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Newt Gingrich Can’t Get With the Program

9:17 am in Uncategorized by Eric Laursen

Why is the Republican Party leadership so scared of Newt Gingrich? Putting aside his generally abrasive personality, his loud streak of megalomania, and his tendency to self-destruct – OK, that’s a lot! – it’s hard to think of much in the way of substantive policy matters that sets the former House speaker apart from the rest of the Republican presidential field.

Oh yes, there’s one thing.

Early last month, when it still seemed that Mitt Romney’s anointment as GOP nominee was a matter of course, the editors of the Wall Street Journal took Gingrich for his position on, of all things, Social Security. The Journal has been pushing for Social Security privatization for decades, but strangely, Read the rest of this entry →

Social Security: It’s All in the Adjectives

9:55 pm in Uncategorized by Eric Laursen

People who want to cut Social Security benefits to lower future budget deficits are “reasonable” and “serious.” Moreover, economists have reached a “consensus” that this should be done. People who oppose balancing the budget on the back of Social Security recipients are “denialists” whose views are “maddening,” “crackpot,” “strident.”

The cartoonist R. Crumb once advised a young protege that to be good at the craft, he needed to draw his subject accurately – but then exaggerate it just a little bit. In polemical writing, adjectives are that little bit of exaggeration. Sprinkled sparingly through an otherwise competently argued piece, they create a slightly distorted view of the writer’s opponents without making the writer sound too angry or confrontational. The cumulative effect is stark: those on the same side as the writer are intelligent and reasonable. Those on the other side are not.

The adjectives applied to defenders of Social Security, quoted above, aren’t from Fox News, the Cato Institute, or a Rush Limbaugh broadcast. They are drawn from Read the rest of this entry →

Paul Ryan’s Hammock

9:59 am in Uncategorized by Eric Laursen

How stands the Social Security discussion in Washington following State-of-the-Union night? More or less where it was before. Which, for defenders of the program is mostly not good.

President Obama honored his pledge to congressional Democrats over the previous weekend not to endorse cuts to the program. In fact, he went a bit farther, rejecting any plan that would include “slashing benefits for future generations.”

There’s more to say about that. But first, what about Paul Ryan and that Michele Bachmann? Neither of them mentioned Social Security. TV’s talking heads, both before and after the SOTU and the two response speeches, couldn’t stop repeating themselves that the Republican leadership had a big problem: the Tea Partiers were out of control and embarrassing the party with their obstreperousness and their fringe views.

Nonsense. Bachmann’s speech was if anything less of a fire-eating act than Ryan’s, mostly confined to self-congratulation at the Tea Party victories in November, statistics about unemployment and the national debt, and an invocation of the raising of the flag at Iwo Jima (more than 65 years ago). Her actual policy positions were completely unsurprising: repeal Obamacare, pass a Balanced Budget Amendment, cut spending to create a “leaner” government.

Nothing Bachmann said veered even slightly from the official position of the Republican leadership. If anything, the party benefited from her speech, since it allowed them to use prime TV airtime to appeal directly to Tea Party voters who were perhaps turned off by the leadership’s propensity to make deals with the administration during the recent lame-duck session. She’s not a rebel. She’s a bridge to the new wave for Boehner, McConnell, and company. . . . Read the rest of this entry →

The Payroll Tax: Just Another Tax?

4:55 am in Uncategorized by Eric Laursen

What does it mean that the U.S. no longer has a permanent tax code? That every major tax Americans pay, including income tax and the payroll tax covering Social Security, is now a temporary measure subject to — effectively — mandatory revision by Congress in the next one to two years? With passage of the Obama-McConnell “stimulus” package, American government is entering a fun-house period like no other in its history.

The tax cut/stimulus bill passed, of course. Indeed, the skids were really greased on this baby (to use then-Treasury Department official Bob Rubin’s choice phrase) like nothing since the 1983 Amendments to the Social Security Act. Here’s how the Wall Street Journal describes the situation we’re about to be living under:

Welcome to the world of the temporary tax code.

In the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so.

Today there are 141.

Now Congress, taking up a deal worked out between the Obama administration and Republican leaders, is poised to turn the whole personal income-tax system into something of a temporary structure. The plan embraces a broad range of provisions—an extension of Bush-era rates, a new estate-tax formula—but for only two years. A payroll-tax cut in the bill is for a single year.

This means that if the compromise passes largely intact, the U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal.

Word on the street in Washington is that the Obama-McConnell deal, which includes a one-year, partial payroll tax holiday – the first such interference with the revenue stream for Social Security in the program’s history – is just the first of a series of deals between the White House and the Republican leadership. The next step will be a deal to be concluded as part of negotiations to raise the debt ceiling – a necessary act of Congress if the federal government is to keep funding its activities past this coming spring.

As described by Robert Kuttner in Politico.com, the deal will be for the president to propose adopting much of the agenda the co-chairs of his deficit commission paid out, including cutting Social Security. doubtless, this will raise a torrent of opposition. Roger Hickey of Campaign for America’s Future is calling for working Americans to flood the White House with faxes, emails, and phone calls demanding that he stop this exercise in self-immolation and refuse to be blackmailed over the debt ceiling increase.

The problem is the situation set up by the Obama-McConnell deal. To put this in perspective a bit, payroll taxes have always been a thing removed from the rest of the tax code. Changes in payroll tax rates have never been negotiated in tandem with any other federal tax, because they’re dedicated to one purpose only: funding Social Security.

Today, we’re being told that payroll taxes should be reduced. This despite the fact that the program is expected to face a shortfall at some point in the future, and for a reason that has nothing to do with Social Security itself: economic stimulus. Of course, getting the economy moving again is a worthy goal, and Obama is replacing the lost funds out of general revenues. But the point is that this is a breach of faith with the millions of people who pay payroll tax with the understanding that it will be used to insure them against poverty in old age, as survivors, or in account of a disability.

Thanks to this exercise in bipartisanship, there will no longer be anything sacrosanct or special about payroll taxes. They will be merely one more set of chips in the now endless poker game over how to manipulate the U.S. tax system. This year, and next year, and every year after that. The Republican leadership has made clear that the only way to end this state of flux is to permanently extend the Bush tax cuts, abolish the estate tax, and begin phasing out Social Security and Medicare.

That’s not going to happen right away. But the way is being prepared. Because the inevitable result of putting payroll taxes in play is that Social Security itself will stop being regarded as singular either. It will be just another government program, not a social insurance system built on collective trust and participation.

Perhaps this shouldn’t be surprising coming from Obama. Historically, he can be seen as the third of America’s post-New Deal American Democratic presidents. The first was Jimmy Carter, who once surprised one of the program’s godfathers, Wilbur Cohen, by saying, “But Social Security is not sacrosanct.”

Carter had to scuttle an attempt to cut the program that his HHS secretary cooked up; Bill Clinton came close to making a deal with Newt Gingrich. Both had to be persuaded not to go down that path by a vigorous grassroots campaign against such a move. An even stronger effort is going to be necessary this time, because the payroll tax has already been compromised, and because the discussion is no longer a relatively simple one about Social Security. It’s about the entire U.S. tax code.

In this fun-house discourse, the inevitable question is, If we can reform the tax system be reducing income tax rates and eliminating tax loopholes, why can’t we “reform” payroll taxes as well? The slippery slope leads from there.

The Greed of the “Bottom Half”

9:22 am in Uncategorized by Eric Laursen

We’ll shortly be hearing the objections of deficit hawks to the deficit reduction package Demos, The Century Foundation, and the Economic Policy Institute. No doubt they’ll echo the criticisms that have already been leveled at the deficit-shrinkage roadmap Rep. Jan Schakowsky put on the table earlier this month. To get a sense of what those criticisms are likely to be, I recently had a close look at a Schakowsky critique by The Atlantic’s resident deficit hawk, Derek Thompson.

The first thing that makes Thompson’s November 16 piece interesting is that it actually acknowledges the existence of Schakowsky’s plan. The second thing, only slightly less extraordinary, is that Thompson makes an effort to analyze and understand the proposal. It took the New York Times nearly two weeks after Schakowsky released it to even note that it was there (and even then, didn’t provide details).

What’s most remarkable about Thompson’s analysis, however, is that he lectures Schakowsky for not squeezing poor and low-income workers hard enough. Read the rest of this entry →

Framing the Schakowsky Plan

11:53 am in Uncategorized by Eric Laursen

Rep. Jan Schakowsky’s deficit reduction proposal is a game changer: a serious, moderate, balanced blueprint for addressing the nation’s long-range fiscal challenges, by a leading progressive lawmaker. How her colleagues on the president’s deficit commission respond to it will be a test of how serious they really are about solving the deficit puzzle in a fair and equitable way.

Jan Schakowsky is sometimes described as “one of the most liberal members” of the commission. But the deficit reduction plan she released on Tuesday is moderate, sensible, and actually more effective at lowering the deficit over the next few years than the plan co-chairs Alan Simpson and Erskine Bowles tabled last week ($427 billion in savings by 2015, vs. $250 billion).

Schakowsky’s plan offers progressives a golden opportunity to highlight the differences Read the rest of this entry →

Bowles-Simpson: The Unequal Marriage of Reaganomics and Rubinomics

12:54 pm in Uncategorized by Eric Laursen

The Bowles-Simpson plan isn’t a fair and equitable way to reduce the long-term federal deficit, whatever its co-authors might claim. In fact, it’s the biggest proposed experiment in supply-side economics since early Reagan.

Long story short: The proposal put on the table last week by the co-chairs of the president’s National Commission on Fiscal Responsibility and Reform is essentially a wedding of Rubinomics and Reaganomics. As such, it’s what we might get if Bill Clinton and the late Ronald Reagan were locked in a room together and required to cut the long-term budget deficit – without any regard for the impact of their handiwork on low- and middle-income people.

You’ve probably guessed which partner has the upper hand in this deal. Read the rest of this entry →

Hail Mary! Co-Chairs Spin While Deficit Commission Staggers Toward Deadlock

8:11 am in Uncategorized by Eric Laursen

I’ve been saying for months that the National Commission on Fiscal Responsibility and Reform is probably doomed. The co-chairs, Alan Simpson and Erskine Bowles, appear to agree.

So my first real question is, What have these people been doing with $500,000 of the taxpayers’ money for the past nine months? Lori Montgomery in the Washington Post reports that many of the commission’s 18 members were “startled” by the Bowles-Simpson plan, which Bowles himself called a “starting point.”

Starting point? Are you kidding? This commission was empaneled in February and held its first – official – meeting in May. Read the rest of this entry →

“Gaming” the System, Again

10:49 am in Uncategorized by Eric Laursen

The Website Industry Gamers reports that Erskine Bowles, co-chair of President Obama’s deficit commission, has approached Microsoft about creating a deficit-reduction video game to help “educate” the public about the need for fiscal austerity. Bowles, apparently, sees the commission’s work as not just to suggest ways to cut the deficit but to convert the unconverted.

To anyone who was around and thinking about the deficit during the first Clinton administration, the deja vu is overwhelming. Back then, Bill Clinton, in appreciation of Bob Kerrey’s vote for his first big package of economic legislation, let the Nebraska senator run a Bipartisan Commission on Entitlement and Tax Reform: the direct precursor of Obama’s National Commission on Fiscal Responsibility and Reform. Read the rest of this entry →