Sunday, November 28, 2010

Krugman: punishing the populace for the bankers’ sins is ... what?

Paul Krugman points at the financial idiocy going on in Ireland. The bankers borrowed money from European bankers for financial and real estate speculation during the recent speculative bubble, and as they did it they bought the Irish politicians. Then the speculative financial bubble created by the bankers and the politicians burst.

Instead of making the lenders who made idiotic loans in the first place take the financial pain of the losses they thoroughly deserved, the paid politicians bailed the banks out with public money and put the taxpayers on the hook to cover the losses. The pain was to be borne by the public, not by the idiot bankers who created the problem. The bought politicians explained this by saying that it was required "to restore confidence" in the Irish economy.

But since the spending cuts have caused a severe recession, the fabled "confidence" is not turning the economy around for some strange reason. Krugman's last line tells the story quite beautifully.
Ireland is now in its third year of austerity, and confidence just keeps draining away. And you have to wonder what it will take for serious people to realize that punishing the populace for the bankers’ sins is worse than a crime; it’s a mistake.

Bob Herbert on the class war being fought in America

Many of us have been focused on the recent elections, elections whose media coverage has been saturated with descriptions of the antics of the Tea Party candidates, the surprising(at least to the media writers) public decline in President Barack Obama's popularity and the larger picture which is the disaster of the overall economy. As far as the media has been concerned all of that was a wave which seemed to culminate in the victory of the Republican Party as it took control of the House of Representatives.

But Friday Bob Herbert in the New York Times dared to lift the lid on the real set of problems at the core of modern American life.
The class war that no one wants to talk about continues unabated.

Even as millions of out-of-work and otherwise struggling Americans are tightening their belts for the holidays, the nation’s elite are lacing up their dancing shoes and partying like royalty as the millions and billions keep rolling in.

Recessions are for the little people, not for the corporate chiefs and the titans of Wall Street who are at the heart of the American aristocracy. They have waged economic warfare against everybody else and are winning big time.
The November election which has dominated much of America's "serious" media is over and the media is now explaining what happened before it moves on to the next American political marker - the elections in November 2012. Why not? The people in the positions of power have been set for the next two years. What else matters? It's time to listen to their pronouncements. They have won, after all. Here is an example:
A stark example of the potential for real conflict is being played out in New York City, where the multibillionaire mayor, Michael Bloomberg, has selected a glittering example of the American aristocracy to be the city’s schools chancellor. Cathleen Black, chairwoman of Hearst Magazines, has a reputation as a crackerjack corporate executive but absolutely no background in education.

Ms. Black travels in the rarefied environs of the very rich. Her own children went to private boarding schools. She owns a penthouse on Park Avenue and a $4 million home in Southampton. She was able to loan a $47,600 Bulgari bracelet to a museum for an exhibit showing off the baubles of the city’s most successful women.

Ms. Black will be peering across an almost unbridgeable gap between her and the largely poor and working-class parents and students she will be expected to serve. Worse, Mr. Bloomberg, heralding Ms. Black as a “superstar manager,” has made it clear that because of budget shortfalls she will be focused on managing cutbacks to the school system.

So here we have the billionaire and the millionaire telling the poor and the struggling — the little people — that they will just have to make do with less. You can almost feel the bitterness rising.

Extreme inequality is already contributing mightily to political and other forms of polarization in the U.S. And it is a major force undermining the idea that as citizens we should try to face the nation’s problems, economic and otherwise, in a reasonably united fashion. When so many people are tumbling toward the bottom, the tendency is to fight among each other for increasingly scarce resources.

What’s really needed is for working Americans to form alliances and try, in a spirit of good will, to work out equitable solutions to the myriad problems facing so many ordinary individuals and families. Strong leaders are needed to develop such alliances and fight back against the forces that nearly destroyed the economy and have left working Americans in the lurch.

Aristocrats were supposed to be anathema to Americans. Now, while much of the rest of the nation is suffering, they are the only ones who can afford to smile.
And smile they are. The aristocrats see the recent election as the take-down of Barack Obama and the Democrats. Byron York already predicts that the results of this November election means Obama is a one-term President. At best York's view is premature. It has no real basis in fact and amounts to little more than premature crowing by one of the conservative media spokesmen of the American aristocrats. Going back to the Bob Herbert piece:
The ranks of the poor may be swelling and families forced out of their foreclosed homes may be enduring a nightmarish holiday season, but American companies have just experienced their most profitable quarter ever. As The Times reported this week, U.S. firms earned profits at an annual rate of $1.659 trillion in the third quarter — the highest total since the government began keeping track more than six decades ago.

The corporate fat cats are becoming alarmingly rotund. Their profits have surged over the past seven quarters at a pace that is among the fastest ever seen, and they can barely contain their glee. On the same day that The Times ran its article about the third-quarter surge in profits, it ran a piece on the front page that carried the headline: “With a Swagger, Wallets Out, Wall Street Dares to Celebrate.”
November's election is over, and it caused some changes in America's political power structure. But the situation on which the antics of politicians and the bloviations of political reporters rest have not changed. If anything, they are getting worse. America's on-going class war is not finished just because the aristocrats are growing fatter and crowing and because the Democrats and the scary Black Democratic President has taken an electoral black eye. Nor will it go away because the media ignores it.

There is a lull in the battles of America's class war right now. That's all. America's wealthy aristocrats think they have finally defeated FDR and the New Deal. But the fact is that the America's middle class and working class have been too busy trying to keep a job and either avoid or deal with foreclosure to fool with the silly games the aristocrats have been playing. Those problems are not going away. If anything, they are getting worse, and the Wall Street Bonuses (estimated at almost $90 billion this year) and the stock market reports of unprecedented earnings this year are going to show them the source of America's problems.

The class war in America has already begun. It will not disappear just because the media is afraid to write or speak of it. Somehow I don't think that Bush's tax cuts for the very wealthy and the elimination of the inheritance tax are likely to last much longer.

Addendum 11:45 AM

Think America is a Democracy? Here from Frank Rich are the results of this recent election demonstrating how money from the aristocracy controls Congress:
Senator Jim Webb, Democrat of Virginia, complained this month that he “couldn’t even get a vote” for his proposal for a one-time windfall profits tax on Wall Street bonuses. Republicans “obviously weren’t going to vote for it,” he told Real Clear Politics, but Democrats also demurred, “saying that any vote like that was going to screw up fund-raising.”


G.E.’s political action committees gave a total of $1.6 million to politicians in both parties in 2010, and one of its former high-powered lobbyists, Dan Coats, is the newly elected Republican senator from Indiana and a probable member of the Senate Finance Committee.
The Tea Party activists may resent the way Congress is bought by big money, but Senator Jon Kyl has already reneged on his pledge against political earmarks.

Democracy in America has been bought off by the wealthy aristocrats. The voters are not served by the government. Big money and America's wealthy aristocrats are getting the service they have paid for.

Monday, November 22, 2010

Visual Presidential votes for the last 88 years

This is a visual representation of the red/blue map of America for the last 88 years by David Sparks. David Sparks is a PhD. candidate in political science at Duke University.

From David Sparks' blog:
"This animated interpretation accentuates certain phenomena: the breadth and duration of support for Roosevelt, the shift from a Democratic to a Republican South, the move from an ostensibly east-west division to the contemporary coasts-versus-heartland division, and the stability of the latter."

[h/t to David Kurtzl at Talking Points Memo.

Tuesday, November 16, 2010

America's banks are shafting customers and investors again.

The foreclosure crisis is getting heavier. America's banks are foreclosing on homes they cannot prove they own, but they are filing so many foreclosures that the judges (if honest) don't have time to look at them. If they did, almost 97% of the foreclosures are based on fraudulent paperwork.
I had a few things to say about this over the last month or two, but I think people had a hard time believing that fraud and perjury on this scale was actually possible; that people were being thrown out onto the street on the basis of affidavits that were forgeries and perjury through and through. Forged, back-dated documents purporting to be contemporaneous records of the transfer of mortgage notes from one party to another. Complete circumvention of the existing legal system for recording real estate ownership - and its associated taxes and fees - and its illegal replacement with an unreliable, understaffed private system. The employees of the corporation running that system passing themselves off as vice-presidents of dozens of banks and servicers so they could foreclose on mortgages. Banks even claiming both that they were and were not the actual owner of the mortage in the very same filings. Failures to convey the actual mortgages to the real estate trusts that backed the securities that were sold to investors. Attempts to convey mortages to those trusts only at the moment of foreclosure. Servicers with a vested interest in the mortages they service going into foreclosure so they can collect fees, and associated failures to collect payments. People given mortgage modifications by the bank, then foreclosed on for failing to pay the original amounts. People without mortgages being foreclosed on. Multiple banks claiming to own the same mortgage foreclosing on the same property.

And at the sharp end of all this, an automated process of perjury and fraud. Notarized affidavits claiming that the signer has personal knowledge of the facts of the case described that were signed by someone else with no knowledge of the facts and not notarized at all. And a court system overloaded with foreclosures unable to and uninterested in examining the facts of the cases in front of it. Families thrown out on the street in the tens or hundreds of thousands on the basis of minute-long hearings in courts where judges refused to consider questions of fraud.

It's hard to comprehend just how pervasive and serious this problem is. Trillions of dollars have already been lost in the bursting of the real estate bubble, but trillions of dollars more of the remaining mortgage-backed securities may be entirely worthless. Not to mention the massive destruction of households and neighborhoods wrought by a mindless, mechanical legal process.

If you don't have time to read the whole thing at RS, I'm excerpting the key parts after the fold. But I recommend taking the time to read it.[ from Rolling Stone.]

There is a great deal more to read all worth it. But if you want to know why the mega banks are working so hard to commit this massive fraud on the courts and on the homeowners, look that this final statement from the Obsidian Wings article. I have bold-faced the key paragraphs below:
It's undeniable that many of the people facing foreclosure bear some responsibility for the crisis. Some borrowed beyond their means. Some even borrowed knowing they would never be able to pay off their debt, either hoping to flip their houses right away or taking on mortgages with low initial teaser rates without bothering to think of the future. The culture of take-for-yourself-now, let-someone-else-pay-later wasn't completely restricted to Wall Street. It penetrated all the way down to the individual consumer, who in some cases was a knowing accomplice in the bubble mess.

But many of these homeowners are just ordinary Joes who had no idea what they were getting into. Some were pushed into dangerous loans when they qualified for safe ones. Others were told not to worry about future jumps in interest rates because they could just refinance down the road, or discovered that the value of their homes had been overinflated by brokers looking to pad their commissions. And that's not even accounting for the fact that most of this credit wouldn't have been available in the first place without the Ponzi-like bubble scheme cooked up by Wall Street, about which the average home­owner knew nothing — hell, even the average U.S. senator didn't know about it.

At worst, these ordinary homeowners were stupid or uninformed — while the banks that lent them the money are guilty of committing a baldfaced crime on a grand scale. These banks robbed investors and conned homeowners, blew themselves up chasing the fraud, then begged the taxpayers to bail them out. And bail them out we did: We ponied up billions to help Wells Fargo buy Wachovia, paid Bank of America to buy Merrill Lynch, and watched as the Fed opened up special facilities to buy up the assets in defective mortgage trusts at inflated prices. And after all that effort by the state to buy back these phony assets so the thieves could all stay in business and keep their bonuses, what did the banks do? They put their foot on the foreclosure gas pedal and stepped up the effort to kick people out of their homes as fast as possible, before the world caught on to how these loans were made in the first place.

Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them. According to the rules of the mortgage trusts, a lender like Bank of America, which controls all the Countrywide loans, is required by law to buy back from investors every faulty loan the crooks at Countrywide ever issued. Think about what that would do to Bank of America's bottom line the next time you wonder why they're trying so hard to rush these loans into someone else's hands.

Addendum 6:22 PM CST
Here is another recent article on the mortgage disaster. It lays out some of the problems and the likely fall out.
Employees or contractors of several major banks have testified in court cases that they signed, and in some cases backdated, thousands of certifying documents for home seizures. Financial firms that service a total $6.4 trillion in mortgages are involved, according to the new report. Big banks including Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc.'s GMAC Mortgage have suspended foreclosures at some point because of flawed documents.

Federal and state regulators, including the Federal Reserve and attorneys general in all 50 states, are investigating whether mortgage companies cut corners on their own procedures when they moved to foreclose on people's homes.

"Clear and uncontested property rights are the foundation of the housing market," the report says. "If these rights fall into question, that foundation could collapse."
Here are some ramifications:
  • Borrowers may not be able to ascertain if they're sending their mortgage payments to the right party.
  • Judges may block all foreclosures.
  • Prospective buyers and sellers could be in left in limbo.
  • For major banks, if they discovered that they still owned millions of bad mortgage loans they assumed had been sold, the losses could reach billions.
It's that last one that really frightens the banks.

In theory the banks sold those mortgages on to investors who should take the losses. But if there is no proof that the mortgages were transferred to the investors, then those mortgages still belong to the banks when they go into default. The banks will have to make restitution to the investors because they investors have no court standing to foreclose from the (alleged) defaulters. Only the legal owner can do that.

If you notice in the earlier article (above) that may apply to as many as 97% of the mortgages that are (allegedly) in default. This is not a simple problem that the homeowners failed to pay and should be foreclosed on. This is major. It is a question of who takes the loss when the mortgage goes bad. If the investors legally own the homes, they are out the loss. But if the bank never transferred ownership then it is the banks who are on the hook for the massive and now inevitable losses in those homes.

If you think that the banks took a big hit to their reserves two years ago when the economy went bad, this would very probably dwarf those losses. Think the feds will step in and bail them out a second time in two years??

This is exactly the scenario that Alan Greenspan thought that the self-interest and professionalism of the banks would prevent when he allowed to housing bubble to grow uncontrolled. Greenspan was responsible for regulating the bank's behavior and he did not do so, depending on the invisible hand of the market.

Greenspan is a libertarian. He had been informed that everyone from the original mortgage brokers through the original lending banks to the firms that bundled the mortgages into mortgage-backed securities and sold them on to investors was cutting corners and holding down administrative costs by not doing the due diligence and the required legal document transfers. But the market factors were supposed to handle that. Guess what? The market failed - again!

I'd hate to own stock in a major bank right now.

Monday, November 15, 2010

The beginnings of an explanation of the tea party as innately American right wing

Rick Perlstein gave the keynote speech at a Berkley conference in October. His subject was the tea party in American political history. Here it is, and it is superb.

I suggest you take notes as you listen.

Addendum 2:41 PM CST
Also, go read Paul Rosenberg's excellent essay on Oligarchy and party breakdown. Rick Perlstein' talk, above, puts it into an interesting perspective.

What is happening in America politically today may not be an echo or reprise of things that have happened in the past. We may be headed into all new political territory, territory which has previously been explored by nations like Argentina.

Sunday, November 14, 2010

Republicans are to give retiree money to the weallthy and cut benefits

There is an argument that because the Social Security trust fund is invested in government bonds, it is nothing more than a slush fund to be used by Congress to spend more without taxing to pay for it - like tax cuts to the rich and unneeded wars -- or even needed wars which also have to be paid for. but Social Security retirement has never added to the deficit and by law it cannot borrow money to pay benefits. Only revenue from the FICA tax can be used to pay benefits.

Why has the Social Security trust fund been invested in treasury bonds? Because they are the safest investment vehicle in the world. If you are going to build up retirement savings for Social Security when the baby boomers retire, where else do you place the money? Wall Street? Bernie Madoff?

Congress has been spending like drunken sailors for thirty years after the Reagan Commission raised the FICA tax to more than needed to pay the benefits each year. The excess money went into the trust fund and was loaned to the federal government. The feds then spent that money, just as they would money the Chinese loaned them. Neither Social Security nor the Chinese have any control over how the Congress spends its money. Congress has been a drunk living on credit card debt. That's the problem. But Social Security has NEVER run a deficit any year since it was established. And it never will because by law if a deficit looms the benefits will be lowered to the amount that anticipated revenue can cover. The retirees have not contributed to the deficit. Why should they have to sacrifice their benefits to bail out Congress for its bad spending and giving government money away to the rich?

As long as the government has a unified budget where income to Social Security could be used to mask the deficit and as long as the fund is growing, the Congress really can use that money. They borrowed money instead of raising taxes. The trust fund masks the true deficit.

The problem now is that the boomers are going to start drawing down on that fund instead of building it up, and Congress is going to have to at long last pay for their profligate tax cuts, unnecessary wars and unneeded military projects (F-22 and F-35 as examples. Neither will ever see combat because the Cold War ended two decades ago.

The fear that is driving the conservatives is that they are going to have to 1. raise taxes to pay for the idiocies they have been spending on or 2. they are going to have to let the federal government default on its debt (which would be a disaster for the economy.) The third choice is 3. a slow subtle default on the money that the Social Security trust fund has promised to pay to retirees. This has the great benefit that it delays the pain without forcing Congress to raise taxes. Again, Congress will be spending today and stealing the money from the retirees. But the real pain is delayed a decade or more, so no current politician will be effectively blamed for their graft.

This third option is the one that the Pete Peterson Foundation and the cat food commission are choosing. Notice that the catfood commission mixes default on benefits promised to social security retirees with further tax cuts to the wealthy and calls that "sharing the pain."

So let me summarize briefly. The Social Security situation is not complicated.

The reason why treasury bonds are so secure is the US has the largest economy in the world, and if the federal government defaults on those treasury bonds the whole US economy will go into the tank faster that Wall Street's derivatives nearly put it there.

The Republicans have three choices 1. Raise taxes to pay social security back, 2. Default to China and the other investors with disastrous economic results for America, or 3. Run a scam that allows them to selectively default to the baby boomer retirees.

We are watching choice 3 being worked out and the US media is so stupid they are buying it. With the House in Republican hands and the Senate under control of Republicans and blue dog Democrats, the retirees will have their retirement benefits slashed to pay for the wars and tax cuts the Congress was unwilling to raise taxes for.

The so-called reformers want to destroy the public education system.

Is the problem with public education really that older teachers are incompetent but are protected by tenure? Should elementary school and grammar school teachers not be paid extra to get masters' degrees? Or are both arguments simply efforts to lower the cost of public education by practicing age discrimination, firing older teachers and hiring younger, cheaper teacher?

Michael in Chicago has a really good blog post on these and other questions about public education that the media does not seem to want to bother the public with.

I strongly recommend reading his blog and the intelligent comments. Then ask yourself why this information is not part of the so-called dialog on the education system?

Thursday, November 11, 2010

The right's reason to attack Social Security

The Social Security Retirement has never added to the federal deficit and never will. It is funded by it's own tax which is paid by working people only. These are the people whose skills and knowledge actually create value in products and services. These are not the wealthy investors who clip coupons and collect dividends based on someone else' work.

Social Security is fully funded by those of us who will depend on it. It does not take taxes from the wealthy. That's why there is a maximum income on which the FICA tax applies, and the FICA tax does not apply to investment income.

Social Security retirement is fully funded by the FICA tax. It has never paid out in more in any year than it took in. If it ever reaches the point where the revenue from FICA plus the reserve in the trust fund already paid by FICA cannot cover the benefits for the coming year, by law dating back to 1935 the benefits for that year will be reduced to the level which the revenu can pay for. In the worst possible case that will not happen for half a century and is unlikely then. The very worst and most unreasonable possible projection states that benefits will be paid at 75% of the promised value.

Social Security retirement does not and cannot contribute to the deficit! So this whole damned Simpson/Bowles (and Pete Peterson) proposal is a rich man's plan to soak the workers to pay for their tax cuts and unnecessary unfunded wars. This is nothing more than theft by the oligarchs!

So the question arises - why is everyone spreading lies and fear about Social Security? It really started seriously in 1983 under Ronald Reagan - an avowed enemy of both Social Security and of Medicare. Here is a description of the problem by William Greider entitled "The Looting of Social Security.
To understand the mechanics of this attempted swindle, you have to roll back twenty-five years, to the time the game of bait and switch began, under Ronald Reagan. The Gipper's great legislative victory in 1981--enacting massive tax cuts for corporations and upper-income ranks--launched the era of swollen federal budget deficits. But their economic impact was offset by the huge tax increase that Congress imposed on working people in 1983: the payroll tax rate supporting Social Security--the weekly FICA deduction--was raised substantially, supposedly to create a nest egg for when the baby boom generation reached retirement age. A blue-ribbon commission chaired by Alan Greenspan worked out the terms, then both parties signed on. Since there was no partisan fight, the press portrayed the massive tax increase as a noncontroversial "good government" reform.

Ever since, working Americans have paid higher taxes on their labor wages--12.4 percent, split between employees and employers. As a result, the Social Security system has accumulated a vast surplus--now around $2.5 trillion and growing. This is the money pot the establishment wants to grab, claiming the government can no longer afford to keep the promise it made to workers twenty-five years ago.

Actually, the government has already spent their money. Every year the Treasury has borrowed the surplus revenue collected by Social Security and spent the money on other purposes--whatever presidents and Congress decide, including more tax cuts for monied interests. The Social Security surplus thus makes the federal deficits seem smaller than they are--around $200 billion a year smaller. Each time the government dipped into the Social Security trust fund this way, it issued a legal obligation to pay back the money with interest whenever Social Security needed it to pay benefits.

That moment of reckoning is approaching. Uncle Sam owes these trillions to Social Security retirees and has to pay it back or look like just another deadbeat. That risk is the only "crisis" facing Social Security. It is the real reason powerful interests are so anxious to cut benefits. Social Security is not broke--not even close. It can sustain its obligations for roughly forty years, according to the Congressional Budget Office, even if nothing is changed. Even reports by the system's conservative trustees say it has no problem until 2041 (that report is signed by former Treasury Secretary Henry Paulson, the guy who bailed out the bankers). During the coming decade, however, the system will need to start drawing on its reserve surpluses to pay for benefits as boomers retire in greater numbers.

But if the government cuts the benefits first, it can push off repayment far into the future, and possibly forever. Otherwise, government has to borrow the money by selling government bonds or extend the Social Security tax to cover incomes above the current $107,000 ceiling.
In other words, the Social Security tax (FICA) was increased to build up trust funds that would allow payment of full promised benefits to the baby boomers when they retired. That was promised thirty years ago when Reagan and the conservative movement needed the votes of the new young conservatives and so they did not want to threaten their promised retirement. But that was then. This is now.

The money has built up as promised, and in line with the philosophy of the Social Security System the surplus was invested in the most secure investment in the world - U.S.Treasury bonds. Think about this last two years. Would you have wanted your retirement fund invested in Wall Street? Social Security was not invested there and we should all be thankful because you cannot trust a Wall Street bank.

Investing the surplus money was an investment decision, and it was based on the history of the federal bonds. Investors who lend money to borrowers do not have the power to determine what that money is used for.

Bill Clinton in the 1990's using a few tweaks and tricks, eliminated the annual government deficit and turned it into a surplus. George Bush hated that. He claimed the annual surplus was the taxpayers money, so he rammed through the 2001 tax cuts for the wealthy. But much of that surplus was the overtaxing of workers to fund the Social Security system when the baby boomers retired. The money was paid in by the workers, but the conservatives gave the tax cuts to the wealthy investors.

The taxes were on the workers who created value and the revenue from those taxes was given to the parasitic wealthy investors. The promptly invested the money in China and Indonesia and such because that is where they got greater returns easier. As a result the workers were funding the very jobs overseas that the American wealthy investors were closing down here in America.

But the tax cuts for the wealthy parasites was only the beginning. Bush lied to Americans about 9/11 and invaded Iraq for no rational reason. The cost of that war and the improperly run war in Afghanistan have run a $ trillion a year since then. The money to pay all that profligate and immoral spending came from overseas bond investors (China especially) and from the Social Security trust fund.) Still OK financially as long as the Social Security trust fund was receiving surplus money.

Only now the baby boomers are starting to retire in greater numbers and the surpluses that the Social Security trust fund are about peaked out. The Social Security program is going to start drawing down the trust funds. More important, the federal government is going to have to start paying back the money it has borrowed to finance the improvident conservatives.

The Republican Party needs to change it's mascot from an elephant to a grasshopper. They are the ones who went all summer and refused to save for the winter.

So to keep the sterling safety rating for U.S. treasury bonds the federal government will have to start paying back those they borrowed from. China, other foreign countries, and (gak) the Social Security trust fund. The government will have to raise taxes to pay for the money it has already wasted on tax cuts to the wealthy and idiotic unwinnable discretionary wars.

Only the government can lower social security benefits instead of paying back the trust fund.

Since the middle class is taxed out, raising taxes on the middle class directly is a non-starter. So the taxes to pay the federal debts are going to have to come from the wealthy parasites of the investor class. But to the extent the conservatives can loot social security and leave the future retirees in penury, that is taxes the Congress will not have to levy on their wealthy supporters and lobbyists.

That's what this Simpson/Bowles catfood commission leak is all about. It's an indirect way of looting Social Security and taxing the working class to support the wealthy parasites who seem to own Congress. The parasites, of course, desperately need the money to fund their next extravagant mansions as they compete with each other in conspicuous consumption.

Alan Simpson, the Republicans and the Catfood Commission - a theft in process

The deficit commission has looked at the anticipated revenues and expenditures of the federal government and what they see is far from good. In fact Alan Simpson and Chester Bowles are convinced that America as facing total disaster unless we make hard decisions now to prevent it from happening. America is just going to have to get serious and cut Social Security benefits and lower the taxes on the wealthy if it is going to survive.

Yep. That's what the very serious people Alan Simpson and Chester Bowles are saying. And no, it doesn't make sense. What they really mean is that they want to rob the middle class and hand the loot to America's wealthiest families and corporations.

First consider the so-called problem that the wealthy commission members see threatening America. The high taxes on the wealthy and the runaway deficit caused by payment of social security benefits is going to bankrupt America and choke off economic growth.

Only, Paul Krugman points out that America does not have high taxes on the wealthy There is no indication that the current tax level, or even a higher one, has any negative effect on the growth of the economy. The problem with the economy is a lack of American consumer demand, not a shortage of wealth for the wealthy to invest overseas. Let's not forget that Bill Clinton raised taxes on the wealthy in the early 90's which led to a decade of booming economy. Meanwhile, Bush's misbegotten tax cuts for the super wealthy led to seven years of stagnant economy followed by a collapse that rivals the Great Depression.

But that ignores the fact that the problem with the deficit is NOT Social Security Benefits. Take a look that the chart Kevin Drum provided. The runaway federal expenses all involve health care! Which is why the Obama administration set reforming health care that as its first priority after stabilizing the crashing economy. THE PROBLEM IS HEALTH CARE EXPENSES, NOT SOCIAL SECURITY!!

And how is the government going to deal with the health care expense problem? By cutting Social Security benefits for working people (even though they are over funded well into the future), by lowering taxes on the wealthy and by (ask the Republicans about this) repealing something they call "Obamacare!"

Somehow there is this fiction that the proposal Simpson/Bowles released in the dark of night while the President was out of the country is a serious solution to a massive problem. This is not a serious proposal.

Americans have seen this same movie from these conservatives before. It starts out with "Be Afraid! Be Very Afraid!!" Remember Bush selling the Iraq War disaster by saying "we don't want the smoking gun to be a mushroom cloud." Then he started a disastrous war based on that lie.

This is another right-wing lie designed to get everyone stampeded towards the door where they are going to pick all our pockets and give the valuables to the wealthy like the Koch brothers.

Mike Lux offers this list of the catfood commission recommendations.

  1. Raises the retirement age for Social Security and Medicare to 69.

  2. Cuts Social Security benefits.

  3. Ends the mortgage tax deduction.

  4. Ends the tax deduction for workers' health benefits.

  5. Freezes salaries for federal workers for 3 years.

  6. Establishes co-pays for veterans at VA health services.

  7. Raises fees to visit the national parks and the Smithsonian.

  8. Merges the Small Business Administration into an agency (Commerce) that has always prioritized helping bigger businesses, and cuts their budget.

  9. Eliminates the Office of Safe and Drug Free Schools.
Notice that this is entirely a list of ways to soak the middle class and make their lives more difficult. Notice also that it conspicuously avoids dealing with the real problem the federal government faces fiscally, that is, how to deal with runaway health care costs.

Addendum II
Surprise, surprise. The fix was in at the Catfood Commission even before it first met. According to The Washington Post many top staffers of the commission were paid by outside sources known to be working for the destruction of Social Security.
about one in four commission staffers is paid by outside entities, many of which have strong ideological points of view about how to tackle the deficit.

For example, the salaries of two senior staffers, Marc Goldwein and Ed Lorenzen, are paid by private groups that have previously advocated cuts to entitlement programs. Lorenzen is paid by the Peter G. Peterson Foundation, while Goldwein is paid by the Committee for a Responsible Federal Budget, which is also partly funded by the Peterson group.


Kennelly and other liberal-leaning critics say they are particularly troubled by the influence of Peterson, a billionaire and former investment banker who began a $6 million campaign this week urging lawmakers to cut the deficit. Peterson, co-founder of the Blackstone Group investment fund, paid for a series of town hall meetings this year that included participation by deficit commission members. He also funds the Fiscal Times, a digital news organization that focuses on federal debt issues.
The Peterson Group has had a long term mission directed at eliminating the Social Security System.