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.

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.

To Infinity and Beyond

Those are the immortal words of Buzz Lightyear. In reality, we may not be reaching for infinity yet, but something just a little bit closer - that mysterious red planet that has spawned so many science fiction and Armageddon movies. On Saturday, November 26th, the United States launched he $2.5 billion Curiosity Mars Rover, with the mission of searching for ancient habitable environments to learn if Mars was once home to microbial life.

On that same day, only two days after Thanksgiving and one month before Christmas, children living in 17 million US households went to bed hungry. While hunger and poverty are reaching record levels in the US and the Republican controlled Congress looks for new ways to cut social welfare programs in the name of reducing the federal deficit, our government was able to justify spending $2.5 billion to learn if there was ancient life on Mars. We all should be asking, “what about life on this planet?”

If we kept our focus on earthly needs and not on the remote possibility of Martian microbes, what could that $2.5 billion have provided? For starters $2.5 billion dollars could have produced more than 6,00 units of affordable housing, providing a decent place for thousands of American families currently without homes.

There are other possibilities for those dollars as well, the same amount of federal dollars could have been used to hire approximately 37,000 elementary school teachers. Replacing many teachers fired due to budget cuts, thereby reducing class size and providing a higher quality education for thousands of children. Or it could have been used to provide more than 150,000 college scholarships making college attainable to young people whose families cannot afford the increasing costs of a college education. If you are more concerned about safety, these funds could have been used to hire 40,000 police and firefighters, making u for the thousands who have been laid off due to municipal budget cuts.

In his remarks at the John F. Kennedy Space Center on April 15, 2010 President Obama stated “I am 100 percent committed to the mission of NASA and its future. Because broadening our capabilities in space will continue to serve our society in ways that we can scarcely imagine. Because exploration will once more inspire wonder in a new generation -- sparking passions and launching careers. And because, ultimately, if we fail to press forward in the pursuit of discovery, we are ceding our future and we are ceding that essential element of the American character.

Now, just nineteen months alter, in the midst of a severe economic downturn, when millions of children are having their dreams denied or deferred these words seem to run hollow. What do we gain by inspiring wonder in a new generation if they are unable to pursue that wonder through a quality education or if they are too hungry to aspire to anything more than wondering where their next meal will come form or when their Mommy or Daddy will get a job or they will have a permanent place to live. How do we tell them that as a country we believe that finding microbes on a distant planet is more important than helping them to succeed right here on planet Earth?

When we cannot even provide the basic needs for millions of American citizens, and unemployment is approaching record levels, we must make crucial decisions about how our federal tax revenues are spent. Do we focus our attention on improving life here on earth, or do we look out beyond the stars and focus on the possibility of ancient life existing on a distant planet?

The Shocking, Graphic Data That Shows Exactly What Motivates the Occupy Movement

By Les Leopold, AlterNet
Posted on October 23, 2011, Printed on October 24, 2011
http://www.alternet.org/story/152811/the_shocking%2C_graphic_data_that_shows_exactly_what_motivates_the_occupy_movement

What are the Occupy Wall Street protesters angry about? The same things we’re all angry about. The only difference is the protestors turned their anger into public action. Occupy Wall Street lit the embers and the sparks are flying. Whether it turns into a genuine populist prairie fire depends on all of us.  

Now is not the time for wonky policy solutions, as the media meatheads are calling for. Rather, it’s time to air our grievances as loudly as possible, which is precisely what Wall Street and its minions fear the most. Here’s a brief list of why we should be angry and the charts to back it up. 

1. The American Dream is imploding...  

The productivity/wage chart says it all. From 1947 until the mid-1970s real wages and productivity (economic output per worker hour) danced together. Both climbed year after year as did our real standard of living. If you’re old enough, you will remember seeing your parents doing just a bit better each year, year after year.  Then, our nation embarked on a grand economic experiment. Taxes were cut especially on the super-rich. Finance was deregulated and unions were crushed. Lo and behold, the two lines broke apart. Productivity continued to climb, but wages stalled and declined. So where did all that productivity money go? To the rich and to the super-rich, especially to those in finance.

2. Our wealth is gushing to the top 1 percent...

Actually the top tenth of one percent. Because of financial deregulation and tax cuts for the rich, the income gap is soaring. Here’s one of my favorite indicators that we compiled for The Looting of America. In 1970 the top 100 CEOs earned $45 for every $1 earned by the average worker. By 2006, the ratio climbed to an obscene 1,723 to one. (Not a misprint!)

3. Family income is declining while the top earners flourish...

As women entered the workforce, family income made up for some of the wage stagnation. But now even family incomes are in trouble. Meanwhile, the incomes of the richest families continue to rise. 

4. The super-rich are paying lower and lower tax rates...

To add financial insult to injury, the richest of the rich pay less and less each year as a percentage of their monstrous incomes. The top 400 taxpayers during the 1950s faced a 90 percent federal tax rate. By 1995 their effective tax rate – what they really paid after all deductions as a percent of all their income – fell to 30 percent. Now it’s barely 16 percent. 

5. Too much money in the hands of the few combined with financial deregulation crashed our economy...

When the rich become astronomically rich, they gamble with their excess money. And when Wall Street is deregulated, it creates financial casinos for the wealthy.  When those casinos inevitably crash, we pay to cover the losses. The 2008 financial crash caused eight million American workers to lose their jobs in a matter of mont

hs due to no fault of their own. The last time we had so much money in the hands of so few was 1929! 

6.  We’re turning into a billionaire bailout society...

We bailed out the big Wall Street banks and protected the billionaires from ruin. Now we are being asked to make good on the debts they caused, while the super-rich get even richer, some making more than $2 million an HOUR! It would take over 47 years for the average family to make as much as the top 10 hedge fund managers make in one hour. 

7. The super-rich still control politics...

Both political parties are occupied by Wall Street. For nearly an entire generation they have competed with each other to gain campaign contributions in exchange for tax breaks and regulatory loopholes for the richest of the rich. Today’s so-called financial reforms are porous, while the money continues to flow to both parties.
 
8. Unemployment is a catastrophe...

The reckless gambling on Wall Street tore a hole in the economy sending millions to the unemployment lines. Wall Street caused the enormous spike in unemployment and no one else – not the government, not home buyers, not China.

9. Our prospects for the future are growing dim...

It’s bad enough that unemployment is sky-high. But it’s even worse when you can’t find a job for months, even years. Right now the number of unemployed for 26 weeks or more is at record levels. Many of the long-term unemployed will never work again.

10. The big banks are getting even bigger...

Too big to fail is alive and well. Our nation’s biggest banks are growing larger and larger with no end in sight. Despite what politicians say, the taxpayer will bail out the big banks again. And the big banks know it.
Stand up and be counted!
Americans are a patient people. Mass movements do not form very often. Most of us hoped that after the crash, the big banks would be broken up, the casinos would be shut down and the gamblers would be punished. At the very least, we expected that the elite financiers would pay for the damage they created – the jobs destroyed, the neighborhoods wrecked, the services cut. It didn’t happen. Finally something clicked. A small number of kids stood up and got noticed. And now it’s growing. We see an outlet for our frustration, our justifiable anger, our disappointment in leaders who sold out.
We don’t know where it’s all going. But this is the time to stand up and be counted – literally. The currency of a populist revolt is numbers in the street. Let’s show our anger where it will be seen. And let us take heart from the words of Franklin Roosevelt who during his first inaugural address in 1933, led the first occupation of Wall Street: 

Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True, they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money.
Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored conditions. They know only the rules of a generation of self-seekers.
They have no vision, and when there is no vision the people perish.
The money changers have fled their high seats in the temple of our civilization. We may now restore that temple to the ancient truths.
The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.
Happiness lies not in the mere possession of money, it lies in the joy of achievement, in the thrill of creative effort.
The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow-men.
Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be values only by the standards of pride of place and personal profit, and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing.

Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).

© 2011 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/152811/

Elizabeth Warren - Massachusetts Senate Candidate - On Class Warfare

Courtesy of Rumproast.com

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there—good for you! But I want to be clear.

You moved your goods to market on the roads the rest of us paid for.

You hired workers the rest of us paid to educate.

You were safe in your factory because of police forces and fire forces that the rest of us paid for.

You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Class Warfare Index

46.2 million          Number of people living in poverty in the United States

15.1                      Per cent of Americans living in poverty

6.7                        Per cent of Americans living in “deep poverty” less than 50% of the poverty level

0                           Number of times poverty was mentioned by either candidate in the 2008 Presidential Debates.

24                         Per cent of total US wealth held by top 1%

$46,495                Median US income in 2009

7.1%                     Decline in median US income since 1999

9.9                        Per cent of Caucasian Americans living in poverty

25                         Per cent of African Americans living in poverty

50 milion              Number of people in US without health insurance

33                         Per cent of Hispanic Americans without health insurance

11.1                      Per cent of Americans living in poverty in 1973, after the “War on Poverty”

15.2                      Per cent of Americans living in poverty, in 1983, three years into Reaganomics

$22,050                Federal poverty level for a family of four

$44,100                Income needed to provide basic needs for a family of four

15 million             Number of US children living in poverty

21                        Per cent of children living in US in poverty

36                        Per cent of all people living in poverty who are children

64                        Per cent of total national wealth controlled by top 5%

87                        Per cent of national wealth controlled by top 20%

13                        Per cent of national wealth controlled by bottom 80% of population

38                        Per cent of Bush tax cuts that went to top 1%

1                          Percent of Bush tax cuts received by bottom 20% of population

$520,000             Average Bush-era tax cut for top .01% of households

$2.6 trillion          Total increase in federal deficit attributed to first ten years of Bush tax cuts

$5 trillion             Cost of extending Bush tax cuts for next decade

$400 Billion         Total amount spent on interest to finance first ten years of Bush tax cuts

-7.4%                   Decrease in real family income for bottom 20% of families between 1979 and 2009

+72.2%                Increase in real family income enjoyed by the top 5% of families between 1979 and 2009

+116%                 Increase in real family income enjoyed by bottom 20% of families between 1947 and1979

+86%                   Increase in real family income enjoyed by top 5% of families between 1947-1979

1980                    Year Reaganomics and trickle down economics began impacting federal tax codes

236                      Number of Congressional Republicans branding Obama’s efforts to fairly tax the wealthiest Americans as “class warfare”

The No (or not so many) Jobs Jobs Bill

In his speech to the joint session of Congress on September 8, President Obama proposed the American Jobs Act,  designed to be his answer to the stalled economy and high unemployment.  The $447 billion bill relies heavily on tax cuts as a way of stimulating the economy by putting more money in the hands of consumers and encouraging employers to create jobs.  This, in spite of the fact that there is no empirical, historical evidence that tax cuts create jobs.  In reality if you follow the arc of tax cuts starting with Reaganomics and the small government fervor of the 1980’s, through the Bush-error tax cuts, in reality it would appear that tax cuts have a negative impact on the economy.

The costliest cut proposed is a fifty per cent reduction in the payroll tax.  By calling this a payroll tax cut,  the President is obfuscating the fact that in realty it is a Social Security payroll tax cut.  The President is proposing that the 6.2% Social Security payroll tax paid by employers and employees be halved to 3.1% costing an estimated $240 billion.  The idea behind this cut is to put more money into the economy so that small businesses can hire new workers and current workers will have more cash to spend, thereby stimulating the economy.  The average worker will realize a payroll tax reduction of approximately $1,500.  While this is not an insignificant amount to put into someone’s pocket, it will do little to change an individual’s economic circumstances.  First, $1,500 translates to less than $30 per week or $120 per month.  Most people with an extra $120 per month will use it towards offsetting the high gasoline costs, paying down their credit card bills or helping to pay their mortgage or rent.  Not one of these options contributes to creating one single new job.  Instead it will increase the demand for gasoline thereby helping to maintain high gas prices or go directly to the banks and help fund even larger bonuses for executives.

The bigger issue that the President does not address, and which has been entirely ignored by the media, is that this $240 billion cut will further strangle the Social Security trust fund.  This is a Democratic president hammering another nail into the coffin of Social Security.  Even the Republicans have criticized their leading presidential contender for suggesting that Social Security would need to be done away with.  How can the President justify reducing the income of Social Security by $240 billion while it is agreed by all analysts that the trust fund needs to be shored up to provide for the long-term viability of the program and ensuring benefits for today’s workers?  The system requires additional inputs of cash, not less.  In 1955 there were 8.6 workers paying into the system for each retiree receiving benefits, while in 2010 there were less than three.  As the baby boom generation marches toward retirement, this ratio will continue to decrease.  Additionally, as older workers are laid off and are unable to find new jobs, they will file for Social Security earlier creating more of a drain on the system.

According to the President’s proposal a quarter of a trillion dollars will be taken from the system at a time when we should be looking at ways to increase the money going into the Social security trust fund, not reducing it.  While this cut will have little or no impact on job creation, it will move the crisis of Social Security up a number of years resulting in cuts to benefits and raising the retirement age.  While the President seeks to solve one crisis, he is exacerbating another.

The president has also proposed tax credits to companies that hire certain unemployed individuals.  Companies hiring a person who has been unemployed for six months or more can qualify for a $4,000 tax credit and companies hiring an unemployed veteran  can qualify for a $9,600 tax credit.  Just like tax cuts, tax credits do not create jobs.  All these credits will do is determine who gets hired when a  job is available.  The tax credits will flow to companies that would be offering jobs anyway.  These will not necessarily be new jobs.  In order for a company to create a job, there needs to be work .  If the economy remains stagnant, and consumer demand remains low, then regardless of tax credits, new jobs will not be created.  So these tax credits will not result in any net increase in employment.  And the President does not address what happens to those jobs once the tax credit expires.  Is he just creating a vicious cycle of short-term employment? 

By referring to his American Jobs Act as a bi-partisan bill that includes both Republican and Democratic initiatives, the president has proposed a bill designed to win Republican support through its heavy reliance on tax cuts.  These tax cuts make up approximately 59% of the cost of the bill, with only 41% targeting government spending that will actually impact unemployment.  There is a simple fact of life, government spending on big projects, such as those proposed only modestly in this bill – modernizing up to 35,000 schools and infrastructure investments – and not tax cuts put people back to work.  Employed people spend money and pay taxes, and that is what impacts a recession.  The only institution large enough and broad enough to help the country spend its way out of this economic slump is the United States Government.

It does not take Nostradamus to predict the outcome of this legislative process.  The Republican controlled House will support portions of the bill, those that focus on tax cuts, while defeating the spending portions of the bill including saving the jobs of teachers, cops and firefighters, extending unemployment and providing low cost mortgage refinancing.  Furthermore, the Republicans in the House will defeat any attempt by the President to offset the cost of this bill through closing tax loopholes for big business and raising taxes on the wealthiest Americans.  Once again the Republicans will show that they are the shills of the truly wealthy and of corporate America, and once again the Democrats will show that they have no backbone as a party.  The goal of the Republicans is to stop the President from a second term in office, and nothing guarantees that more than a sagging economy.