A Red Line for the Dems
MARK WARNER
Virginia’s Senator Mark Warner is talking openly about cutting Social Security, Medicare and Medicaid! APV has been aggressive in communicating our unequivocal opposition to radical conservative attempts to intentionally wreck the most successful and popular government programs in American history. We are alarmed and deeply disappointed that Sen. Warner would be a party to such talk. Social Security is solvent today and for decades to come, and its long-term outlook can be easily secured through a marginal raise to the Wage Cap, which would affect only the wealthiest recipients. I urge you to contact your Senators, and if you live in Virginia, to contact Sen. Warner. Tell them not to negotiate away our hard-earned retirement system.
The same conservative radicals who held the American people and our economy hostage in October when they closed the government and threatened our nation’s credit rating with a pointless and dangerous default, have wanted to privatize or eliminate Social Security for a long time. It is time for Progressives to communicate to our lawmakers that this will not stand and that those who aid in such a scheme will have crossed a red line and will not only lose our support but gain our enmity. “Compromising” on how much of this fundamental, bedrock part of the liberal democratic platform to cut, is like negotiating over how much of the Lincoln Memorial we should jack hammer into gravel.
Such a betrayal would not be forgotten or forgiven. Far from ‘improving’ the economy, such cuts would further poison our recovery and hurt the majority of Americans. If this is not sufficient cause for Senator Warner and the other Democrats to reconsider a grand “compromise”, they might speculate on the more immediate, massive and long-lasting damage it will certainly cause their own political careers, and their colleagues’.
Most Democrats will be deeply demoralized. Many will stop donating or volunteering or otherwise helping any politician or Party who engages in this shameful undertaking. Countless others, I suspect, will simply not vote. Capitulation on Social Security will effectively destroy the Democratic brand and their losses at the polls will be predictable and massive. Many moderate to progressive voters may very well actively support alternatives –as a point of principle–even if doing this results in the election of potentially worse candidates.
Social Security, Medicare and Medicaid should not be “on the table”, and if they are, then the political careers of those who would enable the likes of Ted Cruz and the Heritage Foundation must be as well.
Scott Price
President, Alliance for Progressive Values
9 Democrats who are selling out on Social Security cuts
Contact Info for Senator Warner is here.
Patience is a Virtue
As predicted here, the Washington Post and the kiddies over at the Third Way are trotting out their new game plan which involves their old game plan: enacting what they call ‘entitlement reform.’
With a solemnity only the Very Serious sycophants of our national press corps can muster, Fred Hiatt fairly shouts in a Post editorial: “At the moment, what’s vital is fixing spending priorities.” Not, mind you, putting people back to work. Because unemployment dancing around ten percent can’t possibly be of concern for people like Fred Hiatt or those he hangs with– like Grover Norquist and his acolytes at the wonderfully misnamed Americans for Prosperity. Since Grover can’t get off his no tax jihad, and his dapper enfant terrible self has all the GOP by the no-tax-pledge-short hairs, poor granny getting a hot meal isn’t even in the cards for Fred. Hell, Fred drop kicks granny right off the playing field.
Before I get into the utter tomfoolery that Hiatt is up to here, let’s put a bullet through his verbiage: Social Security is NOT an entitlement. It is our money stuffed into a mattress we call a Trust Fund. It may have a few IOUs where cash once flowed, but it is no less our money, and our children’s money, too. As long as we can keep useful idiots like Fred or Peter Peterson’s (the billionaire who has donated one billion to cut Social Security) hands out of the cookie jar. Despite Wall Street and right-wing misinformation, Social Security, funded by our payroll tax, does not contribute to the deficit. In fact, the Social Security Trust Fund today, according to the Social Security Administration, has a $2.7 trillion surplus and can pay 100 percent of all benefits owed to every eligible American for the next 21 years. Further, unlike the huge commissions paid out to Wall Street firms, Social Security is run with very modest administrative costs.
There are a couple of reasons for the conventional wisdom being so deeply and consistently wrong. Since it was first birthed, Medicare and Social Security have been on the right wing’s hit list. They hate it. They hate it because it represents in concrete human terms everything that is problematic for their party and their ideology. Every successfully cashed Social Security check that buys groceries for Uncle Jim is one more knife in the back of their rhetorical hobby-horse: ‘Big Government failure’…Why? Because it is not a failed program. It is a wildly successful program. Before Social Security existed, about half of America’s senior citizens lived in poverty. Today, less than 10 percent live in poverty. People understand this, too. In a Pew poll, 87 percent of respondents favored present or greater Social Security spending; only 10 percent backed cuts. Big government administers both Social Security and Medicare (and Medicaid) in an infinitely more efficient manner than anything the free market could devise; because Big Government isn’t looking to make a billion dollars off the life’s savings of nearly every man, woman and young adult in the nation. All it does is stash the money in relatively safe Treasury bonds (safe, that is, so long as you don’t blow off the debt ceiling or in other ways shake the world’s confidence in the world’s currency–thank you, GOP). For years, Social Security ran a surplus thanks to interests on the Treasury bonds. If the program sees a deficit, the excess funds from previous years plus any interest earned is used to pay beneficiaries. At the end of 2011, the Trust Fund contained (or alternatively, was owed) $2.7 trillion, up $69 billion from 2010.
The luxurious sound of all that cash floating around is probably one other reason pundits like Hiatt get things so consistently wrong. Back during the Clinton era when privatization was all the rage, Wall Streeters like Robert Rubin saw lots of money for their companies if privatized ‘retirement’ accounts were set up. Thanks to the Wall Street inflicted recession of 2008, no one puts quite so much faith in the miracle of the market anymore. Fred and gang apparently haven’t gotten the memo. Conventional wisdom is a slow and ponderous beast to change, especially when billionaires work assiduously behind the scenes to help you forget just how wrong Rubin and others have been about, well, just about everything.
Finally, even if there were a dramatic and immediate shortfall (and there’s not), there is no obstacle to the government borrowing more money to meet needs and fund Social Security or put people back to work, for that matter. In fact, such spending successfully brought our economy back from the black hole of the Great Depression 80 or so years ago and it would be a useful tool today if superstition, ideological fixation and bad economics didn’t pass as conventional wisdom.
The last projections from the Congressional Budget Office show the combined cost of Social Security and Medicare rising by a bit more than 3 percent of G.D.P. between now and 2035, and that is a concern. But that number could easily come down with more effort on the health care front. In fact, if Paul Krugman is to be believed, it looks like the ACA, the much maligned Obamacare, may be bending that number downward. “True, 3 percent of G.D.P. is a big number, but it is not an economy-crushing number.” According to Krugman, “the United States could, for example, close that gap entirely through tax increases, with no reduction in benefits at all, and still have one of the lowest overall tax rates in the advanced world.” But the Third Way deficit scolds and the Fred Hiatts of the nation will not talk about this because Grover Norquist has a pack of economic dilettantes (the GOP) by the short hairs. Given the current political makeup of the House, this may be true. For now. But not forever.
Will it be true in 2016, say? Much less in 2030? That’s doubtful because all recent national polling suggest what most sane commentators predicted of the radical right’s jihad against the public interest. Bad election numbers.
Hiatt’s whining editorial amounts to tautological nonsense: if we do not cut the future benefits this exact moment, we might have to cut them in the future! Maybe so….Maybe not…. but, in either case, why now? There’s time enough for the political calculus to change. And when it does, a majority of Americans and their newly elected representatives might very well decide it’s more important for a billionaire to pay a couple of tics more in capital gains tax, or raise the Social Security Base Wage tax rather than slashing benefits for the vast majority of Americans who depend on Social Security and Medicare for their retirement years.
Patience is a virtue in this particular game. The deficit scolds know this, too. In their various incarnations, they have been trying to gut the program since Social Security was created nearly 77 years ago. Their sudden urgency seems a bit — well — let’s just call it rehearsed.
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.
Alliance for a Progressive Virginia 