Oct 25 2012

The Captains of Catfood and their Phoney Baloney Debt Crisis

(10 am. – promoted by ek hornbeck)

The Captains of Catfood are getting ready for another big push to steal your Social Security.  Simpson and Bowles are getting into high gear again:

Fifty-eight million Americans saw President Barack Obama and Mitt Romney tangle over former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles’s deficit reduction plan. “Simpson-Bowles” was the most popular Google search during the 90-minute debate.

But behind the scenes, the two deficit hawks are enjoying more than just a search engine moment. The pair is heading to Virginia’s Mount Vernon next week to meet with the new bipartisan Senate “Gang of Eight” in an effort to hash out a major deficit and tax package. …

Inside the Capitol, there’s an increasing recognition that any major deficit deal will at least need the imprimatur of Simpson and Bowles in order to win over votes from both sides of the aisle.

Along with former Sen. Judd Gregg (R-N.H.), they’ve met with Speaker John Boehner (R-Ohio), upwards of half the Senate, major columnists and business leaders seeking support for a massive deficit compromise inspired by the original Simpson-Bowles framework.

Not content to merely lobby the heck out of congressmen, Pete Peterson’s favorite guys, Simpson and Bowles have raised $25 million to fund a “Campaign to Fix the Debt” and they’d like you to help the billionaires by volunteering to bird dog your congressmen.  Simpson and Bowles’ Wall Street Austerians Amen Corner has been abuzz with activity, too.  They’ve just issued marching orders to their government lackeys demanding that the president and congress fix the deficit problem.

Still seeking to push through his neoliberal austerity plan, President Obama says that he is eager to rekindle the negotiations to create a 4 trillion dollar grand bargain based upon Bowles and Simpson’s plan:

President Barack Obama laid out an astoundingly ambitious second-term agenda in an interview published Wednesday, vowing to forge a “grand bargain” with Republicans to reduce the national debt and achieve comprehensive immigration reform-all in 2013. …

“I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs,” Obama said. (The White House quickly clarified that he meant $2.50 of spending cuts for every dollar in new tax revenue).

We can easily meet-‘easily’ is the wrong word-we can credibly meet the target that the Bowles-Simpson Commission established of $4 trillion in deficit reduction, and even more in the out-years, and we can stabilize our deficit-to-GDP ratio in a way that is really going to be a good foundation for long-term growth,” Obama said. “Now, once we get that done, that takes a huge piece of business off the table.”

The Captains of Catfood are hoping to capitalize on the confusion of an impending moment, attempting to inflate it to the status of a crisis with their rhetoric, by describing an event created by bipartisan congressional action as a “fiscal cliff.”

President Obama is completely on board with the strategy:

“The good news is that there’s going to be a forcing mechanism to deal with what is the central ideological argument in Washington right now, and that is: How much government do we have and how do we pay for it?” Obama said in the interview. He was referring to the so-called “fiscal cliff” at the end of 2012-the looming expiration of the Bush-era tax cuts, the painful automatic domestic and military spending cuts known as the “sequester,” and the end of a temporary payroll tax reduction and some unemployment benefits.

“Fiscal cliff” sounds pretty dramatic, doesn’t it?  In plain English, the legislation that Congress passed means that starting January 1, 2013 the government’s revenues will rise by about 20% and there will be a reduction in government spending of less than 1% which will result in reducing the deficit that these “budget hawks” have been squawking about so loudly down to a virtual non-entity.  

So, in order to end the deficit, the president and the congress have to… wait for it… do absolutely nothing.

The problem for the Captains of Catfood is that the deficit they say that they want to eliminate goes away in a manner that doesn’t push forward their interests entirely at the expense of the 99%.  On January 1, the tax cuts for the rich go away and even worse, a perfectly good manufactured crisis is resolved without gutting Social Security, an aim of theirs since the program was created.

So they’re heating up the rhetoric about how we are on the cusp of a crisis which is constraining the economy and keeping virtuous investors and businessmen from confidently gambling investing the trillions of dollars that they have on the sidelines in growth-producing, job creating enterprises.

That’s the line they’re hawking so that they can substitute something like President Obama’s handpicked Catfood Commission’s solution to the deficit “crisis,” which includes certain adjustments to your future Social Security benefits.

To be sure, there will be some cuts that are unpleasant for progressives.  Social Security, Medicare and programs that benefit the poor are not cut, however, Medicare payments to doctors and hospitals can be cut and extended unemployment benefits will run out.  On the other hand, the bulk of the cuts will come out of the bloated defense budget and the Bush tax cuts for the rich go away for good.  It’s a mixed bag, but on the whole it puts progressives in a far better negotiating position than conservatives and blue dog democrats.  This would be a great time to have a president that had a progressive agenda and great negotiating skills.

The bottom line though, is that this “Fiscal Cliff Crisis” is a creation of legislation.  It is not a natural event like a rogue super tornado, a force of nature that cannot be stopped.  It is a crisis whose genesis is in legislation whose purpose was to motivate a bunch of bickering ninnies to come to an agreement on how much it costs to run a government.

Wake up America, there is no debt crisis.  Even Grandfather Catfood, Alan Greenspan admits that a debt crisis is an impossiblity in America:

“A government cannot become insolvent with respect to obligations in its own currency.  A fiat money system, like the ones we have today, can produce such claims without limit.”

Pascal-Emmanuel Gobry in a Forbes magazine article, No, The United States Will Not Go Into A Debt Crisis, Not Now, Not Ever expounds further:

If there’s one article of faith in Washington (and elsewhere), it’s the idea that the United States might get into a debt crisis if it doesn’t get its fiscal house in order.

This is not true.

The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars-something that the United States government can produce infinitely and at no cost.

You would figure that these deficit hawks are sufficiently economically literate to understand that America is not facing a debt crisis like Greece and other european nations that don’t control their currency are.  You might even think that they would understand that since the dollar is the world’s reserve currency that the US is in an even better position than other nations that do have control of their currency.

What explains their “confusion?”

Cui bono?:

The poor and middle classes have shouldered by far the heaviest burdens of the global political obsession with austerity policies over the past three years. In the United States, budget cuts have forced states to reduce education, public transportation, affordable housing and other social services. In Europe, welfare cuts have driven some severely disabled individuals to fear for their lives.

But the austerity game also has winners. Cutting or eliminating government programs that benefit the less advantaged has long been an ideological goal of conservatives. Doing so also generates a tidy windfall for the corporate class, as government services are privatized and savings from austerity pay for tax cuts for the wealthiest citizens.

U.S. financial interests that stand to gain from Medicare, Medicaid and Social Security cutbacks “have been the core of the big con,” the “propaganda,” that those programs are in crisis and must be slashed, said James Galbraith, an economist at the University of Texas.

So, don’t be snookered by the Captains of Catfood; we are not facing a deficit crisis at all.  What we are facing is the need to resolve an ongoing impasse in government.  Our government has been captured by wealthy interests that are intent on shifting the burden of operating government (taxes) onto people of lesser means.  George W. Bush’s base of “have mores”  have shifted the tax burden for the duration of the Bush and Obama administrations; the “have mores” lackeys in government have delivered a  considerably lower their burden of taxes.  

This is class warfare and a major battle is looming.  All indications are that the wealthy class, through their lackeys in government and their liveried think tanks and subsidized organizations are about to mount a major campaign to benefit themselves at the expense of the 99% in the next couple of months.

Get ready.


  1. joe shikspack

    thanks for reading!

  2. joanneleon

    They’re back.

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