bowles proposals were soundly rejected by the American people, and findings from Reagan's chief Social Security actuary and a leading economist (among many others) show that their proposed assault on Social Security is absolutely unnecessary. Far from being a "good starting point," the radical Simpson/Bowles proposals are an ending point - for the core accomplishments of FDR's New Deal and LBJ's Great Society.

What's more, Ezra's familiar enough with health policy to know that the Simpson/Bowles proposal does nothing to reduce the growth of Medicare costs. It merely imposes arbitrary cost caps, benefit cuts, and other devices that place these costs on the back of elderly people who are in no position to control them.

And what can we say about a Klein piece that's entitled "How Congress provoked Standard & Poor's"? That it's the economic equivalent of saying "she asked for it"?

Standard and Poor's is a business that's based on a fundamental conflict of interest: It's part of a publicly traded corporation, and it makes money by pleasing the corporate clients that it rates. S&P is a division of publicly traded McGraw-Hill (NYSE:MHP) and it had annual revenues of $2.61 billion for 2009, most of it from Wall Street. A company like that never makes a move without considering the impact it will have on sales, and this announcement was no exception. S&P's corporate clients were undoubtedly delighted to see more pressure on the government to reduce debt, since that's been a major objective of the US Chamber of Commerce and other corporate organs from some time.

The S&P announcement was somewhat bizarre, since they didn't actually announce a downgrade of the government's credit. They just said they would downgrade it if certain conditions weren't met. Conveniently, that announcement put enormous pressure on reluctant politicians to accept a deal - any deal - that would reduce the deficit. And that's exactly what the anti-New Deal crowd's been pushing. (Very few people picked up on the real implication of their announcement: if people were serious about meeting their obligations, they'd push for tax hikes instead. Dean Baker explains. But it was understood that would never happen.)

S&P was wrong about Enron. It was wrong about AIG. It was wrong about all those securities it rated AAA, and which were later downgraded to junk bond status. But then, when your corporate bottom line depends on being wrong, you're probably going to be wrong a lot.

The right question isn't "why did S&P downgrade the US government?" It's "why does anybody still listen to S&P?"

What's more, S&P has pulled this little routine before. The last time they made an announcement like this was last August, when the Simpson/Bowles Commission was losing steam and it was thought that a little push might help it over the top. They offered that push. Then, as now, their announcement came at a very politically opportune time for the austerity economics crowd.

Standard & Poor's has a history of being serially wrong and serially unethical, so taking their statements at face value is a big mistake.Time and time again, the company has pressured analysts to give better ratings to their customers - a practice that helped dupe investors into making bad investments. Ezra says that S&P issued their warning because "Congress ...seems to be doing everything in its power to undercut the market's opinion of America," and because "Democrats began the year by convincing everyone they weren't going to produce a deficit reduction plan" while Republicans haven't proposed a rational alternative.

Which might make sense -- if S&P hadn't issued an identical warning last summer. Remember, that was before Congress did "everything in its power to undercut the market's opinion." And what exactly did S&P say last August, as the Deficit Commission was preparing to wind up its work? "It is very important for the credit standing of the United States that the Congress considers very carefully what the fiscal commission proposes."

The "fiscal commission." That would be Simpson and Bowles. Funny coincidence, that. Let's face it: Saying that Congress "provoked" S&P is like saying that Gotham City provoked The Joker.

We won't linger too long on the fact that Ezra also defended Paul Ryan's cartoonish, deceptive "Roadmap for the Future, " calling its ambition "welcome, and all too rare," and said of Ryan: "I appreciate his policy-oriented approach to politics." Krugman's already taken him to the woodshed over that, and we won't belabor the point except to say that the incident is illustrative: When a temperamentally moderate person like Ezra (or President Obama, for that matter) is thrown into a room with people like Paul Ryan, the temptation is to give them more credit than they deserve.

Ryan may genuinely be the likeable person Ezra says he is. Many people who do dreadful things are likeable. (I know - I worked on Wall Street and in the insurance industry.) But Ryan's policies are designed to eliminate Social Security, slowly but surely. That's nothing less than a prescription for mass death - a 13% rise in senior mortality, based on the conclusions of one study - and to say anything else is to risk becoming an accessory after the fact.

Back in the heat of the healthcare debate, Ezra suggested that the Senate bill was worth passing because it could save 100,000 lives. I felt then that the number was overstated, and I still feel that way now. It probably will save lives - but it could have saved more if people had kept up the pressure for a stronger bill. A stronger bill would've been more popular, too, according to polls. The seemingly moderate approach taken by Ezra and others contributed to the perception that progressives would accept a weaker bill.

We're at the same kind of impasse now. Today's stakes involve fundamental issues of economic fairness, and the ideas being promote threaten the physcial health and the the retirement security of millions of middle-class Americans. Ezra Klein does a lot of terrific work. But he and the other people we'll be discussing represent a "reasonable" form of liberalism that has begun to undercut common-sense policies - policies that are more popular, wiser economically, and far more humane and fair than those of Simpson and Bowles, the Gang of Six, or any other operatives who are carrying water for the right-wing austerity agenda.

That may not be their intent (I'm sure it isn't), but from where I sit it sure looks like that's the result.

_________________________

"Work Til We Die: The Alternate Reality ... and the Reality"
"Found! The Secret 12-Point PowerPoint Plan To Sell Pro-Wealth Policies To The Middle Class"

More polling data:

The New Silent Majority
... the Wisdom of the American Public ...
The Six Percenters

This post was produced as part of the Strengthen Social Security campaign.

Found! The Secret 12-Point Plan To Sell Pro-Wealth Policies To The Middle Class

Richard Eskow — Wed, 20 Apr 2011 16:00:03 -0400

It's almost like they had a plan. The right-wing has been trying to dismantle the New Deal since its inception, but after decades of failure it's found a new path to success. They're already persuaded quite a few Democrats to support the first steps toward dismantling Medicare and Social Security. They've also convinced a lot of journalists to ignore detailed economic analyses, and accept the ideological platforms of the far right as "moderate" and "reasonable."

How do you do it? How do you sell a nation on dismantling its most popular programs at a time when they're more needed than ever? How do you convince an entire class of people - the middle class - to voluntarily surrender their health and financial security to benefit those who are far wealthier than they are?

Well, we found it! We found the twenty-year-old PowerPoint presentation that outlines the whole thing - the radical agenda, and the 12-point marketing plan that made it possible. Here it is, available to the public for the first time anywhere:

Selling the Middle Class Sell-Out

Well, okay, maybe we didn't find it. Maybe we sat down and wrote it ourselves. But so far things have played out exactly according to this (presumably) fictional plan. The political process is really unfolding as if they'd first laid out a radical seven-step agenda for remaking (or unmaking) the American social compact, and then developed a twelve-point marketing plan for selling it.

The Agenda

Let's remind ourselves of the truly extraordinary policies they're pushing, and which now stand a good chance of being enacted in some form:

Cut taxes for the wealthy to lower levels than we've seen in recent history. (Done.)
Preserve those tax cuts and make them even deeper.
Offset the lost revenue by pushing radical spending cuts that hurt the middle class.
Increase taxes on the middle class. (This also allows Republicans to say they're not always against raising taxes - they don't mind making beleaguered middle class voters pay more by removing the mortgage interest deduction, for example.)
Allow the government to default on its $2.6 trillion debt to the Social Security Trust Fund - money that was collected to fund retirement and disability benefits - in order to fund this tax giveaway.
Ensure that the payroll tax cap isn't raised - or is only raised slightly - as another way to keep taxes low for the wealthy.
Raise the retirement age. That not only preserves income tax breaks for the wealthy, but enlarges the labor force. That keeps wages artificially low and ensures an endless supply of low-cost, blue-vested Wal-Mart greeters.

How do you sell a toxic agenda like that? Those ideas are opposed by a majority of Tea Partiers, a majority of regular Republicans, a majority of independents, and pretty much everyone else.[1] So how do you convince the middle class to endorse proposals that are so harmful to its interests? The same way you convince a bear to chew off its own leg: by making it think it's caught in a trap.

The Marketing Plan

So, whether it was by design or they just stumbled into it, they found themselves with a pretty smart plan:

Convince people that the government deficit is our most urgent problem - not just an important problem, which it certainly is, but the only one that matters. Make people believe that this problem is so grave and fundamental that it outweighs unemployment, illness, poverty, the needs of the elderly, and all of our other national concerns - except defense, which can only be cut at the margins.
Persuade the middle class that that spending, not tax breaks or two unfunded wars, are the source of that problem.
Pretend those low tax rates for the wealthy are an unchangeable political reality. Artificially define the limits of the politically possible so that it excludes any meaningful changes, even if those changes are more popular than your program.
Promote false myths about Social Security's fiscal outlook.
Design flawed economic theories to make your agenda look 'technical' rather than ideological.[2] Pretend that your opponents are politically motivated and you are not, when you're really promoting an extreme and discredited ideology.
Avoid discussing the kinds of genuine health reform that would fix Medicare (see #3, above, regarding the definition of false limits to the politically possible).
Move the center of debate so far to the right that our shared idea of a social contract, treasured by Democrats and Republicans for fifty years and supported by strong majorities in both parties, is marginalized as "extreme" and "impractical."
Turn civility and cooperation from a preferred approach into an ideology, building a "theology of compromise" that values consensus (in this case, around this radical agenda) over results.
Generously finance think tanks like Third Way to generate talking points for this corporatist agenda based on flawed logic and cherry-picked data.
Create an artificial economic panic over deficits (how many times have you heard the phrase "financial Armageddon" lately?)
Employ corrupt and discredited agencies like S&P to contribute to this false hysteria. Think of these announcements as "orange alerts" - the kind that were issued during the 2004 Democratic convention.
Lastly, co-opt "rational moderates" like Dick Durbin, along with otherwise astute observers like Ezra Klein and David Leonhardt.

The Results

How's that working out for them? Pretty darn well, actually. In fact, they've pretty much accomplished all twelve of these goals. For billionaire Peterson, it took twenty years of relentless effort, millions of dollars, the creation of his own press outlet, the subsidization of pliant economists like Alice Rivlin, and decades of cultivating Democrats like Bill Clinton. For other donors, it's taken generous funding of "think tanks" who dutifully distribute plausible-looking documents explaining why the social contract must die.

I'm not saying there was a plan, of course - although we know that billionaire Pete Peterson, a former Nixon cabinet member, has been pushing this agenda for twenty years. And we could quibble about the points - were there five or six policies, ten or twelve sales objectives? Remember, this is a hypothetical framing. But if there wasn't a plan, they sure are lucky folks.

And here we are: Unless the momentum changes, we're about to see our first major rollback of the New Deal. (And don't kid yourself; it won't be the last. They'll call it a "grand compromise" designed to last 100 years, but they'll start to work on their next assault before the ink is dry. No politician today can bind the politicians of tomorrow to a deal.

And the momentum won't change - not as long as Potemkin "think tanks" keep producing propaganda, politicians like Durbin push this radical agenda, and seemingly reasonable journalists like Klein and Leonhardt continue peddling it as if it were a set of moderate and reasonable solutions to a pressing problem.

That will be the topic of the next post in this series. As we said, our little PowerPoint presentation is fictional. But it couldn't have been more successful if it had been real.

(To be continued)
______________

For more on public opinion and the public's priorities, see:

The New Silent Majority
... the Wisdom of the American Public ...
The Six Percenters

Bipartisan Senators Indict Wall Street, Media Yawns. Six Guys Push Stale Deficit Hype, Media Goes Wild

Richard Eskow — Mon, 18 Apr 2011 13:57:04 -0400

It should have been the lead story from coast to coast: A bipartisan panel of senators, including some of that body's most conservative members, released a damning report that slammed bankers, regulators and ratings agencies—and they made it clear that they'd like to see warrants issued against the CEO of Goldman Sachs and other financial executives.

This report was endorsed by all of its Republican members, including conservative co-chair Tom Coburn and Tea Party Senator Rand Paul. Hey, editors, how's this for a headline? "Libs and Tea Party Senators demand: 'Bring me the head of Goldman Sachs.'"

Now that's what I call news!

The media responded with a collective yawn.

Last week also saw yet more coverage of the relentlessly publicity-grubbing "Gang of Six." It's hard to imagine a more stale story. The Gang's just the latest in a series of right-leaning groups that throw a few persuadable Democrats in with Republicans, label them 'bipartisan' or even 'centrist,' then start issuing calls for a conservative agenda that cuts entitlements and keeps taxes low for the wealthy. We've seen that story a thousand times, both in general and specifically about these six senators. What's more, the Democratic Gang members have been bypassed by President Obama and Senate Majority Leader Harry Reid, so a few more interviews with this over-exposed crowd aren't exactly "man bites dog" stuff.

Guess which story got more coverage? A Google News search on "Gang of Six" yielded 4,600 hits this morning, while a search on "Levin Coburn" came up with only 180 hits. And coverage of the Gang of Six continues to be overwhelmingly (and falsely) flattering. Reporters continue to cite the Gang's inaccurate talking points, which were generated in think tanks and crafted by marketers, as if they were Holy Writ. But the exhaustively researched Levin/Coburn Report was treated as if it were empty senatorial bluster.

The coverage of these two stories tells us all we need to know about the media's negative effect on the political process. Sloppy journalism doesn't just cheapen our discourse. It changes the way that politicians govern, too.

Senators, like all politicians, thrive on favorable publicity. When a self-seeking initiative like the "Gang of Six" receives 25 times as much coverage—and much more positive coverage—than a detailed and comprehensive study like the Levin/Coburn Report, it affects senatorial behavior. And when truly bipartisan initiatives like Levin's and Coburn's are dismissed, while the phony bipartisanship of the Gang is celebrated, that sends a message to politicians who rely on independent voters.

The Levin/Coburn report really is newsworthy. These senators—Democrats and Republicans, liberals and die-hard conservatives—laid the blame for the financial crisis directly at the feet of Wall Street's executives, and they document a pattern of risky lending and fraudulent marketing by U.S. banks. They also placed the blame with regulators, who displayed both incompetence and a (sometimes embarrassing) subservience to Wall Street. The senators slammed the morally compromised, incompetent ratings agencies. The panel even called for more regulations.

That's right. Senators like Tom Coburn, John McCain, Rand Paul, and Scott Brown signed a report that includes such recommendations as "Narrow Proprietary Trading Exceptions" and "Design Strong Conflict of Interest Prohibitions." When four of the senate's most prominent Republicans, including Tea Party senators, endorse more regulation, that 's news.

And the panel didn't mince words. "Our investigation found a financial snake pit rife with greed, conflicts of interest, and wrongdoing," said Democrat Levin. Republican Senator Coburn said: "Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight."

The panel made it clear they felt laws had been broken. Sen. Levin stated that they were referring several reports regarding Goldman Sachs executives, including CEO Lloyd Blankfein, to the Justice Department for criminal prosecution on perjury and other charges. And the panel report includes a number of sentences like this one: "Federal regulators should review the (investment banking) activities described in this Report to identify any violations of law."

That's incendiary stuff. But, as the Columbia Journalism Review reports, the story was downplayed by major media outlets and its major findings were softened. The Wall Street Journal placed the story in section C1, and falsely claimed that the report "lacked evidence of outright fraud." Sen. Levin's call to investigate Goldman executives was described this way: "Sen. Levin said Wednesday that he believed some Goldman executives may have misled Congress during a committee hearing in April 2010. He didn't specify how."

Actually, he did specify how. And how did The New York Times, the nation's "paper of record," handle this story? An otherwise excellent story failed to mention it altogether.

Other outlets either didn't cover the story at all or, like the Journal, buried it deep in the bowels of their back sections. Contrast that with some of the recent headlines about the Gang of Six and their mediocre work:

Senators Boast New Deficit Reduction Plan Will 'Make Everybody Mad'‎ - Fox News
Alan Simpson: 'Pray for Gang of Six'‎ - Wall Street Journal
'Gang of Six' hopes to spur bipartisan action on deficit‎ - USA Today
Gang of Six plan in demand - Congress.org
Who They Are & Why They Matter: Senators Work Behind Closed Doors On Bipartisan Debt Reduction Deal - ABC News

Coverage like that explains a lot. Sen. Dick Durbin has been heroic on banking reform issues, especially debit card reform. Last week he laid a mighty smackdown on overrated bank CEO Jamie Dimon of JPMorgan Chase, who has led the charge to roll back bank regulations and return us to the pre-2008 days of uncontrolled misbehavior by too-big-to-fail banks. That confrontation brought Durbin almost no publicity. But his Gang membership has provided him with fawning coverage from coast to coast.

Is it any wonder that Sen. Durbin's reluctant to leave the Gang and devote more time to combating Wall Street?

The Times story on the Levin/Coburn report was co-written by Gretchen Morgenson, who created a stir last week by asking the burning and critical question: Where are the prosecutions for Wall Street crime? Morgenson's a nonpartisan journalist at the pinnacle of her profession, and she's asking the same question that being asked by senators as politically diverse as Carl Levin, Tom Coburn, Rand Paul, John McCain, and Scott Brown. Their report should increase the pressure on the Justice Department to reverse its shameful refusal to enforce the law when rich bankers are the perps.

But with coverage like this, it's more likely that we'll see unnecessary cuts to Social Security and Medicare instead.

__________________________________

This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign.

Both Durbin and Kirk Need to Hear from Illinois Tomorrow

Ellen Beth Gill — Mon, 28 Mar 2011 22:26:54 -0400

We're working with some of the best state-level bloggers from around the country to help us tell the truth about key economic and social policy issues, and to draw the contrast between the rhetoric of the right and the progressive alternative. Please visit our CAF State Blogger Network page to see more.

This morning, Senate majority leader Harry Reid, along with Independent Senator Bernie Sanders, and Democrats Al Franken, Tom Harkin and Richard Blumenthal led a well attended event designed to publicize their efforts to protect Social Security from budget cuts demanded by congressional Republicans. The message was "Back Off Social Security." The program does not add to the federal deficit because it's not a part of the federal budget.

With only two weeks of government funding left under the temporary spending compromise, Republicans have ratcheted up their rhetoric on what they call entitlement reform. They call it reform, but Americans are beginning to see that it's just more wealth shifting from the middle class to the wealthiest Americans and multi-national corporations. Program cuts in exchange for low tax rates for the wealthy are bringing Americans into the streets in Wisconsin, Michigan, Indiana and Ohio.

At the event, Reid spoke about the importance of Social Security in his own state, as reported in the Las Vegas Sun:

“For nearly every Nevadan 65 and older, they rely on Social Security,” Reid said Monday at a rally in the Dirksen Senate Office Building for protecting benefits against reductions and preserving the retirement age. “For half of them, it’s the only money that keeps them out of poverty. But I have to say that the Republicans don’t seem to care ... Look at their proposals, look at HR 1.”

H.R. 1 is the failed House Republican budget proposal that attempted to take $1.7 billion away from the Social Security Administration.

Illinois' Dick Durbin took his own stand to protect Social Security today. Durbin warned his fellow Senators that the votes to pass a budget bill containing cuts to Social Security aren't there . He went on during his appearance on MSNBC's Morning Joe:

There’s a feeling there that for a long time, the Republicans have wanted to push toward privatizing Social Security and doing things, which we don’t agree with. It’s politically explosive.

While Durbin has been talking about deficits this year, he's also indicated that he understands that revenues are the real budget problem. Speaking of Senate Republicans on MSNBC this morning, he quipped,

They don’t talk about Harry Reid, they talk about Grover Norquist, who won’t even let them say the word ‘revenue.'

Durbin knows that austerity will bring our recovery to a crashing halt as it has done in Ireland, Greece and UK. He told Chris Wallace on Fox News back in January that we have to invest in our country to recover from recession:

And if we are going to make it in the USA, which we can make, in terms of our success and in terms of making products, we have to focus on educating and innovating. We can’t be so laser focused on the deficit that we ignore the obvious. We are still in a recession. We need to put America back to work. You can’t end the deficit unless you start putting America back to work.

But Durbin has also inexplicably touted austerity at the same time and supported the deficit commission plan seeking deep budget cuts affecting programs that help middle class and working Illinoisans. Mark Kirk has already shown Illinois that he will vote against Social Security, so Illinoisans should join the Senate call-in to protect Social Security.

Call twice, once for each of Illinois' revenue/austerity -confused Senators, using this number:
1-866-251-4044.

Tell Durbin and Kirk to oppose all cuts to Social Security and vote yes on the Sanders/Reid Social Security Protection Amendment to the Small Business Reauthorization Act of 2011 (S. Amdt. 207) expressing the sense of the Senate that Social Security benefits for current and future beneficiaries should not be cut and that the Social Security program should not be privatized as part of any legislation to reduce the federal budget deficit.

See the Strengthen Social Security campaign website for more information about tomorrow's call-in.

I'm writing a series of posts as a blogging fellow for the Strengthen Social Security Campaign, a coalition of more than 270 national and state organizations.

"Entitlement Reform" Is a Euphemism For Letting Old People Get Sick and Die

Richard Eskow — Fri, 25 Feb 2011 20:26:41 -0500

George Orwell would be proud. The latest Washington catchphrase deserves a place of honor in the 1984 lexicon, right between "War Is Peace" and "Love Is Hate." It's a virus of the language that's spreading faster than the stomach flu.

"The President's budget punts on entitlement reform," reads a statement by House Republicans. "Our budget will lead where the President has failed, and it will include real entitlement reforms." "You have to do entitlement reforms if you are serious about this budget," says Rep. Paul Ryan.

Reality check: Nobody's proposing 'entitlement reform.' That term is a cloaking device for some very ugly intentions. It's a meaningless manufactured phrase cooked up by some highly-paid consultant, and it diminishes the sum total of human understanding every time it's used. The phrase is a euphemism for deep cuts to programs that are vital and even life-saving for millions of elderly and poor people, but it's politically unpalatable to say that. So it became necessary to come up with yet another cognition-killing term designed to numb us from the human toll of our political actions. "Entitlement reform" is the new "collateral damage."

But this time the collateral damage is us.

Orwell's Children

Gotta hand it to 'em. This phrase is a masterstroke that's successfully concealing a brutal plan to slash funds for Social Security, Medicare, and Medicaid. Whoever crafted it did a hell of a job. "Reform" carries positive overtones of courage, and change, improvement, while the word "reformer" has been applied to great heroes like Teddy Roosevelt or Lincoln Steffens who fought for the powerless and the victimized.

And the term "entitlement" resonates with that word's other meaning - selfishness and the greedy assumption that one deserves to be served by others (as in "he acts so entitled)." It even appears in the Diagnostic and Statistical Manual of Mental Disorders (DSM) used to diagnose psychiatric problems, as one of the characteristics of "Narcissistic Personality Disorder":

"Has a sense of entitlement, i.e., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations."

It's number five on the list of diagnostic criteria, right between "requires excessive admiration" and "is interpersonally exploitative i.e., takes advantage of others to achieve his or her own ends." Besides being the perfect description of a politician, it's also the ideal rhetorical fit for a crowd that says the elderly are "greedy geezers" for wanting to receive the Social Security benefits they've paid for all their lives -- or for not wanting to die because they can't afford medical attention.

Every time the phrase is used a subliminal message is transmitted: Americans who oppose cuts to Medicare or Social Security - a group which includes 75% of Republicans and 76% of Tea Partiers - meet the clinical criteria for a serious emotional disorder (It's DSM-IV-TR, diagnosis 301.81, in case you're wondering.)

Got it, America? The Republicans and the media aren't just saying you're selfish. They're subliminally implying you're mentally ill.

More Copy, Less Filling

Given this phrase's slanted messaging and misleading overtones - not to mention the fact that it's, you know, completely inaccurate - it was probably inevitable that it would quickly become a stock journalistic catchphrase:

"Geithner played down the need to move instantly on entitlement reform ..." "... "Pawlenty made a few comments about entitlement reform after the book-signing." "Boehner joined a chorus of Republicans in criticizing Obama's failure to take on entitlement reform ..." "Christie said it had become a "political strategy" for Republicans to ignore reforming entitlement programs."

"Entitlement reform" is seventeen characters long, after all. That makes seventeen less characters reporters have to think up for themselves. The headline writers are getting in on the act, too, even though "benefit cuts" takes less precious header space and is far more accurate:

"Obama Hints At Priorities For Entitlement Reform." "Obama: I didn't punt on entitlement reform." "House Republicans announce they'll include entitlement reform in 2012 budget." "Eric Cantor said the Republican `'prescription' on entitlement reform would be included in budget proposals."

On and on it goes. It wasn't long ago that nobody had heard the phrase, and now it's everywhere. Yet nobody stops to wonder where it came from or why its being used. And with each repetition the human stakes in this debate fade further and further from view.

Democrats' Deficit

The Democrats are already waving the white flag in this war to shape perceptions, once again buying into a reality-altering phraseology instead of challenging it. The public is overwhelmingly opposed to cutting Social Security or Medicare, but instead of pointing out the stark reality behind this euphemism Dems are negotiating terms of surrender.

Rather than unabashedly defending government's role, the President has too often effectively conceded that it's grown too big. He created a Deficit Commission (not, for example, a Jobs Commission) and appointed two stalwart "entitlement" haters (Bowles and Simpson) to co-chair it. When the Commission became hopelessly gridlocked and collapsed under its own weight, failing to produce a report, the co-chairs produced a Potemkin proposal that the media continues to obligingly (and falsely) describe as "the Deficit Commission plan."

Recently the Administration's made some very welcome moves to back away from politically poisonous "entitlement" cuts. But the co-chairs' draconian proposal lurches on like a legislative Frankenstein, indifferent to whatever its creator's current wishes may be and helped by a few Democratic Senators intent on making the brutal implications of "entitlement reform" a reality.

"Senate Democrats began drafting a plan Thursday to slice billions of dollars from domestic agency budgets over the next seven months, yielding to Republican demands to reduce the size of government this year," reports the Washington Post. And some are pushing the right-wing wagon harder than others. Reports indicate that Sen. Dick Durbin is fighting hard to include Social Security cuts in budget negotiations.

If you can't beat 'em, join 'em. And even if you can beat 'em, because the public overwhelmingly wants these programs preserved, what the hell. Join 'em anyway.

A humanitarian disaster

The Administration now says that discussion of Social Security should be separated from deficit talks. While they're still leaving far too much room for an unnecessary and unfair deal, they're absolutely right. The President should be commended for reinforcing the fact that Social Security doesn't present a threat to the government's budget. It's a self-funded program that's forbidden by law from increasing the deficit.

Medicare and Medicaid are the real long-term deficit threat. Unfortunately, all that's being proposed are cuts, not reforms. There's a big difference. Republican proposals mimic those that have been circulating in the Bowles/Simpson crowd (which includes other recipients of billionaire Pete Peterson's largesse like economist Alice Rivlin), taking three basic forms: a "voucher" system, caps on spending, and benefit changes like higher co-payments and premiums that shift more cost back to individuals. The "voucher" would force people to use government chits of ever-diminishing value to purchase private health insurance on the open market, while spending caps and benefit changes would place an ever-increasing financial burden on already strained household budgets.

The human toll of these proposals would be terrible. Medicare saves millions of lives every year and keeps millions of people healthy and active. How do we know that? One of the best studies of Medicare's impact on the health of the elderly found "strong support for the hypothesis that Medicare increased the survival rate of the elderly by about 13 percent." Medicare serves 45 million Americans as of 2008, of whom 38 million are elderly. That means that nearly five million people didn't die last year because they had Medicare. What's more, the study found that Medicare led to "a reduction in days spent in bed of about 13 percent."

Health care costs are skyrocketing in this country. Shifting more of those costs onto retired people with fixed income (and poor people) would be an economic catastrophe and a humanitarian disaster. A number of studies have shown that people reduce their use of essential as well as non-essential medical care when they can't afford it and that, especially for the elderly, the result is more illness and more death.

That's the Dickensian reality being masked by the innocuous phrase "entitlement reform."

Reform this

Real reform would have to comprehensively address our broken health care system, whose costs are far higher than those of comparable countries. To truly "re-form" US healthcare we would need to address those differences that make it more expensive, which include higher physician incomes, prescription drug usage, and for-profit hospital chains. It would require changing an incentive structure in which health providers make more money doing expensive procedures for people who don't need them than they do providing needed services to others. And it would require addressing the high costs of administration, overhead, and profit caused by our reliance on private health insurance companies.

But nobody wants to take about real change like these, so they use phrases like "entitlement reform" that mask the true agenda: Keeping taxes low for the wealthy and protecting for-profit health corporations by shifting the burden to people with less political clout. And by "people with less political clout," you know who I mean:

Us.

The un-reform

The noun "reform" is defined as "action to improve social or economic conditions without radical or revolutionary change." Entitlement reform" is the mirror image of this definition: It's genuinely radical change that worsens social and economic conditions.

And yet the phrase continues to be repeated thousands of times a day, as if it had real meaning or value. And with each repetition the ugly reality behind it grows fainter and fainter, retreating farther and farther into a misty world of illusion where you won't have to see it again ... until you're old and sick, and it suddenly becomes terribly real.

But by then it will be too late.

[CORRECTION: We originally mistyped "Alice Simpson" for "Alice Rivlin" and have since corrected it. D'oh!)

Cold-Blooded: Grandma Souljah, Felon-Friendly Cuts, And Other Austerity Horrors

Richard Eskow — Thu, 10 Feb 2011 01:14:49 -0500

Slasher-Movie Economics

A vicious, savage, axe-wielding killer stalks the political landscape, yearning to draw blood, slash victims, and amputate limbs. That's not my description of austerity economics - that's how its fans talk about it.

"Austerity" is defined as "the trait of great self-denial (especially refraining from worldly pleasures)." Austerity economics, on the other hand, is the practice of denying others things that they need while at the same time ensuring your own continued privilege and comfort. This practice is usually accompanied by a round of self-congratulation for showing such courage and discipline. Its usually sinister spell has seduced Republicans into aiding and abetting felons with budget cuts that would make them de facto accomplices to a thousand crimes. And what the president's about to do will literally send chills down a million spines.

Anne Applebaum nearly worked herself into a case of the vapors when Austerians got elected in Great Britain, when she palpitatingly repeated the phrases used by journalists there to describe the new government's budget. The new British leaders, said journalists, were "axe-wielders" who were inflicting "vicious," "savage," and "swingeing (sic) cuts." (Is that what "bangers and mash" really means?)

"Articles about the nation's finances are filled with talk of blood, knives, and amputation," Applebaum gushed, before adding enviously: "And the British love it." What does she do for relaxation, watch autopsies? (We discussed Applebaum and other austerity-fetishist pundits in greater length here.) Vicious, savage, amputating, bloody cuts. Why do Brits get all the fun?

They don't - not anymore. While Ms. Applebaum takes a cold shower, let's take a walk through an austerity-haunted nation, where terror lurks behind every policy proposal and your best friend might turn out to be your worst enemy.

I wish I were joking.

Felony Friday: The New Republicans' Get-Out-of-Jail-Free Card For Criminals

Tony Montana, this is your lucky day! The fictional drug czar Al Pacino played in Scarface would love the list of cuts that Republicans on the House Appropriations Committee just proposed. They range from the needlessly vengeful (why focus on eliminating a tiny amount like $2 million from the Minority Business Development Agency - just to keep 'em in their place?) to the potentially catastrophic.

Case in point: Why cut thirty million dollars, an insignificant amount in overall budget terms, from the fund for "Flood Control and Coastal Emergencies"? According to the National Oceanographic and Aeronautical Administration (NOAA), damage from coastal floods and storms costs an average $11.4 billion per year, which is nearly four hundred times as much as the cuts would save. NOAA also reports that there's a roughly 1-in-20 chance of a fifty billion dollar event occurring in any given year. In what alternate universe does it make sense to cut thirty million dollars from a fund that helps reduce costs of much greater magnitude, and which helps save lives in the bargain? Good thing NOAA is there to collect the data we need to plan for future disasters.

Oh, wait. They want to cut three hundred and thirty-six million dollars from NOAA, too.

This is exactly the kind of anti-government thinking that gave us Katrina and "heck of a job, Brownie." The other cuts on the list are pretty disastrous, too, but it's the "Tony Montoya cuts" that really caught my eye: $74 million from the FBI. $256 million from "State and Local Law Enforcement Assistance." $600 million from COPS, another program that gives grants for state and local policing. And more than half a billion from the IRS. That won't just help tax cheats and money launderers. It will also impede the government's ability to collect much larger amounts in revenue than these cuts will save, resulting in a bigger deficit than ever.

The Republicans even want to cut $330 million from the Treasury Forfeiture Fund, which isn't even an expense item. It's revenue. That's the fund that administers all the assets seized by U.S. Customs, the Secret Service, the Bureau of Alcohol, Tobacco and Firearms (ATF), the IRS Criminal Investigation unit, and the Coast Guard. Watch some old Miami Vice episodes if you want to picture the sorts of things they collect during a smuggling bust or drug raid: cash, yachts, cars, planes - even the long, sleek "Cigarette" boats that Don Johnson somehow managed to drive at full speed without getting a single drop of water on the rolled-up sleeves of those pastel Armani jackets.

What are they going to do with all that stuff: Give it back?

Oh - they want to cut the budget for "food safety and inspection services," too. Want some fries with that e. coli?

Grandma Souljah

We are all Sistah Souljah now - especially you, Mom.

Sistah Souljah was the rapper and writer against whom Bill Clinton "triangulated" so successfully in 1992. Democratic Senators, including Dick Durbin and Kent Conrad, seemed to invoke the same spirit when they met with their Republican counterparts this week for a budget-cutting party. That led to some nostalgia for the welfare cuts that Clinton "successly" supported four years later.

These Democrats are pushing hard to revive the economically discredited and wildly unpopular Simpson/Bowles deficit reduction proposals - a set of suggestions which Politico, like so many others, mistakenly describes as "the recommendations of last year's presidential debt commission." (The Commission was deadlocked and failed to issue any recommendations.)

Digby highlighted an important passage in the Politico piece, about proposals that include Draconian cuts to Social Security: "For Obama it could be the equivalent of Bill Clinton's famous welfare reform deal -- only on steroids." Even worse, now there's a report that President Obama is doubling down on the "Grandma Souljah" strategy by slashing the energy assistance fund for low-income people (from $5.1 billion to its 2008 level of $2.57 billion.) The Administration's arguing that energy costs are down from their 2008 highs, but this isn't a bloated program and oil costs won't stay lowered. Poverty has reached record highs in this country - largely thanks to the executives that the President so assiduously courted at the Chamber of Commerce last week - so more people need fuel assistance.

Maybe this is another front in the "welfare reform on steroids" war, to use Politico's phrase. Cutting fuel subsidies to 2008 levels would accomplish several goals for the White House: It would further distance it from core Democratic values, allow it to triangulate against the nation's poor (many of whom are also elderly), and enable it to slavishly mimic Republican rhetoric yet another time. (That's an accomplishment that seems increasingly precious to the Administration.)

Incidentally, common side effects of steroids include increased and uncontrollable aggressiveness, acne, high blood pressure, hair loss, and shrinkage of the testicles.

Whatever you thought of Clinton-era "welfare reform" - I didn't think much of it - its perceived popularity came from the fact that many white Americans continue to think that welfare recipients are different, frightening, undeserving - the Other. It's madness to think that Social Security cuts will be equally popular with those voters, since most of the folks on the receiving end of those cuts are people who seem just like themselves - and who, in fact, will be themselves someday. What's more, voters will remember that they've paid for those benefits all their lives, so it's absurd to expect that they'll think of themselves as "undeserving." Poll after poll has confirmed that the public opposes Social Security cuts by enormous majorities.

And in a nation where nearly two-thirds of the public thinks that the Federal government doesn't do enough to fight poverty, Obama's move to cut oil assistance for poor people isn't just cynical. It's also politically foolish. Cutting fuel subsidies? Even Mubarak backed down from that idea.

Confidence Man

This has been coming for a long time. According to a Reuters report, Treasury Secretary Tim Geithner said that "a deal between Republicans and Democrats at the end of last year to extend tax cuts helped spark more confidence among (business) firms." That deal will add $700 billion to the Federal deficit (and more than half of its benefits will accrue to the richest 5% of Americans.) But wait ... Secretary Geithner said last August that the private sector needs to be given "confidence" that "the United States (will) cut its deficits over time." So which is it? Does confidence go up when the deficit is reduced, or when it's increased?

Back in 2009 Geithner joked about being a "fiscal hawk" while adding that "the President explicitly rejects (emphasis mine) the notion that Social Security is an untouchable politically ..." And while the Administration has insisted that its Social Security "reforms" would only be used to stabilize the program itself, the Administration's decision to suspend Social Security payroll taxes blurred the line between Social Security and general taxation for the first time in history. The Simpson/Bowles plan actually cuts taxes for the wealthy and for corporations, supposedly in the name of "deficit reduction," while at the same time slashing Social Security benefits.

This is Bizarro-World economics, the exact opposite of what's needed. Studies show that the wealthy will save most of their newfound riches, while Social Security beneficiaries will spend most of their benefits. It would have made much more economic sense to end tax breaks for the rich and use the money to give Social Security recipients a multi-hundred-billion dollar benefit increase instead.

It's not too late to do something sensible. Any government program that provides income to lower- and middle-income people will lead to increased consumer spending. That, in turn, is the only thing that will persuade US businesses to release the two trillion dollars of cash they're holding, which they'll need to hire new employees and purchase raw materials to meet the increased demand.

More consumer spending = more jobs = more growth = real confidence. We should jump-start job growth now and deal with the deficit later. (The taxes paid by all those newly-employed workers will help with that.)

Cold-Blooded

To be fair, Geithner went to the World Economic Forum at Davos and tried to hold back the pack of well-heeled wolves that's always baying for deficit reduction - except, of course, when deficit reduction is against the pack's self-interest. So let's give him points for nerve, and for fighting the good fight on behalf of short-term stimulus spending while he was there. But Geithner's "confidence" logic is pretzel-shaped. And neither President Obama nor Senators Durbin and Conrad will thrive, either politically or morally, by deploying a "welfare reform on steroids" plan against their own people.

Perhaps Geithner, the President, and these Senate Dems see themselves as the last line of defense against the real fiscal zealots, making deals with devils to ease the suffering of the angels. But there's a time for peace, as Ecclesiastes says - and, as he does not say, a time to open up a can of common-sense economic whup-ass on your political opponents. Instead these Democrats are repeating right-wing talking points with so much fervor that it's increasingly hard to tell if they're defending us from the killer, or if we're in that scene from Scream where we find out the killer is more than one person.

Feinting to the right doesn't seem like a smart strategy for Democrats, since it means alienating their core voters while abandoning popular programs. But if they insist on making "bipartisan" gestures or want to act like they're having a Sistah Souljah moment, then hey: knock yourselves out. Problem is, they don't seem to be acting. They're reading their lines with a little too much conviction. Maybe they should remember Tony Montoya's famous rule: Don't get high from your own supply.

People could freeze to death next winter. There's a killer afoot, all right - a misguided economic fad that's could have deadly consequences. Republicans no longer feel they need to hide their lust for killing government with the death of a thousand cuts. And something has gone seriously wrong inside the Beltway when so many Democrats can convince themselves that their path back to popularity lies in cutting Social Security and leaving poor people freezing in the dark.

That's not just horsesh*t. It's horsesh*t on steroids.

This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign.

Obama's Deficit Frankenstein

Richard Eskow — Fri, 03 Dec 2010 20:40:40 -0500

The Presidential Deficit Commission has issued its report -- sort of -- and the president has a problem. Like Dr. Frankenstein in the Mary Shelley novel, he built a creature from discarded parts and it took on a life of its own. And like its fictional counterpart, this creature is threatening to destroy its creator.

The Deficit Commission's defenders like to say they're the only ones willing to make "tough choices." The president has a very tough choice in front of him. He can either confront this proposal head-on, or he can embrace it and ensure great losses for himself and his party for years to come. It will be hard to find any other way forward.

It's Alive

The Commission's ideas are unpopular, unnecessary, and fail to address the true causes of government deficits. But resisting them, as hard as that will be, is only half of the president's self-created problem. This report is also going to make it harder to accomplish the things that are most needed if we are to turn the economy around. The job situation is dismal and the employment news today was even worse than expected. Only 39,000 new jobs were created last month, instead of the expected 150,000. Even that larger number wouldn't have been enough to reduce unemployment in the next several years. The official unemployment number rose to 9.8 percent -- and that leaves millions of people uncounted.

The Deficit Commission's budget cuts would start in 2013. At this rate, the jobs picture will still be bleak. Worse, the deficit report has fueled the austerity mania that's now seized Washington. In his measured response to the Commission's report, the president rightly said that "jobs and growth are our most urgent need." But it will be hard to meet that urgent need when this Commission has made budget-slashing the new political fashion.

Bad Blood

The president's creation has already turned on him. Co-chair Erskine Bowles taunted the president last week. "I told people in the White House I had spent more time listening to people in the opposition party than they had done as a whole group," chided Bowles. And he's the Democrat. Alan Simpson, his Republican partner, played monster by gloating about "blood baths" and "red meat" in Congress.

"I can't wait for the blood bath in April," said Simpson, " We've got guys who will not approve the debt limit extension unless we give 'em a piece of meat, red meat, off of this package... And boy the bloodbath will be extraordinary." Sounds like Boris Karloff getting ready to raid a Bavarian village.

Simpson and Bowles, both radical ideologues on the subject of deficits, threw away the rulebook and dared the White House to defy them. They ignored the guidelines the president set for them in the Executive Order appointing them. They didn't meet their deadline and issued a report without achieving the number of votes required. In fact, as Talking Points Memo reports, they slipped out of town without even holding a public vote (after canceling Tuesday's planned public debate).

That didn't stop them from issuing those "blood bath" threats if the president and his party dare to deviate from their mandate.

The "No Alternative" Dodge

The report's rightward ideological tilt led all three GOP Senators on the Commission to vote "yes." Republican Rep. Paul Ryan voted "no," but only because the proposal didn't also gut this year's health reform bill. And the Democrats who voted in favor of it offered only weak justifications. "I would agree with what the president said," said Sen. Kent Conrad. "Instead of shooting this down, propose an alternative -- but one that does as good a job as this one does in getting us back on a sound fiscal course."

Fair enough: Here's one. Here's another. Here's another. And here's another.

And if these four proposals aren't enough -- from the Citizens' Commission On Jobs, Deficits, and Our Economic Future, EPI/Demos, and Deficit Commissions members Rep. Jan Schakowsky and Andy Stern -- here's Nobel Prize-winning economist Joseph Stiglitz explaining the fundamental problems with the Commission's entire proposal -- problems that are addressed by each of the four alternatives we just mentioned.

Demonizing America

Some Democrats indulged themselves in the stale stratagem of demonizing their own base. Sen. Dick Durbin's comment was typical in that regard: "I'm going to say something now that is heretical on the left and they won't like me for saying it, but what you have suggested in increasing the Social Security retirement age is acceptable to me."

That's the favored theme among journalists and politicians who support this plan: Its opponents are "the left," and therefore to be marginalized and taunted whenever it's convenient. But are seven out of 10 Americans, including 76 percent of Tea Party members, part of "the left"? 69 percent of the public opposes raising the retirement age and 67 percent would rather raise taxes on the rich instead.

If seven out of 10 Americans belong to "the left," we must be in Cuba.

Taking Hostages

The Commission's co-chairs' comments last week weren't random attacks. They were a threat to hold the president hostage if he didn't accept their proposals. They just got help from 14 Democratic Senators who wrote to Harry Reid, asking that the plan be brought to the floor of the Senate for a vote.

These Senators are usually described as "centrists," and they played that card in their letter, emphasizing the "strong bipartisan support" behind these recommendations. (Only in Washington can the word "bipartisan" be used to describe proposals that are opposed by most Democrats and most Republicans.)

The momentum for austerity builds with every day that the president fails to take a clear stand. As that momentum builds, the president's ability to create jobs and help the economy grows weaker. And if the economy doesn't get better, his electoral prospects and those of his party get dimmer and dimmer.

The End of the World

There will be those who shower the Democrats with praise when they take these positions. There will be people who agree that this is the "adult" thing to do, that they're making "tough choices," and that they've "stood up to the special interests." Those people will be delighted with the policies in this proposal. There's a word for people like that:

Republicans.

They won't vote for Democrats, but they'll praise them for pushing right-wing policies. The president will receive more left-handed compliments like this one in the conservative National Review, praising him for "growing up fast" and abandoning "high-minded adolescence." Or this one from self-described "postpartisan" Ruth Marcus, writing for the austerity-mad Washington Post, calling this "a time to govern." ("Govern," like "adult talk" or "tough choices," has become a euphemism for going along with the new Washington consensus.)

But that's not likely to offer much comfort in 2012. That may not be the year the world ends, as the New Age books say. But it could be the year the presidency ends for Obama. His base stayed home in 2010, and these policies will ensure it stays home in 2012, too. What's more, seniors will turn on him and his party in droves, while poll data shows that persuadable Republicans and independents will also be put off by cuts to Social Security.

The Last Chapter

The Deficit Commission was President Obama's attempt to cobble together a popular policy from the body parts of Republican and right-wing Democratic ideas. That can work sometimes, but in this case the result was monstrous. This proposal is a blend of center-right and far-right ideas that fails to address the fundamental problem driving both the economy and political reality today: jobs.

The word "monster" is derived from the Latin word for "warning" or "omen." Its other ancient meaning was "unnatural" or "unreal." This Commission has become the president's monster, an omen of political disaster whose recommendations are economically unreal.

The President's best hope is to reject it and embrace counter-proposals that both reduce the deficit and put America back to work. It won't be easy for him to resist his own creation. But if he doesn't, polls show that they'll react to this set of proposals the way they always react to a monster:

They'll scream and run away.

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Strengthen Social Security

campaign.