Must reads

Via CBPP (tip to Economists View), Inequality and the High-End Bush Tax Cuts.

They Go or Obama Goes.

It is Obama’s continued deference to the sensibilities of the financiers and his relative indifference to the suffering of ordinary people that threaten his legacy, not to mention the nation’s economic well-being. There have been more than 300,000 foreclosure filings every single month that Obama has been president, and as The New York Times editorialized, “Unfortunately, there is no evidence that the Obama administration’s efforts to address the foreclosure problem will make an appreciable dent.” The Times noted that the administration’s main program has been a bust, with only $321 million of the $30 billion allocated to the program having been spent to help folks stay in their homes.

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There is no way that Obama can begin to seriously reverse this course without shedding the economic team led by the Clinton-era “experts” like Summers and Treasury Secretary Timothy Geithner who got us into this mess in the first place. They are spooked by one overwhelmingly crippling idea—don’t rattle the financial titans whom we must rely on for investment. But when it comes to keeping people in their homes, it is precisely the big banks that must be rattled into doing the right thing.

Obama gained credibility through sacking Gen. Stanley McChrystal for making untoward remarks. Why not sack Summers and Geithner for untoward policies that have inflicted such misery on the general public?

My take is they’ll likely go after the mid-terms, especially if the GOP takes both chambers.

When Wall Street Rules, We Get Wall Street Rules.

The answer to both these questions is simple; the politicians work for someone else. On Election Day, the politicians might need our votes, but they won’t get to be serious contenders unless they’ve gotten the campaign contributions of the big money crew. And the moneyed elite has been using its control of the political process to ensure that an ever larger share of the economy’s output is redistributed upward in their direction.

The reason that there was little interest in cracking down on the housing bubble is that Goldman Sachs, Citigroup and the rest were making a fortune from the financial shenanigans that fueled the bubble. Former Treasury Secretary Robert Rubin personally pocketed over $100 million from this fun. Why would they want the government to rein it in?

Of course, when the bubble did finally blow and threaten their banks with bankruptcy, the Wall Street crew just ran to the government for help. And they got trillions of dollars in loans and loan guarantees to ensure that they would not be victims of the crisis they had created. Now that they are back on their feet, with Wall Street profits and bonuses both again at near record levels, they see little reason to concern themselves with the measures that might set the economy right for the rest of us.

After all, the steps necessary to revitalize the economy could mean some inflation. This would reduce the value of the debt owned by the wealthy. And the wealthy don’t see any reason that they should risk any of their wealth just for the good of the economy.

We have enormous ground to cover to restore an economy that works for the vast majority, but the first step is to know where we are. The upward redistribution of the last three decades has nothing to do with the market and a belief in “market fundamentalism.” This is about a process where the rich and powerful have rewritten the rules to make themselves richer and more powerful.

Arianna tells us to get off our asses (my words), Memo to America’s Middle Class: Obama Is Just Not That Into You.

But as real as all that is, it’s clear that Obama just doesn’t have the fire in his belly that many activists thought he had. “The president,” Yglesias writes, “likes to present himself as a ‘pragmatist’ uninterested in questions of ideology, and his political strategy is largely organized around a posture of unctuous reasonableness in which he never loses patience with the opposition or affiliates himself emotionally with the passions that drive activists.”

And you know what? That’s okay. It’s not ideal, but it doesn’t mean that Obama’s first term can’t be a success. What it means, however, is that those who voted for transformation can’t simply sit back and wait for the man of their dreams to do it for them. That, as we’ve seen, is a recipe for frustration. And the sooner progressives realize this, the stronger they’ll be and the more likely it is that the goals that Obama won America over with — especially saving the middle class, the “North Star” of his campaign — will be met.

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I get that the progressives, and the activists, and the young people who voted for the first time, and the disillusioned voters who returned to the polls in ’08, feel slighted by the president. You thought you had a special connection with him, but it turns out he’d rather hang out with Larry Summers, flirt with Olympia Snowe, or play war games late into the night with David Petraeus. Face it: he just isn’t that into you. But, in the end, it doesn’t matter where the president’s heart is — it matters what he does. LBJ wasn’t that into the National Voting Rights Act until Martin Luther King and the Selma march pushed him into it.

If Obama is going to do the right thing for America’s middle class by sticking to his promise to start winding down (for real) the war in Afghanistan in July 2011, and by prioritizing jobs over the long-term deficit, the passion is going to have to come from outside the White House.

President Obama, It’s Time to Can the Catfood Commission.

The Catfood commission is not legitimate. It was stacked with people who knew their job was to fulfill Pete Peterson’s dream of rolling back the New Deal and waging war on the social safety net. It is a committee of oligarchs designed to circumvent electoral repercussions for those who oppose the will of the vast majority of the American people, both Republicans and Democrats, who don’t want to see the federal budget balanced on the backs of the nation’s senior citizens.

Catfood Commission FAIL

300 million tits?!!  The Catfood Commission is becoming more embarrassing by the day, Tell Obama: Get Rid Of Alan Simpson.

Alan Simpson believes that Social Security is “like a milk cow with 310 million tits,” according to an email he sent to the executive director of National Older Women’s League Tuesday morning. Simpson co-chairs the deficit commission, which is considering various proposals to cut Social Security benefits.

His email is peppered with exclamation points and condescension. At one point he urged Carson to read a certain graph, “which I hope you are able to discern if you are any good at reading graphs.”

Simpson concludes by implying that leading a major organization dedicated to the interests of middle-aged and elderly women is not “honest work.”

“If you have some better suggestions about how to stabilize Social Security instead of just babbling into the vapors, let me know,” he writes. “And yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ‘em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million tits! Call when you get honest work!”

Those are some horrible things to say.  President Obama’s GOP co-chair is embarrassing him and destroying any credibility the commission may have hoped to create.  We pay into Social Security all our working lives and to try and paint working Americans as moochers when they retire and collect Social Security is despicable.  If Simpson had any self respect left he’d resign.

Be sure to sign the petition:

We have set up a petition online calling for his resignation. The National Council of Women’s Organizations is behind us and women’s leaders are lining up in support.

Please click here to sign the petition:
Remove Alan Simpson

Call the White House and let them know we want Alan Simpson’s resignation:
202-456-1111 or
E-mail them

[UPDATE]: AARP takes Simpson to task:

“Senator Simpson’s latest attack on Social Security is offensive for several reasons, particularly for belittling a bedrock program that is the foundation of family security for all generations. The vast majority of the 310 million Americans he insulted – particularly 156 million women and younger Americans for whom the traditional pension will be a relic of history – don’t have access to the type of traditional pension retirement security that Sen. Simpson has from his decades in Congress. Perhaps that’s why his comments demonstrate a woeful disconnect from or disinterest in the challenges facing many American families for whom Social Security is literally a lifeline.

“Sen. Simpson’s most recent departure from reality would be easy to dismiss if not for his position co-leading a Presidential commission that will likely recommend changes to Social Security. Sen. Simpson’s remarks not only cross the line of good judgment, but they undermine the serious work of the commission and give us little confidence the commission can fairly look at important programs such as Social Security.”

It’s time for Simpson to stop digging and leave the commission. If he stays, no matter the final product, it is irreparably damaged.

[UPDATE]: Krugman on Simpson, Fire Alan Simpson.

When you have a commission dedicated to the common good, and the co-chair dismisses Social Security as a “milk cow with 310 million tits,” you either have to get rid of him or admit that you’re completely, um, cowed by the right wing, that IOKIYAR rules completely.

And no, an apology won’t suffice. Simpson was completely in character here; it was perfectly consistent with everything else he’s said, and with his previous behavior. He has to go.

If Obama wants to fire up the Democratic base for November there are two things he can do right now to get that started. Fire Simpson and appoint Elizabeth Warren.

Social Security is secure, WaPo goes mad

A Washington Post editorial today on Social Security lets the cat out of the bag:

Social Security is not a cause of the current or future debt…

The editorial is piss-poor at best, and Dean Baker gives is a proper burial here, Has the Washington Post Gone Mad?

The piece begins by telling readers that: “THIS YEAR, for the first time since 1983, Social Security will pay out more in benefits than it receives from payroll taxes — $41 billion. This development is not an emergency, but it is a warning sign (emphasis in original).” It certainly is a warning sign. The falloff in Social Security tax revenue is a warning that the economy is seriously depressed due to the collapse of the housing bubble. Double digit unemployment leads to all sorts of problems, including the strains that it places on pension funds like Social Security.

In a sane newspaper the next sentence would be pointing out the urgent need to get back to full employment. Instead the Post tells readers:

“Too soon, this year’s anomaly will become the norm. By 2037, all the Social Security reserves will have been drained and the income flowing into the program will only be enough to pay 75 percent of scheduled benefits. If that sounds tolerable, consider that two-thirds of seniors rely on Social Security as their main source of income. The average annual benefit is $14,000. Those who care most about avoiding such painful cuts ought to be working on ways to bolster the program’s finances — and soon, when the necessary changes will be less drastic than if action is postponed.”

Let’s see, it would be intolerable to have Social Security pay 75 percent of scheduled benefits in 2037, but one of the Post preferred cuts is raising the retirement age to 70,a 15 percent cut in benefits when fully phased in. So the Post thinks it would be just fine to have beneficiaries get 85 percent of scheduled benefits in 2037.

Not to mention if the retirement age goes up to 70, then people between 65 and 70 get their benefits cut by 100% for 5 years. 70 seems like an arbitrary number and we always have to keep in mind that to fix Social Security FOREVER all that needs to be done is to remove the payroll tax cap on wages.

The problem with the Catfood Commission, aka debt commission, dealing with Social Security is in the quote above. Social Security has nothing to do with the current or future debt so it should not be part of their purview. Dave Johnson says is better, Is It A Social Security OR A Deficit Commission?

Ever since President Obama set up the Deficit Commission all the talk has been about Social Security? Why?

Social Security is separate from the rest of the US budget, is separately funded, has a huge trust fund and, most important: Social. Security. Does. Not. Contribute. To. The. Deficit.

[...]

So is it a DEFICIT commission or is it a SOCIAL SECURITY commission? If it is a deficit commission, then stop all of this talk about cutting Social Security, please, and start talking about the deficit. Everyone knows the deficit was caused by tax cuts for the rich and the huge increases in military spending that occurred under Reagan and then again under Bush II. (Note – there is no more Soviet Union.)

Social Security works, is popular, and is secure for many years to come. It needs to be tweaked to make it secure forever. The WaPo needs to come back to sanity on this issue and stop being a demagogue on this issue.

[UPDATE]: Did I mention that Social Security works, Social Security Keeps 20 Million Americans Out of Poverty.

Dean Baker destroys the Catfood Commission

The Deficit Commission Refuses to Talk to Anyone Who Knows About the Econom.

Erskine Bowles, the co-chair of President Obama’s Deficit Commission and a director of the Wall Street investment bank Morgan Stanley, claimed that the current economic crisis (which is projected to add more than $4 trillion to the national debt) was “largely unforeseen.” This is not true. Competent economists saw the crisis as an inevitable outcome of the housing bubble. It is remarkable that the deficit commission seems to be relying exclusively on economists who could not see this $8 trillion bubble, the collapse of which wrecked the economy.

The commission also does not appear to be considering any measures that would challenge powerful interest groups like the pharmaceutical industry, the insurance industry, highly-paid medical specialists, or the Wall Street banks. Rather than incur the wrath of these powerful interest groups by reining in medical expenses or reducing the rents earned by Wall Street bankers, the commission seems intent on taking back Social Security and Medicare benefits for ordinary workers. The reporters covering the commission should be reporting on the failure of the commission to follow its mandate in this respect.

The idiocy of the Catfood Commission

The “Catfood Commission”, otherwise known as the National Commission on Fiscal Responsibility and Reform, has by most accounts been focused on blaming Medicare and Social Security for all of our deficit problems while ignoring the main drivers of our deficit – the Bush tax cuts, two foreign wars, and the economic downturn.  (You can see the chart in this previous post, What has caused the deficits? And how to end them, to see the evidence).  What is really disheartening about this commission is the President’s, and his administration’s, willingness to play into a right wing conservative mythical frame, that could enable the destruction of both Medicare and Social Security the main goal of the GOP since their inceptions.

Because of the commissions focus on gutting social programs that benefit the neediest in our country to the great benefit of the wealthy it’s becomes harder by the day to take the commission and the President’s focus on the deficit serious.  Especially when every sane economist – yes even deficit hawks – agree that in the short-term we should not be concerned with deficits. And Social Security is not a cause of the deficit.

Now, seriously. How can any intelligent person convince themselves that the Obama administration isn’t backing this? The commission is stacked with deficit hawks; the national deficit is on track to be more fiscally sound if they let the Bush tax cuts expire; and Social Security, which is a tax-transfer program, doesn’t have a damned thing to do with the deficit.

But deficit hawks aren’t grounded in reality. They just like inflicting pain on the people who didn’t cause our economic crisis.

The main problem is that deficit reduction is not what our country or the economy needs right now. We need massive, and I mean massive, deficit spending to create jobs and get us out of this recession. That’s why when Republicans make stupid statements like this, “…no nation has ever borrowed and spent its way to prosperity“, they must be shown for the idiots they are. The long term deficit can’t be fixed without getting back to around 5% unemployment, that won’t be fixed without deficit spending in the near-term to create jobs. And the Catfood Commission can’t do anything to change or fix that.

Watch This!

What has caused the deficits? And how to end them

Here are the three main drivers of our current deficit:

• Bush Tax Cuts, that weren’t paid for
• Two wars, that weren’t paid for
• Worst economic downturn since the Great Depression

Here it is in visual form:

The answer comes via the CBPP, Critics Still Wrong on What’s Driving Deficits in Coming Years.

The events and policies that have pushed deficits to these high levels in the near term, however, were largely outside the new Administration’s control. If not for the tax cuts enacted during the presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that were initiated during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term.

This information is key to understanding how worthless the work of the “Catfood Commission” is. Social Security and Medicare are not responsible for the current deficit. Doing anything with them will have no effect on the current deficit, since they didn’t cause it. If we want to get rid of the current deficit we need to end the Bush Tax Cuts, end two very expensive wars, and end the economic downturn/drastically lower unemployment. That last one can be cured by the a modern day WPA.

Fight, fight, fight

E.J. Dionne asks this question in his WaPo column today, Have Obama and the Democrats forgotten how to fight? It’s not that they’ve forgotten how to fight, it’s that they’ve forgotten who to fight for. The question really should be why are politicians too stupid to see that working Americans need someone to fight for them, and why won’t enough of them take up for them?

It’s not all Democrats, obviously there are some like Senators Sherrod Brown, and Bernie Sanders, and members of the Congressional Progressive Caucus.  But poeple are hurting and need help, here’s how Chris Hayes put it:

Let’s keep this in perspective. The baroque Ponzi scheme in which Wall Street engaged precipitated a recession that has, as I speak to you right now, left eight million people without jobs, 8.4 million people without jobs, three million homes foreclosed on, and as of 2008 at least a million more people living in poverty. And just today scared consumers are raising more worries of a double-dip recession.

The folks that number among those millions don’t think this recession is just an ant or a bump in the road. For them, it is an existential crisis, the death of life dreams. For John Boehner and so many of his colleagues this doesn’t amount to that big a deal because it’s not their ox being gored. I live in Washington which has one of the strongest regional economies in the country, and I can tell you the boom times are back.

The only way to wake the American elite establishment out of its complacency about the slow motion disaster of the great recession is for the people getting hammered by it to organize and to interrupt this ruling class idol, to remind the people in power that the crisis isn’t over and the real danger isn’t overreaction, it is the sin of forgetting, the threat of failing to use this moment to fix a dangerously broken economy.

Obama and the Democrats problems stem from the fact that their actions are resulting in a 2 steps forward, 1 step back scenario, that largely benefit the wealthy corporate interests, mostly at the expense of working and unemployed Americans.  (See this paper on how, “We need to go back to the original drawing board – the Social Security Act of 1935 – to finish the job it began and create a truly universal and comprehensive social welfare state.”.)

To see how ignorant and wrong the “Catfood Commission” and the focus on the deficit instead ofjob creation and unemployment, I encourage everyone to read the simple destruction of both by James K. Galbraith, Why the Fiscal Commission Does Not Serve the American People. Here’s his final thoughts:

Most people assume that “bipartisan commissions” are designed to fail: they are given thorny (or even impossible) issues and told to make recommendations which Congress is free to ignore or reject. In many cases — yours is no exception — the goal is to defer recognition of the difficulties for as long as possible.

You are plainly not equipped by disposition or resources to take on the true cause of deficits now and in the future: the financial crisis. Recommendations based on CBO’s unrealistic budget and economic outlooks are destined to collapse in failure. Specifically, if cuts are proposed and enacted in Social Security and Medicare, they will hurt millions, weaken the economy, and the deficits will not decline. It’s a lose-lose proposition, with no gainers except a few predatory funds, insurance companies and such who would profit, for some time, from a chaotic private marketplace.

Thus the interesting twist in your situation is that the Republic would be better served by advancing no proposals at all.

The people who are hurting need elected politicians to get to work and fight for them. They thought they did that when they overwhelmingly elected Obama and the Democrats in 2008. Since that hasn’t exactly turned out that way they are now feeling left out. Fight for the American people and they’ll vote for you, it’s really that simple.