Fix Budget Problems With Medicare-For-All

(Post title changed…)

Nate Silver has a much-discussed post today in the NY Times, What Is Driving Growth in Government Spending?. Silver goes over the numbers and writes,

To clarify: all of the major categories of government spending have been increasing relative to inflation. But essentially all of the increase in spending relative to economic growth, and the potential tax base, has come from entitlement programs, and about half of that has come from health care entitlements specifically.

The growth in health care expenditures, for better or worse, is not just a government problem: private spending on health care is increasing at broadly the same rates and is eating up a larger and larger share of economic activity. It’s an immensely complicated problem, but the arithmetic is simple: if we can’t slow the rate of growth in health care expenditures, we’ll either have to raise taxes, cut other government spending or continue to run huge deficits. Or we could hope to grow our way out of the problem, but health care expenditures may be impeding private-sector growth as well.

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European Austerity – What’s Actually Happening?

Are we “going the way of Greece?” Should we cut spending to head off a “debt crisis” here?
Conservatives in Europe and America say cutting back on what democracies do for their citizens is the solution to our economic troubles because it will bring economic growth that helps everyone. But this is not what’s happening where it is tried. These are not stupid people. Maybe economic growth wasn’t the goal of austerity.

What They Said Would Happen

Greece and others have been confronted by lenders demanding very high rates before they will make loans. This increases their debt payments to even more dangerous levels, so lenders demand even higher rates. Financial elites are forcing “austerity,” with Greece cutting government employees, pensions, etc. and privatizing public assets, saying this will free up more money for debt payments. Meanwhile European leaders say that austerity is needed everywhere, that cutting government spending will restore “confidence” which will get businesses investing and hiring again, which will boost economic growth.
Economists and anyone with a brain warned that the austerity approach would only make things worse. Now that many European countries have implemented austerity measures the actual results these efforts can be measured.

What Actually Happened

What the financial elites predicted is not what is happening, the cuts are making the economic situation much worse. Taking money out of the economy didn’t grow the economy! Instead of increased “business confidence” bringing about a round of investment and hiring, these countries are instead experiencing further economic slowdown. As public employees are laid off and citizens’ benefits reduced the resulting reduction in demand slows economic growth further. This reduces tax revenues. Unemployment is soaring. And the threat is that deflation will only further inflate the debt burden.
In The cruel stupidity that is economic austerity at Daily Kos this weekend, Lawrence Lewis outlined just how bad things are as a result of austerity policies,

How bad is it?

The economies of Europe are imploding, as conservative governments continue to pursue exactly the wrong policies at exactly the wrong time. …

But this is not really a surprise. It is exactly what was predicted. And now that it is clear that austerity is making things worse they are demanding more austerity as a cure.

Financial Elites Are Not Stupid

So here is the thing. Everyone can see that this is the result—the expected result—of austerity policies. And Europe’s financial elites are not stupid people—not by a long shot! Perhaps they can see the obvious, because it’s obvious, and therefore we might conclude that their campaign pushing austerity isn’t about growing the economy – it’s about something else — they have a different agenda.
When smart people are forcing something to happen we need to look at what is happening, and realize perhaps this is what they wanted to happen. Maybe economic growth wasn’t austerity’s goal at all. Maybe the results we see— the results we all knew would come from austerity—are the results they wanted.

What Else Happened?

The above-listed effect of austerity are not the only results. Forced privatization is also occurring. Here are a few examples from recent news:
European railway companies eye Greek network sale,

Three European railway companies are interested in buying all or part of Greece’s railway business, as the debt-laden country sells assets to satisfy its lenders, people familiar with the discussions told Reuters.

Greece: 14 firms formally express interest in privatization of DEPA state gas company,

Greece says 14 companies, including a subsidiary of Russian gas company Gazprom, have formally expressed initial interest in buying Greek state gas firm DEPA under the debt-crippled country’s mammoth privatization program.

Greece seeks Israeli buyers for ports, companies, roads,

As part of austerity measures, Greek government looking to sell stakes in major companies, development projects; head of privatization agency says Israeli investors already expressed interest…

In Greek Debt Crisis, Government Puts its Policemen Up For Rent,

With the economic crisis plaguing the country, drastic means have been taken to replenish the public coffers. It is in this context that the Greek government has adopted a measure allowing the use, for a fee, of the National Police and its equipment for private needs.
While the Ministry of Citizen Protection (in charge of the country’s security services) said the move will help to “pay for the cost of using police material and infrastructure, and allow modernizing them,” the average citizen’s security is being seriously compromised and it raises the question of how far Greece is ready to go to cut state funding.

Greece Opens Bidding For Rhodes Property,

ATHENS — Greece invited bids for property in the popular tourist destination of Afantou in Rhodes Tuesday, as part of a long-awaited privatization program to raise EUR19 billion by 2015 in aid of its huge debt crisis.
This is the fourth international real estate tender launched by the Greek government-established Hellenic Republic Asset Development Fund (HRADF).

Strong Investor Interest In Planned Sale Of Former Athens Airport Area

The country’s privatization agency said Tuesday there was strong investor interest in the planned sale of the former Athens airport area, marking the latest step in the country’s efforts to raise some EUR19 billion from the sale of state assets by 2015.

Privatization is happening. Greece is being forced to sell off public assets as a condition of getting help with its debt.
Question: If these assets are contributing to Greece’s debt problem, why would investors want to buy them? If these assets are bringing revenue that could help cover the debt, why would the financial elites want Greece to sell them? Unless forcing Greece to sell them was the point.

Shock Doctrine

Naomi Klein’s book The Shock Doctrine makes the case that financial elites have been following a strategy where they take advantage of crises and the resulting panic (and sometimes they make the crisis happen and whip up panic.) Crisis and panic set up chaotic environments in which it is easy to swoop in with pre-packaged “solutions” and take all the stuff. We see this shock-doctrine cycle over and over again: crisis, panic, panic accelerates, financial elites swoop in and take all the stuff. (America had its own experience recently of a crisis that generated terrible panic, with financial elites then swooping in and taking all the stuff. )
Debt often leads to such a a crisis. The book Confessions of Economic Hit Man exposed the strategy of convincing the leadership of underdeveloped countries to take on high debt. Then when it becomes difficult to carry the debt, financial elites swoop in and take all the stuff.

America’s Debt

In the United States our own financial elite are demanding “spending cuts” and other austerity measures as well — even though we can see in front of our faces what resulted from European austerity policies. Conservatives try to whip up panic, claiming our national debt will force the country into bankruptcy (and tried to prove it by nearly forcing the country into bankruptcy last year.) After forcing tax cuts for the rich, again and again, they now say we have to “cut spending” (but not spending on oil company subsidies or military — estimated upwards of $1 trillion this year.) They demand austerity — cuts in spending on things democracy does for its citizens.
But remember, at the end of the Clinton presidency the United States was paying off its debt. Federal Reserve Chair Alan Greenspan greenlighted the Bush tax cuts, saying that Clinton was paying down the country’s debt too fast! When the surplus vanished President George ‘W’ Bush said that a return to deficits was “incredibly positive news” because it would lead to a debt crisis that would force cutbacks in government.
The cycle repeats, supposed crisis, panic is whipped up, elites offer their “solution”, then swoop in and take all the stuff. Will we fall for it again?
See Also
In The Zombie Rises: The Return of Simpson Bowles CAF’s Bob Borosage writes,

After experiencing the horrors of this misguided policy, European leaders will eventually turn back to trying to get their economies moving again. What we need this fall is a different grand bargain—a global agreement, like that that was forged in early 2009, for coordinated action by governments to reflate the economy —to borrow and spend to put people back to work.
For this to occur, the bipartisan elite fixation about inflicting austerity now must be challenged. If we are to avoid a lost decade or worse, we need action to support still weak and staggering economies. Global coordination would be the best way to achieve that. That requires putting a stake in Simpson-Bowles, the Boehner-Obama grand bargain and other zombies.

In America will not go the way of Europe at the Washington Post, Ezra Klein says Greece’s problem is that lenders believe the government might actually default, which the US can’t do.
In Ezra Klein: Barking Up The Wrong Tree Borosage responds that Greece’s austerity is the problem—such cuts make economies worse. Jobs are the answer to deficits.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Austeridiocy: Budget Cuts Take Money Out Of The Economy

“The patient is sicker so we have to apply more leeches.” Countries that are trying to fix deficits with spending cuts are finding out that taking money out of their economies by cutting government is slowing their economies. Duh! Imagine that! So instead of cutting deficits the resulting slowdowns are making their deficits worse as tax revenues drop and joblessness goes up. So what are they proposing? More “austerity” spending cuts. I call them “austeridiots.”
It Didn’t Work So Do It More
See if you can find the logical flaw in this AP news report: French growth sputters to a halt in 2nd quarter,

The French government was put under further pressure to cut deeper into spending after figures Friday showed growth in Europe’s second biggest economy ground to a halt in the spring, in another sign that the global economy is facing rising recessionary threats.
With the worse-than-expected French growth figures suggesting a possible budget shortfall this year, government ministers may have to find additional savings…

Right, the cuts are slowing the economy, which means the deficits are worse, so they “have to find additional savings.” Cutting government – taking money out of the economy – slowed their economy, so they think they’ll solve the problem by taking more money out of their economy. Austeridiocy.
Austeridiocy Here, Too

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Debt-Ceiling Deal’s Cuts Could Crash Economy

Negotiating with crazy people is always a bad idea and negotiating with hostage-takers is dangerous. But negotiating with crazy hostage-takers is worse than dangerously bad. The “debt-ceiling” deal being negotiated to keep the economy from being crashed could crash the economy anyway. Making draconian cuts could throw us into another recession — one that would be much, much harder to get out of because we have used up many of our recession-fighting tools.
Withdrawing government spending literally “takes money out of the economy.” Democrats should instead offer the country a plan to invest in We, the People by modernizing our infrastructure, improving our schools, making us energy self-sufficient, improving our social safety net and restoring our manufacturing and key industries thereby making American businesses more competitive in the world economy. Propose this instead of painful cuts the benefit only the rich and take it to the country.
From Paying Off Debt To Massive Debt In Ten Years
Ten years ago the government had huge surpluses and was on a path to paying off the entire debt. What changed? Ten years ago last week the Bush tax cuts passed. Republicans promised the tax cuts would create jobs and grow the economy. Instead the economy had one of the slowest periods in our history, creating very few new jobs and causing stagnant wages, leading to huge personal debt. (But the rich got dramatically richer.) And those cuts, along with huge military increases, two wars all leading up to an economic crash caused by deregulation and mismanagement, caused the country’s debt to exploded. Taking office with a surplus of more than $250 billion, Bush left office with a $1.4 trillion budget deficit for his final budget year.

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Debt Limit Reached
Now the United States has reached the Congressionally-authorized borrowing limit and is heading towards default. The White House is negotiating an increase in this limit with the very people who exploded the debt, people who have a vested interest in killing the economy so they can win the next election, and their budget-cut proposals would do just that. It is suddenly dawning on lots of people that this whole enterprise of austerity, taking trillions out of the budget – and therefore out of the economy – is a very, very dangerous proposition.
Cuts Make Economy Worse
Withdrawing government spending literally “takes money out of the economy.” We have a crisis because of lack of demand. Republican solutions of giving the wealthy and corporations even more money and tax cuts obviously will not work because the rich don’t create jobs, we do. The rich are already richer than ever, with a greater share of the income and wealth than ever, and giant corporations are already sitting on tons of cash.
So with the stimulus winding down, and state and local budget cuts causing layoffs of teachers, firefighters and other government employees, Republicans are demanding even more layoffs from federal budget cuts as a “cure.” But cutting government as a prescription for creating jobs sounds a lot like their claim that cutting taxes increases revenue. The problem is a lack of demand, and budget cuts taking hundreds of billions out of the economy only makes that worse.
In a front-page story last week, Economy’s Woes Shift the Focus of Budget Talks, the NY Times sounded the alarm that things are not going well,

Recent signs that the economic recovery is flagging have introduced a new tension into the bipartisan budget negotiations, giving rise to calls especially from liberals to limit the size of immediate spending cuts or even to provide an additional fiscal stimulus.
… More broadly, however, the signs of an economic slowdown in past weeks — not least Friday’s report showing weak job growth in May — have altered the climate for those talks. Amid the emphasis in Washington on significant deficit reductions, … some Democrats, economists and financial market analysts are raising concerns that too much fiscal restraint this year and next could further undermine the recovery.

Democrats are also noticing that agreeing to cuts demanded by Republicans could well have an effect on their chances in the next election.

“I think Obama himself is going to have to move or he’s going to risk losing the next election,” said Mark Weisbrot, a liberal economist and a co-director of the Center for Economic and Policy Research. “He’s going to have to say clearly that the federal government has to step in when the economy is so weak,” regardless of whether his proposals can pass in the Republican-controlled House.

Republican economist Martin Feldstein’s recent op-ed in the Wall Street Journal, The Economy Is Worse Than You Think, also warned how bleak the economy looks and what the prospects are. (Of course, Feldstein argues for Republican plutocratic solutions: cut taxes, Social Security and Medicare.) From the op-ed:

The drop in GDP growth to just 1.8% in the first quarter of 2011, from 3.1% in the final quarter of last year, understates the extent of the decline. Two-thirds of that 1.8% went into business inventories rather than sales to consumers or other final buyers. This means that final sales growth was at an annual rate of just 0.6% and the actual quarterly increase was just 0.15%—dangerously close to no rise at all. A sustained expansion cannot be built on inventory investment. It takes final sales to induce businesses to hire and to invest.
The picture is even gloomier if we look in more detail. Estimates of monthly GDP indicate that the only growth in the first quarter of 2011 was from February to March. After a temporary rise in March, the economy began sliding again in April, with declines in real wages, in durable-goods orders and manufacturing production, in existing home sales, and in real per-capita disposable incomes. It is not surprising that the index of leading indicators fell in April, only the second decline since it began to rise in the spring of 2009.
The data for May are beginning to arrive and are even worse than April’s. They are marked by a collapse in payroll-employment gains; a higher unemployment rate; manufacturers’ reports of slower orders and production; weak chain-store sales; and a sharp drop in consumer confidence.

Feldstein even agreed that the stimulus was not enough,

As for the “stimulus” package, both its size and structure were inadequate to offset the enormous decline in aggregate demand. The fall in household wealth by the end of 2008 reduced the annual level of consumer spending by more than $500 billion. The drop in home building subtracted another $200 billion from GDP. The total GDP shortfall was therefore more than $700 billion. The Obama stimulus package that started at less than $300 billion in 2009 and reached a maximum of $400 billion in 2010 wouldn’t have been big enough to fill the $700 billion annual GDP gap even if every dollar of the stimulus raised GDP by a dollar.

The investment community is taking notice, too. From Reuters: Deficit cut would trim growth: BlackRock’s Fink,

A $4 trillion reduction of the U.S. budget deficit, if enacted by Congress, would trim economic growth by one percentage point a year for the next decade, BlackRock (BLK.N) Chief Executive Laurence Fink said.
With analysts already forecasting modest growth of 2 percent to 3 percent annually, that would leave the United States with an economy expanding at only about 1 percent a year, Fink said at the Morningstar investment conference on Friday.

Fink, however, argues that the government should do it anyway, along with cutting corporate taxes.
Cuts Make Deficit Worse
In a blog post, Thoughts on Voodoo, Paul Krugman explains (with some math) why austerity right now doesn’t help, and only makes deficits worse,

There’s a quite good case to be made that austerity in the face of a depressed economy is, literally, a false economy — that it actually makes long-run budget problems worse.
[. . .]How big do these negative effects have to be to turn austerity into a net negative for the budget? Not very big. In my example, the real interest payments saved by a 1 percent of GDP austerity move are less than .02 percent of GDP; if the marginal tax effect of GDP is 0.25, that means that a reduction of future GDP by .08 percent is enough to swamp the alleged fiscal benefits. It’s not at all hard to imagine that happening.
In short, there’s a very good case to be made that austerity now isn’t just a bad idea because of its impact on the economy and the unemployed; it may well fail even at the task of helping the budget balance.

My recent post, See WHY Austerity Can’t Reduce The Deficit links to the equations that explain the background of Krugman’s (and others’) concusion,

OK, so we have a $100 GDP with $10 deficits and we want to cut that to $5. Kash explains that a $5 spending cut means (by definition) that GDP immediately drops $5, and this (by definition) $5 drop in consumer income makes tax revenue drop as well (as well as a further drop in GDP). After some calculations (go to the post) Kash shows that a $5 cut makes deficits drop to 7.4%, not 5%, but GDP also drops quite a bit – maybe 7 or 8%. Seriously, go see the calculations, they are not difficult.

Just cutting people out of the economy doesn’t fix the problem, it shifts the problem and eventually will kill the economy.
Stimulus Worked — But Was Not Enough

Private Sector Jobs - May 2011

Here is the timeline you see on this chart:

  • First, there is the Bush freefall, from the policies Republicans want to return to
  • then the effect of the stimulus spending reverses the decline, bringing back job growth
  • then the stimulus winds down, and job growth levels out
  • and combined with state & local budget cutbacks — spending cuts, which Republicans want more of — job growth stalls. (Note that this chart is private sector only doesn’t show effect of government job losses.)

Jobs Fix Deficits
Jobs fix deficits. Restoring good-paying jobs starts to restore the tax base and stops the emergency spending on the unemployed. The increased demand as people find work and paychecks revives retail and manufacturing. Housing recovery, for example, depends on more jobs. But with unemployment high and wages are low, so many people just can’t afford to buy — or keep — a house.
Only The “Pain Caucus” Benefits From Cuts
In the recent op-ed, Rule by Rentiers, Krugman explains that these budget-cut austerity policies help a small, select group. He calls them “the pain caucus.”

The latest economic data have dashed any hope of a quick end to America’s job drought, which has already gone on so long that the average unemployed American has been out of work for almost 40 weeks. Yet there is no political will to do anything about the situation. Far from being ready to spend more on job creation, both parties agree that it’s time to slash spending — destroying jobs in the process — with the only difference being one of degree.
. . . Consciously or not, policy makers are catering almost exclusively to the interests of rentiers — those who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone else’s expense.
. . . While the ostensible reasons for inflicting pain keep changing, however, the policy prescriptions of the Pain Caucus all have one thing in common: They protect the interests of creditors, no matter the cost. Deficit spending could put the unemployed to work — but it might hurt the interests of existing bondholders. More aggressive action by the Fed could help boost us out of this slump — in fact, even Republican economists have argued that a bit of inflation might be exactly what the doctor ordered — but deflation, not inflation, serves the interests of creditors.
[. . .] No, the only real beneficiaries of Pain Caucus policies (aside from the Chinese government) are the rentiers: bankers and wealthy individuals with lots of bonds in their portfolios.

Cuts Cold Cost Election
Policies of austerity cause large-scale suffering — done now to avoid restoring tax rates at the top. Budget cuts are asking the public to take the hit, through cuts in programs for us, for among other things the cost of bailing out Wall Street.
Republicans understand that the public will blame Obama for the cuts and are certainly planning on using the resulting lack of jobs in the next election. Remember, in the 2010 midterms they campaigned and won using a theme that Democrats were to blame for “$500 billion in Cuts to Medicare”.
The conservative noise machine is already claiming that Obama is harming Social Security. For example, see last week’s Obama busting Social Security by conservative Don Surber,

Having cut employee contributions by one-third, the president now wants to cut employer contributions in a desperate CYA to cover up the Obamess Economy.

Public Wants A Different Solution
The American Majority wants the same solutions that economists agree work better for more people. The public wants tax increases on the rich. They want direct job creation by government. They want a revival of American manufacturing. They want a national industrial/economic policy. They understand that growing the economy reduces the deficits.
Austerity is about intentionally causing suffering, so a wealthy few benefit. But investing in our country to create jobs, modernize our infrastructure, improve our schools, make us more energy self-sufficient will not only make our country more competitive in the world economy will improve the lives of We, the People. Obviously this is the better choice, and a significant percentage of the public will have Democrats’ back if they offer this plan.
The Congressional Progressive Caucus’ People’s Budget is the template for a job-creating deficit solution. The Progressive Caucus is a group of progressives in the Congress who have put together a budget that fixes the deficit and grows the economy, providing jobs. It is called The PEOPLE’S Budget Plan. You can read the plan at: Congressional Progressive Caucus : FY2012 Progressive Budget,

The CPC proposal:
• Eliminates the deficits and creates a surplus by 2021
• Puts America back to work with a “Make it in America” jobs program
• Protects the social safety net
• Ends the wars in Afghanistan and Iraq
• Is FAIR (Fixing America’s Inequality Responsibly)
What the proposal accomplishes:
• Primary budget balance by 2014.
• Budget surplus by 2021.
• Reduces public debt as a share of GDP to 64.1% by 2021, down 16.5 percentage points from a baseline fully adjusted for both the doc fix and the AMT patch.
• Reduces deficits by $5.6 trillion over 2012-21, relative to this adjusted baseline.
• Outlays equal to 22.2% of GDP and revenue equal 22.3% of GDP by 2021.

Beyond the people’s budget we need a massive investment in infrastructure modernization. This infrastructure work has to be done anyway, no matter what. The longer we delay it the more our country falls behind. It is millions of jobs that need doing at a time when millions need jobs! (And by the way the government can borrow at nearly zero interest rates right now — one more reason to do it now.)
The Republicans are demanding that we cut and gut our government and therefore our economy in exchange for keeping the country from defaulting on its debts. The deal they are demanding will do just as much harm as default. Instead we need to invest in We, the People with jobs and infrastructure that enable us to grow our way out of this mess.
Actions
Tell President Obama to put the People’s Budget on the table.
10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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10 Years Since Bush Tax Cuts: Why The Onion Was Right

It is 10 years since the Bush tax cuts passed. When Bush took office (and never forget the Supreme Court’s 5-4 role in that) The Onion famously declared, “Our long national nightmare of peace and prosperity is finally over.” They had no way to know how prescient they were. Now we are living the real nightmare.
10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.
The Onion satire had Bush declaring,

“My fellow Americans,” Bush said, “at long last, we have reached the end of the dark period in American history that will come to be known as the Clinton Era, eight long years characterized by unprecedented economic expansion, a sharp decrease in crime, and sustained peace overseas. The time has come to put all of that behind us.”
Bush swore to do “everything in [his] power” to undo the damage wrought by Clinton’s two terms in office, including selling off the national parks to developers, going into massive debt to develop expensive and impractical weapons technologies, and passing sweeping budget cuts that drive the mentally ill out of hospitals and onto the street.

Everything the Onion declared in jest became true right down to the Bush administration proposing to sell national parks. Pushed through using “reconciliation,” the Bush tax cuts — along with the Bush wars and military increases — have nearly bankrupted the country. As Roger Hickey writes in, 10 Years Of Bush Tax Cuts Is Enough,

Cutting taxes on the wealthy did not create jobs as conservatives promised. … the Bush Administration [had] the “worst track record on record” for jobs, according to the Wall Street Journal. Bush declared that “the surplus is the people’s money,” and proceeded to give the surplus away to very few people. Now that we face chronic deficits, it’s long past time for millionaires and billionaires to starting giving back.

10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.
Deficits: “Incredibly Positive News”
Ten years ago we had a huge budget surplus. Then came the Bush tax cuts, immediately pushing us into terrible budget deficits. What did Bush say about that? Bush said that turning from surplus to deficit was “Incredibly Positive News,”

President Bush said today that there was a benefit to the government’s fast-dwindling surplus, declaring that it will create “a fiscal straitjacket for Congress.” He said that was “incredibly positive news” because it would halt the growth of the federal government.

“Incredibly positive news” — never for a minute think that these deficits and the resulting debt were anything but intentional, a scheme to gut government and force us toward the current rigged and one-sided discussion of cutting Medicare, etc.
Bring Back Peace And Prosperity
It would be so simple to bring back peace and prosperity. First and foremost: undo the Bush tax cuts.

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But the Supreme Court helped lock in the Bush nightmare, with the “Citizens United” ruling, allowing unlimited corporate money to interfere in our elections. In the 2010 Congressional midterms more than $300 million was pumped into those nasty smear-ads by corporations, half of it from secret donors, according to Common Cause. How much of that came from, say, China? We don’t get to know.
P.S. A Simple Plan To Fix The Jobs Emergency — And The Economy, Too
Take Action
10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Budget Talks: Who Speaks For The American People?

When we hear about the deficits we hear a lot of scare stories, which most “serious” media just echo and amplify. The prevailing “serious” narrative we hear is that we must cut entitlements — any “serious” budget proposal cuts Medicare and Social Security. Even though they just extended tax cuts for the rich the deficits are the worst problem in the world, ever, so we are supposed to be really scared and give in. Seriously.
Polls show that the public wants taxes raised on the rich, cuts in military spending and more & bettter-paying jobs. The public isn’t stupid, because it turns out that these are exactly the things that economists say will get us out of the deficits. But raising taxes isn’t considered a “serious” deficit-cutting option. Either is cutting military. And to top it off, in DC the idea of creating more and better-paying jobs is so unserious that it isn’t even discussed.
Serious Commissions and Gangs Of Negotiators
The public recoils every time politicians get close to reaching their “serious” goal of cutting Social Security or Medicare, instead of raising taxes and cutting military. So the DC elite come up with ways to mask what they are doing : commissions, “triggers,” “caps,” “across-the-board cuts” all of which avoid actually spelling out that these will cut Social Security and Medicare without touching taxes or military. All the “serious” people favor this approach.
There are so many “serious” reporters and editors and politicians and deficit commissions and negotiators and even “gangs” consist of very “serious” people who come up with these “serious” recommendations.
Who Is At The Table?
These “serious” people who engaged in these “serious” negotiations have something in common. They are almost all very, very well paid, usually white, always DC or Wall Street or big-corporate insiders, always college-educated and comfortable people who work in offices. They do not reflect the diverse makup of the American population. Doing that wouldn’t be “serious,” but it would be ‘small-d’ democratic.
The fact is, the American People just are not reflected “at the table” in these budget negotiations. When you hear about these deficit commissions, discussions, etc. ask yourself: How many make less than $250K? How many are unemployed? How many work taking care of someone else? Who speaks for We, the People in these negotiations?
And ask yourself: What would these deficits talks, commissions, gangs consist of if they were representative of the interests of regular Americans?
What If a Deficit Commission Looked Like America?
If a deficit commission with 100 members had the diversity of the American population “at the table” it would look like this:

  • 19 people on the commission would receive some form of Social Security benefits, 12 of those as retirees. And on this deficit commission they get to talk when the ones making over $250K propose cutting Social Security.
  • 43 of the commission members would have less than $10,000 saved up for retirement. 27 of those less than $1,000.
  • 98 of the 100 members would make less than $250,000 a year.
  • 50 of the members would come from households in which the total income of all wage-earners is less than $52,029.
  • 13 wold have income below the poverty level.
  • 14 members would be receiving food stamps.
  • 16.6% of the commission members would be un- or underemployed, and would be wondering why they are on a deficit commission at all instead of a jobs commission.
  • The commission would include the right proportion of factory and construction workers, and people who work in a kitchen, and work waiting tables, and teaching, and nursing, and installing tires, and all the other things that people do except, apparently, those on DC elite commissions. (People who do hard, manual labor get an extra vote each on what the retirement age should be.)
  • 74 members would not have college degrees.
  • 20 would not have graduated high school.
  • 18 would speak a language other than English at home.

Have you seen any deficit commissions like that lately? No, seriously, have you?
What does the PUBLIC want?
A “serious” deficit commission in a democracy would come up with deficit solutions that reflect what the public wants. Here are some of the polling results compiled at The American Majority Project Polling:
Social Security & Medicare:

  • 53% support Collecting Social Security taxes on all the money a worker earns, rather than taxing only up to about $107,000 of annual income.
  • 57% oppose raising the retirement age from 66 to 67.
  • 64% oppose spending cuts to Social Security.
  • 82% oppose cutting Social Security benefits in order to reduce the debt.
  • 67% oppose cutting Social Security to make the program more solvent in the long term.

  • 66% support enacting Social Security taxes on wages about $106,800 (the Pay Roll Tax Cap) to make the program more solvent.
  • 64% oppose spending cuts to Medicare.

Lots more polling on Social Security at The American Majority Project Polling
Taxes:

  • 74% believe eliminating tax credits for the oil and gas industries to help reduce the budget deficit is mostly or totally acceptable.
  • 68% believe that phasing out the Bush tax cuts for families earning $250,000 per year is mostly or totally acceptable to help reduce the budget deficit.
  • 72% of one group of 512 participants favored raising taxes on people earning more than $1 million a year over cutting important programs once they received details on the impact of the budget cuts. That percentage had been 62% before receiving details of the cuts.
  • 53% believe it is totally or mostly unacceptable to reduce the corporate tax rate from 35% to 25% .
  • etc…

Lots more polling on taxes at The American Majority Project Polling
Military Spending:

  • 67% support minor or major reductions in funds to national defense.
  • 66% support removing all troops from Iraq and Afghanistan.
  • 49% said to cut defense “even if it means eliminating programs that bring jobs to your state.”
  • Pew Research Poll, March 8-14, 2011
    etc.

More polling on military spending at The American Majority Project Polling
Union Employees and Collective Bargaining Rights:

  • 81% support the rights of workers to unionize to negotiate with their employers.
  • 77% believe public employees who belong to a union and work for the state government, city government, or school districts should have the same right to bargain when it comes to their health care, pension and other benefits like those members of unions who work for private companies.

More polling on labor rights at The American Majority Project Polling
Job Creation and the Economy:

  • 56% believe creating jobs, rather than spending cuts is the more important priority for the federal government right now.
  • 56% agree that “it is time for government to take a larger and stronger roll in making the economy work for the average American.”
  • 62% believe the government should focus on creating jobs, even if it means increasing the deficit in the short-term.

More polling on jobs and the economy at The American Majority Project Polling
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Sen. Conrad Plutocracy Plan Vs. Democracy Deficit Commission

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
If you saw this morning’s Progressive Breakfast, you know that Senator Kent Conrad has an op-ed in Politico, “Priority no. 1: Pass long-term budget plan,” in which he proposes steps to do something about the borrowing caused by the tax cuts for the rich that he just voted for. (And if you didn’t see this morning’s Progressive Breakfast you really ought to sign up to receive it every day. Click here and scroll to the bottom to sign up.)
In his op-ed Sen. Conrad claims that the President’s National Commission on Fiscal Responsibility and Reform — the “deficit commission” — released “a plan.” This is surprising, because the deficit commission did not release a plan. The commission was assigned the task of coming up with an overall package that, taken as a whole, could receive 14 votes from the commission’s members. Instead co-chairs Alan Simpson and Erskine Bowles, a conservative Republican and a Wall Street representative (a Director of Morgan Stanley) — released a plan of their own that did not get the required support of the commission. Just two guys, not the commission.

Continue reading

Education For We, The People Or For Private Profit?

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
In his press conference this week President Obama said the economic focus is no longer saving the economy from crisis, but “jumpstarting” it to make a dent in unemployment. He listed education as one of the pillars of that effort. Later in the press conference he talked about making colleges and universities being open not just to people who are well-to-do, but to all of us.
Progressives For A We, The People Economy
Progressives believe that a We, the People economy works best when we act as a community where “we are all in this together,” and watch out and take care of each other. We mutually benefit from this approach: the better off we all are, the better off we all are. Conservatives, on the other hand, believe we should all be on our own, looking out for only ourselves and our families, and it is up to each of us, alone, to take “personal responsibility” for our own success.
Our differing approaches to education reflect these different philosophies. Progressives believe that education is good for all of us, and should be available to all of us. We believe that the economy does better when more of us can receive a good education, whether this brings a vocational or advanced degree, in a community college or a university. We try to enact policies that make this education affordable for everyone.
Conservatives, on the other hand, believe that “the government” (We, the People) has no business helping people. So they resist providing free public or university education. They call this “socialism.”
And so America’s conflict continues, one side asking for public investment in all of us for the long-term benefit of We, the People while the other side tries to harvest the public good for the short-term benefit of a few.
Compromise With Conservatives
A compromise of sorts has existed in recent decades in which the government helps students get loans, enabling them to go to more expensive schools. But these loans increasingly leave students with a very high debt to pay off after they graduate. In recent years students are graduating with more student loan debt than they can reasonably be expected to pay off.
Result: Increasing Debt
CNBC reports: Student loans leave crushing debt burden

The cost of a college education is rising faster than the cost of medical care and as much as three times as fast as consumer prices in general. But that’s just the beginning of the price of admission. This is the story of a debt crisis few are talking about.
Americans now owe more on their student loans than they do on their credit cards — a debt fast approaching $1 trillion with no end in sight.

Please read the entire CNBC report on the crushing debt load that students are taking on, just to get an education that will help our economy. Here is a clip of the video available at the link:

USA Today reports: Student loan debt exceeds credit card debt in USA,

Total student loan debt exceeds total credit card debt in this country, with $850 billion outstanding, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, websites that provide information about student aid and scholarships.
Consumers owe about $828 billion in revolving credit, including credit card debt, according to seasonally adjusted numbers in a report on July credit from the Federal Reserve.

Result: Increasing Defaults
With the increasing debt load and the resulting crushing monthly payments come increasing defaults. From the Dept. of Education, Student Loan Default Rates Increase,

“This data confirms what we already know: that many students are struggling to pay back their student loans during very difficult economic times. That’s why the Administration has expanded programs like income based repayment and Pell grants to help students in financial need,” said U.S. Secretary of Education Arne Duncan.

And, of course, along with the for-profit privatization of what should be a public function, and the compromise of federal help for loans comes the companies profiting from federal dollars.

“The data also tells us that students attending for-profit schools are the most likely to default,” Duncan continued. “While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not. Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use. This is a disservice to students and taxpayers, and undermines the valuable work being done by the for-profit education industry as a whole,” Duncan continued.

Result: Increasing Quick-Buck For-Profit Scams
Along with increasing and crushing debt and defaults another problem has cropped up. Just like with the housing bubble, the private predators have arrived to prey on the public. Private schools like Kaplan University are increasingly scamming their students with schemes reminiscent of the worst of the housing bubble, running up loan debt greater than any job they would ever get could pay, even hitting them with excessive fees and outright fraudulent charges. A Huffington Post report of their investigation of Kaplan University, At Kaplan University, ‘Guerilla Registration’ Leaves Students Deep In Debt, exposes Kaplan’s practice of “guerilla registration” in which they register students and charge them tuition for classes they don’t want or take, even in some cases after they have withdrawn from the school. And then they send the debt collectors after them for the money.

Despite having attended only two online sessions, Castillo had remained officially enrolled at Kaplan for nearly a year after her withdrawal.
Far from an aberration, Castillo’s experience typifies the results of a practice known informally inside Kaplan as “guerilla registration”: academic advisors have long enrolled students in classes they never take, without their consent and sometimes even after they have sought to withdraw from the university, in order to maximize the company’s revenues, according to interviews with former employees.

Please read the whole Huffington Post report, there is much, much more there. Kaplan University, by the way, is owned by The Washington Post company.
Speaking of Kaplan, this is also in the news: NY Times, E.E.O.C. Sues Kaplan Over Hiring,

Sending a sharp warning to employers nationwide, the Equal Employment Opportunity Commission sued the Kaplan Higher Education Corporation on Tuesday, accusing it of discriminating against black job applicants through the way it uses credit histories in its hiring process.
. . . In the E.E.O.C.’s suit, which was filed in federal district court in Cleveland, the agency said that since at least January 2008, Kaplan had rejected job applicants based on their credit history, with a “significant disparate impact” on blacks.
. . . The E.E.O.C. typically brings discrimination cases only when it is convinced that serious abuse has occurred.

Resources:
Demos: Student Loans and Student Loan Debt, links to Demos resources and research on this issue.
The Project On Student Debt
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Alan Greenspan And Things Forgotten

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Ah, the things we forget.
This was then: Federal Reserve Chair Alan Greenspan greenlighted the Bush tax cuts, saying that Clinton was paying down the country’s debt too fast as a result of modest taxes on the wealthy. So the Bush tax cuts for the rich passed, which immediately brought us the huge, huge deficits. Bush called the deficits “Incredibly positive news” because they would force a debt crisis.
In the 80′s Alan Greenspan’s Social Security Commission raised taxes and cut benefits on working people, providing a huge amount of revenue which was then handed out as tax cuts for the rich. And now, rather than pay back that money borrowed from Social Security from where it went, our elites are insisting that Social Security must be cut back, we must all work until 70, etc.
Decades earlier Alan Greenspan was smack in the center of the Ayn Rand* cult that called the non-wealthy “parasites,”

Mr. Greenspan had married a member of Rand’s inner circle, known as the Collective, that met every Saturday night in her New York apartment. . . . Mr. Greenspan wrote: “ ‘Atlas Shrugged’ is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should.”

This is now: Greenspan Calls for Congress to Let All Bush Tax Cuts Expire

Former Federal Reserve Chairman Alan Greenspan, whose backing of George W. Bush’s 2001 tax cuts helped persuade Congress to pass them, said lawmakers should allow the reductions to expire at the end of this year. “They should follow the law and let them lapse,” Greenspan said in an interview on Bloomberg Television’s “Conversations with Judy Woodruff,” citing a need for the tax revenue to reduce the federal budget deficit.

And there was his “I was wrong” testimony,

… a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

Alan Greenspan is in his 80s. He forgets — or at least wants us to forget. Don’t let anyone forget.
The debt crisis was the plan, right there for everyone to see:

  • Step 1: Cut taxes to “cut the allowance” of government so that it can’t function on the side of We, the People. Intentionally force the government into greater and greater debt.
  • Step 2: Use the debt as a reason to cut the things government does for We, the People. When the resulting deficits pile up scare people that the government is “going bankrupt” so they’ll let you sell off the people’s assets and “privatize” the functions of government. Of course, insist that putting taxes back where they were will “harm the economy.”

So don’t forget.

* One more thing not to forget. I mentioned Ayn Rand. Rand’s work is very popular among conservatives now. It forms a core justification for their “on your own” philosophy praising the wealthy and discarding the rest. So it is useful to explore the formation and core of this philosophy. Early in her writings Rand became fascinated with a serial killer named William Hickman. Rand wrote that the serial killer was an “ideal man,” a superior form of human because he didn’t let society impose their morals on him. He didn’t worry about what others thought and just did as he pleased.
Other people do not exist for him, and he does not see why they should,” Rand wrote. Hickman had “no regard whatsoever for all that society holds sacred, and with a consciousness all his own. He has the true, innate psychology of a Superman. He can never realize and feel ‘other people.’” She considered these to be good qualities! And so does her cult.
This is the foundation of the modern “tea party” conservative thinking. So when you look at the modern capitalism that has grown up around Rand’s philosophy and the big corporations that are chewing up the planet to enrich a very few at the expense of the rest of us, and think it seems sort of psychopathic, maybe that’s because it literally is.
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Tax Cuts Caused The Deficits, Therefore…

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
No serious person denies that Reagan’s 1981 tax cuts and military increases threw the country into a pattern of borrowing and borrowing that we have not escaped. When Reagan took office the national debt was $995 billion. When Reagan left office it was $2.87 trillion and climbing fast.
No serious person denies that Bush’s 2001 tax cuts and continued military increases dramatically worsened the problem. Bush’s last budget year ended with a record single-year deficit of $1.4 trillion.
As the country discusses what to do about the borrowing the elephant in the room is that everyone understands that restoring top tax rates to pre-Reagan levels and cutting the military budget in half would solve the problem completely. But we can’t do that. We can’t even discuss it.
And we all know why. And we all know why. It is because the Reagan Revolution transformed the country from a democracy to a plutocracy — a country run by and for the wealthy.
Such sensible and simple ideas are considered off-limits. To even bring up the idea of restoring tax rates to pre-Reagan levels and cutting military spending invites terrible consequences. The speaker risks becoming the target of the money’s noise machine: Limbaugh, Hannity, Drudge, Fox. Smears. Humiliation. Banishment. Or the noise machine cranks up a campaign of misinformation, convincing people –especially DC people — that what they see in front of their eyes just isn’t so. Repeat it enough and it becomes solid knowledge.
We all know this is the way it is. So don’t tell me that “we don’t have the money” to keep 300,000 teachers from being laid off, or to help the long-term, mostly older unemployed workers get something to live on and keep their health care. The money is right there in front of us, but the Congress is bought and paid for.
What do we do? We have to demand representatives who represent us, not make excuses for representing the wealthy. The unfortunate, poor and disadvantaged must count every bit as much as the privileged — that’s what democracy means. And we have to be ready to turn them out if they don’t. For our part, we have to pay attention and demand to be shown, not told. We have to become citizens, not consumers.

Why The Deficit Dominates DC Thinking

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

Washington politicians are convinced that the public is demanding cuts in spending, even over creating jobs and restoring the economy. This pressure comes because much of the public believes that “Obama tripled the deficit.” This has been the right’s drumbeat for over a year and the public has not heard any response. You can barely turn on the radio or TV, or go on the Internet, or read the letters-to-the-editor in your local paper without hearing one or another form of this message repeated.

Fact: Bush’s 2009 budget-year deficit was $1.4 trillion. 2009 was President Bush’s last budget and included the Wall Street bailouts, unemployment benefits and other costs of the incoming recession, plus Iraq and Afghanistan. This massive deficit was just one more conservative failure.

But the right’s propaganda campaign telling the public that this was Obama’s deficit, not Bush’s has gone unanswered. The Obama administration and their allies are not reaching the public with the truth or any message that counters the lies the right is putting out.

Charts that make it appear that the huge deficit was Obama’s doing are an example of how the public is being conned:

obama-deficit-slide

The well-funded Heritage Foundation is one leader of the effort to convince the public of this. Bush Deficit vs. Obama Deficit in Pictures demonstrates an effort to mislead the public into blaming Obama for Bush’s massive deficits.

FOX News had this headline: Obama Triples Budget Deficit to $1.4 Trillion (they have since changed the headline but here is it as it appeared:)

fox nation clip

On the radio the drumbeat continues with people like Rush Limbaugh, saying, President Obama Lies About His Massive Deficits and Tax Increases,

People are fed up with this spending. They’re scared to death of it. They know full well what it portends. It portends massive tax increases for years on us, our kids and grandkids. It weakens the country. This is just an abomination. Nine years ago we were attacked. Barack Obama cannot tell the truth. Constitutionally, he’s not capable of telling the truth. He has increased the deficit, not by twice, not by three times, but by four times… Last year’s deficit surged to $1.42 trillion, more than three times the record of the previous year. An imbalance of $454.8 billion in 2008. So Bush’s last year budget deficit was $454.8 billion. Obama’s budget deficit last year was $1.42 trillion. That’s nearly $1 trillion more that he added to it in fiscal 2009.

Here is Sean Hannity claiming Obama “quadrupled the deficit”,

This is why the deficit dominates the agenda in DC. This dishonest propaganda campaign is the source of the political pressure to cut spending. Fine. What else would you expect from the right? It’s what they do. But why has this campaign gone unanswered? Why haven’t the forces allied with the President reached out with the facts? Why have they let themselves be put into this box?

A bigger question, why does the Obama administration still not seem to get it that this is what they do? The right has a coordinated, funded propaganda machine that just lies, and smears, belittles and humiliates people, makes the public afraid, stirs up division – even encourages sedition, all to get their way.

The right is well-funded because there is a monetary payoff to the big corporations and wealthy individuals who fund campaigns like this one. Their anti-government campaign is buying tax cuts, subsidies, deregulation or just non-enforcement of regulations, waivers or just lack of enforcement of anti-trust rules, military contracts, and a long list of other financial benefits.

Meanwhile people interested in democracy and good government are largely unfunded. They are largely shut out of TV and radio. For example, you rarely see a representative of labor on TV, radio or in the news. Bloggers reach a lot of people, but nothing like the talk radio/TV empire of the right. So how can we do this better?
We will be talking about this Tuesday afternoon at the Americas Future Now conference session, Can Bloggers Bring Populism To The Potomac? with Digby, Sara Robinson, Zach Carter, Terrance Heath, RJ Eskow and myself.