The Republican Myth Of Obama's "Entitlement Society"

By Robert Reich, cross-posted from his website

One of the few things Mitt Romney and Newt Gingrich agree on is that President Obama is turning America into “European-style welfare culture.”

In his standard stump speech Romney charges Obama with creating a nation of dependents. “Over the past three years Barack Obama has been replacing our merit-based society with an entitlement society.”

Gingrich calls Obama “the best food-stamp president in American history.”

What’s their evidence? Both rely on federal budget data showing direct payments to individuals shot up by almost $600 billion, a 32 percent increase, since the start of 2009.

They also point to Census data showing that 49 percent of Americans now live in homes where at least one person is collecting a federal benefit – Social Security, food stamps, unemployment insurance, worker’s compensation, or subsidized housing. That’s up from 44 percent in 2008.

Finally, they trumpet Social Security Administration figures showing that the number of people on Social Security disability jumped 10 percent in Obama’s first two years in office.
They argue our economic problems stem from this sharp rise in “dependency.” Get rid of these benefits and people will work harder.

But they have cause and effect backwards. The reason for the rise in food stamps, unemployment insurance, and other safety-net programs is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically over the past three years. According to a study by Northeastern University,  a third of families with young children are now in poverty.

This is the real scandal. For example, only 40 percent of the unemployed qualify for unemployment benefits because they weren’t working full time or long enough on a single job before they were canned. The unemployment system doesn’t take account of the fact that a large portion of the workforce typically works part time on several jobs, and moves from job to job.

Republicans also object to Obama’s health care law, which covers 30 million more Americans than were covered before. That law still leaves over 20 million without health insurance. They’ll get emergency care when they’re in dire straights — hospitals won’t refuse them — but we all end up paying indirectly.

Regressive Republicans pretend they’re about opportunity. In reality they’re back at what they’ve been doing for years — promoting Social Darwinism.

 Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

Progressive Caucus Challenge: Restore The American Dream

By Isaiah J. Poole, cross-posted from Campaign for America's Future

While the rest of Congress is arguing over how to continue a payroll tax cut that will not dramatically improve the economy over the next year, members of the Congressional Progressive Caucus planned to introduce legislation today that its leaders assert would create more than 4 million jobs and reduce the deficit by more than $2 trillion over the next 10 years.

Just as the Progressive Caucus People's Budget was the only serious proposal offered in Congress to meaningfully address both the short-term need for economic stimulus and the long-term need for deficit reduction, "The Restore the American Dream for the 99% Act" is the most serious effort to bring together the tools needed to address today's economic crisis. It is a direct answer to the economic anger at the heart of the Occupy movement.

It is also destined in today's political environment to the same fate as the People's Budget—in other words, utter defeat, assuming it even manages to come to a vote in the Republican-controlled House. The legislation's value is as a statement of the kind of budget policy discussion America needs—and it is a sharp contrast from the latest poison pill offered by congressional Republicans, which seeks to force on the American public the potentially environmentally catastrophic Keystone XL pipeline in exchange for another year of a payroll tax cut that has helped add up to about $1,000 year to workers' take-home pay.

Progressive Caucus co-chairmen Reps. Keith Ellison, D-Minn., and Raul Grijalva, D-Ariz., are scheduled to present the legislation at a news conference today inside the Capitol.


The legislation would authorize the creation of several "corps" that will quickly offer jobs to unemployed people doing such essential work as repairing school buildings, maintaining public parks, completing neighborhood energy efficiency and conservation projects, and providing health care and other public services in underserved areas. One of the corps would be devoted to rehiring teachers and first responders laid off by cash-strapped state and local governments.

Under the legislation would also mandate that 75 percent of the goods and services the federal government buys be made in America, toughen initiatives designed to help small businesses get federal contracts, and allocate $50 billion for highway, public transportation, and electrical grid improvement projects. To counter China's currency manipulation, which artificially drives down the cost of Chinese imports, the legislation would set a countervailing tariff. It would also include language protecting the long-term unemployed and wounded veterans from hiring discrimination.

Included in the bill are provisions that would raise $800 billion through a surcharge on millionaires, end tax subsidies for fossil fuel companies, and impose a small excise tax on the sale of stocks and bonds. It would extract budget savings through such steps as ending the war in Afghanistan as well as cutting close to $200 billion from the defense budget through such measures as eliminating unneeded weapons systems and cutting in half the military forces now based in Europe.

Also, the legislation tackles some of the unfinished business of health care reform: it creates a pubic health insurance option that would be available through health care exchanges, which is expected to drive down federal health care spending by almost $90 billion. Allowing Medicare to bargain with pharmaceutical companies to get bulk discounts, a move that Republicans and some drug-company-funded Democrats have blocked in the past, would help save more than $150 billion.

To preserve Social Security benefits and the financial integrity of the Social Security trust fund, the legislation would raise the cap on earnings taxed by Social Security above its current $106,800.
This legislation helps set up the debate we should be having about the direction of the country in the coming months. The Republicans, of course, would like the country focused on its dissatisfaction with an unemployment rate well above 8 percent as President Obama enters the fourth year of his presidency. They do not want the country to count the number of proposals they rejected that would have lifted the economy, and the fortunes of working-class and middle-class households, had it not been for their unrelenting obstruction. They certainly don't want people to count the job-killing toll of the Republican proposals, which can be seen in states controlled by Republican governors and legislatures.

The Progressive Caucus legislation offers a different choice. We can put people to work today building the foundation of the economy of the future, or allow the stubborn subservience of congressional conservatives to millionaires and big corporations to cause more economic pain, widen the gulf between the very wealthy and struggling workers, and fuel more Occupy movements.

Rick Perry And The Bankruptcy Of Modern Day Conservatives

By Robert. Borosage, cross-posted from Campaign for America's Future

by Donkey Hotey

Texas Governor Rick Perry touts himself as the most conservative candidate who is electable. He prays with the fundamentalists, hunts with the Second Amendment gang, decries federal tyranny with the 10th Amendment crowd, and “pokes” around with the birthers. He just released an economic plan that looks like a conservative wish list. And in doing so, he reveals the essential bankruptcy of today’s conservative politics.

Perry’s plan is anchored in the belief that the rich have too little money. He would eliminate taxes on million dollar estates, coddling the heirs to the wealthy. He would tax work but eliminate all taxes on wealth – on capital gains, interest and dividends. Warren Buffett’s tax rate will plummet towards zero. He’d install an optional flat tax at 20%, offering the affluent their choice of the old code or the flat tax, insuring full employment for accountants.

In the US, the richest 1% now make about as much as the bottom 60% combined, and have as much wealth as the bottom 90%. Perry would insure that the rich do even better. Asked about this, Perry said “I don’t care” if my proposals add to inequality. He assumes that if the rich have more money, they will use it to create jobs. But there is no evidence to support that fact. Over the last decade, with the top end Bush tax cuts and the wealthiest 1% capturing all the rewards for growth, we suffered the worst job creation record since the Depression, and wages for the typical US household lost ground for the first time when the economy was growing.

Perry’s plan believes that corporations have too little in profits. So he slashes taxes on corporations. He calls for lowering the corporate tax rate to 20%, offers multinationals the chance to repatriate the trillion in profits they’ve parked abroad at 5.25%, and would establish a “territorial tax” on corporations, ending US taxation on profits earned abroad. This too would generate jobs, he argues.

But corporations are now sitting on over $2 trillion in profits. They don’t lack cash; they lack customers. And multinationals have been shipping good jobs abroad, while perfecting methods to avoid taxes by parking profits in overseas tax havens. Perry’s plan would simply give them greater incentives to move jobs and report profits abroad.


Perry’s plan assumes that Wall Street has too little freedom and corporations have too much accountability. He would repeal the financial reforms passed in the last Congress, removing any guard rails on Wall Street excesses. He would repeal the corporate reforms, passed after Enron, that require company CEOs to certify the accuracy of their audits, freeing companies to go back to cooking their books. He assumes this will help create jobs. But, it is hard to forget, it was Wall Street’s wilding that blew up the economy and caused mass unemployment; and it was the excesses of corporate boardrooms that undermined investor confidence. Removing the cop on the corporate and financial beat only insures a new crime streak.

Perry’s plan assumes that retired Americans have too much security. He would raise the eligibility age for Medicare, turn Medicare into a voucher system and cut Medicaid and turn it over to the states. (While he ducks offering details on this; he embraces Sen. Coburn’s Back to Black plan which follows these lines). He savages Social Security, raising the retirement age and instilling a lower cost of living index - - which would cut retirement support by approximately 30% for retirees in future years. Then he calls for offering a new benefit – private accounts for young workers – which would blow a trillion dollar hole into the Social Security trust fund. He does not say how he would pay for this. In fact, Americans rely increasingly on Social Security for their retirement. Half have no retirement plan at all at work. The few with savings found their hopes dashed as their homes plummeted in value. Retired couples on Medicare who live a normal life will need to spend over $160,000 on health care over the course of their lives.

Perry promises a balanced budget amendment, and a budget balanced by slashing spending. He would limit spending to 18% of GDP, which would require cutting the current budget by about one-fourth. (Far deeper cuts would be needed to cover the decline in tax revenue and the financing of private accounts in Social Security). The federal budget, as Paul Krugman has pointed out, is basically an insurance program with an army. To cut government by one-fourth, you must savage Social Security, Medicare, Medicaid, Veteran’s health care. Perry focuses on cutting the domestic discretionary budget – he boasts about cutting the education budget in half, gutting support for schools in poverty areas. But eliminating all domestic programs won’t come close to covering the cuts required to balance the budget under his tax program.

“There’s nothing wrong with lower revenue,” Parry said, “Americans are ready for Washington DC to quit spending money.” No doubt Americans think their tax dollars are often wasted. They want loopholes closed, an end to corporate subsidies and insider privileges. But they want Social Security, Medicare and Medicaid protected. They want investment in education.

And lost in the Perry cuts would be any hope of rebuilding America. Perry says he wants to make America friendly to business again. But his budget choices will insure that vital public investments in America are starved. Our decrepit and outmoded infrastructure will continue to decline. Our education system will fail to provide the basics, from pre-K to affordable college. Vital investments in research and development will be short changed. We’ll surrender any hope of leading the new green industrial revolution that will be the growth global markets of the future, in a world of global warming that Rick Perry denies. Perry will rail against waste and big government, but his budget leaves no choice but to cut out bone and muscle, not just fat

Perry has plummeted in the polls after abysmal debate performances that suggest he isn’t the brightest light bulb in the closet. But he remains the best funded conservative alternative to Romney, and has the resources to sustain a national campaign.

His candidacy thus reveals the essential bankruptcy of today’s conservatism. In a time of Gilded Age inequality, conservatives want to end taxes on wealth. As good jobs are shipped abroad, they would give corporations added incentives to move jobs and report profits abroad. In the midst of the Great Recession caused by Wall Street’s excesses, they would reopen the financial casino, and remove what limited safeguards were passed. With America’s boomers moving into retirement, they would undermine the basic promises the society made to them for retirement security. With the millennium generation flooding our public schools, they would gut federal support for public education.

Conservative policies – from top end tax cuts, to corporate trade policies, to Wall Street deregulation— blew up the economy, leaving us with mass unemployment, a sinking middle class and spreading poverty. And conservatives have learned nothing and changed nothing. Led by Rick Perry, they argue only for more of the same. They offer a road to more riches for the few and ruin for the many.

The Seven Biggest Economic Lies

By Robert Reich, cross-posted from his website

The President’s Jobs Bill doesn’t have a chance in Congress — and the Occupiers on Wall Street and elsewhere can’t become a national movement for a more equitable society – unless more Americans know the truth about the economy.

Here’s a short (2 minute 30 second) effort to rebut the seven biggest whoppers now being told by those who want to take America backwards.  The major points:

1. Tax cuts for the rich trickle down to everyone else. Baloney. Ronald Reagan and George W. Bush both sliced taxes on the rich and what happened? Most Americans’ wages (measured by the real median wage) began flattening under Reagan and have dropped since George W. Bush. Trickle-down economics is a cruel joke. 

 2. Higher taxes on the rich would hurt the economy and slow job growth. False. From the end of World War II until 1981, the richest Americans faced a top marginal tax rate of 70 percent or above. Under Dwight Eisenhower it was 91 percent. Even after all deductions and credits, the top taxes on the very rich were far higher than they’ve been since. Yet the economy grew faster during those years than it has since. (Don’t believe small businesses would be hurt by a higher marginal tax; fewer than 2 percent of small business owners are in the highest tax bracket.)  

 3. Shrinking government generates more jobs. Wrong again. It means fewer government workers – everyone from teachers, fire fighters, police officers, and social workers at the state and local levels to safety inspectors and military personnel at the federal. And fewer government contractors, who would employ fewer private-sector workers. According to Moody’s economist Mark Zandi (a campaign advisor to John McCain), the $61 billion in spending cuts proposed by the House GOP will cost the economy 700,000 jobs this year and next. 

 4. Cutting the budget deficit now is more important than boosting the economy. Untrue. With so many Americans out of work, budget cuts now will shrink the economy. They’ll increase unemployment and reduce tax revenues. That will worsen the ratio of the debt to the total economy. The first priority must be getting jobs and growth back by boosting the economy. Only then, when jobs and growth are returning vigorously, should we turn to cutting the deficit. 

 5. Medicare and Medicaid are the major drivers of budget deficits. Wrong. Medicare and Medicaid spending is rising quickly, to be sure. But that’s because the nation’s health-care costs are rising so fast. One of the best ways of slowing these costs is to use Medicare and Medicaid’s bargaining power over drug companies and hospitals to reduce costs, and to move from a fee-for-service system to a fee-for-healthy outcomes system. And since Medicare has far lower administrative costs than private health insurers, we should make Medicare available to everyone. 

 6. Social Security is a Ponzi scheme. Don’t believe it. Social Security is solvent for the next 26 years. It could be solvent for the next century if we raised the ceiling on income subject to the Social Security payroll tax. That ceiling is now $106,800.  

 7. It’s unfair that lower-income Americans don’t pay income tax. Wrong. There’s nothing unfair about it. Lower-income Americans pay out a larger share of their paychecks in payroll taxes, sales taxes, user fees, and tolls than everyone else.

Demagogues through history have known that big lies, repeated often enough,  start being believed — unless they’re rebutted. These seven economic whoppers are just plain wrong. Make sure you know the truth – and spread it on.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

The Election of 2012: Why the Most Important Issues May Be Off the Table (But Should Be On It)

By Robert Reich, cross-posted from his website

We’re on the cusp of the 2012 election. What will it be about? It seems reasonably certain President Obama will be confronted by a putative Republican candidate who:

Believes corporations are people, wants to cut the top corporate rate to 25% (from the current 35%) and no longer require they pay tax on foreign income, who will eliminate capital gains and dividend taxes on anyone earning less than $250,000 a year, raise the retirement age for Social Security and turn Medicaid into block grants to states, seek a balanced-budged amendment to the Constitution, require any regulatory agency issuing a new regulation repeal another regulation of equal cost (regardless of the benefits), and seek repeal of Obama’s healthcare plan.

Or one who:

Believes the Federal Reserve is treasonous when it expands the money supply, doubts human beings evolved from more primitive forms of life, seeks to abolish the Internal Revenue Service and shift most public services to the states, thinks Social Security is a Ponzi scheme, while governor took a meat axe to public education and presided over an economy that generated large numbers of near-minimum-wage jobs, and who will shut down most federal regulatory agencies, cut corporate taxes, and seek repeal of Obama’s healthcare plan.

Whether it’s Romney or Perry, he’s sure to attack everything Obama has done or proposed. And Obama, for his part, will have to defend his positions and look for ways to counterpunch.

Hence, the parameters of public debate for the next fourteen months.


Within these narrow confines progressive ideas won’t get an airing. Even though poverty and unemployment will almost surely stay sky-high, wages will stagnate or continue to fall, inequality will widen, and deficit hawks will create an indelible (and false) impression that the nation can’t afford to do much about any of it – proposals to reverse these trends are unlikely to be heard.

Neither party’s presidential candidate will propose to tame CEO pay, create more tax brackets at the top and raise the highest marginal rates back to their levels in the 1950s and 1960s (that is, 70 to 90 percent), and match the capital-gains rate with ordinary income.

You won’t hear a call to strengthen labor unions and increase the bargaining power of ordinary workers.

Don’t expect an argument for resurrecting the Glass-Steagall Act, thereby separating commercial from investment banking and stopping Wall Street’s most lucrative and dangerous practices.

You won’t hear there’s no reason to cut Medicare and Medicaid – that a better means of taming health-care costs is to use these programs’ bargaining clout with drug companies and hospitals to obtain better deals and to shift from fee-for-services to fee for healthy outcomes.

Nor will you hear why we must move toward Medicare for all.

Nor why the best approach to assuring Social Security’s long-term solvency is to lift the ceiling on income subject to Social Security payroll taxes.

Don’t expect any reference to the absurdity of spending more on the military than do all other countries put together, and the waste and futility of an unending and undeclared war against Islamic extremism – especially when we have so much to do at home.

Nor are you likely to hear proposals for ending the corruption of our democracy by big money.
Although proposals like these are more important and relevant than ever, they won’t be part of the upcoming presidential election.

But they should be part of the public debate nonetheless.

That’s why I urge you to speak out about them – at town halls, candidate forums, and public events. Continue to mobilize and organize around them. Talk with your local media about them. Use social media to get the truth out.

Don’t be silenced by Democrats who say by doing so we’ll jeopardize the President’s re-election. If anything we’ll be painting him as more of a centrist than Republicans want the public to believe. And we’ll be preserving the possibility (however faint) of a progressive agenda if he’s reelected.

Remember, too, the presidential race isn’t the only one occurring in 2012. More than a third of Senate seats and every House seat will be decided on, as well as numerous governorships and state races. Making a ruckus about these issues could push some candidates in this direction — particularly since, as polls show, much of the public agrees.

Most importantly, by continuing to push and prod we give hope to countless Americans on the verge of giving up. We give back to them the courage of their own convictions, and thereby lay the groundwork for a future progressive agenda — to take back America from the privileged and powerful, and restore broad-based prosperity.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

The White House Won't Touch Social Security. Great! Now, About Medicare . . .

By Richard (RJ) Eskow, cross-posted from Huffington Post

Coburn-Lieberman

Washington, DC felt like a city on a deathwatch this week, after a series of White House news leaks said the president would announce cuts to Medicare and Social Security benefits next Monday.

One plan was to raise the eligibility age for Medicare and Social Security. Another involved an accounting gimmick that would cut the already-inadequate cost of living adjustments for Social Security benefits -- and raise taxes on the middle class, too.

The response was negative, as most people might expect. Very, very negative.

Come Monday

Ever since these trial balloons were first floated, many elected Democrats have been dreading next Monday's speech. They saw these proposals as a fatal blow to their reelection chances. Another dark cloud was hanging over public interest groups who represent older Americans, sound economic policy, or improvements to our health care system. They understood the damage these ideas could cause.

That was then, this is now. Today the clouds lifted... some of them, anyway.


Partly Cloudy

Today's leak, as reported in the Wall Street Journal and many other outlets, cites "people familiar with the discussions" who now say Monday's deficit reduction proposal "will leave out changes to Social Security" and "may" -- note the use of that word, "may" -- "may exclude any increase in the Medicare eligibility age."

Those "discussions" are internal White House deliberations, which means the "people familiar with them" are on the President's staff. That makes these leaks real and official, and they bring good news about Social Security.

Political and advocacy groups have been making their feelings known to the White House, and they deserve credit for the change in plans. So does the president, who was open-minded and flexible enough to see the wisdom in their arguments.

That's the good news.

What's left (isn't "left")

What's left to fix in Monday's speech? There's still that word "may" in those comments from his staff. The decision to protect Social Security is a smart one, but if the president goes ahead with his plan to raise the Medicare age it will still be a political and policy disaster. The blowback won't come from the "left," as Washington insiders might think, but from voters all across the political spectrum.
Remember, 51% of Republicans wanted the public option, which was a way of making Medicare available to all Americans. And they were right. This country is being strangled by runaway health care costs. The solution to that problem is making Medicare available to more people, not less.

A plan for insurance companies (and those who love them)

We've already listed eight reasons why raising the Medicare age is a truly terrible idea -- possibly the worst in a season of terrible policy ideas. Where did it come from? One likely source is the health insurance industry, which is giving it as warm a public reception as it possibly can without killing it. Why wouldn't they like it? It would hand them millions of new customers, just as they were handed millions of new customers when the public option was scrapped from a bill that required people to purchase insurance products.

This idea found two Senators to propose it: Conservative Republican Tom Coburn of Oklahoma, and conservative (non) Democrat Joe Lieberman, the insurance-friendly Senator from Connecticut.
If the president proposes this Coburn/Lieberman idea on Monday, he'll be offering the insurance industry a bonanza while infuriating seniors -- and pretty much everybody else, too.

The deficit that dare not speak its name

That's not to say we don't have a long-term deficit problem, or that Medicare isn't a huge part of it.

It's the biggest part of it, in fact, as this chart clearly shows:



This chart shows that we can't afford to let profiteers make millions off our elderly and sick populations any longer. The real "deficit hawks," as opposed to the phonies, are the people who understand this. It can't be fed by taking more from the pockets of older Americans. We have a systemic problem that requires systemic solutions.

The president should reject the Coburn-Lieberman-insurance industry proposal, and use this as an opportunity to demand that his opponents address the real source of our long-term spending problem: runaway profits for drug companies, insurance companies, and for-profit medical providers.

Just Say No to Drug Manufacturers

There are several steps that can be taken immediately, and reports suggest the president is seriously considering one of them. They say he'll propose letting Medicare use its buying power to negotiate discount prices with the drug companies, which it should have been allowed to do all along. That's a smart move that would save hundreds of billions of dollars from the Federal budget. It would also save money for America's seniors by lowering their out-of-pocket costs. That, in turn, would have an immediate stimulus effect by freeing up billions of dollars, which seniors will then spend on goods and services. That means more jobs.

What a three-fer: Cut the deficit, help our seniors, and create a no-cost economic stimulus at the same time! Anybody who doesn't support that idea has lost the right to be called a "deficit hawk," and must instead be called a "pro-drug company politician."

Smart Ideas

We can do other creative things to address Medicare costs. Medical students, like other young people, graduate with unprecedented and onerous levels of debt. Why not implement a debt-forgiveness program for young physicians who agree to dedicate a certain percentage of their work to providing Medicare services for which there is a shortage of doctors?

We need more studies on which forms of treatment really work, and which force patients to endure needless suffering while driving up costs. The Dartmouth Atlas and other studies show that many surgeries are unnecessary -- and extremely costly. We're not talking about "death panels." We're talking about making sure nobody cuts you open unless it's going to help you.

That's only common sense. It's how the British and Canadians do it. For all the scare talk, one fact is inescapable: Their health plans are much cheaper than ours. And the only plan in this country that approaches theirs in public approval is... Medicare.

Will Power

As the distinguished physician and policy expert Ezekiel Emanuel pointed out (yes, he's Rahm's brother): "Cost-shifting cuts don't actually reduce health care spending; they just shift costs from the government to the private sector." If you do that enough, with foolishly-designed industry giveaways like raising the Medicare age, you'll create even more economic chaos and doom seniors to a life of poverty.

The president should be commended for deciding against unwise moves against Social Security. Now he has an opportunity to defend Medicare, too, and to propose deficit solutions that really work -- while making things better for everyone.

Today they're saying the president's plan "may exclude any increase in the Medicare eligibility age." It's time to turn that "may" into a "will." It's time to say he will exclude that increase, and that we have the political "will" to fix our real Medicare problem:

Greed.

Perry's Scheme Is Far Worse Than Ponzi's

Rick Perry is getting a lot of attention for describing Social Security as a "Ponzi scheme."  What is missed by focusing on this provocative soundbite is that Perry's point is not that Social Security must be fixed, but that it should be scrapped.  Perry believes that states should be permitted to opt out of Social Security and supports the radical, legally unsupportable and highly unpopular notion that Social Security, as well as Medicaid, is unconstitutional.

I don’t think our founding fathers when they were putting the term “general welfare” in there were thinking about a federally operated program of pensions nor a federally operated program of health care. What they clearly said was that those were issues that the states need to address. Not the federal government. I stand very clear on that. From my perspective, the states could substantially better operate those programs if that’s what those states decided to do. 

It would be helpful if the media would cease being enamored of another purportedly macho straight talker with a Texas twang, and realize that Perry is another dangerous case of All Hat and No Cattle. 

Higher Retirement Age? Lower Benefits? The President Says You Won't "Notice"

By Richard (RJ) Eskow, cross-posted from Huffington Post

Back in my corporate days I sat in a boardroom with one of the most powerful and fearsome CEOs in the country. He had called in the executives that designed his employee benefits program and asked them to propose changes to the corporation's retirement and health programs.  But he scowled and shook his head as they presented one set of options after another.  Finally I asked the question the others were afraid to ask: What do you want to accomplish by changing your employees' benefits?

"I want to give them less," he said, "and make them think it's more."

The Human Resources executives in the room turned pale. As brilliant as this CEO was, he didn't know what they had learned from experience:  When you give people less, they always know it.

Less is Less

I thought of that meeting when I listened to the president's remarks on Social Security in Iowa. A woman with lung cancer asked the president to speak about Social Security, and he began by employing a lot of the rhetoric he's been reluctant to use so far, and by making a lot of the arguments he's refused to make since he was elected.

"You pay into Social Security," said the president. "They call it an entitlement, but it's not an entitlement, you're paying for it. It's getting taken out of your paycheck." A minute later he said this: "Social Security is not the cause of our debt and our deficit -- so don't let folks fool ya, by saying that in order to get a handle on our debt, we've gotta -- we've gotta slash Social Security."

So far, so good. But he also repeated a misconception that's been promoted by the anti-tax crowd, when he said "it is true that as the population gets older, there's going to be more and more pressure on the Social Security system." And pretty soon he was promoting his idea of a solution:

"The way to do it is similar to the way Ronald Reagan and Tip O'Neill fixed Social Security back in 1983. They said, Okay, we'll make some modest adjustments that are phased in over a very long period of time. Most folks don't notice 'em."

Out of Touch?

All Americans should be concerned about their financial future under this kind of plan, and Barack Obama's supporters should be more concerned than anyone. A president who can suggest "folks won't notice"the kinds of cuts he and others have proposed runs the risk of appearing both insensitive and hopelessly out of touch with the concerns and fears of average Americans.

Cost of living adjustments (COLA) are already too low to keep pace with living costs for seniors and people with disabilities(see here and here for more information), and the White House has expressed support for a new formula that would reduce these increases and cut benefits more with each passing year. This change would result in $121 billion less in benefit payments like Social Security, disability insurance, and other programs with COLAs during the first ten years alone.

"Most folks won't notice 'em."

As Social Security Works calculated, "The average earner at age 45 who begins receiving disability benefits would get a $333 benefit cut at age 55, and a nearly $700 cut by age 65. By age 75, when Social Security benefits are probably needed the most, that person faces a loss of over $1,000, an 8.1 percent cut."
"Most folks won't notice 'em."

Look who noticed ...

Proposed cuts led 33 disability groups to urge the president and Congress not to cut Social Security benefits.
Groups signing the statement included the American Association of People with Disabilities, the American Council of the Blind, the Association of Assistive Technology Act Programs, Easter Seals, the Epilepsy Foundation, Paralyzed Veterans of America, United Cerebral Palsy, and a number of others.

With all due respect, Mr. President: If you've lost Easter Seals, you've lost America.

Ahem. We couldn't help but notice ...


By age 75, the  average retiree on Social Security will lose the money it costs to buy nearly three months' worth of food. By 85 they'll lose the cost of five months' food. The average retired woman receives $890 per month will see her benefits cut by roughly $500 per year by the time she's turning 80.

And working people will certainly "notice" that they're being forced to work years longer at jobs that put stress on aging bodies. They'll "notice" that they're forced to stay in the private, for-profit health insurance system as the eligibility age for Medicare rises and their health needs become greater with each passing year.
Raising the age of retirement from today's 66 to 69 would result in a benefit cut of around 20%, reducing the typical $14,000 annual benefit to $11,200.

People may not make the connection between higher unemployment rates and the fact that older people are being kept in the workforce for years longer than they once were. They may not realize that the nation's skyrocketing health care costs were made worse by forcing millions of older Americans back into the for-profit insurance system.  But they'll "notice" how much they're struggling to make ends meet.

Words and Action

What the president really seems to be saying is that he hopes they won't "notice" who made the deal that put them in this position. He hopes they won't "notice" that the so-called "Super Committee" was empowered to cut their benefits, or that his own commission proposed drastic benefit cuts he called a "framework for the conversation."  And he's hoping that strong rhetoric in defense of Social Security and Medicare will be remembered long after cuts to these programs take place on his watch.

The rhetorical change is a step in the right direction. But it's no substitute for action, especially when it's accompanied by misleading statements about the "pressure" created by an aging population. That statement by the president isn't true. The "age wave" was addressed in that Reagan/Tip O'Neill deal the president loves to mention. The baby boomers and their employers have been saving up for their retirement ever since, which is why there's a $2.6 trillion surplus in the program's trust fund.

What wasn't addressed by Reagan and O'Neill was the massive upward shift in income, which meant that the payroll tax cap failed to cover the great (and undertaxed) earnings of the wealthiest Americans. Any solution that doesn't address the real cause of Social Security's mild long-term imbalance is intellectually dishonest and plainly unfair.

As for Medicare, which is a long-term budget threat, the logical first step to fixing its problems lies in a solution the president needs to fight for with more energy: giving Medicare the right to purchase drugs from whomever it wants, using its purchasing power to negotiate the best deals possible. From there, the president needs to fight for solutions that reduce the costly influence of for-profit health care on our long-term fiscal solvency.

Compromised Positions

"This is where everybody gets so dug in on their positions," the president went on to say in his now-famous "both sides are wrong" manner. But the Democrats have compromised, many times over, starting with that Reagan/O'Neill deal. The Republicans refuse to raise taxes, and the president wants to be seen as the guy who rose "above left and right" to make a deal. And, for all we know, the president himself is ideologically committed to cutting benefits.

Either way, the president's deeds, when measured against his proposals, add up to the same message I heard in that boardroom so many years ago:

"I want to give them less and make them think it's more."

That's a tragic mistake that will hurt most Americans. People who support and admire Barack Obama should urge him to end this misguided approach before it leads to election results everyone's likely to notice.

How It's Supposed To Be Done

"Compromise is one thing, but capitulation is another — especially when core principles of decency and fairness are at stake."   Norman Solomon

You won't find a better progressive candidate for Congress than Norman Solomon, who is running for a seat from the newly drawn North Coast, California district.  Solomon, paraphrasing Paul Wellstone's famous comment about representing the democratic wing of the Democratic Party, says that he will represent the progressive wing of the Progressive Caucus.

In a previous piece, Solomon talked convincingly about "building coalitions to fight for a wide-ranging progressive agenda — including guaranteed health care, full employment, workers' rights, green sustainability, full funding for public education, fundamental changes in federal spending priorities, and an end to perennial war."

In his new article about the economy, below, Solomon provides a refreshingly stark contrast to the "bipartisan dealmakers in Washington [who] are slashing the safety net that's essential for vast numbers of Americans."  He explains ways to reduce the deficit without gutting social programs or undermining Medicare and Social Security, while rightly arguing that the top priority in Washington must be job creation.  But, as Solomon says, this "won't happen by continuing to give tax cuts to the wealthy while imposing benefit cuts on the rest of us." 

Here is yet another demonstration of what a powerful, progressive voice he would bring to Washington; a voice that is so badly needed.  (Click on the Fair and Unbalanced "Solomon" tag for more evidence.)  Please share this and his other posts widely, and click here to join, contribute to, or learn more about Norman Solomon's campaign.
-- Lovechilde

Democrats Must Push Back

By Norman Solomon, originally published as an op-ed in the Marin Independent Journal

The negative trends  in the Nation's Capital are mostly due to extreme GOP ideologues in Congress. But they've been enabled by too many Democrats who keep giving ground while Republican leaders refuse to give an inch.

Many a political truth can be spoken in jest, and that was the case with a mock news item that appeared in The Onion last week.

A day after signing legislation that raised the government debt ceiling and authorized steep budget cuts," the satirical magazine reported, "President Obama thanked Democrats as well as Democrats for their willingness to make tough, but necessary, concessions during negotiations."

The Onion went on: "Obama added that while it may look ugly at times, politics is about Democrats giving up what they want, as well as Democrats giving up what they want, until an agreement can ultimately be reached."

Compromise is one thing, but capitulation is another — especially when core principles of decency and fairness are at stake.

We must stand our ground on behalf of seniors, children, the disabled and other vulnerable Americans. All the rhetoric about "shared sacrifice" rings hollow when the vast majority of us are being sacrificed to the financial benefit of big banks and large corporations.

There are plenty of sensible and effective ways to reduce the deficit — including a transaction tax on Wall Street, closure of tax loopholes for big companies,  an end to the Bush tax cuts for the very wealthy and a major reduction in the military budget.Instead, the bipartisan dealmakers in Washington are slashing the safety net that's essential for vast numbers of Americans.

One of the most dangerous aspects of the recent budget deal is that it explicitly sets the stage for future actions to undermine Medicare. This scenario strikes at the heart of precious values. I'm committed to defending Social Security and Medicare on the campaign trail and as a member of Congress.

I fully agree with Congresswoman Lynn Woolsey's explanation for why she voted against the new budget deal.

Woolsey pointed out that the deal "puts virtually the entire burden on working families and the middle class while asking nothing from billionaires, millionaires and companies that send jobs overseas."
In Washington, job one should be creating jobs. And that won't happen by continuing to give tax cuts to the wealthy while imposing benefit cuts on the rest of us.

Corporations are sitting on huge quantities of cash. But rather than expanding the workforce, they're hoarding the money — and stretching workers in the name of "productivity" — while often posting record profits.

Three years ago, on this page, I wrote a column opposing the Wall Street bank bailout then being debated in Congress. Unfortunately, my concerns were borne out by later events.

Banks took the bailout money and largely used it to buy other banks — instead of making loans to small businesses and helping homeowners keep their homes.

With the new budget deal, Congress again acted in the financial interests of the rich instead of the vast majority of us.

With chronic unemployment at historic highs and personal savings in the tank, fewer and fewer Americans have the buying power that can pull the economy out of its deep ravine.

Call me old-fashioned, but I believe in the vital lessons of the New Deal. Many millions of good jobs must be created — and that will require well-funded federal jobs programs on a large scale.

Trickle-down economics, relying on the tender mercies of powerful corporations, won't get it done.

Why The New Healthcare Law Should Have Been Based On Medicare (And What Democrats Should Have Learned By Now)

By Robert Reich, cross-posted from his website.

Last week, two appellate judges in Atlanta — one appointed by President Bill Clinton and one by George H.W. Bush – held the Constitution doesn’t allow the federal government to require individuals to buy health insurance. 

Yet the so-called “individual mandate” is a cornerstone of the Affordable Care Act, President Obama’s 2010 health care reform law, scheduled to go into effect in 2014. 

The whole idea of the law is to pool heath risks. Only if everyone buys insurance can insurers afford to cover people with preexisting conditions, or pay the costs of catastrophic diseases. 

The issue is now destined for the Supreme Court (another appellate court has upheld the law’s constitutionality) where the prognosis isn’t good. The Court’s Republican-appointed majority has not exactly distinguished itself by its progressive views.  

Chalk up another example of how the GOP has outwitted and outflanked the President and the Democrats. 

Remember the health-care debate? Congressional Republicans refused to consider a single-payer system that would automatically pool risks. They wouldn’t even consider giving people the option of buying into it. 

The President and the Democrats caved, as they have on almost everything. They came up with a compromise that kept health care in the hands of private insurance companies. The only way to spread the risk in such a system was to require everyone to buy insurance.

Which is exactly what the two appellate judges in Atlanta objected to. The Constitution, in their view, doesn’t allow the federal government to compel citizens to buy something. “Congress may regulate commercial actors,” they wrote. “But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”

Most Americans seem to agree. According to polls, 60 percent of the public opposes the individual mandate. Many on the right believe it a threat to individual liberty. Many on the left object to being required to buy something from a private company. 

Had the President and the Democrats stuck to their guns during the health-care debate and insisted on Medicare for all, or at least a public option, they wouldn’t now be facing the possible unraveling of the new health care law. 

After all, Social Security and Medicare – the nation’s two most popular safety nets – require every working American to “buy” them. The purchase happens automatically in the form of a deduction from everyone’s paychecks.  

But because Social Security and Medicare are government programs they don’t feel like mandatory purchases. They feel more like tax payments, which is what they are – payroll taxes.

There’s no question payroll taxes are constitutional, because there’s no doubt that the federal government can tax people in order to finance particular public benefits.

Nor do Americans mind mandates in the form of payroll taxes for Social Security or Medicare. In fact, both programs are so popular even conservative Republicans were heard to shout “don’t take away my Medicare!” at rallies opposed to the new healthcare law. 

Requiring citizens to buy something from a private company is entirely different. If Congress can require citizens to buy health insurance from the private sector, reasoned the two appellate judges in Atlanta, what’s to stop it from requiring citizens to buy anything else? If the law were to stand, “a future Congress similarly would be able to articulate a unique problem … compelling Americans to purchase a certain product from a private company.”

Other federal judges in district courts — one in Virginia and another in Florida — have struck down the law on similar grounds. They said the federal government has no more constitutional authority requiring citizens to buy insurance than requiring them to buy broccoli or asparagus. (The Florida judge referred to broccoli; the Virginia judge to asparagus.)

Social Security and Medicare aren’t broccoli or asparagus. They’re as American as hot dogs and apple pie.

The Republican strategy should now be clear: Privatize anything that might otherwise be a public program financed by tax dollars. Then argue in the courts  that any mandatory purchase of it is unconstitutional, and rally the public against the requirement.   

Remember this next time you hear the GOP touting Paul Ryan’s plan for turning Medicare into vouchers for seniors to buy private health insurance. 

So what do Obama and the Democrats do if the individual mandate in the new healthcare law gets struck down by the Supreme Court? 

Immediately propose what they should have proposed in the beginning — universal health care based on Medicare for all, financed by payroll taxes.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

'Super Committee' Of Doom: Who'll Protect Us?

By Richard (RJ) Eskow, cross-posted from Huffington Post

An unelected and unrepresentative group they call the 'Super Committee' has been given extraordinary power over our own economic destiny. Think of it as a political Justice League of America, except that its mission is to rescue Treasury bonds, not people.
Problem is, the bonds don't need to be rescued. People do.

Donner party of twelve, your table is ready!

The twelve people on the Committee, six Republicans and six Democrats, come half from the Senate and half from the House. Their assignment is to find $1.5 trillion in additional deficit reductions, dollars that can only be found by collecting more taxes or by cutting more spending. The last deal, negotiated primarily by the White House and the Republicans, consisted entirely of spending cuts.

This twelve-person junta need to come up with roughly $1.5 trillion more in deficit reduction. The Republicans have already sworn not to raise taxes on the wealthy. The Democrats say they want to to be "balanced" and they're eager make a deal.

We've seen this movie before. We don't like the ending.


The Twelve

In the 1950's teleplay Twelve Angry Men, a jury was ready to convict an innocent defendant until a lone holdout changed everybody's mind. Even as recently as the mid-fifties, nobody found it remarkable that juries included only men. Boy, how times have changed! Today it's all of us, middle class and lower income who stand in the economic dock, accused of nothing but facing our punishment anyway. But at least our jury of twelve isn't all male. There's one woman.¹

You've come a long way, baby!

They walk on without the Lord's name/ All twelve of them -- into the distance/Prepared for the worst/ Willing to spare no one. ~ "The Twelve," Aleksandr Blok

Here are a few questions worth asking about this unelected junta, whose proceedings will be hidden from public view and whose judgments will be fast-tracked to a high-pressure up-or-down vote:

• Democrats hold the Senate and the White House. That's two out of three. So why is the group's composition evenly split between the parties?


• Why are the Committee's members forbidden to come up with any solutions except deficit reduction?


• Why are normal legislative rules being suspended to give them such extraordinary power?


• Why aren't we doing anything about our far more immediate economic crisis -- jobs?

This is a stacked deck, any way you look at it. But you go to war with the Super Committee you have, not the Super Committee you wish you had. So it's time to suck it up and let go of that democracy nostalgia. Representative government is so nineties!

Besides, it's time to meet our new overlords.

The Antimatter Jobs Plan

Ladies and gentlemen, let's meet our Republican panel! Leading off on the Senate side is Sen. Rob Portman of Ohio, chief architect of the GOP's 'jobs plan'. If that's a plan for creating jobs, the Black Plague was a public health initiative. Let's take a look at its highlights, which we can call up from Sen. Portman's own website before you can say bring out your dead!

The plan's first statement is that we must "begin living within our means." That's coded conservative language for cutting government spending on things like police, firefighters, and teachers. This part of the "jobs plan" includes a "balanced budget amendment," spending limits, and "spending cuts." That's three different ways of saying "let's create jobs... by firing a lot of people."

There's more "job creation" in the Portman plan, too:

• More tax cuts for capital gains and dividends, very much like the cuts that didn't produce any jobs over the last ten years.


• More tax cuts for millionaires, very much like the cuts that didn't produce any jobs over the next ten years.


• Anti-regulatory roadblocks to prevent "costly new mandates and burdens associated with Dodd-Frank and ObamaCare."

Last year's Dodd/Frank bill is a first small step toward urgently-needed bank reform which the Republicans say it's too "costly" and "job killing." The total cost of unreformed banking in 2008 was tens of trillions in lost wealth, and tens of millions of lost jobs. What they're really saying is, "Wall Street spends billions of dollars on campaign contributions, and it would be too costly to lose them -- too costly for us."

"ObamaCare" is the Republican code for "the health law we supported when it was first drafted by the American Enterprise Institute, and then it was proposed by our Senators as an alternative to what we then called 'HillaryCare', which we embraced when Mitt Romney passed it in Massachusetts, and which we then decided was intolerable when it passed during a Democratic President's term -- after which we affixed his name to it as a pejorative term."

That's what they mean to say when they say "Obamacare."

Unlike his Republican peers, Portman said recently that he'd be open to some "revenue enhancement." That phrase is Beltway code for "increasing taxes on the middle class so the wealthy aren't disturbed." Expect more of this "flexibility" in the weeks to come.

There's way too much in the wacky Portman plan than we can cover here, including a ban on any control of greenhouse gas emissions and lots of new international trade deals that'll create new jobs... in other countries, by destroying millions more of them here.

If there's one common thread running through this grab bag of far-right wish list items, it's this: None of them create jobs, and most of them would destroy them by the millions. It's an antimatter jobs plan, produced in some alternative universe, and like anything made of antimatter it would cause a massive explosion if it touched anything in our world.

Now Boarding, Crazy Train, Track 2

That's the bad news about Portman. Want the good news? He's the moderate Republican on the Committee. Two of the Junta's other members, Dave Camp and Jed Hensaerling, voted for the Republican Study Committee budget, a document that's the political equivalent of Ozzy Osbourne biting the head off a live bat onstage (an act he swears he never performed). Here are some of the highlights of that document:

• It would increase defense spending, by about $50 billion over ten years².


• It radically cuts other government spending, the kind that does create jobs.


• It slashes Social Security and Medicare benefits, and weakens Medicare by turning billions over to insurance companies.


• It slashes assistance to the needy, whose ranks have grown dramatically.


• It would privatize Fannie Mae and Freddie Mac. The last time that happened, sleazy executives used their government mandate to pay themselves billions and engage in practices that helped run the government into the ground.


• It would cut $45 billion in 2012 alone for supplemental nutrition assistance -- because nothing says prosperity like hungry poor children.


• It would reduce the state children's health insurance program by3 billion in 2012, because nothing says prosperity like hungry poor kids who can't get medical treatment when they come down with rickets.

Funky Dollar Bill

It pollutes this air in the name of wealth. It'll buy you life, but not true life ... the kind of life where the soul is hard. My name is dollar bill." Funkadelic, "Funky Dollar Bill"

Isn't this plan crazy enough for you yet? Then get this: It also eliminates the $1 bill and replaces it with a coin. That may seem silly at first, but think about it: Dollars are like pennies to the wealthy, and other people won't have enough of them to matter. Besides, it helps the poor a little too. When all those malnourished and uninsured kids grow up blind and disabled, they'll know if you really dropped a buck in their cup because they'll hear it rattling against the tin.

All the Republicans on the Committee expressed support for the Paul Ryan budget proposal. That would have eliminated Medicare and replaced it with an increasingly worthless voucher, which they called "Medicare" in order to hide the fact that it was an increasingly-worthless voucher. The House Republicans also voted for steep cuts in funding for education and state and local police. (We've just seen how well that worked out in Great Britain.) There's a lot of other crazy stuff in there, too.

All the Republicans have pledged not to raise taxes on the wealthy. But they seem to be open to "revenue enhancements" that would devastate the already-struggling middle class, like an elimination of the employer health benefit deduction (which would strip millions of medical coverage and create billions in out-of-pocket costs) and an end to the mortgage interest tax credit (which could put millions more homes into foreclosures and drive real estate values even more).

At any other point in modern history, people in both parties would have seen these six Republicans for what they are -- extremists who seek the wholesale destruction of governmental institutions, the decimation of the middle class, and the transfer of even more national income national income to the ultra-wealthy. Eisenhower, Nixon, and even Reagan would recoil at their radical agenda.

The Defenders?

The Democrats on the Committee are the nation's last line of defense. They must be outraged about these Social Security cuts, don't you think? They must be gearing up to save us from this insanity right now, right? Actually the best-known Democrat on the Committee, John Kerry, told Meet the Press that we need "a mix of reductions and reforms in Social Security, Medicare, and Medicaid."

Kerry's recently been repeating some of the economically meaningless mantras that were designed and promoted with billionaire Pete Peterson's money, as when he said that our problem "is not the short-term debt... (but) the structural debt of Social Security, Medicare, Medicaid measured against the demographics of our nation."

No, it's not. Social Security doesn't contribute to the deficit. The demographic problem, or "baby boomer wave," was fixed in the 1980s, which is why there's currently a $2.6 trillion surplus in Social Security. And the way to fix Medicare and Medicaid, which are long-term problems, is by reducing or eliminating the direct and indirect cost of for-profit medicine from our economy.

Hey, maybe the Super Committee will say we can't afford to treat health care as a get-rich-quick scheme for MBAs anymore! They won't, of course, but any group that was sincerely committed to fixing our long-term deficits would.

Ladies Lady and gentlemen, have you reached your verdict?

The president's already agreed to two deals that relied exclusively on spending cuts and gave the wealthy a free pass to keep enjoying their historically low levels of taxation. Many of the Democrats on the Super Committee have been praised for their "balanced" approach, while all of the Republicans have refused to consider taxes for the rich and are even proposing more cuts at the highest income levels.

These Democrats are the nation's last line of defense. That's reason to be concerned about their resolve, and reason to demand that they stand firm on behalf of measures supported by the majority of Americans. The majority wants higher taxes for the wealthy, no cuts in Social Security or Medicare benefits, and deep reductions in military spending.

There's a reason why this Committee was designed to bypass normal democratic processes. The public hates what it's trying to do. So do policy experts who understand how destructive their cuts would be to an already-wounded economy. The Republicans of today are radical extremists, and Democrats would rather appease the radicals than fight for what's right.

The "Twelve Angry Men" scenario could never happen in this group, since the Republicans have already said they'll never change their minds. If Democrats hold out for what's right and fair, they can still protect us. But if they opportunistically choose to appease the radicals for misguided political reasons, they'll be guilty of watching millions of people get hurt without lifting a finger. The words of Edmund Burke might have been written for today's Democratic Party: All that's necessary for the triumph of evil is that good men do nothing.
Correction: Make that "... for good men and one woman to do nothing." Like we said, times have changed, at least a little. The question is, will these Democrats change too? Because the Republicans won't, so the old Democratic politics of compromise would spell doom for our economic future ... and the Democratic Party's political future.

Notes:
1 - Since the House and Senate are both dominated by white males, especially on the Republican side, this isn't as surprising as it seems. But it is unfortunate. The best way to change it is by electing a legislative body that more closely resembles America.
2 - Defense spending creates far fewer jobs for the money spent than other forms of expenditure.

Four Myths About The "Deal" -- And Four Ways It Can Hurt You

By Richard (RJ) Eskow, cross-posted from Huffington Post

Senate Minority Leader McConnell

Today we're watching the end of a brief manufactured crisis -- and the beginning of a long national nightmare. This deal's designed so that"centrist" (right-wing) Democrats and Republicans can finally implement the draconian measures they both want in an indirect way that gives them as little accountability as possible.

There's nothing to celebrate in this deal unless you're either an economic right-winger or very wealthy -- or both. Even the "defense cuts" some Democrats are touting could turn take the form of sharp reductions in veterans benefits or State Department diplomatic activities.

It's a plan they've tried to execute before. It creates a secret extra-democratic process designed to implement highly unpopular and harmful policies, which include "revenue increases" that could further decimate the middle class; pre-timed cost-cutting "triggers" that let politicians hide their role in the process; potentially slashing cuts to Social Security, Medicare, and Medicaid; and a refusal to address the depression-like economy that still binds million of Americans.

And all to protect the rich from additional taxes.


A Three-Stage Plan

The nation's austerity plan is to be rolled out in three stages. The first, which apparently has already been concluded, was to have economic conservatives in both parties agree that they will do nothing more to help the country's devastated economy. As the New York Times reported, "The nation's political leaders agreed on Sunday to spend and invest less money in the American economy, a step that economists said risks the reversal of a faltering recovery." That plan of inaction is an integral, if unspoken, part of this agreement, and it's likely to have as great an impact as their agreed-upon actions.

The second step will take place if and when this deal is passed, and will consist of nearly $1 trillion in mandatory cuts. We're told that half of the cuts will be from "defense spending," but that doesn't mean what you might think it means. As the Democratic Policy and Communications Center explains, "security spending includes defense, state and foreign operations, homeland security, and military construction/veterans affairs." In other words, these cuts could include layoffs for TSA workers, reduction in health care or other veteran spending. and shutdowns of US diplomatic missions around the world.

The other half of the cuts will come from a cap on non-security spending, and the specifics haven't been laid out their either. We're told that Social Security, Medicare, and Medicaid are "off the table" for this round of cuts -- but then comes Step Three.

In Step Three a Super Committee of six Democrats and six Republicans will be empowered with creating $1.5 trillion in additional cuts. Similar groups "bipartisan" groups of Republicans and conservative Democrats have been convened in the past. They've consistently come up with cuts that are widely opposed by most Americans (often including most Republicans), while refusing to raise taxes on the wealthy (widely supported by most Americans).

Four Myths

As might be expected, there's a lot of confusion around the deal -- in fact, it's designed to create confusion. Here are four myths that sprang up overnight:

Myth #1: It "preserves Social Security and Medicare."

False. It only defers the day of reckoning. Social Security and Medicare are exempted from the first and smaller round of cuts, but not from the larger $1.5 trillion in cuts that the unelected "Super Congress" must find.
The likeliest outcome? Unnecessary and drastic benefit cuts to Social Security that probably involve raising the retirement age even more than it's already scheduled to rise, the "chained-CPI" that artificially lowers cost-of-living standards to well below what seniors need for their expenses, and possibly a means-testing system that sounds reasonable but will quickly target middle-income Americans.

Myth #2: Military spending faces deeps cuts under this plan. 

Even the eagle-eyed Ezra Klein falls for this myth when he writes that "a year ago, defense spending was supposed to be sacrosanct" but that "The Pentagon" will now be facing deep cuts.
Not necessarily.
As the Democratic Policy and Communications Center explains, "security spending includes defense, state and foreign operations, homeland security, and military construction/veterans affairs." In other words, these cuts could include layoffs for TSA workers, reduction in health care or other veteran spending. and shutdowns of US diplomatic missions around the world.
Myth #3: It's a "compromise."

Do we really need to rebut this again? The word's being used by the President, DNC Chair Debbie Wasserman-Schultz, and some other right-tilting Democrats. Let's review it one more time:

• No tax increases for the wealthy.
• Massive spending cuts.
• A "deficit panel" that will be half Republican, even though Democrats hold both the Senate and the White House and Republicans hold only the House. This panel is likely to mirror others that have recommended deep cuts to Social Security, Medicare, and Medicaid, and have even recommended deeper tax cuts for the wealthy.

If this is a compromise, I'd hate to see what capitulation looks like.

Myth #4: The president and others backing this bill will now "pivot and address the jobs issue."

That Times report only makes explicit what has been understood all along: The Republicans won't agree to tax increases for the wealthy, and they won't spend any money for jobs or rebuilding the economy. Everybody's agreed to stop pretending they intend to do anything more to fix this blighted economy.

More Myths
 
These aren't the only myths. The deal offers Congress several ways to create another debt ceiling crisis in the future, for example, despite the White House claim that it "removes the cloud of uncertainty over our economy at this critical time." There's still a very real possibility the US government could lose its AAA credit rating even if it's enacted.

Welcome to Your Nightmare

How is this deal likely to affect your household? If you're in the top 1% of earners, there's no need to read any further because it probably won't affect you personally. Here are five ways it's likely to affect the rest of us:

1. You'll be less likely to find a job. If you've got one, you're less likely to earn more money -- and more likely to lose it. 

If both parties have agreed not to push for jobs programs or other economic recovery efforts, it's bad news if you or anyone close to you is currently unemployed -- especially if you live an a hard-hit area, have been unemployed for a long time, are African American, or are older. It's equally bad news if you've just graduated from college. This "grand bargain" won't even extend your Federal unemployment insurance.
If you're not working enough hours or haven't seen your salary go up very much, this will hurt you too. And wages are stagnating, even for fully-employed people, too. In other words, of you're one of the 22 to 24 million people in the country who are un- or under-employed, this deal is bad news. And if you're one of the tens of millions of people with stagnant income, it will hurt you too.
Hang in there, and don't give up. Join us in pressuring Washington to address unemployment. That will give you added purpose -- and we sure could use the help.

2. Your housing value is likely to suffer.

The bipartisan coalition that bailed out Wall Street has agreed to exclude any help for suffering homeowners in their "grand bargain." That means that a wave of foreclosures will continue unabated, driving down housing value, ruining millions of households, and depressing the local economy in tens of thousands of cities, towns, and neighborhoods.
The tax provisions we'll describe in a minute are likely to make that problem even worse.

3. Your old age just got scarier.

Benefit cuts are likely to be recommended by the "Super Congress" and implemented by that other body. (What should it be called from now on -- the "Lesser Congress," perhaps?)
A "chained-CPI" benefit cut will reduce Social Security by nearly ten percent by the time you're 80 -- and that's if you retire right away. If you're young the cuts will be even greater. Raising the retirement age is a huge benefit cut, too.

That's likely to mean an old age with more financial insecurity -- unless this deal can be stopped, or the "Super Congress" is staffed with Democrats who believe in the higher good and not a deal for expediency's sake.

4. Your tax bill is likely to go way up.

The phrase "tax increase" is understood to mean raising tax rates, which would discommode the wealthy. That's why they'd rather say "revenue enhancement" instead, because that phrase also covers eliminating tax deductions that benefit the middle class but mean very little to the wealthy. Two of the biggest are the home mortgage interest deduction and the tax deduction for employer-sponsored health care.
If the mortgage deduction goes, even more homes will go into foreclosure, leading to even more severe drops in home prices. Those families who can keep their homes will face a steep increase.
If you get your health benefits through your employer, you'll pay a lot more for coverage if they eliminate or reduce the health benefit deduction . You'll also get a lot less coverage in return -- as your employer shifts even more of the health bill back to you. Many small employers may drop coverage altogether -- which means that more households will be required to purchase it on the individual market. That could cost a middle class family ten thousand dollars or more per year under the current health bill.

But wait. There's less ...
That's not all, folks. Education will be cut under this plan, which means your children will get less of an education and will have less money for college, closing one more avenue to a better life. And things will get much worse for lower-income Americans, who'll be stripped of health care and educational opportunities. Overall, economic growth is likely to be reduced from its current crawl to a complete standstill, causing spikes in unemployment and other economic hardships.

Is this a done deal?

Pretty close, but there are still things that can be done. First and foremost, people can call today and demand that your Senators and representatives reject this deal. And if the deal does pass, demand that only people who represent you are appointed to the extra-legislative Super Congress that's been empowered with deciding your fate.

And don't forget how your elected officials behave as this deal makes its way through the process. Write it down if you need to, but be sure you remember everything when you vote next Novemb

Ransom Paid

By Robert Reich, cross-posted from his website.

Anyone who characterizes the deal between the President, Democratic, and Republican leaders as a victory for the American people over partisanship understands neither economics nor politics.

The deal does not raise taxes on America’s wealthy and most fortunate — who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been, in eighty years. Yet it puts the nation’s most important safety nets and public investments on the chopping block.

It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.

Yes, the deal is preferable to the unfolding economic catastrophe of a default on the debt of the U.S. government. The outrage and the shame is it has come to this choice.

More than a year ago, the President could have conditioned his agreement to extend the Bush tax cuts beyond 2010 on Republicans’ agreement not to link a vote on the debt ceiling to the budget deficit. But he did not.

Many months ago, when Republicans first demanded spending cuts and no tax increases as a condition for raising the debt ceiling, the President could have blown their cover. He could have shown the American people why this demand had nothing to do with deficit reduction but everything to do with the GOP’s ideological fixation on shrinking the size of the government — thereby imperiling Medicare, Social Security, education, infrastructure, and everything else Americans depend on. But he did not.

And through it all the President could have explained to Americans that the biggest economic challenge we face is restoring jobs and wages and economic growth, that spending cuts in the next few years will slow the economy even further, and therefore that the Republicans’ demands threaten us all. Again, he did not.

The radical right has now won a huge tactical and strategic victory. Democrats and the White House have proven they have little by way of tactics or strategy.

By putting Medicare and Social Security on the block, they have made it more difficult for Democrats in the upcoming 2012 election cycle to blame Republicans for doing so.

By embracing deficit reduction as their apparent goal – claiming only that they’d seek to do it differently than the GOP – Democrats and the White House now seemingly agree with the GOP that the budget deficit is the biggest obstacle to the nation’s future prosperity.

The budget deficit is not the biggest obstacle to our prosperity. Lack of jobs and growth is. And the largest threat to our democracy is the emergence of a radical right capable of getting most of the ransom it demands.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock. 

Unconditional Surrender

By Fuzzyone

The details are still filtering out but it looks like the "deal" that Obama has made is total capitulation to the Republicans. No taxes of any kind, cuts in Medicaid, an additional vote where the Republican's get to vote against raising the debt ceiling again, and a "Super Committee" that will figure out how to cut $1.2 trillion or there would be automatic cuts, half to defense and half to domestic programs (though not Medicare of Social Security).

The Chair of the Congressional Black Caucus call it "a sugar coated Satan sandwich." The House Progressive Caucus has also rejected the deal. Even Nancy Pelosi does not seem so hot on saying "I look forward to reviewing the legislation with my caucus to see what level of support we can provide." Not exactly a ringing endorsement. Given all that it will be interesting to see if this can get through the House. Boehner says that nothing in the deal "violates our [Republican] principles" the determination of the Tea Baggers to say no should not be underestimated so it will be interesting to see if the votes are really there. Tea Party leader Rep. Joe Walsh has already said he won't vote for it.

Once again Obama has shown his total lack of spine or conviction and complete incompetence as a negotiator. Just as he insisted in December that the tax cuts for the rich would not be continued, that he would close Guantanamo, and fight for a public option he had insisted that tax increases had to be part of a debt limit deal. I've never been a dead ender but right this minute I'm not sure I could bring myself to pull the lever for him.