Tag: Debt

What Atrios said: Republicans Don’t Care About Cutting Social Security

The big flaw in the premise of the grand bargain is that Obama is asking them to give away their precious by increasing taxes on the rich in exchange for something they don’t care much about. Cutting taxes for rich people is their whole purpose. Cutting Social Security? Well, if they can use Social Security cuts to cut taxes for rich people, sure. But cutting Social Security in order to increase taxes on rich people? Really not interested.

401Ks are a disaster

We need an across the board increase in Social Security retirement benefits of 20% or more. We need it to happen right now, even if that means raising taxes on high incomes or removing the salary cap in Social Security taxes.

Over the past few decades, employees fortunate enough to have employer-based retirement benefits have been shifted from defined benefit plans to defined contribution plans. We are now seeing the results of that grand experiment, and they are frightening. Recent and near-retirees, the first major cohort of the 401(k) era, do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles.

Frankly, that’s an optimistic way of putting it. Let me be alarmist for a moment, because the fact is the numbers are truly alarming. We should be worried that large numbers of people nearing retirement will be unable to keep their homes or continue to pay

Economics and law professor at the University of Missouri, Kansas City, William K. Black joined Paul Jay, senior editor at The Real News Network to discuss President Barack Obama’s State of the Union address and his economic proposals.

President Barack Obama told Democratic delegates and congressional members meeting at the annual House Democratic retreat at Lansdowne Resort in Virginia that the he wants a “big budget deal”

President Barack Obama said he wants to reach a “big deal” on the budget that will cut the nation’s deficit without slashing spending on education and research that is needed to ensure future growth.

Obama said negotiations with congressional Republicans over avoiding the $1.2 trillion in automatic, across-the-board spending reductions set to begin March 1 shouldn’t push aside the effort for a broader plan to cut government debt.

While the president stood firm against “government by crisis” and the need for more revenue in any future deficit reduction deal, and much like the Republicans, who keep saying that they will close loop holes in the tax code but not which ones, there have been few details in how that deal would be accomplished. Nobel Prize winning economist points out that any reduction in government spending at this time would “destroys jobs and causes the economy to shrink”

This really isn’t a debatable proposition at this point. The contractionary effects of fiscal austerity have been demonstrated by study after study and overwhelmingly confirmed by recent experience – for example, by the severe and continuing slump in Ireland, which was for a while touted as a shining example of responsible policy, or by the way the Cameron government’s turn to austerity derailed recovery in Britain. [..]

But aren’t we facing a fiscal crisis? No, not at all. The federal government can borrow more cheaply than at almost any point in history, and medium-term forecasts, like the 10-year projections released Tuesday by the Congressional Budget Office, are distinctly not alarming. Yes, there’s a long-term fiscal problem, but it’s not urgent that we resolve that long-term problem right now. The alleged fiscal crisis exists only in the minds of Beltway insiders.

(my emphasis)

Prof. Krugman discussed with MSNBC’s The Last Word host, Lawrence O’Donnell the consequences of such a deal at this time would mean and what the government should be doing to restart the economy.

As you might have heard the economy is contracting while unemployment remains high inching higher especially in real terms again while Washington is too stupid or corrupt across the board to notice. I can’t say I didn’t see this coming even as just an above average layman. All this focus on austerity is detrimental. After all, spending is actually income and so are deficits which are the life blood of the private sector in the economy when it comes to those sectoral balances you hear me always harping about.

And on that point I refer to Post Keynesian economist Wynne Godley as he along with MMT economist L. Randall Wray predicted this crisis in 2000 and that matters. Therefore it’s safe to say the Post Keynesian school is pretty much vindicated. And part of this tradition can be read in Forbes magazine every month. Imagine that! I have thanks to discovering the work of the most excellent Post Keynesian/MMT economist John T. Harvey.

I have to thank NY brit expat for introducing me to John whom is not only a brilliant economist, but an all around cool guy who is very approachable and has an awesome taste in music. He stresses that the economics discipline hasn’t made economics very understandable to the general public and he’s right; however, you wouldn’t know that by reading his many excellent pieces on why everything people think they know about debt and deficits is absolutely wrong. As John points out, it’s not only wrong, it pervades this entire ignorant and corrupt political debate happening right now over this stupid sequester that was a creation of the White House and Congress.  

As you will read down below, this horrible self induced debt ceiling pro austerity political show where never is heard an encouraging word like full employment, but instead for Peter Peterson’s enjoyment, idiotic words praising deficit terrorism(budget balance and cutting our safety net) rule the day. It only amounts to economic decay and a likely recession on the way depending on how much deficit spending is cut in the coming days.

There seems to be a lot of celebrating without actually understanding much of what has happened as of late. One reason is that it looks like House Republicans will agree to raise the debt ceiling but only for 3 months until the budget gimmick of all Congressmen supposedly either passing a budget or denying their own pay as if that will ever happen. There will be infighting on whether there should be heavy or light deficit terrorism terrorizing the unemployed as usual, but now we can expect these dysfunctional austerity celebrating battles to go on and on.  And as I pointed out when I predicted all of this 3 years ago, when this is the debate in Washington DC we have already lost.

We’ve Already Lost So Cancel Any Perceivable Celebration

This budget gimmick fight is already on top of what the last debt ceiling fight created with the negotiations coming up over the self induced sequester on the basis that 4 trillion bipartisan austerity is awesome. That is the problem for all debates and all fake “progressive” political rhetoric in DC we heard at the Inauguration even though it was a great speech.

The plans to kick this austerity shit can down the road continually every few months is not a victory; it’s also not even a clean debt ceiling raise because it’s not even going to be for a fiscal year. It also means the White House was really posturing as I said they were when they claimed they wouldn’t negotiate on the debt ceiling; this shows that all this so called new-found post reelection “strength for progress” is a myth. That also means that all the hyp being bandied about, about the low-balled 60 billion to merely 9 billion Sandy relief bill passing weeks late and 51 billion dollars short breaking the Hastert rule did not have the significance of the spin behind it at all. It’s simple: John Boehner was looking out for his own ass as speaker(shocking!). That’s it.

The idiotic bipartisan sequester created by the last grand self induced standoff over the last debt ceiling fight will come to a head on March 1. I don’t expect a lot of defense cuts despite the posturing and fully expect more cuts to SS and Medicare to be floated and bargained with within multiple negotiations that show nothing but contempt for the public. Yves Smith goes into the real reasons why a Republican grand standoff on the debt ceiling looks like it won’t happen despite the coming miniature ones every few months that will happen where plenty of deal making and deficit terrorism will take place.

All Good Democrats Applaud Republicans Rearranging Battle Lines in Austerity Phony War

It’s not quite that simple.

First, if you widen the frame, the budget jockeying is largely kabuki: which team is going to score more points that appeal (or more accurately, can hopefully be spun to appeal) to their base? The reality is that both parties are fully committed to imposing austerity. The only question is whether we get Dem Lite or Republican Hi Test. But rest assured, neither version will be good for ordinary Americans.

Second, the Republicans have not dropped the deficit ceiling cudgel, but they seem to recognize that it is a mutual assured destruction weapon, and therefore not as useful as they once thought. They seem to still be coming to grips with the negotiating implications. As the New York Times reports, the Republicans are willing to extend the deficit ceiling for three months, but that increase was conditioned on having the Democrats approve a budget (during the Obama administration, no budget has been approved; the government has carried on because Congress has passed spending resolutions). Notice that while Obama has said that he would not discuss deficit cuts under a debt ceiling sword of Damocles. But if he accepts this deal (which includes a gimmick, of having Congresscritters go unpaid if they can’t agree on a budget on the normal timetable), he will still be doing that. So why is this a victory of sorts?

The more important part of the New York Times story on the Republican climbdown is that Dave Camp, the House Ways and Means Committee chairman, disabused his fellow party members of the idea that the government could limp through hitting the debt ceiling by using tax proceeds to pay only debt obligations, Social Security, the military, and other critical needs. So the Republicans can’t refuse to raise the debt ceiling and not do serious damage, pronto. And everyone would blame them for their intransigence. So unless they want to play Major Kong, they will probably continue to play ball with the Democrats on debt ceiling increases while trying to save face about it.

That’s right. It’s now undeniably pathetic or immoral assuming this is what they want and it probably is. The Trillion Dollar Coin and a 14th amendment challenge have now been rejected. What do we have instead? Insulting fake pseudo macho posturing from the President about what he will or will not negotiate on as if there has ever been anything this POTUS won’t negotiate on. It’s already happening as we speak.

Besides, he just got done with negotiating away his “iron clad” promise to raise income taxes on the rich above $250,000. But this time we are supposed to believe the same fairy tale? Or maybe when I say negotiate when I really mean “negotiate.” Yeah, this is actually what he and John Boehner wanted as in to show us “extremists” who care about people instead of idiotic deficit terrorism on the backs of the poor a thing or two.

Conspiracy of Two

“I’m the President of the United States,” Obama told Boehner [in 2011]. “You’re the Speaker of the House. We’re the two most responsible leaders right now.” And so they began to talk about the truly epic possibility of using the threat, the genuine danger of default, to freeze out their respective extremists and make the kind of historic deal that no one really thought possible anymore – bigger than when Reagan and Tip O’Neill overhauled the tax code in 1986 or when Bill Clinton and Newt Gingrich passed welfare reform a decade later. It would include deeper cuts in spending, the elimination of all kinds of tax loopholes and lower income tax rates for all. “Come on, you and I,” Boehner admitted telling Obama. “Let’s lock arms, and we’ll jump out of the boat together.”

It’s too late to spin tales of the intrepid politician that stands up to Congress. You know, as Stephen Colbert says regarding journalists, fiction. Debt ceilings were never negotiated until this POTUS put his full faith in crediting John Boehner for NOT using the debt ceiling as a hostage as part of the Obama/Bush tax cut deal in 2010. Oops. I predicted this. Others deluded themselves thinking this mess happening right now extended from back then was somehow an abstract form of 11th dimensional chess again and again. When will they learn?  

We know by now that fake tough talk from the President on letting the Bush tax cuts above those making $250,000 expire being an absolute was just that, fake. So there’s absolutely no reason to believe that Republicans do not have all the leverage in this upcoming debt ceiling fight coming up. They do.

US Double-Dip Death Watch Continues

Jay Carney’s press conference today leaves no doubt that the situation is substantially as I described it in my previous post.  The White House commitment not to negotiate on the debt ceiling is mainly fluff.  Their public position is that the Congress must lift the debt ceiling with a “clean” vote first, before a deal can be struck on the massive spending cuts that will take place automatically in March.  Carney implores listeners to believe that the debt ceiling and sequester are “separate” issues, and insists that “this not a negotiation the White House is going to have.” But of course the entire press conference is itself a public gambit in an ongoing negotiation that obviously includes back-channel talks.

There’s also no reason to believe the President won’t put up huge cuts to our safety net just to raise the debt ceiling thanks to what we know from the austerity memo from Jack Lew’s office when he was head of Obama’s OMB in 2011.

This was all thanks to the gross incompetence of not adding a raise in the debt ceiling in the original 2010 deal that extended the Bush tax cuts as I have repeatedly pointed out. However more than half of you already know this, so let’s get to the here and now; there are only two options.

There is the 14th amendment challenge to the SCOTUS option and there is the minting of a 1 trillion platinum coin to start off with. We know the 14th amendment challenge is the least likely scenario to be pursued now. So given the lack of appetite there, there is only one other option and the President better consider it because no one believes the fake posturing about a debt ceiling raise “not being for debate.” Too late. It is.

It didn’t have to be, but the President made it that way by trusting John Boehner with the full faith and credit of the US so now political default(the only way it could happen as a currency sovereign) is a possibility thanks to this mess. So a Trillion Dollar Coin (TDC) is the first step and a small chance at redemption that suddenly is bigger than the blogger and the blogs talking about it thought it would be. It suddenly got real and thank goodness it did because we need to go further. To defeat austerity for the future we also should go from a Trillion Dollar Coin (TDC) towards Platinum Coin Seigniorage(PCS) and think about minting coins of a higher value up to 60 trillion. Therefore, as a firts step, I urge all of you to instruct the President to…

Direct the United States Mint to make a single platinum trillion dollar coin!

Once we realize there is no fiscal cliff and the whole premise is a myth, you think about why it was created. It was created so we can mop up after the 1% which owns all three branches of government including the President. Obama didn’t add a raise in the debt ceiling to the Obama Bush tax cut deal he made in 2010 which created this political mess we are in right now.

Yet the poor and middle class are supposed to “stop whining and complaining” and just mop it up as if it’s one of the menial 60% of low wage jobs created that were part of this “recovery” where 93% of the income it went to the top 1%? I don’t think that’s fair. He needs to ask his Wall St buddies in his Treasury Department to share sacrifice. We have sacrificed enough in the name of the fantasy evil deficits from the land of Mordor causing fantasy default. Think about this when Nancy Pelosi was lying to you about this sellout ultimately helping the middle class last night.

From blatant robbery to money laundering, here are the biggest scandals of 2012 banking history.

#9. Middle-Class Wealth declines by 35 percent

On July 18, 2012, the U.S. Bureau of the Census made it official: The middle-class is getting poorer. The median family — that family exactly at the mid-point of the wealth ladder  — saw its net worth collapse. (Net worth is all assets minus all liabilities.) In 2005, the median family’s wealth was valued at $102,844 (in inflation adjusted dollars.)  By 2010, the latest Census figures showed a drop of 35 percent to $66,740.

And we’re supposed to celebrate this?  

Up Date 14:26 EDT: The House of Representatives has adjourned until Monday December 31

New Year’s Eve is four days away but you may want to start drinking now. True to form Congress is right on track to do nothing about anything, except maybe to try to repeal the Affordable Care Act. The House is still in recess, under what Senate Majority Leader Harry Reid (D-NV) called the “dictatorship” of House Speaker John Boehner (R-OH), with some major issues still in need of resolution. There is the mythical Cliff with its draconian spending cuts to everything except Medicare, Medicaid, and Social Security; the expiration of the Bush/Obama tax cuts and the end of unemployment benefits for two million long term unemployed. There is the farm bill that has lingered undebated in the House which will most likely result in steep spikes in the cost of dairy products and to throw another log on the fire, Treasury Secretary notified congress yesterday that the debt limit will be reached on December 31.

This past Sunday on MSNBC’s Up with Chris Hayes, host Chris Hayes discussed how the president and congress almost came up with a deal to avert a non-crisis and how Speaker Boehner’s “Plan B” failed. Chris’ guests were former Governor James Florio (D-NJ); Heidi Moore, Finance and Economics Editor for The Guardian newspaper; Dean Baker, Co-Director of the Center for Economic and Policy Research; and Dylan Glenn, Senior Vice President of Guggenheim Advisors and former Special Assistant to Pres. George W. Bush. Keep in mind that Social Security has nothing to do with the deficit. It is on the table because President Obama put it there.

Warning: Dylan Glenn and the lack of push back from Hayes and the others on Social Security may have you throwing things at your monitor, so secure any damaging objects before watching.

Back to the grind. President Barack Obama cut his Christmas holiday in Hawaii short, returning to Washington to try to cut a deal to avoid the mythical” fiscal cliff.” While there was much cheering from the president’s most avid supporters over the reports of his tough talk last week during negotiations with House Speaker John Boehner (R-OH), there is still a major concern that Social Security cuts are still on the table by tying cost of living increases it to the chained CPI. It is not just Republican and the president we can’t trust on this, it’s also Democrats. House Minority Leader Nancy Pelosi (D-CA) sees no problem with chained CPI. While there was no mention of Social Security in Speaker Boehner’s failed “Plan-B,” there is no indication from Pres. Obama that it won’t be offered again as a carrot to entice the Republicans to accept a tax increase on the top two tax brackets.

Until we hear it from Pres. Obama’s lips that it isn’t, Social Security is still a bargaining chip in the manufactured debt/deficit crisis. So it is back to the phone. Flood the White House and the Congressional phone lines with calls demanding that they keep their hands off Social Security.

White House

202-456-1111

Your senators

Your House member.

No cuts to Social Security.

Gaius Publius @ Americablog offers this helpful digest-

What are we protecting?

We’re protecting three social insurance programs. These are:

    ■ Social Security

    ■ Medicare

    ■ Medicaid

What are we protecting them from? Anything that:

    ■ Reduces benefits

    ■ Turns the program from insurance to welfare (which only the “deserving” have access to)

How are these programs being threatened?

As near as I can tell, these are the threats. Note to foxes – this is the hands-off list. Each of these seven items is a benefit cut:

Social Security

    1. Raising the retirement age

    2. Chained CPI instead of current COLA

    3. Means-testing benefits

Medicare

    4. Raising the eligibility age

    5. Increasing Part B premiums

    6. Increasing “cost-sharing”

Medicaid

    7. Shifting costs to the states by any means, such as “federal blended rate,” etc.

Keep it up everyday, jam the lines until the President and Congress get the message:

As you know, if you read this blog, or any of the true left wing sites, like FiredogLake and Corrente, that Pres. Obama has once again gone back on his word that cuts to Social Security were off the table as a bargaining chip for a “Grand Bargain.” He has proposed to use  the chained CPI to calculate cost of living increases in Social Security benefits. Now House Minority Leader Nancy is saying that she could live with tying Social Security to the chained CPI, plus she said Democrats would stick with the president to avoid going over the fiscal cliff.

David Dayen at FDL News summed up Pelosi’s meaning and later White House Press Secretary Jay Carney said at the press briefing:

Pelosi tried to emphasize the unformed idea that there would be “protections” for the most vulnerable. For example, the disabled on Supplemental Security Income might not be subject to chained CPI, and there could be a “bump-up” for people aged 80, to compensate for the cumulative effect of the benefit cut. Again, the vulnerable are a massive part of this population (pdf). This is almost the entire income source for almost half of seniors, and for 3/4 of widows or unmarried women. And 15.1% of seniors live in poverty. And if you hold all of them harmless, you erode the actual savings you can derive from this. The three-legged stool of retirement has withered away, especially since the dot-com bust and the Great Recession. This argues strongly for increasing Social Security benefits, not cutting them and not even mitigating cuts.

White House Press Secretary Jay Carney called this a “technical fix” to better calculate inflation. Bullshit. If this were just a technical fix, you would adjust so that the fix wouldn’t hit beneficiaries in a regressive fashion, with the most pain at the bottom. This plan doesn’t, to any real degree. The goal isn’t to properly measure inflation, it’s to save money for the federal government. It always has been.

Well, it time to make noise and fight back. Atrios has sounded the alert and we should take to the phones:

White House

202-456-1111

Your senators

Your House member.

No cuts to Social Security.

Keep it up everyday, jam the lines until the President and Congress get the message: