“If by a "Liberal" they mean someone who looks ahead and not behind, someone who welcomes new ideas without rigid reactions, someone who cares about the welfare of the people-their health, their housing, their schools, their jobs, their civil rights and their civil liberties-someone who believes we can break through the stalemate and suspicions that grip us in our policies abroad, if that is what they mean by a "Liberal", then I'm proud to say I'm a "Liberal.”
John F. Kennedy, Profiles in Courage

Poverty in America

Robert Reich Explains the Economy

Tea Party Pubic Service Announcement

December 30, 2011

A Modern Update on an Old Classic

For those of us who first saw the Wizard of Oz as children, Dorothy, Toto and her imaginary friends will live forever in our memories. Like all classics this story continues to enchant new generations of children. Like so many literary classics it also serves as a morality play illustrating the never-ending battle between good and evil and false leaders projecting themselves as more than they really are.

In the true sense of a classic the story remains relevant today serving as a metaphor for our moribund political leadership and the continuing fight between two sides each defining themselves as good and the other as evil.

So, let’s take a trip down the yellow brick road and explore the Wizard of Oz as a contemporary story for the politics of today.

Dorothy as the embodiment of the United States is lost and on a trip that she does not know where it will take her, nor how she got there. When she lands among the munchkins, she finds a people living in fantasy world waiting to be rescued, similar to the American people of today, such as the 52% in a recent Gallup poll that found the widening gap between rich and poor as an “acceptable part of our economic system.” So Dorothy as America is lost without direction, seeking leadership to help her find the way home. Instead she is given roadblocks, a twisting path and setbacks along the way. Similarly today, each political party promises us that they will show us the way if we just put our faith in them, but then fail to provide any true leadership to help us find the path home.

The character of Dorothy as a child is illustrative of how our political leaders treat the American people. We are considered to be children incapable of knowing what is best for us and told that if we would only follow their path blindly we will find our way. Instead we get deeper and deeper into a confusing path with no clear way out and unforeseen dangers at every turn: two threatened shutdowns of government, no clear policy on taxes or the recovery, an increasing tax burden on working people while reducing taxes on the wealthiest, all contributing to a growing national debt creating dark clouds on the horizon.

But still we dance down the yellow brick road.

First Dorothy finds the scarecrow. He’s a nice sort of fellow, a sack of straw masquerading as a person, but alas he has no brain. Yes, this lovable scarecrow without a brain could only be representative of the Tea Party. A movement born in anger, with one discernable objective – limit government’s role because big government is bad and it must be starved down to size. Well, in reality what they are saying is that big government is bad when it is in service to others, but when disaster strikes, just like everybody else they want the government to come in and help. If they only had a brain, they would understand that it is government that maintains the rods they drive on, the bridges they cross and that if it were not for government they would be working seven days a week at below poverty wages. The world is so easy to understand when you don’t have brain to muck things up with the facts.

The most recent example of this is Tea Party activist turned mayor of Flint, Michigan who recently turned down an $8.5 million federal grant to build transportation hub, because she believes that “There’s nothing free about government money,” Mayor Janice Daniels said in an interview. “It’s never free, and it’s crippling our way of life.” Placing her ideology before practicality denying the reality of how unemployment cripples people’s way of life by blocking the promise of new jobs as a result of the new transportation hub, Mayor Daniels demonstrates the blind allegiance to ideology over what is good for her constituents.

Facts, oh yes that is another thing that a brain is good for, understanding and making sense out of facts. Our straw-filled, brainless friends deny global climate change in the face of volumes of scientific fact, but challenge a potentially dangerous pipeline because they say here are no scientific facts to support its opposition. But as experience shows us, without a brain, one cannot make sense of facts even once they are presented in logical and irrefutable fashion. Then there is the obsession with no tax increase, and the Tea Party Congress members who have signed a pledge to not raise taxes. Without a brain to take in and interpret information, these folks are willing to sit back and watch municipalities go into bankruptcy and the federal government face the brink of shutdown. That is not leadership, that is blind allegiance to an ideology that does not work, followed only by someone who does not have the brainpower to think critically.

Next Dorothy comes across the Tin Man, who lacks heart. If only the wizard could help him gain a heart all will be right. In or modern day morality play the Tin Man, without a heart is representative of the Republican Party. A party that has become so focused on representing the wealthiest among us that it has lost its heart in the service of its benefactors. Tax cuts for the wealthiest while reducing essential services for everyone else. Critical government benefits such as an extension of unemployment benefits are held hostage to continued tax breaks for the wealthiest Americans. While insisting that deficit reduction can only be achieved by spending cuts targeted at working and low income Americans, their insistence on rewarding their wealthy benefactors with tax cuts adds to the deficit. Further indication of an empty place where their hearts should be is that while insisting on a so-called “strict interpretation” of the Constitution, they ignore a phrase in the preamble that clearly states that it is the role of government to “promote the general welfare.” But without a heart, the Republican interpretation of that phrase becomes to promote the welfare of the few at the cost of the many.

Then there is the lion, all he needs is courage; a perfect description of today’s Democratic Party. Today’s Democratic Party has become a collection of men and women without the courage to fight for what they should stand for. This is a group of people that like the lion in Dorothy’s tale, runs from the fight before it even begins. For example take a major part of the party’s 2008 platform – no extension of the Bush-era tax cuts that mostly benefitted the wealthy. Without so much as a whimper, the Democrats agreed to a two-year extension of these cuts and now only have the courage to complain that they exist, but not to do anything about it. The same can be said for giving up universal health care even before the negotiations began and most recently signing approval of a defense spending bill that takes away basic rights of US citizens who can be held without trial indefinitely just for suspicion of terrorist activities.

Like Dorothy we are lost in a strange and foreboding land without anyone to lead us out but yet we manage to pick up baggage along the way without any promise of their ability to help us out or to find the way home. But wait we have one more friend to find, perhaps he will be the one to help us in our journey –Now we come to the Wizard himself, the guiding philosopher of the tea party – Grover Norquist. This is the man who has expressed his desire to shrink the federal government down to where t is small enough to drown in the bathtub. The no-tax pledge blindly signed by Tea Party and Republican member of Congress was his brainchild. While Grover Norquist stands as the guiding light of the Tea Party and it’s anti-government activists, we never get to see what is going on behind the curtain. But pull it away and you will see the dirty little secret of this so-called “grassroots movement.” Norquist and the Tea Party are funded by the billionaire Koch brothers and by Karl Roves latest incarnation Freedom Works. This is hardly the making of a grassroots movement, rather it is perhaps the biggest corporate lobbying machine fighting any type of government regulation or taxation that might level the playing field and reduce the influence of corporate dollars in the political system.

With a cast of characters like this, I am afraid that real life can only mimic fantasy for so long, then they must part company. So, unless the American people rise up and push back there will be no happy ending here. We will not find our way home and the morass that is Congress will only become more dysfunctional, is that is at all possible.

December 6, 2011

Extending the “Payroll” Tax Cut

While the Democrats and Republicans in Congress posture over extending the so-called payroll tax cut, the facts about the impact of this policy are lost in all the bombast. In reality, taxes cut are not nor have they ever proven to be effective stimuli to a sagging economy. If the two parties can make headlines with their fight over these tax cuts, it gives the appearance that they are trying to actually do something, and hide the fact that this may well be the most ineffective and unproductive Congress in generations.

Let’s start with some facts that seem to have gotten lost in the shuffle. First, by calling this a “payroll” tax cut, the administration is camouflaging the fact that it is a Social Security tax cut. While one side of the aisle tries to deal its deathblow to Social Security by claiming that it is on a collision course with insolvency, the other side of the aisle is hastening that insolvency by reducing its only source of income – the Social Security tax. The two percent reduction in the Social Security tax essentially robs $265 billion from the Social Security trust fund. This “incidental” fact has never entered into the arguments on Capitol Hill.

If it is true that the Social security trust fund is heading toward insolvency, then why deny it more funds? As usual, the answer is a shortsighted fiscal policy and politicians who cannot see beyond their next election.

Cutting taxes as a stimulus to the economy is a straw dog. Politicians settle on this because it seems as though they are doing something and voters like to have more money in their pockets. According to the Congressional Budget Office each $1 million in tax cuts creates thirteen new jobs. That translates to a cost to the government of $77,000 per job created. On the other hand $1 million in unemployment benefit creates 19 new jobs for a cost of $52,000 per job. The reason that unemployment benefits creates more jobs is that people collecting benefits need that money to meet daily expenses and will spend it immediately while a social security tax cut goes to people who are employed and many of them will not spend their tax break but will save it instead.

The GOP members of congress are insisting that spending cuts offset any tax cut. However when they championed the extension of the Bush era tax cuts, there was no such demand. So the GOP platform seems to be that tax cuts for the wealthiest Americans are solid fiscal policy while tax cuts for working families are dangerous fiscal policy that must be offset. This position becomes clearer when one looks at the offsets being suggested by the Republicans.

One idea being floated by the GOP is a pay freeze for federal workers and a reduction in the federal workforce by 10%. Both would further harm the economy, and both place an inordinate burden of reducing the deficit on working families. A ten percent reduction in the civilian workforce of 2.15 million would result in 215,000 jobs lost, offsetting the 265,000 jobs that would be created by the payroll tax cut. The dollar savings would be approximately $1.6 billion to offset a tax cut of $265 billion. Either the GOP leadership cannot do simple math or the real reason behind their plan is to gut Social Security and the work of the federal government.

However there are ways that can bring more funds into the federal government and maintain the solvency of the Social Security system well into the future. The first step would be to eliminate the Social Security tax cap. Currently all employees pay Social security tax on the first $106,800 of salaried income. Other income such as investment income, business income, etc are not subject to this tax. As a result of this wage cap, higher income workers pay a substantially reduced Social security tax rate. For example, at the current rate of 4.2%, all workers earning less that $106,800 pays the full tax rate on all of their salaried earnings. However, a hypothetical salaried employee earning $213,600 is only paying a rate of 2.1% of salary. Eliminating the cap would not only make Social security a more progressive and fairer tax but it would guarantee solvency well beyond 2075.

Another plan by the GOP, again focuses on some of the most vulnerable people in society - reducing Medicare reimbursements to senior citizens. This plan is in response to the astronomical growth of Medicare costs. However, what is being ignored here, is that under the previous administration, the Medicare was prohibited from negotiating drug prices with the pharmaceutical industry. In essence this translates into a $29 billion dollar annual subsidy to big pharma. Unlike other prescription drug suppliers Medicare is the only major insurance company that is barred from negotiating prices. As an example, Medicare currently pays 58% more for prescription drugs than the Veterans Administration that is permitted to negotiate.

Another step would be to eliminate the Bush era tax cuts, which went overwhelmingly to the wealthiest Americans. The extension of these cuts were justified as a fiscal necessity in this economic downturn. But if they indeed were needed as a stimulus, they should have softened the economic downturn that began during the prior administration. Another example of how tax cuts, do not stimulate the economy and that the cost of extending these cuts - $220-300 billion – is poor fiscal policy.

One more quick fix that would not only help reduce the deficit and also bring an increased level of fairness and rationality to US tax and fiscal policy are the subsidies aid to the oil companies. While posting record profits and increasing her costs to consumers, big oil enjoys $4 billion a year in tax subsidies. However, in this new world of Repubospeak, any attempt to bring an increased level of fairness and equity to tax policy is defined as a tax increase.

If we were to implement these simple fixes the total saved would be between $234 and $334 billion. That total is achieved through saving $29 billion in Medicare art D, $200-300 billion in Bush tax cuts and $4 billion in oil subsidies. These are just three quick fixes that bring fairness and restore some level of responsibility and fairness to federal tax and fiscal policy. I am confident that here are dozens more such items in the federal budget that can result in billions more in savings. But these will never be implemented because it is not about reducing the deficit, it is about starving government and creating a crisis in Social Security to justify gutting this country’s most successful social program.