The New York Times buys into the nonsense being peddled by the president’s Fiscal Commission, calling their proposal a dose of fiscal reality and shared pain — though sharing the pain is far from what this plan would do.
The plan, the Times says,
frankly acknowledges what most politicians are too cowardly to admit — that deficit reduction will require shared sacrifice.
It lays out sensible principles, prominent among them that deficit reduction should start gradually, beginning in 2012, to avoid disrupting the fragile economic recovery. It also affirms the need to protect the most vulnerable Americans and to invest in education, infrastructure and research and development.
Then it does what any successful deficit reduction plan must do: It puts everything on the table, including tax reform to raise revenue and cuts in spending on health care and defense. It even dares to mention the need to find significant savings in Social Security, Medicare and other mandatory programs.
But Social Security is not the problem (minor fixes will address a potential problem in the retirement program that has been blown out of proportion) and the kind of tax reform being proposed is the kind that the people who run our corporate state will appreciate, but that those of us in the middle class will be none too happy about.
The focus should be on addressing healthcare costs — which the Obama health-care plan is supposed to do, but won’t because it left the contours of the for-profit corporate system in place. A single-payer system is what is needed, with less of a focus on high-end technology and more on preventative medicine. But that is another debate.
The issue here is the plan on the table, which is a right-wing economist’s dream come true. As Jeff Madrick, a senior fellow at the Roosevelt Institute, writes on Huffington Post, the radical reduction in the federal income tax rate (the bulk of which would go to top earners) “is simply right wing ideology at work, and has nothing to do with deficit issues.”
To the contrary, the authors are using deficit alarms to present a new tax agenda. Is Obama really going to stand behind it? There is no commonly accepted evidence that current marginal tax rates, or even higher ones, suppress economic growth.
He also is critical of the arbitrary slashing of federal outlays — to 21 percent from an expected 24 percent (and the current 22 percent) and what he calls Draconian (and unnecessary) cuts in debt levels.
Why the reduction? There is no reason at all to do so, except an ideological one: less government is always better. Again, there is no absolutely commonly accepted evidence that higher levels of government suppress growth. Yet the proposal is willing to make painful cuts in programs to meet this spurious goal. And it will leave no room for more public investment.
Third, the proposal’s goal is to reduce debt levels to 60 percent of GDP and eventually 40 percent. To do so requires a deficit on average of 2.2 percent of GDP. Again, there is no evidence that debt levels of 60 percent are better than levels of 70 percent, for example. Reducing the debt levels to 40 percent is simply Draconian. One argument is to keep them low to be able to respond to emergencies, as the nation just did. It would be far better to devote attention to avoiding the extreme emergencies.
The spending cuts, as Madrick points out, will be counterproductive in this broken economy, making it more difficult to address stagnant employment or help those dislocated by the damage done by the very economic elites likely to benefit from its medicine.
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Just the fact that Obama created this commission and stacked it with center right and far right wing anti Social Security and anti Medicare ideologues says all we need to know, unfortunately. The commission members may be non partisan but with a few exceptions they are uni-ideological (right wing conservative). It's bad enough he creates this commission but he picks Simpson and Bowles as the co-chairs? Is this a joke? It's no joke, it's real and it's disastrous news for middle and lower class folks. All of this says nothing good about Obama. It would appear that Obama is a bought and paid for tool of corporate America. What am I to conclude when another hand picked member of the panel is David Cote, CEO of Honeywell, a huge defense contractor. Obama did the same thing with health care. He invites in the big insurance and drug companies (and their lobbying shills) for \”advice\” but the single payer crowd is arrested and hauled off the premises. Not only that but billionaire right winger/libertarian Pete Peterson is funding a lot of the activities of this commission through 2nd and 3rd parties. Right wing Dem and uber deficit hawk, Kent Conrad, has allied himself with Pete Peterson.So who the heck will I vote for in 2012? I feel betrayed by Obama but if it's a choice between Obama and some crazed radical Republican I will have no choice but to vote for the lesser of the evils.
From a March Huffingtonpost article by Matthew Skomarovsky :Part 1Starting at the top, the commission's two co-chairs are both veteran Social Security hawks. The Democrat is Erskine Bowles. Bowles is president of the University of North Carolina and a venture capitalist with close ties to Wall Street. He sits on the board of Morgan Stanley and General Motors, both of which have received multi-billion dollar government bailouts since the start of the financial crisis. The finance, insurance and real estate (FIRE) sector was by far the largest donor to Bowles in his unsuccessful Senate campaigns in 2002 and 2004, donating over $3 million. His wife, Crandall Bowles, is on the board of JPMorgan Chase, making the couple two of the biggest beneficiaries of the government's financial welfare over the past two years. Crandall Bowles also gave over $14,000 to Obama's 2008 presidential campaign. Both are members of the Business Council, a prestigious association of major CEOs.Bowles' Republican co-chair, Alan Simpson, is a former Republican senator who pushed (unsuccessfully) for a back-door benefit cut to Social Security benefits in the '90s by tampering with its cost-of-living adjustment and attacked AARP for its defense of Medicare. Simpson's former Senate aide, Chuck Blahous, is a prolific crusader against Social Security and was executive director of Bush's commission in 2001. In a warning sign for Social Security advocates, Blahous and Robert Reischauer, another policy insider who penned a memo in 2009 with fellow Brookings Institution elites calling for Obama to take \”action to stem the growth of Social Security and Medicare,\” were recently nominated by Obama to be Social Security Trustees. (The Blahous pick he apparently owed to Senator Mitch McConnell.)
Part 2Reischauer has close ties to economic wrecking ball Robert Rubin—the Goldman Sachs chairman who became Clinton Treasury Secretary and pushed through radical deregulatory banking laws, then went to Citigroup to score $120 million for driving his company into the ground. Rubin and Reischauer knew each other at both the Harvard Corporation and the Clinton White House, where Reischauer was director of CBO. Reischauer is on the advisory board of Rubin’s Hamilton Project, and the two most recent CBO directors have come straight from Hamilton.One of Reischauer's co-signers of the Brookings memo, Alice Rivlin, is another fox Obama has put in charge of the Social Security henhouse. Former Vice Chair of the Federal Reserve under Greenspan at the peak of the tech bubble, and also a Hamilton Project board member, Rivlin will likely make another great Wall Street ally on the commission. [snip]If that's not enough, Rivlin, who gave roughly $10,000 to Obama's 2008 campaign, was also on the board of Public Agenda Foundation with Peter Peterson, the private equity kingpin who has devoted literally billions to destroying Social Security during his lifetime. Public Agenda has organized research and events to refine elite strategies for pushing deficit reduction, including entitlement reform. [snip] Obama's other Republican pick, David Cote, who is CEO of Honeywell, a major defense contractor with millions in profits at stake in maintaining our out-of-control military budget. Cote is also a former executive at GE, another big military contractor, and director of JPMorgan Chase. Obama has named Cote, who supported the stimulus bill, as one of his favorite CEOs. He is additionally a senior adviser to KKR, the infamous leveraged buyout firm, and a member of the Business Roundtable, a powerful association of CEOs that has spent millions fighting Social Security.Obama's fifth pick is Ann Fudge, a major campaign bundler who already spends a bit of time around tables with the American banking elite. Fudge was chairman of the board of advertising firm Young & Rubicam Brands, which includes former Bear Stearns CEO Alan Schwartz, until 2006. She's now on the boards of Brookings and Rockefeller Foundation, both teeming with top Wall Street elites (including Prince, Parsons, Gupta, Hutchins, Johnson, Rubenstein and Wolstencroft, to name a few), as well as GE and Novartis Pharmaceuticals. With her extensive marketing experience, perhaps she'll be the one who figures out how to sell the commission's \”sacrifices\” to the public.Bruce Reed, whom Bowles and Simpson recently named as the commission’s executive director, can help Fudge brainstorm slogans. Reed is CEO of the corporatist Democratic Leadership Council (previously chaired by Joe Lieberman for six years, and now by Hamilton Project advisory board member and Blue Dog Harold Ford, Jr), is very tight with Rahm Emmanuel (they wrote a book together), and coined the phrase “end welfare as we know it.”
Paul Krugman has a great column today on Obama's cat food death panel. From the article:\”It’s no mystery what has happened on the deficit commission: as so often happens in modern Washington, a process meant to deal with real problems has been hijacked on behalf of an ideological agenda. Under the guise of facing our fiscal problems, Mr. Bowles and Mr. Simpson are trying to smuggle in the same old, same old — tax cuts for the rich and erosion of the social safety net. Can anything be salvaged from this wreck? I doubt it. The deficit commission should be told to fold its tents and go away.\”Obama created the cat food commission by executive order. I wish he would use that power for actual progressive issues that benefit ordinary working people instead of his corporate buddies. Ralph Nader was and is right about everything. We live in a plutocracy, a nation of the corporations, for hedge fund managers and by libertarian billionaires.