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Sunday, October 23, 2016

Fix the Debt

Originally posted at The Washington Spectator

Austerity has always been a political choice, not a practical one.

That point was underscored yet again when the Institute for Policy Studies (IPS) released a report on the pensions enjoyed by backers of Fix The Debt, a corporate-funded austerity advocacy group.

The report describes how key players in this group—who are among the wealthiest and most vocal advocates of “entitlement reform”—themselves enjoy so-called “Platinum-Plated Pensions“: hundreds of millions in guaranteed retirement income supported in no small part by federal and state tax breaks as well as explicit government subsidies. IPS’s message was clear:

Austerity is a choice that Fix The Debt wants to have made, but only for the rest of us.

Fix The Debt took to Twitter to respond to the report, sending copies of a rather vacuous press release to anyone talking about the IPS report. This did the group no favors. Instead, the effort inspired more vitriol than it quelled. The most telling moment came when Twitter commentators pointed out that lifting the income cap on Social Security tax—currently, the payroll tax that funds Social Security is levied only on the first $113,700 of income, leaving billions on the table each year—would dramatically expand the revenue base for the program for decades.

@FixTheDebt responded that this measure “would close 70% of gap. Cap or another revenue source should be part of [solution] but can’t be whole [solution].”

Setting aside the veracity of their numbers—the nonpartisan Congressional Research Service rated Sen. Mark Begich’s (D-AK) proposal to eliminate the cap as covering 95 percent of any potential shortfalls through the next century—it’s telling that even Fix The Debt agrees that simply ending Social Security’s quixotic status as one of the few overtly regressive federal taxes would cover the overwhelming majority (if not, as many forecasters estimate, nearly all) of shortfalls.

Instead, they advocate reducing benefits, primarily by raising the retirement age, which would affect 100 percent of the population, rather than extending to a tiny fraction of the population—the wealthy—a tax burden shared by the vast preponderance of workers earning wages that fall far below the cap. Last year’s median wage (half making more, half making less) was $27,519.

Though austerity propaganda is often cast as beholden only to simple arithmetic, a moment of weakness reveals that Fix the Debt’s beliefs are less about math than they are about priorities.

So the question is: whose priorities?

The modern austerity era can in many ways be traced to Ronald Reagan’s 1966 campaign pledge to “clean up” the University of California Berkeley campus. One key tactic in the “clean-up” of radicalization-by-education was to impose the first tuition (“fees”) on the previously fully state-funded university system, thus beginning a decades-long spiral that has culminated in today’s UC graduates entering the world saddled with debt—and tuition prices rise faster than even medical costs, though a public option for higher education is eminently affordable.

This was, of course, the intended effect. Tuition increases were a “disciplinary technique.” Students who worry about their debts—at a time when employability is threatened by participation in protests—are much less likely to retaliate against a system to which they are so heavily in hock.

The lesson then and now is that austerity initiatives, though they are couched in the language of kitchen-table common sense, are more often than not thinly veiled cover for longstanding political goals—scores to settle, ideologies to impose, redistribution of largesse to well-heeled friends.

Now as sequestration begins to take its full toll, the choices being made for us become all the more stark: life-saving food-stamp assistance is being cut for 40 million people, all to save an amount of money less than the Pentagon “misplaces” each week.

So as is always the case in politics, the question is simple: who chooses and who loses?

Austerity is a conscious choice to redistribute wealth from those in need to those with greed. But it is a choice we can choose to unmake. The first step is to stop making the choice again.

Aaron Bornstein is an independent writer living in New York City.

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Copyright 2013 The National Memo
  • Oarboar

    There isn’t a single austerity advocate out there who thinks austerity should be for themselves. No, austerity is always for someone else.

    And they get a free pass for their hypocrisy, too. Feel free to compare and contrast with the treatment some rich guy gets whenever he says the rich aren’t paying enough in taxes. Those guys never suggest exempting themselves, but they get a fair amount of abuse while those who want to shank people like my 84-year-old mother are treated like heroes.

  • Bruce Webb

    Actually this ‘admission’ is just a distraction move by Fix the Debts billionaires. Almost all ‘Just Lift the Cap’ proposals actually exempt almost all the income sources from which the top 1% get their wealth while targeting those in the 85% to 95% of income stratum. Not that progressives should be shedding a tear for folk earning in the mid six digits annually but this kind of reform leaves the actual billionaires laughing up their sleeves. Because it unwittingly reduces the risk that their actual effective rates would ever be changed. Because “you already taxed ‘the rich’ by raising the cap”.

    Well no, that amounts to bait and switch at the cost of the professional class to the benefit of the returns on capital class. Peter Peterson could give a crap about raising the cap, just don’t touch the Carried Interest exemption and he is sitting pretty.

    Bill Gates is the richest man in the world. Yet raising the cap might increase his tax bill by as little as $80,000. Because only on the order of a million a year of his income fell in the category of ‘covered income’ subject to FICA even in theory.

    • stcroixcarp

      ALL income should be subject to social security and medicare contributions, including income from capital gains, hedge fund fees, financial management fees. And those off shore tax shelter accounts need to be taxed too, both here and in the sheltering country.

    • 788eddie

      This is really a non-issue. Social Security is not the problem. Our FICA deductions pay for most of it (except that now there are more recipients being added daily due to the “Boomers.”

      What we really need to do is re-adjust the tax code.

      Top marginal tax rates before Kennedy were over 90%, for an effective tax rate of over 50% (yes, you can check this out). Our top tax rate is now 37% and some of the wealthy feel that they are being bled dry. Capital gains was taxed as income, not at the discounted 15% rate. There was no “carried interest” deduction for the very wealthy. And no special deductions for things like yachts or jet planes.

      Adjusting the tax code for fairness would go a long way toward eliminating the debt.

      • omgamike

        Just take the tax code back to where it was during the Clinton administration. That alone would go a long way to solving our revenue problems. The ultimate solution would be to find a way to vote out every one of the tea baggers so the dems could take back control of the House. And, yes, I am aware of the difficulty of doing this because of all of the gerrymandering. On that, all I can say, is just wait until the next census when redistricting occurs. Revenge will be cold, but sweet.

    • omgamike

      Which is why, when raising the cap. No, that’s the wrong term. The cap should be removed entirely, not just lifted a bit. And all income, from whatever source and from whatever investments, should be counted. No exemptions. No way to avoid paying it. That would fix SS probably through the end of the next century.

  • FT66

    Austerity must exist especially to those who have something. Does it make any sense to tax the poor and let those who have something continue their way of living? It is quite simple. You can’t get milk from a cow which doesn’t even show any sign of having something in it, BUT you can happily get a lot, I mean a lot of milk from a cow which once you touch it, the milk flows like an opened tap.

    • tax payer

      I believe everyone should be taxes equally ( no matter how much they earn ). By taxing the rich more it may make them think ( I should be poor too ), so I can be taxed as low as a poor person. This country is going nuts trying to keep the poor up to par with the people that never get any Benefits because they did something to avoid being a burden to the tax payers. How can you expect for others to share what they have with someone that has nothing to share. They may have two hands, but never put them to work.

      • omgamike

        The thing is, the poor already pay their taxes. Maybe not a lot in income tax, but they still pay every other public tax out there (e.g. sales taxes, property taxes, excise taxes, gasoline taxes, cigarette taxes, etc.)

        • tax payer

          They do, but they get back ( more than ) what they pay in every year in Benefits.

          • 788eddie

            So do a lot of “Red” states!

          • tax payer

            I keep reading about the Color of the States and have never bothered to ask why are they given a color?

          • Allan Richardson

            It goes back several Presidential elections when the media wanted a visual aid to show viewers how the electoral vote totals were distributed as the evening progressed. Since our national colors are red, white and blue, they started out the evening with all the states on the map white, then as each state’s results were gelled, that state was colored in red or blue. Red was chosen arbitrarily for the Republican candidate, and blue for the Democrat (if there was a viable third party, its candidate might turn the state yellow, green, etc. but that only happened in a few years). The color coding became a popular shorthand for the states that usually vote R or D, and “purple” became shorthand for swing states.

          • 788eddie

            Thanks for the explanation, Allan. I knew it was referred to as such back into the eighties, but had no idea why it came to be that way.

  • InsideEye

    If you taxed the wealthy and all corporations , 100%, would that be enough to cover the budget and deficit loans.?????

    • NCSteve

      Hope you didn’t hurt yourself beating that strawman to the ground.

      • InsideEye

        I thought I had the actually numbers at one time and was interested if this was actually true.

        • NCSteve

          Oh, it was a serious question. Sorry. Poe’s law strikes again.

          And the answer is “no.” The hypothetical doesn’t work because the incentive to make a dollar that gets taxed at a top marginal rate of 100% is close to zero (a few will presumably do it out of public spiritedness or ego) and thus GDP falls. The net effect would likely be a reduction in total tax revenues combined with an increased need for expenditures due to increasing unemployment.

          No one questions that extremely high top marginal rates have a negative effect on economic activity. The fight is over how high they have to go before the incentive to make a dollar taxed at the top marginal rate is effectively eliminated. And empirically, the data suggest that the answer is “less than 100% but a hell of a lot higher than they are now.”

          • InsideEye

            I believe back in JFKs era people were being taxed 90% of residual earnings?? . Corporations are sheltering 3 trillion in profits ,not yet to be used for investment…jobs.. What is the amount of fallow money out there that can be taxed, private or corporate, and if it were taxed what would be its affect on current needs and loans. I am saying there is not enough to be taxed of these to make a difference even if we up the marginal? Rate to 90%. Is my terminology correct.

          • NCSteve

            JFK lowered the top marginal rate to 76%, which is more or less where it stayed (not counting a war surtax levy or two–a thing totally inconceivable to the modern American) until Reagan was president.

            There were many more brackets then and many, many, many more ways to keep your taxable income from rising so high as to hit that bracket. Only a tiny handful made so much that they couldn’t shelter all of their income from the top rate. And, indeed, the AMT was originally implemented to rope in a mere 155 very rich households that were able to take advantage of so many shelters that their effective rates were zero.

            The other part of it, however, is that inheritance taxes were high and somewhat harder (though not impossible) to avoid then.

          • InsideEye

            Thanks for update. Tis true.. sheltering earnings (profits, disposable income is a professional past time) …but that is the unfairness that… is perceived…is reality. and causes animosity. with the regular working class…which is most of us….these are all sanctioned through PACs , Congress and Presidents for their own self interests. there are no PACs represent the Working classes…being left with the crums….we could always eat cake.

    • mikem42

      Just let them pay their fair share, on all income, no overseas offshore gimmicks. That would do the job. Companies that make their living in the USA and don’t pay fair taxes are not patriots. They are traitors.

      • InsideEye

        Al of those off shore gimmicks are the result from congress and the Bribing PACs stuffing congress to pass laws that will hind their PAC bribes……all of them signed off on it. All companies should be allowed to re patriot their profits even if it is a token amount and return jobs back here.

        • mikem42

          I agree that congress was bought and paid for on these issues. But, the companies shouldn’t be allowed to repatriate their profits, they should be required to do so, and pay their taxes. And end tax loopholes that actually pay to offshore jobs. Jobs here, jobs now.

    • Commie Dearest

      This is a red herring cooked up by the deficit hawks to fool the weak-minded. Think about it this way: I owe more on my house than I make in a year, even before taxes. This doesn’t mean I am in financial straits. I pay the house off a little at a time, and the bank knows I’m good for it.

      So the US is more than good for its debts (mostly owed to the very wealthy and corporations you speak of and backed by the enormous wealth of the country, which far exceed the debt).

  • Ed

    This cesspool of Libturd thinking is so funny.

    Look at what this (typical) leftist IDIOT, Paul Colby (see above under the Facebook section) had to say:
    “I took drugs and drank a lot of alcohol when I was younger. I spent all
    my money on things I wanted. I didn’t really want to work 40 hours a
    week. Now I am older and don’t have much but there are many people with
    lots of money, why shouldn’t they be made by the government to give it
    to people like me that are hurting while they have it so good?”
    I thought for a moment that this guy was joking, but then I spotted the “Top Commenter” rating and realized that the guy is actually serious and feels totally “entitled”.
    Now I will sit back and start reading the posts from complete assholes who will call me “stupid bigot” instead of calling Paul Colby (or Fern Woodford the COWARD, for that matter !) the “perfect socialist parasite turd”.
    Oh brother.

    • highpckts

      You can’t be serious?? You believe the above poster? You are dumber than snot!

    • mikem42

      The letter you speak of was planted by a fraud. Either being “funny”, or just a plant by the right. If the cap were lifted, it might just save your social security payments when you need them.

  • tax payer

    Who would it help? Not me or the working class, so tell us who? I can answer that in one word. Parasites.

  • itsfun

    Just how much are people suppose to give. We have more food stamps users then the entire population of Spain, low income housing, free medical care, free phones. Somebody is paying for these benefits. Couldn’t be the taxpayers could it? Whats next a new car in every garage?

    • omgamike

      We have more food stamp users because of the right wing trashing the economy and the financial markets, causing millions of foreclosures and bankruptcies. And why do you people always bring up the free phone issue? These are tiny little simple phones that have anywhere from 125 to 250 minutes available a month. They allow poor people who may live in a rural area by themselves, to have a way to access the outside world. Especially in case of an emergency. More often than not, they don’t have a car, so that tiny little phone is their only way of dealing with the outside world. The majority of the poor that you refer to are working poor. People who work hard, but can’t get ahead, who live from tiny little paycheck to tiny little paycheck. That is why we have a social safety net. Just because you are poor does not mean that you should not be able to live with dignity, as humble as that may be.

      • itsfun

        After 5 years of Obama, you are still blaming George Bush. Why do I bring up the free phone, its because I am paying for it. You say it is their only way of dealing with the outside world. What about the low income housing the taxpayers provide. You act llike these people with the free phones are living in the woods in a tent. You don’t have any idea how many of these people have or don’t have a car.I have seen welfare recipents getting into new cars, some of them luxury cars. You have no idea how many of these folks are working. You talk about tiny little paychecks. Get a GED, go to night school get an education and get yourself qualified for a better paying job. Living off taxpayers is not living with dignity.

  • Dominick Vila

    Austerity for an economy that thrives on consumerism is the kiss of death. One thing is to eliminate fraud, waste, and abuse; removing stimuli from our economy is nothing short of suicidal. In fact, the reason we are not farther alone than we are is not because we are spending too much, but because we refused to invest in infrastructure, R&D, new technologies, preventive measures to minimize the effects of climate change, and education.

    • omgamike

      Dominick, the stimulus Obama got in the very beginning should have been two or three times larger than what it was, due to the economy being so very, very bad when the President first took office.

      • CPAinNewYork

        True. the Republicans are doing their best to stymie the recovery. They live in fear of things getting better.

      • Dominick Vila

        You are right, and his proposal to invest in infrastructure should have passed and should have been implemented immediately. Unfortunately, the focus in Congress seems to be on delaying the economic recovery and making sure unemployment remains above normal levels.

  • Montesquieu

    Since our minds cannot anticipate their own advance, we must maintain leeway for learning the unforeseeable lessons of future experiences.

  • Allan Richardson

    It’s not the poor that are stealing opportunity from the middle class, it’s a small and greedy subset of the rich. They have been keeping wages low and unemployment high by outsourcing, then they expect the impoverished middle class to pay more for the consumer goods they make overseas cheaply, but charge monopolistically high prices for. Then they blame the middle class problems on an imaginary “poor” class who do not work or pay taxes (actually, most poor are WORKING poor, and they pay FICA and Medicare taxes, sales taxes on the portion of their small income that they spend, which is almost 100 percent, and other local taxes — renters reimburse their landlords for the property tax on their residences).

    It would not be necessary, as the right wing straw man says, to tax all the rich 100 percent, because if their additional taxes were used to help working poor people, the money they spend would circulate in the economy and create more jobs.

    • Commie Dearest

      Keerect! The answer is to grow the economy by making sure our wealth is working, and one classic way to do that is to tax passive investments so that the wealthy will steer their wealth to active, job creating investment and to take some of the earnings and support spending by the poor.