Cliffsmas is coming and I bet you, like most of us, have not figured out just what it is that you are going to wind up giving the 1% this time around. Fortunately, they want to make it easy for you, they have made a list of their wants and checked it several times now.
Many on Wall Street with the help of nice people like Paul Ryan and a group of Democrats that call themselves “The Third Way,” working with President Obama would like to give your Social Security to the 1% to use as gambling chips on Wall Street.
Then there are the CEO’s from Peter Peterson’s “Fix the Debt Commission,” who want 134 Billion dollars in tax cuts exempting foreign earnings for corporations (along with their usual trillions in federal war contracts, subsidies, bailouts and tax loopholes) for Cliffsmas.
In fact, these Fix the Debt Commission CEO’s are so eager to get this cutting of costs for people other than themselves who want to retire, that less than 60% of their companies offer pensions for their employees and of the ones that do, the CEO’s have underfunded their employee pension funds by more than $100 billion.
There are a bunch of other 1%ers that would prefer the Bowles-Simpson approach of gutting your Social Security payouts over a period of years as President Obama was pushing on the campaign trail and in negotiations with Congressional Republicans over a long period. In these same negotiations Mr. Obama put cuts to health care for veterans and cuts to Medicare on the table.
The cuts to your benefits that Mr. Obama and the Austerians are promoting for Cliffsmas are far from chump change. The chained-cpi cut is small at first, but over a period of years is a 9% cut in benefits over a period of years. Raising the age of eligibility for retirement age to 70 would cut benefits for the average retiree by 19 percent or about $35,419.
Why what Obama is negotiating won’t “strengthen” Social Security
Executive summary – It’s the income inequality, stupid!
All of the proposals that Mr. Obama has been working with, from the Bowles-Simpson proposal to the Super Congress proposals to the “Grand Bargain” under the terms Mr. Obama was negotiating with John Boehner and Congressional Republicans will increase income inequality by shifting costs away from the 1% and onto the 99%.
Social Security was “fixed” last Cliffsmas back in 1983. The assumption of the Greenspan Commission’s fix was that Social Security taxes would apply to 90% of income when the cap on Social Security taxes (around $107k) rose due to the inflation index.
It turns out that just like Greenspan’s assumptions about markets turned out to be repudiated by reality, there was also a problem with his assumptions about income inequality.
Today the Social Security tax only applies to about 84% of income because the share of income going to the top 1% is considerably larger now than it was in 1983 (11.6% then vs. 20% today).
The only fix needed to actually strengthen Social Security and make it solvent decades from now when it is projected to have a problem is to adjust the cap on the Social Security tax in order to make it apply to 90% of income again.
Why President Obama’s austerity measures benefit the 1% and not the 99%
President Obama said in his Des Moines Register interview:
“I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs.”
With millions of people out of work and the economy sputtering, it hardly makes sense to reduce spending. There is no sign of inflation, the price of government borrowing is about as low as it could possibly get – there is no signal that it is time to cool spending. On the contrary, our infrastructure is crumbling, massive unemployment exacerbated by cuts of state and local workers is driving down wages (increasing income inequality) and slowly hollowing out the nation.
The poor and middle classes have shouldered by far the heaviest burdens of the global political obsession with austerity policies over the past three years. In the United States, budget cuts have forced states to reduce education, public transportation, affordable housing and other social services. In Europe, welfare cuts have driven some severely disabled individuals to fear for their lives.
But the austerity game also has winners. Cutting or eliminating government programs that benefit the less advantaged has long been an ideological goal of conservatives. Doing so also generates a tidy windfall for the corporate class, as government services are privatized and savings from austerity pay for tax cuts for the wealthiest citizens. …
As many economists predicted, however, the austerity policies implemented after the financial crisis have proved to be a losing proposition for the global economy. The strong economic growth that austerity advocates predicted has not materialized, with the United States showing only anemic improvements, and European countries sliding back into devastating recessions.
At the same time, corporate profits in the financial industry remain above even the levels reached at the height of the housing bubble, according to Commerce Department data. And elites on both sides of the Atlantic have secured generous tax breaks, made possible in part by cuts to social services.
The bottom line is that the people who are salivating madly over the prospect of a Merry Fiscal Cliffsmas are poised to make enormous gains. There has been a massive networking effort among one-percenters to create a very well-funded organization with tentacles throughout Wall Street and corporate boardrooms across America to drive their agenda of Austerity for the 99% and a vast growth in wealth for the 1%.
So, what do you want to give the 1% this Cliffsmas? Will you support chained-cpi and make it the “easy payment plan” that eventually takes 9% of the Social Security income benefit that you paid for? Will you support an increase in the age of eligibility for your earned benefits, that will give back 19% of your money to be available for tax breaks, bailouts and other special concessions for the 1%?
Maybe you want to make it a surprise gift and as Mr. Obama is urging, and you will urge Congress to pass his deal without knowing the details because you want your $2,000 tax break this year? Perhaps you’d like to support any cuts that might be made to your earned benefits just so that the 1% will have to pay a couple of percent more in taxes until they can get the Republicans back in power to reverse their temporary losses?
I hope not.
What the 99% need for Cliffsmas appears to be voice lessons and some comfortable shoes.