The Dawn of Austerity in America

Distinctions of Little Difference


by JASON HIRTHLER


Since the rosy fingered dawn of austerity in America, the liberal media have consistently proclaimed that the Republicans are a deluded gang of filibustering rejectionists. By contrast, they make the rather more strident claim that, for all their faults, Democrats at least believe, as The New York Times columnist Paul Krugman puts it, “in letting its policy views be shaped by facts; the other believes in suppressing the facts if they contradict its fixed beliefs.” But is this true? Are Democrats a clear-eyed party of well-meaning centrists, and are conservatives a frothing admixture of venal Congressional lifers and mob-backed junior legislators, both taking their talking points from a dim confection of scripture and grainy clips of “Free to Choose”?

The Right—Delusional and Demented?

First, liberals seem to believe that the Republicans who push for austerity are ignorant knaves, a seething clan of badly misguided ideologues who whitewash their realities with the worst theoretical models to emerge from the Chicago School of Economics. For his part, Krugman has nobly piled fact upon fact in his columns and blogs, outlining the harshly regressive outcomes associated with spending cuts during economic downturns. Exhaustively argued, scrupulously referenced, Krugman is an economic champion of the liberal class. Even so, in articles like, “The Ignorance Caucus,” “Sequester of Fools,” and “Friends of Fraud,” Krugman asks, in a state of jaded disbelief, how could it be that, “Republicans are deep in denial about what actually happened to our financial system and economy.”

He’s not alone in this regard. Leslie Savan in The Nation also chalks up the deficit obsessions to the pitfalls of “groupthink,” a kind of innocent self-delusion that encourages “the punditocracy to repeat, despite incontrovertible evidence to the contrary, that austerity will pave toward economic growth.” Robert Reich, who regularly and expertly denounces austerity, also seems baffled by the apparent inability of Congress to look facts in the eye. Columnist Ezra Klein touts studies that confirm the myopia of GOP legislators.

But the facts suggest that conservatives foresee austerity’s aftermath quite clearly, but are simply disinterested. To put it bluntly, Republicans and their backers know precisely what they’re doing. They aren’t mathematically-challenged stooges fumbling away the American dream. They’re conniving dogmatists bent on real social change—for the worse. A recent joint investigation by Democracy Now! and the Center for Media and Democracy is rapidly exposing the fraudulent claims of the "Fix the Debt" gang, a group of at least 127 corporate CEOs led by billionaire Pete Peterson. Like their Congressional shills, the Fix the Debt thugs claim they want to salvage America’s economy from being wrecked by debt. But what lies just beneath the surface of this thinly veiled publicity campaign is a desire by corporate interests to decimate the New Deal and Great Society initiatives.

Why? For a couple of reasons.

First, because this faction of plutocrats and their confederates genuinely believe in the radical individualism they espouse: tax is theft, welfare is the path to dependency, and poverty is the rightful destiny of the dilatory and thriftless. And here’s the crucial verdict: if preserving the sanctity of individualism means America becomes a sea of indigence, so be it. If each of us controls our fate, and if our fate has led us to ruin, who’s to blame but ourselves? In this sense, we are witnessing the rise of a kind of secular Calvinism in which our destinies reveal our character.

Second, eviscerating the safety net is a good bottom-line bargain. A dramatically enervated and sickly state, bereft of its capacity to regulate, stripped of its assets, and shorn of its social mandate, is a state deterred from taxation for want of cause, and too enfeebled to counter the rapacity of monopoly capital. Capital is thus freed to cannibalize labor. Like a mining colony in a jungle with natives swept aside, the drills won’t cease until every fluid drop and mineral grain of profit is safely nestled on a northbound container vessel. Anything to stave off a declining rate of profit.

The related claim that our half-sighted multinationals needs to recognize that if American incomes continue to slide, the populace will no longer be able to purchase the products they peddle, is neither important nor novel for elite interests. Renewed lending and debt accumulation can falsely inflate another housing market, generating a freshet of new derivative plunder. But the larger point is that America is no longer corporate America’s primary growth market. China is. India is. Latin America is. The United States already looms large in the rear view mirror, diminishing by the day.

The Left—Decency Denied?

If conservatives are Machiavellis incarnate, what about those malleable Democrats? That glum tribe forever beset by weak temperaments, constitutionally incapable of taking a hard line, handicapped, perhaps, by their bottomless empathy. Along these lines, liberals are happy to claim that President Obama is simply being stonewalled by his Republican colleagues, who have capitalized on his naïve faith in human decency to press their savage austerity agenda on the population.

The President, exhausted by ceaseless good-faith attempts to reason with pathologically irrational extremists, finally capitulates. “Alas,” writes Krugman, fawning with forgiveness, “Mr. Obama did not stand firm.” The intimation is that the President is a paragon of progressive values, an emblem of liberalism clad in multi-cultural cloth. In fact, the multi-cultural is running interference for the multi-national.

But looking past Obama’s hypnotic rhetoric, one finds a political graph marked by one artificial crisis after another, perpetrated by Democrats and Republicans alike. The debt ceiling, the fiscal cliff, sequestration. Afghanistan, Iraq, Iran. Every one a politically manufactured, fear-mongered crisis. Every one carrying a trillion-dollar price tag. Every one a bipartisan swindle. It’s Disaster Capitalism par excellence, as Naomi Klein laid out in her bestseller The Shock Doctrine, which popularized how crises are manipulated to justify the introduction of fiscal austerity.

While Republican intransigence—cemented by record filibusters in the last two years—has muddled the president’s efforts to add some progressive sops to legislation, an obsession with conservative obstructionism obscures the bipartisan foundation of the deficit debate. From the earliest days of his presidency, Obama signaled that “entitlement reform” was a central plank in his agenda, offering up these sacrificial lambs marinated in talk of “bitter pills” and “reasonable” spending cuts. Not only did Obama appoint Alan Simpson and Erskine Bowles to head his deficit commission, knowing they were deficit hawks of the highest order, but Peterson’s Fix the Debt gang grandly supported Simpson-Bowles precisely because it advocated the dramatic spending cuts both parties favor. Yet former New York Times editor Bill Keller recently claimed that Obama has not embraced the commission’s wisdom.

Obama’s own 2011 plan—different from the commission’s version in that its tax revenues were at least mildly progressive—also aimed at $4 trillion in deficit reduction, with all three social programs included for euphemistic “reforms.” Sequestration itself was hatched in the White House, a trigger mechanism that creates the illusion that Congress is at the mercy of a higher law and, of course, conservative hordes brandishing wildly underlined copies of Atlas Shrugged. Likewise, the notion that the Senate can only pass a bill with a super-majority of sixty is a technicality that can be dispatched by a simple Democratic majority. But the decorum of tradition trumps the exigencies of an anonymous populace. In the end, the policy prescriptions of both parties are overwhelmingly austere.

When the administration does differ from its conservative counterparts, largely in the desire to impose a degree of taxation to polish its progressive credentials, the onus falls largely on the working class. Obama’s much-celebrated tax on the wealthy is a clever sleight of hand: the tax hits a couple of million Americans whose incomes exceed $450,000, but the tax only applies to income over $450,000 and only by the smallest of marginal increases. Cobbled together with slight increases in capital gains taxes, new Obamacare taxes, and fewer deductions for the wealthy, the 1 percent will cede an extra $62 billion a year. By contrast, the media-slighted payroll tax will sift $95 billion in 2013 alone from the pockets of the working class. Although initially and intelligently proposed by Democrats as a stimulative measure in 2010, the payroll tax was allowed to expire with the consent of both parties. Treasury Secretary Timothy Geithner said he saw no reason to extend it. (Granted, it is hard to discern the smoking ruin through the cloud bank.) Nor did Obama bother to include it in his 2013 budget. Yet the tax penalizes 160 million working class Americans with a 50 percent increase in what amounts to a nationwide wage cut, wiping out the wage gains of 2012.

If it’s not austerity, it’s elitism. Both are now beltway consensus; the notion of handcuffed liberal do-gooders has worn thin, exposing the Janus face of progressive Washington—rhetorically populist, practically bought.
The Media—Paying the Price of Inclusion?

As crass and crude an image as it may seem, the Oval Office is little more than a luxury suite being peddled to palm-greasing plutocrats, their lobbyists, and the venal sophists whose pockets they ply with cash. The political hue is never red or blue—but always green. It is ever Spring in Washington. But this truth, that both parties are consciously visiting hardship on a defenseless populace—is unspeakable. That Obama knows he’s favoring wealth at paucity’s expense—unmentionable. That conservatives know austerity will crush vast majorities—unprintable. And to coin a lie of this magnitude and continue to employ it as ideological currency requires you to simply elide sizeable sections of reality from your worldview.

Perhaps the price of writing for a mainstream paper like the Times, then, is silence on this point and substituting for it the fallacy that our leaders have honorable intentions. That purity of motive is part of our American exceptionalism, our ahistorical singularity. But even if it were so, and by our well-intentioned deeds we were unwittingly paving a highway to hell, how would this be any more ethically commendable than the brainwashed suicide bomber who believes liked a blind Bush that his actions are pure? Both are tragedies of delusion. Yet evidence abounds as counterpoint. The powers that be know exactly what they’re doing and attempts to render their Machiavellianism more palatable by obtruding it from sight, is itself a form of complicity. As Noam Chomsky once noted, there isn’t much value in speaking truth to power; they already know it.

The Deficit Hawk Industry

In a weak economy, there are more important issues for us to spend money on than the deficit.--jef

 

Fear Mongering the Federal Debt

by DEAN BAKER

 

The gang for gutting Social Security and Medicare (aka “The Campaign to Fix the Debt”) are running in high gear. During the long election campaign they gathered dollars, corporate CEOs and washed up politicians for a full-fledged push in the final months of the year. They are hoping that the hype around the budget standoff (aka “fiscal cliff”) can be used for a grand bargain that eviscerates the country’s two most important social programs, Social Security and Medicare.

They made a point of keeping this plan out of election year politics because they know it is a huge loser with the electorate. People across the political and ideological spectrums strongly support these programs and are opposed to cuts. Politicians who advocated cuts would have been likely losers on Election Day. But now that the voters are out of the way, the Wall Street gang and the CEOs see their opportunity.

It is especially important that they act now, because one of the pillars of their deficit horror story could be collapsing. Due to a sharp slowing in the rise of health care costs over the last four years, the assumption that exploding health care costs would lead to unfathomable deficits may no longer be plausible even to people in high level policy positions.

As we all know, the large budget deficits of the last four years are entirely due to the economic downturn caused by the collapse of the housing bubble. The budget deficit was slightly over 1.0 percent of GDP in 2007 and the Congressional Budget Office (CBO) projections showed it remaining low for the near-term future. The origin of the large deficits of the last few years is not a debatable point among serious people, even though talk of “trillion dollar deficits, with a ‘t’” is very good for scaring the children.

However, the big stick for the deficit hawks was their story of huge deficits in the longer term. They attributed these to the rising cost of “entitlements,” which are known to the rest of us as Social Security, Medicare, and Medicaid.

While they like to push the notion that the aging of the population threatened to impose an unbearable burden on future generations, the reality is that most of the horror story of huge deficits was driven by projections of exploding private sector health care costs. Since Medicare and Medicaid mostly pay for private sector health care, an explosion in private sector health care costs would eventually make these programs unaffordable.

As some of us have long pointed out, there are serious grounds for questioning the plausibility of projections that the health care sector would rise to 30 or 40 percent of GDP over the rest of the century. Recently a paper from the Federal Reserve Board documented this argument in considerable detail.

Even more important than the professional argument over health care cost projections is the recent trend in health care costs. While the CBO projections assume that age-adjusted health care costs rise considerably more rapidly than per capita income, in the last four years they have been roughly keeping pace with per capita income.

In fact, in the last year nominal spending on health care services, the sector that comprises almost two-thirds of health care costs, rose by just 1.7 percent. This is far below the rate of nominal GDP growth over this period, which was more than 4.0 percent. While at least some of this slowing in health care costs is undoubtedly due to the downturn, it is hard to believe that it is not at least partially attributable to a slower underlying rate of health care cost growth.

CBO and other budget forecasters can ignore economic reality for a period of time (they ignored the housing bubble until after its collapse wrecked the economy), but if it continues, at some point they will have to incorporate the trend of slower health care cost growth into their projections. When this happens, the really scary long-term deficit numbers will disappear.

A projection that assumes that health care costs will only rise as a result of the aging of the population, and otherwise move in step with per capita income, will lop tens of trillions of dollars off the most commonly cited long-term deficit projections. It would cost some deficit hawks, like National Public Radio, more than $100 trillion of their long-term deficit story. This would be a real disaster for the deficit hawk industry.

This is why the Campaign to Fix the Debt and the rest of the deficit hawk industry will be operating at full speed at least until a budget deal is reached over the current impasse. If CBO adjusts its long-term health care cost projections downward then their whole rationale for gutting Social Security and Medicare will disappear. Now that is really a crisis.

Obama Uncensored: Rightwing Centrist Tax Cut Plan?

I get a right chuckle whenever I hear someone say Obama is a socialist. He's barely a democrat, more conservative than Saint Ronny ever was, and the real truth about this election? Obama and Romney are the same.  They play up their supposed differences in these "debates" but when it comes down to policy and which group they'll fuck the hardest, it will always be the group that has historically been fucked the hardest: the poor. Both parties do the bidding of their corporate masters, neither is progressive, it's all about the great big sellout. You'll be ok as long as you remain silent...or until you have something or do something that calls their attention to you. Regardless, you don't get a say in your future. You are a statistical subroutine.

The Real Referendum

Monday, October 1, 2012 by The New York Times

by Paul Krugman

 

Republicans came into this campaign believing that it would be a referendum on President Obama, and that still-high unemployment would hand them victory on a silver platter. But given the usual caveats — a month can be a long time in politics, it’s not over until the votes are actually counted, and so on — it doesn’t seem to be turning out that way.

Yet there is a sense in which the election is indeed a referendum, but of a different kind. Voters are, in effect, being asked to deliver a verdict on the legacy of the New Deal and the Great Society, on Social Security, Medicare and, yes, Obamacare, which represents an extension of that legacy. Will they vote for politicians who want to replace Medicare with Vouchercare, who denounce Social Security as “collectivist” (as Paul Ryan once did), who dismiss those who turn to social insurance programs as people unwilling to take responsibility for their lives?

If the polls are any indication, the result of that referendum will be a clear reassertion of support for the safety net, and a clear rejection of politicians who want to return us to the Gilded Age. But here’s the question: Will that election result be honored?

I ask that question because we already know what Mr. Obama will face if re-elected: a clamor from Beltway insiders demanding that he immediately return to his failed political strategy of 2011, in which he made a Grand Bargain over the budget deficit his overriding priority. 

Now is the time, he’ll be told, to fix America’s entitlement problem once and for all. There will be calls — as there were at the time of the Democratic National Convention — for him to officially endorse Simpson-Bowles, the budget proposal issued by the co-chairmen of his deficit commission (although never accepted by the commission as a whole).

And Mr. Obama should just say no, for three reasons.

1. First, despite years of dire warnings from people like, well, Alan Simpson and Erskine Bowles, we are not facing any kind of fiscal crisis. Indeed, U.S. borrowing costs are at historic lows, with investors actually willing to pay the government for the privilege of owning inflation-protected bonds. So reducing the budget deficit just isn’t the top priority for America at the moment; creating jobs is. For now, the administration’s political capital should be devoted to passing something like last year’s American Jobs Act and providing effective mortgage debt relief. 
2. Second, contrary to Beltway conventional wisdom, America does not have an “entitlements problem.” Mainly, it has a health cost problem, private as well as public, which must be addressed (and which the Affordable Care Act at least starts to address). It’s true that there’s also, even aside from health care, a gap between the services we’re promising and the taxes we’re collecting — but to call that gap an “entitlements” issue is already to accept the very right-wing frame that voters appear to be in the process of rejecting.
3. Finally, despite the bizarre reverence it inspires in Beltway insiders — the same people, by the way, who assured us that Paul Ryan was a brave truth-teller — the fact is that Simpson-Bowles is a really bad plan, one that would undermine some key pieces of our safety net. And if a re-elected president were to endorse it, he would be betraying the trust of the voters who returned him to office.

Consider, in particular, the proposal to raise the Social Security retirement age, supposedly to reflect rising life expectancy. This is an idea Washington loves — but it’s also totally at odds with the reality of an America in which rising inequality is reflected not just in the quality of life but in its duration. For while average life expectancy has indeed risen, that increase is confined to the relatively well-off and well-educated — the very people who need Social Security least. Meanwhile, life expectancy is actually falling for a substantial part of the nation.

Now, there’s no mystery about why Simpson-Bowles looks the way it does. It was put together in a political environment in which progressives, and even supporters of the safety net as we know it, were very much on the defensive — an environment in which conservatives were presumed to be in the ascendant, and in which bipartisanship was effectively defined as the effort to broker deals between the center-right and the hard right.

Barring an upset, however, that environment will come to an end on Nov. 6. This election is, as I said, shaping up as a referendum on our social insurance system, and it looks as if Mr. Obama will emerge with a clear mandate for preserving and extending that system. It would be a terrible mistake, both politically and for the nation’s future, for him to let himself be talked into snatching defeat from the jaws of victory.

Liberals Get 'Déjà Vu' and Complain Dems Have Bungled in Debt Talks

Friday, October 28, 2011 by The Hill

Déjà vu

by Mike Lillis 

 

Liberals on and off Capitol Hill agonized Thursday that supercommittee Democrats had bungled early negotiations over a budget deal and put their party in a position to be bested again by Republicans.

By proposing significant cuts to Medicare and Medicaid as an early offering, liberals said the panel Democrats weakened their party’s negotiating position as Republicans, who have ceded no ground on their central anti-tax message, sat back and watched.

"My fear is that this is déjà vu all over again,” said Rep. Peter Welch (D-Vt.), one of the dozens of liberals who thought the White House cornered itself in the summer debt-ceiling talks by floating similar entitlement cuts to the GOP in negotiations led by Vice President Biden.

“This is essentially what happened in the Biden talks,” Welch said. “The Democrats were putting concrete proposals on the table [including entitlement cuts] and the Republicans never came forward with concrete revenues to match it.

“The Democratic side was negotiating against itself,” Welch added. “As a strategy, that won’t work.”

While some Democrats said their deficit package is evidence that they’re the more serious negotiators, Speaker John Boehner (R-Ohio) shrugged it off and remarked it was “time for everybody to get serious” about the talks.

In a memo highlighting the Republicans’ blanket opposition to new tax hikes, Boehner’s office said the Democrats’ plan is “not a serious proposal.”

“Republicans have been willing to discuss new revenues, but this offer is rooted in unacceptable tax increases, which would have a negative impact on the economy and jobs,” the memo reads.

Adam Green, co-founder of the Progressive Change Campaign Committee ( PCCC), a liberal activist group, echoed Welch’s message Thursday, saying the Democrats’ early offer to cut Medicare and Medicaid is “just incompetent negotiation strategy.”

“If Democrats on the [supercommittee] are proposing cuts to Medicare, Medicaid or other middle-class benefits, that is fundamentally out of step with what the 99 percent of Americans are crying out for right now,” Green said in an email. “The middle class has sacrificed enough — it’s time for Wall Street and the wealthy to finally pay their fair share, and voters need Democratic politicians to get that.”

A former House Democratic staffer sounded a similar note, saying the Democrats could use a lesson in how to squeeze more of their priorities out of the ongoing bipartisan talks.
“Though the [Democrats] won’t likely bite on Medicare offsets (i.e., bene[fit] cuts) w/out revenue, the cuts are now, nevertheless, out there,” the staffer, who is now a health policy analyst, said in an email. “Someone really should give these guys a primer on negotiating skills!?!”

The liberals are furious with the sweeping $3 trillion deficit-reduction proposal presented Tuesday by Senate Finance Committee Chairman Max Baucus (D-Mont.) to Republicans on the deficit panel. The plan includes hundreds of billions of dollars in entitlement cuts and more than $1 trillion in new tax hikes — a package along the lines of the “grand bargain” negotiated over the summer by President Obama and Boehner that eventually died in favor of a more modest deal focused on spending cuts.

The proposal offered by Baucus — which was endorsed by a majority of the six Democrats on the deficit panel — features roughly $400 billion in Medicare reductions, including significant cuts to senior benefits. A number of liberal Democrats hammered the proposal this week, warning that benefit cuts under Medicare, Medicaid and Social Security are a nonstarter.

“I don’t want to hear Democrats suggesting that we have those types of cuts in Medicare,” Rep. Charles Rangel (D-N.Y.), former chairman of the House Ways and Means Committee, told The Hill on Wednesday. “I hope that’s not true.”

House Minority Leader Nancy Pelosi, however, declined to join those critics on Thursday.
“It’s no use asking me about specific things until we see the whole package,” Pelosi said during a press briefing in the Capitol.

The California Democrat reiterated her party’s insistence on a “balanced” deficit-reduction plan, suggesting that she and her caucus won’t support a package that fails to spread the pain of austerity across a class spectrum.

“It’s not fair to say to a senior, ‘You’re going to pay more for Social Security, and we’re not going to touch a hair on the head of the wealthiest people in our country,’ ” Pelosi said.
Democrats also hammered a Republican counteroffer that would cut the deficit by $2.2 trillion over 10 years and generate up to $640 billion in new revenue.

Consistent with the Republicans’ vows not to impose new taxes, the revenues originate from increased user fees and tax-revenue increases the GOP says will accompany an overhaul of the tax code.

Democrats said it focused too heavily on middle-class benefit cuts without balancing them out with tax hikes on the wealthy.

“As reported, Republicans’ stubborn refusal to come forth on real revenues as part of a deficit reduction package threatens any real progress in the Select Committee,” Rep. Sandy Levin (Mich.), senior Democrat on the Ways and Means Committee, said in a statement.

“Their unwillingness to ask anything of the very wealthiest even as they propose devastating cuts to Medicare and Social Security is totally unacceptable.”

Yet liberal activists argue that the Democrats’ proposal is little better.

“This plan protects the status quo for the 1 percent while the 99 percent are expected to sacrifice vital healthcare they need to survive,” said Jim Dean, former Vermont Gov. Howard Dean’s brother and the chairman of Democracy for America, a political action committee with 1 million members.

“Democracy for America will oppose any Democrat who votes for a plan that cuts Medicare or Medicaid.”

Fox host back from maternity leave with ‘post-partum compassion’

vidlink

"Malefactors of Great Wealth"

High-Stakes Blackmail
By JEFF KLEIN

When I recalled that phrase recently, I was sure it had been coined by Franklin D. Roosevelt against the Big Business opponents of the New Deal. In fact, when I looked it up I was surprised to learn that the memorable words were used by Republican President Theodore Roosevelt in a speech at Provincetown, Mass, to accuse the "Trusts" of causing the financial "panic" of 1907. He went on to say:

". . . [these men] combine to bring about as much financial stress as possible, in order to discredit the policy of the government and thereby secure a reversal of that policy, so that they may enjoy unmolested the fruits of their own evil-doing. . . I regard this contest as one to determine who shall rule this free country—the people through their governmental agents, or a few ruthless and domineering men whose wealth makes them peculiarly formidable because they hide behind the breastworks of corporate organization."

Not a bad description of the political class war being waged by Wall Street and the extremists of the Right against the majority of us a century later.

So why can't a Democratic President talk about the "Malefactors of Great Wealth" who are responsible for the economic catastrophe we face today? Could it have something to do with the fact that wealthy individuals and corporations fund the expensive electoral campaigns of both political parties, and so ensure that the solutions supported by the majority of people – raising taxes on the wealthy and the corporations, putting people to work, ending the wars, protecting Social Security and Medicare -- are simply off the agenda? Fake Republican populism is allowed in our system, since it is easily deflected (by racism, among other means) away from the real perpetrators. Democratic populism is unacceptable, because it might be taken seriously.

Here's a truth: when people cannot identify the source of their troubles they are much more likely to accept a bad situation as a kind of natural disaster with no fault and no solution. That's why it is important to name the agents of our economic meltdown and the obstacles to common-sense budget policies: the big banks, the corporations and wealthy individuals who pay hardly any taxes, the profiteers and cheerleaders for endless wars -- and the politicians who serve them.

Words matter. When politicians talk about cutting programs overwhelmingly supported by the public they say "entitlement reform" to mask what they are about. It's not surprising that the Right and its media supporters would use that slippery euphemism, but the expression has also become the standard term in political discourse and the mainstream press among those who should know better. "Entitlement reform" allows folks naively to imagine that politicians are talking about ending giveaways to some "other" undeserving people. But what the so-called "reformers" want is simply to cut Social Security and Medicare. (Social Security, by the way, is paid for out of its own payroll taxes and has so far contributed not one dime to the deficit; Medicare costs are rising rapidly because of the inefficiencies and waste in our privately-run healthcare system, which costs on average double what any other country pays on a per capita basis and yields worse results in all the health indices – life expectancy, infant mortality, chronic diseases and access to medical treatment -- that can be measured.)

As high-stakes budget blackmail continues, and politicians of both parties sharpen their knives for the social programs most of us want, now is the moment to demand instead a focus on creating jobs and reviving the economy.

But how can we afford the big investments in infrastructure and education that will put people back to work? After all, we have a "debt crisis" with the credit rating of the US government downgraded and the stock market tanking because of excessive deficit spending, right? Actually not. Those right-wing fundamentalists who claim to believe in the magic of the market are quick to ignore its message when it challenges their cherished fantasies. The stock market is falling because of the pessimistic outlook for the US economy. Meanwhile, mountains of cash are streaming into the safe haven of "downgraded" US treasury notes – so much so that the government can now borrow whatever it needs at virtually no (or even negative!) interest rates when adjusted for inflation. That is, cash-flush individuals, banks and corporations are paying the US government to hold their money safely. There are just no mattresses big enough!

It has never been easier for the government to finance what is required to invest in our economy -- even before we are able to make the necessary cuts in war and military spending that are also needed. Serious economists calculate that the resulting growth will more than pay for the money we spend today as the jobs picture and the economy improve. And those infrastructure projects in mass transportation, clean energy, rebuilt roads and bridges (you name it) will continue to pay off well into the future. Think of it as a home improvement loan.

The New Feudalism

Friday, January 14, 2011 – by Daily Bell Staff Report

TSA Pays Off In Breast Exposure Suit ... Texas woman, 24, receives "nominal" settlement ... The woman who sued the Transportation Security Administration after her breasts were exposed during a frisking at a Texas airport will receive a "nominal" payment from the government as part of a legal settlement ... The settlement was disclosed in documents filed last week in U.S. District Court in Amarillo, where Lynsie Murley last year filed a lawsuit accusing the TSA of negligence and intentional infliction of emotional distress in connection with the May 2008 incident at the Corpus Christi airport. – Smoking Gun

Dominant Social Theme: Fairness is the least that can be expected.

Free-Market Analysis: A new feudalism is being born. It is a quite deliberate effort of the power elite in our view, but people don't notice it – or haven't verbalized it – because it is difficult to analyze something when one is in the middle of it. But the feudal evolution is surely occurring. We can see its signature in the article above but there are many other signs.

Feudalism's "flourishing" or time-span was between ninth and 15th century, apparently. It was not a formal system but a sociopolitical evolution of relationships between various power nexuses. Wikipedia describes feudalism as "a set of reciprocal legal and military obligations among the warrior nobility, revolving around the three key concepts of lords, vassals and fiefs. There is also a broader definition, as described by Marc Bloch (1939), that includes not only warrior nobility but the peasantry bonds of manorialism, sometimes referred to as a ‘feudal society.'"

The evolution of the new feudalism can be seen in various ways, including the erosion of property rights for the middle class and the increasing molding of employment around the vast portfolios of the powers-that-be. (Lawyers and accountants are in high-demand.) The Western middle classes – especially in America where they have been the most vital – are under sustained attack. Taxes, inflation and unemployment are signatures of such a society, along with expansive regulations.

Of course the economic issues mentioned above have been features of Western regulatory democracies for some time. What is changing is the regulatory environment and people's attitudes towards its enforcement. Partially as a result of a bad economy, people are more willing to put up with a level of authoritarianism that would have disturbed them years ago. Ms. Murley is something of an exception, yet even here it is not her reaction that is so noteworthy as the attitude of those who harassed her. Here's some more from the article:

The 24-year-old Murley alleged that after being "singled out for extended search procedures," a TSA agent frisked her and "pulled Plaintiff's blouse completely down, exposing Plaintiff's breasts to everyone in the area." Her complaint noted that, "as would be expected," Murley was "extremely embarrassed and humiliated." Murley charged that TSA employees "joked and laughed about the incident for an extended period of time." After leaving the security line to be "consoled by an acquaintance who had brought her to the airport," Murley returned to the line, where a male TSA worker said that he had wished he was there when she first passed through. The employee, Murley recalled, added that "he would just have to watch the video."

There is a sense of entitlement, even arrogance, among TSA employees, or so it seems; and this is evidently and obviously shared by other government workers in the US, including law enforcement officials. There are endless reports in mainstream media of inappropriate use of tazers, and of outright shootings; the drug-war has been especially corrosive to American civil rights, encouraging government "takings" of private property without due process. Government service is increasingly glorified, if not rhetorically than through compensation. The average government worker apparently makes up to 50 percent more than the average individual in the private sector.

The inequities are increasingly obvious. Senior government officials contravene tax laws without penalty; central banks hand out trillions to favored financial firms and corporations; government secrecy is increasingly enshrined by judicial fiat along with the ever-expanding power of the US executive bench via authoritarian executive orders. As the inequities increase, so does the arrogance. Gradually a two-tier society is created.

At the center of the new feudalism, apparently, are the Anglosphere's great banking families and assorted appendages: major multinationals and even elements of church institutions. Beyond the core are lesser families and wealthy entrepreneurs, along with the corporate and government lieges that carry out the will of the central core. Still further down are government workers, soldiers, intelligence agents and others working within formal government institutions. In the private sector, lawyers, accountants and academic professors provide resources for the emergence of the new feudalism. Then, finally, there are the vassals ... everyone else.

The new feudalism is evidently to be worldwide; and the drive toward increased global governance is to be accompanied by eroding economic conditions, food insecurity and heightened authoritarianism. There is evidently and obviously a pattern in what is occurring; a level of planning seems evident and the implementation is ongoing. On the other hand, as we have pointed out, there has been a shock to the system: the Internet, the advent of which was unexpected. It has resulted in close scrutiny of the emergent new feudalism and may yet help ameliorate it.

Conclusion: The new feudalism is not being built openly but in secret; society is to be reorganized gradually and without any fanfare. But it is difficult to conduct a pan-social reconfiguration under the bright lights of electronic scrutiny. The Tea Party in America and the austerity riots in Europe are but two examples of the Internet's impact in our view. And just yesterday, protests flared in Tunisia, with much of the organizing apparently taking place on Facebook as occurred previously in Iran. Signs of the new feudalism are widespread; but because of the ‘Net, its imposition remains somewhat problematic.

The Odious Alan Simpson

He's Not Only Offensive; He's Ignorant!
Co-Chair of Obama's 'Fiscal Commission' Calls Social Security: 'Milk Cow with 310 Million Tits'
By DEAN BAKER

Former Wyoming Senator Alan Simpson, the co-chairman of President Obama's deficit commission, has sparked calls for his resignation after sending an offensive and sexist note to Ashley Carson, the executive director of the Older Women's League. While such calls are reasonable -- Simpson's comments were certainly more offensive than remarks that led to the resignation of other people from the Obama Administration -- the Senator's determined ignorance about the basic facts on Social Security is an even more important reason for him to leave his position.

I was also a recipient of one of Simpson's tirades. As was the case with the note he sent to Carson, Simpson attached a presentation prepared for the commission by Social Security's chief actuary. Simpson implied that this presentation had some especially eye-opening information that would lead Carson and me to give up our wrong-headed views on Social Security.

While I opened the presentation with great expectations, I quickly discovered there was nothing in the presentation that would not already be known to anyone familiar with the annual Social Security trustees' report. The presentation showed a program that is currently in solid financial shape, but somewhere in the next three decades will face a shortfall due to an upward redistribution of wage income, increasing life expectancy and slow growth in the size of the workforce. The projected shortfall is not larger than what the program has faced at prior points in its history, most notably in 1982 when the Greenspan Commission was established to restore the program's solvency.

It was disturbing to see that Simpson seemed surprised by what should have been old hat to anyone familiar with the policy debate on Social Security. After all, he had been a leading participant in these debates in his years in the Senate.

Simpson's public remarks also seem to show very little knowledge of the financial situation of the elderly or near elderly. He has repeatedly made references to retirees driving up to their gated communities in their Lexuses. While this description may apply to Simpson's friends, it applies to very few other retirees, the vast majority of whom rely on Social Security for the bulk of their income. Cutting the benefits of the small group of genuinely affluent elderly would make almost no difference in the finances of the program.

Furthermore, the baby-boom generation that is nearing retirement has seen most of its savings destroyed by the collapse of the housing bubble that both wiped out their housing equity and took a big chunk of the limited money they were able to put aside in their 401(k)s. Simpson shows no understanding of this fact as he prepares to cut benefits for near retirees.

He also doesn't seem to have a clue as to the type of work that most older people are doing. While it is possible for senators to continue in their jobs late in life, nearly half of older workers have jobs that are either physically demanding or require they work in difficult conditions. Simpson seems totally clueless on this point when he considers proposals to raise the retirement age.

The key facts on Social Security are not hard to understand. The shortfall is relatively minor and distant. Most retirees have little income other than their Social Security, and most workers would find it quite difficult to stay at their jobs in their late 60s or even 70. We might have hoped that Senator Simpson understood these facts at the time when he was appointed to the commission, but we should at least expect that he would learn them on the job.

His determined ignorance in the face of the facts is the most important reason why he is not qualified to serve on President Obama's commission. Someone who is co-chairman of such an important group should be able to critically evaluate information, not just insult and demean his critics.

Latest Bi-Partisan Attack on Social Security: "Let Them Eat Cat Food!"

Monday, August 23, 2010 by This Can't Be Happening
by James Ridgeway

President Obama’s Deficit Commission is all smoke and mirrors. Its members are making a big show of laboring over ”painful” choices and considering all options in their quest to bring down the deficit. But inside the Beltway everyone knows what’s going to happen: The commission will reduce the deficit on the backs of the old and the poor, through cuts to Social Security, Medicare, and Medicaid. Some opponents have taken to calling it the Cat Food Commission, since that’s what its victims will be forced to eat once the commission gets done slashing away at their modest entitlements.

In fact, the true intent of the Deficit Commission was evident before it was even formed. That intent was only driven home when Obama appointed as its co-chair Alan Simpson, a former Republican senator from Wyoming who is well known for voicing, in the most colorful terms, what Paul Krugman calls the "zombie lie" that old-age entitlements will soon "bankrupt the country."

So why the big show? Because neither Obama nor the Congress wants to get caught cutting Social Security and Medicare in public, certainly not before the November elections. (Medicaid will be cut as well, but politicians tend not to worry so much about poor people, since they don’t go to the polls in the numbers we middle-class geezers do.) So instead, they are foisting off this unpleasant task onto the Deficit Commission, showing what the lawyers call “due diligence,” sucking their thumbs and pretending to study how to cut the deficit. They’ve got $1 billion in walk-around money to pay for propaganda so the PR industry ought to be plenty happy. So too should billionaire Pete Peterson, as he and his foundation lackeys push forward towards a victory in their longstanding attack on so-called “entitlements.”

Quite frankly, if the Republican Right could get itself together and shove the Tea Party nuts back into their cave–as Reagan did with the crackpots hanging around him–they too could reap the benefits of the Cat Food Commission’s work. Ever since the New Deal, the Right has been kicking and screaming about Social Security. Things just got worse in the 1960s with Medicare and Medicaid. And now, thanks to our supposedly “socialist” president, they are within a few inches of cutting a nice hefty hunk out of the largest social programs this nation.

But just when it looks like the right wingers have collected themselves, the nutcases throw spanners into the works. This time it’s not the Tea Party, but economists from the Federal Reserve and intellectuals from NYU and Harvard. Four of these people have united to publish an 8-page paper via Boston College’s Center for Retirement Research last month entitled What is the Age of Reason?

This paper is about what to do when old people start losing their marbles, plunging into dementia, euphemistically called "Cognitive Decline among Older Adults," and simply aren’t up to such basic tasks as investing their own money. To save these poor fools from themselves, the intellectuals propose "possible policy choices," including such anemic remedies as full disclosure in such things as mutual fund and 401(k) fees.The authors doubt disclosure will have much import. Then there is the intriguing prospect of "Financial `Driving Licenses,” which would require "that individuals pass a `license’ test before being allowed to make nontrivial financial decisions,such as opting out of `safe harbor’ investment products."Another scheme envisions " mandatory advance directives. It is described as follows: "One direct way to address the impact of cognitive decline on financial decision-making would be to require older adults to put in place a financial advance directive before reaching a certain age, so that the management of their assets could be transferred to a third party in the event of incapacity."

Get the picture? Cuts in entitlements, including Social Security and Medicare, will be accompanied by a push to get people to invest part of their Social Security income in Wall Street so as to make up what is being lost in the cuts. And since we are to believe that old people are going crackers, why then, wouldn’t it make more sense to let Wall Street take charge and invest the money directly? That would save a lot of hassle and bring about a windfall in earnings. Remember how we made so much money in our 401(k)s in the recent recession that we all went broke? Wouldn’t it be fun to do it all over again?

It’s going to take a lot to waylay the likely course of future events: The Cat Food Commission will undoubtedly recommend, and a lame duck Congress will pass, legislation that looks fairly innocuous: trimming Social Security a bit, maybe by upping the age by a few years, and cutting a little from Medicare–none of it affecting anyone who is over 65 right now. That will enable the politicians now in office to look like they are protecting seniors and fending off any drastic cuts, while at the same time appearing “tough” on the deficit. But the legislation, in the usual Washington mode, will gradually widen as the years go by, so that by the time this bunch of pols are retired (on their fat pensions) and out of the fray, the new rules will be eating into entitlements in a big way.

The other side of this Faustian bargain would appear to be Congress passing some tax increases. ”In setting up his National Commission on Fiscal Responsibility and Reform,” William Greider recently wrote in The Nation, ”Barack Obama is again playing coy in public, but his intentions are widely understood among Washington insiders.” As Greider puts it, “The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.”

It remains to be seen how “significant” those tax increases actually turn out to be. But even former Federal Reserve Chair Alan Greenspan seems to be on board with this general plan. Greenspan’s credentials include chairing the first major entitlement-cutting commission back in the 1980s, as well as promoting the Bush-era tax cuts that helped the deficit grow to its current proportions. He still says that reductions to Medicare benefits are necessary–but in a recent interview in the New York Times, Greenspan also says that he now wants to remove all the Bush tax cuts. Seeing as it comes from the champion of “let them eat cake” economics, this pronouncement must be seen as predictor of how conservatives could end up voting. In short, the old and the poor will have to eat cat food, but the rich might kick in a few crumbs as well.

Melt Up

(I might have posted this here previously, but it would have been last Feb or March if I did. Please forgive if you've seen it. Watch it if you haven't.--jef)

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Millionaire Senators Moan About 'Disincentives' For The Lazy Unemployed. Meanwhile, No Action On Extensions

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