Monday, November 29, 2010

Social Security Scapegoat

It’s time for the American public to blow a big hole in the proposals now being seriously considered to “solve the budget crisis.” As noted in my last blog, the onus, as always, is meant to fall on the poorest among us. We have been hearing ad nauseam the mantra that the Social Security system is driving the nation into insolvency. Therefore, recent proposals to “solve” the debt crisis—brought on, it should be remembered, by two unpaid-for and unnecessary wars, the Reagan-Bush-Bush reductions in tax income on the wealthy, and of course the outright thievery of Wall Street financiers that produced the housing bubble, and crash—always target Social Security. ‘We’ll all have to make sacrifices,’ is the song line. Which means, you, you poor gullible assholes, will have to sacrifice as usual.

Unless, that is, everyone remembers some simple facts, the first of which is: Social Security is NOT responsible in any way for the current deficits. Indeed, Social Security right now runs surpluses—that is, the money paid in, by workers themselves—outstrips the money paid out. And remember, it’s your money you’ve been paying in for a lifetime. You may recall, in fact, the campaign promises of our presidential candidates a few years ago, who promised that Social Security funds would be “put in a lock box.” What that referred to is the fact that right now, according to the National Committee to Preserve Social Security and Medicare (, there is a “$2.6 trillion dollar trust fund built up by American workers over decades.” That’s $2.6 trillion folks. Except for the fact that the federal government, to disguise the deficit it runs each time we have a war, borrows from the SS trust fund, and is thereby obligated to pay it back, with interest. This raiding of the Trust Fund started in 1968 when Pres. Lyndon Johnson got legislation passed—he was building up American involvement in the Vietnam War, and of course wanted to tout “both guns and butter” (their guns, our butter)—started the game. The Trust Fund was allowed to be mixed with the General Fund, and off we went.

Bottom line: not only does Social Security run a surplus, the Federal Government owes the Social Security Trust Fund a ton of money, which it has to pay back with interest. It is in this sense only that Social Security could be said—by a blatant liar—to be contributing to the deficit. A more honest assessment would admit that, in fact, Social Security has contributed to the government’s solvency by supplying it with unused SS funds (the surplus) to disguise its deficits. Is the government grateful? Are the fiscal hawks grateful? Au contraire, mon ami. These bastards resent having to pay all that money back. It will break us! they whine. So let’s kill the goose that lays the golden eggs!

Sounds unbelievable, but that is the proposal coming out of such august bodies as the President’s Commission on Reducing the Deficit, and the Domenici/Rivlin plan referred to in a previous post. Let’s raise the retirement age, cut the COLAs (cost of living adjustments), force seniors to pay more for prescription drugs, and find other ways to cut benefits to the poorest among us. The key thing is to help business! Domenici/Rivlin, in fact, propose giving businesses a one-year Social Security tax “holiday” (we all love holidays, right?) that would reduce government income by $650 billion. It’s not enough that the money-grubbing swine who drove us into this ditch have all been bailed out—with government funds, some of which no doubt came from that SS Trust Fund. Now we have to give them another “holiday” while cutting the pathetic benefits given to the old folks. I tell you, if the American people fall for this one, they deserve to be rooting around in garbage bins to survive.

Fortunately, the National Committee to Preserve Social Security and Medicare has organized a day of protest. The Committee is calling on all interested parties (and if there’s someone who plans on not getting older, I’d like to hear from him/her) to take part in a day (Tuesday, Nov. 30) of calling Congress and making two demands: 1) NO cuts to Social Security for deficit reduction, and 2) a $250 payment this year to SS beneficiaries in lieu of no cost-of-living increases (COLAs) the past two years. Here’s the number of a hot line that will connect you to your Congressperson’s office: 800-998-0180. CALL, because you can be sure the other side will be shouting their ears off.

While you’re at it, you might want to cast a vote of support for Representative Jan Schakowsky’s plan for deficit reduction. Shakowsky is the only people’s representative on the Budget Deficit Commission, and her plan amounts to getting some budget reductions by such unheard-of expedients as “$144.6 billion in tax increases, $110.7 billion in defense cuts and $17.2 billion in healthcare savings through a public option.” And definitely no cuts in Social Security. As the Huffington Post quoted Shakowsky re: the Bowles-Simpson proposal to cut SS benefits: Using Social Security to address the deficit “is like attacking Iraq to retaliate for the September 11 attacks.”

Of course there are legions of benighted souls in America who would respond: what’s wrong with that? But perhaps there are other legions who get the point. Let us hope so; because as it stands now, the greatest push seems to be coming from the yahoos, who clearly see the current series of shocks (remember the Shock Doctrine?) as their best opportunity to, once and for all, get rid of the most hated of Roosevelt’s “giveaways”: Social Security.

Lawrence DiStasi

Friday, November 19, 2010

Destroying the Working Classes

It has become Republican party policy to scream “class warfare” any time Democrats try to blame the rich for our current economic troubles. This is supposed to embarrass those who, according to the code of our time, are reviving socialistic or communistic dogma. The truth, though, is that the wealthy in this country—aided and abetted by the last three Republican administrations (and often enough by Democratic ones as well)—have been waging class warfare since at least the Reagan administration, have succeeded beyond anything they could have imagined, and are still not satisfied. They apparently want to reduce most of us to literal peonage. And the response? Well just think about the difference in the silence here, compared to near-riots in Europe—where Greek and French workers have had massive strikes and taken to the streets to condemn their governments’ proposals to reduce benefits won over years of struggle. Americans, by contrast, simply sit back and take it, or worse, ally themselves with the very people who have done them in.

Consider some facts assembled by Robert Freeman in a recent article (“Rich Declare War on the Middle Class,” Nov. 14, He begins with Ronald Reagan’s ‘revered’ administration, which “cut the marginal tax rate on the highest income earners from 75% to 35% while dramatically expanding spending for war.” Result: the national debt quadrupled between 1980 and 1992. But did anyone howl then? No, conservative economists kept saying, debt doesn’t matter; it’s a small percent of GDP. Both Bushes continued the trend, with W getting the prize, reducing the tax rate even more, spending trillions on war, and more than doubling the share of income to the top 1% (40% of his tax cut went to the top 1% of earners), and tripling the share to the top 1/10th of 1%. In dollars, this means that from 1973 till today, real wages for workers dropped, with adjusted income of the bottom fifth falling by about $7000/year, while yearly income for the top 1% increased by no less than $741,000. The figures for wealth held by each class are even starker: the top 1% now holds 34% of the nation’s wealth while the bottom half holds a mere 2.5%. As for the bottom two-fifths, they hold nothing, zero, zilch.

You might think, if you’re one of the working or middle classes—i.e., one of the growing numbers on food stamps (1 out of 8 Americans) or in official poverty (1 out of 5 Americans)—that perhaps this would satisfy the rich. But greed is insatiable. So now we hear from some of those alarmed individuals who have suddenly grown concerned over our national debt—particularly at the Obama adminstration providing a stimulus to create jobs for some of the 25 million unemployed, and also trying to reform the health care system to include more Americans left out of the worst system in the world—that something must be done. Our nation will go broke, they cry. We can’t sustain this kind of spending, they moan. And so we have the recommendations of the National Deficit Commission—to rip off the working classes even more. To allegedly lower the deficit by $4 billion, they propose remedies like this: eliminate the tax deduction for mortgage payments, which will decimate one of the last remaining sources of wealth for most people, their homes. They also propose to cut back the meager benefits provided by Social Security, lowering cost-of-living adjustments, raising the minimum retirement age, and while they’re at it, increasing the co-pays and deductibles for Medicare. And of course, they propose to reduce spending—which always means not cutting the military spending that’s bankrupting the country (recent govt estimates place the cost of keeping one (1) soldier in Afghanistan for a year at $1 million; that’s one soldier!), but the paltry programs that benefit the poor and the indigent.

And the monstrous benefits for the rich? Not a word about that. Or rather, those are slated to be increased! The Commission proposes to lower the maximum tax on the highest income earners from 35% to 24%, while their great buddies, the corporations, also get a drop in their nominal tax rate from 35% to 24% (those who actually pay taxes, that is.)

Amazing. But that’s not all. Into the fray, recently, has come yet another proposal from a front organization calling itself the Bipartisan Policy Center, made up of 19 prominent citizens, ex-legislators, ex-governors, and so on, chaired by retired Senator Pete Domenici of New Mexico and a former budget director, Alice Rivlin. And what do they propose to “solve” our crisis? Why yet another tax holiday, this time a suspension of the Social Security payroll tax for a year or two, cutting and simplifying individual and corporate tax rates, and, get this, instituting a new 6.5% national sales tax. That’s to make up for the huge tax losses from the tax holiday. Now anyone who knows anything about taxation knows that sales taxes (and fees for things like drivers’ licenses, etc.) are regressive: that is, because the tax on purchases constitutes a much larger percentage of disposable income for the poor and working classes than it does for the rich, its impact on the poor is orders of magnitude greater. This is the whole theory behind a graduated income tax: to help make up for the disparity in wealth (and the wealthy always consume more natural resources and public services than their poorer counterparts), the tax on those who earn more should comprise a greater percentage of their earnings. But increasingly in our “everything for the wealthy” nation, progressive taxes are seen as unfairly depriving the wealthy of their just desserts. Tax has become a dirty word—as if any nation or any community could long survive without it. And increasing taxes, why that has become the equivalent of the black plague. So we have more and more proposals for sales taxes to bail out state and local governments, as well as the federal government, from the income tax-deprived holes they’ve dug for themselves.

The question is, why would elected representatives be so inclined to ignore the poor and aid the rich (the cost of the recent bailout of banks and Wall Street has been estimated at $13 trillion, and growing)? Perhaps a recent statistic about members of Congress will help clarify. In an article on Yahoo Finance (“Members of US Congress Get Richer Despite Sour Economy,” Nov. 17, 2010), a study by the Center for Responsive Politics reported this: about half of all members of Congress, 261 of them, were millionaires, one in five being worth at least $10 million, with eight in the $100 million-plus range (Rep. Darrell Issa, Republican of California, led with personal wealth of $303.5 million). Then contrast median household incomes between these mandarins and those they represent: for a House member, it was $765,010 in 2009r, an increase of more than $100,000 from 2008 (senatorial median income rose by a smaller percentage but a comparable dollar amount, ca. $100,000, to $2.38 million/yr), while for average working slobs, median household income dropped 3% at the same time (between 2008 and 2009) to about $50,000 annually. When stock holdings were examined, it should come as no surprise that these “people’s representatives” had most holdings in the “bigs,” like General Electric (which owns CNBC), Bank of America, Cisco Systems, Proctor & Gamble, and Microsoft. Also popular were Goldman Sachs, Wells Fargo, JP Morgan Chase, and Citygroup, all of whom received TARP money. As the report put it:
The most popular investment among congressional members reads as a who's who list of the most powerful corporate political forces in Washington, D.C. -- companies that each spend millions, if not tens of millions of dollars each year lobbying federal officials.

Nice work if you can get it.

So we’re left with this. Unless you’re one of the wealthiest 1% in this country, you’re being taken to the cleaners by the most well-oiled machine ever invented to do the job. They have the money, the legislators, the lobbyists (moving in a revolving door from Congress to lobbying and back again, like the recently elected Senator Dan Coats of Indiana) the propaganda organs at every level, and the stupidity of the public to help. They also have a level of unbridled greed that would make ancient Roman plutocrats blanche with shame. It sort of makes one wonder: how long can this organized theft and thuggery continue? Where is the righteous (and I don’t mean the manipulated Tea Party variety) wrath of “the people?” Are there any “people” left?

Lawrence DiStasi

Sunday, November 7, 2010

Wag the Dog

So many bizarre results from the Republican tsunami in last week’s mid-term elections—which to choose first?

How about this? Pick a target for the United States military to attack—urr, uh, how about Iran?—and see if it flies. Might even be able to convince Obama, now that he’s staggering from his ‘shellacking,’ to use it as a surefire way to get re-elected. You know, the old Wag the Dog scenario, where a weakened president starts a war to galvanize public opinion in his favor (Clinton allegedly did it in Bosnia; Bush clearly did it in Iraq after 9/11). Nevermind that we’re already engaged in two wars in the Middle East. Nevermind that another war would surely raise the deficit to newer more dizzying heights. War works.

Unlikely as such madness might seem to most of us, some recent trial balloons suggest that we should all think again.

For example, Senator Lindsey Graham (one of the so-called Republican “moderates” in the Senate who was flirting with voting for the Health Care Bill) just recently raised the issue of attacking Iran at a security conference in Canada (Saturday, Nov. 6). Asserting that “containment is off the table,” Graham said that war on Iran had several positive components to recommend it: “not to just neutralize their nuclear program, but to sink their navy, destroy their air force and deliver a decisive blow to the Revolutionary Guard, in other words neuter that regime.” (Matt Duss, ThinkProgress, 7 November 2010). This is astonishing, not only because countless international observers have opined that such an attack would prove counterproductive—actually leading more surely to a nuclear-armed Iran than anything else (Duss in the above-referenced article cites several of these informed opinions)—but also because it was not that long ago that the CIA’s National Intelligence Estimate stated that “not only was Iran NOT working on a nuclear weapon, but it had ended its nuclear weapons efforts in 2003” (see my blog “Iran Again,” June 9, 2008). No matter, the "reasonable" Senator Graham had no hesitation at all in calling for another war against this “great threat.”

He’s not alone. But more subtly than Graham’s, the notion of a military strike on Iran has recently been framed as a great way for President Obama to rescue his tattered reputation in time for the 2012 elections. ‘Wag the Dog.' The amazing thing here, though, is that the nation’s oldest and most respected journalist, is proposing the war option. David Broder, of the Washington Post, wrote a piece on October 31 on the eve of the election, titled, “How Obama Might Recover.” Beginning with his august opinion that conventional policy options would probably not work to revive the economy in time since no one can design surefire economic measures, Broder gets to his “inside” advice to the President on one measure that might:

What else might affect the economy? The answer is obvious, but its implications are frightening. War and peace influence the economy.
Look back at FDR and the Great Depression. What finally resolved that economic crisis? World War II.
Here is where Obama is likely to prevail. With strong Republican support in Congress for challenging Iran's ambition to become a nuclear power, he can spend much of 2011 and 2012 orchestrating a showdown with the mullahs. This will help him politically because the opposition party will be urging him on. And as tensions rise and we accelerate preparations for war, the economy will improve. (Broder, Washington Post, 10/31/10)

Now this is truly bizarre. Broder is no nutball conservative; if anything, he tends toward the liberal end of the spectrum. And yet, here he is, seriously and publicly proposing that the President of the United States start a pre-emptive war with a nation that has attacked no one, in order to rescue his failing presidency and improve the economy. After what we’ve been through in the last ten years with Bush’s pre-emptive wars and the huge hole they put in the nation’s budget (estimates for the Iraq war go as high as $3 trillion! not to mention the cost in death, the drubbing of America’s reputation in the world, and so on), for a respected journalist to seriously offer a plan like this begins to make Tea Party wackos look sane. Broder, of course, is quick to stress that he’s “not suggesting, of course, that the president incite a war to get reelected.” Oh heavens no. But he goes on to close his piece with precisely that suggestion:
But the nation will rally around Obama because Iran is the greatest threat to the world in the young century. If he can confront this threat and contain Iran's nuclear ambitions, he will have made the world safer and may be regarded as one of the most successful presidents in history.

No proof, of course, for his assertion that Iran is, in fact, “the greatest threat to the world in the young century.” Nothing but the uncontested assertion of our senior pundit—and the appetizing carrot to the young president that he will have “made the world safer” and be regarded by history (or at least by Broder) as one of our most “successful presidents.”

How is one to explain such a thing? Has the 81-year-old Broder gone senile? Or is he just listening to a few other pundits who have actually said the same thing recently. Like, for example, the rabidly pro-Israel Elliott Abrams (he of Iran-Contra fame, resuscitated as a ‘National Security Adviser for Global Democracy Strategy’ for Bush) who said recently: “The Obama who had struck Iran and destroyed its nuclear program would be a far stronger candidate, and perhaps an unbeatable one.” Or the equally rabid Daniel Pipes: “a strike on Iranian facilities would dispatch Obama’s feckless first year down the memory hole and transform the domestic political scene.” (both quoted by Eric Alterman,, Nov. 4, 2010). Whatever the source for his loony idea, it is enough to give one pause. And though most commentators on Broder’s lunacy have discounted the fact that it might influence President Obama, we would do well to consider where the president stands with respect to Iran. When he was running for President, he spoke to AIPAC, the America Israel Political Action Committee, a front for promoting even the most right-wing Israeli policies in Washington. As I noted in the above-mentioned blog, what candidate Obama said, at that time, was that he was holding Iran responsible for the rockets launched by Hezbollah on Israel after the latter attacked Lebanon. He added,
we must preserve our total commitment to our unique defense relationship with Israel by fully funding military assistance and continuing to work on the Arrow and related missile defense programs…(to) help Israel maintain its military edge and deter and repel attacks from as far as Tehran and as close as Gaza.

The Obama administration’s rhetoric excoriating Iran for its alleged nuclear weapons program has only escalated since then.

Is it beyond the realm of possibility, then, that a severely wounded Obama would consider the Broder/Abrams/Pipes suggestion (NB: Jeffrey Goldberg’s September 2010 piece in the Atlantic Magazine, “The Point of No Return,” in which he essentially predicts and rationalizes the fact that Israel will, in the next year, attack Iran itself, may be the mother of all such Israeli-promoted trial balloons; it ends with this quote from Israeli President Shimon Peres: “We don’t want to win over the president,” he said. “We want the president to win.”)?

Given the madness now at large in this nation, it would be folly to think so.

Lawrence DiStasi

Thursday, November 4, 2010

Quantitative Easing, or, The Rich Get Richer

Here’s my favorite take on the elections.

The Federal Reserve and its head, Ben Bernanke, have recently announced their latest initiative, called “quantitative easing.” Aside from the fact that this sounds somewhat pornographic, it apparently means that a central bank creates money ex nihilo, i.e. out of nothing (sometimes called printing money, though these days it’s not so crude; the Fed just magically adds billions to its account), and then uses the funds to purchase financial assets (including government bonds, mortgage-backed securities, and corporate bonds) from regular banks and financial institutions. The Fed, this time, is apparently going to create some $600,000,000,000 (that’s billions), a sum, according to Chrystia Freeland of Reuters, “nearly as big as the TARP. It’s nearly as big as the first stimulus was.”

Now why, you might ask, would the Fed be doing this now. Well apparently, the Fed and most economists really think it’s imperative that the economy get another boost to prevent it from going into a second tailspin. And since the Fed is pretty sure, especially now that the “people” have spoken and swept out Democrats and swept in Republicans (giving the latter control of the House) that there is going to be even worse gridlock in Congress and the White House than before, they have to act. In short, there’s not a snowball’s chance in hell that this Congress will pass another stimulus, so the unelected Fed has to do it.

Here's where it gets interesting. The “people,” according to pundits and pollsters, have decided that Obama and the Democrats have spent too much money keeping the country out of depression; the stimulus, in particular, has been rejected as the product of “big spending Democrats.” It’s time to cut back on spending, is the alleged popular message, to get money back to the people. And how to do that: why by putting back into power the Republicans—the very party that crashed the economy in the first place. NO MORE STIMULUS, is the message. And yet, economists agree a stimulus is needed, and so the Fed rides to the rescue. The irony of all this? Listen to Chrystia Freeland:

I think the problem is, when the Fed acts as it does, printing more money, it’s a rich-get-richer phenomenon. This is going to be great for the banks. It’s going to be great for people whose personal finances are strong enough that they can re-mortgage—refinance their mortgages. But it’s not so great for the people who are in trouble. And that’s one reason why it might not have as powerful an impact as the Fed would like.

Now isn’t that sweet? The poor working-class slobs in the Midwest and South (the Tea Partiers) who voted the Republicans into office presumably believed they were voting to help themselves. But by voting for gridlock, they are doing exactly the opposite! They are forcing the Fed to push a stimulus through the back door. And that stimulus, quantitative easing, is going to help the very people—the bankers and financial pirates—voters are supposedly pissed off at. Banks are infused with tons of money, presumably to induce them to lend to small businesses and households to increase buying. But the banks don’t really have to do that (and all indications are that they don’t want to). Rather, they’ll invest in foreign assets where they can make more profit (have people still not caught on that financial institutions and corporations couldn’t give less of a damn about the USA?). And because there’s a whole lot more money in circulation, it’s going to increase inflation. All of which will help make people like us even poorer. We’ll be poorer, too, because the Fed’s stimulus doesn’t create jobs directly, as another stimulus from Congress presumably would.

Is our democracy not a wondrous thing? It allows damned fools, like the ones who enjoyed victory on Tuesday, the freedom to vote against themselves! While the financiers laugh all the way the bank.

There are other, perhaps more serious global downsides to this latest move of the Fed. But frankly I’m not sure I understand how it all works well enough to explain it. To get some ideas, check out Professor Michael Hudson, “U.S. Quantitative Easing is Fracturing the Global Economy,” at Meantime, and remembering that “quantitative easing” didn’t work for Japan in the 1990s, enjoy the irony. It may provide the only laughs we get for a while.

Lawrence DiStasi