Take The Red Pill

TODAY'S TOPICS: GOP Terrorism, Debt Deal, Age of Austerity, Media Complicity, Centrism Myth, Olbermann

GOP Terrorism and the Age of Austerity

So this long, phony debt ceiling extortion orchestrated by the domestic terrorist organization known as the GOP is finally over…and the terrorists won….big time (remember...GOP has also shut down the FAA...halting 200 construction projects, 1000's of jobs, all to the tune of billions in lost tax revenue...that is unless or until unionizing rights are eliminated...as I said, from Wisconsin to DC we're experiencing a coup).

In other words, in response to a deficit caused by tax cuts for the rich and corporations, illegal wars, corporate welfare (Medicare D), and a wall street induced economic crash, we are going to devastate programs that invest in America, provide a safety net for the poor, and encourage economic growth. Another way to look at it is at a time of near record wealth disparity, poverty, unemployment, and private debt; we are giving more to those that have it all, and punishing those suffering because of the actions of that very elite being rewarded.

For example: Wall Street won't be paying a dime more to help reduce the debt. The wars in Iraq (yep...Obama wants to prolong that now too) and Afghanistan will go on - costing at LEAST another trillion over the next decade. Hedge fund managers that make a billion a year yet taxed at only 15%...not a dime. The richest 400 families that own more than the bottom 60% of Americans combined (yet pay about 20% in taxes)...not a dime more. Chevron? Exxon? Monsanto? Merck? Dow Chemical? Halliburton? Nothing...most will pay NO TAXES in fact.

But, thousands of children will be kicked off healthcare roles, thousands more will go hungry, thousands more will be kicked out of head start. Tens of thousands of college students will no longer be able to afford school. Hundreds of thousands of public employees will lose their jobs. Roads and bridges will continue to crumble as unemployment lines increase. I could go on, but you get the gist.

What's astonishing is that this deal nearly ENSURES a double dip recession and, as a result, probably won't even reduce the deficit. Just look at how austerity has worked in the UK, Greece, Spain, and Ireland. As I have made clear here, this was never about reducing the deficit, its about starving government and dismantling the New Deal, no matter the cost to the country and human life. The fact is that cutting spending, at the state and federal level, is a primary DRIVER of our economic problems and job losses right now...and we're about to double down.

We are in the age of austerity and oligarchy…there simply is no denying that anymore. And make no mistake, this deal will increase unemployment, hurt economic growth and expand inequality – which is already higher in the US than in any industrialized country in the world, including most Banana Republics.

Politicians like to say they’re JUST cutting “discretionary spending”…an innocuous term to be sure…but what does that mean? Well, it means, while taxes are at their lowest level for the rich and corporations since the 1920’s, we’re going to MASSIVELY CUT spending on education, pell grants, infrastructure, environmental protections (i.e. water, air, food, etc.), medical and scientific research, aid to the poor, heating subsidies for poor families, transportation, Head Start, food stamps and on down the line

In other words, Congress, and this President, agreed to over two TRILLION in spending cuts at a time we need MORE investments, with no tax revenues (and they aren't coming either)…and the creation of yet another phony “deficit commission” (i.e. Super Congress) that will surely go straight for the throat of Social Security, Medicare, and Medicaid…and if they can't come to an agreement on that (How much want to bet that McConnell will appoint right wing nuts jobs and Reid will appoint conservative Dems?), a trigger will cut $1.5 trillion MORE!

So to recap: Major cuts in the most important programs that the middle class needs and wants, and no sacrifice from the wealthy and the powerful…and NOT INCLUDED in the deal was an extension of unemployment insurance OR the payroll tax cut!!

Consider the context for this deal: at a time the real combined figure for unemployment and under-employment is approximately 22 percent, the number of Americans who "live paycheck to paycheck," has gone from 43% in 2007 to 61% today, total wages have fallen 5% from 2007, or about 313 billion (in fixed dollars…while incomes went up at the very top, so the real figure for everybody but the wealthiest among us is even worse), and since 1980, the year of Ronald Reagan's election, income for the bottom 90% has grown 1% (From 1930 to 1980 it grew by 74%)…we are CUTTING programs that help people and the economy, while failing to extend unemployment insurance.

Here’s some more context for understanding this deal:

Since the financial crisis, more than two million Americans have fallen into poverty.
More than 43 million Americans now live below the poverty line. More than 20% of this country's children now live in poverty, more than twice the figure for children in Great Britain or France.
More than one household in twenty lives with "extreme food insecurity," which means normal eating patterns have been disrupted "at times" during the year because they didn't have money for food.

When it comes to the wealthy, there's plenty:

66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.
The average income for Americans earning $50 million or more surged from 91.2 million in 2008 to 518.8 million in 2009. In the midst of the recession, there were fewer of these high earners, but the survivors - just 74 people - made as much as the 19 million lowest-paid people in America.
The top 5% of American households have seen their income increase by 103% since 1975 (as opposed to a 1% increase since 1980 for the bottom 90%).

And what of corporations? As Bernie Sanders noted, “Well, companies like General Electric and Exxon-Mobil have made billions in profits while using loopholes to avoid paying any federal income taxes. We lose $100 billion every year in federal revenue from companies and individuals who stash their wealth in tax havens off-shore like the Cayman Islands and Bermuda. The sum of all the revenue collected by the Treasury today totals just 14.8% of our gross domestic product, the lowest in about 50 years.”

I’ll be the first to admit, yes, President Obama has been forced to deal with an unprecedented extremist GOP willing to use terrorists tactics to get their way, creating phony "hostage crises" time and again - in the latest episode putting a gun to the head of the world economy. I also understand how difficult it must be to play chicken with people who want to crash head first.

But, to those that continue to defend him simply because his adversaries are so awful, I would simply say that giving terrorists everything they want – and pleading they take more - isn't the best negotiating tactic. I'd also pose a few questions, like: Who put social security, Medicare and Medicaid on the table? (and ARGUED FOR CUTS?) Who offered $4 trillion in cuts, twice what was agreed to in the final bargain? Who has made entitlement spending and deficits the center plank of his agenda? Who allowed the debt ceiling to be tied to spending cuts? The President has…and that’s just a partial list.

As Brad Friedman explains, as a Senator Obama showed himself to be a pathetic, spineless negotiator (again…my theory is that its on purpose…he just doesn’t’ care about any of these principles) when, in negotiations over Iraq with President Bush, he told the media that if the President vetoed the requirements to withdrawal the Democrats would send him a new bill without them…wow…way to undercut the entire hand of the Dems!! Friedman goes on, “What was clear to us as long ago as 2007 was that Obama was the worst. negotiator. ever. His time in office to date has done nothing to assuage us of that initial assessment, as he has negotiated with himself and capitulated to terror tactics again and again, acceding to virtually ever demand of the hostage takers by the end.

From giving away the store with un-stimulating tax cuts in a much-smaller-than-needed stimulus package, to giving up away the public option (much less single payer) right off the bat in the health care reform bill, to capitulating on extending the Bush tax cuts for the rich earlier this year, and now accepting a "bargain" which tosses out everything he had formerly promised to be a "bottom line" for any debt ceiling deal, the President has done almost precisely as he projected he would 4 years ago when we pointed it out, so that we could "get a sense of how the next president will make decisions."

Reactions to “Deal” Worth Reading

In other words, a slew of millionaire politicians who spent the last decade exploding the national debt with Endless War, a sprawling Surveillance State, and tax cuts for the rich are now imposing extreme suffering on the already-suffering ordinary citizenry, all at the direction of their plutocratic overlords, who are prospering more than ever and will sacrifice virtually nothing under this deal (despite their responsibility for the 2008 financial collapse that continues to spawn economic misery). And all of this will be justified by these politicians and their millionaire media mouthpieces with the obscenely deceitful slogans of "shared sacrifice" and "balanced debt reduction" -- two of the most odiously Orwellian phrases since "Look Forward, not Backward" and "2009 Nobel Peace Prize laureate" (and anyone claiming that Obama was involuntarily forced by the "crazy" Tea Party into massive budget cuts at a time of almost 10% unemployment: see the actual facts here)…

How can the leader of the Democratic Party wage an all-out war on the ostensible core beliefs of the Party's voters in this manner and expect not just to survive, but thrive politically? Democratic Party functionaries are not shy about saying exactly what they're thinking in this regard… In other words: it makes no difference to us how much we stomp on liberals' beliefs or how much they squawk, because we'll just wave around enough pictures of Michele Bachmann and scare them into unconditional submission.

That's the Democratic Party's core calculation: from "hope" in 2008 to a rank fear-mongering campaign in 2012. Will it work? The ones who will determine if it will are the intended victims of that tactic: angry, impotent liberals whom the White House expects will snap dutifully into line no matter what else happens (even, as seems likely, massive Social Security and Medicare cuts) between now and next November.

- Glenn Greenwald

No matter how the immediate issue is resolved, Mr. Obama, in his failed effort for greater deficit reduction, has put on the table far more in reductions for future years' spending, including Medicare, Medicaid and Social Security, than he did in new revenue from the wealthy and corporations. He proposed fewer cuts in military spending and more in health care than a bipartisan Senate group that includes one of the chamber's most conservative Republicans. . . .

But by this month, in ultimately unsuccessful talks with Speaker John A. Boehner, Mr. Obama tentatively agreed to a plan that was farther to the right than that of the majority of the fiscal commission and a bipartisan group of senators, the so-called Gang of Six. It also included a slow rise in the Medicare eligibility age to 67 from 65, and, after 2015, a change in the formula for Social Security cost-of-living adjustments long sought by economists.

-- NY Times

How do you invite the radical right to take power? Start with thirty years of stagnant of declining living standards for most people. Then add a financial crisis made on Wall Street. Next, elect a Democratic president who raises hopes, but who turns out to be a close ally of the same forces that caused the collapse. Give that president a temperament that refuses to blame the right, and is mainly about seeking accommodation. The right then gets to put Washington and Wall Street in the same bucket, and blame the Democrats.

So you end up with a weak center unable to deliver recovery or reform, an angry, passionate right, and an enfeebled left reluctant to challenge their president until it is too late.

-- Robert Kuttner

The United States has now experienced more than 3 years of an economy worse than anything Japan experienced in its “lost decade” of the 1990s, and we are still dead in the water economically. The real unemployment rate, when you include discouraged workers and part timers/short-term temporary workers desperate for a full time job, is hovering frighteningly close to 20%, with any marginal progress in the private sector being more than wiped out by government sector cutbacks. The American middle class is being crushed by flat or declining wages, higher prices on most essential items like energy and groceries, and declining value in home prices. And the deal on the default crisis agreed to last night, combined with a continued weak response to the housing crisis, will (absent a major reversal in the next Congress) lock us in to a spiral even more destructive to the middle class. It will be a lost decade on steroids.

When you hear generalized talk about more government cutbacks, it can all sound harmless in theory. And there is of course some wasteful government spending out there- subsidies to millionaire farmers, poorly written government contracts that allow contractors to make money even when they screw things up, subsidies for oil companies that make plenty of money, etc- but most of the cuts that will be made aren’t even in these areas of obvious waste. They’ll cut money for education and Pell Grants; they’ll cut the R and D spending that could produce important new technological breakthroughs; they’ll cut investments in green jobs that are key to the future; they’ll cut spending on badly outdated infrastructure projects; they’ll cut money for social service agencies that are helping people create productive lives for themselves.

-- Mike Lux

This deal trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it. Progressives have been organizing for months to oppose any scheme that cuts Medicare, Medicaid or Social Security, and it now seems clear that even these bedrock pillars of the American success story are on the chopping block. Even if this deal were not as bad as it is, this would be enough for me to fight against its passage. This deal does not even attempt to strike a balance between more cuts for the working people of America and a fairer contribution from millionaires and corporations. The very wealthy will continue to receive taxpayer handouts, and corporations will keep their expensive federal giveaways. Meanwhile, millions of families unfairly lose more in this deal than they have already lost. I will not be a part of it.

- Raul Grijalva, Chair of Progressive Caucus

The Shock Doctrine and Disaster Capitalism

As I have noted, this all falls perfectly in line with Naomi Klein’s Shock Doctrine theory…this being that the elites use disasters, sometimes natural, sometimes deliberately caused (as in this case), sometimes unintentionally, to push through a radical right wing agenda…because when people are in shock and in fear, nearly anything can be done to them. We saw this with the bank bailouts after the crash, we saw it after Katrina in New Orleans, we saw it after 9/11, and we’re seeing it again, right now. The end result of course is oligarchy, and a burgeoning new form of fascism.

For more details on the actual agreements effect on jobs, here’s David Dayen: “Let’s remember, that original House Republican budget for FY2011 was analyzed by Mark Zandi and Goldman Sachs, and they said it would cost anywhere between 700,000-1 million jobs. So if this deal cuts $25B in FY2012, I think it’s somewhat imperfect, but also somewhat reasonable, to assume that it’s a deal costing 175,000-200,000 jobs."

Let’s also remember, come end of 2012, the President COULD simply allow the Bush tax cuts to all expire. That would bring back between $3.6-$4 trillion. Of course, this would mean a tax increase on everyone…because despite how the Administration tries to spin it, there is no separate “tax cuts for the rich” stand alone law…so it’s all or nothing at this point, and this is why it’s likely he’ll fold again come next year.

Let me say another thing, the idea that the President uses “lowest level of discretionary spending since Eisenhower” as an applause line is DISGRACEFUL. As Jared Bernstein writes, “Why is that a good thing? Why are 1950s levels (relative to GDP) of investment, infrastructure, and research in medicine and innovation so damn optimal?”

And that's the ELEPHANT IN THE ROOM...As Dayen correctly notes, “Rhetorically, the playing field has utterly shifted away from a sober, factual telling of our economic problems and toward a fantasyland scenario, where deficits are the big problem the economy faces and business confidence will bring it back.Once that rhetorical ground is given, there’s not going to be any way to turn the ship around and argue that the economy needs more fiscal stimulus. This means that $160 billion in payroll tax cuts and unemployment insurance is exceedingly likely to go away at the end of 2011. It means that unemployment, which is now at 9%, isn’t going to go any lower. It means that we’ll shave GDP growth down significantly from trend. It means that deficit hawkery will grind us into the dirt.”

Let’s expose some myths coming out from the Administration about this deal while we’re at it:

Myth #1: The deal "preserves Social Security and Medicare”: Right-leaning Democrats are busy telling this story this morning, but it's not true. It only defers the day of reckoning. Social Security and Medicare are exempted from the first and smaller round of cuts, but not from the larger $1.5 trillion in cuts that the unelected "Super Congress" must find.

Myth #2: Military spending faces deeps cuts under this plan. As the Democratic Policy and Communications Center explains, "security spending includes defense, state and foreign operations, homeland security, and military construction/veterans affairs." In other words, these cuts could include layoffs for TSA workers, reduction in health care or other veteran spending. and shutdowns of US diplomatic missions around the world.

With that said, clearly the one, single partial bright spot in all this is that defense is going to be cut...how much the master's of the world at the Pentagon will allow is yet to be seen.

Media Complicity and the Matrix

I think it goes without saying that a MAJOR part of the problem is the corporate media and public ignorance regarding basic functions of government (that’s why they always support spending cuts generally, but then oppose them specifically when explained to them) and sound economic policy. If too many Americans don’t believe in or understand what government does to help them, to offset recessions, to protect their security in retirement and in hard times, to maintain the infrastructure, to provide educational opportunities and health care decent enough to offset the disadvantages so many are born with…if those functions are unknown, underfunded, and/or carried out poorly, why should they care about how much this deal or the next one cuts?

This is a big reason why Obama has been such an unmitigated disaster as President. Hell, all data shows that based on the economic growth patterns shown by the revised data sure makes it appear that the stimulus worked...but you wouldn't know that would you? The main problem would seem to be that the stimulus was not big enough and it wasn't left in place long enough to lift the economy to anywhere near potential output. But none of this was being discussed in Washington…and its never mentioned anymore…in fact, we are now pursuing ANTI-STIMULUS.

Media Malpractice on Debt Ceiling

And this leads me to the media…who keep people ignorant and confused, while marginalizing progressive ideas and economic REALITIES. "Compromise" between the major parties is encouraged. Democrats should ALWAYS "move to the center," which in practical terms actually means moving to the right.

Fairness and Accuracy in Reporting lays out how all of these tendencies have driven the discussion over the federal debt and the debt ceiling. In the end, the political process has produced an agreement that can be cheered by pundits and analysts for adhering to media's built-in bias for center-right economics and bogus ideas about centrism and political compromise.

FAIR lays out a couple key media failures:

1. Why Is the Debt Ceiling Being Raised? "While some coverage correctly pointed out that raising the debt ceiling has always been a routine political maneuver, Republican rhetoric and right-wing commentary portrayed the current round as a consequence of Barack Obama's "big government" spending philosophy.

What was rarely explained is the fact that raising the debt ceiling is a consequence of previous budget decisions made by Congress (New York Times, 7/28/11)--like a massive tax cut tilted towards the wealthy, two major wars and, most of all, the effects of a major recession.

As economist Dean Baker (Al Jazeera English, 7/27/11) pointed out, the debt "crisis" has very little to do with out-of-control spending: At the beginning of 2008 the Congressional Budget Office (CBO), the country's most respected official forecasting agency, projected that the budget deficit in 2009 would be just 1.4 percent of GDP. The reason that the deficit exploded from 1.4 percent of GDP to 10.0 percent had nothing to do with wild new spending programs or excessive tax cuts. This enormous increase in the size of the deficit was entirely the result of the fallout from the housing bubble.

2. Balance' Bias: "The media's aversion to pointing out when one side is more prone to obstruction or exaggeration than the other makes it difficult for voters to understand what is happening--and does little to dissuade lawmakers from engaging in similar behavior in the future."

3. Debate Way Off to the Right: "Often lost amidst all the talk about rancor and compromise is the fact that the entire debate between party leaders and the White House has shifted well to the right. As Jamelle Bouie summed it up at the American Prospect's blog (Tapped, 7/27/11):

Mr. Obama, seeking to appeal to the broad swath of independent voters, has adopted the Republicans’ language and in some cases their policies, while signaling a willingness to break with liberals on some issues. The assumption, then, is that "independents" really just want Republican budget ideas. There is no evidence that this is the case."

4. Finding the 'Center': "There is a long-established pattern of corporate media advising Democrats to move to the "middle," which in practice means shifting to the right. This has been a constant presence throughout this debate. With a very Republican-friendly solution perhaps at hand, some accounts are portraying this as a deft move to the middle by Obama. The fact that liberals are opposed to Obama's proposals only serves to demonstrate that he is on the right track. The Washington Post reported (8/1/11):

The White House and Democratic leaders are cheered for abandoning those goals, while the press explains that this is what "centrists" and "independents" really want.

5. Were There Budget Alternatives?: "If this debate was really about dealing with the nation's long-term debt/deficit issues, then the press would seriously examine a range of ideas for addressing these problems. But the most serious progressive alternative, the People's Budget, was never given significant attention in the corporate media--in contrast to Republican Rep. Paul Ryan's budget plan, which, contrary to the rhetoric, failed to meaningfully reduce the deficit at all (Extra!, 6/11). The corporate media's abject failure to seriously examine a budget proposal that is more in line with majority public opinion suggests that serious dysfunction is not limited to Beltway political leaders."

Remember The People's Budget offered by the progressive caucus? You know, the one that CUT THE DEFICIT more than all the others while being better for the economy? That budget, never discussed, would have:

Ended the recently passed upper-income tax cuts and lets Bush-era tax cuts expire at the end of 2012
Extended tax credits for the middle class, families, and students
Created new tax brackets that range from 45% starting at $1 million to 49% for $1 billion or more
Implemented a progressive estate tax
Eliminated corporate welfare for oil, gas, and coal companies; closes loopholes for multinational corporations
Enacted a financial crisis responsibility fee and a financial speculation tax on derivatives and foreign exchange

The Bottom Line - The People's Budget: