Better Late Than Never

12/02/2012
Robert Kuttner
Co-founder and co-editor, 'The American Prospect'
http://www.huffingtonpost.com/robert-kuttner/fiscal-cliff_b_2229352.html

President Obama has belatedly grasped that holding firm on tax increases for the top 2 percent, and defending Social Security, Medicare and Medicaid against needless cuts, is good politics and good policy. As his Treasury Secretary, Tim Geithner put it on Fox News Sunday, "Why does it make sense for the country to force tax increases on all Americans, because a small group of Republicans want to extend tax rates for 2 percent of Americans, why does that make any sense? There's no reason why it should happen."

Geithner was even more explicit on CNN, when interviewer Candy Crowley pressed him on whether the Administration was really prepared to go "off the cliff" if Republicans refused to raise tax rates on the top 2 percent.

"If Republicans are not willing to let rates go back up [on the top 2 percent" Geithner said, "and we think they should go back to the Clinton levels when the American economy did exceptionally well, then there will not be an agreement."

In his budget proposal, the president offered no cuts in Social Security, and only $400 billion over 10 years in Medicare and other savings, money that can be gotten by allowing Medicare to negotiate bulk discounts with drug companies and other administrative savings, without raising the eligibility age or otherwise cutting into benefits.

The Republicans, meanwhile are revealed as the people who would push the economy off a cliff in order to fight for tax breaks for the richest 2 percent; the party that would rather cut benefits in Medicare and Social Security than have the wealthy pay even the relatively low tax rates of the Clinton years.

It was Winston Churchill who said that you can always count on Americans to do the right thing, after they've tried everything else. Obama, belatedly, is doing the right thing.

He tried taking big savings out of Medicare in order to finance his Affordable Care Act. The Republicans pilloried him for it.

He tried pivoting to fashionable austerity, appointing the Bowles-Simpson Commission to propose far deeper budget cuts than the economy required. The commission majority report offered a deflationary program of cuts in Medicare, Social Security, and no rate increases on the taxes paid by the rich. Mercifully, the commission failed to get the necessary super-majority for its proposals.

And he tried offering cuts in Social Security and Medicare in order to get a budget deal in 2011 with House Speaker John Boehner. But the refusal of the Republicans to consider even a penny of tax increases saved the President from himself.

Now, as a last resort, President Obama has come around to sensible economics and smart politics -- no cuts in social insurance benefits, no backing down on tax hikes for the rich, no deeper deficit cuts until the economy is stronger. His plan even proposes $50 billion in new public investments -- not enough but a big step in the right direction.

What's so heartening is not just that Obama is helping voters appreciate what Republicans really stand for but that he is turning his back on the echo chamber of deficit hysteria ginned up by Wall Street as a way of cutting social insurance and protecting low tax rates on the richest. Seeing Pete Peterson and his corporate deficit-hawk cronies lose this fight is as satisfying as seeing the Republicans lose.

So what happens next?

The Republicans will continue to huff and puff that it's Obama's fault if taxes go up for everyone. But the fact is that the Senate has already approved a continuation of the Bush tax cuts for the bottom 98 percent -- all the Republican House has to do is concur and Obama will sign the bill into law.

The business elite, through the corporate-funded campaign "Fix the Debt" campaign, will continue to warn about the perils of the automatic tax hikes and spending cuts -- the dreaded fiscal cliff -- and press the two parties to meet each other halfway.

But domestic spending has already been cut by $1.7 trillion over 10 years under the terms of the 2011 budget deal. Domestic spending has been cut enough. Tax rates on the rich are already at a postwar low, and it hasn't levitated a depressed economy. The Democratic Party have already met the GOP more than halfway. And each time, the Republicans use the concession as the new starting point.

If Obama hangs tough and the budget briefly goes "over the cliff" in the form of automatic tax increases for everyone and mandated indiscriminate spending cuts that risk sending the economy back into recession, the Republicans are at last set up to take the blame that they richly deserve.

Obama seems willing let that happen, in order to keep the pressure on Republicans to allow taxes to rise on the rich.

The risk is that when the negotiations finally get to the end game, and Republicans are forced accept the tax deal, Obama may succumb to pressure to cut Social Security and Medicare, so that he can say that he, too, gave ground on issues that were difficult for his party. The risk is that he will listen to his inner bipartisan.

That would be a huge mistake. The Republicans have been unmasked for who they are. The best thing Obama can do is to continue to hold the high ground of this debate. The Republican position is entirely at odds with the vast majority of voters. If Obama doesn't fold a winning hand, eventually the Republicans will have to come to him.

Walmart Shifts Burden To Medicaid, Obamacare

Walmart's New Health Care Policy Shifts Burden To Medicaid, Obamacare
Alice Hines
12/01/2012
http://www.huffingtonpost.com/2012/12/01/walmart-health-care-policy-medicaid-obamacare_n_2220152.html

Walmart, the nation’s largest private employer, plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week, according to a copy of the company’s policy obtained by The Huffington Post.

Under the policy, slated to take effect in January, Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours -- something that happens with regularity and at the direction of company managers.

Walmart declined to disclose how many of its roughly 1.4 million U.S. workers are vulnerable to losing medical insurance under its new policy. In an emailed statement, company spokesman David Tovar said Walmart had “made a business decision” not to respond to questions from The Huffington Post and accused the publication of unfair coverage.

Labor and health care experts portrayed Walmart’s decision to exclude workers from its medical plans as an attempt to limit costs while taking advantage of the national health care reform known as Obamacare. Among the key features of Obamacare is an expansion of Medicaid, the taxpayer-financed health insurance program for poor people. Many of the Walmart workers who might be dropped from the company’s health care plans earn so little that they would qualify for the expanded Medicaid program, these experts said.

“Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan, which is one of the problems with the way the law is structured,” said Ken Jacobs, chairman of the Labor Research Center at the University of California, Berkeley.

For Walmart, this latest policy represents a step back in time. Almost seven years ago, as Walmart confronted public criticism that its employees couldn't afford its benefits, the company announced with much fanfare that it would expand health coverage for part-time workers.

But last year, the company eliminated coverage for some part-time workers -- those new hires working 24 hours a week or less. Now, Walmart is going further.

“Walmart likely thought it didn’t need to offer this part-time coverage anymore with Obamacare,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara. “This is another example of a tremendous government subsidy to Walmart via its workers.”

In pursuing lower health care costs, Walmart is following the same course as many other large employers. But given its unrivaled scale, Walmart’s policies tend to influence American working conditions more broadly. Tom Billet, a senior consultant at Towers Watson, a professional services firm that works with large companies to develop benefit plans, said other companies are also crafting policies that will exclude some part-time workers from medical coverage.

Billet portrayed the growing corporate interest in separating out part-time workers as a reaction to another aspect of Obamacare -- the new rules that require companies with at least 50 full-time workers to offer health coverage to all employees who work 30 or more hours a week or pay penalties.

Several employers in recent months, including Darden Restaurants, owner of Olive Garden and Red Lobster, and a New York-area Applebee’s franchise owner, said they are considering cutting employee hours to push more workers below the 30-hour threshold.

“In the past, firms were less careful about monitoring whether someone was full- or part-time,” Billet said, noting that some of his clients were planning to track workers’ hours more carefully. “I expect health plans like Walmart’s won’t be uncommon as firms adjust to this law.”

For Walmart employees, the new system raises the risk that they could lose their health coverage in large part because they have little control over their schedules. Walmart uses an advanced scheduling system to constantly alter workers’ shifts according to store traffic and sales figures.

The company has said the scheduling system improves flexibility and efficiency. But in recent interviews with The Huffington Post, several workers described their oft-changing schedules as a source of fear that they might earn too little to pay their bills. Many said they have begged managers to assign them additional hours only to see their shifts cut further as new workers were hired.

The new plan detailed in the 2013 "Associate’s Benefits Book" adds another element to that fear: the risk of losing health coverage. According to the plan, part-time workers hired in or after 2011 are now subject to an “Annual Benefits Eligibility Check” each August, during which managers will review the average number of hours per week that workers have logged over the past year.

If part-time workers hired after Feb. 1, 2012, fail to reach the 30-hour threshold, they will lose benefits the following January, according to the book. Part-time workers hired after Jan. 15, 2011, but before Feb. 1, 2012, must work at least 24 hours a week to retain coverage and will also be subject to an eligibility check each year. Those hired before 2011 aren’t subject to the minimum hours requirements or eligibility checks.

As for full-time workers under the plan, those who lose hours and slip to part-time at any point during the year will see their spouses’ health coverage dropped immediately. Those workers will also lose their dental and life insurance policies in the following pay period, according to the plan.

Some Walmart workers who are excluded from the company’s health care plans are likely to become eligible for Medicaid under the Obamacare expansion, which aims to replace a patchwork of standards now set by individual states with one minimum federal threshold -- income below 133 percent of the federal poverty line, which for an individual currently comes to $14,856. However, the Supreme Court ruled earlier this year that the decision to expand the program is voluntary for the states. At least eight states, including Texas, have said they will not expand the program, which would leave Walmart workers there with one less option.

Part-time workers who lose their Walmart insurance but earn too much to qualify for Medicaid should be able to buy insurance through the health care exchanges to be established under Obamacare -- essentially, online marketplaces offering an array of health care plans.

For workers who do qualify for health coverage under Walmart's new policy, the latest package represents an upgrade over previous plans. Walmart’s health plans began covering 100 percent of spine and heart surgeries this year at select hospitals and medical centers. They also include a smattering of preventative care services required by Obamacare.

But the company’s plans still leave many workers facing significant financial distress in the event of major illness. Under the new policy, one major offering, the so-called Health Reimbursement Account Plan, costs nonsmoking workers $34.80 a month -- a seemingly affordable sum. Yet it comes with an annual deductible of $2,750, a hefty expense given that half of Walmart’s hourly workforce earns no more than $10 an hour.

While a shifting of Walmart employees to Medicaid rolls may increase the burden on American taxpayers, it is likely to be a better deal for the workers themselves.

“The packages Walmart is providing for low-income people aren’t offering very much coverage except for catastrophes,” said Linda Blumberg, a senior fellow at the Urban Institute, a left-leaning think tank. “It’s likely they’ll be better off going with a government-sponsored plan.”

Don't cut Medicare, Medicaid or Social Security benefits

Tell the deficit super committee: Don't cut Medicare, Medicaid or Social Security benefits
http://act.credoaction.com/campaign/sc_dont_cut

Medicare, Medicaid and Social Security are in danger. But the biggest threat isn't driven by economics, it's driven by politics.

Twelve members of Congress from the House and Senate have been newly empowered to force both chambers of Congress to vote on a deficit reduction bill that can neither be amended nor filibustered.

Unfortunately many members of this new bipartisan, bicameral deficit super committee have Medicare, Medicaid and Social Security squarely in their sights.

In essence, they think it's better to let seniors fall into poverty, or deny needed health care to the poor and elderly, than to raise taxes on people who can comfortably afford to pay more.

Tell the members of the deficit super committee not to cut Medicare, Medicaid or Social Security benefits.

Cuts to Social Security, Medicare and Medicaid are deeply unpopular, even among Republican voters. But Congress isn't reflecting the values and priorities of most Americans.

It used to be that programs like Medicare and Social Security were considered a "third rail" in politics, and that neither Democrats nor Republicans wanted to face the wrath of voters should they try to roll back these wildly popular programs.

But today in Washington, the programs that keep millions of Americans from falling into poverty have taken a back seat to manufactured concerns about the long term implications of our national debt. Incredibly, some Democrats have bought into the Republican craze for cuts, even signaling that they would be willing to put Medicare benefits on the table!

Until our economy recovers, we should be spending money to take care of people and boost our economy, not fixating on deficit reduction.

Yet the concern about the debt has been used as a wedge to force deep cuts to important programs that help many Americans live a dignified life.

That doesn't mean that there shouldn't be vigilant efforts to root out fraud in government programs. But it does mean that we absolutely cannot afford the human or the economic effects of cuts to vital benefits.

We need to make sure that we speak out to put massive pressure on the members of the deficit committee not to agree to a plan that puts Medicare, Medicaid and Social Security benefits on the chopping block.

Let's be clear on some things. While there are progressive reforms to all these programs, that's not what's on the table.

Furthermore, Social Security has nothing to do with the debt and is projected to be fully solvent for over 25 years. And while Medicaid and Medicare costs are rising, that's because health care in this country is very expensive. Saving money by cutting benefits does nothing more than shift the cost of necessary medical care onto the backs of people who might not be able to pay for it.

Finally those who say we can't afford these hugely popular and successful programs are also happy to spend trillions of dollars on corporate welfare, needless military spending and tax cuts for the rich.

Government has a role in ensuring there's a social safety net, and democracy demands that everybody is asked to pay what they are able before we start cutting programs that all of us need.

Tell the members of the deficit super committee not to cut Medicare, Medicaid or Social Security benefits.

Rightward Tilt Leaves Obama With Party Rift

JACKIE CALMES
July 30, 2011
http://www.nytimes.com/2011/07/31/us/politics/31dems.html

WASHINGTON — However the debt limit showdown ends, one thing is clear: under pressure from Congressional Republicans, President Obama has moved rightward on budget policy, deepening a rift within his party heading into the next election.

Entering a campaign that is shaping up as an epic clash over the parties’ divergent views on the size and role of the federal government, Republicans have changed the terms of the national debate. 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.

That has some progressive members of Congress and liberal groups arguing that by not fighting for more stimulus spending, Mr. Obama could be left with an economy still producing so few jobs by Election Day that his re-election could be threatened. Besides turning off independents, Mr. Obama risks alienating Democratic voters already disappointed by his escalation of the war in Afghanistan and his failure to close the Guantánamo Bay prison, end the Bush-era tax cuts and enact a government-run health insurance system.

“The activist liberal base will support Obama because they’re terrified of the right wing,” said Robert L. Borosage, co-director of the liberal group Campaign for America’s Future.

But he said, “I believe that the voting base of the Democratic Party — young people, single women, African-Americans, Latinos — are going to be so discouraged by this economy and so dismayed unless the president starts to champion a jobs program and take on the Republican Congress that the ability of labor to turn out its vote, the ability of activists to mobilize that vote, is going to be dramatically reduced.”

While Mr. Obama and Republicans have been unable to agree on a debt reduction plan for spending cuts and revenue increases to cut $4 trillion in the first decade, on Saturday they were negotiating a deal with fewer spending cuts that would ensure the government’s debt ceiling would be increased into 2013 to avoid another deadlock in the heat of campaign season.

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.

To win approval of the essential increase in the nation’s $14.3 trillion borrowing ceiling, Mr. Obama sought more in deficit reduction than Republicans did, and with fewer changes to the entitlement programs, because he was willing to raise additional revenue starting in 2013 and they were not. And despite unemployment lingering at its highest level in decades, Mr. Obama has not fought this year for a big jobs program with billions of dollars for public-works projects, which liberals in his party have clamored for. Instead, he wants to extend a temporary payroll tax cut for everyone, since Republicans will support tax cuts, despite studies showing that spending programs are generally the more effective stimulus.

Even before last November’s election gave the Republicans control of the House, Mr. Obama had said he would pivot to deficit reduction after two years of stimulus measures intended first to rescue the economy and then to spur a recovery from the near collapse of the financial system. With Republicans’ gains in the midterm elections, that pivot became a lurch. Yet Congressional Republicans say Mr. Obama seeks a debt limit increase as “a blank check” to keep spending.

“The Republicans won, and they don’t know how to accept victory,” said Robert D. Reischauer, a former director of the Congressional Budget Office.

In his budget proposal in January, Mr. Obama declined to suggest a plan along the lines proposed by a majority of his bipartisan fiscal commission, which in December recommended $4 trillion in savings over 10 years through cuts in military and domestic programs, including Medicare and Medicaid, and a tax code overhaul to lower rates while also raising more revenue.

Even though Mr. Obama was widely criticized, administration officials said at the time that to have embraced that approach then would have put him too far to the right — where he ultimately wanted to end up in any compromise with Republicans, not where he wanted to start.

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.

“He’s accommodated himself to the new reality in Washington,” said Tom Davis, a former House Republican leader from Virginia. “That’s what leaders do.”

But Congressional Democrats and liberal groups objected.

“The president’s proposing cuts to Social Security and Medicare has the potential to sap the energy of the Democratic base — among older voters because of Medicare and Medicaid and younger voters because of the lack of jobs,” said Damon A. Silvers, policy director of the A.F.L.-C.I.O. “And second, all these fiscal austerity proposals on the table will make the economy worse.”

Mr. Obama’s situation has parallels with the mid-1990s, when President Bill Clinton shifted to the center after Republicans took Congress and battled them on deficit reduction and a welfare overhaul. Many Democrats were angered by his concessions, by a sense of being left out of negotiations and by a fear of alienating Democratic voters. Mr. Clinton was re-elected in 1996.

But Mr. Obama is likely to face the voters with a weaker economy and higher unemployment than during Mr. Clinton’s era. Still, his advisers express confidence that voters will reward Mr. Obama either for winning a bipartisan deal, if that were to happen, or for at least having a more balanced approach that does not remake Medicare and Medicaid and asks for more revenue from the wealthy. And they suggest another potential parallel with the Clinton years of divided government: that Republicans risk a voter backlash with their uncompromising stands.

“Democrats created Social Security and Medicare, and we have fought for decades against Republican attempts to end these programs,” said Dan Pfeiffer, Mr. Obama’s communications director. “And President Obama believes that now is the time for Democrats to be the ones to step up and save Social Security and Medicare.”

Mark Mellman, a Democratic pollster, said polling data showed that at this point in his term, Mr. Obama, compared with past Democratic presidents, was doing as well or better with Democratic voters. “Whatever qualms or questions they may have about this policy or that policy, at the end of the day the one thing they’re absolutely certain of — they’re going to hate these Republican candidates,” Mr. Mellman said. “So I’m not honestly all that worried about a solid or enthusiastic base.”

Binyamin Appelbaum contributed reporting.

A version of this article appeared in print on July 31, 2011, on page A1 of the New York edition with the headline: Rightward Tilt Leaves Obama With Party Rift.

WSWS on Debt Deal

President Barack Obama made a brief White House appearance Sunday night to announce that an agreement had been reached with Republican and Democratic congressional leaders to raise the federal debt ceiling before Tuesday’s deadline set by the Treasury. Speaking in advance of the opening of financial markets in Asia, Obama thanked “the leaders of both parties” and said the deal would “allow us to avoid default.”
The agreement, which must still be voted on by the Senate and the House of Representatives, imposes unprecedented cuts on domestic social spending without a single dollar of increased taxes on the wealthy.

It calls for raising the debt limit by $2.7 trillion in two stages, $1 trillion immediately and $1.7 trillion in four months. The increase in the debt ceiling will be matched dollar-for-dollar by cuts in spending over the next ten years, as demanded by Boehner, the top congressional Republican. Reid admitted that the deal would “give the Republicans everything they’ve asked for.”

The first $1 trillion will comprise spending cuts already agreed upon in bipartisan talks headed by Vice President Joseph Biden, mainly in non-entitlement domestic programs including education, housing, transportation and the environment. The immediate effect of these cuts will be substantial—$25 billion in fiscal year 2012, which begins October 1, and $47 billion in fiscal year 2013—and escalating thereafter.

A new 12-member House-Senate committee, consisting of three Democrats and three Republicans from each body, will have until Thanksgiving to identify an additional $1.7 trillion to $1.8 trillion in spending cuts, including entitlement programs such as Medicare, Medicaid and Social Security. Theoretically, the committee could also mandate an end to certain tax breaks to increase government revenues, but Republican leaders are on record opposing even token tax increases on the wealthy, and Obama and the congressional Democratic leadership have dropped their previous demand that any deficit reduction package include some tax increases.

If the bipartisan committee fails to reach agreement, the equivalent reduction will be carried out through an across-the-board spending cut in both domestic social programs and the military, with tax increases ruled out. According to press reports, the automatic cuts triggered by a failure of the committee to agree on a package would include Medicare, but not Social Security. Exempting Social Security from cuts under this scenario was the bone thrown to House Democrats, whose votes will be required to offset the expected defection of some ultra-right Republicans linked to the Tea Party.

The outlines of the deal emerged after Saturday’s vote by the House of Representatives preemptively rejecting a plan proposed by Reid that called for spending cuts and a debt ceiling increase of the same amount, but included more than $1 trillion in reduced military spending from the winding down of the wars in Iraq and Afghanistan.

House Republicans wanted much greater cuts in social spending and they voted unanimously against the Reid bill. Nearly every liberal Democrat in the House, including former presidential candidate Dennis Kucinich, voted for the Reid bill and the massive domestic spending cuts it called for...

The media coverage of the debt ceiling crisis can no longer conceal the dramatic shift to the right in the Democratic Party and the Obama administration. The New York Times carried on the front page of its Sunday edition an account headlining the “rightward tilt” of the Obama White House and writing that Obama “has adopted the Republicans’ language and in some cases their policies…”

This observation, however, is itself duplicitous. It is not that Obama has gone over to the side of the Republicans. The budget-cutting agreement is the expression of the bipartisan consensus of both capitalist parties, the Democrats just as much as the Republicans. It was Obama who insisted on tying the debt ceiling increase to massive deficit reduction, dropping the initial position of the administration—following all its predecessors—that a debt ceiling increase should be considered separately from any social policy issue.

Appearing on several television interview programs Sunday, Senator Charles Schumer of New York, the third-ranking Democrat, boasted of his party’s embrace of drastic cuts in social spending, which he portrayed as “a willingness to compromise.” Schumer declared, “There are people on the left who would probably say ‘no cuts,’ but they haven’t been able to have their way within our caucuses.”

There is virtually no discussion in the media or from any of the representatives of big business, Democratic or Republican, of the actual human cost of the cuts that are being discussed. Three trillion dollars in domestic spending over ten years is a gargantuan sum—at $300 billion a year, it would cover the annual deficits of all 50 states, twice over. It is more than the combined annual budgets of the departments of Education, Housing and Urban Development, Labor, Transportation, Agriculture and Veterans Affairs.

The initial impact of the cuts will be on the social infrastructure of education, public housing, mass transportation and environmental protection, as well as the Medicaid program for the poor, disabled and blind. In the longer term—in other words, as soon as the 2012 elections are safely past—the cuts will begin to be felt by the more than 50 million elderly covered by Medicare.

And it must be clear: these cuts are only the beginning. Spokesmen for the financial elite, such as the Wall Street Journal editorial board, are pressing for trillions in additional cuts, including the outright destruction of Medicare and Social Security, which are to be privatized and effectively abolished. Obama and the Democrats differ only on the tactical means for carrying out this historic assault on the working class...

The US debt ceiling deal
Patrick Martin
1 August 2011
http://wsws.org/articles/2011/aug2011/pers-a01.shtml

"If you’re going to cave, tell us right now..."

From NYBooks.com:
In early July, when Obama suddenly injected Medicare, Social Security, and Medicaid into the deficit and debt negotiations, many, perhaps most, Democrats were dismayed. They believed that the President was offering up the poor and the needy as a negotiating gambit. (His position was that if the Republicans would give on taxes, he’d give on entitlements.) A bewildered Pelosi said after that meeting, “He calls this a Grand Bargain?” And she came down firmly against any changes in those programs that would hurt beneficiaries.

Moreover, the Democrats had their own political reasons for opposing reductions in Medicare benefits. They had had great success in campaigning against Paul Ryan’s bizarre proposal, adopted by the House (despite even Boehner’s expressed misgivings), that would turn Medicare into a voucher system. According to Ryan’s plan the government would give future eligible Medicare recipients $6,000 and let them shop for private insurance. (Good luck.)

Having made Ryan’s proposal the centerpiece of the campaign, the Democrats had recently won a special election in a New York district that had been held by the Republicans since the 1950s. The Democrats believed they were onto a good thing.

The question arises, aside from Obama’s chronically allowing the Republicans to define the agenda and even the terminology (the pejorative word “Obamacare” is now even used by news broadcasters), why did he so definitively place himself on the side of the deficit reducers at a time when growth and job creation were by far the country’s most urgent needs?

It all goes back to the “shellacking” Obama took in the 2010 elections. The President’s political advisers studied the numbers and concluded that the voters wanted the government to spend less. This was an arguable interpretation. Nevertheless, the political advisers believed that elections are decided by middle-of-the-road independent voters, and this group became the target for determining the policies of the next two years.

That explains a lot about the course the President has been taking this year. The political team’s reading of these voters was that to them, a dollar spent by government to create a job is a dollar wasted. The only thing that carries weight with such swing voters, they decided—in another arguable proposition—is cutting spending. Moreover, like Democrats—and very unlike Republicans—these voters do not consider “compromise” a dirty word.

The President proposed at least two modest plans for stimulus spending, someone familiar with all these deliberations told me, “but he’s not as Keynesian as before.” This person said, “If the political advisers had told him in 2009 that the median voter didn’t like the stimulus, he’d have told them to get lost.” By 2011, in his State of the Union address in January he moved from jobs creation (such as the stimulus program) toward longer-term investment.

The speech Obama gave on April 13 marked his conversion to fiscal centrism; to being the fiscally responsible Democrat. In that speech he stated that he wanted to reduce the debt by $4 trillion—thus aligning himself with the Republicans—but also asked for revenues to partly offset that reduction. It was all about reelection politics, designed to appeal to this same group of independents. “And that’s why,” I was told by the person familiar with the White House deliberations, “he went bigger in the deficit reduction talks; bringing in Social Security is consistent with that slice of the electorate they’re trying to reach.” This person said, “There’s a bit of bass-ackwardness to this; the deficit spending you’d want to focus on right now is the jobs issue.”

This all fits with another development in the Obama White House. According to another close observer, David Plouffe, the manager of Obama’s 2008 presidential campaign, who officially joined the White House staff in January 2011, has taken over. “Everything is about the reelect,” this observer says—”where the President goes, what he does.”

Plouffe’s advice to the President defines not just Obama’s policies but also his behavior. Plouffe tells the President, according to this observer, that the target group wants him to seem the most reasonable man in the room. Plouffe is the conceptualizer, and Bill Daley, the chief of staff who shares Plouffe’s political outlook, makes things happen; Gene Sperling, the director of economic policy, and Tom Donilon, the national security adviser, are smart men but they come out of politics rather than academia or deep experience in their respective fields. Once Austan Goolsbee, chairman of the Council of Economic Advisers, departs later this summer, all of the President’s original economic advisers will be gone. Partly this is because the President’s emphasis on budget cutting didn’t leave them very much to do. One White House émigré told me, “It’s not a place that welcomes ideas.”

Because of the extent to which the President had allowed the Republicans to set the terms of the debate, the attitude of numerous congressional Democrats toward him became increasingly sour, even disrespectful. After Obama introduced popular entitlement programs into the budget fight, a Democratic senator described the attitude of a number of his colleagues as:

Resigned disgust at the White House: there they go again. “Mr. Halfway” keeps getting maneuvered around as Republicans move the goalposts on him.

According to a report in The Hill newspaper in late June, the tough-minded, experienced, and blunt Democratic Representative Henry Waxman of California told Obama in a White House meeting that he’d asked several Republicans about their meeting with him the day before, and, “To a person, they said the President’s going to cave.” Then the congressman said to the President of the United States, “And if you’re going to cave, tell us right now.” The President was reported to have been displeased, and responded, “I’m the President of the United States; my words carry weight.”

What Were They Thinking?
Elizabeth Drew
August 18, 2011
http://www.nybooks.com/articles/archives/2011/aug/18/what-were-they-thinking

The US Constitution Makes Default Illegal

The US Constitution Makes Default Illegal
What a Real President Would Do
August 1, 2011
Webster G. Tarpley, Ph.D.
TARPLEY.net
http://tarpley.net/2011/07/27/a-real-president-would-call-default-unconstitutional

My fellow Americans:

I speak to you tonight in an hour of grave danger to our nation. As you know, within the next few hours our government is in danger of failing to make payments of interest and principal which the United States Treasury has contracted to make. In technical terms, we are not far away from beginning to default on payments associated with those US Treasury securities which represent the public debt of the United States. As part of the same crisis, there is now a threat to over 70 million checks which your government issues every month — payments which go to recipients of Social Security, to providers of health services under the Medicare program, to Medicaid beneficiaries, to our active-duty and retired military personnel, to our defense contractors, to our government employees — in short, to everyone who receives a benefit from the federal government, who works for the federal government, or who does business with the federal government.

Default Means National Bankruptcy and World Chaos

A default of this kind means nothing less than national bankruptcy. Default is the essence of chaos and anarchy. It is a peril which we have successfully avoided during our entire existence as a nation, through a terrible civil war and the two world wars of the past century.

The United States dollar continues to play the role of the world reserve currency. This means that the central banks on every continent have chosen to maintain large portions of their reserves in the form of US Treasury securities. This role has been slightly diminished in recent years, but it is substantially intact. For the US government to default on payments through the US Treasury would therefore provoke a radical devaluation of the central bank reserves of the entire globe, wiping out some central banks and leaving others critically weakened. This might lead to massive dumping of US Treasury securities, leading to a general world panic to which no asset class would remain immune. We might see a dramatic decline of the dollar. This would represent the disintegration of the current world financial system, and a breakdown crisis of economic activity of unthinkable proportions. This might happen immediately, or it might require months or even years to explode in its full fury. In any case, it would put the United States on the road to national decline.

If you recall how financial markets seized up and ceased to function in the terrible days of September and October 2008, you have some inkling of the kind of catastrophic market climate that would be unleashed by the national bankruptcy of the United States. Borrowing, credit, mortgages, car financing, credit cards, and the like would not just require astronomical interest rates; many kinds of lending would disappear altogether. Millions more jobs would be lost.

The Public Credit is an Asset for All Americans and for the World

The United States Treasury securities market, with its $1 trillion per day of turnover, represents a unique national asset for our country. It is a signal achievement of the American System of Political Economy founded by Alexander Hamilton. It is the broadest, deepest, and most liquid market in the world. It is capable of absorbing trillions of dollars of securities and turning them into cash within a few hours – a capability unique on this planet. Despite how indignant we all are about the abuses of Wall Street, it would be extremely unwise to permit the Treasury securities market to be wrecked by ideological fanatics. All the more so since the Treasury market is unique in the world, and its extinction would leave no currency whatsoever in a position to function as the reserve medium of the world. This would have terrible implications for world trade and investment.

In short, our Treasury securities are the bedrock of all economic activity in this planet, and the common interest of humanity is well served by avoiding their chaotic insolvency.

The “Tea Party Caucus”: Right-wing Anarchists Funded by Malefactors of Great Wealth

Why, many Americans may wonder, should this crisis exist today? Here it is useless to talk in euphemisms in order to appear conciliatory; it is now necessary to call things by their names. As a result of the current world economic and financial depression which began in 2007-2008, the extreme right wing of the Republican Party, now calling itself the Tea Party, has been energized and revitalized. They have also begun to receive large amounts of political funding, including from a sinister individual who is reported to be the richest man in New York City. These are the malefactors of great wealth about whom presidents of both parties have been warning you for over a century. The goal of these opulent backers of the so-called Tea Party is to eliminate taxation and regulation upon themselves and their private business interests, many of which are in direct conflict with the public good. The impact of this Tea Party on public opinion has been magnified out of all proportion by the collusion of corrupt media cartels; in reality, the supporters of the so-called Tea Party do not exceed about 15% of our population.

Neo-Feudalism

Thanks to the economic royalists who support them, a Tea Party contingent numbering almost 90 members has entered the House of Representatives. Many are political novices. Many of them sincerely believe in the strange and un-American foreign doctrines of the Austrian school, according to which government is an unnecessary evil which needs to be abolished. It is entirely proper to see them as a species of right wing anarchist. The market, by contrast, they fetishize as infallible, and deserving of unbridled free reign over all the human affairs. They want a market without a government, something which has not existed in human affairs since the transition from the Old Stone Age to the Neolithic age, when the state emerged. The free market with no role whatsoever for government went out with Alley Oop the cave man, and it is not likely to return.

And all too often, the market of which they speak turns out not to be free, but rather dominated by predatory cartels, monopolies, and oligopolies. They are devoted to the causes of deregulation, privatization, the abolition of trade unions, more privileges for the wealthy, and a race to the bottom among the states. The world for which they are striving resembles perhaps nothing so much as feudalism as seen in Europe after the fall of the Roman Empire – and, like that anarchic chaos, it can only be described as A New Dark Age.

Most especially, these right wing anarchists of the Tea Party hate the social safety net which incorporates the precious economic rights for which the struggles of the American people won recognition during the New Deal and the Great Society. I am referring of course to Social Security, Medicare, Medicaid, unemployment insurance, the Head Start Program, the WIC program of high-protein meals for expectant mothers and infants, and many more. I am also referring to the right to collective bargaining for wage earners in the public and private sectors alike, and other features of a humane modern society.

Their reasons for this view read like a catalogue of the seven deadly sins, with pride, greed, rage, and envy in the lead. To these we must add class hatred, and also racism, since many of them are obsessed with the idea that their taxes are being spent to help minority groups.

New Deal America Repudiates the Tea Party

The problem faced by the Tea Party Republicans is that two thirds to three quarters of the American people warmly support the social safety net created by the New Deal and the Great Society. A recent poll has also shown that fully 80% of Americans want tax rates on the super-rich to be increased. Despite so many years of radio ranting, venal professors, and merciless sloganeering by politicians, the American people continue to repudiate the ideological platform of the so-called Tea Party. There is no hope their program could ever get passed.

Out of their despair that their ideological goals could ever be met through the democratic process, these wealthy individuals and their anarchist following have evolved a diabolical strategy. Their strategy is extortion. It is an attempt to place the United States government under duress. It is an attempt to mutilate, alter, and denature our Constitution through unconstitutional means.

It is nothing short of an illegal coup d’etat.

The Tea Party cloaks themselves in public as the greatest admirers of the U.S. Constitution. But in one concrete instance after another, we find that the Tea Party is at war with the Constitution.

The Tea Party Hates the Constitution in Practice

Our Constitution speaks not once but twice about the general welfare. To the Tea Party, this is anathema, since they believe that government should serve the wealthy few.

In terms of the issue at hand, Article I, Section 8 of the Constitution specifies that the Congress shall have the power “To borrow money on the credit of the United States.”

This is once again anathema to the Tea Party. In such a fundamental provision as this, enacted in response to the bitter lessons of ungovernability taught by the Articles of Confederation interlude, the Tea Party faction sets itself above the wisdom of the founders. The Tea Party would rewrite this provision to read that the Congress shall NOT have the power to borrow money on the credit of the United States, and the framers be damned.

This is what they admit when they demand their so-called balanced budget amendment. Such an amendment would destroy the finely wrought mechanism of the separation of powers and its accompanying checks and balances, which have served us so well over the centuries. But it is also a subterfuge, since the Tea Party knows very well that this amendment has no chance of being approved by the Congress, nor by the states. Rather, it has included in their litany of cut, cap, and balance purely as a deal-breaker, to make absolutely sure that no possible settlement can be forthcoming in the time available. They are determined to make all negotiations fail.

The Tea Party Goal is to Bankrupt the United States

The goal of the Tea Party faction of Congress is nothing less than the national bankruptcy of the United States, procured by forcing our default on the contractual and legal obligations of this government. They regard default and bankruptcy as positive goods, and indeed as indispensable steps on the path to the free market utopia they fondly imagine. Their reasoning is that, once the United States has gone bankrupt, it will henceforth be either prohibitively expensive or totally impossible for the Treasury to sell its bonds on the world financial markets. Therefore, payments on Social Security, Medicare, Medicaid, and other programs will have to be cut – not by law, but by the brute force of having no money.

This they do in wartime, with some 160,000 troops in the field, many of them fighting determined enemies on the other side of the world.

They claim they want predictabilty to allow businesses to create jobs, yet they court the greatest chaos and instability our nation has ever faced in our financial affairs – insolvency.

These same Tea Party ideologues, still feigning a concern about the American people, have already sponsored legislation which would give foreign creditors — the Chinese, the Japanese, the Saudis, and others — top priority in payments made by the federal government, ahead of our military personnel. According to these bills, we can be sure that Americans whose lives depend on Social Security, Medicare, and Medicaid will be dead last when disbursements are made. We can perhaps now see the real dimensions of the sinister plan with which we are confronted. By driving this government into bankruptcy, the Tea Party hopes to roll back the Constitution by wrecking the Congressional ability to borrow money as a practical matter, while at the same time destroying the entitlement programs which the most extreme Republicans have hated since the time of Franklin D. Roosevelt.

And not just Tea Party fanatics endorse this strategy. Indeed, it has the sympathy of rich elitists of all political stripes, including the academic and foundation left, who welcome the effort to strip away the economic rights of the American people.

Default Spells Genocide Against the American People

This is a policy which threatens the very lives of millions of Americans. It raises the specter of genocide against our own people. And I have not become President of the United States to preside over genocide against Americans.

I am not motivated by any ambition for the aggrandizement of the powers of the presidency. I have negotiated in good faith for months. The other side has not. I have offered reasonable concessions. Indeed, I have waited until now, when the clock reads five minutes to twelve, constantly hoping that the legislative process in Congress would yield an acceptable result. But now, with the specter of national bankruptcy in full view, and no reasonable outcome forthcoming, it is my responsibility to act. Since I sit in the seat that belonged to Washington and Lincoln and Roosevelt, it is my hope that my actions may be worthy of their heritage.

In a Conflict Among Statutes, the Constitution Decides

I am faced first of all with a conflict among statutes passed by Congress. On the one hand there is the debt ceiling law, which states that the Total Public Debt Outstanding of the United States of America shall not exceed $14.294 trillion. Since our public debt reached that level on May 16, this statute could be interpreted as barring any further auctions of United States treasury bills, notes, and bonds. And if we cannot borrow money in this way, since our current income is inadequate to meet all our obligations, we are headed for default, bankruptcy, and, worst of all, social chaos.

But this is not the only statute in the US Code. There are also other statutes to which I must pay attention. All public expenditure of the United States government, as you know, is carried out by law — by a law called the federal budget, which specifies what amounts are to be spent and on what. Every expenditure has to go through the Congress not once but twice — it must be authorized, and then it must be appropriated, and each of these requires the consent of the two houses of Congress and the signature of the president. I am now confronted with a series of expenditures which the current Fiscal Year 2011 budget, passed by Congress and signed into law by me, requires me to make. This includes the entire vast array of social safety net, defense, transportation, health, regulation, inspection, government employment, and other activities which I outlined above. I am under legal compulsion to make these expenditures.

Concerning Treasury securities outstanding, each one of these is an explicit contract that the United States government will pay specific sums of interest and principal at specified dates. Respect from the sanctity of contracts also requires me to make every one of these payments, without exception.

This is therefore my situation: on the one hand, the debt ceiling forbids me to borrow. On the other hand, the federal budget and the implied contracts represented by entitlements and Treasury securities require me to pay. Since tax revenue, partly because of recent and misguided legislation, is not adequate to make all of these payments, something has to give.

It is obvious that, when two or more statutes conflict, we need to look to the Constitution itself for guidance as to which one will apply. Given the extraordinary attention which the Constitution gives the concept of the general welfare, this guiding principle needs always to be kept in mind. Beyond this, our founding document contains two especially relevant provisions. On the one hand, we find that it is Congress which has the power to borrow money. But on the other hand we also have the 14th amendment, section 4 which states:

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

In other words, this country is not allowed to default. Default is unconstitutional. Default is illegal. Default is a federal crime.

This is not an option which I can choose to exercise or ignore. It is not something I can invoke or not invoke. This is the Constitution talking. This provision binds me, and ought to bind the opposition in Congress, since they too have sworn to uphold the Constitution.

The Debt Ceiling is Unconstitutional and Must Be Disregarded

This provision places upon the President the responsibility to guarantee the timely payment of all United States debt obligations, regardless of attempts to the contrary that might come from other organs of government, including Congress or, for that matter, the courts. These words make me the ultimate guarantor of the solvency of the United States, especially under emergency conditions in which other branches of government have failed to do this. I am the last backstop. The buck stops here.

By contrast, the Constitution nowhere makes any reference to a debt limit. In fact, the first debt limit was instituted in 1917, less than a hundred years ago. Somehow we got through our first century and a quarter of national life, conquered the frontier, won the Civil War, and created the world’s greatest industrial power without any need for a debt ceiling.

In my considered judgment, and in the light of Amendment 14, Section 4, of the U.S. Constitution, a statutory debt ceiling is therefore unconstitutional. And all competent constitutional jurisprudence agrees that the president must not be bound by legislation which the courts are likely to find unconstitutional. This is all the more true in the present acute crisis.

Accordingly, I have issued an executive order directing the Secretary of the Treasury to resume Treasury auctions today, August 1, 2011, with a view to maintaining the uninterrupted ability of the United States to meet all of its financial obligations, budget and debt, foreign and domestic, without exception. The full faith and credit of our country will be maintained.

I cordially invite the Congress to approve and validate this decision ex post facto.

If your child is in Head Start, it will remain open. If you rely on Social Security, this means you will get your check. If your life depends on Medicare, you can rest assured that your doctors and hospitals will be paid on time so that they can continue their useful activity. If you are living in a nursing home and require Medicaid, those payments will also be available. If you are a member of the military, or a government employee of any kind, you will receive your salary on time. If you are a private firm doing business as a contractor with the government of the United States, you will be able to meet your payroll. If you are carrying out medical research or other scientific research funded by a US government grant, you can be assured that this support will not be interrupted. If you are a person or institution or government anywhere in the world who has purchased United States Treasury securities, you will be paid every penny, on time. If you want to buy a United States Savings Bond or cash one in, you can go ahead and do it.

Those intent on bankrupting the government of the United States and pitching our country into chaos may attempt to reverse this decision in the courts. I have directed the Solicitor General of the United States to prepare to refute their arguments. Since our constitutional position is strong, I have no doubt that we will prevail.

Some will say that the debt ceiling has been around for almost a century, and that so many precedents should not be overturned. That kind of thinking would leave us in bondage to judicial monstrosities like Plessy v. Ferguson, which validated racial segregation, or the infamous Dred Scott decision, which said that skin color was the basis for denying people rights given by God and natural law, and recognized by the Constitution. It will not be the first time we have fixed what turned out to be a terrible mistake.

Others in the House of Representatives bent on driving our nation into default have already announced their intention of impeaching me over this issue. I welcome their attack and the opportunity it will give to further clarify these great issues of the American public.

They will try to impeach me for what I am doing to save the public credit of the United States. In my view, I would truly deserve impeachment were I to refrain from taking this timely action. The President must take care that the laws be faithfully enforced, and this includes the federal budget and the commitments embodied in our entitlements programs and in the solvency of our Treasury securities.

I look forward to next year’s elections, which I expect will be largely fought over this issue and the larger questions which it raises.

Some have raised the question of the debt ratings agencies, and of their future evaluation of the United States public debt in the light of these events. I take this opportunity to announce that the Attorney General, the Department of Justice, and the FBI, acting under my direction, have initiated a comprehensive investigation of corruption and malfeasance which has been alleged against these ratings agencies in connection with their failure to provide timely warning to investors who had purchased certain toxic derivative securities in 2007-2008. We are also studying the legal means of depriving these ratings agencies of the extraordinary and quasi-governmental authority they exercise because of laws and regulations which limit certain forms of public and private investment to securities which have received favorable ratings from these agencies. To this end, we are cooperating with the authorities in Italy and other countries who have also undertaken aggressive investigations of the corruption of these ratings agencies.

The Department of Justice is also investigating reports that members of Congress have entered into criminal conspiracies with bankers and hedge fund operators for the purpose of selling Treasury securities short in the context of the current crisis, and linked this to the votes they cast. The Attorney General has promised to report on this issue at the earliest possible date.

For my part, I do not intend to sell America short. Historically, those who have bet against the United States have not prevailed, nor will they prevail today.

My great predecessor, Franklin D. Roosevelt, delivered his first inaugural address on a morning in March 1933 when every bank in our country had been forced to close its doors because of panic runs, and the economic heart of the nation had stopped beating. In the face of that emergency, the defiant rallying figure of FDR promised action with these words:

It is to be hoped that the normal balance of executive and legislative authority may be wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure. I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require.

Roosevelt spoke these words at a time when a new Congress had failed for almost three months to do anything meaningful to fight the Great Depression and the banking panic which were ravaging the land in those years. Some at that time had concluded that our form of government was unworkable in a modern crisis, and they were looking abroad for new models of totalitarianism. We must always realize that any system of government which cannot solve the most urgent, life and death problems of the everyday life of the people is not long for this world. It risks being swept aside. If democracy brings chaos, that may be the end of democracy. In this sense, the future our democratic representative government depends on our solvency.

It is in this spirit that I am dealing with the current crisis. I remind you all that, while avoiding national bankruptcy and default in the short-term is absolutely indispensable, this will not by itself solve the majority of our economic problems. The world will remain gripped by an economic and financial depression of incalculable proportions. We will still have some 30 million unemployed in our country. We will still witness American families thrown on the street by fraudulent foreclosures. We will require a comprehensive economic recovery program, supplemented by significant domestic reforms, and capped by a new world monetary system, to put the current world depression behind us.

It is, however, my hope that, by rebuffing those political forces seeking to drive our country into bankruptcy and chaos, we have gained the time necessary to address these issues of economic recovery and financial reform free from the climate of blackmail, extortion, and shakedown.

In the meantime, America will be open for business, today, tomorrow, and every day. Equally important, we can be confident in the ability of our constitutional system to protect the general welfare and the public interest from the machinations of small cliques of fanatics, wealthy though they may be.

I ask for your support. Thank you.

Debt Ceiling Debate Charade Masks Planned Entitlement Cuts

Stephen Lendman
Friday, July 15, 2011
http://sjlendman.blogspot.com/2011/07/debt-ceiling-debate-charade-masks.html

Short of finalizing details and assuring enough bipartisan support, it's a done deal to slash Social Security, Medicare, Medicaid, and other social spending while leaving outsized military budgets and generous handouts to corporate favorites in place.

At the same time, the timeline to accomplish it is undetermined. Political posturing may extend the August 2 deadline until fall or beyond.

It's how corrupted Washington always works, notably since the 1980s under both parties. Obama was elected to assure continuity and accomplish by rhetorical duplicity what Republicans on their own can't do.

Notably after capitulating last December on tax cuts for America's super-rich, he proposed deep budget cuts, affecting disease prevention, children's and community healthcare, education, supplemental grants to poor women and children, community block grants for housing, energy efficiency and renewable energy, and other benefits for people most in need.

He's a charlatan, not a leader who cares. Earlier, he proposed hundreds of billions in Medicare cuts. It was step one ahead of incrementally ending entitlements and other social benefits altogether, including publicly funded pensions, returning America to dark age harshness.

Bipartisan duplicity supports it, including slashing healthcare, education, housing, virtually all social benefits incrementally, eliminating them all altogether. Obama and many Democrats tacitly agree. Timing is mostly at issue with an eye to 2012.

In principle, Obama and Speaker Boehner privately agreed to $4 trillion in Social Security, Medicare, and other social spending cuts, backtracking when word leaked prematurely to a more modest $2.4 trillion package, then resurrecting the $4 trillion one.

At a July 11 press conference, Obama again stressed "shared sacrifice," leaving unexplained he means working households sacrifice to let America's super-rich share.

Also unmentioned was his 2006 debt ceiling position, voting against raising it in the Senate saying:

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the US government can't pay its bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government's reckless fiscal policies."

"Increasing America's debt weakens us domestically and internationally. Leadership means that 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

As President, Obama endorsed reckless fiscal policies, including:

-- trillions of bailout dollars to bankers;

-- generous handouts to other corporate favorites;

-- record high military spending for multiple illegal wars and proxy ones;

-- the same anti-labor tax workers, not the rich policies as Republicans;

-- wrecking Social Security, Medicare, Medicaid, and other social spending policies; and

-- rhetorically insisting the debt ceiling be raised before the August 2 deadline as part of a deal to please Wall Street at the expense of working households and seniors, dependent on vital entitlements they can't afford to lose or see weakened.

In fact, economist Michael Hudson accused Obama of governing to the right of George Bush, Sarah Palin, and Michele Bachmann, the Republican far right-wing extremist presidential candidate endorsing holy war on democratic values.

At the same time, he's triangulating more than Clinton to appear responsible. The budget debate is a charade. Republicans are playing bad cop. Obama plans selling out his constituency. Ahead is a nightmarish scenario comparable to Greece, impoverishing working households to pay bankers, starving states and cities of revenue, forcing them to sell public assets cheap, putting America on sale at fire sale prices, creating a dystopian Great Depression, wiping out generations of social progress.

Moreover, only a democrat could do this, especially a smooth talking charlatan like Obama - more duplicitous and pernicious than hardline Republicans saying, "(M)eaningful changes to Medicare, Social Security and Medicaid (plus other social spending policies must be made to) preserve the integrity of the programs and keep our sacred trust with our seniors (and other needy households), but make sure those programs were there not for just this generation, but for the next generation."

He lied. He wants them incrementally ended, perhaps over the next decade when another president will have to answer for his social destruction. His Wall Street and other corporate cronies demand it. They also want and will get the debt ceiling raised. It's why they funded his 2008 campaign, put him in the White House, and assure his reelection if he plays ball.

Chamber of Commerce president Thomas Donahue also weighed in, saying:

"An unprecedented default on the nation's bills would have dire consequences for our economy, our markets, and Main Street Americans."

The Washington Post gave PIMCO's Bill Gross (the nation's largest bond investor) July 13 op-ed space, saying:

"Don't mess with the debt ceiling. Raise it unencumbered if necessary. (Default) would....be a huge negative for the US and global financial markets, introducing fear and unnecessary volatility into the economy and global trade."

False! America won't default, but doing so is the road to recovery, forcing bondholders to take stiff haircuts, letting too-big-to-fail banks take pain, collapsing their Ponzi scheme speculating, or shutting them down altogether. Removing that cancer would facilitate recovery and growth.

Moreover, if post-2008 crash Fed created trillions went into the real economy, creating jobs and stimulating growth, they'd be no social spending cuts/debt ceiling debate because America again would be healthy.

Ignoring basic truths, a July 11 Washington Post editorial called Obama's entitlement slashing a "truly progressive position."

A June 1 New York Times editorial called congressional posturing "Playing With Matches on the Debt," endorsing corporate America's advocacy for raising it, slashing social spending to finagle it, and keeping the nation on a fast track to third world status, including workers transformed to serfs.

On July 13, Fed Chairman Bernanke (Wall Street's hired hand) said Washington's failure to service debt would cause "shock waves through the entire global financial system," omitting what he should have said: namely,

-- that Washington has no debt creation limit;

-- that quantitative easing buys all of it not absorbed by sovereign or private buyers;

-- that the Fed can issue whatever amount is needed to service it; and

-- most important that Congress can reassert money creation power, replacing Federal Reserve notes with Treasury ones interest and inflation free with no need to raise taxes if responsibly done.

Doing so would end the budget cutting/debt ceiling charade. Moreover, sustainable economic growth would follow because publicly controlled money would reignite it free from predatory bankers, wrecking the economy to buy assets cheap, complicit with corrupt politicians letting them.

A Final Comment

On July 12, economist Jack Rasmus tried "reading the debt ceiling tea leaves," predicting what he sees ahead, saying:

-- gutting Social Security and Medicare is planned;

-- the debt ceiling will be raised;

-- real negotiations will begin once it's done;

-- for starters, slashing $3 trillion in entitlements is a done deal;

-- October 1 is the next deadline, the start of FY 2012; at issue is passing next year's budget, including cuts;

-- expect the retirement age to be raised to 70 as well as sharply reduced disability benefits;

-- Medicare recipients will absorb all future cost increases, including Part B (raised to double the current level) and higher Part D deductibles; "(t)hat way Obama can say he never 'cut' Medicare," yet, in fact, slash "$200 - $400 billion a year for the next decade;"

-- Republicans will agree to token tax cuts, closing loopholes easily offset by agreeing to overhaul the tax code favoring corporations; specifically, the top corporate rate will be cut from 35% to 20%, though gaming the system lets many corporations pay minimal taxes or get rebates despite being profitable;

-- "lowering rates for foreign profits (will) placate multinational" firms;

-- what political Washington takes with one hand goes back twice over with the other, continuing "the decades long tax 'shell game;' "

It's why corporations' share of federal revenue dropped from 20% years ago to 10% now, and falling because of bipartisan deceit.

Obama and Congress now plan completing their financial coup d'etat, ending America's social contract, leaving retirees, working households, and impoverished millions on their own sink or swim.

Only revolutionary change, impeaching Obama, and routing bipartisan criminals can stop them. It's high time public anger demanded it.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

http://www.progressiveradionetwork.com/the-progressive-news-hour

Obama’s “Big Deal”

Wallowing with Pigs in Search of a Grand Center-Right Coalition
http://blackagendareport.com/content/obama%E2%80%99s-%E2%80%9Cbig-deal%E2%80%9D-wallowing-pigs-search-grand-center-right-coalition
Barack Obama is salivating at the prospect of concluding his Big Deal with the Republicans, the one that will move the center robustly – even transformatively – to the Right, where this president really lives. The debt-limit deadline is Obama’s big chance to panic a significant part of the Democratic Party into joining in the rape of Social Security, Medicare and Medicaid. “When the debt-limit showdown arrives, pray for gridlock, which would at least mean there is still resistance to Republican extortion.”
Wed, 07/13/2011
BAR executive editor Glen Ford

“Obama’s Big Deal is actually the coup de grace for Franklin Roosevelt’s New Deal and Lyndon Johnson's Great Society.”

President Obama says he’s determined to make the “big deal” with the Republicans – not like the little, piddling deals he has been cutting all along to benefit the corporate classes, but the BIG deal, the grand consensus he believes he was born to forge with the GOP. Although it’s true that it will take a whopper of a deal to outclass the bipartisan joint venture that transferred $14 trillion to Wall Street, the vast bulk of it on Obama’s watch, the First Black President is nothing if not ambitious. Obama’s Big Deal is actually the coup de grace for Franklin Roosevelt’s New Deal and Lyndon Johnson's Great Society – relics, like Black activism, standing in the way of a post-everything world.

Obama has been savoring the big moment since last November, when the Republicans seized control of the House and sidelined the president’s main opposition: the left wing of his own party. Delusional Obamites, especially Blacks, are fond of saying their guy really wants Democrats and activists to force him to take a more progressive path – to “make him do it.” It’s actually the other way around. Obama depends strategically on Republicans to “make him do it” – to push him inexorably rightward with their brinksmanship and constant threats of gridlock. It is an intricate and intimate dance, with Obama and the GOP moving and grooving to the same music. Obama often gets so caught up, he mouths the Republicans’ lyrics.

“The reason to do Social Security” – by “do,” Obama means “cut” – “is to strengthen Social Security to make sure that those benefits are there for seniors in the out-years,” says Obama, an exact echo of the apocalypse-soon Social Security scare propaganda perfected over the years by the GOP. Obama has been promising to “do” Social Security, Medicare and Medicaid since just before he was sworn into office in January, 2009, when he announced that these entitlements would be “on the table” in his administration. His deficit reduction commission last year did indeed put the programs on the operating table, with Obama’s corporate surgeons tracing dotted lines around the organs to be excised under the irresistible imperatives of austerity – the Republicans’ copyrighted anthem.

“Obama depends strategically on Republicans to push him inexorably rightward with their brinksmanship and constant threats of gridlock.”

Last November 3, I wrote: “The best outcome that could result from Tuesday’s Democratic debacle is that the Republicans overreach and, in their white nationalist triumphalism, make it impossible for President Obama and congressional Democrats to reach an accommodation with rampaging reaction and racism.” In other words, when the debt-limit showdown arrives, pray for gridlock, which would at least mean there is still resistance to Republican extortion.

The showdown is nigh, although Obama is squeezing every Democratic arm and groin in reach to ensure that he and the Republicans are able to walk down the dusty street arm-in-arm at high noon, so that the outcome can be billed as a grand consensus, a Big Deal for Obama. This requires that he gather Democratic accomplices in the gang rape of entitlements. “So we might as well do it now,” says Obama, while people are panicked by the prospect of a technical U.S. “default.” “Pull off the Band-Aid, eat our peas,” he commands, as if the death blow to the last vestiges of the New Deal and the Great Society is just a short, sharp pain, after which the boo-boo will heal just fine.

The real Obama is a cold, cynical bastard. He is not a wimp, but rather, has plenty of spine to face down and brow-beat the remaining defenders of the social safety net in his own Democratic Party, who have always been the most immediate dangers to his grand center-right coalition. But it must be done quickly, quickly, quickly, to capture the debt-limit panic opportunity.

“He harms poor people because he is contemptuous of them, just like his Wall Street friends and patrons.”

Half or more of the Congressional Black Caucus will do whatever the White House asks of it, will sacrifice anything and everything dear to African American interests in order to preserve this particular Black family in the executive mansion for as long as possible. But many of Obama’s white groupies are facing the fact that they backed a corporate Trojan Horse. Paul Krugman, the columnist for the New York Times, should not have needed a Nobel Prize in economics to realize that Obama “basically shares the GOP’s diagnosis of what ails our economy and what should be done to fix it,” or that the president’s eagerness to gut Social Security, Medicare and Medicaid “is something Mr. Obama and those he listens to apparently want for its own sake.”

In other words, this guy works for the other side because that’s where his soul is – if he has one. He advocates policies that serve corporate pigs because he’s one of them. He harms poor people because he is contemptuous of them, just like his Wall Street friends and patrons. His administration is negligent or hostile to Black aspirations for the same reasons as his white business buddies, with whom he shares a worldview. He is every bit as much a war criminal as Bush, and as morally debased.

The last thing we need is to allow this guy to conclude his long-sought Big Deal with the GOP under cover of a debt-limit crisis.

BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.

Social Security, Medicare & The Shock Doctrine

Robert Sterling
Konformist.com

Throughout the entire budget debate this summer, there have been apologists for Team Obama who have defended Obama's negotiating tactics (which involved offering unprecedented cuts to Social Security and Medicare, as well as predictable chops to Medicaid) as necessary to appease the far-right Republicans and evade a catastrophic default. Of course, never mind that if it has gone this close to the cliff, it's due to Obama's poor negotiating skills climaxing last year with the lame duck Congress, where he caved to their demands for continued tax cuts to the rich. And never mind that Obama has other weapons at his disposal, like using the 14th Amendment to nullify the debt ceiling or using other legal banking moves to continue government financing.

Still, while I am no fan of Barack Obama, even I defended him to a degree on this issue on a recent episode of Robert Larson's Out The Rabbit Hole on KUCI.org. Whatever I think of him, I don't Obama is personally conservative to any degree (in that if he is right wing in practice, it is by mere cynical pragmatic strategy and not by personal conviction) and I don't think he is stupid. More important, he has had the opportunity before to jump the shark on cutting Social Security earlier this year when the leaders of his so-called "Deficit Commission" released their recommendations, and he didn't. If he was throwing out an offer to do so now, it was merely because he knew the GOP still wouldn't agree to any deal with income tax increases in the mix. Thus, he could look as acting in good faith in negotiating, something that the Republicans can't.

As usual, even I was giving Obama too much credit. To begin with, as Paul Krugman has wisely observed, it was Obama, and not the Republicans, who put an offer of Social Security cuts into the mix. (Yes, the Republicans in the House did vote to privatize Medicare, but even they with their ultra-right reactionary view knew that attacking SS was a political loser.) The significance of this can't be overstated: simply put, arguably the most successful (and most popular) program in the history of American government, one conceived by and pushed through as law by a Democratic congress and president, was being offered up in the budget debate not by evil Republicans who hate old people but rather by a Democratic president. That Social Security is also the shining example of the New Deal - when a New Deal II rather than austerity is needed - makes it all the more offensive.

This also brings up another common lie by the Obamapologists, that his rightward shifts are nothing more than following what Clinton did with his strategy of triangulation. Of course, there are different circumstances here: Clinton used it as a defensive strategy in 1995 with both houses in GOP hands, while Obama ran with it when he started in office, with a solid majority of Dems in the HOR and 60 out of 100 senators. In any case, we can argue why Clinton used triangulation and how effective it was, but specifically in the budget debate, it is important to point out that Obama is not using triangulation at all. After all, the whole idea of triangulation is the president taking a supposed centrist position between the two excesses in the left and right. In the case of Social Security, Obama has taken a position even to the right of the GOP's own posturing.

Making the situation worse was Obama warning that Social Security checks may not be cut on August 3rd if a budget deal isn't in place. Yes, he was answering a question, but it was a question he could've easily dodged. Again, there are options besides default that the White House has at its disposal, including citing the 14th Amendment, and Team Obama certainly hasn't shied away from asserting executive power. So why issue the dire warning? The best explanation I can think of is Obama is using the Shock Doctrine strategy espoused by Naomi Klein in her book of the same name. Obama is trying to put the elderly in a state of shock so that if he does cut a deal involving social security cuts, they will consider it a reasonable alternative to the nightmare scenario of SS going broke.

The good news is that Congress appears to be rebelling against Obama's "grand bargain" plan, Republicans because it includes nominal income tax increases, and Democrats because it requires them to support Social Security and Medicare cuts. This is a positive sign, but the cynical side of me looks at the last decades of betrayals by both parties of the poor and middle class, and it's hard to dismiss the likelihood that this is mere kabuki theater and will end up with a last minute deal which cuts entitlements, a deal praised by the establishment media as some sort of incredible compromise.

No matter the short term results of Obama's offer, there can be no good from it long term. Obama has set the precedent that Social Security and Medicare are now fair game in budget debate, and it seems likely it will continue to be used as cannon fodder in future budget battles thanks to this.

The only question left to ask is why. As in, why did Obama do this and why does he continue to engage in a strategy of betraying his base? The best answer I can think of is that Obama and his advisors believe that ultimately his base will crawl over glass to support him, especially when faced with an extremely right-wing GOP and no potential Republican nominee with anything resembling charisma. Apparently Obama thinks he can get more votes by snuggling as close to the right wing as possible than battling for the interests of his base.

Of course, this game plan didn't work too well in 2010, and it probably won't help for the Democratic Party at large in 2012. They were basing their campaign strategy on being the defenders of Social Security and Medicare from the crazed extremists in the GOP, so Obama's moves cut the heart out of their argument. So he has not only alienated political insiders in his own party, but the very base that it caters to. That appears fine to Obama, as he has apparently decided to cut his political ties to the fortunes of the Democratic Party and its supporters. That leads me conclude that the only thing worse than having a Republican in the White House in 2013 surrounded by right-wing extremists may be to continue having a Democrat in there who seems eager to continue shifting the frame of the debate even further to the right than most could have imagined in 2008.

Don't Let Deficit Panel Co-Chairs Hype a Bad Plan

http://www.thenation.com/blog/156831/after-deficit-panel-deadlock-progressives-must-promote-alternative-austerity

Don't Let Deficit Panel Co-Chairs Hype a Bad Plan, Embrace the Progressive Alternative That Saves Social Security
John Nichols
December 3, 2010

The National Commission on Fiscal Responsibility and Reform failed to produce a mandate for assaulting Social Security, undermining Medicare and Medicaid and generally balancing the budget on the backs of working Americans.

But that hasn't stopped its co-chairmen from claiming a sort of victory for their plan to make Main Street pay for Wall Street's failures.

Their goal is obvious. Commission co-chairs Alan Simpson and Erskine Bowles want to spin a win they did not achieve in order to foster the false impression that their ominously titled " Moment of Truth" proposal is the only real alternative to fiscal ruin. That's not the case. There are better proposals—such as the detailed alternative to austerity outlined by commission member Jan Schakowsky. But this is a critical juncture, and progressives need to be conscious that an effort will be made to narrow the range of options and impose key elements of a bad plan that failed to gain required support.

Let's start by getting a few things straight:

The commission was given a clear charge when President Obama cobbled it together in February—after failing to win congressional support for the formal launch of the project.

The commission was to come up with a plan address deficits, debts and the challenge of maintaining a federal government at a point when revenues are not sufficient to keep paying for every war, bailout and boondoggle that comes along.

Proposals for what could be radical, and in many cases painful, change had to attract broad support, so the president said that at least fourteen of the eighteen members of the commission would need to back an initiative before he would promote it. Senate majority leader Harry Reid and House speaker Nancy Pelosi promised to hold votes this year vote a consensus could be reached.

On Friday, the commission co-chairs failed to get to fourteen. Only eleven members of the commission voted "yes," while seven voted "no." And the seven "no" votes came from precisely the members whose votes were most needed if this plan was to have legitimacy. Three House conservatives—incoming Budget Committee chair Paul Ryan, R-Wisconsin; incoming Ways and Means Committee chair Dave Camp, R-Michigan; and incoming Republicans Conference chair Jeb Henserling, R-Texas—voted "no" because they did not think it went far enough in calling for tax cuts and the gutting of entitlement programs.

Two key House Democrats, Xavier Beccera, D-California, and Jan Schakowsky, D-Illinois, voted "no" because, as Schakowsky explained it, the proposed benefit cuts would have meant that "those who have not joined the prosperity party the last couple years are being asked to pick up too much of the tab."

Senate Finance Committee chair Max Baucus, D-Montana, also voted "no," as did former Service Employees International Union president Andy Stern.

Opposition from the right and the left—including that of the legislators who will chair the House Budget and Senate Finance committees in the new Congress—is significant, as is the opposition of the most clearly identifiable representative of working Americans on the panel.

But commission co-chairs Simpson and Bowles, who went rogue last month and started promoting a proposal that lacked broad backing, were going to claim a mandate no matter what vote their got. Bowles declared victory, claiming that the panel had opened an "adult conversation" about cutting the deficit. Simpson, the former Republican senator from Wyoming who was the driving force on the commission, chirped: "I will walk home proudly, with my head held high."

Simpson is proud of his plan, and of the fact that he and Bowles won some unexpected votes for austerity—including that of the number-two Democrat in the Senate, Illinois's Dick Durbin. But what they aren't highlighting is the fact that Durbin announced that he was voting for the plan in order to "to kick-start an adult debate," not because he thought it was sound.

Pointing out that opposed many of the proposal's provisions and would not necessarily have backed it if it came to a Congressional vote, Durbin explained that: "I want progressive voices at the table arguing that we must protect the most vulnerable."

So what is the progressive alternative?

Stern offered a credible plan on Wednesday, calling for substantially larger tax increases than Simpson and Bowles proposed, along with a shift in government spending toward infrastructure investment.

But the strongest alternative is a detailed plan advanced by Schakowsky.

The Congressional Progressive Caucus member and key ally of outgoing House Speaker Nancy Pelosi—who has dismissed the Simpson-Bowles approach as a non-starter—has been the sanest voice in the commission's debate about how to balance budgets, reduce debt and grow the economy.

"Lower- and middle-class Americans did not cause the deficit. Just ten years ago the federal budget was generating a surplus as far as the eye could see. That surplus was turned into a deficit due to massive tax cuts—mainly to wealthy Americans; two wars paid for by borrowed money; and a major recession caused by the recklessness of the big Wall Street banks. Over the last decade the incomes of middle-class Americans have actually shrunk, while those of the wealthiest 2 percent of the population have exploded," argues Schakowsky, who says, "The middle class did not benefit from the Republican economic policies that led to the current deficit—they were the victims—they should not be called upon to pick up the tab."

As such, Schakowsky has rejected the Simpson-Bowles scheme, which would weaken Social Security, Medicare and Medicaid while cutting taxes for multinational corporations. "The president's Fiscal Commission has been given a concrete goal: to achieve primary budget balance in 2015, ensuring that all spending is paid for except for interest on the national debt," she explained after the co-chairs laid out their plan. "Their proposal," she explained, "would have serious consequences for lower- and middle-class Americans, and that is why I cannot support it."

But Schakowsky did not just say "no."

She presented an alternative plan to reduce the deficit by $427 billion over the next five years, far surpassing the target proposed by President Obama, and she would do it with an eye toward protecting the poor and the middle class and strengthening the economy.

"Fixing the federal deficit is not an end in itself. The goal of budget policy should be to assure long-term, widely shared economic growth," explains Schakowsky. "Economic growth is not just good for businesses and families—it will reduce the deficit. Sustained, long-term economic growth requires that we end the trend of concentrating more and more wealth in the hands of the rich and less and less in the hands of a middle class that can then afford to buy the products and services that will sustain economic growth."

Notably, Schakowsky preserves Social Security and other programs that protect and serve working Americans. Instead of undermining the program, she would assure its long-term solvency by eliminating the wage cap on the employer side and raising it to 90 percent on the employee side, applying FICA to all wage income below the cap and establishing a modest legacy tax on wealthier Americans.

This is part of a broader plan from Schakowsky, which has five key elements:

1. Increased economic stimulus to spur growth in the immediate term

• Provide $200 billion to invest over the next two years in measures to create jobs and spur economic growth, including passing the Local Jobs for America Act; and funding for education and law enforcement; Unemployment Insurance, Federal Medical Assistance Percentages (FMAP) and Supplemental Nutrition Assistance Program extensions; and infrastructure.

• Adopt the president's proposals to eliminate overseas tax havens and incentives for outsourcing

2. Smart, targeted spending cuts

• Non-defense discretionary—$7.55 billion in savings through increased efficiency and cuts to programs that benefit large corporations that don't need assistance.

• Defense discretionary—$110.7 billion in cuts from the 2015 defense budget, including efficiency savings, reducing our troop levels, cutting weapons systems we don't need and scaling back the wartime increases in the size of the military.

3. Mandatory spending cuts

• Healthcare—at least $17.2 billion in savings by implementing measures to bring down the cost of healthcare to the federal government and lower healthcare inflation overall.

• Other—$7.7 billion in savings by cutting agriculture subsidies in half, and redistributing federal support to offer greater benefits to small family farms and reduce subsidies to large corporate agribusiness.

4. Reductions in tax expenditures

• Raise $132.2 billion by closing tax subsidies for companies that ship American jobs overseas.

5. Increases in revenues

• Raise $144.6 billion in revenue through progressive reforms to the estate tax, treating capital gains and dividends as regular income, and enacting a cap-and-trade proposal that includes protections for lower-income people.

• Enact President Obama's budget proposal to let the Bush tax cuts for the top two brackets expire and return to 2009 estate tax levels.

• Nontax revenue—raise $7 billion by addressing places where the private sector is currently underpaying.

The plan that Schakowsky has produced is not the final word on how progressives ought to approach debates about fiscal policy, debts and deficits. There needs to be more consideration of the role that the trade deficit plays in destabilizing the US economy and the financial health of the federal government, as Ohio Congressman Marcy Kaptur has noted. There should be consideration of the proposals by Oregon Congressman Peter DeFazio for taxes on speculation and financial transactions. And there should be new approaches to how the Federal Reserve manages bank funds, as economist Robert Pollin has suggested.

But Schakowsky has provided the essential framework for the coming debate.

Simpson and Bowles can claim their hollow "victory."

But when the real debate about deficits and debts gets opens, progressives can say there is an alternative to austerity—an alternative, presented by Jan Schakowsky, that balances budgets, reduces debt, serves working families rather than Wall Street CEOs, protects Social Security and expands the economy.