US Retirement Benefits to be Cut? Posted on May 10, 2010 by Yves Smith Tom Ferguson, professor of political science professor at the University of Massachusetts, Boston, is in fine form here. Enjoy! Post navigation ← Is the Eurozone Shock and Awe Enough? (Updated) An Analysis of the Thursday Meltdown → Subscribe to Post Comments 86 comments ndk May 10, 2010 at 2:01 am Well, what else are you going to cut? Our heavily mercenary forces blowing up countries in the Middle East? The ridiculously high costs of healthcare services, which we did absolutely nothing to resolve and many things to exacerbate in the so-called reform(thanks for mentioning it, Greenstein)? The portion of GDP allocated to the dreams of Pete Peterson? I do think our concerns about our fiscal position are quite justified at this point in time. I don’t listen to Peterson, but I do listen to Kotlikoff and David Walker. There really is trouble, but the trouble is not inherent to social programs. It’s looting of the state by taxpayers and competing corporate interests who have far too much control of the government. And yes, the social programs are one of those looting vectors, which presents a very serious problem in how you fight against it. ndk May 10, 2010 at 2:03 am This, of course, should’ve been looting of the taxpayers by the state and competing corporate interests. I miss the edit button. aet May 10, 2010 at 8:27 am Heaven forbid that they should cut interest ratespayable to Bankers upon existing debt! Or mandate a reduction of principal to be repaid! better to alter contracts of employment, rather than contracts about debt, eh? Oh wait…they are kind of the same: just that workers have much less political clout,…. Renato May 10, 2010 at 10:31 am Why pay for it yourself, when you could just drive the slaves harder? Calvin Jones and the 13th Apostle May 10, 2010 at 11:47 pm Except Walker works for Pete Peterson. ndk May 11, 2010 at 2:26 am Well, then. I guess I do listen to Pete Peterson after all. :D aet May 11, 2010 at 3:48 am Easy to tell that your Petersan’s man when you call SS “looting”. Michael May 10, 2010 at 2:06 am Something that never made sense to me….If you’ve reached the point of being a billionaire, why continue to fight so vigorously for lower taxes? I truly don’t understand how that extra few million dollars is going to benefit you. Doesn’t there come a time when…I don’t know…you decide you have enough and just spend the remainder of your life enjoying it? campbeln May 10, 2010 at 2:18 am What if you derive your enjoyment from controlling other people’s lives? If your enjoyment is the power and the exercise of that power, then the money is merely the door prize. In short, I think they ARE pursuing their pleasures… too bad it’s at everyone else’s expense (monetarily and otherwise). Cn aet May 10, 2010 at 8:28 am They like to see people suffer. Renato May 10, 2010 at 10:19 am Not suffer. Squish them underfoot like insignificant insects. aet May 10, 2010 at 10:57 am The suffering of insects is truly unsung. Not that singing about such would help. Greg May 10, 2010 at 10:58 am What? Michael? Are you a SOCIALIST!! QuentinCompson May 10, 2010 at 11:24 am Part of the initiation into the ranks of the filthy rich is demonstrating your commitment by hating on taxes loudly and often, and, in some countries, by killing a poor widow or orphan in the town square before the lowered eyes of the media. The big corp gangs want to make sure you have some skin in the game. – Renato May 10, 2010 at 11:36 am No that’s the initiation for becoming a Soldato in the organization. Michaael May 11, 2010 at 12:09 pm The problem is ideological not practical. A quick trip through the three phases of morality is necessary to understand. Moral is when you know what it is and do it. Immoral is when you know what it is and don’t do it. AMORAL is when you don’t take it into consideration in the first place. There can be no better operant definition of amoral than someone for whom dollars are the only value considered before decision/acting. These conservative/republican people are for amorality, the only value they consider is dollars – human or social values are never allowed to be a constraint on dollars. The corporate conservative/republican agenda operates on dollars only and can never consider human or social values or tolerate these values being imposed on them. Only government can consider human or social values and impose limitations on wealth concentration which is damaging to large parts of the population. Therefore the republican/conservative agenda which hates any human or social values which impinge on dollars in any way, hates and is at war with government and attempts to limit or deny any consideration of human or social values. The darling of the amoral republican/conservative agenda is Grover Norquist who has declared that ” Government should be shrunk in size until it can be drowned in a bathtub – HE WAS NOT KIDDING AND THIS IS NO JOKE!!! The amoral need to choke off any limitations placed on greed by social morality whose only expression is through democratic government. A stalemated government is the optimum because this hobbles and eliminates the ability of government to intercede and force the corporate/conservatives/republican side to limit wealth accumulation which is destructive of the general population. One could have the most pristine morals in the world but if that person was working in a system which was only responsive to dollars they would have to be amoral or be expunged from the political system. The USA is a republic which form of government was created by Plato to be the antithesis of democracy. Plato devised this system because Socrates was forced to suicide by Greek Democrats because he refused to refute a public statement he made which was:” Not all positions in government should be elected because they require special skills which cannot be easily acquired by general election.” The USA, like the republic envisioned by Plato, is run by wealthy elites for the benefit of wealthy elites – it is not now nor has it ever been a democracy. Democracy is run by the majority of ordinary voters; a republic is run by wealthy elites. IT IS IMPOSSIBLE TO HAVE A DEMOCRATIC REPUBLIC! You cannot have a government run by both wealthy elites and the majority of ordinary voters at the same time! It is either one or the other. If government is stalemated and cannot function – who wins? The wealthy or the poor??? The wealthy of course. Political power that is highly divided cannot be focused to make changes and into this power vacuum flows the wealthy elites who in the case of the USA have purchased government and corrupted elected officials to stalemate the political process! This is in addition to having a system set up to frustrate democratic control – so called checks and balances. How is it necessary to have “checks and balances” on a truly democratic system??? If you “check and balance” democracy you destroy democracy or any possibility of democratic government which can inject real morality into social structures. A very scary proposition for amoral corporate and wealthy interests! Mickey Marzick in Akron, Ohio May 11, 2010 at 4:54 pm Michael, Michael And the philosopher-king [Virtue and Wisdom]? Go back and re-read The REPUBLIC because you overlooked what Plato had to say about wealth and oligarchy. It was only a philospher-king who, after years of learning, training, and praxis as a guardian, would assume the mantle of governing. “Knowledge transformed into wisdom” was much more important… than money-grubbing. Raymond Robitaille May 10, 2010 at 2:10 am Social Security and Medicare, and even Universal Health Care, are certainly affordable for the US. What is not affordable is a class of parasites that are sucking everything up. Implement the Tobin Tax (for frequency trading), bring back the Eisenhower era income tax rates (90%)and apply this to all income, including capital gains. Cut the Defense budget. This way, there will be more than enough to pay for these basic social programs. Go get the money where it is. mmckinl May 10, 2010 at 2:40 am Indeed … Andrew Bissell May 10, 2010 at 2:49 am Implement the Tobin Tax (for frequency trading), bring back the Eisenhower era income tax rates (90%)and apply this to all income, including capital gains … This way, there will be more than enough to pay for these basic social programs. Go get the money where it is. Raid the seedcorn, basically. Rex May 10, 2010 at 4:28 am “Raid the seedcorn, basically.” Excuse me, I have to go puke now. (The “seedcorn” you seem to be defending is what is currently eating up the actual seedcorn.) Andrew Bissell May 10, 2010 at 7:30 am The proposal cited above would basically seek to liquidate any and all successful investments and divert them to the U.S. Treasury to be used for consumption spending. If you’re looking for a faster way to tank the stock market and end this whole stimulated, quantitatively eased, Keynesio-fried “recovery” in its tracks, I can think of no better way than to impose a 90% tax on capital gains. (A Tobin tax or other limits on high frequency trading may make sense, but would probably also have a pretty harsh market impact in the short term.) Even FDR and his “brain trust” knew better than to raid the country’s capital stock that way. I mean really, once 90% of your investment earnings are being taken and handed out, why even try to invest wisely at all anymore? Why not just be on the receiving end of the 90% that’s being taken from others (assuming there are any capital gains at all to be taxed in this brave new world)? Get the barfing done while there’s still food to be had. aet May 10, 2010 at 8:29 am 90%? Why not 50%? Or 30%? aet May 10, 2010 at 8:30 am A buck is a buck: tax all gains as income. Greg May 10, 2010 at 11:12 am Look Andrew I’m not sure I agree with any kind of tax that is being levied for “punitive” reasons, thats not the reason to tax, but your defense of the status quo is pathetic. I dont give a shit if the stock market tanks. Our focus should not be on the stock market levels. The stock market levels are simply a “price”. Why should we be defending stock market prices any more than we defend home prices or labor prices? It is exactly this short term “asset price defending” that has ruined our real economy the last 30 plus yrs. It helps no one but those who hold the assets, which happen to be about 5% of the population. Dont fool yourself into thinking that because you have a mutual fund you OWN any stock. No, you are simply being cut in on a small portion of the stock gains. 5% of the people own over 90% of the real financial assets in this country. The other 95% need to stop caring about the “price” of their investments for them. Let them trade it amongst themselves and see how much appreciation theyll get. Having to deal with a few miserly potential buyers is going to be far less profitable than dealing with many more duped buyers who think their portfolio manager is going to look out for them. ArmchairRevolutionary May 10, 2010 at 11:26 am If you look at our highest real growth years as an economy, those occurred where the marginal tax rate was very high. It is not about disincenting investment, it is about assuring effective resource allocation. High concentration of wealth is not effective at resource allocation. Anonymous Jones May 10, 2010 at 12:16 pm Andrew — I understand your seedcorn theory. It might actually be correct. At the same time, I think a lot of smart people disagree with your theory, and despite much vigorous searching, I cannot actually find *facts* that support your theory. I don’t think the seedcorn theory is supported by the US under Eisenhower era rates (though I do agree those rates were nominal and not close to real) or the current high rates in Scandinavian countries. Specifically about your post above, no one suggested a 90% tax on all “capital gains.” Perhaps they suggested a 90% tax on “income” (which could, yes, include capital gains) above a threshold, let’s say, $10 million per year. So your argument was a straw man, not completely outside of the realm of apposite analogies, but a straw man nonetheless. The idea is not to discourage smart investing (though I actually cannot conceive of how you would rather have 100% of nothing rather than 10% of something, but I’m sure you have a brilliant justification for that analysis) but instead to impede extreme concentrations of wealth. Finally, the idea that the 90% taken from any particular taxpayer is distributed *entirely* to other taxpayers is a little extreme. Actually, a good chunk of government is devoted to the protection of private property, and if you don’t think the wealthy are disproportionate beneficiaries of these government expenditures for the protection of private property (of which our military is exhibit A), I gotta be honest, you’re not paying close enough attention. zapster May 11, 2010 at 1:29 am The reality was, when the 90% tax rate was in effect, we had more investment than we do now. We also created the middle class, built most of this country’s infrastructure and ended up world leader in pretty much everything. *With* a top tax rate of 90% for much of that time. So, fearmongering about investment going away is just that. Fact is, the biggest drop in business investment we’ve seen in the last 20 years was when the Bush tax cuts went into effect. Why invest in business when you don’t need the business deductions anymore and gambling is so much more fun anyway? Francois T May 11, 2010 at 6:43 am As Buffett pointed out time and again: the real enemy of the investor is inflation, not taxes. But, don’t try to tell that to those who, having made it to the top, suddenly start to believe they did it by themselves. You know, the kind of people who believe they’re self-made while worshiping their Creator. :-D VernS May 10, 2010 at 1:08 pm The 90% tax bracket only cut in at what today would be above $2 million per year. I find it interesting that the repeal of the 90% tax bracket was concurrent (early 70’s) with the beginning of median real personal income going flat even though we have had great growth in GDP and productivity. At the same time wealth discrepancy and national debt has exploded. Coincidence? According to “How Progressive is the U.S. Federal Tax System? A Historical and International Perspective” by Piketty and Saez (Journal of Economic Perspectives—Volume 21, Number 1—Winter 2007) the real tax rate for the top 99.99 percentile in 1960 was 71.4%. According to a WSJ article average earnings for the “Fortunate 400” in 2007 was $345 million with a real tax rate of 16.6%. This is equivalent to the total federal tax rate (including payroll) on the discretionary income of a married status “single” burger-flipper. abelenkpe May 10, 2010 at 6:58 pm I love you. Please run for office. Fred May 10, 2010 at 2:10 am Well, I would be willing to do something along the lines of no harm, no foul. Say, I drop all claims to Social Security and the govmn’t returns the money I have paid in. We finish even up. jbmoore May 10, 2010 at 2:19 am Is it me, or does it seem hypocritical that billionaires who have no need for Social Security and Medicare are trying to destroy it for those of us who will need it when we age? Why are the wealthy perceived as people who know what is best for the other 99% of humanity? Wealth and wisdom are two entirely different attributes and they are generally mutually incompatible traits with rare exceptions. aet May 10, 2010 at 8:31 am Political sociuety does not exist for the benfit of only a tiny minority of the population, nor can such a form long survive. Why is the US gov trying to re-intrduce Royal privileges to the wealthy? sglover May 10, 2010 at 2:28 am Why do I get the feeling that the “liberal” Obama is going to be the telegenic front man for Social Security’s final gutting? And if we’re **really** serious about cutting federal spending, how come the costs of empire are never really on the table? Andrew Bissell May 10, 2010 at 2:51 am And if we’re **really** serious about cutting federal spending, how come the costs of empire are never really on the table? Ron Paul has always put them there, but of course he is just a silly crank. Greg May 10, 2010 at 11:17 am You’re right about Ron Paul, And if he’d actually figure out that a gold standard is a stupid way to run a monetary system, I’d vote ENTHUSIASTICALLY for him. (There may be more to him if I actually looked closer but from what I know his gold buggishness is the only big flaw I’ve seen) Willy May 10, 2010 at 4:10 pm While I’m not sure of the precise details of R. Paul’s concept of a Gold Standard, have you seen the results of depegging from Gold since the 1970’s? Debt across all segments (Government, Private, Corporate) has exploded to the point where the U.S. is worse off than it was in 1930. Globally the story is the same. This could not have been accomplished without a casting off of asset backed currencies. We are now witnessing the culmination of the inherent lack of prudence afforded by 40 years of non backed currency. On a dollar chart the inflection point is crystal clear. aet May 11, 2010 at 3:52 am Worse off than it was in 1930? WTF are you just stupid? abelenkpe May 10, 2010 at 7:01 pm Yes a silly bigoted conspiracy loving crank. I’m sure he’d gut defense spending right after doing away with all social programs. He’s such a sweetie alsays looking out for the worker. Hugh May 10, 2010 at 2:42 am Yes, Virginia, it is all about looting. The health insurance bill that Obama signed has $400 billion in Medicare cuts (over 10 years). It was the biggest cost cutting element in the whole plan and got almost no attention. Obama’s deficit cutting commission is stacked with those who want to make major reductions in Social Security. That it is the Democrats that are spearheading this shows that really is no significan difference between the parties. Sure, we get pseudo-fights between them, but either way it is always the corporate agenda that wins. Thomasina Jefferson May 10, 2010 at 7:25 am I noticed that too. The federal budget will save – I think – 150 billion in 2010. Now since premiums are not reduced – and there is effectively no cost control in the health care reform – the insured will end up paying much more than they do today. If you now reduce social security, including medicare, medicaid, you completly crush the folks. I think that’s what they are after- they will cut at any costs (to citizens). JTFaraday May 10, 2010 at 10:05 am “The health insurance bill that Obama signed has $400 billion in Medicare cuts (over 10 years). It was the biggest cost cutting element in the whole plan and got almost no attention.” Well, I think it did get some attention, pace “keep the government’s hands off my medicare.” run75441 May 10, 2010 at 7:26 pm Hugh: Since when does healthcare reform impact seniors not on the Advantage Plan? It does cut government subsidies to insurance companies for Advantage Programs, the insurance industry company cash cows. It does push more money into primary care rather than specialties. It does launch pilot programs to cut spending. Hugh May 11, 2010 at 1:22 am I keep an Obama scandals list on the web: http://obamascandalslist.blogspot.com/ It has 151 entries at the moment. My discussion of healthcare is item 26. It is rather lengthy but I attach the following excerpt: On the government side, Obama fixed his sights on Medicare and Medicaid. As he said on June 24, 2009, “Medicare and Medicaid are the single biggest drivers of the federal deficit and the federal debt — by a huge margin.” The first of these assertions is disputable. Tax cuts for the wealthy, unnecessary wars, an oversized military, and bailouts for bankers certainly have all made major contributions to budget deficits. With regard to the national debt, Obama is simply wrong. The government owes a lot of money to Social Security for the surpluses which it borrowed and spent. And in his September 9, 2009 speech to Congress, “Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.” This too is not quite accurate. Obama projects savings of $948 billion over 10 years. $309 billion would come directly from Medicare and Medicaid. $326 billion comes from raising taxes, principally on those making more than $250,000 a year. The remaining $313 billion comes from cuts in Medicare payments, expected savings to hospitals from “covering” the uninsured, and the Big Pharma giveback mentioned above. The various links are embedded. I attach the following for the last paragraph: http://www.whitehouse.gov/MedicareFactSheetFinal/ Basically, you have $309 billion cut from both Medicare and Medicaid plus another $110 billion in other expected “savings” from Medicare. Minus the contribution from Medicaid, it is this that gives the rounded number of $400 billion. Now you may think these cuts are just elimination of waste and inefficiencies, that certainly has been the Administration line, but if you do believe this I have a wonderful bridge to sell you. Independent Accountant May 10, 2010 at 3:05 am Im my other than humble opinion, Ferguson is an ignoramus. Or worse. One way or the other, American’s retirement benefits will be cut. Bring on the death panels! Kill the old white women. It’s their fault. They live too long. Giving Ferguson every benefit of the doubt, he is another innumerate “humanities type” who wouldn’t know what a balance sheet was, much less how to read one! Reminiscient of the line in the old song, “the revolution will not be televised”, “the disaster will not be avoided”. Chinese and Japanese will not pay for America’s profligacy forever. The answer: inflation. aet May 10, 2010 at 8:35 am WHo gives a damn about inflation when you are bleeding to death: the services, and not the costs are the important things here. Single-payer universal health care, paid by general taxation. And cut military spending to do it. But it seems that that would be contrary to some politico-theological beliefs held by many in the US media… Evelyn Sinclair May 10, 2010 at 8:36 pm Aging white woman here. I know job one for me is “stay healthy!” I have savings, which I’m trying to live on as long as I can, but no income anymore, and no health insurance. So, you’re saying, here’s the way this Game Show works: I hope my $ holds up because I’m going to need it because the benefits (Social Security I paid into) will be cut – – – but wait! What’s behind the curtain? My savings are going to be eaten up by inflation! What’s behind the door? Risk the $ in the stock market, trying to chase some kind of yield? Riiiiiight. I wonder if I’m going to be able to afford to live to 70. bob May 10, 2010 at 3:48 am Paul Ryan needs to be beaten over the head with his own words, and owners. Career donations- far and way the biggest is FIRE, the next biggest health. http://www.opensecrets.org/politicians/industries.php?cycle=Career&cid=N00004357&type=I Credit Suisse, at the height of the madness, was his #1 contributor during the 2006 election cycle(2004-2006). Credit Suisse and Blue Cross Blue Shield were his largest contributors in the 2008 election cycle. How can he possibly come out and lecture on fiscal responsibility and cost control? Jerry May 10, 2010 at 3:31 pm I am from Wisconsin…..Paul Ryan is running for President or Vice President…..so he’ll do anything….you must know that the paper listed his big insurance contributions, just so you know where he’s coming from…..hopefully those in his district will vote him out but don’t count on it…I live in a different district… Paul Tioxon May 10, 2010 at 8:06 am Raiding the seed corn? Did you ever run a farm, a feudal manor or a plantation? Really, I thought we were exposing the general equilibrium economists and now the physiocrats weigh in? The restructuring that needs to take place is clear now that the seedcorn crowd has completely decoupled from the operational economy of production, distribution and consumption. Money can be replaced by software, but a factory is forever. The wealth producing engine does not pay taxes, but the cost of doing business in the form of salaries is carrying the burden of taxation. The wellspring of profits needs to be regularly taxed, in proportion to it role as the sole source of wealth in the economy. Since labor’s paycheck is seen only as an input, not the output of the enterprise of business, how can it ever hope to match the unlimited growth of profits as the source of taxation? The social security tax needs to be completely uncapped, applied to capital gains, and all other non W-2 income. The top tier of recipients need to be cut out SSI, even if they pay into the system, a further tax on them, and maybe they will still have a social order that protects property rights and allows them their affluent privileges in peace. There is no other choice. aet May 10, 2010 at 8:37 am “Factory”? Like the British East India Company’s factories in the Indian cities of the British Empire? A place for factors? Or are you talking about manufactures? aet May 10, 2010 at 8:38 am But I agree with the gist of your comment. In a rotten and unequal society, spending money is no joy. Eric May 10, 2010 at 3:12 pm What does the “top tier of recipients” mean? LeeAnne May 10, 2010 at 9:20 am The memory of Simpson seared into my brain is his nastiness; a remark about seniors after he’d departed the Senate that those old people didn’t give a damn about their children –or words to that effect. I didn’t know what to expect of Obama. I feared a demagogue. Its worse than sad that he’s betrayed the masses of young and naive who expected him to create a better world for them. Renato May 10, 2010 at 10:27 am I, for one, am delighted with Obama. If he were a Republican, I might even agree with him publically. aet May 10, 2010 at 11:03 am Meh. I think that rather than seeking better leaders, that people perhaps ought to instead seek themselves to be better people. Seems to be historically more prone to success. LeeAnne May 10, 2010 at 11:13 am You’re living in a world without leaders now. How do you like it? aet May 11, 2010 at 3:57 am So far so good. But we are neither as rich nor as happy as we as a society ought to be. For this i blame ignorance, fear,hatred & greed. VernS May 10, 2010 at 11:53 am The 90% tax bracket only cut in at what today would be above $2 million per year. I find it interesting that the repeal of the 90% tax bracket was concurrent (early 70’s) with the beginning of median real personal income going flat even though we have had great growth in GDP and productivity. At the same time wealth discrepancy and national debt has exploded. Coincidence? aet May 11, 2010 at 3:58 am Nope.rather s twisted kind of ‘central planning for the 1% for whose ease and luxury the rest of us suffer and work. Mickey Marzick in Akron, Ohio May 10, 2010 at 12:07 pm What else can “starving the beast” mean when taken to its logical conclusion policy-wise? Defense, Social Security, and Medicare are the three largest outlays of the federal budget. But unlike DEFENSE, we are reminded of the latter two in the form of OASDI and FICA taxes in every paycheck. Yes, Virginia, we pay for them. The travesty is that the reactionaries have managed to brand them “entitlements” and many an American, particularly those under 45, see these two programs as such. Yet nothing could be further from the truth. Divide and conquer, pitting one generation against another would seem to be the “strategy”. The “success” of neoliberal economic policy has been to bankrupt the federal government over time so as to make the “cuts” in Social Secuirty and Medicare appear fiscally necessary – the only responsible choice. Americans would not accept such AUSTERITY under any other circumstances. They certainly would not VOTE to eliminate these two popular programs. Even reactionaries know this. Milton Friedman did and REAM Emmanuel does. But don’t kid yourselves, this is and has been the real prize and goal of reactionaries ever since the inception of Social Security and Medicare. Grover Norquist is only one of the architects of this campaign to “starve the beast” and put an end to the last two vestiges of the New Deal once and for all. None of my neighbors believed me 30 years ago. Even my mother didn’t! They said I was crazy… never going to happen. But now a few of them retired or close to it see where this is all going… when it’s too late. What else is there left to loot but the public sector – the family silver? LOOTING 3.0 or 4.0? I’ve lost count. As the AUSTERITIZATION of the developing world [periphery] has been tweaked and fine tuned there by the IMF over the past three decades or so, this process is now making its way back to the center. Greece is merely the opening act. But guess who will be the final act in this tragedy called “MARKET TOTALITARIANISM”? And the denouement will be delivered by none other than the Democratic Party – the party of the little guy – after 2012. How fitting! Abolishing the cap on OASDI once and for all and “means testing” for those above a certain income threshold suggested above are two possible ways of foregoing such austerity but seem unlikely in the politically charged debate that will ensue. The forces arrayed against such a tax increase are formidable even if the “wealthy” were not opposed to such policies. If the health insurance debacle is any guide the “reform” will only delay the haircut but not postpone it. Only if the Chinese and Indians can be convinced that “globalization” requires the establishment of something akin to Social Security and Medicare – the taxes to fund it – worldwide will this be avoided. But that would defeat the whole purpose of “globalization” to begin with, wouldn’t it? It’s not really about raising everyone’s boat is it? Some will ALWAYS rise more quickly than others… Funny thing, I keep coming back to the TRILEMMA – national sovereignty, economic integration [globalization], and “democracy”. Might be able to have two of the three, but can’t have all three simultaneously. And the way things are going, neither national sovereignty nor “democracy” are compatible with the neofeudal corporate world order spearheading globalization. Reminds me of the merchant adventurers – the Dutch East India Company followed by the British East India Company, the Hudson’s Bay Fur Trading Company, and the American Fur Trading Company. Each “trading” company worked out fabulously well for the “adventurers” with ROI several fold, but the natives have a different story to tell. Are we listening? DownSouth May 10, 2010 at 6:41 pm Mickey Marzick in Akron, Ohio You say: The “success” of neoliberal economic policy has been to bankrupt the federal government over time so as to make the “cuts” in Social Secuirty and Medicare appear fiscally necessary – the only responsible choice. You got it. LANism (Libertarian-Austrian-Neoliberalism) is as much a rhetorical strategy as anything else. The first part of their magic show is to get a nation in debt. The neoliberals peddle debt like a drug pusher pushes cocaine. And it doesn’t matter whether the debt is private or public, because the neoliberal knows he can always pull his second magic trick out of the bag: convert private debt to public debt. The buildup of private debt is where the libertarians play their role in this magic show: laissez faire so that government regulation doesn’t act as an impediment to the buildup of unsustainable private debt. Once the debt is there then they demand austerity. This is when the Austrian School insanity kicks in. This is what is so great about the MMT analysis. If shows what a doddering old idiot von Mises was. Evelyn Sinclair May 10, 2010 at 8:54 pm Anyone not familiar with this routine should Google “IMF Riot” (or even “the usual IMF riot”) and read the step by step course from freedom to violent suppression, via privatized everything and people too poor to afford to buy, say, water that used to be municipal. Peaceful demonstrations that ensue are reported to have “turned violent” and the police fire on the crowd…. DownSouth May 10, 2010 at 7:24 pm Mickey Marzick in Akron, Ohio You say: As the AUSTERITIZATION of the developing world [periphery] has been tweaked and fine tuned there by the IMF over the past three decades or so, this process is now making its way back to the center. Greece is merely the opening act. But guess who will be the final act in this tragedy called “MARKET TOTALITARIANISM”? Another very astute observation. But Latin America never really voluntarily accepted LANism. It was imposed with violence, or the threat of violence. That’s why neoliberalism and neoconservatism go hand in hand, or as Max Boot so candidly put it: “imposing the rule of law, property rights and other guarantees at gunpoint if necessary.” After all, what would neoliberalism’s “freedom and prosperity” be without neoconservatism’s gunboats to cram it down people’s throats? So like you say, LANism and democracy just don’t mix, as Frederick von Hayek came to realize in Chile: Friedrich von Hayek, the Austrian émigré and University of Chicago professor whose 1944 Road to Serfdom dared to suggest that state planning would produce not “freedom and prosperity” but “bondage and misery,” visited Pinochet’s Chile a number of times. He was so impressed that he held a meeting of his famed Société Mont Pélérin there. He even recommended Chile to Thatcher as a model to complete her free-market revolution. The Prime Minister, at the nadir of Chile’s 1982 financial collapse, agreed that Chile represented a “remarkable success” but believed that Britain’s “democratic institutions and the need for a high degree of consent” make “some of the measures” taken by Pinochet “quite unacceptable.” Like (Milton) Friedman, Hayek glimpsed in Pinochet the avatar of true freedom, who would rule as a dictator only for a “transitional period,” only as long as needed to reverse decades of state regulation. “My personal preference,” he told a Chilean interviewer, “leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism.” http://www.counterpunch.org/grandin11172006.html This is how Carlos Fuentes described Friedman’s and Hayek’s “freedom and prosperity”: In a savage action, Allende partisans were rounded up, gathered in a stadium, and murdered en masse. Others were sent to concentration camps, and still others were exiled and sometimes murdered abroad. –Carlos Fuentes, The Buried Mirror But, as Fuentes goes on to point out, Latin Americans’ “perception of the United States has been that of a democracy inside and an empire outside: Dr. Jekyll and Mr. Hyde.” So I think the big test for the LANies will be whether they can convince the people of the United States and other constitutional democracies (who, like you say, have sovereignty) to opt for LANism voluntarily. I don’t know what the outcome of this will be. In this regard, however, the words of Eric Hoffer hang over me like a gathering storm: It colors my thinking and shapes my attitude toward events. I can never forget that one of the most gifted, best educated nations in the world, of its own free will, surrendered its fate into the hands of a maniac. DownSouth May 10, 2010 at 7:40 pm Should have read: So like you say, LANism and democracy just don’t mix, at least they didn’t in Latin America, as Frederick von Hayek came to realize in Chile: Mickey Marzick in Akron, Ohio May 11, 2010 at 3:41 pm Down… When you quote: “It colors my thinking and shapes my attitude toward events. I can never forget that one of the most gifted, best educated nations in the world, of its own free will, surrendered its fate into the hands of a maniac…” Is it Eric Hoffer or Eric Fromm in ESCAPE FROM FREEDOM? The quote made me recall the latter… No matter insofar as the most insidious totalitarianism would be one in which its citizens were convinced they were free. Overt repression would not be necessary because the oppressed would often identify with their oppressors’ value system. The “inner cop” inculcated since birth would do the rest. aet May 11, 2010 at 4:02 am Royals were both the beneficiaries and the enablers of those organized pillages of the world’s resources, for their own exclusive benefit. America has royalty now: the rich treat the poor with open contempt. Haigh May 10, 2010 at 12:36 pm The REAL news reporter blew it when he claimed the Social Security system has saved up $3 trillion dollars over the last decade. He would have stayed REAL if he had asserted all that savings has already been spent on global interventions and bankster bailouts. jean paul May 10, 2010 at 1:52 pm ‘defend Euro: $650 billion plan’ noted 5 ’10. Glen May 10, 2010 at 2:30 pm Shorter message to all those that have paid for Social Security your whole life – you will be robbed. But banksters multi-million dollar bonus contracts must be honored. And failed banks must be bailed out. Valissa May 10, 2010 at 3:41 pm Thomas Ferguson wrote the classic “Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems”. I think he’s right on here, and have seen much confirmation of this in my perusing of American history. However I think this book is more reader friendly and immediately useful in understanding how the world elites operate today… although as one Amazon reviewer reminds, there is no inside dirt here as the author is friendly with his subjects. Despite this it is still a good overview. Superclass: The Global Power Elite and the World They Are Making, by David Rothkopf Valissa May 10, 2010 at 3:42 pm sorry I responded in the wrong place… Jerry May 10, 2010 at 3:35 pm We are moving toward one world currency….not sure what it will be..maybe something new…..after that it will be one world government……a war between Israel and their neighbors….and then a 7 year peace treaty….if you want to know my source, I’ll get it for you… aet May 11, 2010 at 3:42 am Bible thumper. Obscurantist scum. David C. May 10, 2010 at 5:05 pm The clown who talks about the “trust fund” should explain where the money comes from when those special bonds must be “cashed in.” In truth, we’re drowning in DEBT (federal, state, local, private, corporate, mortgage, college, etc.) and the promises of gov’t welfare programs (SS and Medicare are wealth transfer programs just like AFDC) are just another form of IOU! Who are you going to tax next? The banks are insolvent, regulations and pro-union laws have made it uneconomic to employ Americans and make things here. You people should discover Jean B. Say who, 200 years ago revealed that you CAN’T CONSUME THAT WHICH HAS NOT YET BEEN PRODUCED. DownSouth May 10, 2010 at 7:54 pm Yes, but that which is currently being produced can certainly be consumed. I think you’ve been reading too many of the sophistries of that doddering old idiot von Mises, who managed to get just about everything wrong, including his concepts of wealth and money. Will & Ariel Durant, on the other hand, got it right: [W]wealth is an order and procedure of production and exchange rather than an accumulation of (mostly perishable) goods, and it is a trust (the “credit system”) in men and institutions rather than in the intrinsic value of paper money or checks… Will & Ariel Durant, The Lessons of History mock turtle May 10, 2010 at 5:38 pm social security taxes…which are regressive were repeatedly raised and the justification was fiscal responsibility and keeping the plan solvent but the revenue was always in fact co mingled with the general fund and the influx of ss tax revenue enabled repeated , hughe tax cuts for corporations, and those at the top income levels, where the SS tax did not reach beyond the ceiling on taxable income, which of late has moved from 90k to just over 100k per year not to mention how unearned income escapes this and other taxation, how people like me make much of our wealth but if you are thinking of bringing back those eisenhower erra tax rates first you have to stem the hemoraging of capital out of the country the rullers have flung the boarders open in both directions for labor and capital as it suits them and so now the primary purpose of america is to supply a military force to secure business and resource concerns for companies psychohistorian May 10, 2010 at 10:34 pm Not to send all to their pearl clutching but they define this clearly as FASCISM. America is FASCIST. I don’t like writing it and I don’t like thinking it but it is the unvarnished truth. Show me an economist who has EVER discussed American Imperialism or America as empire. It is just not done in polite society. Well, I think we have long lost polite society and it is high time to start a world war about human morals and ethics. Hopefully at the end of that effort there will no longer be ANY rich folks to exert sick control of our society for their benefit. Evelyn Sinclair May 10, 2010 at 9:03 pm I’ve been looking at what I called the coming “thirdworldization” of the US ever since Globalization started being talked up so rosily, YEARS ago. I knew that Chinese laborers earned 1/40th of the average wage in the US. Not very hard to see what happens when you take down the walls and let labor compete globally. Evelyn Sinclair May 10, 2010 at 9:22 pm Remember Mr. Bush’s “Trifecta?” Here’s part one: NY Times article: AUG 25, 2001 President …Hints at Possibility of Tapping Social Security Surplus… By DAVID E. SANGER CRAWFORD, Tex., Aug. 24 — President Bush said today that there was a benefit to the government’s fast-dwindling surplus, declaring that it will create “a fiscal straitjacket for Congress.” He said that was “incredibly positive news” because it would halt the growth of the federal government. In a 45-minute news conference in a community hall next to an RV park here, Mr. Bush avoided specific answers to several questions about how he would find the money for his next big initiatives, from missile defense, to overhauling the military, to reforming Medicaid, without dipping into Social Security surpluses that both parties have declared off limits. And he made it clear he would not re- think his tax cut, saying, “I can’t tell you how proud I am to be traveling around the country and people say, `Thanks for the $600.’ ” At the same time, Mr. Bush talked in some detail about the economic slowdown, which he called a “correction,” and left open the possibility that he might dip into the Social Security money if a further economic stimulus was needed. “I’ve said that the only reason we should use Social Security funds is in the case of an economic recession or war,” Mr. Bush said. … Mr. Bush’s news conference was his first extended session with reporters since arriving at his ranch here early this month. By putting down a strong claim for military spending and also by hinting, even in a vague way, that Social Security might not be untouchable, Mr. Bush seemed to be pulling together the strands of an emerging strategy for what could be difficult fiscal times ahead…. — — And then came the September 11 “surprise.” Evelyn Sinclair May 10, 2010 at 9:25 pm Mr. Bush’s “trifecta” part two: it’s been STOLEN and spent on war. “There is no trust fund, just IOUs” — George W. Bush Jan. 2005 http://www.informationclearinghouse.info/article24050.htm Social Security: The Hidden Problem By Allen W. Smith November 24, 2009 “Dissident Voice” — There is much debate today about how solvent Social Security is, but most of the debate is over when the trust fund will run out of money, not about whether or not the trust fund actually holds real assets. The conventional wisdom, prior to the economic downturn, was that the trust fund had enough money to pay full Social Security benefits until about 2041. That date has now been revised to about 2037. In order to understand the true status of the trust fund we need to go back to 1982, and then chronicle the events that have taken place since that date. In 1982, the Presidential Commission on Social Security, chaired by Alan Greenspan, warned that Social Security would face serious problems when the baby boomers began to retire about 2010, unless Congress took immediate action to begin building up a reserve in the trust fund that could be drawn down in order to pay full benefits to the baby-boom generation. In 1983, Congress enacted the legislation recommended by the Greenspan Commission, which included a hefty hike in payroll taxes. In essence, the legislation required the baby-boom generation to pay enough taxes to fund the benefits of the previous generation, as was customary, plus enough additional taxes to prepay most of the cost of their own benefits, which was not customary. That payroll tax hike has generated about $2.5 trillion of surplus Social Security revenue to date. If the money had been saved and invested, as it was supposed to be, Social Security would be in good shape today. But the money was neither saved nor invested in anything. Instead, it has been used as a giant slush fund to pay for tax cuts, wars, and other government programs for the past 25 years. The government has “borrowed,” or “stolen” every dime of the surplus Social Security revenue. If the government eventually repays the looted money, we can say that the government “borrowed” the money. Unfortunately, no provisions have been made for repaying the money. Furthermore, it may not be politically feasible to raise taxes for the purpose of replacing tax revenue that was misspent in the first place. If the looted money is never be repaid, it will have clearly been “stolen” from American workers who paid the extra Social Security taxes. This is the hidden Social Security problem. The trust fund holds no real assets. This was made clear by David Walker, Comptroller General of the GAO, in a speech given January 21, 2005. Walker said, “There are no stocks or bonds or real estate in the trust fund. It has nothing of real value to draw down.” On April 5, 2005, President George W. Bush shocked many Americans, during a speech at West Virginia University at Parkersburg, when he openly admitted, “There is no trust fund, just IOUs that I saw firsthand that future generations will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.” … psychohistorian May 10, 2010 at 10:27 pm Thank you for publishing this hidden information about SS. It was Greenspan and Reagan that convinced congress that it was “imprudent” to keep all that SS money in Treasuries and such. They took it instead and gave it to their rich friends. I have been paying into SS for 45 years and am now disabled and can’t work because some jackass decided he didn’t want me riding my bicycle on the side of the road. If they try to take what is left of SS they have no idea of the backlash they will unleash. Without SS I don’t have much more to lose of my life but the moral and ethical values that have brought me to this point. And those values were all about working hard and being prudent. More than just me are angry at the immorality running this country and we might just all want to do just one more good and moral thing before we go. Go ahead and keep pushing us pond scum until we break or we destroy you. Evelyn Sinclair May 11, 2010 at 12:02 am psychohistorian, You say “Go ahead and keep pushing us pond scum until we break or we destroy you.” and: “Well, I think we have long lost polite society and it is high time to start a world war about human morals and ethics. Hopefully at the end of that effort there will no longer be ANY rich folks to exert sick control of our society for their benefit.” Oh great, I’m 57 and a bit less energetic than I was 20 years ago and am one of the most harmless looking people I can think of — long haired ex-hippy getting a bit soft. Angry gerbils look scarier. You’re disabled and even older than I am. So lets all get our crutches and walkers and STORM the castle! Long before we drag Cheney out of his spiderhole, we’ll have been bayonetted and teargassed by a lot of strapping young men who watch Fox news every night and think “Support the Troops” is salutary rather than a million-dollar-a-year-each sick joke. The french revolution: people had horses, swords, cannon and some rather temperamental fierarms so you could square off a whole bunch of peasants and some barricades Vs. the guys with the shiny stuff and horses, and the mobs stood a chance of winning at least some of the battles. Guillotine was the new high-tech. Now, we’ve got warriors who play video games with people’s lives from helicopters and send off remote controlled drones to splatter people so thoroughly that you always hear on the news that they’re sifting through “DNA evidence” to see whether or not one of the people they blew up with the one they were hoping for (Never been able to figure out how they got all this DNA in their library on these guys. Big mystery, what?) So while we’re rounding up our false teeth and spectacles …. You know another sad bit is how the rightwing talkingheads talk about “asymetrical warfare” like its the fault of the poor people who’s countries they invade that the people who live there don’t own uniforms or “conventional” weapons (i.e. those expensive toys the US army has). They have explained that the reason “enemy combatants” are not offered the rights that captured soldiers have under the Geneva conventions is that they’re not up to snuff as soldiers. So, since they’re civilians (=’insurgents’ = ‘terrorists’) the fact that we invaded their country and they tried to do something about it makes them have no legal rights at all. With logic like that, I think you and I would fall very quickly into the new category Obama decided on, where someone can decide you might be a terrorist or sympathizer and deprive you of US citizenship on that basis. I’m sure we wouldn’t have any rights at all. We’d get Kent Stated (http://blog.cleveland.com/metro/2010/05/new_analysis_of_40-year-old_re.html). Another reason not to storm the castle waving our Clappers and canes: we might be mistaken for Teabaggers! I’d die of shame. :-( lambert strether May 11, 2010 at 12:09 am Well, now that the counsel of despair is done with… In Argentina, one of the key features that drove the IMF austerity plans of was grandma on the barricades, along with the young people. There’s no reason such an intergenerational alliance can’t be fashioned here — except Versailles, of course. Evelyn Sinclair May 11, 2010 at 1:38 am lambert strether, you think we can make something happen? You’re saying people out protesting in the streets defeated IMF austerity plans? Peaceful protests or the kind they’ve got in Greece? Links please. I’m not trying to incite unnecessary despair, I just get all realistic about things when I look at the success we had with the big peace marches — the ones that got practically no press coverage, unlike when 200 people show up for a Tea Party — and did NOTHING to deter the attacks on Afghanistan and Iraq. You tell me how we can make a positive difference, I’ll listen. Comments are closed. Tip Jar Please Donate or Subscribe!