Mitt Romney said he wasn't concerned about the very poor, because they have a safety net. This is typical of the widespread ignorance about inequality in our country. Struggling Americans want jobs, not handouts, and for the most part they've paid for their "safety net." The real problem is at the other end of the wealth gap.
How many people know that out of 150 countries, we have the 4th-highest wealth disparity? Only Zimbabwe, Namibia, and Switzerland are worse.
It's not just economic inequality that's plaguing our country. It's lack of opportunity. It's a dismissal of poor people as lazy, or as threats to society. More than any other issue over the next four years, we need to address the growing divide in our nation, to tone down our winner-take-all philosophy, to provide job opportunities for people who want to contribute to society.
Here are some of the common misconceptions:
1. Americans believe that the poorest 40 percent own about 10% of the wealth.
Most people greatly underestimate the level of inequality in our country, guessing that the poorest 40 percent own about 10% of the wealth, when in reality they own much less than 1% of the wealth. Out of every dollar, they own a third of a penny.
Factor in race, and it gets worse. Much of minority wealth exists in home values. But housing crashed, while the financial wealth owned almost entirely (93% of it) by the richest quintile of Americans has rebounded to lofty pre-recession levels.
As a result, for every dollar of NON-HOME wealth owned by white families, people of color have only one cent. Median wealth for a single white woman is over $40,000. For black and Hispanic women it is a little over $100.
2. Entitlements are the problem
No, they're not. The evidence is overwhelming. Social Security is a popular and well-run program. As summarized by Bernie Sanders, "Social Security, which is funded by the payroll tax, has not contributed one nickel to the deficit and, according to its trustees, can pay 100 percent of all benefits owed to every eligible American for the next 21 years." Dean Baker calls it "perhaps the greatest success story of any program in US history."
Medicare, which is largely without the profit motive and the competing sources of billing, is efficiently run, for all eligible Americans. According to the Council for Affordable Health Insurance, medical administrative costs as a percentage of claims are about three times higher for private insurance than for Medicare. And it's just as popular as Social Security.
3. Welfare benefits are a drag on the economy
Critics bemoan the amounts of aid being lavished on lower-income Americans, making dubious claims about thousands of dollars going to every poor family.
But despite an ever-growing need for jobs and basic living necessities, federal spending on poverty programs is a small part of the budget, and it's been that way for almost 50 years, increasing from 0.8 percent of GDP in 1962 to 1.2 percent of GDP in 2007.
Temporary Assistance for Needy Families (TANF) has dropped significantly over the past 15 years, leaving benefit levels far below the poverty line for most families. Ninety percent of the available benefits go to the elderly, the disabled, or working households.
For each family, current federal budgets pay about $400 per month for food, housing, and traditional 'welfare' programs. Food stamp recipients get $4.30 a day.
4. The American Dream is still alive -- if you just work hard
The Horatio Alger tale has been a popular one for conservatives, but the OECD, the Economic Policy Institute, and the National Journal all came to the same conclusion: the future earnings of a child in the U.S. is closely correlated to the earnings of his or her parents. This lack of mobility is more prevalent in the U.S. than in almost all other OECD countries.
Only 4 percent of those raised in the bottom quintile make it to the top quintile as adults. Only about 20 percent even make it to the top half.
A big part of the problem is the severe degree of poverty for our nation's children. According to UNICEF, among industrialized countries only Romania has a higher child poverty rate than the United States. Just in the last ten years the number of impoverished American children increased by 30 percent.
Not unexpectedly, it's much worse for minorities. While 12 percent of white children live in poverty, 35 percent of Hispanic children and 39% of black children start their lives in conditions that make simple survival more important than the American Dream. 80 percent of black children who started in or near the top half of U.S. income levels experienced downward mobility later in life.
5. Prison puts away the bad guys
Despite a falling violent crime rate in the U.S., there are now, as noted by Adam Gopnik, "more people under 'correctional supervision' in America -- more than six million -- than were in the Gulag Archipelago under Stalin at its height."
Incredibly, almost half of the inmates in federal prisons were jailed for drug offenses. Between 1980 and 2003, the number of drug offenders in prison or jail increased by 1100% from 41,100 in 1980 to 493,800 in 2003.
Outrageously, African Americans constituted 53.5 percent of all persons who entered prison because of a drug conviction. In the nation's largest cities, drug arrests for African Americans rose at three times the rate for whites from 1980 to 2003.
In Washington, D.C., it is estimated that three out of four young black men will serve time in prison. In New York, with 50,000 marijuana arrests per year, 90% are black or Latino. In Seattle, the 8% black population accounts for 60 percent of the arrests. Over the last ten years Colorado police have arrested Latinos at 1.5 times the rate of whites, and blacks at over 3 times the rate of whites. Newly passed marijuana laws reflect the beginnings of a backlash.
The Greatest Misconception: The rich are being "soaked"
Redistribution has not spread the wealth, it has concentrated the wealth. Conservative estimates say the richest 1% have doubled their share of America's income in 30 years. It's worse. From 1980 to 2006, the richest 1% actually TRIPLED their share of after-tax income.
The real problem is tax avoidance: lost revenue from tax expenditures (deferrals and deductions), corporate tax avoidance, and tax haven losses could pay off the entire deficit. But the very rich refuse to pay. They have their own safety net in the House of Representatives.
Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.
If you’ve never heard of state-funded General Assistance (GA) programs, you’re hardly alone. A “safety net of last resort” for very poor people—often childless adults—who don’t qualify for other forms of public assistance, there aren’t too many of them still in existence. Not too long ago most states offered them, but in recent decades they have been eliminated or severely restricted. Now, only thirty states maintain GA programs, and the benefit level for most falls below one-quarter of the poverty line, or less than $2,750 per year.
Pennsylvania Gov. Tom Corbett unveils his 2012-13 state budget proposal before the Pennsylvania House Chamber Tuesday, Feb. 7 2012 in Harrisburg, PA. (AP Photo/Bradley C Bower)
In a recent report for the Center on Budget and Policy Priorities (CBPP), Liz Schott and Clare Cho call this trend “especially troubling” since “a growing number of jobless and elderly” are exhausting their unemployment benefits and continue to be unable to find work.
“Poor, childless adults are becoming even more vulnerable to severe hardship than in the past and are doing so in greater numbers,” write the authors.
One state that still maintains a GA program is Pennsylvania where 68,000 people—or just about one in every 200 residents—receive about $205 per month (five counties offer a little more, twenty-eight counties a little less). But when Republican Governor Tom Corbett released his budget in February he proposed eliminating the program entirely as of July 1. A final budget must be passed and signed by that date, and with Republican majorities in the House and Senate, legal aid lawyer Michael Froehlich of Community Legal Services in Philadelphia says, “It’s not looking good.”
The prospect of the sudden elimination of the safety net of last resort is especially troubling when one considers who is eligible for it: disabled or sick adults without children; domestic violence survivors, many of whom have just fled abusers (lifetime benefit capped at nine months); adults participating in alcohol and other drug treatment programs (also capped at nine months); adults caring for someone sick or disabled, or an unrelated child; and children living with an unrelated adult. In all, over 90 percent of recipients are temporarily or permanently disabled.
“Only twelve states have GA programs for employable people, and Pennsylvania isn’t one of them,” says Schott. “It just serves unemployable people or a small number of persons for whom work is not appropriate, most of whom are children.”
The GA program also serves as a sort of bridge loan while people wait for the Social Security Administration (SSA) to consider a disability claim. Froehlich says that process may take eighteen to twenty-four months, and upon approval of the claim the SSA reimburses the state for the GA benefits it paid during the wait.
“Individuals with pending disability claims use their General Assistance as a bridge that keeps them alive while their claim is pending,” says Froehlich.
Froehlich and Community Legal Services are part of PA Cares for All, a coalition of more than 100 organizations that are trying to save the program. They press their case on both moral and economic grounds. The moral argument is pretty clear, and the coalition lays it out in a letter to state legislators: “These cuts will eliminate a lifeline for people in desperate crisis. This is not how Pennsylvanians want our government to treat abused women, people with disabilities, orphaned children, and people struggling to overcome drug addictions.”
But it’s the economic case that is perhaps more convincing in these times of budget cuts that routinely target the most vulnerable and least politically powerful people. The $205 per month enables many people to rent a room, pay for transportation to needed appointments, cover co-pays or escape abuse.
“If you eliminate the only source of income for these 68,000 Pennsylvanians overnight—folks who’ve already been determined by their doctors to be temporarily unable to work—it’s not like they are just going to disappear,” says Froehlich. “They are going to show up in the shelter system. Worst case scenario they’re going to show up in the criminal justice system.”
According to the coalition, GA’s $205 monthly payment is a bargain compared to the monthly costs that would be incurred by the state if people are left destitute: homeless shelters run $1,050 per month, per person; foster care $600 to $1,800; incarceration $2,750; and state psychiatric hospitals average $20,584.
“Why are we ditching a system that keeps people off the street and housed in favor of a shelter system that costs five times that?” asks Froehlich.
One current GA recipient, 62-year-old “Suzy,” has been receiving assistance for two years while waiting on the SSA to process her application for disability benefits. She lost her home three years ago after working as a college professor, in catering and food service, and as a tutor, and then caring for her two elderly parents until their deaths.
“I’ve had a bit of an eclectic career, but it has suited me,” she says.
After losing her home Suzy found herself on the streets—“a place I never imagined I would be.” The GA assistance enables her to rent a room in transitional housing. Even though her disability prevents her from working, she’s interviewed for jobs anyway (to no avail) because she’s so desperate for more money. She says the prospect of losing this last bit of assistance is overwhelming.
“It’s too enormous and it’s to the point where I almost go into a willful forgetfulness because I really don’t know that I can deal with it,” she says. “At this point I don’t even have money to buy a toothbrush or a toiletry, and I’m not talking fancy, the dollar store will do.”
Suzy says that a friend recently asked her what she would do if her assistance is cutoff on July 1? She replied, “Jump off a roof.” The friend told her not to do that.
“And I said, ‘You know something? I’m beyond at this point—I’m too tired. I’m beyond saying, Oh no, I won’t do that anymore.’ I just don’t know, because it leaves you with nothing and a crushing burden,” she says.
Suzy did manage to write a letter to her legislators lobbying them to vote against cutting the program, and Froehlich is hopeful that more Pennsylvanians will join in that effort and also participate in a lobbying day on May 7 as they become aware of the issue. But it’s a tough road ahead. The governor’s budget proposes significant cuts to K-12 education, higher education and programs for homelessness, mental health and other disability services. Without additional pressure, the GA program might be last in line for restored funding if any of the governor’s cuts are reversed.
Froehlich says educators, colleges, universities and human services people are all doing an excellent job turning their people out to lobby.
“But it’s very difficult for somebody who is really at the end of their rope to get on a bus, go to Harrisburg, and meet with their legislators,” he says.
What frustrates Froehlich and the coalition most of all is that none of these cuts would be necessary—to any of the programs—if the Legislature would take up the revenue side of the equation. For starters, a planned phased reduction of a corporate “capital stock and franchise tax” beginning this year could be delayed; and corporate loopholes could be closed—like “the Delaware loophole,” which allows three out of four companies in Pennsylvania to avoid paying state taxes by claiming a Delaware address. These loopholes represent billions in potential revenues, while the state’s Department of Public Welfare estimates that eliminating the GA program will save just $150 million per year.
“I’m bewildered by these people, I really, really am,” says Suzy. “They are just throwing people away. I guess it’s their solution for the poor, if everybody just dies then that pesky, pesky, little problem will go away.”
Read the full article with additional resources at The Nation.
Greg Kaufmann is a Nation contributor. His column, This Week in Poverty, posts every Friday morning. His work has also appeared on Common Dreams, AlterNet, Tikkun.org, NPR.org, CBS News.com, and MichaelMoore.com. Constructive comments and ideas will also be read at WeekInPoverty@me.com. Please follow him on Twitter as well.
LINDSTROM, Minn. — Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.
He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.
Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.
There is little poverty here in Chisago County, northeast of Minneapolis, where cheap housing for commuters is gradually replacing farmland. But Mr. Gulbranson and many other residents who describe themselves as self-sufficient members of the American middle class and as opponents of government largess are drawing more deeply on that government with each passing year.
Dozens of benefits programs provided an average of $6,583 for each man, woman and child in the county in 2009, a 69 percent increase from 2000 after adjusting for inflation. In Chisago, and across the nation, the government now provides almost $1 in benefits for every $4 in other income.
Older people get most of the benefits, primarily through Social Security and Medicare, but aid for the rest of the population has increased about as quickly through programs for the disabled, the unemployed, veterans and children.
The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.
And as more middle-class families like the Gulbransons land in the safety net in Chisago and similar communities, anger at the government has increased alongside. Many people say they are angry because the government is wasting money and giving money to people who do not deserve it. But more than that, they say they want to reduce the role of government in their own lives. They are frustrated that they need help, feel guilty for taking it and resent the government for providing it. They say they want less help for themselves; less help in caring for relatives; less assistance when they reach old age.
The expansion of government benefits has become an issue in the presidential campaign. Rick Santorum, who won 57 percent of the vote in Chisago County in the Republican presidential caucuses last week, has warned of “the narcotic of government dependency.” Newt Gingrich has compared the safety net to a spider web. Mitt Romney has said the nation must choose between an “entitlement society” and an “opportunity society.” All the candidates, including Ron Paul, have promised to cut spending and further reduce taxes.
The problem by now is familiar to most. Politicians have expanded the safety net without a commensurate increase in revenues, a primary reason for the government’s annual deficits and mushrooming debt. In 2000, federal and state governments spent about 37 cents on the safety net from every dollar they collected in revenue, according to a New York Times analysis. A decade later, after one Medicare expansion, two recessions and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.
The recent recession increased dependence on government, and stronger economic growth would reduce demand for programs like unemployment benefits. But the long-term trend is clear. Over the next 25 years, as the population ages and medical costs climb, the budget office projects that benefits programs will grow faster than any other part of government, driving the federal debt to dangerous heights.
Americans are divided about the way forward. Seventy percent of respondents to a recent New York Times poll said the government should raise taxes. Fifty-six percent supported cuts in Medicare and Social Security. Forty-four percent favored both.
Support for spending cuts runs strong in Chisago, where anger at the government helped fuel Mr. Cravaack’s upset victory in 2010 over James L. Oberstar, the Democrat who had represented northeast Minnesota for 36 years.
“Spending like this is simply unsustainable, and it’s time to cut up Washington, D.C.’s credit card,” Mr. Cravaack said in a February speech to the Hibbing Area Chamber of Commerce. “It may hurt now, but it will be absolutely deadly for the next generation — that’s our children and our grandchildren.”
But the reality of life here is that Mr. Gulbranson and many of his neighbors continue to take as much help from the government as they can get. When pressed to choose between paying more and taking less, many people interviewed here hemmed and hawed and said they could not decide. Some were reduced to tears. It is much easier to promise future restraint than to deny present needs.
“How do you tell someone that you deserve to have heart surgery and you can’t?” Mr. Gulbranson said.
He paused.
“You have to help and have compassion as a people, because otherwise you have no society, but financially you can’t destroy yourself. And that is what we’re doing.”
He paused again, unable to resolve the dilemma.
“I feel bad for my children.”
Middle-Class Blues
Mr. Gulbranson has tried several ways to make a living in the storefront he bought from his father in 1979. He ran a gift shop, then shifted to selling jewelry. Nine years ago, he moved the gold scales to the back and bought equipment for screen-printing clothing. Through it all, he has never made more than about $46,000 in a year.
Meanwhile, the cost of life — and of raising five children — has climbed inexorably.
“I used to go out and try to have a meal at Perkins, which is a restaurant here, and get out of the store with $5,” Mr. Gulbranson said. “And now it’s probably up to $10.”
In recent years he has earned so little that he did not pay federal income taxes, although he still paid thousands of dollars toward Medicare and Social Security. The earned-income tax credit is intended to offset those payroll taxes, to encourage people with lower-paying jobs to remain in the work force.
Mr. Gulbranson said the money covered the fees for his children’s sports leagues and the cost of keeping the older ones on the family’s car insurance.
“If we didn’t get these government things, then probably my kids could not participate in some of the sports they do,” he said.
Almost half of all Americans lived in households that received government benefits in 2010, according to the Census Bureau. The share climbed from 37.7 percent in 1998 to 44.5 percent in 2006, before the recession, to 48.5 percent in 2010.
The trend reflects the expansion of the safety net. When the earned-income credit was introduced in 1975, eligibility was limited to households making the current equivalent of up to $26,997. In 2010, it was available to families making up to $49,317. The maximum payout, meanwhile, quadrupled on an inflation-adjusted basis.
It also reflects the deterioration of the middle class. Chisago boomed and prospered for decades as working families packed new subdivisions along Interstate 35, which runs up the western edge of the county like a flagpole with its base set firmly in Minneapolis. But recent years have been leaner. Per capita income in Chisago excluding government aid fell 6 percent on an inflation-adjusted basis between 2000 and 2007. Over the next two years, it fell an additional 7 percent. Nationally, per capita income excluding government benefits fell by 3 percent over the same 10 years.
Mr. Gulbranson’s business struggled as other companies, particularly construction firms, stopped ordering logo-emblazoned shirts. In 2009, the family claimed the earned-income credit for the first time on the advice of their accountant, who was claiming it for herself. The share of local families claiming the credit climbed 33 percent between 2000 and 2008, the most recent year for which data are available.
To make extra money, Mr. Gulbranson refereed 40 soccer games on Tuesday and Thursday nights last fall. His wife sold clothes at equestrian events and air-brushed novelties at craft fairs, driving around the country with a one-ton trailer hitched to a 20-foot van.
Their difficulties, Mr. Gulbranson said, have made it hard to imagine asking anyone to pay higher taxes.
“I don’t think most people could bear to pay more,” he said.
Instead, he said he would rather give up the earned-income credit the family now receives and start paying for school lunches for his children.
“I don’t demand that the government does this for me,” he said. “I don’t feel like I need the government.”
How about Social Security? And Medicare? Can he imagine retiring without government help?
“I don’t think so,” he said. “No. I don’t know. Not the way we expect to live as Americans.”
A Starring Role
Bob Kopka and his wife often drive to the American Legion hall in North Branch on Thursday nights, joining the crowd gathered in the basement bar for the weekly meat raffle. Almost everyone present relies on the government to pay for their medical care.
Mr. Kopka, 74, has had three heart procedures in recent years. His wife recently had surgery to remove cataracts from both eyes.
Without Medicare, Mr. Kopka said, the couple could not have paid for the treatments.
“Hell, no,” he said. “No. Never. She would have to go blind.”
And him?
“I’d die.”
Few federal programs are more popular than Medicare, which along with Social Security assures a minimum quality of life for older Americans.
None are more central to the nation’s financial problems. The Congressional Budget Office projects that government spending on medical benefits, even taking into account the cost containment measures in the 2010 health care law, will rise 60 percent over the next decade. Then it will start rising even more quickly. The cost of caring for each beneficiary continues to increase, and the government projects that Medicare enrollment will grow by roughly one-third as baby boomers enter old age.
Spending on medical benefits will account for a larger share of the projected increase in the federal budget over the next decade than any other kind of spending except interest payments on the federal debt.
Medicare’s starring role in the nation’s financial problems is not well understood. Only 22 percent of respondents to the New York Times poll correctly identified Medicare as the fastest-growing benefits program. A greater number of respondents, 27 percent, chose programs for the poor. That category, which includes Medicaid, is slightly larger than Medicare today but is projected to add only half as much to federal spending over the next decade.
Medicare’s financial problems are much worse than Social Security’s. A worker earning average wages still pays enough in Social Security taxes to cover the benefits the worker is likely to receive in retirement, according to an analysis by the Urban Institute. Social Security is still running out of money because the program must also support spouses who do not work and workers who earn lower wages. But Medicare’s situation is even more dire because a worker earning average wages still contributes only $1 in Medicare taxes for every $3 in benefits likely to be received in retirement.
A woman who was 45 in 2010, earning $43,500 a year, will pay taxes that will reach a value of $87,000 by the time she retires, assuming the money is invested at an annual interest rate 2 percentage points above inflation, according to the Urban Institute analysis. But on average, the government will then spend $275,000 on her medical care. The average is somewhat lower for men, because women live longer.
Medicare is often described as an insurance program, but its premiums are not nearly high enough. In simple terms, Americans are getting more than they pay for.
But many older residents in Chisago say this problem belongs to younger generations. They paid what they were told; they want to collect what they were promised.
Some, like the Kopkas, have savings they can tap. Mr. Kopka still owns the landscaping business he started after leaving the Navy in the early 1960s. He and his wife own a three-bedroom home on three acres, valued by the county at $153,700. The mortgage is paid. They hope to pass the house to their children.
Others have nothing else. Barbara Sullivan, 71, moved last year to the apartments above the Chisago County Senior Center in North Branch. Waiting on a recent Friday for the hot lunch, which costs $3.50, she watched roughly 20 people play bingo for prizes including canned soup and Chef Boyardee pasta.
“Most of the seniors around here are struggling to make it,” she said.
She counts herself among them. She lives on $1,220 a month in Social Security benefits and relied on Medicare to pay for an operation in November.
She believes that she is taking more from the government than she paid in taxes. She worries about the consequences for her grandchildren. She said she would like politicians to propose solutions.
“We’re reasonable people,” she said. “We’re not going to say, ‘Give it to me and let my grandchildren suffer.’ I think they underestimate seniors when they think that way.”
But she cannot imagine asking people to pay higher taxes. And as she considered making do with less, she started to cry.
“Without it, I’m not sure how I would live,” she said. “With the check I’m getting from Social Security, it’s a constant struggle on making sure that I pay my rent and have enough left for groceries.
“I haven’t bought a Christmas present, I haven’t bought clothing in the last five years, simply because I can’t afford it.”
Keeping a Promise
Representative Cravaack often says he entered politics to lift the burden of debt from the shoulders of his two sons.
“I vision that I open up their backpacks and I put in a 50-pound rock and zip it back up again,” Mr. Cravaack told the Minnesota Freedom Council in October 2010. “And I say, ‘Sorry, son, you’re going to have to hump this the rest of your life.’ Because that’s exactly what we’re doing to our national debt right now to our children.”
Mr. Cravaack, a 53-year-old Navy veteran and a retired pilot for Northwest Airlines, was grounded by sleep apnea in 2007. He and his wife, an executive at the drug company Novo Nordisk, decided he would stay home with their sons. He soon became the first man to serve as president of the Chisago Lakes Parent Teacher Organization.
In August 2009, while driving the children to North Branch, he heard a talk radio host urging people to protest President Obama’s health care legislation. Mr. Cravaack and about two dozen others spent more than two hours the next day in Mr. Oberstar’s North Branch office before a staff member told them the congressman would not meet them. The rejection convinced Mr. Cravaack that Mr. Oberstar should be replaced. One of the other protesters, a woman who had taken her six children to the office, became Mr. Cravaack’s campaign scheduler.
Two weeks after speaking to the Freedom Council, he beat Mr. Oberstar by 1.6 percentage points, or 4,407 votes. Voters in Chisago, the southern tip of an expansive district, provided the margin of victory.
“We have to break away,” Mr. Cravaack told supporters, “from relying on government to provide all the answers.”
Mr. Cravaack has said he drew unemployment benefits during a furlough from Northwest in the early 1990s. He did not respond to several requests for an interview, nor to an e-mail with questions about his views and about whether his family has drawn on other benefits programs. This account is based on a review of his public statements.
Shortly after arriving in Congress, Mr. Cravaack voted with a vast majority of House Republicans for a plan to remake Medicare by providing money to its beneficiaries to buy private insurance. Senate Democrats have rejected that plan.
But Mr. Cravaack has also consistently said the government should not reduce its largest category of spending — benefits for the current generation of retirees. He also says he does not support cuts for people who will turn 65 over the next decade.
“If you’re 55 years and older, you don’t have to listen to this conversation because we have to keep those promises,” Mr. Cravaack told The Daily Caller last April. “People like myself, 52, if you’re 54 or younger, we’re going to have a conversation.”
Tomorrow, Tomorrow
The government helps Matt Falk and his wife care for their disabled 14-year-old daughter. It pays for extra assistance at school and for trained attendants to stay with her at home while they work. It pays much of the cost of her regular visits to the hospital.
Mr. Falk, 42, would like the government to do less.
“She doesn’t need some of the stuff that we’re doing for her,” said Mr. Falk, who owns a heating and air-conditioning business in North Branch. “I don’t think it’s a bad thing if society can afford it, but given the situation that our society is facing, we just have to say that we can’t offer as much resources at school or that we need to pay a higher premium” for her medical care.
Mr. Falk, who voted for Mr. Cravaack, said he did not want to pay higher taxes and did not want the government to impose higher taxes on anyone else. He said that his family appreciated the government’s help and that living with less would be painful for them and many other families. But he said the government could not continue to operate on borrowed money.
“They’re going to have to reduce benefits,” he said. “We’re going to have to accept it, and we’re going to have to suffer.”
One of the oldest criticisms of democracy is that the people will inevitably drain the treasury by demanding more spending than taxes. The theory is that citizens who get more than they pay for will vote for politicians who promise to increase spending.
But Dean P. Lacy, a professor of political science at Dartmouth College, has identified a twist on that theme in American politics over the last generation. Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.
Conversely, states that pay more in taxes than they receive in benefits tend to support Democratic candidates. And Professor Lacy found that the pattern could not be explained by demographics or social issues.
Chisago has shifted over 30 years from dependably Democratic to reliably Republican. Support for the Republican presidential candidate has increased relative to the national vote in each election since 1984. Senator John McCain won 55 percent of the vote here in 2008.
Residents say social issues play a role, but in recent years concerns about spending and taxes have predominated.
Voters in the North Branch school district have rejected increased financing for local schools in each of the past three years. In 2010, the district switched to a four-day school week, striking Monday from the calendar to save money.
Some of the fiercest advocates for spending cuts have drawn public benefits. Many, like Mr. Falk, have family members who rely on the government. They often cite that personal experience as the reason they want to cut government spending.
Brian Qualley, 49, has a sister who survived a brain tumor but was disabled by its removal. The government pays for her care at an assisted-living facility. Their mother scrapes by on Social Security.
Mr. Qualley said that the government should provide for those who need help, but that too much money was being wasted. Mr. Qualley, who owns a tattoo parlor in Harris, north of North Branch, said some of his customers paid with money from government disability checks.
“They’re getting $300 or $400 tattoos, and they’re wearing nice new Nike shoes that I can’t afford,” he said, looking up from working a complicated design into the left leg of a middle-aged woman. “I guess I shouldn’t say it because it’s my business, but I think a tattoo is a little too extravagant.”
But Mr. Qualley said he did not want to reduce benefits for the current generation of retirees. Rather, he said his own generation should get less, because they have time to prepare. This is a common position among the young and healthy in Chisago.
Mr. Qualley said he was saving some money for retirement, although, he added, “I don’t have a 401(k) or anything like that.”
“I also have a job that I don’t necessarily ever want to — or have to — retire from,” he said.
What if his hands start to shake as he gets older?
“Actually,” he said, the electric needle falling silent in his hand, “it’s my shoulders and neck that bother me most.”
Safety in Numbers
Barbara Nelson has little patience for people who say they will not need government help. She considers herself lucky she has not, and obligated to provide for those who do.
“Catastrophes happen in life,” she said, sitting in a coffee shop in Taylors Falls. “To be so arrogant that you think it won’t happen to you, that somehow you’re going to be one of the special ones, I disagree with that.”
Ms. Nelson, 61, who describes herself as a centrist Democrat, also dismisses the claim that people cannot afford to pay more taxes.
“Anyone who can come into a coffee shop and buy coffee is capable of paying more,” she said. “If someone’s life can be granted, in terms of adequate health care, if that means I give up five cups of coffee a month, that is a small price to pay.”
Gordy Peterson, 62, who has used a wheelchair for 30 years since a construction accident, has reluctantly reached a similar conclusion.
“I’m a conservative,” he said by way of introducing himself. He built his own house before his injury and paid for it in cash. He still thinks the government should operate that way. He never intended to depend on federal aid and said he sometimes felt guilty about it.
But for the last three decades, he has received a regular check from the Social Security disability insurance program, and Medicare has helped to pay his medical bills.
“Here I’m getting money, and everybody is struggling,” he said. “Even though it ain’t no cakewalk for me.”
Mr. Peterson used a workers’ compensation settlement to buy a farm that he managed with his brother-in-law, who is mentally handicapped and also on government disability.
“He was my legs, and we worked it,” Mr. Peterson said.
They grew corn, soybeans and rye, and even kept steers for a while. In good years they earned enough to live on. In bad years they lived on the government’s checks. Life would have been very difficult without them, he said.
Mr. Peterson, an easygoing man who looks down when he thinks and smiles sheepishly when he offers an opinion, looked down after completing the story of his own dependence on the safety net.
“It’s hard to beat up on the government when they’ve been so good to you,” he finally said. “I’ve never really thought about it, I guess.”
Lately, the government has been very good, indeed. The county, with federal financing, bought a corner of Mr. Peterson’s farm to build a new interchange for Interstate 35. He used the money to open a gas station at the edge of the farm in 2008 to serve the traffic that rolls off the new ramp. The business is prospering, and he no longer worries that he will need to depend on Social Security.
“But you can’t take that away,” he said. “My own sister has only Social Security. That’s all. That’s all she’s going to have. And if you take that away from her, Christ, she’d be a street person. I don’t think we can cut them off on that.”
How about higher taxes?
Maybe a little higher, he said. Maybe.
“I’m glad I’m not a politician,” he said. “We’re all going to complain no matter what they do. Nobody wants to put a noose around their own neck.”
There's not much that comes out of conservative mouths these days that I find agreeable. However, Republican Governor of Indiana Mitch Daniels, in his rebuttal to President Obama's State of the Union Speech, mentioned an idea for saving the government money which I heartedly (I won't say whole- heartedly) endorse. He said:
"There is a second item on our national must-do list: we must unite to save the safety net. Medicare and Social Security have served us well, and that must continue. But after half and three quarters of a century respectively, it’s not surprising that they need some repairs. We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too.
“Decades ago, for instance, we could afford to send millionaires pension checks and pay medical bills for even the wealthiest among us. Now, we can’t, so the dollars we have should be devoted to those who need them most. [ed. note: Amen!]
...
"It’s absolutely so that everyone should contribute to our national recovery, including of course the most affluent among us. ... The better course is to stop sending the wealthy benefits they do not need, and stop providing them so many tax preferences that distort our economy and do little or nothing to foster growth."
First I should add that there is $2.5 trillion in the Social Security Trust Fund so it is not exactly in dire need of reform and also eliminating the cap on income on which people pay Social Security and Medicare taxes will bring in additional money. Medicare, on the other hand, is in dire need of reform, but increasing the amount on which the rich pay into the system in Medicare taxes will help to fix that.
But why do liberals, like Thom Hartmann, disagree with the sentiment "to stop sending the wealthy benefits they do not need"? By Hartmann's convoluted logic we must continue to make payments to the rich just so they won't eliminate payments to the poor and middle class. Thom Hartmann says that this would be the "camel's nose under the tent" for those who want to destroy Social Security and Medicare. His logic is the same as those who say we must give tax breaks to big corporations just so they will continue to provide jobs. Means testing according to him will give Republicans all the leeway they need to eliminate Social Security and Medicare altogether. Bullshit! They don't need the pretext of "means testing" to accomplish that. Hartmann doesn't realize that all social programs in the US are under attack by the right wing and the only thing standing in the way of their entire elimination is the determination of the middle class and Democratic politicians to fight for their continuance and even expansion.
So liberals will resist even a rational idea for reform because it might lead to the complete destruction of these venerable programs? Let me tell you something. Their nose is already under the tent. They don't need this pretext for wanting to destroy Social Security and Medicare. Why they have already boldly proposed privatizing both of these programs. Check out Paul Ryan's plan, "The Path to Prosperity" (for the rich). For liberals or progressives to oppose a rational idea just because it comes from someone that I for one disagree with on everything else he is trying to do, like destroying unions in the state of Indiana, is utter irrational nonsense. It goes under the same principal of not giving subsidies and tax breaks to highly profitable corporations like the oil companies.
President Obama is proposing an alternative minimum tax for millionaires. Why not apply this alternative minimum tax to corporations? Why should Exxon and GE actually get back taxpayer dollars and pay absolutely nothing in? There should be an alternative minimum tax for them too. By the same token senior citizens who have retirement incomes in the $100,000. range or higher don't need another $1000. a month in social security benefits. The money would be better spent by giving it to people whose only retirement income is social security and whose social security income places them below the poverty line. If you are getting $10,000. a month in retirement income, you don't need another $1000. a month in Social Security. It's absolutely ridiculous. By the same token, you don't need Medicare either. You're perfectly capable of buying a gold plated private health insurance policy which the rich would probably do anyway since the finest doctors (unfortunately) do not even accept Medicare patients.
To take a truly conservative approach to government spending is to make everyone (including corporations which according to the Supreme Court are people) pay their fair share and to not receive government benefits which they don't deserve. By definition they don't deserve government benefits if they are fantastically wealthy in the first place although the rich have hired lobbyists whose main goal is to provide them with government benefits at the expense of the poor and middle class. This has turned the goal of reducing government spending on its head. According to them (in defiance of the hypocritical words that come out of their mouths) there is no government spending so large that goes to the wealthy that should be eliminated. Their goal is to shower government benefits on the rich while denying them to the poor. That's why there is so much inequality in the US - because they have been actively promoting it regardless of the hypocritical words they say. They are only for reducing the size of government when it comes to reducing government programs and subsidies which benefit the poor and middle class.
The top 1% of Americans own 40% of the nation's wealth. The bottom 80% own 7%. The top 1% take home 24% of the nation's income. In 1976 they took home just 9%. Their share of national income has almost tripled in just over 30 years. How was this accomplished? Not by hard work, but by incessant lobbying to change laws that benefit the rich like the 1999 Financial Services Modernization Act and the Commodities Futures Modernization Act of 2000 that overthrew Glass-Steagall leading to the merger of commercial and investment banks, unregulated derivatives, credit default swaps, collateralized debt obligations and all the other paraphernalia of the financialization and globalization of the US economy. Leveraged buyout artists or vulture capitalists like Mitt Romney can give $100,000,000. to each of his five sons without paying any gift tax while ordinary middle class folks pay taxes through the nose. On Romney's income of $21 million last year, for which he did no work to earn it, he paid less than 14% in taxes while most middle class folks are taxed in the 30% range. Romney also paid practically nothing in Social Security or FICA taxes. If he had paid FICA taxes on all his income, this would have helped to bail out Social Security and Medicare right there.
Capital gains is how the rich make their money and they are taxed right now at half the rate that the middle class is taxed. Here is the history:
In the 1970s under President Carter capital gains were taxed at 40%. In the 1980s under President Reagan they were lowered to 20% and under George W Bush they were lowered to 15%. All this was done under the noses of the middle class while they were sleeping or watching football on television. What me worry? Meanwhile lobbyists for the rich were hard and persistently at work. It's pretty clear that Democratic Presidents have raised capital gains taxes while Republican Presidents have lowered them.
A true conservative would want to conserve the safety net while insuring that the rich pay their fair share. Instead all they talk about is lowering taxes (primarily on the rich) while eliminating government programs which primarily benefit the poor and middle class. If they want to reduce the size of government a good place to start would be to reduce the size of the bloated military-industrial complex. Presdident Obama is already striking a populist tone with his talk about an "alternative minimum tax" on millionaires while Defense Secretary Leon Panetta is busy ending wars and reducing the size of the military-industrial complex. They should follow up by embracing Social Security and Medicare reform and by reducing or eliminating payouts of all kinds to the rich. They should also enact a Financial Transactions Tax to be used for debt reduction so that the banks can pay back their fair share to the taxpayers who bailed them out.
Fifteen years ago, on August 22, 1996, President Bill Clinton perched at a podium in the White House Rose Garden and signed the bill that would become known as welfare reform. Flanked by three former welfare recipients and looking glazed and smooth as a donut, he swept aside six decades of social welfare policy with a single triangulating stroke of his pen, reversing a course that had been set by Franklin Delano Roosevelt during the New Deal. In the process, he handed the law’s right-wing backers their first emboldening victory in a far bigger, dirtier, and still raging campaign to unravel the government safety net.
“Today we are ending welfare as we know it,” Clinton declared, the words “A New Beginning” emblazoned on the podium beneath him in case anyone missed the point. From that moment on, needy families would face a strict five-year lifetime limit for welfare assistance. They would have to comply with stringent work requirements. Handouts would be replaced by a hand up, self-destruction would yield to self-sufficiency, and dependency would give way to the starchy respectability of personal responsibility.
Or, as Clinton promised, “Today we are taking a historic chance to make welfare what it was meant to be: a second chance, not a way of life.”
Exactly fifteen years later, a handful of welfare recipients gathered in Harlem, just a few blocks from Clinton’s post-presidency redoubt, to describe exactly what Bubba’s “second chance” has meant for them. They had been brought together by Community Voices Heard, a grassroots group of low-income people forged out of the fires of welfare reform, and their stories crisscrossed the spectrum of welfare experiences. They were several women and one man, they were white, black, and Latina, they were young and they were older – and their verdict was as swift and final as a guillotine.
“It’s a failure. It’s a total failure,” said Melissa McClure, a reedy-voiced 50-something with a Louise Brooks bob who successfully managed gift stores before falling on hard times and applying for welfare in early 2007.
“If I had a worst nightmare, this would be it,” said Ketny Jean-Francois, a Haitian-born single mother who spent four years in the welfare meat-grinder before managing to land a spot in a nursing program – against welfare reform rules – and then a job.
The lone man of the group, Bill, a single 49-year-old with a host of physical and psychological ailments, struggled to find the words before spitting out, “It’s definitely not achieving the goals of helping out,” he said. “The official line is, ‘If you’re not working, we want to see you working. If you have children, we want to help you so you [don’t] come back.’ But if that’s really the goal – no.”
Failure. Nightmare. Not achieving its goals. None of these descriptions are part of the official line peddled by welfare reform’s sponsors and backers. If you hear anything these days, it’s how dramatically welfare caseloads have dropped in the last 15 years – 57 percent! – and how salutary it’s been for the country. “We renewed the American spirit by emphasizing personal responsibility in place of generational dependency on government,” boated E. Clay Shaw Jr., former Republican congressman and drafter of 1996’s welfare reform law, in a recent Politico editorial. Indeed, far from questioning the law’s fundamental merits and efficacy, many Republicans (and a few Democrats) have taken to complaining that the law hasn’t gone far enough, that its implementation has been too lax and its lessons not fully adequately exported. “The job is not finished,” Dave Camp, Michigan Republican and Ways and Means Committee Chairman, said in a statement. “[O]ther programs can and should be reformed to follow suit.”
And yet, to listen to the people who know welfare reform best, to the “Reformed,” the reality of the 1996 law is not only a far cry from the compassionate conservative triumph it’s trumpeted to be, it’s a crucible for the failures of the stingy, starve-the-beast, punish-the-poor philosophy so in vogue among the Tea Bag brigades.
A hand up? More like a slap down, say those who’ve been through the system. The famously-touted welfare-to-work programs are little more than exercises in make-work and are often exploitative to boot. Childcare remains persistently scarce. Job training is poor to non-existent. And on the increasingly rare occasions when people do find jobs, these jobs are often low-wage gigs that fail to hoist them out of poverty.
Meanwhile, life on welfare has become shorter, harsher, and more strapped. Cash grants have stagnated or even fallen in a number of states, with the median benefit for a family of three now clocking in at $429 a month, just 28 percent of the federal poverty level, according to the Center for Budget and Policy Priorities. Time limits have also gotten shorter. And while caseloads have certainly plummeted, it’s fairly clear that a hefty portion of this drop can be attributed to steep new barriers to entry – and time limits, of course. How else to explain the fact that at the height of the Great Recession only 28 percent of Americans living in poverty received welfare assistance while 75 percent got welfare help in 1995? In 13 states, welfare rolls actually declined during the recession, according to an Urban Institute report.
All of which suggests that for all the braying triumphalism, our nation’s great welfare reform experiment is little more than an elaborate shell game, a confidence trick in which poor people get shuffled this way and that while their lives remain essentially unchanged. Or get harder.
Take the case of Bill, the lone man at the Community Voices Heard gathering, who wore a charm bracelet of Catholic saints around his wrist and asked to keep his last name on the down-low since most of his family doesn’t know his situation. Bill is a college graduate who spent years working in and around the computer world until the recession conspired with a greedy landlord to take most of his income (he made only $6000 in 2008) and then his home. Eviction was followed by homelessness. Eventually he landed on Public Assistance, which immediately put him to work in New York’s notorious workfare program.
The city’s workfare program is the twisted, and nationally celebrated, brainchild of former New York City mayor, Rudolph Giuliani, and a small cadre of conservative think tank gurus. It requires public assistance recipients to spend 35 hours a week doing a mix of job search and work activities – or face losing part or all of their benefits. These work activities, grouped under the condescending title of the Work Experience Program (WEP), include jobs like sweeping streets, cleaning parks, doing security, filing – low-skilled, formerly union jobs for which the WEP workers are not paid, per se, because they are actually working off their benefits. Hence the comparisons to indentured servitude. Alternatives like education and training courses are generally forbidden, and exemptions for disabilities or disease are difficult to obtain. The reason: a “work-first” ethic so unrelenting that Giuliani’s most notorious welfare commissioner, Jason Turner, famously explained, “It’s work that sets you free.” (Apparently he skipped the chapter in his high school history book about the Holocaust.)
“Work-first,” however, has not set many welfare recipients free. It certainly didn’t help bill.
Bill is a man of many ailments, something that is apparent to the casual observer almost upon meeting him. Smart and sensitive, he is beset by the tics and torments of a man with serious depressive and anxiety disorders. He also underwent major surgery for a tear in his stomach in 2010. But within weeks of the operation, unable to bend, lift, or twist and suffering from pain and panic attacks, he was required to go back to his welfare-mandated job search and work activities. All so he could continue to receive $45 a month in cash assistance.
“It’s like trying to trip a handicapped person,” said Bill, who was recently judged disabled enough to qualify for Social Security Disability insurance and Supplemental Security Income – though not before suffering a year in the workfare trenches. “But I have to stress that there are so many people that are in a much, much worse situation, and they’re making them [work].… I saw guys nodding off in wheelchairs!”
Such stories reverberate throughout the archives of welfare reform, but even the stories that aren’t so patently bad aren’t so pretty either. Everyone has something to tell. For Ketny Jean-Francois, for instance, it was working a WEP assignment for the sanitation department in the Hunts Point section of the Bronx, a swath of asphalt and misery famous for its brisk drug and prostitution trades. Each day she would head to her assignment picking up condoms, needles, and “doodoo” (as she delicately put it) in the protective company of one of her male co-workers, but that only seemed to encourage the Johns, who would invariably stop her “guard” to ask her going rate.
As for Cheina Goncalec, a petite 27-year-old with two young kids who moved to New York in search of work, her story revolved around her stint as a security guard at a West Harlem community center, a WEP experience that consisted of fending off the occasional cursing, threatening gym-goer without any self-defense training whatsoever. But that was just icing. There was the constant abuse by welfare agency workers. And the arbitrary closing of her case. And the welfare agency’s refusal to let her substitute education or training for WEP, even though “the only way to get out of welfare is getting a good job,” she said. And there was the fact that after a year-and-a-half spent doing “job search” and WEP, she was no closer to finding a permanent job – or climbing out of poverty.
Given such snags in a program widely touted as one of the jewels of welfare reform – so “successful” that it’s been used as a model for the creation of workfare programs in places as far-flung as Israel and London – it would seem like it might be long past time to re-evaluate. There are certainly plenty of smart ideas. And since the welfare program, Temporary Assistance for Needy Families, is set to be reauthorized in September, this would be the perfect time to debate, tweak, even radically reshape it.
Perhaps the most desperately-needed change is a philosophical one, a shift in purpose and focus from welfare reform as an experiment in punitive behavior modification and deterrence to welfare as a genuine anti-poverty program. From this, everything else would follow: welfare caseworkers caring and experienced enough to help applicants get the services they need (beginning with access to welfare) rather than deterring them; higher cash grants which would allow recipients to live rather than simply subsist; access to quality child care; programs and alternatives for people with barriers to employment; training programs that are tiered to meet recipients where they’re at – and prepare them for quality jobs; and above all, subsidized employment programs that would train and then place recipients in bona fide, living-wage paying jobs.
“During the Great Depression, they put people to work doing what they knew to do,” said Melissa McClure, offering an example of the kind of jobs program she’d like to see. “All that and you were paid, and it was promoting you into a better position.”
And yet, what are the chances? The government couldn’t – or, more accurately, wouldn’t – even maintain the TANF Emergency Fund, which provided subsidized jobs to some 240,000 unemployed people and was one of the few effective jobs programs created during the Great Recession; instead, it let its funding expire last September. And with Congress divided between slack do-nothings and rabid ideologues (the worst really are full of passionate intensity), the fight over “reform” has moved from the fringes of a fraying society to the center, from the question of entitlements to the poor to entitlements more broadly.
Welfare reform, it turns out, was just the warm-up. It was a test-case and a prophecy, “a new beginning” after all. And as the first hard yank on the threads holding together the country’s safety net – its social contract to provide for the needy – it should have been a clarion warning. Welfare reform was an attack on all of us.
The Dutch three-tier pension system -- state AOW (Social Security) Pension, Supplementary Pensions based on terms of employment between employers and employees, and Supplementary Personal Pensions anyone can buy from insurance firms, companies or banks -- are reputed to be the best in the world. At the end of 2009, total assets of Dutch pensions funds were $745 billion or 130% of GDP -- the highest of all OECD countries by far. This enormous sum is invested in bonds and stocks and is thus sensitive to volatility in the financial markets. During the years 2001-2003 preceeding the bubble, the Dutch very wisely reduced significantly the level of pension fund investments in stocks while sharply increasing investments in bonds. Result? Modest exposure to plummeting stock markets in 2007-09.
Still, the Netherlands is no exception to the rising pressures being placed on pensions (and health care) as a result of the financial and economic crises, low interest rates, and particularly the aging population, increasing life expectancy, and recourse to expensive high-tech medical services. So, true to Dutch pragmatism of timely confronting changing macro-economic realities head-on -- unlike the enduring systemic political squabbling and paralysis on such serious matters in the U.S. -- last Friday, a majority of Dutch Parliament MPs announced their support of a reformed state AOW pension deal agreed to among unions, employers, and ministers. The reforms still have to be approved by individual union members and some influential union members have said they will vote no.
The main reform points of the state AOW (Social Security) pension agreement include:
The pension age will go to 66 in 2020 and probably rise again to 67 in 2025.
The pension will increase by 0.6% plus inflation per year from 2013 to 2028.
The pension of people who stop working earlier will be cut by 6.5% per year. Those who work longer than 67 will receive 6.5% more for each extra year.
The main reform points on corporate pensions include:
Corporate pensions will not work with nominal guaranteed payouts but will vary with stock exchange developments. The effect of changes will be spread over a maximum of 10 years, removing the need for quick fixes. Details have to be worked out. One alternative for the current nominal contract may be a "hybrid contract" composed of two layers -- one layer of lower accrual but with a large degree of nominal security and a second layer that is fully performance-dependent (profit sharing). A second alternative may be a completely flexible contract.
Companies and employers can determine the balance between risk and security in terms of the corporate pension fund investment mix.
Premiums will be split between workers (one-third) and employers (two-thirds) and employers will no longer have to top up the fund if it runs into trouble.
No final conclusion has been reached on how to handle accrued pension rights: freeze them and set them apart or bring them under the enforcement of the new rules. The second option is unlikely and probably not even possible. Trade unions are vocal in pressuring officials to respect accrued pension rights.
And here we are in America constantly spreading lies and fear-mongering stories about how our Social Security system is near bankruptcy. Actually it has been and is in a SOLID financial state -- punctuated by fact that over the years our Federal Government has borrowed substantially from the surplus funds built up in the Social Security Trust Fund. All that needs to be done to preserve the fund's financial integrity and solvency over the next 30 years is to do (in some appropriate way) exactly just what the Dutch have timely done, namely, set the policy for raising the qualifying retirement age from 65 and 67 (or higher) as dictated by the fiduciary math calculations.
SIMPLE? Actually YES! ... but NOT SIMPLE in our broken down political system where everything's about getting re-elected, being ideologically pure to self-interests rather than serving the national interest.
Instead, populist fundamentalists with tunnel vision are popularized as they patronize the libertarian drumbeat of privatization of everything governmental to truly enjoy the greater "benefits-freedom-equality" (better said, "excesses") of unregulated capitalism! This axiomatic thinking leads to stupid flights of fancy, for example, to claim government intervention never does any good overall for society as opposed to the effects of the market. If accepted, this fools' dogma would be the deathknell of affordable Social Security and Medicare for older generations to come.
Meanwhile, in a spirit of solidarity, the Netherlands like other mature European countries are promptly, painfully, fairly, cleverly restructuring the financial imbalances in their social-economic models ... while not throwing out that overriding, long-standing European value, "WE ARE ALL IN THIS LIFE TOGETHER."
Everyone is talking about how to get the economy moving again and how to create jobs. President Obama talks about "winning the future." This means more education, more entrepreneurialism, more new industries, more new products for consumers to buy. Surely, all this new economic activity is exactly what we need or is it? Since the GDP of the US is dependent on consumers consuming to the tune of 70% of the entire economy, it stands to reason that for the economy to expand, consumers need to consume more. But wait a minute. We are already stuffed to the gills with products rammed down our throats by TV advertisers. Maybe what we need is less consumption. Americans are already experiencing an epidemic of obesity. We should be consuming less fast food. But that would bring the profits of McDonald's down. They might even have to lay off employees. Their stock might plummet. Wal-Mart offers us a plethora of cheap crap made in China. But if we stopped buying it, Wal-Mart's profits would go down, their stock price would tumble and the Dow Jones average might even find itself in bear market territory. Everyone agrees that this would be terrible for the economy. But it might be good for the citizens.
I say we need to participate less in the market economy and be more self-subsistent. This would result in a decrease in GDP, but an increase in citizen independence. The more we rely on ourselves to fulfill our needs, the less we rely on the market economy and the better off we are when that economy goes kerflooey. The recent economic meltdown was all about Wall Street and their shenanigans. It was of paramount importance to bail out Wall Street and then all good things would follow. Such was the conventional wisdom. Only good things didn't follow. People's homes were foreclosed on en masse even when banks couldn't prove that they held title to the houses. Main Street, the middle class - they were not protected at all. The culprits who caused the crisis were bailed out. The average citizen who lost his job and his house and maybe even his wife was not bailed out at all. In fact Republicans are doubling down on destroying what remains of the safety net which might have helped these unfortunates to maintain the skeleton of a half way decent way of life. Congress has continued to sponsor and uphold legislation that encourages corporations to outsource jobs. The budget is to be balanced on the backs of the poor and middle class and not by asking the rich to contribute a little more. We are rapidly retreating to the Dickensian era where to ask for a little more porridge was to be answered with a "certainly not!"
What we need is not more consumption of cheap Chinese produced crap or even newly minted crap from our own entrepreneurs. What we need is a better system of distributing the immense amount of stuff that we are already capable of producing. And in particular we are in need of a more widely distributed system of ownership so that profits redound to the average citizen and not to the upper .1% who are becoming immensely wealthy far beyond their needs while the poor and middle class are being reduced to penury and poverty. What we need is a government that looks out for the little guy, not one who is all for the competitive struggle to produce more and more goods and win the future that way. How about winning the future by taking back our ability to be self-sustaining? We need to return to an era when people produced a large amount of their own food by growing it themselves instead of relying on the marketplace of consumer provided food by large agricorporations which use pesticides, herbicides and hormones to provide us with food which in most cases will not kill us right away. That will take place in 30-40 years when cancer sets in. But in a lot of cases of e coli and salmonella brought on by filthy conditions for animals in factory farms, it will kill us or sicken us immediately. So profits are concentrated in the hands of a few corporations instead of being widely distributed which would take place if there were widespread family gardening which also produces healthier foods. If everyone farmed to some extent, we would all be better off but GDP and corporate profits would decline because we wouldn't be participating to such a great extent in the market economy.
Sociologists decry the fact that in many parts of the world people are living on $2. a day. But those in this category that are rural may in fact be 98% self-subsistent. In other words they are providing for their own needs without participating in the market economy or are only participating to the tune of $2. a day. On the other hand the urban poor who are living on $2. a day may not be in a position to be self-subsistent, and they are truly poor because they have to meet all their needs by means of the market economy and $2. a day doesn't go very far. Just recently many Americans met probably 75% of their needs without participating in the market economy. Take my grandparents, for example. My Grandfather lived and worked on a small dairy farm. They had chickens and hogs and a large garden. So they provided perhaps 90% or more of their own food instead of buying it at the market. They sold milk into the marketplace in exchange for dollars which they used to purchase what they could not provide for themselves. Instead of buying oil or gas, my grandfather farmed with horses and he grew the fuel that they consumed with the result that he did his own energy production and did not have to depend on Exxon Mobil or Chevron for energy. And as a bonus horses did not pollute. Since chemicals were not available, his farming was organic by default. He learned carpentry and built his own buildings with the result he didn't have to hire a contractor. They were largely self-sufficient and self-subsistent. Of course, they made their own clothes instead of buying them in a store. Women had a whole variety of functions within the household instead of vying for jobs in the marketplace, another way in which they were self-sufficient. They actually weathered the Great Depression quite well since they weren't dependent on the market economy. Even my parents who had government jobs as teachers, the kind that Republicans are attacking today, raised chickens and had a really large garden from which they provided much of their own food. And women used to bake instead of buying prepared foods.
So maybe the answer to the economic malaise that we find ourselves in today will be solved not by creating new industries to manufacture more and better stuff but by figuring out ways to be less dependent on the marketplace and more self-sufficient. Profit centers need to be more widely dispersed instead of profits ending up in the hands of the Fortune 400. Think about it: when you participate in the market economy, the money you spend ends up in the hands of a very few and select group of corporations and wealthy individuals and families. These individuals, families and corporations have effectively captured government through their paid lobbyists so that government operates solely in their interests. Jefferson envisioned a country of independent yeoman, small farmers and craftsmen. In today's America, there are hardly any such people. Instead most rely on a job to provide them with income which they use to provide for all their needs by purchasing goods and services in the marketplace. As more and more people lose their jobs because the jobs are outsourced or are replaced by automated machines, there is no place to go but down. But the self-employed, the self-sufficient and self-subsistent will be able to provide for themselves and their families irregardless of what is happening in the marketplace. Those absolutely dependent on wages to make a living are already becoming neo-serfs needing two or three minimum wage jobs to make a go of it. The worst off are dependent on charity.
As unfortunate as our current age of austerity is claimed to be, legislators at both the federal and state levels seem to relish the opportunity it has provided them to dismantle the last vestiges of the social safety net. If the economic crisis taught us anything, after all, it is that there is too much government regulation on Wall Street, and too many government safeguards for those most in need, right?
With the latest set of proposals, "belt tightening" will have a very literal meaning for millions of Americans as Republicans in Congress have now proposed cutting and radically restructuring the Supplemental Nutrition Assistance Program (Snap) – the program more commonly known as food stamps – despite record numbers of people presently on the rolls. Without question, these cuts and changes would prove devastating for many of those to whom food stamps represent a last line of defence against hunger.
Food stamps were first instituted in 1939 at the tail end of the Great Depression, but were discontinued in 1943. It was more than two decades later that the program was established on a permanent basis with the Food Stamp Act of 1964 – as a part of President Lyndon B Johnson's "Great Society". Since then, it has undergone some changes but remains essentially intact.
Meanwhile, Wisconsin Republican and House budget committee chairman Paul Ryan's "Path to Prosperity" budget proposes deep cuts to Snap, and even more fundamental changes to how it is administered:
"[P]rograms that subsidize food and housing for low-income Americans remain dysfunctional, and their explosive growth is threatening the overall strength of the safety net."
His plan would turn Snap into a block grant program in 2015 (along with Medicare, starting 2013), meaning the funds would be delivered to the individual states with only loose stipulations about how they are to be used. The belief is that this improves flexibility and promotes innovation and creativity in the delivery of federal funds. But coupled with Republicans' intention to slash Snap by 20% over the next ten years – or $127bn, as the Center on Budget and Policy Priorities calculates – Ryan's plan could leave millions in danger of going hungry.
While Ryan has not made clear the specifics of how the cuts would be instituted, Dottie Rosenbaum of the CBPP speculates that they would most likely come in two areas: a change in eligibility requirements and an across-the-board cut in the benefits available. Additionally, she argues, block-granting Snap would render it "unable to respond automatically to increased need resulting from rising poverty and unemployment during an economic downturn" and would also give individual states the option of placing their own restrictions on the program. Finally, Rosenbaum responds to Ryan's claim that Snap has undergone "relentless and unsustainable growth" by pointing out that "[t]he recent growth in the number of people participating in Snap closely tracks the increases in poverty associated with the recent recession."
A fuller appreciation of the potentially disastrous effects of these cuts is gained by examining their possible impact at the local level. "Nobody really wants to see what it will look like if they block-grant Snap, because it's going to be ugly," says Carey Morgan, the executive director of the Greater Philadelphia Coalition Against Hunger. Her organization screens 6,000–7,000 Philadelphia-area households per year for eligibility for food stamps, of which about 70% qualify. Then, they assist families with the application process and provide them with case work services for dealing with what can be a complex bureaucracy.
Morgan, who recognizes the structural roots of poverty and its inherent relationship to hunger, notes that Ryan's plan would hit Philadelphia particularly hard:
"When we see the rates of poverty being 27%, which is what it is in Philadelphia, of course you're going to have high rates of hunger."
Moreover, the costs of cutting food could have attendant effects in other areas. She adds:
"If you can't eat, you're going to get sicker and you're going to be sick more often, and those medical costs will go up. Food is a great preventative tool."
It seems like common sense, but apparently, not to Ryan and his ilk.
One enduring legacy of the Reagan administration has been the extent to which it greased the ideological rails for the continued destruction of the welfare state – long after he had his crack at it by perpetuating lurid fantasies about the purportedly pathological (largely urban and black or hispanic) poor. Who could forget Reagan's most notorious and nefarious tall tale? That of the "welfare queen":
"She has 80 names, 30 addresses, 12 social security cards and is collecting veteran's benefits on four non-existing deceased husbands. And she is collecting social security on her cards. She's got Medicaid, getting food stamps, and she is collecting welfare under each of her names. Her tax-free cash income is over $150,000."
This and similar anecdotes have framed the rightwing discourse about poverty for the past 35 years. If the poor are a fundamentally defective, lazy and criminal underclass, the logic goes, what good can government aid possibly do?
But nothing could be further from the truth, which is obvious if one just talks with some of the people who rely on these benefits. For instance, Tamika Finn is a 34-year-old, recently-unemployed single mother from West Philadelphia. She cares for her mother and son – both of whom are disabled – while she completes an associates degree in information technology. "I'm grateful to have food stamps," she says. But, she maintains, "the goal is always to get off and do something different – do something better." Dispelling the notion that recipients wish to remain on food stamps indefinitely, Morgan points out that "99% of the people we talk to are not proud of getting the benefit and are not looking to scam the system."
The assault on the welfare state has hardly been the work of Republicans alone. Lest we forget, it was Bill Clinton who signed Personal Responsibility and Work Opportunity Reconciliation Act of 1996 into law, keeping his promise to "end welfare as we know it". Among many other things, this act made significant cuts to Snap. Incidentally, it was also Bill Clinton who, in 1999, repealed the Glass-Steagall Act of 1933, which prevented speculation by banks. This move is now believed to have contributed to the current economic crisis.
Indeed, the logic of slashing the social safety net fits cozily with an upwardly redistributive program of tax cuts and deregulation. And, of course, this is the path we have been on for the last 30 years. Morgan sums up bankruptcy of this trend nicely: "Our priorities are completely messed up if we are cutting food, which is a basic right to the most vulnerable populations we have." As the oft-repeated maxim goes, the true test of a society is how it treats its weakest members.
I agree that each nation should ideally be production self-sufficient in basic commodities to extent possible … like oil and gas. The intractable political reality problem undermining such sensible strategic aims is that the governing elites of both parties are hopelessly mired, divided, and corrupted by parochial special interests to the extreme. We can’t come together on anything.
It’s high time the U.S. did – what Germany and Japan historically have been cleverly doing with superb technical training and education programs – namely, adopt an aggressive policy of retaining and expanding “home production” of key component parts of intensive-knowhow-industrial products … as opposed to current practice of U.S. corporations’ outsourcing production of products or components for knowhow fees, maximum global profits and then reimporting same products, skyrocketing U.S. trade deficits. The revenue inflows from this trade practice benefit but a SMALL number of middle-class workers. The job growth dynamics are peanuts compared to a national strategy of having product development, design and at least component manufacturing in America for American needs. Spirits will be energized as a more equitable, inclusive, confident sharing in our nation’s social-economic progress returns.
We should also formulate a policy – under easy-to-measure guidelines and criteria – that requires foreign firm importers of industrial, high knowhow products to establish manufacturing facilities in the U.S. After all, this has been rather successfully done with Japanese cars. Control and oversight could be in the hands of a respected team of independent experts from the business, R&D, education, worker training and development fields.
Lastly, as you have noted John in a prior writing, American products coming into the EU, e.g., to Germany or The Netherlands, are hit with a VAT of +- 19% plus an import duty. In sharp contrast, EU products entering the U.S. incur only an import duty plus a much lower state sales tax at point of final sale. Thus, the EU vs. U.S. total tax-import duty system, when combined with low-cost foreign labor, grossly unfairly favors imports from the EU (and Asia). This tax-duty disparity also generates more EU tax revenues, greatly tempers excessive EU imports while helping exports, leading to relatively modest EU trade deficits (even annual trade surpluses for Germany and The Netherlands). It further intensifies the will of U.S. corporations to outsource all or a part of their production to China or to some other low-cost developing country, thereby permanently destroying hundreds of thousands of American jobs each year.
A FEUD over trade has erupted in Washington, and American workers are caught in the middle. Congressional Republicans (and some Democrats) are threatening to hold up approval of free-trade agreements with South Korea, Colombia and Panama if President Obama keeps insisting on renewing expanded benefits under Trade Adjustment Assistance, the main aid program for American workers harmed by foreign trade.
Supporters say the program — which offers retraining, relocation and other benefits to workers who lose their jobs due to competition from imports — offers vital protection. Opponents label it an unaffordable boondoggle. If our country fails to resolve this dispute, our economic future will be bleak.
As former advisers to presidents from different parties, we are coming together to urge a way out: rethinking how we help displaced workers in order to revive political support for the free trade our economy needs.
Three principles guide our proposal. First, trade is indeed worth it for America. Annual national income today is at least $1 trillion higher than it would have been absent decades of trade and investment liberalization. With unemployment at 9.1 percent and 24.6 million Americans unemployed or underemployed, we need to rebalance our economy away from the excessive consumption that helped bring about the global financial crisis, and create jobs linked to exports and international investment.
Second, trade is not worth it for every individual American. Trade creates unemployment for some and wage losses for others; its gains do not directly accrue to every worker and community. Indeed, there has been a steep drop in public support for trade; a recent Wall Street Journal/NBC poll found that only 17 percent of respondents said free-trade deals have helped America.
Third, Trade Adjustment Assistance, created in 1962 to supplement unemployment insurance, cannot adequately help displaced workers. Workers today face continual adjustment as new technologies and competitors, both domestic and foreign, render their talents and skills obsolete. Indeed, the premise that job losses can be attributed to precise causes is archaic, given the linkages among international trade and investment and technological change.
In recent years, less than half of workers certified as eligible for T.A.A. benefits have actually used them. Petitions filed with the Labor Department for T.A.A. benefits in 2007 covered just 93,903 workers — fewer than the number of jobs created or lost on an average day.
Our proposal to resolve the trade impasse: more trade and more aid. More trade means that President Obama should immediately submit, and Congress should immediately ratify, the pending free-trade agreements. Colombia and Panama already enjoy unfettered access to our market, and South Korea has negotiated free-trade deals with the European Union and India; we cannot afford to fall behind.
More aid means Congress and the president should replace T.A.A. with a broader safety net that helps workers regardless of why they lost their jobs. Unemployment insurance, introduced in the early 1930s, has not really changed since then; it should be merged with T.A.A. Today, unemployed workers face challenges far greater than T.A.A. or unemployment insurance alone can address: getting matched with a new employer, often in a new industry; upgrading or learning new skills, often at reduced wages; and coping with lost benefits, especially health coverage.
A new American Adjustment Program should combine the best elements of unemployment insurance, T.A.A., and training programs authorized by the Workforce Investment Act. This approach would include a wage-loss insurance program for workers 45 and older, to speed their rehiring by supplementing their income if they take work at lower pay; helping workers receiving unemployment insurance to pay for coverage under Cobra (which allows workers who lose their jobs to keep group health benefits for limited periods); and enabling unemployed workers to make penalty-free withdrawals from savings accounts like 401(k)’s and I.R.A.’s to finance costs like occupational retraining and relocation.
Our plan would cost about $20 billion per year. We would pay for this by scrapping the current unemployment insurance tax structure, which is extremely regressive, for a low flat tax on all worker earnings — a change that would cut taxes for tens of millions of lower-wage workers. The costs of our plan would decline in the long run as the economy recovers. Moreover, the cost of not better supporting workers will be far greater if a skeptical public pushes America into economic isolation and the result is slower growth, fewer jobs and lower tax receipts.
Voter support for engagement with the world economy is strongly linked to labor-market performance. If American workers continue to fear change, their support for free trade will not return.
Matthew J. Slaughter, a professor of management at the Tuck School of Business at Dartmouth, and Robert Z. Lawrence, a professor of international trade and investment at the Harvard Kennedy School, were economic advisers to Presidents George W. Bush and Bill Clinton, respectively.
We hear all this blather about how the US is such a wealthy nation. Not true. Before Ronald Reagan became President, the US was the world's largest creditor nation. People and countries owed us more money than we owed them. Now some 30 years later the US is the world's largest debtor nation. This is the definition of a poor - not a rich - nation. China on the other hand holds $3 trillion in international reserves including $1 trillion of US debt. Other nations have sovereign wealth funds which contain vast amounts of money. The US has only a huge pile of debt - some $14 trillion worth. The US used to be the world's largest importer of raw materials and exporter of manufactured goods. Now we're the world's largest exporter of raw materials and importer of manufactured goods with a trade deficit of some $600 billion a year. At the present time the US has a deficit of some $2 trillion in needed infrastructure repairs while China is building high speed rail track at such a rate that it will soon have more miles than the rest of the world combined. Meanwhile, the US spends more on its military establishment than the rest of the world combined while cutting safety nets and education for its own citizens.
Americans have pulled the wool over their own eyes. Despite having a national debt of $14 trillion, despite having gone from a net creditor nation to a net debtor nation in little over 30 years, despite having enormous trade deficits month after month, year after year, despite having an infrastructure in need of $2 trillion worth of repairs, Americans think they live in a wealthy nation. The truth of the matter is that the US is a poor nation within which live a lot of wealthy individuals. China on the other hand holds a little over $1 trillion of US debt making it a fairly wealthy nation albeit with a large but diminishing number of poor people. China is building new infrastructure at an astonishing rate. It's a fallacy to think a wealthy nation is a nation comprised of a large number of wealthy individuals. In fact many Banana Republics are comprised of a small class of wealthy individuals surrounded by a sea of poverty. The US is on track to becoming one of those. A recent survey showed that there is a higher level of inequality in the US than exists in Pakistan, Ethiopia and Ivory Coast.
It is not hard to diagnose why the US is a poor nation which thinks itself rich while China is a rich nation which passes itself off as being poor. All the free trade agreements like NAFTA and CAFTA have resulted in the decimation of the US manufacturing base. US factories are closing in droves:
2010 comes in the midst of a stunning wave of U.S. factory closings that stretches from coast to coast. Once upon a time America was the greatest manufacturing machine that the world has ever seen, but now it seems as though the only jobs available for working class Americans involve phrases such as “Welcome to Wal-Mart” and “Would you like fries with that?” Even though the population of the United States has exploded over the last several decades, the number of Americans employed in the manufacturing sector today is smaller than it was in 1950. America has become a voracious economic black hole that ”consumes” as much as possible and yet actually produces very little. The United States is becoming deindustrialized at a blinding pace, and it is becoming increasingly difficult for blue collar American workers to find jobs that will actually enable them to support their families. The sad truth is that American workers don’t have a whole lot to actually celebrate this Labor Day. 14 million U.S. workers are “officially unemployed” and tens of millions of others have been forced to take part-time or temporary jobs that they are overqualified for just so they can survive. Unfortunately, this is not just a temporary situation for American workers. As millions of good jobs continue to get outsourced and offshored, Labor Day celebrations in coming years will be even more depressing.
Since 2001, The U.S. Has Lost 42,400 factories. The "giant sucking sound" that Ross Perot predicted has become a point of actual fact. But this doesn't seem to bother America's leaders. They are dedicated to the policy that US consumption drives US GDP and as long as US GDP is the largest in the world, who cares? Sales are up! However China, as the world's second largest economy as measured by GDP, is on track to overtake the US in the near future. American politicians only care about transnational corporations, nominally American, and how they can maintain the US consumer appetite (and their profit margins) for buying their goods even though most of those goods are produced overseas. They coddle these corporations by lowering their taxes, having their lobbyists drill loophioles in the tax code and giving them a "tax holiday" during which they can "repatriate" their overseas capital and bring it "home" without any tax consequences.
The model of trickle down economics, long since discredited, is still being championed by right wing politicians with the result that the fig leaf of prosperity is being shredded to reveal a naked transfer of wealth from the middle class to the upper one per cent. Naked power grabs are becoming the order of the day as the recent vote to extend taxpayer subsidies to the five Big OIl companies, despite their being the most profitable corporations in human history, reveals. At the same time those same right wing policticians are demanding that the budget be balanced on the backs of the poor and middle class. While countries such as Norway fund their safety net with royalties from oil drilling, the US gives away its natural resources to oil corporations including BP which is not even headquartered in the US. The neocon model of privatization and eliminating safety nets, although unsuccessful in Argentina and Brazil, is achieving considerably more success when practiced here at home. Trade unions are being decimated. States are being turned into fiefdoms and dictatorships. Public education is being defunded. There is an all out assault on teachers, police and other public workers. The notion that government doesn't work and can't be trusted is being fostered.
The US is becoming the very definition of a Banana Republic. It is becoming a nation largely bereft of a middle class, a nation in which there exists a small class of extremely wealthy individuals surrounded by a sea of impoverishment, a nation of antiquated infrastructure, a nation in which there is no there there. All that exists is a diminshing probablity of getting rich or even making it into the middle class. Students are being saddled with immense and obscene amounts of student loan debt. Middle classers are losing their homes to foreclosure. Poor people are being shunted aside as food stamp programs are being shut down and home heating oil allowances are drying up. The war on the poor is raging. And the American people continue to vote the guys that are screwing them into office because they pander to them with promises of unlimited rights of gun ownership and promises that they won't allow gays to marry
The US in point of fact is not a wealthy nation despite attempts to brainwash us that it is, and it's becoming poorer by the hour. But instead of implementing a rational health care system, we continue to give away billions to the pharmaceutical companies that we wouldn't have to if the government weren't prevented by law from negotiating with them. We continue to give away billions in subsidies to Big Oil and Big Agriculture. We continue to give away billions in tax breaks to the rich. We continue to pour billions down ratholes in Afghanistan, Pakistan, Iraq, Israel and many other places. .
These countries are taking us for a ride, and the Israeli President Netanyahu lectures our President on why he won't cooperate to bring about mideast peace. They are manipulating us out of our money while actually working and fighting against us as revealed by Pakistan's harboring of bin Laden. If Obama had tried to coordinate bin Laden's capture with Pakistan instead of going it alone, bin Laden would probably have been tipped off with the result that the Seals, to Obama's embarassment, would not have found bin Laden at home. What, no bin Laden? Just innocent women and children.
As China eats the US' lunch and the rest of the world rips off Uncle Sucker for billions of US taxpayer dollars, the American people should get used to the fact that we're not number 1 any more. Far from being the world's richest nation we're fast becoming one of the world's poorest nations where some of the world's richest people happen to reside. But don't worry about them. They also own villas in France, Italy and Spain. They only continue to hold US citizenship as a convenience. They could live anywhere. They could headquarter their corporations anywhere. It's still convenient for them to headquarter here so they can use their lobbyists to rip off American taxpayers and sell into the American consumer market. But as time goes on most of their sales will be to emerging consumer markets in China and elsewhere.
Budget protests continued in California this week as hundreds of San Jose city workers gathered at City Hall plaza Tuesday night to dispute the city budget that aims to cut staff, salaries, and benefits.
Waving signs and chanting, "They say cut back, we say fight back!" the protesters rallied, then marched from the plaza to the council chamber, where Mayor Chuck Reed and the council had scheduled an evening meeting to discuss the 2011-12 budget.
The 300 or so protesters -- mostly city employees and union members, some faith leaders and community members -- are fighting proposed budget cuts that will slash neighborhood services, reduce library and community center hours, cut funding for youth programs including gang prevention, and lay off police and firefighters.
The city faces a general fund shortfall of $115 million in the fiscal year that begins July 1. When that gap is closed, the general fund budget will total $819 million.
Under the proposed cuts, nearly 200 police and 64 firefighter positions would be eliminated, library services and hours would be reduced to three days per week, ten hub community centers would have their hours reduced, and park ranger jobs would be slashed by more than half.
"San Jose will not become the Wisconsin of the West -- we will not let that happen," Lee Saunders, [secretary-treasurer of the American Federation of State, County and Municipal Employees, AFL-CIO], told the crowd gathered outside City Hall early Tuesday evening.
Pensions have long been a loathed target of austerity hawks who view the system as wasteful even though a conducted city audit indicates that 40 percent of city retirees, as well as survivors and other beneficiaries, have annual pensions earnings of less than $24,000 a year.
In Sacramento, hundreds of police officers and staff members also protested Tuesday night before a city council budget hearing to oppose $12 million in cuts. On the chopping block are 167 police department positions, including 80 police officers.
Those opposing the police cuts pleaded for observers to consider the consequences of firing law enforcement employees. For example, longer waits when you call 911.
"Every second counts, especially when you have a loved one who's suffering a heart attack, a mother finding her child floating in a pool. Minutes count," supervisory dispatcher with Sacramento Police Department Paul Troxel said.
Troxel said his job is on the line. "With the budget cuts, my rank (as) supervising dispatcher would be eliminated," Troxel said.
Here in New York City, we saw the consequences of these kinds of budget cuts during a particularly bad blizzard in early January. Mayor Bloomberg’s decision to fire 400 sanitation workers meant that there were less workers to clear the streets, which resulted in Emergency Medical Service workers having a hard time reaching distressed citizens.
The city had a backlog of around 1,300 critical calls – not calls for minor occurrences, but critical, life and death stuff. Over a thousand of those went unanswered.
With resources in short supply, the EMS was forced to limit CPR time to 20 minutes. Desperate and unable to wait for the limited EMS response team to come and save them, residents of Forest Hills dragged people from a fiery building and transported them to a nearby hospital on sleds.
That’s the reality of a world quick to cut services at the bottom instead of moderately raise taxes at the top, which is why California residents are trying to stop that dystopian vision before officials unleash it.
Allison Kilkenny is the co-host of the progressive political podcast Citizen Radio (wearecitizenradio.com) and independent journalist who blogs at allisonkilkenny.com. Her work has appeared in The American Prospect, the L.A. Times, In These Times, Common Dreams, Truthout and the award-winning grassroots NYC newspaper The Indypendent.
Decrease spending on Defense and Corporate Welfare and Increase Spending on Job Creation and the Safety Net. Increase revenues from Corporations and the Wealthy.
Everyone is concerned about creating a 2012 budget that will get the US annual deficit and finally the national debt under control. Republican Paul Ryan has proposed one that would balance the budget on the backs of the poor and middle class while voucherizing Medicare and giving tax breaks to the wealthy. President Obama has proposed one that would keep Medicare the way it is and raise taxes slightly on millionaires and billionaires. Then the progressive Democratic caucus has proposed the "People's Budget," which is the virtual opposite of the Paul Ryan budget. All these plans would decrease the deficit over a period of time.
First, a little background on how we got into this mess. Number one: a bloated Defense Department whose budget has doubled in size since 2001. Second, Bush tax cuts for the rich. Bush dropped the top rate from 39.6% to 35%. To be fair Bush also dropped the lowest tax rate from 15% to 10%. So the Bush tax cuts were across the board, but the rich profited most from the cuts. Bush also finagled the income ranges to which the rates applied. For instance, the Clinton 15% rate applied to incomes up to $43,050. The Bush 10% rate applied to incomes only up to $12,000. Then the 15% rate kicked in for incomes up to $46,700. So the Bush rates did nothing for the middle class; they were essentially the same as the Clinton rates. Bush also lowered taxes on capital gains. Clinton kept the top capital gains tax rate at 28% until 1997, when he agreed to lower it to 20%. President Bush lowered it to 15% in 2003. Capital gains revenues increased by 0.7% of GDP from 1994 through 2000 under President Clinton, and they fell to 0.6% of GDP from 2000 to 2004 under President Bush. Under Bush the estate tax was reduced from 55% to 35% and the exclusionary amount was increased from $675,000 to $5 million.
Third, tax revenues from corporations went from 30 percent in the mid-1950s to 6.6 percent today thanks to loopholes drilled into the tax code by lobbyists. So corporations are not paying their fair share by historical standards. Fourth, the wars in Iraq and Afghanistan started by Bush were unfunded which means they were just added to the deficit. These represent a structural built-in ongoing deficit. Fifth, Bush's Part D drug plan for Medicare recipients was just added to the deficit. Cheney, notably said, "Reagan proved deficits don't matter." Ha! Sixth, Bush signed into law the TARP (Troubled Asset Relief Plan) which was a $700 billion bank bailout although most of this is expected to be paid back. Seventh, in order to prevent a world wide economic meltdown, Obama enacted the American Recovery and Reinvestment ACT (ARRA). However, there are no long term effects of this on the deficit after 2011.
Bush Tax Cuts, War Costs Do Lasting Harm to Budget Outlook
Some commentators blame recent legislation — the stimulus bill and the financial rescues — for today’s record deficits. Yet those costs pale next to other policies enacted since 2001 that have swollen the deficit. Those other policies may be less conspicuous now, because many were enacted years ago and they have long since been absorbed into CBO’s and other organizations’ budget projections.
Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs. (The prescription drug benefit enacted in 2003 accounts for further substantial increases in deficits and debt, which we are unable to quantify due to data limitations.) These impacts easily dwarf the stimulus and financial rescues. Furthermore, unlike those temporary costs, these inherited policies (especially the tax cuts and the drug benefit) do not fade away as the economy recovers (see Figure 1).
Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.
So now that we have established that Bush is to blame for much of ouir budgetary woes, the question is what to do about it. I agree with former Treasury Secretary Paul O'Neill who said on Meet the Press on Easter Sunday that he favored a VAT. I recently blogged about the need for a VAT tax here. It's nice to be corroborated by such an eminence gris as Paul O'Neill. But a VAT would at one and the same time solve a myriad of problems. It would eliminate the lobbyists on Capitol Hill whose only purpose is to drill holes in the tax code for special interests. It would act as a tariff eliminating the advantages of manufacturing overseas and importing into the American market. It would eliminate corporations playing one state off against another or one municipality against another on tax breaks as a quid pro quo for plant location. It would make it less profitable for corporations to locate factories in foreign countries where labor is cheaper and tax advantages are greater. The question is what do corporations most want to do? The answer is they want to sell into the American market. The VAT is the only tax that taxes this privilege. What does it matter whether foreign or domestic corporations locate plants in the US as long as they provide jobs and pay taxes? They are all transnational corporations anyway locating plants and selling into markets all over the world. Let American corporations leave the country and let other foreign corporations take their place here. So what?
The incentive structure with a VAT would be such that it would be to the advantage of corporations to locate here as there would be no advantage to locating elsewhere and then importing into the American market. The sooner our politicians figure this out, the better we'll all be in terms of jobs and corporate tax revenues. Make them pay for the privilege of selling into the American market, the largest consumer market in the world. The VAT would have so many benefits and advantages that no wonder it is not even being considered by the nincompoops who run the country. Lowering corporate tax rates and closing loopholes, as Obama and Ryan want to do, would not work since corporate lobbyists would then drill new loopholes (after all that is their job) albeit at the lower tax rate.
Secondly, if a VAT is not enacted, there are tons of loopholes that need to be eliminated. How about an alternative minimum tax for corporations that would have them pay a certain percentage of profits no matter what? Too many corporations including the most profitable, GE and Exxon Mobil, pay absolutely no taxes at all. Third, create higher tax brackets for millionaires and billionaires. It's ridiculous that John Paulson who made $5 billion in 2010 should pay at the same rate as someone who made $375,000. But that's not the worst of it since he paid at the even smaller rate of 15% because his income was all capital gains. Capital gains and dividends should be taxed as ordinary income with higher tax brackets for millionaires and billionaiures.
For social security the answer is simple. Means test it and raise the cap. Right now no FICA taxes are paid on incomes over about $100 K. Let it apply to total income not just the first $100 K. That's called raising the cap. And no one with retirement income of over $250 K needs to collect it unless all of a sudden they lose part of their income. Then social security could kick in for them. In other words for high rollers it would still be an insurance policy. Problem solved. Republican Eric Cantor has said, rightfully in my opinion, that right now we're providing a social safety net for people who don't even need it. So I would agree with him and not have the government pay out social security benefits to anyone with a retirement income of $250,000. although these individuals should pay in during their working years because they don't know what their retirement income will be. And in the event that they go bust, social security would be available to them. It just would not be available to those who are fortunate enough to have become wealthy.
The same applies for Medicare. Those who have retirement incomes of over $250,000. should not get Medicare. They can well afford to buy health insurance on the private market. Thom Hartmann disagrees with Cantor on the grounds that if the wealthy opt out of Medicare, Medicare would not have enough money to function. Poppeycock! First of all the wealthy are only 1% to 5% of the population. this means that 95% would still be paying in. Second of all, the wealthy would be paying in anyway during their working years because nobody knows - including them - whether or not they will be wealthy in retirement. Medicare's costs can be brought under control by creating a public option and using government's purchasing power to negotiate downward the price of prescription drugs. Health care costs in general need to be brought under control. Medical technology, much of it of dubious value, continues to be invented which drives up the cost of health care. Technologies need to be considered as much for their cost as for their supposed benefits and some rational decision made about what will be supported under Medicare.
1,000 economists (with me included in that number) have written to the G20 and Bill Gates to call for a financial transaction tax.
We said:
Dear G20 Finance Ministers and Bill Gates,
We write to you as the call for a Financial Transaction Tax is now gathering global momentum, and the French government has made it a key priority for their G20 presidency.
This tax is an idea that has come of age. The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.
Even at very low rates of 0.05% or less, this tax could raise hundreds of billions of dollars annually and calm excessive speculation. The UK already levies a tax on share transactions of 0.5%, or ten times this rate, without unduly impacting on the competitiveness of the City of London.
This money is urgently needed to raise revenue for global and domestic public goods such as health, education and water, and to tackle the challenge of climate change.
Given the automation of payments, this tax is technically feasible. It is morally right.
We call on you to implement the FTT as a matter of urgency.
Government subsidies to large scale agricultural corporations and oil companies should be eliminated. No one making a profit should get any subsidy. Subsidies should only go to businesses who are creating jobs or creating new businesses like alternative energy, in other words, which are involved in the economy in ways that are constructive. In general the same applies for business as for individuals: we shouldn't be supplying a safety net for those who don't need it.
The People's Budget also would solve most of the problems. Here it is in a nutshell:
Individual Income Tax Policies
• Allow the Bush-era tax cuts to expire at the end of 2012, but extend marriage relief, credits, and incentives for children, families, and education • Immediately rescind the upper-income tax cuts in December’s tax deal • Index the AMT for inflation for a decade (the AMT patch is fully paid for) • Schakowsky millionaire tax rates proposal (adding 45%, 46%, 47%, 48%, and 49% top rates) • Tax all capital gains and qualified dividends as ordinary income • Progressive estate tax (Sanders’ estate tax, repeal of Kyl-Lincoln) • Limit the rate at which itemized deductions can reduce tax liability to 28% for high earners • Replace the tax exclusion for interest on state and local bonds with a subsidy for the issuer
Corporate Tax Reform
• Tax U.S. corporate foreign income as it is earned • Eliminate corporate welfare for oil, gas, and coal companies • Enact a financial crisis responsibility fee • Financial speculation tax (derivatives, foreign exchange) • Reinstate Superfund taxes
Health Care
• Enact a public option • Negotiate Rx payments with pharmaceutical companies • CMS program integrity and other Medicare and Medicaid savings in the president’s budget • Prevent a cut in Medicare physician payments for a decade (maintain doc fix)
Social Security
• Raise the taxable maximum on the employee side to 90% of earnings and eliminate the taxable maximum on the employer side • Increase benefits based on higher contributions on the employee side
Defense Savings
• End overseas contingency operations emergency supplementals starting in Fiscal Year 2013, providing $170 billion in FY2012 to fund redeployment, while saving more than $1.8 trillion from current law spending levels over ten years. • Reduce baseline defense spending by reducing strategic capabilities, conventional forces, procurement, and R&D programs
Comprehensive Jobs Program
• Invest $1.45 trillion in job creation, education, clean energy and broadband infrastructure, housing, and R&D • Infrastructure bank • Surface transportation reauthorization bill ($213 billion)
(End of People's Budget)
So the hallmarks of any budget which would bring the deficit under control are
1) Cut defense spending.
2) Cut corporate welfare in terms of subsidies and loopholes.
3) Increase taxes on millionaires and billionaires.
4) Raise the cap on social security and means test the payouts.
5) Include a public option for Medicare and use the power of the Federal government to negotiate drug prices. Means test Medicare. The wealthy can afford to buy private health insurance.
6) Invest in infrastructure and alternative energy.
The Republican Paul Ryan's budget is just the opposite of the above. He wants to cut taxes for millionares, billionaires and corporations, increase defense spending, cut spending on social services and education for the poor and middle class and privatize Social Security and Medicare. Obama's budget (dare we call it Obamanomics) would place a five year freeze on non-security discretionary spending, increase the defense budget slightly, cut low income home energy assistance and community service block grants and preserve Medicare and Social Security as we know it. He would raise taxes somewhat on banks and oil companies. He preserves Pell grants and R&D spending. He would reform the tax code for corporations, eliminate loopholes and lower the tax rate.
In short Mr. Obama's budget is halfway between Paul Ryan's budget and the People's budget. He makes some modest reforms and preserves Social Security, Medicare and Pell grants. The problem with Obama's budget is that it doesn't go far enough in any direction and it actually hurts the poor and middle class although modestly and not drastically like the Paul Ryan budget which balances the budget on the backs of the poor and middle class while giving tax breaks to the wealthy. The People's budget gets closer to the core of the problem.
The only ways I would differ with the People's Budget are that I would means test Social Security and Medicare on the theory that those who can afford to pay should not get a taxpayer subsidy. For example, for those who have retirement incomes over $250,000., they can well afford to not receive an extra $1000. a month in social security income. And they can well afford to buy medical insurance on the private market. Let's not pretend that the wealthy need the assistance of these programs. On defense spending I suggest we go back to the defense budget in 2000 of around $300 billion. This amounts to approximately a 50% reduction in defense spending. I also propose closing half of the 1000 bases located around the world. We do not need to be the world's policeman. I support the Schakowsky millionaire tax rates proposal except I would definitely have an even higher rate for billionaires. I also support a VAT tax to eliminate corporate lobbyists drilling holes in the tax code no matter how "reformed" it is and to correct the imbalance in the trade deficit. I am a big believer in the need for Federal government investment in infrastructure particularly alternative energy development and high speed rail. Incentives should be given, as they were in Germany, for individuals and families to develop solar and wind on their individual properties to the maximum extent not only for their own use but to sell back into the grid. This way the profits from the sale of energy would not be concentrated in a few energy corporations but be widely distributed. This would result in a distribution of wealth as opposed to a redistribution of wealth. The government should facilitate this.
Faced with intermediate and long-term financial austerity pressures, the Dutch government is now planning to cut $1.4 billion from a $12.1 billion Defense Budget, bringing the Budget to 1.3% of GDP in 2011. During the Cold War, the highest this % got in the Netherlands was 2.8%. There has been a steady spending decline since 1991. For example, the number of F-16s has gone from 162 to 87; the number of brigades from 10 to 3.5; the number of frigates from 18 to 6. The military personnel level of 48,000 today is far, far below what it was in the Cold War period.
The Dutch 2011 Defense Budget cuts include reducing military (primarily Army) and civilian personnel (48,000 and 21,000, respectively) from 69,000 to 59,000 or 15%. This means at least one-in-six military employees will likely lose their jobs in the very near future. The Dutch plan is to do a lot fewer protracted operations with many ground troops. Under a policy of AGILITY FORCE and FLEXIBILITY of RESPONSE, the tactical policies will be: (a) to perform operations where speed and having enough transport capability is important, and (b) to undertake long-term committments that do not have any footprint in another country's territory.
Can you imagine the 5-10 year accumulated savings possible if the US had the leadership courage to reduce our bloated Defense Budget from +5% of GDP (+-$800 billion including veterans benefits) to a still high 3.5% of GDP or +-$520 billion at today's prices .... monies better redirected to R&D, infrastructure, green energy independence, education for real job growth and long-term deficit reduction. As you know, I have long held the view our miltary spending -- in combination with last 20 year gigantically accelerating trade deficits from over-consumption and exhorbitant oil imports and trend of slowdown in the growth rate of federal tax revenues -- is simply bankrupting us and strangling our ability to make serious internal productivity improvement investments.
Here's the Netherlands, a small country of 16 million people getting a grip on its hard choices for structural financial stability, reducing again to 1.3% of GDP its already modest level of Defense spending by American standards. The Defense spending of most mature EU countries averages about 1.7% of GDP. Not surprisingly, the one exception is the UK where spending is 4% of GDP. But the right-left coalition goverment led by Cameron is also now considering substantial Defense Budget cuts. China's Defense spending is around 1% of GDP. And they are not too anxious to accelerate this given the country's huge next 10-year investment requirements for industrializing the economy amidst grossly inadequate natural resources (except large quantities of CO2 pollution-intensive coal reserves).
As with all our structural problems -- including your to-the-point article on the wisdom of going after solar and wind energy with a Marshall Plan vengeance -- we are stuck in our usual culture of polarized do-nothing, special-interest politics. We have a play-it-safe President more concerned about re-election than decisively knocking heads together NOW to come out of our social-economic morass and paralysis on the critical issues obvious to everyone. So we'll patiently drift status-quo for some 18 months while Obama's supporters divert their energies to raising $800 million, some say $1 billion, for his next election campaign.
On the positive side, we can try to feel good about monthly job reports of 200,000 new jobs created (net of state government firings) which, if achieved every month over the next few years, would take until 2019 before our nation would reach a 5%, 2007 pre-bubble unemployment level. And this EXCLUDES the 10-12 million underemployed now not officially reported as unemployed in BLS statistics. For as everyone also knows, today our true unemployment is 8.8% plus 7-8% underemployed or no longer looking for a job.
We remain between a Rock and a Hard Place. It's WAKE-UP time on many fronts!
It was one of the biggest demonstrations since rallies in 2003 against the Iraq war.
by Henry Chu
LONDON – Tens of thousands of demonstrators whistled, chanted, drummed and marched their way through the heart of London on Saturday to protest massive government spending cuts that threaten to leave almost no part of British society untouched.
Over 500,000 Brits turnout for the anti-cuts march in London, Saturday, March 26, 2011. Photograph: Ian Langsdon/EPA
It was one of the biggest public demonstrations in Britain since 2003, when antiwar rallies were held across the country before the invasion of Iraq. Organizers said up to 500,000 people participated in the march, whose carnival-like atmosphere was briefly marred by black-clad anarchists who smashed a few shop windows, flung paint bombs and attacked luxury icons such as the Ritz Hotel.
The protesters gathered here from all corners of Britain to express their outrage over a whopping $130 billion in cutbacks that the government insists are necessary to tame a runaway budget deficit. The retrenchment is expected to result in a radical shakeup of bedrocksocial services such as welfare and healthcare and in the elimination of nearly half a million public-sector jobs.
"It's our right to march and to say we don't accept any of this," said Corinne Drummond, 37, a nurse from East London who joined several colleagues for the demonstration, which began in the morning and lasted for hours.
On a gray and occasionally drizzly spring day, a huge of column of protesters snaked its way along some of London's best-known streets, past landmarks such as Big Ben and the Houses of Parliament and through Trafalgar Square and Piccadilly Circus.
They were a motley crowd of civil servants, environmentalists, prison officers, academics, feminists and young parents with toddlers on their shoulders. "Don't believe in the deficit," some placards exhorted, while other signs and T-shirts called for a "general strike now" and exhorted Britons to "make tea, not war."
In Hyde Park, the leader of the opposition Labor Party ridiculed Prime Minister David Cameron's vision of a "Big Society" full of citizen volunteers who plug the holes left by cuts in government spending.
"You wanted to create a Big Society. This is the Big Society, the big society united against what your government is doing to our country," Ed Miliband said in a speech that invoked Martin Luther King Jr. and the American civil rights movement. "We stand today not for the minority. We stand today for the mainstream majority of Britain."
The Labor Party, which was kicked out by voters in May after 13 years in power, acknowledges that some cuts are unavoidable to shrink a deficit built up largely under its watch. But it says the scale and pace of the austerity plan put forward by the Conservative Party-led government will strangle Britain's fledgling economic recovery and hurt the most vulnerable members of society.
Effects of the belt-tightening will begin to be felt more acutely next month, when libraries start closing down, youth programs disappear, social workers get laid off and fewer buses ply the streets. In the northern city of Manchester, police are bracing for the elimination of nearly 3,000 jobs – a quarter of the department's workforce.
Analysts say the spending cuts could change the fabric of British society in a way not seen since the free-enterprise revolution of Margaret Thatcher in the 1980s.
"It's changing the whole ethos of everything," said nurse Rikke Albert, 37. "That's not what I signed up for when I did my training."
Germany's economy is doing just fine while the US economy languishes. There are many reasons for this, but one that predominates is the Value Added Tax (VAT). At each stage in the production process, when a product or service changes hands, it is taxed at 19%. So if you're manufacturing a car, for example, when you buy a component like a transmission from another manufacturer, that manufacturer has to pay the VAT before that product can be sold to you. Some products and services like food and doctors pay a lower VAT.
The VAT must be paid on all imports in one fell swoop as they enter the country whereas the VAT was paid in stages by different business entities at each stage along the supply chain within the country. This tends to discourage imports, and make it more profitable to manufacture and sell (and thus provide jobs) within the country of Germany itself. Contrast this with America in which there is no tax on imports (thanks to free trade) so it is cheaper to manufacture abroad and import products into the US thus creating jobs abroad. The VAT acts as a tariff on imports and also provides a loopholeproof source of revenues for the government. In the US many major corporations like GE and Exxon Mobil, for example, pay no income tax even though they make tens of billions of dollars in profits. In fact many of them actually get tax refunds or subsidies! This process defunds the government, frays the safety net for the middle class and the poor and results in the budget being balanced, to the extent that it is, on the backs of the poor and middle class.
For German exports, the VAT is refunded thus encouraging exports at the expense of imports. No wonder Germany has a healthy export economy. This acts like a tariff in reverse. So imports are subjected to a 19% VAT at the border and exports are given a 19% refund at the border. American exports are given no such incentive. In short the US is letting foreign countries eat their lunch and running up their trade deficit in the process because of an antiquated approach to taxation which favors American multinationals while shortchanging American taxpayers.
Unknown to most Americans, the United States is losing the ability to compete in global trade because of the little known foreign Value-Added Tax (VAT).
Foreign governments use this tax against United States producers as a means to prevent the importation and consumption of U.S. goods, while providing incentives for their countries to export their goods to the U.S. The foreign VAT was a subsidy created after World War II to speed up beneficial other countries' recovery. However, it is still used today by 149 countries to exploit this advantageous position against American trade. We have not used it domestically to off set theirs as a benefit to ourselves.
The foreign VAT gives the companies of other nations and their exports the upper-hand by providing incentives in the form of rebates equal to the indirect tax on the exported product. For example, the VAT rate is 19 percent in Germany; therefore the Germans receive a 19 percent rebate from their government on each product exported to the U.S. This acts as a subsidy for a product while encouraging the exportation of products to the U.S. However, the VAT imposes a punishment on U.S. exports by placing a VAT equivalent to the Value Added Tax rate of the importing country. This means all U.S. exports that enter into Germany are taxed 19 percent on top of another 19 percent for the transportation fees of the goods into the country. The VAT destroys American industries’ ability to promote exports, while encouraging foreigners to sell their products to Americans – it must be amended or eliminated.
In 2001, European countries had a VAT rate of 19.2 percent. By 2005, 94 percent of U.S. exports received a VAT. In the same year, foreign governments received rebates of $239 billion from the tax while collecting $131 billion from U.S. producers of goods and services.
It is not surprising that the U.S. has become a nation promoting imports over exports under these unfair and harsh tax conditions. It can be seen why some companies choose to move overseas to produce their product abroad to avoid this monstrous tax and gain the advantage of it in some cases. Because of this detrimental tax, American firms cannot compete worldwide.
Numerous attempts have been made by Congress to offset the tax – in 1974 the Nixon administration was urged to negotiate the tax during the Tokyo Round of global trade talks – only to be ignored by the other countries.
In 1972 and 1984, Congress changed the tax system to exempt between 15 and 30 percent of an exporter’s income from U.S. taxes to offset the disadvantage of the VAT. The European Union (EU) complained to the World Trade Organization (WTO) in 1998, saying the U.S. tax exemption, acting as a tax subsidy, was a direct violation of the WTO agreement. In 1999 the WTO ruled in favor of the EU, giving the U.S. one year to change its tax exemption law or face penalties from the WTO.
Again in 2000, Americans enacted new tax legislation to offset the VAT, which resulted in yet more EU complaints and another WTO case. The WTO decided in favor of the EU, leading to a ruling in 2002 allowing the EU to impose retaliatory tariffs of $4 billion each year on U.S. imports. By this time 25 European nations enacted the VAT to usurp America’s ability to trade.
In 2004 Pres. Bush created new legislation again to offset the VAT. This again led to complaints from the EU – again filing a case with the WTO – arguing export subsidies were provided by the new legislation. In 2006 President Bush and Congress stopped enacting the tax provisions to U.S. exporters, demonstrating how the EU and WTO had successfully usurped the U.S. of its power to promote fair and free trade.
During the battle between the WTO and the U.S., all nations were provided full VAT privileges, usurping the U.S. of fair trade. The WTO and EU do not serve in the best interest of the U.S. They are acting to support and promote continuance of this debilitating tax.
The only way the WTO will allow us to offset the VAT is to have one of our own. We could feasibly do this if we were to lower our income tax. Until we do get a VAT of our own, our companies and our nation will continue to suffer against this unfair disadvantage.
While the US is straitjacketed by partisan bickering and paralyzed by insane trade policies, Germany and other countries are surging ahead with enlightened, rational thinking which gets translated into effective policies that keep the German government in a position of solvency and keep German factories humming. Meanwhile, the US engages in a race to the bottom encouraging the export not of products but of jobs and defunding the government by giving tax breaks to corporations and the rich. Another informative article is the following:
In a June 28, 2010, economist Ian Fletcher said “Germany, like the U.S., is nominally a free-trading country. The difference is that, while the U. S. genuinely believes in free trade, Germany quietly follows a contrary tradition that goes back to the 19th-century German economist Friedrich List … So despite Germany’s nominal policy of free trade, in reality a huge key to its trading success is a vast and half-hidden thicket of de facto non-tariff trade barriers.”
Fletcher quoted from a report by the Heritage Foundation: “Non-tariff barriers reflected in EU and German policy include agricultural and manufacturing subsidies, quotas, import restrictions and bans for some good and services, market access restrictions in some services sectors, non-transparent and restrictive regulations and standards, and inconsistent regulatory and customs administration among EU members.”
Another opinion of Germany’s export success as reported in The New York Times, is “the roots of Germany’s export-driven success reach back to the painful restructuring under the previous government of Chancellor Gerhard Schröder. By paring unemployment benefits, easing rules for hiring and firing, and management and labor’s working together to keep a lid on wages, ensured that it could again export its way to growth with competitive, nimble companies producing the cars and machine tools the world’s economies – emerging and developed alike – demanded.”
The same article reported that Germany’s Chancellor Angela Merkel resisted the use of government stimulus spending that the United States and some European partners used to handle the recession. Instead of extending unemployment benefits like the United States has done several times since the recession began, Germany “extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions. At its peak in May 2009, roughly 1.5 million workers were enrolled in the program,” and the Organization for Economic Cooperation and Development estimated that “more than 200,000 jobs may have been saved as a result.”
As a result, Germany’s unemployment rate at the height of the global recession was 9.0 percent in contrast to the 10.2 percent of the United States. The German jobless rate in October 2010 was down to 7.0 percent in contrast to the 9.6 percent of the United States. Germany is one of the few economies experiencing a solid recovery and one of the even fewer economies without a substantial deficit crisis on its hands. Germany’s exports surged month by month in 2010, but year-end data hasn’t been released yet.
The US model of free trade has largely worked to create a trade deficit in the US, encourage a consumer based economy based on cheap imported products and undermine American workers. While the US encourages the offshoring of US corporations and unlimited imports into the US economy, it gives no incentives for corporations based in the US to export to other countries. As a result it is at a competitive disadvantage, and is losing out in the struggle to supply its government with cash and its workers with jobs. But instead of a rational assessment of this situation and a resolve to do something about it, the US argues about the President's birth certificate and engages in pointless, meaningless culture wars tantamount to arguing about how many angels can dance on the head of a pin.
Now, a group of House Republicans is launching a new stealth attack against union workers. GOP Reps. Jim Jordan (OH), Tim Scott (SC), Scott Garrett (NJ), Dan Burton (IN), and Louie Gohmert (TX) have introduced H.R. 1135, which states that it is designed to “provide information on total spending on means-tested welfare programs, to provide additional work requirements, and to provide an overall spending limit on means-tested welfare programs.”
Much of the bill is based upon verifying that those who receive food stamps benefits are meeting the federal requirements for doing so. However, one section buried deep within the bill adds a startling new requirement. The bill, if passed, would actually cut off all food stamp benefits to any family where one adult member is engaging in a strike against an employer:
The bill also includes a provision that would exempt households from losing eligibility, “if the household was eligible immediately prior to such strike, however, such family unit shall not receive an increased allotment as the result of a decrease in the income of the striking member or members of the household.”
Yet removing entire families from eligibility while a single adult family member is striking would have a chilling effect on workers who are considering going on strike for better wages, benefits, or working conditions — something that is especially alarming in light of the fact that unions are one of the fundamental building blocks of the middle class that allow people to earn wages that keep them off food stamps.
With a record 42 million Americans on food stamps during these poor economic times, it appears that the right is simply looking for more ways to hurt working class Americans.
As these conservatives are cutting these services for hard-working middle class Americans, they are claiming they are acting out of need for “shared sacrifice.” Yet at the same time, the right continues to advocate for massive tax cuts for the wealthiest among us.
Rep. Jan Schakowksy (D-IL), along with a number of her progressive congressional colleagues, has introduced a plan that demands real “shared sacrifice.” Her plan, The Fairness in Taxation Act, calls for creating new tax brackets for the richest Americans, starting at a 45 percent rate for people whose income is $1 million. Her bracket would impose the highest rate — 49 percent — on billionaires.
A chart provided by her congressional office demonstrates that asking the wealthiest among us to pay a little more would actually save more money than all of the House Republicans’ cuts to domestic spending combined. House Resolution 1, which gutted funding on Pell Grants, low-income housing aid, community health centers, and other important programs for Main Street Americans, cut a total of $61 billion. Meanwhile, Schakowsky’s plan saves $78.9 billion, considerably more:
In an interview with ThinkProgress, Schakowsky said that she is “hoping” to build enough momentum within Congress to make her proposal the main alternative to the conservative slash-and-burn budget effort, saying that it is a “winner” for Democrats, both politically and on policy grounds. She said that the House Progressive Caucus is planning to do a road show in the summer to campaign on tax justice and endorsed the Main Street Movement that is defending the middle class across America:
THINKPROGRESS: You’ve mentioned a few times the grassroots movement that’s going on…that’s something that we here at ThinkProgress have dubbed the Main Street Movement, all around this country we’re seeing working families rise up. [...] I wonder if you’ve and your colleagues on the Progressive Caucus have thought about similar kinds of tactics [to the Tea Party], a road show, holding rallies, trying to engender grassroots momentum around your proposals.
SCHAKOWSKY: Well, the Progressive Caucus is planning a road show this summer. This will be a central theme of that. [...] But I think this needs to be bigger than that. [...] I like the idea of branding, I like the idea of the Main Street Movement, and I think it is beginning to seriously come together. I think all of the pieces are out there to put this together right now. This is a moment. I want to capture it right now by introducing this legislation that clearly states an alternative that is very popular.
Listen to it:
Indeed, taxing the super-wealthy is quite popular. A March 2 NBC News/Wall Street Journal poll found that 81 percent of Americans prefer taxing the wealthiest Americans more as their top choice for deficit reduction, while less than a third of Americans endorsed policy options like cutting funding to education and health care.
Update ThinkProgress commenter Jay Kimball used IRS data to put together the following graph showing how the richest 1 percent of Americans is nearly earning more money than they ever have while they are paying the lowest taxes in decades:
An important new initiative from Half in Ten, a national campaign to reduce poverty by 50 percent over the next ten years, and the Coalition on Human Needs, is putting a face on irresponsible “slash and burn” deficit reduction by showing how it would damage real lives.The organizations are collecting people’s stories so that the cruel consequences of draconian cuts to key federal programs are plain to see.
Consider the story of Carolyn, who was in her 40s when her husband of 25 years left her with two daughters.She had never received any kind of assistance and describes turning to her local community action agency as “the hardest thing I had ever done.”Her fears were quickly allayed as she “was treated with respect and was never made to feel like a drain on society.”She enrolled in a workforce development program that helped her with tuition and books while she attended community college.
“I went to college five days a week and spent the weekend working, so I never had a day off,” writes Carolyn.“When I graduated I became a Registered Nurse, able to support myself and my family. I couldn’t have done it without the Federal Workforce Development Program and the supportive services the local Community Action Agency provided.”
But the Boehner-led “so be it” Republicans would nearly eliminate funding for Community Service Block Grants (CSBG) for the remainder of 2011, and President Obama proposes cutting it in half in 2012.The cuts would disrupt the antipoverty services provided by 1,065 community action agencies nationwide to over 20 million low-income people, including 5 million children, 2.3 million seniors and 1.7 million people with disabilities.What makes the cuts even more insane is that the agencies generate $6.54 from state, local, and private sources for every federal dollar received, according to the Coalition on Human Needs.
People like Carolyn would be hit doubly hard—not only would the community action agencies reach fewer people, but the kind of workforce development programs that allowed her to change her life would also be slashed by Republicans.In fact, at a time when 14 million Americans are out of work, more than 8 million adults and youth would lose access to job training and other employment services. Job training under the Workforce Investment Act programs for adults, youths, and dislocated workers would essentially be shut down until July 2012.
But, hey, at least folks can turn to higher education, right?Actually, not really.At a time when the US is now 12th in the world in the percentage of 25 to 34 year olds with a college degree, the GOP bill would result in 9.4 million low-income college students losing all or some of their Pell grant.It would reduce the maximum Pell grant by a whopping 17.4 percent!(Obama would increase Pell Grant funding by 20 percent.)
The GOP cuts would be a disaster for students like this senior at University of Missouri who anonymously writes, “I will be applying to medical school at the end of this year. I come from a single-parent household and my mother makes about $20,000/year; hardly enough to put me through college. Without federal aid such as the Pell Grant, I would not have enough money to attend college at all.”
The student also works as a medical assistant at Planned Parenthood, where the GOP would eliminate all federal funding.That means zero funding for 820 health centers that do 90 percent of their work on preventive, primary care.
“I know first-hand how important the services we provide to people really are,” writes the Mizzou student.“The majority of our patients literally cannot afford to go anywhere else, and without our care, they simply would not receive services such as cancer screenings, birth control, and so much more.”
Nor would many of them be able to heat their homes, if the Chainsaw Republicans have their way, and President Obama’s 2012 budget isn’t much better.Despite the fact that a record number of households are expected to need assistance to pay for heating or cooling, the cuts in the GOP bill would essentially wipe out the Low-Income Home Energy Assistance (LIHEAP) contingency fund for 2011.The contingency fund provides aid during periods of particularly severe weather or energy price increases.Obama’s cut of about $2.5 billion would deny assistance to more than three million households.
That doesn’t sit very well with Kimberly Thompson, who turned to her local community action agency when her 89 year old, very independent grandmother was facing “nursing home institutionalization.”Through the CSBG, the agency was able to purchase a walker for her, deliver a hot lunch daily, and “provide a home care worker to do light housekeeping and help her with personal care.”The agency also signed her up for LIHEAP and “weatherized her home which lowered her utility bills and gave her more money each month to buy food and medicine.”
“All of these services enabled my grandmother to stay at home for the rest of her life until she died at the age of 92, three years later,” writes Thompson.“If she didn’t have those community services, she would have had to move to a nursing home which would have been a much greater cost to the government—and therefore, the taxpayers—and also would have caused her much emotional distress.”
What is most maddening about the budget debate is that few legislators are talking about alternatives like increasing revenues by closing obscene tax loopholes and corporate giveaways and making the wealthy pay their fair share.Instead, the proposals hit the most vulnerable people the hardest—lower-income people, children, seniors, people with disabilities, unemployed workers, and others.(For a “Better Budget for All” check out this report.)
Kudos to Half in Ten and the Coalition on Human Needs for collecting these stories and making these budget cuts real.If you have a story to tell, please share it.The only way we win this budget battle is to show the very real consequences of these abstract numbers being thrown around Washington, DC, and then organize and demand alternatives.
The people's revolution in Egypt may be a turning point in world zeitgeist. For 30 years neocon values have prevailed. On November 23, 2006 I blogged in a post entitled "Neocon Rats Leaving the Sinking Ship":
"The whole neocon idea of spreading democracy in the middle east by attacking and invading a country in order to change it from a dictatorship to a democracy is a ridiculous proposition on the face of it, but that's what the neocons were selling. And the preposterous notion that this was a moral undertaking - it was morally a good thing to do - to bring death and destruction to a nation in order to spread democracy is as repugnant as the notion that Hitler was morally correct to invade weaker countries because the Germans were the most advanced civilization composed of the stongest and best people. The American supermensch, according to the neocons, would advance the Iraqi undermensch to democracy and freedom. Depite the cost in death and destruction, they would thank us some day. They would throw flowers at the advancing troops much as the Austrians threw flowers at the German army during the Anscluss."
This pretty well sums up American policy under George W Bush and the neocons. Their notion of forcing democracy on a country by invading it played out in Iraq and Afghanistan. The IMF and the World Bank were US surrogates which forced policies of privatization, deregulation and shredding of the social safety net down the throats of any country not stong enough to resist. The neocon US saw as its duty the forcing of what they considered to be American values down the throats of the rest of the world. The result in many cases was the creation of an elite class of wealthy oligarchs and increased poverty among the majority of the people with a corrupt and repressive dictator favorable to American intersts at the top. The intersection of political and economic power was complete. Such was the case in Egypt.
For those that say that this protest came out of nowhere, let me set the matter straight. There have been protests as recently as last June. They just never got the mass publicity. In an article, Privatization and Corruption in Egypt, we find the following:
Last June there were protests against privatization in Egypt. The protests were so severe that the government actually decided to effectively end the program. Since the 1990's a key economic priority in Egypt was the privatization of state owned industries and a transition from a centrally controlled economy to a more free market oriented economy that would be part of the global capitalist system.
The justification for such a move was the inefficiency of the state controlled command economy. However, the more pressing concern was to open up the country to foreign investment and also enrich crony supporters of the government through privatization of state owned assets at fire sale prices.
Many in the public long believed that privatization of state companies involved corruption involving insider dealings and opposed it for this reason but also there was oppoosition from some old guard officials who thought that privatization would be destabilizing. When the state owned companies, this ownership could be used to help control dissent. Wages could be raised and people could be employed even when in purely capitalist market terms they were not needed. In fact they provided a social safety net of sorts.
The privatization has already gone about as far as it could go. Remaining state companies often are technologically outdated and overstaffed with poorly trained workers. No capitalist investors are interested in buying them except perhaps at very low prices.
In June of 2010 thousands of workers protested outside parliament complaining about lost jobs, wages, and social protections. Fearing even more political unrest the government decided to drop further privatization for now. The government has even bought back several companies from investors.
The demand from the international business community has been for further "reform"to cut Egyptians expectations. Egyptians expect their government to do things for them not just for business! Experts claim that the fundamental mistake of the government was in failing to reduce public expectations. Under the command economy and state ownership people expected the state to be the primary provider. People supported the government because the government gave everyone jobs. The experts complain that there are still about six million state civil service employees. Of course the reform would be to privatize most of these services, make them centers for private profit and investment and hire only if this made money for investors.
The new view of this is expressed by an official. Anonymous of course and to the New York Times! ‘You educate me, give me a degree, you give me a job, when I die you bury me - and I do nothing.' " Of course they did do something; they kept the system going inefficient or not. The problem is that it is not part of the system of global capitalism and it does not provide much for private profit or investors.
Political scientist Amr El-Shobaki said that privatization was a way that friends of the rich and powerful could grow more rich and powerful. The privatization process had begun under Anwar Sadat but it begin in earnest in 1991.
The goal was to privatize 314 companies. All the bargains are gone to investors, dissolved or merged with other state companies. 150 are still left.
Shobaki said:"There is always a cost for reform, but the problem here is that people now have the impression that those who always pay the cost of every reform are the simple people, while businessmen are never held accountable for corruption and while privatization of companies takes place in secret, without the knowledge or participation of the people," Perhaps people's impressions are correct.
Faced with opposition to privatization the government took another tack. Open the door to foreign investment and let state industries wither. In the Egyptian context, economists say it is a victory that this work force has shrunk, to about 300,000 from about 1.3 million in 1978. Right, it is a victory that jobs are lost. THe government that scored that victory is now in danger of falling. One of the reasons is the high unemployment.
The government has adopted other "reforms" to reduce expectations of the Egyptian working class and whip them into shape. The government adopted a law that allowed state-owned companies to deal with employees in the same way as private-sector companies. In 2009 it began to carry out a new law allowing the private firms to build infrastructure, including sewage plants and hospitals, another unpopular move intended to whittle away the state-dominated system.
A study of Egyptian attitudes show a quite different view of privatization and the role of government than in the U.S. Consider this:
""The majority of citizens believe that the best system would strengthen the role of the state and the public sector; only 20% of citizens considered privatization to be beneficial to Egypt’s economy. ""
There you have it, friends, in a nutshell! Privatization, a core neocon value, led to large scale unemployment and it was this that was the primary factor behind Egypt's revolution. You had large numbers of young college educated people with no job prospects. You had fantastic wealth among a tiny elite while the rest lived in poverty. This revolution was about corruption in this sense, but it was all perfectly legal. Mubarak himself had siphoned off $70 billion dollars from the system which required foreign investors to enter into partnerships with Egyptians owning 51%. The best state owned companies had been privatized and snapped up by foreign investors. The remaining state owned companies were virtually worthless. No investor wanted to buy them. In the name of efficiency workers had been laid off.
The New York Times confirmed that what was happening was the sell-off of state owned enterprises to private investors with the consequence of laid off employees and high unemployment:
Privatization began in earnest in 1991, when Egypt agreed to work with international lenders on an economic restructuring plan to help it repair a failing economy. This represented an effort to accelerate changes started in the 1970s by President Anwar el-Sadat, who began the process of dismantling the state-controlled economy fashioned by President Gamal Abdel Nasser in the 1950s and early ’60s.
The 1991 effort started off easily enough when the state readily found buyers for assets like its beer and cement industries. But over time, the state said it was left with difficult-to-sell assets, outdated factories producing cars, instruments for textile manufacturing and other things that are either obsolete or unwanted. At the same time public pressure became intense as workers complained that their rights were being auctioned off.
The goal was originally to sell off 314 companies. There are still 150 left: the rest have been sold to investors, gone public on the stock market, dissolved or merged with other state industries.
“There is always a cost for reform, but the problem here is that people now have the impression that those who always pay the cost of every reform are the simple people, while businessmen are never held accountable for corruption and while privatization of companies takes place in secret, without the knowledge or participation of the people,” Mr. Shobaki said.
Faced with so many obstacles, the government took another approach, trying to open the door to foreign investment while quietly allowing state industries to wither. In the Egyptian context, economists say it is a victory that this work force has shrunk, to about 300,000 from about 1.3 million in 1978.
The government also adopted a law that allowed state-owned companies to deal with employees in the same way as private-sector companies. This year it began to carry out a new law allowing the private firms to build infrastructure, including sewage plants and hospitals, another unpopular move intended to whittle away the state-dominated system.
So fundamentally the revolution was about jobs. It was about economic democracy as opposed to economic aristocracy. It was a rejection of crony capitalism in which state owned assets are sold off to a group of politically powerful and connected insiders. It was about a repudiation of neocon values. The reason that the American right wing is so upset is that they are afraid that the Muslim Brotherhood will take over. They are upset over the word "Brotherhood." Any new economic system put in place by the Egyptian people that has anything to do with "Brotherhood" is antithetical to American economic values, the values of capitalism. Why it might mean redistribution of wealth not from the poor to the wealthy which they favor but in the other direction from wealthy to poor which they don't. When George W Bush and the neocons talked about "democracy," democracy was just a euphemism for American style capitalism - a top down elite of wealthy investors and a majority underclass living in poverty with a repressive dictator at the top who maintained stability so American interests in the region would not be transgressed. The American right wing has gotten so comfortable with sham democracy that it has a problem with anything approaching authentic democracy.
But the Egyptian people are interested in real democracy not sham democracy, and that real democracy very definitely has an economic component as did the 1948 UN Declaration of Human Rights which states: "Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control." The Egyptian revolution is a repudiation of neocon values, a repudiation of privatization, deregulation, austerity and shredding of the social safety net. It is more than a call for free elections and a new parliament. It is a call for economic as well as political justice. Let's hope that the Egyptian people's revolution is not hijacked.
It's impossible to know what went on behind closed doors, but the final results show that the military sided with the people and against the oligarchy. If Bush were President, the results might have turned out differently. The military might have been persuaded to turn on the people thus preserving American interests in the region. The victory of the Egyptian people does not mean a repudiation of American interests, just a rejection of neocon values. Neocon values are only American values when Republicans are in control. The fact that we have a President Obama and Democrats are in power in the White House means that American values have shifted. Now American values can support and work hand in hand with a true democracy in Egypt. This might be the paradigm shift which truly delivers power and economic justice to the people and away from the interests of globalized transnational corporations and the international wealthy class of elite investors. Let's hope so.
I haven't had time to respond to this article [In Norway, Start-Ups Say Ja to Socialism] properly. You must understand Max Chafkin's excellent information is old hat to me as I have lived in Europe and worked for European firms for over 30 years now. Here are my abbreviated personal comments on some key differences in how the economies of Europe and America work.
At the age of 30, I was Scandinavian Director of Finance for Merck, Sharpe & Dohme located in Denmark. Had extensive direct contact with all the Nordic countries, including Norway. Later, as a consultant-manager for the Dutch shipbuilding and offshore oil-gas industry for many years, I had a number of business dealings/negotiations with Norwegians as result of their offshore oil-gas discoveries in the late 60s.
The Norwegians have much in common with the Dutch. They both have a plethora of entrepreneurial family companies and small firms, and some very successful global firms .... an entrepreneurial history that goes way, way back.They both have been conducting business around the world since the 17th century -- the Norwegians with their enormous tanker fleets and the Dutch starting with the Dutch East India Company, then Royal Dutch Shell, Unilever, Phillips, etc.. For centuries, both nations have been very worldly-engaged people, making them super alert to new ideas, ways of making, doing things, and dealing with vastly different cultures.
In brief, here are a few important points of Norway's story that similarly relate to other mature EU countries like the Netherlands, Sweden, Denmark, Switzerland, etc.:
(1) European countries have to be extra focused on the internal general welfare of their citizens and quality-of-life because the majority will never live and work in another country .... as each country has such a completely different history and cultural at-home cohesiveness. This, of course, is just what makes Europe so attractive.
(2) The European welfare system with its higher taxes gives something concrete and valuable back to all its citizens regardless of income level, e.g., state-of-art productive transport/water-sewer systems; generous vacations; quality-affordable basic health care for all (as our study of Dutch-American health care systems dramatized); free pre-college public education (although the Netherlands, unlike Norway, does have some private schools) and very low cost of universities; very low poverty rates due in part to advanced/refined internal flexible-work markets and extreme ease and low cost of starting up so-called "one-man firms"(as in Holland); energy efficiency and conservation standards far exceeding those in America; GDP COMPONENTS OF GROWTH that reflect a sound economic culture of higher savings rates, lower consumption, stronger public and private investment, modest trade deficits .... compared to the U.S.
(3) A relatively far more stable and harmonious regulatory environment that does not drastically vacillate with political mood or with newly elected officials.
(4) A fundamental cultural value of sharing and enjoying life has also nutured the idea that, "Life is much less about living to make money than it is about making money to live." Quality-of-life priorities are high on everyone's list.
(5) The relatively higher social-nets are silent Economic-Stabilizers (not noted by most U.S.economists) in weak economic times thus making the slowdowns less severe while the recoveries can be slower. I've watched this dynamic occur here for many years.
So, what all the supposedly expert U.S. economists have seldom understood and what the U.S. fear-mongering politicians constantly are lying about is that although taxes may be higher in Europe (and Max Chafkin is closer to the truth when he suggests this may even be highly questionable), taxpayers get something back of real value. This fact and the deeply-rooted European cultural value, "We are all in this life together," give support to the acceptance of progressive taxation to insure that prosperity is broadly shared.
When the economic environment dictates the need for change and financial austerity, the mature European countries generally go about doing what has to be done promptly and systematically in a fair, clever manner ... without hurting the lower middle-class nor drastically reducing social capital for deregulated, fundamental market capitalism. An important omission by Americans is that there is always much more room to economize or make more efficient generous European social-net systems than to cut America's social-nets. The latter are already ridicuously "bare-bone" and might more appropriately be labeled "poverty social-nets."
Europe now has its plate of problems and problem countries -- Ireland, Greece, Spain, Portugal. But all the U.S. media/politician hysterical and demagogic misrepersentations (e.g., typically by Paul Ryan recently and Fox news) of Europe's general economic demise due to massive out-of-control social-nets are pure NONSENSE!
Of course, the euro's future and financial problems certain countries present are awesome challenges. But for over 30 years I've watched European coalition governments come realistically to grips with institutional policy mistakes, excesses or new system-threatening challenges. A key advantage is that most mature EU countries have inherently more balanced, stable economic models than the US has on which to make adjustments to meet the new global circumstances .... crisis situations like now where both austerity measures as well as intelligent investments are essential.
In sharp contrast, the US is out-of-balance with an extraordinary level of unaffordable military spending (at +5% of GDP vs. 1.5% in Europe), an ancient broken-down infrastructure, an extraordinary dependence on consumption combined with stagnant middle-class wages stimulated by outsourcing/automating/robotosizing/downsizing where labor's value for society is seen as a replaceable machine of 400 times less value than top management and shareholder wealth enhancement ...all resulting in low middle-class savings, huge trade deficits, high long-term structural unemployment, explosive budget deficits as tax revenues decline.
The Norways, Swedens, Denmarks, Hollands, Switzerlands of the world are not into any form of self-destructive capitalism extolling a "survival of the fittest" caricature as being the ideal social-economic paradigm for long-term stability, cultural cohesiveness or quality-of-life experience. The European economic models have interesting shades of differences, but all have the central value and priority to keep in proper balance a dynamic market of entrepreneurship/innovation and the protection of society's general welfare.
As Steven Hill has so correctly noted in his book "The Promise of Europe: "It's the steady statesociety of Europe versus the "On your own society of America," each with its inherent weaknesses and unique strengths .... with the major exception that Europe pragmatically steps up to the task of refining/correcting any capitalistic and general-welfare imbalances in their societies under the principle of SOLIDARITY.
Whereas we in the U.S. are addressing (better said not addressing) our societal imbalances by encouraging greater class DIVISIONS and GAPS between the Haves and Have Nots.
Published on Tuesday, January 25, 2011 by OtherWords
by Sam Pizzigati
Following World War II, the United States produced something the world had never seen: a mass middle class. For the first time, a majority of a major nation's people had real money left over after paying for basic food and shelter.
New York and California served as geographic bookends to this colossal achievement. They offered ordinary citizens lives unimaginable only a few short years before. Activist government policies made those lives possible. Government-subsidized loans raised new middle-class suburbs from potato fields and sugar beet acres. Tax dollars funded new roads, schools, and parks.
"California's children, swarming on all those new playgrounds, seemed healthier, happier, taller," as Atlantic editor Benjamin Schwarz has noted. "A sweet, vivacious time."
That time may be gone for good. The new governors of New York and California, both Democrats, have essentially declared America's mass middle class ancient history.
Andrew Cuomo in New York and Jerry Brown in California are pushing a fundamental "realignment" that goes beyond the budget cutbacks that have become a grim annual routine in state capitals.
Brown and Cuomo are attacking the foundational core of America's middle class: the notion that public policies can improve ordinary people's lives. Instead, they're squeezing public employees and the public goods and services they provide.
Consider what's happened to higher education in California. Fifty years ago, every California high school grad had access to free community college. High-achievers paid rock-bottom rates to attend some of the world's finest universities. Today, under Jerry Brown's new fiscal game plan, revenue from student fees will exceed the state government’s contribution to higher education for the first time in California history.
Brown says he has no alternative.
"This is the world we live in," Brown has pronounced. "You can't manufacture money."
But governments can raise revenue by taxing their most affluent. Back in America's middle class golden age, that's what happened.
Brown refuses to go down that road. The temporary California tax hikes that he wants to preserve--a 1 percent boost in state sales tax, a 0.25 percent increase across the board on the state income tax, among others--all fall heavier on middle-income Californians.
In New York, Andrew Cuomo isn't willing to raise taxes on the rich at all. His rationale for that refusal?
"The working families of New York," Cuomo says, "cannot afford tax increases."
Cuomo defines "working families" to include the wealthy. "They work, too," he explains. Indeed they do. But under current law New York's wealthy actually spend less of their income in state and local taxes than ordinary New Yorkers.
New Yorkers making between $33,000 and $95,000, analysts Chloe Tribich, Sunshine Ludder, and Ron Deutsch recently pointed out, pay 11 percent of their incomes in state and local tax. New York's richest 1 percent--taxpayers making over $633,000--only pay 7 percent.
In the middle class's heyday, New York's wealthy faced a far heavier tax burden. In fact, since 1980, the top state tax rate on New York's highest incomes has dropped by half.
So has the top federal tax rate, from 70 to 35 percent.
New York and California alone have more taxpayers making over $200,000 than all 22 states that John McCain carried in the 2008 Presidential election combined, according to David Callahan, a senior fellow at the think tank Demos.
Without the recent tax deal Obama brokered with the GOP, Callahan notes, these affluent would be paying federal taxes, this year and next, at a 39.6 percent top rate. So why not, he asks, raise top state income tax rates--from 10.5 to 15 percent in California and from 8.97 percent to 13.5 percent in New York--to take back what the rich are saving at the federal level?
Don't hold your breath. Neither Brown nor Cuomo sees any reason to inconvenience the financially fortunate. We're just "going to have to reduce government spending," Cuomo insists.
For the awesomely affluent, that makes sense. Rich people, after all, don't require public schools and parks and libraries. They feel they don't need government spending. Only the little people do.
Sam Pizzigati edits Too Much, the online weekly newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies, from which this op-ed is adapted. www.ips-dc.org
It is well known that members of Congress have the best of gold plated health care policies bought and paid for by you, the American taxpayer. We're paying for the privilege of having the GOP controlled House piss around with repealing health care for the people that pay for theirs. How arrogant of them! Please get this government burden off our backs - the burden of paying for health care for the politicians who are trying to repeal our health care. If they were'nt such hypocrites, they would repeal their government provided health care first. I'm sick and tired of paying for health care for politicians who want to deny the American public protection from having their policies terminated if they should have the audacity to get sick.
The following is from an article subtitled, "Politicians Receive the Country's Best Care - at Taxpayer Expense."
Few would deny that a health care crisis looms large in the U.S. In a country with millions of uninsured and underinsured citizens, health care has become more a privilege than a right. Indeed, the United States remains the only industrialized country in the world that doesn’t guarantee health care to all its citizens.
But this isn’t the case for members of the U.S. Congress. Representatives and Senators alike receive some of the best health care benefits in the country, much of it paid for with taxpayer dollars. Yet these same members seem unable - or unwilling - to extend similar protections to the rest of America.
Federal Employees Health Benefits Program
As soon as members of Congress are sworn in, they may participate in the Federal Employees Health Benefits Program (FEHBP). The program offers an assortment of health plans from which to choose, including fee-for-service, point-of-service, and health maintenance organizations (HMOs). In addition, Congress members can also insure their spouses and their dependents.
Not only does Congress get to choose from a wide range of plans, but there’s no waiting period. Unlike many Americans who must struggle against precondition clauses or are even denied coverage because of those preconditions, Senators and Representatives are covered no matter what - effective immediately.
And here’s the best part. The government pays up to 75 percent of the premium. That government, of course, is funded by taxpayers, the same taxpayers who often cannot afford health care themselves.
More Health Care Perks for Congress
And the Congressional perks don’t stop with the FEHBP. According to the article “Health care as good as Congress gets,” by John Barry, a staff writer for the St. Petersburg Times, “Members of Congress have their own pharmacy, right in the Capitol. They also have a team of doctors, technicians and nurses standing by in case something busts in a filibuster. They can get a physical exam, an X-ray or an electrocardiogram, without leaving work.”
The GOP Yahoos in addition to receiving their government subsidized health care are wasting taxpayer money by voting to repeal Obamacare. They know they can't really do it because the Democrats control the Senate so it won't pass muster with the Senate. Yet the GOP controlled House is wasting time and taxpayer money making a big deal over repealing it instead of spending their time getting some work done which might actually benefit the American people. They're the ones who always talk as if they are doing what the "American people" want when in reality they are doing the bidding of the corporations - in this case the health insurance corporations. They are nothing more than corporate shills, yet they are always talking about the American people. Well, what this American person wants is for them to repeal their own taxpayer funded, gold plated health care. If it's good enough for the gander, it's good enough for the goose. Then let them buy insurance on the private market. If they happen to get sick, tough. They will be kicked off their policy; their medical bills will mount up. Why they just might lose their home and have to declare bankruptcy. If it's good enough for the American people, it's good enough for them.
I'm for making government smaller by eliminating government subsidized health care for members of Congress. With the money saved we can properly fund Medicaid. These Congressmen are mostly millionaires anyway. Surely, they can afford to buy health insurance on the private market. But they are such hypocrites. They want to deny any kind of government aid to poor people while they appropriate as many government resources as they possibly can for themselves and their cronies. And I am talking here mainly about Republicans. The Democrats for the most part are responsible for passing Obamacare which will provide protections for the American people like preventing health insurance companies from discriminating against them based on preexisting conditions. So this is not a rant against "government"; it's a rant against Republican controlled government which is wholly subservient to corporate lobbyists.
I'm happy to see that the House GOP's big publicity stunt - the repeal of Obamacare - is going nowhere as Democrats point out all the good things in Obamacare like ending the doughnut hole for seniors, ending policy termination due to preexisting conditions, ending rescission which is when you get kicked off your policy after you get sick, letting young adults remain on their parents' policies until they're 26 etc. More and more people are starting to realize and appreciate the profound benefits of Obamacare, and President Obama's approval rating is getting steadily higher with each passing day.
Not so the hapless Republicans who don't have a plan for replacing Obamacare. Now if they just would have said "let's make Obamacare better" instead of trashing it lock, stock and barrel. Wouldn't that have been the sensible thing to do? Let's make it better. Admittedly, it's not perfect. More cost containment is needed. If the Republicans were sincere and serious, they would have taken that attitude: let's make the weak parts of it stronger. The Democrats would have gladly partnered with them in a cooperative effort. Oh wait - the reason it's not better is that Republicans did everything they possibly could to weaken it in the first place. Their approach is wholly destructive when, if they truly cared about the American people - and not the corporations that provide campaign funds for the politicians - they woud have taken a more constructive approach in the first place.
The Republican Study Committee, aka "the caucus of House conservatives," has released a list of proposed spending cuts that it says will add up to $2.5 trillion over the next 10 years. Dave Weigel has a tidy summary here. Although for the most part the line items add up to a list of cherished liberal priorities (no defense spending or homeland security cuts here, no indeed!), I'm guessing that the average person will glance at it and see some things that they don't think the government should be funding. Mohair subsidies?
But it's worth drilling down on the third biggest item on the list -- weighing in at $16.1 billion -- the "Repealing Medicaid FMAP increase," because I can't think of anything that better demonstrates the priorities of the current Republican Party.
Medicaid is the government's primary social insurance program targeted at poor and disabled Americans. Medicaid is responsible, for example, for such things as nursing home care for the indigent. It is jointly funded by the states and the federal government --it is, in fact, one of the biggest items in most state budgets.
When the recession hit, two things happened almost immediately at the state level: tax revenue plummeted, and applications for Medicaid coverage boomed. The two phenomena were intimately related, of course. People who lost their jobs and homes as a result of a cratering economy also lost their healthcare.
Let me repeat that, because it's important -- a major consequence of the recession was a surge in poverty-stricken Americans seeking government-funded healthcare. State budgets got crushed. The Obama administration moved quickly to address the problem, authorizing a big increase in Medicaid funding to the states via the American Reinvestment and Recovery Act (the stimulus bill). This is what is referred to by the acronym FMAP -- Federal Medical Assistance Percentage. It's not stimulus in the sense that a big infrastructure project is stimulus, but it undoubtedly saved some jobs by preventing public sector layoffs by state governments that would not otherwise have been able to balance their budgets. And, naturally, the pain and suffering of the American people would have been much worse without the federal help. One of the reasons why the Great Recession was not a Great Depression is precisely because of the existence of programs like Medicaid.
The stimulus FMAP boost was temporary -- designed to run out at the end of 2010. In August 2010, after a big political fight, the Senate and the House passed a $15 billion extension that will run through June 2011. So in one sense, the Republican spending cut pledge is entirely illusory -- the FMAP increase is already scheduled to end this year.
Whether it should end this year is another question. Some people might imagine that such decisions should be related to how well the U.S. economy is performing, and correspondingly, how many people need Medicaid coverage. If unemployment falls and Medicaid rolls stop expanding, or even start declining -- the program is means-tested, so if you find a job and start making money, you are no longer eligible -- the pressure on state budgets and the necessity for federal assistance should ease. If, on the other hand, Medicaid funding gets cut off before the economy fully recovers, and state budgets get hammered again, resulting in more public sector layoffs, there would, tragically, likely be increased applications for Medicaid help. Talk about your widening gyres!
I'm sure there are plenty of conservatives who want to get rid of Medicaid altogether. If poor old people can't pay for nursing home care then let them die in the street, like they used to. The Tea Party version of government apparently just doesn't believe in helping people who can't help themselves. For the modern Republican Party, it's far far more important to ensure that those who will never need Medicaid -- the richest 1 percent of Americans, the people who are already doing quite fine as their market portfolios swell -- get their big fat tax cuts, adding up to $700 billion over the next 10 years, than that the poorest Americans get another $15 billion a year so that they can die in a manner that befits a nation that dares considers itself civilized.
I mean, consider the scene, early in the book, where Ebenezer Scrooge rightly refuses to contribute to a poverty relief fund. “I’m opposed to giving people money for doing nothing,” he declares. Oh, wait. That wasn’t Scrooge. That was Newt Gingrich — last week. What Scrooge actually says is, “Are there no prisons?” But it’s pretty much the same thing.
Anyway, instead of praising Scrooge for his principled stand against the welfare state, Charles Dickens makes him out to be some kind of bad guy. How leftist is that?
As you can see, the fundamental issues of public policy haven’t changed since Victorian times. Still, some things are different. In particular, the production of humbug — which was still a somewhat amateurish craft when Dickens wrote — has now become a systematic, even industrial, process.
Let me walk you through a case in point, one that I’ve been following lately.
If you listen to the recent speeches of Republican presidential hopefuls, you’ll find several of them talking at length about the harm done by unionized government workers, who have, they say, multiplied under the Obama administration. A recent example was an op-ed article by the outgoing Minnesota governor Tim Pawlenty, who declared that “thanks to President Obama,” government is the only booming sector in our economy: “Since January 2008” — silly me, I thought Mr. Obama wasn’t inaugurated until 2009 — “the private sector has lost nearly eight million jobs, while local, state and federal governments added 590,000.”
Horrors! Except that according to the Bureau of Labor Statistics, government employment has fallen, not risen, since January 2008. And since January 2009, when Mr. Obama actually did take office, government employment has fallen by more than 300,000 as hard-pressed state and local governments have been forced to lay off teachers, police officers, firefighters and other workers.
So how did the notion of a surge in government payrolls under Mr. Obama take hold?
It turns out that last spring there was, in fact, a bulge in government employment. And both politicians and researchers at humbug factories — I mean, conservative think tanks — quickly seized on this bulge as evidence of an exploding public sector. Over the summer, articles and speeches began to appear highlighting the rise in government employment and issuing dire warnings about what it portended for America’s future.
But anyone paying attention knew why public employment had risen — and it had nothing to do with Big Government. It was, instead, the fact that the federal government had to hire a lot of temporary workers to carry out the 2010 Census — workers who have almost all left the payroll now that the Census is done.
Is it really possible that the authors of those articles and speeches about soaring public employment didn’t know what was going on? Well, I guess we should never assume malice when ignorance remains a possibility.
There has not, however, been any visible effort to retract those erroneous claims. And this isn’t the only case of a claimed huge expansion in government that turns out to be nothing of the kind. Have you heard the one about how there’s been an explosion in the number of federal regulators? Mike Konczal of the Roosevelt Institute looked into the numbers behind that claim, and it turns out that almost all of those additional “regulators” work for the Department of Homeland Security, protecting us against terrorists.
Still, why does it matter what some politicians and think tanks say? The answer is that there’s a well-developed right-wing media infrastructure in place to catapult the propaganda, as former President George W. Bush put it, to rapidly disseminate bogus analysis to a wide audience where it becomes part of what “everyone knows.” (There’s nothing comparable on the left, which has fallen far behind in the humbug race.)
And it’s a very effective process. When discussing the alleged huge expansion of government under Mr. Obama, I’ve repeatedly found that people just won’t believe me when I try to point out that it never happened. They assume that I’m lying, or somehow cherry-picking the data. After all, they’ve heard over and over again about that surge in government spending and employment, and they don’t realize that everything they’ve heard was a special delivery from the Humbug Express.
So in this holiday season, let’s remember the wisdom of Ebenezer Scrooge. Not the bit about denying food and medical care to those who need them: America’s failure to take care of its own less-fortunate citizens is a national disgrace. But Scrooge was right about the prevalence of humbug. And we’d be much better off as a nation if more people had the courage to say “Bah!”
The rationale for Obama's tax cut proposal that would add $1 trillion to the deficit and hence to the national debt is that it would stimulate the economy. Really? According to some pundits it could knock a couple tenths of a per cent off the unemployment rate. So in their mind reducing the unemployment rate by a couple of tenths of a per cent is worth a trillion dollars. Really? I don't think so. The economy as measured by GDP is already out of recession and has been for some time. It's not GDP that's the problem. The problem is joblessness. GDP is heavily dependent on consumption. In fact 70% of GDP is consumption. By giving out lavish tax breaks, there will obviously be increased consumption at some level so GDP will remain at least at the level it's at- namely high enough so that the economy stays out of recession.
However, GDP is not the problem. The problem, dare I repeat, is LACK OF JOBS. GDP and job growth are not correlated any more. Consumption is predicated on selling stuff manufactured in China and other low wage countries. So while selling more stuff maintains or increases GDP, it does nothing for job growth. You'd think that they would have learned that lesson after the first stimulus. Although it increased GDP, it did nothing for job growth. But Obama and the politicians who crafted Stimulus II, another unfunded liability, have learned nothing, and they're only adding another trillion dollars to the debt. As Robert Reich says, they didn't even consider a WPA style jobs program which would have put people back to work directly. Or they might have learned from Argentina.
My prediction is that Stimulus II, otherwise known as the Obama tax proposal, will do next to nothing to create jobs, and Obama will find himself in the predicament in 2012 of having blown a couple trillion dollars on tax breaks in a totally futile effort to create jobs. Why he is still subscribing to trickle down economics when it has been totally discredited, God only knows. The theory that corporations will hire more workers if they only get more tax breaks is utterly ridculous. They are sitting on tons of cash and last quarter made more profits than any other quarter in history. If you or I were sitting on tons of cash and recently our income minus expenses was greater than any other time in our life, would we need government to sweeten our situation even more? I don't think so. Only the infinitely greedy would.
The theory that increased consumer demand will result in companies hiring more workers is equally ridiculous when most of the stuff consumers will be buying is produced elsewhere. Will a few more retail clerks be hired? Undoubtedly, but this will do little to reduce unemployment. There have been more than 400,000 workers per week filing first time unemployment claims in recent history. And less than 100,000 jobs per month are being created. Over 100,000 new jobs need to be created each month just to keep up with new workers entering the work force!
The real issue is not whether or not the economy (as measured by GDP) improves. The real issue is whether or not joblessness declines. Obama is gambling that a trillion dollar hole in the deficit will increase the number of jobs. Republicans, despite their rhetoric, are gambling that it will not so that 2012 will be a walk in the park for them. If the unemployment rate does not come down to 5-6% by voting day in 2011, Obama is toast so in effect he's gambling the store on Stimulus II. Republicans probably know something Obama doesn't know which is that increased tax breaks for the rich will not result in more jobs despite their saying that it will. So they, despite Krauthammer's protestations to the contrary, probably are confident that tax breaks will not produce more jobs despite their rhetoric. They have been successful in keeping Obama away from the one thing that would bring the unemployment rate down: direct creation of jobs by a WPA style work program. So again Obama has probably been snookered. Investors and producers will probably take their investment and production tax savings out of the country investing and creating jobs elsewhere where there are better growth opportunities. Giving them additional tax breaks in the hopes that they will create jobs here is probably futile.
And now Republicans will come down hard on the deficit using its increased size to justify an all out attack on social programs. In my opinion Obama has squandered another trillion dollar hole in the budget and now must defend traditional Democratic social programs from a Republican onslaught. American citizen/consumers will face a sink or swim social safety net as decreasing wages and decreasing number of jobs increase the number of Americans in debt peonage. Homelessness will continue to increase and charities will be overwhelmed as government decreases the amount it spends on the safety net. Workers will flock to enlist in the military as a last resort thus shoring up the US as the world's paramount national security state. The deficit can is being kicked down the road ad infinitum. Obama could have taken his stand on taxes even if it provoked a crisis. Now the crisis will probably happen to the US as a result of external uncontrollable forces as the bond market bids up interest rates. Democrats need to stand up and redefine what they stand for. They need to take control of the narrative and decide when and where to take a stand even if it provokes a crisis. They cannot, as Obama has done, continue to play patty-cake with the wealthy while mouthing homilies about their allegiance to the middle class. Obviously, Obama's tax deal was a lost opportunity to do so.
All indications are that the electorate, fed up with the way things are going in Washington, will vote the Democrats out and Republicans in next Tuesday. Does this make any sense? Shouldn't we stop and ask ourselves why there has been so little progress in Washington? Republicans in the Senate voted "No" on virtually every piece of legislation Democrats brought forth. They filibustered anything and everything on the theory that nothing would get done, people would get dissatisfied and vote out the people who were trying to accomplish something and vote in the party who obstructed every attempt at progress. Sure enough, it appears that they were right. People dissatisfied with a lack of progress are about to vote into office the very party responsible for that lack of progress. Is this insane or what?
Does the voting public even look beneath the surface as to what's going on in Washington? If so they would surely have seen that the Republican strategy was and is to defeat Obama at every turn regardless of how much good his policies would be for the country. Obama certainly doesn't have all the answers and his big mistake, in my opinion, was to cater too much to Republicans and conservatives in the first place. In the prevailing climate the notion of bipartisanship is a joke. Republicans and some Democrats are so venal and self-serving that their only goal is to serve their corporate masters and lap up their financial rewards when they leave Congress to become lobbyists. Obama watered down many of his initiatives in the hopes of winning over some Republcicans. It didn't really work as a general policy. On other issues he adopted more or less the conservative approach despite the abysmal record that 30 years of Reaganism and Bushism has left in its wake. Reagan and Bush policies have created a nation which for all intents and purposes has joined the Third World. Before Reagan took over, the US was a manufacturing nation that was a net creditor. Now all the manufacturing jobs have left for Asia and the US is a debtor nation like no other still trading on the fact that the dollar is the world's reserve currency. Some day we'll realize that that was more of a curse than a blessing because it only allows us to go deeper and deeper into debt.
Obama's big mistake though was failing to properly analyze the causes of the Great Recession. He and the Democrats thought the country would bounce back if only the banking system was not allowed to disintegrate. The result was that they bailed out Wall Street but failed to give much help to Main Street. Of course, Republicans were basically happy with this result but they wouldn't go so far as to give Obama any credit. Much to the current administration's dismay, the economy did not bounce back. Unemployment remains at ridiculous levels with the unemployed losing their houses in record numbers. Foreclosures continue apace. The combination of lack of jobs and people getting kicked out of their homes represents the bankruptcy of the Obama administration's approach to getting the economy back on track. But if the American public thinks the Republicans, having been voted into office and the Democrats thrown out, will do any better, they have another think coming. The Republican approach will be to accelerate joblessness and homelessness. Under the Republicans, the safety net will be shredded totally. The growing transfer of wealth from the poor and middle class to the rich will increase.
So what is the public thinkling? If they think that voting the Republicans in will save their jobs or their houses, they are absolutely nuts. The Republicans will revert to the policies of Reagan and Bush which have been tantamount to the destruction of the US economy. Jobs will continue to be outsourced. The unemployed will have their benefits reduced. The long term unemployed will be cut off completely. Any public program that benefits the poor will be eliminated. The hollowing out of the middle class will continue on steroids. While Obama and the Democrats have been reluctant to analyze the structural changes that Bush and Reagan policies have brought about and to propose anything too radical in terms of correcting them, Republicans having regained power will do all they can to run the economy into the ditch again. They will transfer wealth from poor to rich with a vengeance. They will ramp up the War Department and spend more trillions in futile battlefield endeavors and foreign adventurism. They will do all they can to put an end to social security and Medicare.
Is this what the public really wants? Don't they understand that Republican policies of the last 30 years are the problem, not the solution. Do they really want a return to those policies? If so, they will have to bear the responsibility for hastening the destruction of the US as a democratic, largely middle class nation and turning it into a corporatist state where the former middle class will have to get used to the role of being peons and peasants. They will have been responsible for hastening their own demise.
HONOLULU — Lillie Gonzales does whatever it takes to provide for three ravenous sons who live under her roof. She grows her own vegetables at home on Kauai, runs her own small business and like a record 42 million other Americans, she relies on food stamps.
Gonzales and her husband consistently qualify for food stamps now that Hawaii and other states are quietly expanding eligibility and offering the benefit to more working, moderate income families.
Data from the U.S. Department of Agriculture reviewed by The Associated Press shows that 30 states have adopted rules making it easier to qualify for food stamps since 2007. In all, 38 states have loosened eligibility standards.
Hawaii has gone farther than most, allowing a family like Gonzales' to earn up to $59,328 and still get food stamps.
Prior to an Oct. 1 increase, the income eligibility limit for a Hawaii family of five was $38,568 a year.
"If I didn't have food stamps, I would be buying white rice and Spam every day," said Gonzales, whose Island Angels business makes Hawaiian-style fabric angel ornaments, quilts, aprons and purses.
Eligibility for food stamps varies from state to state, with the 11 most generous states allowing families to apply if their gross income is less than double the federal poverty line of $22,050 for a family of four on the U.S. mainland. The threshold is higher in Alaska and Hawaii.
With more than 1 in 8 Americans now on food stamps, participation in the program has jumped about 70 percent from 26 million in May 2007, while the nation's unemployment rate rose from 4.3 percent to 9.2 percent through September of this year.
"We've seen a huge increase in participation due to the economic downturn," said Jean Daniel, a spokeswoman for the USDA's Food and Nutrition Service. "That's the way this program was designed."
In addition to helping alleviate economic pressures, many states embrace the popularity of food stamps because their cost – $50 billion last year – is paid entirely by the federal government. States are only responsible for paying half of their programs' administrative costs.
Food stamps have been blasted by some Republicans in this midterm election season as just another federal entitlement program, with former House Speaker Newt Gingrich framing the vote as a choice between "the party of food stamps" and Republican policies that create jobs.
Participants in the food stamp program, technically called the Supplemental Nutrition Assistance Program, receive a per person average of $133 per month to buy staples including milk, bread and vegetables.
Shortly after Hawaii announced it was raising its eligibility limits starting this month, three carloads of 10 seniors drove to the Kauai Independent Food Bank to ask if they qualified. Nine of them did, said Judy Lenthall, executive director for the food bank, which helps people apply for food stamps.
"We saw an immediate and overwhelmingly wonderful response," Lenthall said. "It surprised us how fast it's spreading."
States that have relaxed food stamp eligibility did so by moving to a system where applicants could qualify based on their income, and their other assets such as real estate, vehicles and savings accounts could be ignored.
Basing food stamps on income alone allows the newly unemployed and the elderly to seek government food aid without having to first sell their property or exhaust every dollar they've earned, said Sue McGinn, director of the food stamp program in Colorado, which will expand eligibility beginning in March.
"They won't have to wipe out their savings to apply for benefits," McGinn said.
Many of these states also raised income limits, although applicants still have to show they're essentially living at the poverty line after accounting for allowable deductions, including elder medical expenses and child support.
"It helps moderate and low-income people who are struggling," said Stacy Dean of the Washington-based Center on Budget and Policy Priorities. "They're doing everything we want: they're working, paying all their bills, taking care of their kids, and they still don't have enough money at the end of the month to put food on the table."
Since 2000, the only states that haven't enacted the lower food stamp eligibility requirements are Alaska, Arkansas, Indiana, Iowa, Kansas, Missouri, Nebraska, South Dakota, Tennessee, Utah, Virginia and Wyoming.
In Hawaii, where everything from milk to gasoline is typically the highest in the nation, the changes are welcomed by Gonzales and others.
"As long as my kids have good food, that's all I care about," Gonzales said. "It makes a tremendous difference."
State and municipal governments are slashing their appetite for spending, while more and more personal pocket books are lean if not empty. Slimming down is always good for personal health, but forced economic diets can provoke havoc on those struggling with poverty.
Reducing the "fat" in an agency's budget is one way to survive the worst economic recession since the Great Depression, but cutting essential programs, or the "meat," causes suffering for those people desperately in need of help.
The outcome is stark. Eliminate a 45 bed homeless shelter for the sake of saving money, and 45 people end up on the streets. Cut a jobs program, and less people will find employment.
I recently shared with the Board of Directors of the agency I run that three homeless agencies recently closed their doors because of severe funding cuts. One agency had been in operation for more than half a decade.
Almost every agency director I know has told me they are making severe budget cuts, from 20 percent layoffs or furloughs, to eliminating crucial programs.
The capacity for this country to serve and house our poor is being starved to death. It will take decades for our social service safety net to be woven back together.
With the recent passing of California's state budget, experts already have called the balanced budget a farce. Political leaders have basically forwarded $19 billion of expenses onto next year for the next Governor to grapple. With a projected multi-billion dollar deficit already in the works, everyone knows social service spending will be the first on the chopping board.
A bail out is needed for America's social safety net in order to rebuild a tattered, under-funded anti-poverty system on a scale of the $700 billion bank bailout in 2008. Otherwise, this country teeters on the brink of social insolvency.
The nation's welfare system of cash assistance, for decades the core of help for mothers and children in financial distress, has become a shrunken piece of the U.S. social safety net.
The welfare rolls have absorbed relatively few of the Americans who have tumbled lately into poverty or unemployment.
The number of families getting welfare checks, federal figures show, increased by about 185,000 between the start of the recession in late 2007 and this spring. During roughly the same period, the number of families living in poverty rose by more than 400,000 to record levels, according to the Census Bureau, which reported this week that, in Washington, three out of 10 children were poor last year.
State by state, welfare programs are a patchwork, with little connection between the condition of a state's economy and the number of people who have gone onto welfare.
Taken together, this new portrait of welfare answers a central question that hovered over the impassioned debate of the mid-1990s, when Congress and the Clinton administration transformed welfare from a federal entitlement into a state-run program of temporary assistance that emphasized work. How would the reshaped welfare system respond, policymakers and advocates wondered then, if the economy plunged into long, serious trouble?
Nearly three years after the start of a grave economic downturn, it now is clear that "despite extremely high levels of employment, that has not translated into welfare increases as much as many people expected," said Douglas J. Besharov, a University of Maryland professor who has studied welfare for years.
Welfare's role will be further diminished after Thursday, when emergency funds Congress began providing early last year to help states cope with hard economic times run out. Despite urging from the Obama administration and welfare directors around the country, lawmakers decided not to extend the emergency welfare money, which gave states more than $4 million, in part to subsidize wages to help people go to work.
Congress also was scheduled this year to renew the entire welfare program, known officially as Temporary Assistance for Needy Families, but deferred the task until at least next year.
For now, debate rages between conservatives and liberals over whether welfare is playing the role it should.
Robert Rector, an authority on welfare at the conservative Heritage Foundation, said the program has become "just a drop in the bucket" but that has been offset by "just a massive expansion" of other government help, including tax credits.
LaDonna Pavetti, who tracks welfare rolls at the liberal Center on Budget and Policy Priorities, said the program "no longer reaches the number of people it should. There are people who are in need."
Pavetti pointed out that in some states, including those with the most severe job losses, welfare rolls have risen with poverty rates, while in others they have not.
In California, with the nation's third-highest unemployment rate, welfare caseloads swelled by nearly one-fourth since the recession began to a half-million families this summer, according to state figures. But in Michigan, with the second-highest unemployment, caseloads had increased by 2 percent as of this spring, federal figures show. And in Rhode Island, with the fourth-highest unemployment, welfare cases dropped by 10 percent.
Welfare rolls have risen lately in D.C., Maryland and Virginia.
Nationwide, welfare cases grew by 11 percent from the start of the recession through March, according to the Department of Health and Human Services. In contrast, the number of families getting food stamps jumped by 50 percent and the number getting unemployment benefits more than doubled. Medicaid grew by more than 13 percent from late 2007 to late 2009, according to the Kaiser Family Foundation.
David Hansell, head of HHS's Administration for Children and Families, which oversees welfare, said the reason welfare rolls have lagged "is a very important question" that is not fully understood.
He and others say there is no single reason. But one explanation lies in the discretion states were given starting in 1996 to design their program. California, for instance, allows families with higher incomes to receive welfare than would in many other states. It also is one of few states that continues benefits for children even if their parents have been kicked off because they had been on the rolls longer than time limits, or failed to meet work requirements.
On the other hand, faced with state budget crises, Rhode Island and Michigan lowered the amount of time families could receive benefits.
Another reason the rolls have not grown more rapidly is that most of those who have lost jobs lately are men, Hansell pointed out, while welfare is designed primarily to help children and single women.
In addition, since welfare was redefined as a program requiring job training, some people who would qualify have shied away. Kristin S. Seefeldt of Indiana University said poor women she has followed over time have increasingly resented that welfare would require them to get job training when already they knew how to work but could not find employment. "They understood the program as being ridiculous," Seefeldt, an assistant professor for public and environmental affairs, said. "For a very small amount of benefits, why go through the hassle?"
More recently, welfare programs in budget-strapped states are trying to help people without giving them ongoing cash assistance. For instance, Russell Sykes, who overseas welfare in New York state and leads the National Association of State TANF Administrators, said, "we are doing a huge number" of single payments, in part with the emergency federal funds that just ended, to prevent families from having utilities shut off or being evicted.
And three dozen states have used a total of more than $1 billion of the emergency funds to subsidize pay for about 250,000 Americans who otherwise would probably not have gotten hired, according to welfare directors and Obama administration officials. While cash assistance has grown modestly, job subsidies "became the little engine that could," said Don Winstead, deputy secretary of the Floria Department of Children and Families.
The Heritage Foundation's Rector said states could have used federal welfare money for that purpose all along, but now "understand an emphasis on work is the best way to get more money" from Congress.
Others predict that welfare's reach will be narrowed further. "The emergency fund is expiring, poverty is going up," said Sheldon H. Danziger, a University of Michigan researcher on poverty, "and there are all these people getting food stamps and Medicaid but not cash."
Study without desire spoils the memory, and it retains nothing that it takes in.
- Leonardo da Vinci
Advertising may be described as the science of arresting the human intelligence long enough to get money from it.
--Stephen Leacock
Canadian economist & humorist (1869 - 1944)
They can't put you in jail for what you're thinking.
--Clifton E Lawrence
If we can't create a good impression, we can at least try to create a bland impression.
-- Ben Weinbaum, my supervisor at General Dynamics
Men are generally idle, and ready to satisfy themselves, and intimidate the industry of others, by calling that impossible which is only difficult.
-- Samuel Johnson
There's a vas deferens between us.
--Paul Desmond to a girlfriend
Lawrence, how do you manage to go through so much shit and come out smelling like a rose?
--a college classmate
Lawrence, you're better on paper than you are in person.
--Guy Carlisle
Lawrencie, you're smart in school, but dumb in life.
--Arthur Hill
In politics you must always keep running with the pack. The moment that you falter and they sense that you are injured, the rest will turn on you like wolves.
--R. A. Butler
Don't put off till tomorrow what you can do today.
--Florence C Lawrence
There's no time like the present.
--Florence C Lawrence
One hand washes the other.
--Clifton E Lawrence
You have to take the bitter with the better.
--Clifton E Lawrence
An inventor is simply a fellow who doesn't take his education too seriously.
--Charles F Kettering
A problem well stated is a problem half solved.
--Charles F Kettering
Any sufficiently advanced technology is indistinguishable from magic.
--Arthur C. Clarke, "Profiles of The Future", 1961 (Clarke's third law) English physicist & science fiction author (1917 - )
The least of learning is done in the classrooms.
--Thomas Merton
Tastes pretty good for an old dead cow.
--Clifton E Lawrence at a family picnic
If the shoe fits, wear it.
--anonymous
If the shoe doesn't fit, don't wear it.
--John Lawrence
Doug Ramsey: Take Five: The Public and Private Lives of Paul Desmond This is a great book! Paul Desmond and Dave Brubeck formed the heart of one of the best all time jazz groups. Paul was the quintessential intellectual, white jazz musician. A talented writer, he never published anything. However author, Doug Ramsey has collected Paul's letters here. How ironic that now his writing in the form of letters to his father and ex-wife, among others, is finally published showing another window on the mind of this talented person.
A sideman, for the most part, his entire life, the Dave Brubeck Quartet might never have happened at all due to the fact that Paul had managed to offend Dave to the point where he never wanted to see him again. It had to do with a gig that Paul actually was the leader of. Paul wanted to take the summer off to play another gig, and Dave wanted Paul to let him take over the gig at the Band Box in Palo Alto, CA. Paul wouldn't let him and Dave, married with two children, proceeded to starve.
Due to an elaborate publicity campaign, when he realized the error of his ways, Paul managed to worm himself back into Dave's good graces. The rest is history.
This book is remarkable for the insight it gives into a working jazz musician's mind, wonderful pictures and interviews with the significant figures in Paul's life. Author Ramsey, not a remarkable penman himself, has nevertheless done a magnificent job of assembling all these various materials. Unlike a lot of jazz authors, he doesn't overly idolize his subject with the result that you get the feeling that you have met a real person and not a idealized version. That's high praise indeed for any biographer. (*****)
The Republican Study Committee, aka "the caucus of House conservatives," has released 
Social Choice and Beyond