Taking the Long View

A cynical man, and too clever by half, Emmanuel Rahm famously advised that one should never let a crisis go to waste. Naomi Klein wrote a book about characters like Rahm called, ‘The Shock Doctrine.’ Her thesis is as simple as Rahm is Machiavellian. In the context of global capital, neoliberals have repeatedly harnessed appalling systemic shocks–wars, depressions, civil unrest– to implement radical economic policies that suit their ideologies, and Wall Street’s profits. The government shutdown crisis may be priming the pump for much the same, a kind of perfect storm for progressives. Although it’s probably best to ignore the Republican suicide caucus and their horsemen of the apocalypse, the fact is they have been useful fools for the far right, at least for a time. But now they are getting a bit unruly. Even the heart of conservative darkness, Koch & Klan, shot a missive to GOP leadership essentially begging them not to destroy the world economy. The Heritage foundation chipped in with their own think piece. Both following the Bloomberg news accounts of what would unfold should the debt ceiling be breached, to wit: “Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.”

Given the amount of angst currently brewing in the padded penthouses of Wall Street, odds are this debt ceiling will be raised. I say this with a million caveats about predicting the habits of the insane, but still, there’s some serious mojo moving against them. So we may get lucky enough to razor edge the cliff of Economic Apocalypse, but we still have our Emmanuel Rahms out there sniffing the pain points and figuring what advantage such a crisis might reveal. And there’s a doozy shaping up on the horizon – what conservatives and neoliberals like to wrongly call ‘entitlements.’ That “Bug Eyed Granny Killer” (as Charles Pierce likes to tag Paul Ryan) lays it out in calm, bureaucratized fashion in a Wall Street Journal Op-Ed:

“We could provide relief from the discretionary spending levels in the Budget Control Act in exchange for structural reforms to entitlement programs.”

Concise, and in complete sentences, too, why it almost sounds rational. But like House Whip Eric Cantor, who went on a royal pout in a recent Washington Post Op-Ed, both he and Ryan seem to think there’s a magic secret relationship between the Presidency and the House; and the Senate is like a flyover state, mostly ignored.

“Mr. Obama has been continually thwarting the will of Congress,” Cantor wrote, breathlessly, “This must end.”

Actually, Mr. Harry Reid of the Senate, not Mr. Obama of the Presidency, has been thwarting the will of the House, or as I like to think of them, our new Saturday morning cartoons.

One gets the sense that the Republicans are angling for a backroom deal; that everything would be better if only the President would be deferential enough to their emotional needs. But even if Obama were inclined (and why should he be?) that’s not the way our government works.

Granny killer goes on to say, “Those [entitlement] reforms are vital”, but, no they’re not. There are thousands of ways to balance the federal budget without cutting funding for retirees and healthcare. And even if there weren’t, the suggested solutions are dysfunctional in design, and immoral in practice. If the President tilts this way at all (and unfortunately, he may), the likeliest compromise would be something called a chained CPI (Obama floated this in his April 2013 budget). The CPI acronym stands for Consumer Price Index, a formula that looks at how the prices of stuff we need (food, for example) changes over time.

The ‘chained’ CPI measures living costs differently because it assumes that when prices for one thing go up, people sometimes settle for cheaper substitutes (if beef prices go up, for example, they’ll buy more chicken and less beef). If this continues, as it likely will, maybe the old folk can just settle for cat food.

Using he chained CPI formulation, if you’re 62 and take early retirement this year, by age 92 — when health care costs can skyrocket and more than 1 in 6 older Americans live in poverty — you’ll be losing a full month of income every year. And it will only get worse for our children and our children’s children. So, in fact, this is a deeply regressive solution to a GOP manufactured crisis.

Are there alternatives? Absolutely. One of the easiest and fairest would be to raise the base wage tax on Social Security. As of 2013, Social Security tax is only taken out on the first 113,700 dollars of income. Folks that make 213,700 dollars a year, take in 100,000 dollars free of this charge. And it only escalates as you make more money. A millionaire rakes in 886,300 without paying a dime of Social Security tax.

There are other alternatives as well, like a small financial transaction tax on each Wall Street buy or sell. This tax could fund both Medicare and Social Security, which millions of people depend upon, and it would have the ancillary benefit of cooling the often overheated dealing by hedge fund managers and their largely disruptive ‘financial products.’

But none of this will get discussed in crisis mode. That’s why it serves conservatives to ally with the likes of Ted Cruz. It’s bad cop, good cop day for progressives; the classic interrogation technique:

“Ya know, I’d really like to help you out here, but you’re going to have to give up a little something. Either that or I unleash my friend back there. That’s right, the one who keeps screaming insanely about socialism and beating his skull against the wall.”

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Taking the long view, this kind of opposition is nothing new. The modern Republican party has defined itself in opposition to Social Security and ‘entitlements’ since the New Deal, often in hysterical tones. Republicans had the same knee jerk reaction to Medicare and Medicaid as they do to the ACA.

In 1961, the Patron Saint of Republicans, Ronald Reagan said: “[I]f you don’t [stop Medicare] and I don’t do it, one of these days you and I are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.”

George H. Bush called it socialized medicine. Showing off the Republican’s uncanny ability to make future predictions, Bob Dole said: “I was there, fighting the fight, voting against Medicare . . . because we knew it wouldn’t work in 1965.” He said this in 1996, running against Clinton. But it has worked, of course. Quite well.

A successful government social program destroys one of the main tenants of modern conservatism: that the government is the problem. Hence the wild cries and distortions. When Social Security was first introduced, Republicans of New Deal era, like Republicans of today, liked to use overheated rhetoric to scare the populace and create an artificial ‘crisis’ mentality. Daniel Reed, a Republican representative from New York, predicted that with Social Security, Americans would come to feel “the lash of the dictator.” Senator Daniel Hastings, a Delaware Republican, declared that Social Security would “end the progress of a great country.”

John Taber, a Republican representative from New York, went further and said of Social Security: “Never in the history of the world has any measure been brought here so insidiously designed as to prevent business recovery, to enslave workers.”

None of this was true.

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Taking the long view, again, we should keep in mind the Republicans are threatening to wreck the car they’ve already refused to service. In the budget negotiations that led up to the sequester, Republicans have gained about $1.7 trillion in spending cuts (to both discretionary and mandatory spending), while Democrats have gotten only $650 billion in revenue increases.

The sequester is still in place. The government is shut down. All of this while U.S. tax revenue as a percentage of GDP is far below the OECD average.

And, what will be on the table shortly won’t be the debt ceiling, or the government shutdown, not really: ultimately, it will be what Republicans like to call ’entitlements,’ which is a demeaning way of saying ‘our savings’. Social Security is a Trust Fund, after all. That means the vast majority of us pay into it every day of our working lives. It is not an ‘entitlement’, nor a big chip in a high stakes political game; it is our future.