Obama’s Obscene Budget; Cuts to Social Security and Medicare and Tax Relief for the Rich

It is nearly impossible to describe the level of disgust I feel toward the budget presented by President Obama. At the same time, I stand in absolute awe that he is surprised at the response to the budget, both from Democrats and the elderly, and from the Republicans.

How could anyone not have predicted or anticipated the following sequence of events, except someone who seems totally out of touch with reality:

1. He releases a budget that will not only cut Social Security benefits, but further the efforts to destroy both Social Security and Medicare over the long term.

2. The Democratic base and those who depend on Social Security to keep them from starving pretty much go ballistic, in one case delivering 2.3 million signatures to the White House, all gathered within about 48 hours, protesting this absurd budget proposal.

3. Obama gets all defensive and huffy, claiming that he was only trying to implement the Republicans’ ideas, because he knew they wanted bipartisan compromise and to be his bestest buddies in the whole world.

4. The Republicans, who had the good sense NOT to include Social Security cuts in their fantasy budget which cuts Medicare and every other shred of the safety net, had the good sense NOT to step on the third rail of American politics.

5. And the Republicans immediately launch the 2014 campaign for the house with their charges that no one should vote for the Democrats, because the Democrats want to cut Social Security.

Who could have predicted such a scenario and sequence of events, other than someone like President Obama, who sometimes seems to live in a fantasy world in which all that matters to him is getting the Republican leadership to like him, and his Wall Street buddies to like him.

If I had wanted the Republicans in power, I would not have voted a straight Democratic ticket.

And for the White House, and the Democratic campaign committees, just be aware of this: We have donated our last thin and diminishing dime to any politician. We are letting the Democratic Party know with every email and call from then that they can pretty much rot in Hell at this point, as far as we are concerned.

Why should we continue to vote when every promise made is broken, and even the President and the Democrats are clearly in thrall to the 1% and Corporate Oligarchy, who are bleeding this nation dry, destroying the Middle Class, and continuing to support trillions of dollars in tax subsidies to the most profitable corporations in the nation, some of which like GE pay NO taxes whatsoever, but in fact get refunds making their tax LESS THAN ZERO!

Here are some clear bottom lines in this debate.

Social Security is NOT PART OF THE DEFICIT.

Social Security, by law, does not add to the deficit. It is not a driver of long-term debt. We’ve been over this. The reason no one can get it right is because here in this season of the fiscal cliff, no one is getting anything right. It’s a full-on headless chicken panic. Everyone needs to calm down, about a lot of things, but especially about Social Security, which does not even have to come up during the “fiscal cliff talks” because it’s totally irrelevant to the situation and will only complicate everything needlessly.

(In the most recent fiscal year, Social Security brought in $831 billion dollars. It paid out $775 billion dollars.)

To say that Social Security added to the deficit because it handed money to the federal government is the same as saying that foreign investors or grandmothers or pension funds who bought U.S. bonds added to the deficit. Besides, what did the AP think the U.S. government would do with the money? Invest it in tech stocks? Hide it in a mattress? Replenish its gold supply? Of course it spent the money.

Nancy Altman, head of Social Security Works, which opposes cuts to the program, read the law to the lawmakers. “The law is unambiguous. So let me read it: Social Security ‘shall not be counted for purposes of the congressional budget,'” she read.

“Social Security is not part of the budget. So that $14.3 trillion debt that we are at, the limit that you are going to have to raise — or at least have to vote on whether to raise in a few months — if you cut Social Security, that $14.3 trillion does not change. It does not put any room into the debt limit.”

Fact-checkers Sputter And Flop Attempting To Explain How Social Security Works, Affects Deficit

Social Security is NOT GOING BANKRUPT.

It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.” This belief is the result of a common error: conceptualizing Social Security from the micro (individual) rather than the macro (economy-wide) perspective. It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today. That’s what it has always been and that’s what it has to be–there is no other possible way for it to work.

What, then, you may ask, is the Social Security Trust Fund, the pool of money that people say will dry up and make it impossible for anyone to receive their Social Security payments? It is the surplus that resulted from having collected more in taxes than was necessary to pay out to retirees. Let me say that again: it is how much existing workers were overtaxed relative to the need to pay retirees in the past. It was never the source of the money we’ve been paying to Social Security recipients all these years. Strictly speaking, it’s completely unnecessary if we are able to precisely and continuously match tax revenues and pay outs.

The lesson from this is that if we want Social Security to “be there” when we retire, our efforts must be focused on increasing productivity and making sure in particular that these increases get passed on to workers in the form of higher wages.

Incidentally, there appears to be every indication that productivity increases should be sufficient for the Baby Boomers to retire AND allow the rest of us enjoy even higher standards of living (assuming the compression of wages ends). That’s good news. In fact, it’s the only news that’s important.

In closing, I’m not telling you whether you should be for or against Social Security, but the argument that it is going bankrupt is a non-starter. It is much ado about nothing.

Why Social Security Can’t go Bankrupt: Rerun

And, which should come as no surprise to us victims, the mass of working Americans who are not a part of the 1%, CPI will result in the equivalent of a massive tax increase on the lower and middle classes, and, surprise surprise, an absolutely minuscule increase of 0.1 percent to all those with incomes over $1 million dollars.

Just another day in America, where the budget must be balanced on the broken backs of the working class and poor. What else is new?

According to Congress’ Joint Committee on Taxation, if individual income taxes had been indexed to the chained CPI starting four months ago, by 2021, 69 percent of the gains in revenue would come from taxpayers with incomes below $100,000, while those in the highest income brackets would barely be affected. For example, workers with incomes between $10,000 and $20,000 would experience an increased tax burden of 14.5 percent, while those with incomes over $1 million would just see an increase of 0.1 percent.

That’s because many elements of the federal tax code — including tax brackets, personal exemptions, standard deductions, limits on contributions to 401(k) plans and similar accounts, and key parameters of the earned income and child tax credits — are also adjusted annually for the CPI. “A switch to the chained CPI would raise an additional $124 billion of tax revenue through 2023, according to the Congressional Budget Office.”

Chained CPI Could Raise Taxes on Lower Middle Class

As for all the hysteria over the deficit and debt, the deficit has been reduced under Obama so far over 40%, and the debt is falling steadily.

I would like also point out to the Idiot Republicans that the vast majority of American households are NOT run on a debt free basis. Nor or any corporations or businesses I have ever seen. Debt is an integral part of any economic system, and without debt there would be no businesses started, nor would any families be buying homes, cars, or any other large consumer items.

Debt is integral to business. It is integral to having a functioning government and infrastructure that is not crumbling in disrepair. And getting the deficit down to 400 billion and the debt to manageable levels is the correct target. You will NEVER have a totally balanced budget, that is a chimera, a myth, and a fallacy.

But then, every last word coming out of Washington right now is pretty much that: a tale told by an idiot, full of sound and fury.

The true tragedy is that the sound and fury are now destroying the lives and livelihoods of the American People.


Author: Ron