"Everything is on the Table" at the Catfood Commission
by Bruce Webb
I am not going to harp on the sexism or ageism in Simpson’s ‘310 million tits’ comment generally, if you happen to have just gotten back on the Inter-Spatial Shuttle from Alpha Centauri this evening and don’t catch the reference a Google search on that turns up 125,000 hits, and I daresay the first 25,000 of them relevant. I want to examine what it, and some other developments inside and outside the Obama Deficit Commission reveal about a new openness in class warfare.
What Simpson’s comments revealed more broadly was a profound contempt for the lower 98%, those who might end up reliant in whole or even in part on Social Security. Because ‘310 million’ takes in everybody, in Simpson’s world anyone who ever did, is, or will ever rely on Social Security is just a Randite ‘parasite’ or at best ‘dependent farm animal’ and you can bet it is a long time since Simpson read Timothy 1:18: “For the scripture saith, Thou shalt not muzzle the ox that treadeth out the corn. And, The labourer is worthy of his reward.” and clearly he glossed over the even more famous admonition “Honor thy Father and they Mother”. For Simpson workers are suckling pigs and seniors are ‘Greedy Geezers’.
Naturally the Simpson remarks sparked large and heated discussions in the blogosphere including my old, old stomping grounds at dKos including one by commenter bink Time for Obama to Shut Down the SS Commission which sparked a long and ongoing comment thread with some vigorous participation by me. In the course of that conversation some people pushed back in defending Obama by noting that it wasn’t formally just a Social Security Commission, instead it was focused on deficit reduction generally and was formally known as the Fiscal Responsibility and Reform Commission, and that moreover both current commissioners and people around Peter G Peterson, who clearly was the inspiration for applying the BRAC Commission model to deficit reduction, were on record supporting defense cuts and tax increases, meaning that nobody was really in the tank, and that everything was on the table. But how does the Commission seem to be defining ‘defense cuts’ and ‘tax increases’ and how does that relate to Simpson’s open contempt for the ‘lesser people’ sucking away at those ‘310 million tits’. Well some discussion under the fold.
First as to defense cuts. Given the requirement for a 14-4 minimum vote for any recommendation to come out of the Commission major cuts in defense acquisition were never likely to make the cut, the six Republican Congressional members should have been enough to prevent anymore than tinkering on that front. But seemingly to make sure Obama named Republican David Cote, CEO of major defense contractor Honeywell, and he, understanding that nothing could be seen to be a total sacred cow, came up with an ingenious idea to have defense cuts while avoiding cancellation of current and future weapons program cuts: you just stick it to the troops. I’ll let TPM take it up from here: Source: Debt Commission Fights Over Freezing Military Pay, Slashing Benefits
A source familiar with the proceedings of the working group on discretionary spending tells TPM that some commissioners, including one military contractor, would prefer to save money by freezing military pay and scaling back benefits, rather than by eliminating waste in defense contracting.
The source said that different members of the commission come down on different sides of the issue. The discussion group is led by Sen. Tom Coburn (R-OK), whose primary aim is trimming fat on the contractor side, but, according to the source, David Cote, the Honeywell CEO who was appointed to the panel by President Obama, is pushing to find savings elsewhere.
“Coburn raised concerns about all of the cost overruns and redundant weapons system,” the source told TPM. “Cote made excuses for it all.”
According to the source, Cote and other members, including the commission’s co-chair Alan Simpson, are focusing instead on “freezing military pay, making military people pay for their health care.”
So Simpson’s ‘310 million’ was not just a misquote, it not only includes all those working civilians whose retirement will be based on Social Security, it also includes all those military people relying on military retirement. And since retirement pay is formulaically based on final military pay, the Commission can save $100s of billion off the back end, to say nothing of requiring service persons and retirees to kick in more for their health care. And all without taking a penny from the bottom line of Honeywell or Raytheon. But plenty of ‘shared sacrifice’ for the lower 98%.
Now as to tax cuts, also alleged to be on the table. Do you think Commission sponsor Peterson is generously offering to have the exemption for ‘carried interest’ for Hedge fund billionaires to be on the table? I don’t think so, his cofounder at Blackstone suggested that any attempt to address that would be the equivalent of Hitler invading Poland. Schwarzman: A ‘Fat Cat’ Speaks Back and I think it is safe to think it is still speaking for his old partner (and obviously still huge investor) Peterson. And Peterson has been on record for a few decades for eliminating the corporate income tax and doesn’t seem to have changed his stripes. In an op-ed last month in the WSJ (where else) Tax Aversion Syndrome and Our Deficit Future: We’ve run out of painless options. Higher taxes and reduced entitlement benefits for the well-off are the only solutions. he spells that out. (And note the clever word play-the ‘higher taxes’ on the left side of the conjunction don’t actually apply to the ‘higher off’ on the right side, only the benefit reduction)
Some have tax aversion syndrome—they have never met a tax increase they didn’t do everything in their power to block. While I believe that spending cuts must play a lead role in any solution to our long-term structural deficits, the sheer magnitude of the imbalances requires revenue increases.
Ideally, the country should raise as much government revenue as possible from a progressive consumption tax. Such a tax can be designed so that it won’t overly burden lower-income families but will raise significant revenues and increase our savings rate.
However, given political realities, it is not likely that we could enact a progressive consumption tax that would raise sufficient revenues to meet our needs. Therefore, I would initiate such a tax in conjunction with a simplified income tax (that would have far fewer corporate and individual credits and deductions)—thereby allowing for lower individual and corporate income tax rates.
Meaning that for Peterson ‘shared sacrifice’ means retaining current reduced rates on capital gains, means testing the middle class for Social Security, slapping on a broad ‘progressive’ consumption tax on everyone. And you can bet ‘progressive’ doesn’t mean a huge luxury tax on yachts.
So the translation of “Everything is on the Table” seems to be: across the board benefit cuts to Social Security, additional means testing on the middle class, cutting military pay and shifting more of the cost of medical care to soldiers and retirees, and ‘progressive’ consumption tax. Meanwhile I guess the top 2% and even more the top 0.001% just keep producing along supporting us 310 million sucking parasites. (0.001% of the population is roughly 3100 individuals and maybe 1000 households and should handily include all those with 9 digit (multi-multi millionaire) and 10 digit (billionaire) net worth and 310 million – 0.001% still equals 310 million, Simpson was not indicting everyone, just you me and everyone we know).
We can couple this with troubling statements out of the Obama Administration touting the success of TARP, the stimulus bill, and HAMP even though TARP hasn’t led to a loosening in credit to small business, the stimulus is turning around profits while not actaully reducing unemployment, and HAMP only seems to have allowed some extra months of mortgage payment extraction from homeowners who are now in large numbers re-entering default. But it is all good for the banks and the bonuses of the top 2%.
Somebody is playing a dangerous game here, surely they can’t be so far in the bubble that they want to add active unrest among the left to the ongoing tea party anger emanating from the right. If the Obama Administration allows the Catfood Commission to define ‘shared sacrifice’ in he way this post suggests they are preparing to, that nice smooth road to re-election in 2012 may shape up to be a lot rockier than they intended. Even Reagan didn’t run explicitly on a platform of “Screw the Middle Class” and nobody back then dared openly come out and admit that in practice ‘Trickle Down’ meant ‘Golden Shower’. Why the Democratic Party is attempting a merger with the Plutocratic Party is beyond me.
Yeah, it is beyond me too, but I do not think you are being paranoid. Gibbs comment a couple of weeks ago about the “professional left” or dirty f***ing hippies tells you everything you need to know about where Obama’s head is at. I keep getting solicitations from the Dems that I throw out and everyone is talking about an “enthusiam gap”. Well duh. The catfood commission is just one more example of Obama being a more eloquent Dumbya. I am almost to the point of hoping that the GOP does retake Congress and I am ready to support financially anyone who can credibly take on Obama in the primaries come 2012.
By tax increases the catfood commission means… i can find the source if someone smarter than me doesn’t find it first… means eliminating the deduction for medical benefits and the deduction for mortgage interest.
Well don’t be surprised to find a VAT in that mix.
A straight out reduction in deductions for medical benefits and mortgage interests hits hard at at least the lower rungs of the top 5%, the Commission is not going to get hugs and kisses from the elites with that. On the other hand a properly constructed VAT can sock it right to the working and middle classes while giving the top folk a break
“Why the Democratic Party is attempting a merger with the Plutocratic Party is beyond me.”
Because that’s where the money is?
no, but it tells you how they are thinking.
these guys are far above the lower rungs of the top 5%.
If we cannot cut military spending, then no problem will get fixed. Obama is a dolt that cannot lead, and assigns commissions to make important decisions he should make. The Democrats have proved they are no better than their Republican predecessors. Governmnet is a giant joke right now.
FDR was a wealthy man, so was JFK, and LBJ married into money. And frankly the money your typical Democratic politico ends up collecting in the end is chump change compared to the people he is blowing for campaign contributions, which mostly are not ending up directly in his pockets anyway.
Bill Clinton is fabulously rich by my standards, but odds are his daughter and son-in-law will end up earning as much or more in careers outside those of their parents, all four of whom were elected officials.
Now there is a sense that you might be right, which is the lesson of the Great Gatsby, He chased the life of Daisy and Tom without in the end ever being accepted, you can’t discount the attraction of Kissing the Ring of the Great and Powerful.
But the money was always there and it didn’t effect earlier generations of Dems in quite the same way, the question is what changed since 1982.
Jacobins United For a Better America!!!
The televisionization of politics is a fair starting point for figuring out why Democrats are in bed with moneyed interests these days. It takes a lot of money to blow your opponent off the screens these days. Free TV has to deal with “equal time” but buying add time doesn’t.
we don’t have to afford the 2% increase. we need to afford a one tenth percent increase. the next one tenth percent installment won’t be due until about 2026. The full 2% won’t be due until about 2070. By which time I think we will be able to afford it.
Liked your Krugman post on Zero Hedge. But keep your hands off our SS!
But have you really noticed how ridiculous this all is? Everyone wants the Fed to become some sort of all purpose SIV. So here’s my version. The Fed agrees to pay FICA, (employer and employee halves) to the treasury who in turn credits the SS fund. Employers and employees no longer pay. Everyone’s after tax income goes up 6.2% and corps get a profitability boost to spend on new hires. It should be inflationary due to demand rather than cost push, so we actually do get inflation instead of stagflation. Since 90% of the economists out there seem to think inflation makes the world go ’round, they should be happy. Not listening to them blather about that all the time would make me happy. Best of all old decrepit people can retire and maybe even stay retired.
So when in Dreamland, Dream like the Dreamers.
Also, I don’t think means testing SS at a high enough level will cause a reactionary kill response. Only if someone lets it, and we are getting the attempt without means testing anyway.
One more thought on means testing. It shouldn’t just be based on net worth. There are the so called “double dippers”. Like ranking military who retire at 40, cops, and school teachers can retire at 52 etc…they have pensions paying a significant percentage of peak career pay. Many get new jobs because the pension is still a bit light. But SS is designed to ramp up the benefit quickly as you pay into it then taper off to a cap. It’s so low wage earners do end up with a little something. But it ends up adding up to a nice little lump on top of the other pension.
Conversely, those of us trying to generate some living income from savings aren’t doing too well in a ZIRP world. Especially if you think any of the markets will just rob you blind if you go for something besides a money market right now.
“Home investors” and LLs should be shot, not incented.
the issue about means testing is not that it will lead to efforts to kill SS. means testing kills SS outright.
Social Security is an insurance plan in which the people who expect the benefits pay the premium.
means testing would turn it into welfare as we knew it. and even if the taxpayers could be disuaded from turning welfare into workfare (as in workhouses), i guarantee you won’t like those quarterly visits to the government proctologist so they can search you for hidden assets.
even those so called double dippers paid their premium. they paid for their benefits. if they are genuinely high income, their “return on investment” will not be so high that it’s worth gaming the system. and they will, of course pay ordinary taxes on their benefits if their income is high enough.
the only place “double dipping” makes any sense is the situation in which someone, otherwise well off, gets a job paying SS taxes for a few years in order to just qualify for benefits, then attempts to collect benefits at the high rate of return on investment that low lifetime earners get.
the purpose of SS is to protect you from the sort of market disappointments you are describing. it is not going to make you just as rich as if your investments all paid off. it is going to allow you to eat better than cat food when your investments go the way of most of the best laid plans of mice and men.
“Somebody is playing a dangerous game here…”
The only thing that makes any sense to me is that your .001% at the top feel they have the technology, funds and smarts to keep the 310 million frogs pacified no matter how hot the water is getting.
The sad thing, is maybe they’re right.
“Nice smooth road to re-election in 2012”?
You’re assuming that the legacy parties are responsive to the electorate. They aren’t. Obama’s going to end up as a VP at Golden Sacks, or as the next Oprah with his own teebee show. He’s a made man. And all the other Ds can get jobs on K Street or the other side of the revolving door. The elite thinks of electoral office as a sort of unpaid internship on the way to the real money.
There haven’t been many (any?) Presidents who willingly gave up a second shot at the Golden Ring.
If it was all about money Meg Whitman and Rick Scott wouldn’t have been dropping 8 and 9 digits just for a shot at the Governors mansion, nor would you have had people like Kohl, Dayton, Heinz and Rockefeller running for office.
I don’t believe Clinton (either one) or Obama went into this looking to cash out, that just comes with the territory, they do it to be called Mr. President the rest of their lives. And ex-Presidents don’t get day jobs like a Senator might and certainly not a job where they report to someone else. The whole concept is faintly ridiculous.
OK, I guess I wasn’t idealogikal enough to realize that. But then again I don’t think of screwing SS as an affront to FDR. It’s all about ME ME ME.
But the mechanics of means testing is a troublesome issue. If we let existing tax rates do it we should at least earmark that revenue as returning to the SSTF to keep the book keeping fair.