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The ‘Grand Bargain’ Would Hurt Middle Class Working Families

I am happy the elections are over, because now we can get back to work on resolving the issues that have dominated the campaigns over the last nine months.  Everyone agrees that we need to do something about the National Debt.  The debt issue and the looming ‘sequestration’ budget cuts are now all people seem to be talking about.

The two issues are one in the same.  Sequestration is the result of the super committee failing to reach agreement on budget cuts to balance the budget and reduce the debt.  Their failure triggers an automatic budget cut of one trillion dollars.

Right now there are two very different trains of thought on how to resolve this looming destruction. President Obama wants to raise taxes on the ultra-wealthy and continue to reduce the burdon on students and middle class families. (Watch the full video here. )

I’m committed to solving our fiscal challenges,” he said. “But I refuse to accept any approach that isn’t balanced. I am not going to ask students and seniors and middle-class families to pay down the entire deficit while people like me, making over $250,000, aren’t asked to pay a dime more in taxes. I’m not going to do that.”

Contrary, the Speaker of the House John Boehner, wants to extend the ‘Bush Era Tax Cuts’ and make deep cuts to the Federal Budget. Boehner says he would be willing to compromise to stop the sequestration cuts but held firm on his stance not to raise taxes.

Flicker Creative Commons via DonkeyHotey

Labor organizations are getting ahead of the lame duck session calling for action not cuts to entitlement programs.

“The American Federation of Government Employees strongly opposes any legislative action that reduces Social Security or Medicare benefits, reduces federal jobs or lowers the living standards of the middle-class men and women who comprise the federal workforce.”

Congresses so-called “Grand Bargain” would be an unmitigated disaster for all middle-class and working class Americans, including the men and women who make up the federal workforce. Their plan:

  • Cuts Social Security benefits by raising the retirement age, changing the benefit formula, and reducing cost of living adjustments (COLAs) by using an inferior measure of inflation.
  • Voucherizes Medicare, adjusting it by the Consumer Price Index (CPI) rather than the rise in health care costs. This saves the government money solely by shifting health care costs to seniors who, inevitably, will not be able to afford the care they need.
  • Adds three years to the two-year federal employee pay freeze, for a total of five years with no raise. In the meantime, the price of everything else goes up: health care premiums, rent, child care, gas and electricity.
  • Voucherizes the Federal Employees Health Benefits Program (FEHBP), adjusting it by the CPI rather than the rate of premium increases, so that they pay far more for already unaffordable health care.
  • Cuts 10% of jobs in every federal agency. Such reductions would force VA nursing assistants to take care of 30% more veterans with 30% less support and would throw 200,000 more Americans out of work.
  • Slashes retirement benefits by charging workers more and reducing the amount they receive. Benefits would be cut by between a third and a half, leading to old age poverty for people who worked and faithfully contributed to a fully-funded system for 30 years.
These two very different ideas have two very different outcomes for middle class families.  

“No cuts to Social Security, Medicare or federal employee jobs or compensation are justified now or in the future, and no amount of deception, misrepresentation or hyperbole regarding the budget can change that fact.”
— AFGE National President J. David Cox Sr.

More Tax Cuts? Or Keep Social Security?


Something to keep in mind while you are watching tomorrow night’s debate between Joe Biden and Paul Ryan:

Back in 2001, then-President George Bush pushed through a package of “temporary” tax cuts that mostly benefited the wealthy.  Joe Biden voted against the tax cuts.  Paul Ryan voted in favor of them.

At the time, conservative pundits said the temporary tax cuts would generate 1.6 million new jobs by 2011 – and that would generate enough federal revenue to pay back the entire federal debt.  (You can read the 2001 Heritage Foundation report here.)

Instead, the tax cuts contributed to record-setting federal deficits.

In 2003, President Bush pushed through a second package of “temporary” tax cuts, which again mostly benefited the wealthy.  And again, Joe Biden voted “nay”; and Paul Ryan voted in favor.

A year later, the new jobs hadn’t materialized.  “Supply-side economics” hadn’t cut the federal debt.

But that didn’t stop the tax-cutters.  Instead, they pushed to have the “temporary” tax cuts made permanent.  Here’s the Associated Press report from February 13, 2004:

Federal Reserve Chairman Alan Greenspan said Thursday that Congress should make President Bush’s tax cuts permanent and cover the $1 trillion price by trimming future benefits in Social Security and other entitlement programs.

Social Security?!!?

During the Bush presidency, Social Security was “running a surplus.”  More money was coming in through payroll taxes than was being paid out in retirement benefits.  And the federal government borrowed every single penny of that surplus.

Today, the Social Security Trust Fund is the single largest creditor of the federal government.  Over $2.7 trillion of the federal debt is owed to the Social Security Trust Fund.  And that’s about the same amount as the 10-year cost of extending the Bush tax cuts for the wealthiest 5%.

That’s what you should keep in mind during tomorrow night’s debate: this election is coming down to a choice between tax cuts for the rich and financial security for the rest of us.

Social Security has stopped running a surplus, now that the Baby Boomers are retiring. Will the federal government honor its IOUs to working families?  Or will the $2.7 trillion in federal debt get washed off the books by the proposed Romney-Ryan “reform” of Social Security?

Union members know what it’s like to see pension benefits vanish.  It’s become all-too-common for corporations to use bankruptcy court to get “relief” from their pension obligations; American Airlines is just one example.  More than 4,000 corporate pension programs are now in the trusteeship of the federal government.  (You can download the list — representing more than 2 million American families! —  here.)

Most of us have been paying into the Social Security system for decades.  We don’t want to see our benefits disappear through a Romney-Ryan “reform” of the Social Security system.  (One more reason why we don’t want to elect a President who will “manage” the federal government as if it were a corporation.)

Tax cuts for the wealthy didn’t create jobs in 2001.

More tax cuts didn’t create jobs in 2003.

Tax cuts in 2013 won’t create jobs, either – but they may cost us our Social Security benefits.

Please remember that, as you watch Joe Biden and Paul Ryan in the Vice Presidential debate tomorrow night at 9:00 pm.


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