Today on Let’s Make a Deal

09 Thursday Dec 2010

Posted by Craig in budget, Congress, economy, Obama, Politics, Taxes

Tags

Bob Corker, compromise, Don't Ask Don't Tell, double dip recession, House Democrats, Lamar Alexander, Larry Summers, payroll tax holiday, President Obama, press conference, Social Security, Susan Collins, take it or leave it, Vice President Biden

The latest on “The Deal”:

President Obama at Tuesday’s press conference: [I]t’s a big, diverse country, and people have a lot of complicated positions, it means that in order to get stuff done we’re gonna compromise…This country was founded on compromise.”

Yesterday:

“Vice President Biden told House Democrats on Wednesday that the tax agreement the White House struck with Republicans was essentially final, forcing the divided caucus to decide whether to press its fight for changes in the package. “It’s up or down,” Biden told the caucus in a closed-door meeting, according to Rep. Yvette Clarke (D-N.Y.).

“So far as the administration is concerned, it’s take it or leave it,” Rep. Peter DeFazio (D-Ore.), one of the most vocal critics of the tax deal, told The Hill after the meeting. “I would say [Biden] was pretty specific about that.”

[…]

“It’s fair to say that he said, ‘We’ve negotiated with the Republicans, but we’re not going to negotiate with the Democrats,” Rep. Anthony Weiner (D-N.Y.) said in paraphrasing the vice president.

Larry Summers is saying, ‘One wrong move and the economy gets it.’

“One of President Obama’s top economic advisers warned on Wednesday that the nation could slip back into recession if Congress did not pass the administration’s tax cut deal with Republicans, as the White House sought to press Democrats into backing the plan.

“Failure to pass this bill in the next couple weeks would materially increase the risk that the economy would stall out and we would have a double-dip” recession, Mr. Summers told reporters at a briefing.”

But in September:

“Maintaining tax cuts for top wage-earners should take a back seat to other more pressing measures, White House economic advisor Larry Summers said…”With deficits looming as seriously as they are, why is now the right moment to lock in several hundred billion dollars of tax cuts for 2 percent of the population when we could be using those revenues to strengthen incentives for investment in the country’s future?”

What a difference 3 months makes.

President Obama’s Republican “friends” are making clear their intentions on the so-called “temporary” reduction in Social Security payroll taxes:

“Republicans acknowledged that the expiration of the tax holiday will be treated as a tax increase. “Once something like this goes into place, a year from now, when it expires, it’ll be portrayed as a tax increase,” said Sen. Bob Corker (R-Tenn.). So in a body like Congress, precedents matter and this is setting a precedent. I think that certainly is going to create some problems down the road if it passes.”

“Once you bring a rate down, if it goes back up, people will feel that. They’ll feel their paycheck being less and that argument” — that letting it expire amounts to a tax hike — “eventually is bound to be made,” said Sen. Mike Johanns (R-Neb.).

[…]

Lamar Alexander, the Senate’s number-three Republican, also said that reform of Social Security should be tied to moving that tax rate back up. “My personal hope is that it doesn’t become permanent unless we deal with a way to make Social Security solvent over the long term,” he told HuffPost. “You have to remember, the payroll tax funds Social Security and I like the idea of a lower payroll tax contribution, but we’ve got to make sure Social Security is solvent, which we should be doing this next year as the first order of business.” The way to make the program “solvent” and keep taxes low, of course, is to reduce benefits.

On a related note, this is what happens when you go down the road of giving in to the demands of “hostage takers.” The line starts to form:

“Here’s what Sen. Susan Collins (R-ME) told Senate Majority Leader Harry Reid that she needs to support a full Senate debate on the defense authorization bill (the vehicle for Don’t Ask, Don’t Tell repeal): 15 guaranteed votes on amendments (10 for Republicans, and 5 for Democrats), and somewhere around four days to debate the bill.

Senate Majority Leader Harry Reid already promised her the 15 amendments, but his initial offer was for a day or two of debate. Here’s her response to reporters tonight, after a Senate vote.

“The majority leader’s allotment of time for to debate those amendments was extremely short, so I have suggested doubling the amount of time, assuring that there would be votes, and making sure that the Republicans get to pick our own amendments as opposed to the Majority Leader.”

“If he does that I will do all that I can to help him proceed to the bill. But if he does not do that, then I will not,” she added.”

Heckuva Job, Mr. President

30 Tuesday Nov 2010

Posted by Craig in budget, Congress, economy, Obama, Politics, Republicans, Taxes, Wall Street

≈ 1 Comment

Tags

Agricultural Inspector, Air Traffic Controllers, Bush tax cuts, deficit, Republicans, Social Security, wage freeze, Wall Street, wars

Good call, Mr. President. You’ve hit on the reason for the $1.3 trillion deficit. Nothing to do with the ~~crooks~~ savvy businessmen on Wall Street or wars that never end or tax cuts for the top 2 percent. It’s the Social Security Customer Service Reps making $35,000 a year. It’s the USDA Agricultural Inspector making $30,000. It’s Correctional Officers making $46,000. It’s those greedy Air Traffic Controllers pulling down the astronomical sum of $93,000 a year.

They all just make too damn much money, and denying them a whopping 1.4% increase is surely the solution to all our budget woes. Never mind that their health insurance premiums are scheduled to go up 7.2% next year so that a wage freeze amounts to a wage cut, not a freeze.

But hey, the Republicans love you for it, and apparently that’s what matters most. They always love it when you start making concessions before you even get to the bargaining table. A tactic that paid off so well in health care reform, why not use it again when it comes to deficit reduction. Oh, by the way, what did you get in exchange for conceding this issue to the GOP? Absolutely nothing—as usual.

This just in, sir. Republicans don’t give a flying pile of horse manure about reducing the deficit. If they did, they wouldn’t be insisting on an extension of the Bush tax cuts which, given the prior record of your negotiating skills, I fully expect to see happen to some degree at today’s ~~capitulation session~~ bi-partisan meeting with Republican leadership.

Here’s an early “heckuva job” on that, too.

Social Security Cuts Straight Ahead

04 Sunday Jul 2010

Posted by Craig in budget, Congress, economy, Obama, Obama administration, Politics, Wall Street

≈ 1 Comment

Tags

cut benefits, Debt Commission, Erskine bowles, JPMorgan Chase, lifting earnings cap, Morgan Stanley, privatizing, Social Security, Speaker Pelosi, trust fund, Wall Street

Reading the road signs along the highway that leads to cutting or privatizing Social Security:

In December Blue Dog Jim Cooper, said a report which showed “that the governments unfunded liabilities are roughly $56 trillion” was “shocking.” He called for a commission to address it.”

In January the White House signed on:

“[President] Obama said that he has made clear to his advisers that some of the difficult choices–particularly in regards to entitlement programs like Social Security and Medicare – should be made on his watch. “We’ve kicked this can down the road and now we are at the end of the road,” he said.”

In February, Jane Hamsher at Firedog lake reported that:

“…people who have been briefed on the administration’s plans indicate that things like raising the retirement age and cutting benefits are under consideration.”

The president then packed the Debt Commission “with members who have an overwhelming history of support for both benefit cuts and privatization of Social Security.”

Among those are the chairman of the commission, Erskine Bowles, who sits on the board at Morgan Stanley, and whose wife sits on the board at JPMorgan Chase. Can you say conflict of interest? Seems to me both those firms stand to benefit handsomely if Wall Street gets its grubby fingers in the Social Security trust fund.

The rules are that the commission recommendation must be approves by 14 of the 18 members:

“There are certainly enough votes on the right to block any significant tax increase proposals. There certainly aren’t enough votes anywhere to propose deep spending cuts in the bloated military budget. The only real question is whether there are five votes — enough to block passage — against cutting social programs, particularly Social Security.”

And in what’s becoming a pattern in this administration, much of the commission’s work is behind closed doors. Openness and transparency, anyone?

Then last Thursday Speaker Pelosi, under the cover of funding for Afghanistan, sneaked in language calling for an up or down vote on the commission’s recommendation, by a lame duck Congress in December.

Now comes this from Crooks and Liars:

“It’s a cynical political strategy almost beyond belief, but it’s becoming obvious that President Obama and the Democratic leaders plan to let the Republicans do what they’ve tried to do since the days of FDR: Cut Social Security.

[…]

When I wrote about this last week, some readers insisted it would “never” happen, and questioned whether there was any logical reason Obama would support benefit cuts. So I talked to a couple of D.C. Social Security activists this week and posed that very question. I was told that Obama’s reelection strategy was based on allowing Social Security cuts to win over independent voters. (Apparently it polls well with the Tea Party crowd.)”

[…]

Now, seriously. How can any intelligent person convince themselves that the Obama administration isn’t backing this? The commission is stacked with deficit hawks; the national deficit is on track to be more fiscally sound if they let the Bush tax cuts expire; and Social Security, which is a tax-transfer program, doesn’t have a damned thing to do with the deficit.”

One solution I don’t see from the Debt Commission—lifting the Social Security earnings cap. According to John Irons of the Economic Policy Institute, “eliminating the cap on taxable earnings would be sufficient to fully close the projected shortfall.”

And it would only affect about 6% of the population. But then again, those are the 6% who sit on these useless (for everyone but the elites) bi-partisan commissions and who write large checks to those in Congress who vote on their recommendations.

Cowards, Hypocrites, and Fools

02 Friday Jul 2010

Posted by Craig in budget, Congress, Democrats, economy, Politics, Republicans

≈ Leave a comment

Tags

1937, budget, Congress, cowards, credit tightening, deficit commission, double dip recession, fools, Howard Beale, hypocrites, jobless claims, new home sales, Pelosi, Republican, Social Security, states, stock market

Quickly approaching mad as hell stage:

We have a Congress packed with cowards, hypocrites, and fools—on both sides of the aisle. House Democrats have passed a budget that’s not really a budget, and projected a balanced budget that’s not really a balanced budget because it excludes interest payments on the debt. They left out the minor details of how to achieve that lofty goal, depending on recommendations from the debt commission to cover their collective asses and keep them from having to make what could be controversial votes in an election year. Profiles in courage.

That would be the deficit commission packed with Social Security privatizers, some of whom support investing as much as 20% of the SS trust fund in the stock market. Speaker Pelosi, in the interest of openness and transparency, last night sneaked in inserted language in the war funding bill that would allow the House to have an up-or-down vote on the deficit commission’s recommendations in a lame duck session after the November elections. Buck passing and CYA at its finest.

Republican deficit hypocrites, who never saw a spending program they didn’t like when they held power, have now become fiscal conservatives, allegedly. They, along with their lackey Ben Nelson, have blocked the extension of unemployment benefits despite the fact that new jobless claims have hit their highest levels since March, and the unemployment numbers due out today are expected to show an increase from the 9.7% we have now.

Both sides have their collective moistened fingers in the wind which tells them that voters are worried about increasing deficits, so these geniuses look for ways to cut spending, except for the untouchable Defense Department, that is. Wouldn’t want to be accused of being “soft on terror.”. Never mind that the stock market is headed back down, pending new home sales dropped 30% from April to May, credit is still tightening, and many states are facing budget crises that, without federal assistance, could result in the loss of 900,000 more jobs.

Add these to the anticipated rise in unemployment and the prospects of a double-dip recession are increasing by the day. Exactly the wrong time to even be considering spending cuts, unless you want a repeat of 1937. Fools.

We don’t need one Howard Beale, we need to become a nation of Howard Beales.

Bi-Partisan Commissions: A Hiding Place for Gutless Politicians

18 Thursday Feb 2010

Posted by Craig in Congress, economy, Obama, Politics, Uncategorized

≈ 1 Comment

Tags

debt reduction commission, Defense Department, Medicare, Social Security, taxes

Generally speaking, bi-partisan commissions are a bad idea, with just a few exceptions. Those being when something is being investigated–such as the 9/11 Commission or the current Financial Crisis Inquiry Commission. The debt reduction commission, set to be unveiled today by President Obama, falls into the bad idea category, and for the usual reason.

Bi-partisan commissions are nothing more than a refuge for gutless politicians who are more concerned with the next election than the next generation, and who don’t want to go on the record with votes on controversial issues which might hurt their re-election chances. And there are no issues more controversial than what must be done if we hope to make any serious attempt at reducing the national debt. And I don’t mean re-arranging deck chairs on the Titanic with so-called “spending freezes” on areas of the budget which amount to less than 20% of all spending.

Serious debt reduction has to take on Social Security, Medicare, and Medicaid, which together make up about 40% of the budget. And for the two biggest expenditures–Social Security and Medicare– there are only 3 options–raise taxes, reduce benefits, or raise the eligibility age.

Serious debt reduction has to cut spending across the board, no exceptions and no exclusions, including the Pentagon. The 2009 budget for the Department of Defense was north of $700 billion, which is roughly equivalent to the rest of the world’s military spending combined.

Serious debt reduction has to include tax increases. We, as a country, have been living on a credit card for the last 30 years–it’s time to start paying the bill.

Tough decisions all, and decisions we pay members of Congress to make, not shove off on “bi-partisan commissions” with no authority to do anything other than make recommendations.

Consider All Options? Well, All But One

13 Saturday Feb 2010

Posted by Craig in economy, Obama, Politics

≈ 1 Comment

Tags

agnostic, Defense Department, Medicare, Obama, raising taxes, Social Security, spending cuts

Another campaign promise bites the dust:

“President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.

“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”

Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.

Consider all options? All ideas are on the table? Hmmmm, I don’t see War Defense Department spending cuts on that list. Just an oversight, I’m sure.

Facing Tough Choices on Deficit and Debt

04 Thursday Feb 2010

Posted by Craig in economy, Politics

≈ Leave a comment

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Afghanistan, Bloomberg, David Pauly, debt, deficit, Fannie Mae, farm subsidies, Freddie Mac, Iraq, Medicare, Social Security, taxes

I think most people who live in the real world (leaving out the gutless wonders who inhabit Washington, D.C.) will agree that if we ever hope to get our fiscal house in order some tough choices will have to be made. David Pauly has a piece at Bloomberg today with 9 suggestions:

1. Restore all income taxes to the pre-President George W. Bush level, not just those for people earning $250,000 or more.

2. Tax the banks $90 billion as proposed by President Barack Obama to pay for their bailout. Then break them up — making them small enough to fail and eliminating the need for more trillion-dollar rescues.

3. Eliminate income-tax deductions for property taxes and mortgage interest. Phase it in over five years so it hurts less.

4. Break Fannie Mae and Freddie Mac into four mortgage- buying companies and get them off the federal dole.

5. Raise the retirement age for collecting full Social Security benefits to 72. Cut cost-of-living increases for beneficiaries to half the inflation rate for 10 years.

6. Raise the age for Medicare eligibility to 68.

Regarding numbers 5 and 6: Keep in mind that when Social Security was passed in 1936, life expectancy was 62. When Medicare was passed in 1965 it was 70. Today it’s 78.

7. End the wars in Iraq and Afghanistan on the current schedules.

8. Kill farm subsidies.

9. Reduce government.
Pauly lists some of the overlapping agencies and departments which could eliminated:

The government has both the U.S. Postal Service and the Postal Regulatory Commission. Doesn’t competition from e-mail and FedEx Corp. keep postal rates in line?

[Does] the president really needs both a Council of Economic Advisers and a National Economic Council?

Government housing officials will have less to do if we cut Fannie and Freddie loose.

Whole agencies might be suspect. We, for instance, have a Selective Service System but no draft.

Certainly food for thought.

The Return of the “Social Security is Going Broke” Myth

26 Tuesday May 2009

Posted by Craig in Obama, Politics, Uncategorized

≈ 2 Comments

Tags

broke, health care reform, Medicare, myth, Obama, privatization, Robert Samuelson, Social Security, Washington Post

As if there wasn’t enough panic coming from the Republicans in D.C. (along with some Democrats like Harry Reid) about detainees from Gitmo being re-located to American suburbia, now comes the obligatory ‘Social Security is going broke’ myth from one of the usual suspects on the right, Robert Samuelson, columnist for the Washington Post.

”The recession had made everything worse…trust funds run dry; promised benefits exceed dedicated payroll taxes…retirees would scream. Hospitals might shut.” Chicken Little Samuelson cries.

Mr. Samuelson’s solution?

“It’s increasingly obvious that Congress and the president (regardless of the party in power) will deal with the political stink bomb of an aging society only if forced. And the most plausible means of compulsion would be for Social Security and Medicare to go bankrupt.”

Good idea, let them both go away, paving the way for another all-time greatest hit from Samuelson and his fellow travelers, privatization. (Note: the preceding contains sarcasm).

Just a couple of problems with the panic scenario. One, Social Security isn’t going broke. Two, the fiscal outlook for Social Security and Medicare are completely different. Of course the privatizers know this, they just like to lump them together to make the numbers bigger and scarier.

“About a decade ago, conservative and libertarian economists who oppose Social Security, Medicare and other entitlements came up with a clever rhetorical strategy. They would calculate the gap between the payroll taxes that pay for these programs and estimated costs over time. But there was one problem: The gap isn’t all that scary, at least in the near future.

So in order to frighten the American people and their elected leaders, deficit hawks cite the sum total of Social Security’s “unfunded liabilities” over 75 years. But even this — a paltry $4.3 trillion over three-quarters of a century, according to the 2008 report — isn’t sufficiently terrifying. [So they combine Medicare and SS]

[This] produces a suitably spooky 75-year shortfall of $42.9 trillion. And if this is not alarming enough, deficit hawks can cite the truly apocalyptic figure of $101.7 trillion in combined “entitlement” spending over an infinite time horizon.

The anti-Social Security lobby always presents the “unfunded liabilities” of “entitlements” in scary dollar terms, rather than as percentage points of GDP. Here’s why: Over the next 75 years, the Social Security shortfall at most hovers around 1 percent of total U.S. GDP over that same period.”

Samuelson claims that Social Security will run out of money by 2037. Never mind the fact that this projection is based on an annual economic growth rate of 2.6% and the average annual growth rate since the Civil War is nearly 3 percent.

At a rate of 3%, Social Security is solvent for 75 years, not 28.

Even using the conservative estimates, an increase in the payroll tax from 12.4% to 14.4% would completely eliminate the shortfall.

Medicare is a problem right now. But President Obama’s proposed health care reform would go a long way towards solving it.

“Medicare is entirely different. It’s a monster. But fixing it has everything to do with slowing the rate of growth of medical costs — including, let’s not forget, having a public option when it comes to choosing insurance plans under the emerging universal health insurance bill. With a public option, the government can use its bargaining power with drug companies and suppliers of medical services to reduce prices.”

So you see, no need to panic, Republicans. Resume focusing on KSM being your next door neighbor.