Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Obama vs Social Security trial balloon is up!

by fairleft Fri Aug 20th, 2010 at 03:03:34 PM EST

Summary: President Obama's Social Security cutbacks are being trial ballooned today, with little resistance shown by the official left. Obama wants us not to notice those plans, while animatedly (since 2007) nodding and winking to the financial and economic elite. The U.S. Democratic Party are no help, of course, so what strategy do the rest of us need in order to successfully protect Social Security?

According to a new Wall Street Journal/NBC poll, U.S. Voters Want to Soak the Rich in order to fight the deficit. Matthew Yglesias writes that the only measures a majority of voters supported were

lower Medicare benefits for the rich, higher Social Security taxes for the rich, higher income taxes for the rich, higher corporate income tax, and lower Medicare payment rates. That's pretty much an aggressively leveling agenda.

(Like Yglesias I'll note in passing that the WSJ headlined their 'editorial pretending to be news' on the poll "Voters Back Tough Steps to Reduce Budget Deficit.")

But, unfortunately for all but the ruling elite, for President Obama (through his appointed commission) the way to cut the deficit is to soak the old by cutting Social Security:

In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said.

On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission.

The next paragraph of the WSJ piece is the 'get a clue' one for those who still don't `get' Obama:

Even before the commission settles on a plan, many liberals are vowing to block any cut in retirement benefits. But the White House [that's Obama] and the powerful senior group AARP appear open to a deal.

This simply reminds us of what we long should have known about Obama. Alan Nasser's excellent "The Neoliberal Attack on Social Security" points out (emphasis added):

Reduced benefits and a shorter retirement are the favored starting points, in the name of reducing the deficit. But the Obama boys are too smart to talk about the coming blows to workers. Even as they are in the process of effecting the "reforms", they'd have you worry about the Republicans. . . . Obama's neoliberalism is his own, not a response to external pressure. He made it clear before his election that he holds the New Deal and the Great Society in derision, and regards Ronald Reagan as America's most prophetic post-War president.

Yes, of course Obama is a 'Social Security Crisis' neoliberal, as anyone who read "Obama's 3 Right-Wing Economists" long ago should've realized. But, probably not a particularly entrenched one, as the second sentence below indicates:

It's probably important to remember that Obama is both a member of the ruling elite and 100% a lawyer, and the basic approach in that industry is serving clients' needs regardless of your own personal beliefs. I'm sure he has personal beliefs on [financial and health care reform], but they're very general/flexible and not particularly important to his job.  His job is to survive politically while serving his clients, a word he (like all mainstream politicians) interprets as meaning 'campaign contribution heavy hitters'. And those clients' fundamental demand is to write most of the specifics of laws, including 'reforms', directed at their industries.

To draw optimism from the above, "His job is to survive politically . . ." is the key. It's fairly simple: Obama will do all he can for his clients but damn well wants 2010 not to be catastrophic and wants a second term in 2012. So there's a way for the left, or just those that don't want Social Security to be cut, to get to Obama. But the problem now is that the organized left utterly refuses to do so. We must threaten what Obama holds dear and now, when he is floating the cutbacks trial balloon in the WSJ, but the bureaucratic left continues to act as his mouthpiece on the issue. For example, writes Nasser, observe MoveOn, which

apparently wants you to know that there is a political movement among elites to assault Social Security, but you are to associate this threat with Republicans only. Not a word about alerting the electorate to Obama and his deficit reduction panel. No suggestion that the Democratic faithful announce that the president will lose their vote if he supports the recommendations of the panel.

And how will the Obama's deficit commission's new openness on planned Social Security cutbacks affect the Democratic Party? How should it affect the Democratic Party? Well, of course, Democratic Party Social Security mealy-mouthing and in fact anti-populism certainly right now is shedding voters. The people listen carefully, and do not hear "no cuts."

But client wants trump popular need if you can get away with it, and maybe Obama will. After all, there still is no alternative to the two-party monopoly, nor is there within the Democratic Party any insurgent anti-neoliberal movement to challenge Obama. This despite 10% plus real unemployment, flat-lined economy, a continued two-front war in the Middle East, capitulations to the health care and financial industries on `their' legislation, failed labor law reform, and now open trial ballooning of `cut Social Security.'

Broadly, what we need to learn is that populist anger is the mark of a real left and an indication that politicians and activist bureaucrats (like those at MoveOn) are serious, or have been scared by voter anger into being serious, about this fundamental fight between big money and the rest of us. As I've said:

Solution: When the right does its fear thing, a real left should do its anger thing. Anger at the unfairness and the economic elites. This leads directly to appeals for populism, egalitarianism, and social democracy, which most people of the largest classes have a natural, reflexive attraction to. That the official left can't even say, loudly, the words "populism, egalitarianism, and social democracy" tells you all you need to know: they're really on the same side as the right, but want to carve out a space as the party of 'slightly more charitable and empathetic rightists.' Screw them and that.

Find the anger, be the anti-Obama anger, that protects and improves Social Security and the economic welfare of the rest of us.

P.S. -- Look here for a group honestly trying to preserve and advance the best legacy of FDR rather than the immediate strategies of neoliberal Democrats. Listen to James Galbraith and NCPSSM's Barbara Kennelly here on the recent Social Security facts and politics.

by fairleft (fairleftatyahoodotcom) on Fri Aug 20th, 2010 at 03:26:33 PM EST
Nice going on the DKos intrusion.

I have some problems with no one mentioning the capital gains/dividend tax, a measily 15%. Will the wealthy stick it to us again by being able to rescue this gift from the Washington elite crowd?

A study in 2000 by a Columbia or NYU economics professor found that 85% of the stock market was owned by the top 10% of wealthy families, who also owned 90% of all business assets. When people talk about raising taxes on the wealthy I laugh and laugh. Presidents since Reagan through George II have given the rich the ability to increase wealth inequality to beyond what it was in 1929. If the capital gains/dividend tax is not raised and all income taxed equally regardless of its source, the wealthy will have won and the middle class will again be expected to pay for their relatively free ride.

However, count on the Republicans to get enough of the cattle to walk to the slaughterhouse, again.

by shergald on Sat Aug 21st, 2010 at 05:11:19 PM EST
[ Parent ]
Telling you all you need to know about the Democratic Party we have now: that it is a non-issue for the Democrats that the income tax on dividends is 'special' and generally much lower than income tax on forms of income that derive from actually working. Basically, the Democrats, like the Republicans, just hope people don't notice that enormous tax break for those who don't work and just collect dividends from profits taken out of the hides of those who do.

by fairleft (fairleftatyahoodotcom) on Sat Aug 21st, 2010 at 06:31:49 PM EST
[ Parent ]
I can live with having a leisure class, as long as they don't interfere with how society is run, and let competent people run the business of providing the material necessaries and conveniencies of life. The bounty of industrial automation is large, and, like priests and royalty, bribing shareholders to stay out of the way of those more qualified than themselves to run society is probably easier than toppling them outright.

What I want to eliminate is looting of perfectly fine going concerns and the instabilities that create major business depressions.

To that end, what you need to do is, in order of importance,

  1. Increase the progressivity of income taxes to the point where the top brackets became downright confiscatory (steeply progressive tax systems encourage people to value modest long-term gains over high but unsustainable gains).

  2. Remove all deductions for interest (leverage is one of the principal sources of macroeconomic instability - subsidising it through the tax code is insane).

  3. Tax wealth, at progressive rates ending with confiscatory rates for large personal fortunes. I have no problem with people who can live comfortably off their wealth without working. But I do have a problem with people who can buy politicians wholesale.

  4. Remove the deductions for pension contributions (and use the revenue to boost public pensions). Private pension funds are a source of shareholder power, and create the mother of all moral hazards during a speculative bubble in the stock market.

  5. Reclassify profits from purchase and sale of securities as gambling income rather than capital gains. Purchase and sale of securities, as opposed to dividends, is completely decoupled from the actual activities of the underlying company. You might as well be betting on horses, and should be taxed as such.

Preferential treatment of dividends is actually sort of justified (as long as the preferential treatment is capped at a sustainable fraction of the company's total value added, so it can't be used for looting). It incentivises holding stock for the long term rather than flipping it every quarter. And shifting the bulk of corporate profit payouts to dividends rather than share price appreciation would re-couple take-home profits to the actual cash flow of the corporation, which would limit the deployment of the more innovative forms of financial weapons of mass destruction.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Aug 22nd, 2010 at 09:09:15 PM EST
[ Parent ]
All great ideas. How to penetrate the victims' minds when all of mainstream wisdom is various forms of right-wing economics.

by fairleft (fairleftatyahoodotcom) on Mon Aug 23rd, 2010 at 11:28:39 AM EST
[ Parent ]
Traditionally, there have been three basic ways:

  1. Beat them at their own game. That's what our resident investment bankers are doing.

  2. Beat the living daylight out of them. Historically, this approach has been largely rejected in The WestTM, for a variety of usually excellent reasons.

  3. Wait for the bad guys to plunge your country into a sufficiently serious business depression (if you're lucky) or a serious shooting war against a country that has a sporting chance of shooting back (if you're unlucky). Recruit the disaffected and disillusioned and rebuild from there. Mushroom clouds might pose a teensy-tiny problem with pursuing that strategy in the present century, though.

And no, your colonial escapades in Asia do not count as enemies with a sporting chance of shooting back.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Aug 23rd, 2010 at 05:31:42 PM EST
[ Parent ]

Go to: [ European Tribune Homepage : Top of page : Top of comments ]