Do Not Believe The Myths Surrounding The ‘Grand Bargain’

Let’s get serious about our future.

Over the last nine months every politician on both sides was saying we need to do something about the deficit, the budget, to preserve Social Security and Medicare for all.  “This is about our grandkids”.  Some even liked to say that our “children would be inheriting our debt”.  Those are great talking points because they created a message based on fear and propaganda not facts.

The AFL-CIO has been working with many allied organizations to help people understand the facts around some of the issues facing America and Congress in the coming month.

Everyone is talking about taxes! ‘We need to tax the rich.’ ‘We need to extend the middle class tax cuts.’ ‘We need to extend the tax cuts for all, especially to the job creators.’  What is the truth behind these statements?

The truth is America has a budget problem.  We spend more that we take in. This creates deficit.  While many politicians are still trying to lay blame to how we got here, I have already moved on.  We need a balanced approach to solving this budget problem.  We need to make strategic cuts and revenue increases.  That’s right — I am asking for an increase in taxes, that is if you are one of the people who make $250,000 a year or more. If you are, then paying a few extra dollars in taxes is not really going to hurt you, is it?  Making those ends meet every month is a lot easier when you have $20,000 a month coming in.

Ending the ‘Bush Era Tax Rates’ would also reduce our budgetary shortfalls by “1 Trillion dollars over ten years“.

The first way to help fix our deficit and budget problem is to END THE BUSH TAX CUTS!  That is right, we let the “temporary” tax cuts expire.  These tax cuts were supposed to increase job creation. What actually happened was they created a huge hole in our deficit and led to the worst financial depression in 60 years.  I know what you’re saying, ‘those tax cuts are going to hurt small businesses and the job creators’.   You would be wrong.  The truth is that onlyonly 2.5% of small business owners make more than $250,000 per year, and these include 237 of the 400 wealthiest people in the country.”  Ending the ‘Bush Era Tax Rates’ would also reduce our budgetary shortfalls by “1 Trillion dollars over ten years“.  Wasn’t the entire “super committee” created to find one trillion in debt reduction?

The real question is, how do we convince the ‘Norquist’ tax dodgers that in order to save our economy and Social Security/Medicare programs, we have to raise taxes on the top 2%?  This is being referred to as the ‘Grand Bargain’.   Republicans want to make cuts to Social Security and replace Medicare with a voucher in order to preserve the tax rates for those above $250,000.   That is right: the GOP is going to bargain away the benefits promised to 62 million Americans to preserve a tax rate for 6.2 million Americans! This does not make any sense at all.

 According to the Trustees, Social Security can pay 100% of promised benefits until 2033. 

People say that ‘Social Security is going bankrupt’.  This is another myth that many on the right keep using. The fact is “Social Security is not going broke. It will always be able to collect payroll tax revenue to fund benefits. According to the Trustees, Social Security can pay 100% of promised benefits until 2033. Without any changes at all, Social Security can pay three-fourths of promised benefits indefinitely after that.”  If you are still not convinced, there is one simple change to Social Security that will solve the issue forever: just eliminate the cap.

Right now, people who make over $110,000 hit the Social Security cap, and don’t have to make any further contributions.  Eliminating the cap is an idea that was supported by President Obama and proposed by Sen Bernie Sanders (I-VT).

Fact: Increasing the retirement age from 67 to 69 amounts to a 13% cut in benefits.

One more myth that needs to be mentioned is the outright lie that ‘if we increase the eligibility age of Social Security there will be no loss in benefits’. The fact is “Increasing the retirement age from 67 to 69 amounts to a 13% cut in benefits.”

One of the other ‘bargains’ that Congress is bartering with is cuts to Medicare.  Medicare provides millions with affordable healthcare options and benefits for those who have none.  Congressional Republicans are proposing cuts and “adjustments” to “make Medicare last longer.”  This is another myth.  They are using the same model that corporations are using to shift the cost burden to the worker. Making the workers pay more for the same benefit reduces the bottom line.

“Turning Medicare into a voucher … (beneficiaries) will have to pay an average of $6,500 a year more”
-Robert Riech

Many of the right wing media like to say that ‘Medicare (like all government programs in their opinion) is wasteful and inefficient’. The AFL-CIO would beg to differ: “Medicare has lower costs than private insurance and has done a better job of controlling health care cost growth for the last 40 years.”  Even famed author and public policy expert Robert Reich agrees that what the Republicans are trying to do to Medicare is wrong. “Turning Medicare into a voucher whose value doesn’t keep up with expected increases in healthcare costs — thereby shifting the burden onto Medicare beneficiaries, who will have to pay an average of $6,500 a year more for their Medicare insurance.”

Anything that Congress does to the Medicare plan has (or will) have a direct effect on you.  If they increase the premium, that is more you must pay in the program up front. If the increase the co-pays, that is more that you have to pay out of pocket before the insurance kicks in. If they place a cap on benefits, then if you exceed that cap – well, you’re pretty much screwed.

This ‘Grand Bargain’ and ‘Fiscal Cliff’ discussion is a disaster waiting to happen.  The country re-elected President Obama because we believed that the wealthy need to pay a little more to help reduce our deficit.  America rejected the idea that we need to continue to reduce taxes on the ultra-wealthy and corporations. We need our President to hold strong to his statements made during the campaign.  Do not let Congress change Social Security or Medicare in any way, and do not let them walk out without ending the ‘Bush Era Tax Cuts’ to top two per-cent.

Do not be fooled by the myths and propaganda.  The truth will set you free.

 

350 Economist Speak Out: Jobs Not Austerity

Today in a nation wide conference call over 350 economists came together to tell people we need ‘Economy Needs Growth and Jobs, Not Austerity‘.  These 350 economists are business leaders and scholars from across the country.   They want to alert everyone to the dangers of making massive cuts to the federal budget would push us back into a depression.

As even Federal Reserve Chairman Ben Bernanke recognizes, it is long term unemployment, not excessive deficits or debt, that is now inflicting the greatest human toll and economic damage. Polls show that voters agree joblessness and a bad economy are much higher priorities than deficits.

Yet too many in Washington are fixated on cutting public spending to balance the budget, not on how to put people back to work and get our economy going. There is no theory of economics that explains how we can deflate our way to recovery. Businesses are not basing investment decisions on how much Congress cuts the debt in 2023. As Great Britain, Ireland, Spain and Greece have shown, inflicting austerity on a weak economy leads to deeper recession, rising unemployment and increasing misery.

How do we rebuild our economy and create jobs? The answer is simple. We must double down on our reinvestment fundings.  Put people back to work by rebuilding our roads, bridges, and schools.  We can make serious investments for our future.

This is exactly how America pulled out of the ‘Great Depression’.  In 1945, our leaders placed a priority on putting people to work, not cutting spending. So government doubled down with public investments like the GI bill, housing, and highways — and widespread collective bargaining and equal opportunity laws made sure the rewards of growth were widely shared. Today, we need the same scale of public investments that made sure the greatest generation and their children enjoyed growth, opportunity, and shared prosperity.

What we need is a plan not party rhetoric.  We need Congress to pass the American Jobs Act take serious action to create jobs.  Budget cuts will only raise our unemployment stifle any growth and recovery that we have seen in the last four years.

Will GOP Leaders in Congress Really Negotiate? Or are they Aiming for Impasse?


Less than 18 hours after Tuesday’s election results were in, House Speaker John Boehner started drawing lines in the sand.  He said Congressional Republicans would “negotiate” – as long as he got to dictate the terms of the compromise.

Those of us in the labor movement know this dynamic all too well.  We have tried to negotiate contracts with employers who draw lines in the sand.  They won’t increase wages; or they insist that employees pay more for health insurance; or they’re going to end job-security provisions, no matter what it takes.

But it’s not a “negotiation” if one side insists on setting the terms.  And what we’ve been hearing from Congressional Republicans the past week isn’t “negotiation.”

Right now, our country is facing what experts call “the fiscal cliff.”  On December 31st, tax rates are scheduled to rise automatically.  Then a series of automatic spending cuts will be triggered.  And not long after that, the federal government will hit the debt limit.

Economists agree: if these things happen as scheduled, America will fall off the fiscal cliff.  On Thursday, the non-partisan Congressional Budget Office reiterated that, if Congress does not act, the economy will be plunged back into recession; and unemployment rates are expected to soar.

It’s a political crisis like our nation has never seen before.  We are watching the clock tick down on an economic crash.  And the worst part about it is: the coming crash was intentionally designed by Congress

The “fiscal cliff” has its roots in two packages of tax cuts that Congress passed while George W. Bush was President.  At the time Congress passed the tax cuts, everybody knew the country couldn’t afford them.  That’s why they were passed as “temporary” provisions, rather than permanent changes.

The Bush-era tax cuts were originally scheduled to expire in 2010.  Why then? Through 2010, the Social Security system would be running an annual surplus – taking in more money in payroll taxes than it paid out in benefits – and the way Congress set things up, the only place “excess” Social Security revenues can be “invested” is in special US Treasury securities.   At this point, about 20% of our nation’s debt is owed to the Social Security Trust Fund.

When Congress passed the Bush-era tax cuts, it was clear that once 2010 rolled around, the Social Security system would have to stop loaning the federal government money.  Enough Baby Boomers would have retired that the Social Security Trust Fund would need to get its money back from the US Treasury.  And that’s why the tax cuts were scheduled to end two years ago.

Instead, when 2010 rolled around, our nation was mired in one of the worst economic downturns of our history.  Millions of Americans were unemployed; millions of families depended on emergency unemployment benefits.

How did you view the situation, two years ago?  As a crisis?  A time to pull together as a nation?  A time we should be feeding the hungry, as so many of our religions hold?  Senate Republicans saw the economic crisis as a political opportunity.  The Senate was debating a one-year extension of unemployment benefits when Republicans drew a line in the sand.  A minority of Senate members blocked the legislation; and they kept up their filibuster until tax cuts for the wealthy were extended for twice as long as the unemployment benefits.

Is it really a “compromise”, if one side gets almost all the pie?  In the end, when that Senate filibuster was finally over, that legislation cost $900 billion – and the extension of unemployment benefits was only 6% of the total cost.

Again, Congress knew the country couldn’t really afford it – that’s why the tax cuts were only extended for two years.  Just until after the 2012 election, when the Republicans would have an opportunity to take back the Oval Office.  And radically “reform” Social Security.  (Think about that: a Romney/Ryan administration would have “reformed” the single-largest “investor” in the national debt.  Got Social Security?  Aren’t you glad you voted last Tuesday?)

In that December 2010 “compromise” legislation, millions of American families got a financial lifeline; and the wealthy and the corporations got their tax cuts.  But almost all of the cost was put on the country’s credit card… and the result of that was predictable, too.  Five months later, the federal government hit the debt limit.

For decades, hitting the debt limit has been more ceremonial than meaningful.  It has been an opportunity to make speeches, a sort of “speed bump” reminding Congress that spending needs to be balanced by revenue.  For decades, every time the government came close to the debt limit, Congress raised the limit.

But not in the summer of 2011.  Again, Congressional Republicans saw the debt limit as a political opportunity.  Drawing a line in the sand over the debt limit gave them an opportunity to “negotiate”; and as one participant described  those negotiations, Republicans insisted that any deal would have to “protect taxpayer subsidies for big oil companies, tax breaks for corporate jets, and tax breaks for millionaires.”  In other words, Republicans viewed the debt limit as an opportunity to make the Bush-era tax cuts permanent – even though Congress has known from Day One that our country couldn’t afford them.

Any of this starting to feel familiar?  Starting to remind you of when corporate negotiators insist on cutting wages, even though the CEO just got a $2 million “performance bonus”?

When the debt limit dust finally settled, in August 2011, the end result was lose-lose.   The legislation raised the debt limit by $900 billion in the short term (which covered the cost of the December 2010 “compromise” over unemployment benefits).  It cut $1 trillion in federal spending.  And it required Congress to come up with another $1.2 trillion in debt reduction before the end of this year, either new revenues or specified spending cuts; otherwise, that $1.2 trillion would be automatically cut from the government budget.  In Congressional lingo, that’s called “sequestration”.  (Want to know what sequestration looks like?  You can read all the details here.)

Guess where Congressional Republicans drew their next line in the sand?  So far, there has been no “compromise” on that $1.2 trillion in additional debt reduction.

So piece by piece, tax cut by tax cut, Congressional Republicans have actually built this fiscal cliff we’re facing.  

But if they do a ”Thelma and Louise” thing and drive the nation’s economy off the cliff…  Well, maybe the 1% figure they’ll survive just fine.  People living in gated communities, who keep extra money in offshore accounts;  people whose net worth has actually grown since the Bush recession; maybe folks like Karl Rove figure they’ll survive just fine.  But another economic crash would destroy millions upon millions of families who work (or want to work) for a living.

Yes, Congressional Republicans built the fiscal cliff; and now they’re making their stand on it.  Since the election, Republican leaders have drawn line after line: no increased tax rates; protect the wealthy; no deal without “entitlement reform”.  (Hello, Social Security?)

They’re like the employer who comes to the table with obstacle after obstacle – because the company’s owners don’t really want to negotiate.  They’ve already decided to close the factory; they’re just looking for someone else to take the blame.

“Let me put it very clearly,” Senate Minority Leader Mitch McConnell told the Wall Street Journal last week. “I am not willing to raise taxes to turn off the sequester. Period.”

Buckle your seatbelts.  Looks like it’s going to be a bumpy ride.

 

Voters Vote To Overturn Citizens United

Did you get enough of the political ad, flyers, mailers, and radio spots this election? I did (see post), and I do not think I was alone.  Everyone is complaining that money, especially the corporate money, involved in this years election process.   Vermont Senator Bernie Sanders has been leading the charge against the Citizens United ruling.  Sen. Sanders is the sponsor of the Saving American Democracy Amendment.

“Amazingly enough, we withstood the assault. We withstood the hundreds of millions of dollars that came in from these billionaires,” Sanders said after the election. The money spent by billionaires to influence the election was not enough to topple President Obama. Others in Congress survived the financial onslaught too. But he said a constitutional amendment still is needed.” Sen Bernie Sanders

This year voters voiced their agreement with Sen Sanders in elections across the country.  The two biggest amendments were:

  • Montana’s Initiative 166Stand with Montanans, establishes an official Montana policy that corporations are not people with constitutional rights and charges Montana’s elected officials with supporting a constitutional amendment to create a level playing field in campaign spending.
  • Colorado Amendment 65 instructs Colorado’s congressional delegation to propose and support an amendment to the U.S. Constitution that allows congress and the states to limit campaign contributions and spending that allow all citizens, regardless of wealth, to express their views to one another on a level playing field.

Both of these amendments were aimed at limiting campaign contributions and ‘corporate personhood’. While this is good for the people in these states, we need more.  We need to craft legislation to overturn Citizens United ruling.  Sen Sanders fears that Congress will not have the strength to stand up to the corporate money.

“I worry very much what it does on the floor of the House and the Senate. How many people are going to have the guts to stand up to big money when they know that the airwaves in their states are going to be flooded with negative ads if they vote against Wall Street or vote against coal or oil? So I would say that one of the major issues that we’ve got to deal with is Citizens United. I think we need a constitutional amendment to overturn it. I think it would be a wonderful rallying point for folks all over this country.”

I completely agree with Senator Sanders. We need to reverse Citizens United and remove the corporate money in our political system.  We need all of elected representatives to stand up for the ‘real’ people and reject the ‘corporate’ people.

Watch Senator Bernie Sanders as he proposes his Constitutional Amendment to reverse Citizens United. Then take one minute to sign his petition