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Obama’s Second Inaugural Address

4:42 pm in Uncategorized by masaccio

Mitch McConnell


I watched the inauguration on CBS, and didn’t turn it off before I was exposed to the sophomoric punditry we get from both old and young on national TV. One of the talking heads informed us that the speech called for working together, which in mediaspeak means doing what Republicans want, and the rest of the comments reinforced that view. They had the text in advance, but they don’t get it; it didn’t fit their idiotic narrative. Now that we have it, let’s take a closer look.

I see three related themes. First, there is a reference to the Declaration of Independence, “life, liberty and the pursuit of happiness”. This theme starts with “Through blood drawn by lash and blood drawn by sword, we learned that no union founded on the principles of liberty and equality could survive half-slave and half-free. “ This is a reference to Lincoln’s Second Inaugural Address:

Fondly do we hope, fervently do we pray, that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue until all the wealth piled by the bondsman’s two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said “the judgments of the Lord are true and righteous altogether.”

Obama makes this stick by talking about the struggles represented by “Seneca Falls, Selma, and Stonewall”. Those struggles are brought forward to today, and he adds to them fair treatment of all of our immigrants. This motif is reinforced by those participating in the ceremony, people from the communities who made up the winning coalition. Obama makes it clear that he knows who elected him and what they want, at least in the social sphere.

Lincoln’s Second Inaugural Address is best known for this:

With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.

I think we can assume that Obama knows this, and intended to say that he recognizes that the minority who loathe these changes do not lose their personal dignity, but that they have to change. Peterr made this point last Saturday, and obviously Obama has read and understood Lincoln’s powerful speech.

The second theme is the statement that the election was a defeat for the Republicans who demand that the rich be given a special place in the nation, that they are entitled to run things.

The patriots of 1776 did not fight to replace the tyranny of a king with the privileges of a few or the rule of a mob.

He says that the privileged few are the biggest beneficiaries of the collective efforts of the nation.

No single person can train all the math and science teachers we’ll need to equip our children for the future, or build the roads and networks and research labs that will bring new jobs and businesses to our shores. Now, more than ever, we must do these things together, as one nation, and one people.

… For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it.

This is a beautiful restatement of Elizabeth Warren’s forceful statement that “nobody got rich on their own”.

The third theme is that the election was a massive defeat for every last one of the conservative principles espoused by loser Mitt Romney, and Obama knows it. First, he throws the Republican campaign themes back in their faces. First there is the Warren reference, which denies the premise of the Republican Convention. Then there is this:

The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.

This is a flat denial of the Republican makers and takers meme.

Second, there is no call for bipartisanship. Instead, there is as close to a demand for change in the losing party as we could hope for in a public speech:

Progress does not compel us to settle centuries-long debates about the role of government for all time – but it does require us to act in our time.

For now decisions are upon us, and we cannot afford delay. We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate. We must act, we must act knowing that our work will be imperfect.

Obama already has begun to act in this vein, as we saw on taxes. I want more. I hope he makes McConnell get that lemon-sucking look every single day as he realizes he failed in his mission to ruin this President. This speech is a hopeful first step on the road to change. Read the rest of this entry →

Social Security Isn’t a Pension Plan But

11:58 am in Social Security by masaccio

From Shanghai, Photo by Sean Munson via Flickr,


The most obvious way Social Security is like a pension plan is that the rich are trying to destroy it, just like Hostess Brands wrecked the retirement plans of its bakers. But there are other similarities. Since 1983, we have all paid in a lot more money in FICA taxes than needed to fund current payments on the theory that it would be there for baby boomers when it was needed.

Pension plans do the same thing. They use actuarial calculations to figure out how much money they need in out years, and how much they need to take in today to make those payments. Then they invest the money as safely as possible so that it will be there when it is needed. The Social Security Trust Fund was ordered to use the excess contributions to buy Treasury obligations, albeit of a type supposedly not to be sold to the public. Those obligations are the bulwark of the demands of citizens who don’t want to see any more cuts to Social Security. They also constitute a partial explanation for the desire of the rich to cut Social Security: the bonds will have to be redeemed, meaning either the Treasury will have to sell bonds to replace them or we will have to increase taxes to fund the repayment of the bonds, or some other step will be necessary that the rich don’t like.

The deep desire not to pay the bonds is part of a longer term project, tax reduction for the rich. In fact, the use of the Special Treasury Obligation/Trust Fund was meant to disguise the reality of the huge tax cuts handed to the wealthy in the 1980s in a lovely bipartisan way. The unfairness and stupidity of the tax cut for the rich was hidden by the increase in the FICA taxes imposed only on income from work, and only modestly affecting the income of the rich. Meanwhile, the rich funded the increasing Reagan deficits by lending money to the Treasury that should have been paid in taxes.

Congress adopted a unified budget approach that folded the increased FICA taxes into the revenue side, making budget deficits seem much smaller than they actually were. (That was theoretically changed in 1990; see this for details of the current situation.) Now that it’s time to pay off the bonds held by the Trust Fund, the richest Americans have made their position clear: they aren’t paying back those bonds, and they won’t pay more taxes. They get support from their servant think tanks, like this from Jagadeesh Gokhale at the Koch Cato Institute:

Let us recognize that past excess payroll taxes relative to benefit outlays (past Trust Fund surpluses under the “off budget” perspective) have been spent on other government programs. Grants of additional spending authority for Social Security must ultimately be paid out of today’s and future taxpayer resources so making them whole is not really possible.

Gokhale says that the bonds held by the Trust Fund are like corporate borrowings, where the proceeds are used for corporate purposes. When due, they are either are paid from future income and assets, or are dumped in the trash through bankruptcy or negotiations with creditors. Let’s default, he says. He might want to check out the Fourteenth Amendment.

But the richest Americans plan to act on Gokhale’s advice. They are going to cut the retirement benefits of millions of fellow citizens rather than pay more taxes. And they have their hired hands in government to make that stick. Here’s their pet Senator, Mitch McConnell:

Predictably, the President is already claiming that his tax hike on the “rich” isn’t enough. I have news for him: the moment that he and virtually every elected Democrat in Washington signed off on the terms of the current arrangement, it was the last word on taxes. That debate is over. Now the conversation turns to cutting spending on the government programs that are the real source of the nation’s fiscal imbalance.

Where does that leave people dependent on Social Security, Medicare and Medicaid? The Center for Retirement Research at Boston College recently issued an update on its retirement risk index. Here is the conclusion:

The NRRI shows that, as of 2010, more than half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 – which is above the current average retirement age – and annuitize all of their financial assets, including the receipts from a reverse mortgage on their homes.

President Obama sees himself as a moderate Republican. He thinks that if half of the families in the country can’t maintain their standard of living in retirement, they should simply substitute a less pleasant life. They could, for example, live on a moderate amount of catfood, which is the logical substitute for tuna fish under his Chained CPI proposal. The Republicans in the House and Senate have a counteroffer: the old should die in the street. I’m sure there is a compromise for this infinitely flexible President: maybe we can set up Federal Die-In Locations so the rich won’t have to see the dead.

A Vicious Assault on Retirees

2:46 pm in Failed government by masaccio

There is no other way to describe the machinations in DC today. The median Social Security benefit is $1229. The median net worth of retirees is about $160K, including home equity according to the 2010 Survey of Consumer Finances.

Chart from 2012 Annual Report of the Pension Benefit Guaranty Corporation

Any cut to the Social Security benefit is going to damage these average people seriously, and it’s worse for the people below the medians. But that isn’t the whole picture. The original idea behind Social Security was that it would be just of part of retirement, along with employer pensions and personal savings. As the graphic shows, the pension plan has gone the way of the Dodo.

Now think for a moment about the people above that median. These are the people who saved money to fund their retirement, and have some assets. They get no interest income, thanks the to the Fed and its zero interest rate policy (ZIRP). There has been precious little income from savings for the last few years, and the Fed promises that there won’t be any in the foreseeable future. That means that people are being forced to eat up their savings, or to put it with the wolves of Wall Street.

We aren’t talking about pocket change, either. For people in the 75-90 percentile range, the mean net worth in 2010 was $525K, down from $616K in 2007. The mean value of financial assets held by this group was $233K, down from $254K in 2007. That isn’t all that much money to last 20 or thirty years. ZIRP means that savers get screwed. Bloomberg reports that ZIRP is helping the rich and screwing everyone else, quoting Joseph Stiglitz: “Monetary policy has been indirectly, surreptitiously helping the top and hurting the bottom.” It describes a semi-retired college librarian:

…when he first started an annuity in 2005, his interest rate was 5.25 percent. Now it’s 2 percent, he said. That means that instead of getting a monthly payout of $700, he gets $413.

In the face of the horrible damage inflicted on all segments of the population by the richest Americans, aided by an ideologically insane party and a spineless party, President Obama and the rest of the Washington Elite insist on slapping retirees with Social Security cuts via the Chained CPI, and cuts to Medicare and Medicaid, to go with the demand that they eat up their savings or reduce their standard of living.

There is no excuse for this vicious assault on the retirement plans of millions of Americans. And there is no other way to describe it. It is a horrible and mean-spirited attack on every American except a few hyper-rich people.