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Mr. Lew to Berlin: Don’t Do What Obama Is Doing Here

9:31 am in Uncategorized by TomThumb

I. Treasury Secretary Lew Goes to Berlin, NPR interviews him about the budget

Portrait of Treasury Secretary Lew

Secretary of the Treasury Jacob Lew told Germans to cut austerity measures while President Obama pushes them at home.

Treasury Secretary Lew goes to Berlin. Mr. Lew encourages Europeans to reduce their austerity measures because they are ruining their economies. He wants Europeans to spur their demand or spending. That is a good suggestion.

Lew has pressed European officials to moderate austerity measures in order to boost growth, and called on surplus countries like Germany to boost their consumption to help pull the continent out of the doldrums.

Schaeuble and Lew tried to play down any differences in their views, however, with the German arguing that growth and budget consolidation were not mutually exclusive.

NPR’s Mr. Green asks Mr. Lew (in Berlin) what he thinks about President Obama’s budget. Mr. Lew gives the official party response of how Mr. Obama has been offering the same budget policies for years and they are a reasonable mix of cuts to entitlements and increases in tax revenues. Mr. Green works really hard to ask about the similarities between austerity in Europe and austerity at home. But phrases like ‘long term fiscal constraint’, and ‘finding the sensible center’ act like intellectual razor wire and fill the interview with a wordsmith’s version of a room full of those small annoying plastic styrofoam packing pebbles.

II. What Obama Is Doing Here At Home

President Obama is persistently focusing his Presidential policy on deficit reduction and austerity in Federal and State spending. Since 2011, there have been 2 fronts in the Austerity war.

Two Visible Fronts in the Austerity War:

1. The Sequester cuts impact a range of government programs and services. 784 billion dollars in cuts over the next ten years. The cuts reduce spending on the Federal workforce and cause furloughs costing (of up to) 20% of workers’ salaries. Medicare is cut 2% per year under the Sequester rules. At any time the Sequester could be reversed through passing Conyers & Sanders sponsored bill, HR 900. The Sequester is a deliberate tool created to force all parties to pass the Grand Bargain.

2. The Grand Bargain consists of proposed cuts to the social insurance programs. Social Security, Medicare, and Medicaid are in the crosshairs. Gaius Publius outlined seven areas which have historically been under attack in the Grand Bargain offers. You should read his article as he explains how each one of the seven cuts would impact Americans.

Less visible fronts in the austerity wars:

Cutting the Federal Work Force. Indirectly creating pressures to cut worker’s wages. Advocating against government job creation. Expansion of military commitments and spending in Africa, Asia, The middle East. Offering government subsidies to oil and energy companies. Permitting further, ongoing inflation of commodities like food and energy through financial speculation. Privatizing public services such as health care through the ACA, & changes to Medicare and Medicaid, subsidizing health insurance companies. Blank check spending on Security Theatre programs such HS, CIA, FBI, NSA. Propping up Wall Street & Banks through the $85 billion dollars/month Fed buying program. Starving savers through keeping interest rates at near zero. Absence of any Works Progress Administration, guaranteed jobs programs. Strangulation of TANF, Food Stamps, Housing Subsidies for low-income families. No advocacy for a guaranteed income for low-income families. Continuation of public assistance work requirements for homeless people. The ongoing privatization of the public education system.

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The Cuts In The Grand Bargain Are In Addition To Cuts In The Sequester.

3:53 pm in Uncategorized by TomThumb

It appears that the President is trying to convince both sides to cooperate in a really bad deal. A bad deal for everyone they cut in the Sequester cuts. And, for all of those affected by a Grand Bargain. The Sequester is set to cut 984 Billion dollars in across the board cuts over ten years. According to the  CBPP report, even Medicare providers get a cut of 2% per year in each of the ten years. In the proposals for a Grand Bargain, cuts to Social Security, Medicare and Medicaid have been offered.  A chained cpi has been a consistent offer for a Grand Bargain from this Administration. But now it appears that the Sequester cuts are to be added onto the Grand Bargain.


From today’s newspaper report:


“Top Democrats and Republicans sketched out for us what a deal would and could look like if relations were not so bad. It would go like this: Both sides would agree to keep the $1.2 trillion in total domestic spending cuts included in the sequester but reorder the programs that get hit and delay the biggest changes until the economy recovers in a year or two. Republicans would agree to raise new revenue through tax reform in exchange for an equal amount of entitlement cuts that do not begin until 2023 and beyond. Because neither side wants to take any chances right now, the number both sides could match would probably be $400 billion or so, give or take.”(my bold)


“They would agree to keep the $1.2 Trillion in total domestic spending cuts in the Sequester”…. That is what the Grand Bargain was supposed to be switching out, as of reports in the New York Times over the last weekend.

‘Hopes now rest on finding a narrow path through the ideological and political imperatives of both parties. White House aides have not ruled out some money-saving structural reforms to Medicare that Republicans favor, notably an idea promoted by the House majority leader, Eric Cantor, to combine the program’s doctor and hospital components with a single deductible for beneficiaries. Using savings from entitlement shifts like that to replace sequestration, as the automatic cuts are called, would meet Republicans’ demands not to use tax increases for that purpose.”(mybold)

Just recently, we reported that Gene Sperling said that the Grand Bargain was meant to be a way out of the deliberately painful cuts imposed through the Sequester.

From the CNN quote in the last link:

“President Barack Obama raised anew the issue of cutting entitlements such as Medicare and Social Security as a way out of damaging budget cuts, a White House official said on Sunday, as both sides in Washington tried to limit a fiscal crisis that may soon hit millions of Americans.”(my bold)

The Grand Bargain was supposed to be the replacement for the Sequester cuts, but now has become an additional set of cuts:

“…Mr. Obama has signaled a willingness to reduce cost-of-living increases for Social Security by using a less-generous measure of inflation. He has indicated openness to imposing means-testing on Medicare beneficiaries so that high-income retirees would pay more for their medical care, and he has put on the table $400 billion of cuts in Medicare over the next decade, mostly through reductions in payments to health care providers.”(NYTimes)

The worst case scenario. The Sequester was a gratuitous, fabricated crisis created in 2011. It was described as meant to force the current ‘replacement’ with a Grand Bargain. Now we are to understand that the Sequester will stand, and in addition, the Grand Bargain will make more cuts.

For those who say ‘there is no alternative’, there is. There is the Back2WorkBudget of the Progressives. The Progressive Caucus’s budget ends the Sequester and raises revenue. Their goal is to put people back to work instead of putting people out of work through Sequesters and cuts from “Grand Bargains”.

Not New and Certainly Not Improved: Bowles-Simpson: V. 2.0

11:47 am in Uncategorized by TomThumb

The corporate austerians released their ‘new’ Bowles-Simpson recommendations today. They claim that they are building upon their original plan, not replacing it. They framed their recommendations as the last two steps in a four step process. For Social Security followers, Step Three includes the chained CPI. And Step Four includes all of the previous cuts to Social Security which they recommended in their first plan.  Raising the retirement age starting in 2022 slowly to 69, cutting benefits through re-indexing and flattening  all future benefits for our recipients in 2050. Our children’s benefits would look like this:

Bowles-Simpson Plan

Bowles-Simpson Plan

The corporate austerians go for installing the chained cpi first. Why? It could be that they still think that most Americans do not realize that the chained cpi is a cut which keeps on cutting:

Bowles-Simpson Plan

Bowles-Simpson Plan

Note the changes to Medicare and Medicaid in Step Three.  “reducing provider payments….reforming cost-sharing…increasing premiums….adjusting benefits to account for population aging….”

The language is a vague euphemism for cuts; code words to their rich buddies that the uploading of wealth will not be threatened with significant new taxes. No pesky new scrap-the-FICA cap income taxes which might be used to pay for under-funded social insurance programs.

Or in their own words: “The problem is real and the solutions are painful, and there is no easy way out.”  It is very, very painful for them to think of being responsible Americans and painful for them to think of paying their fair share of the cost of living in a decent society. But all of their solutions ask low income folks, approximately half of all Americans, to shoulder all of the burden of keeping tax rates super low for corporations and rich people.  There is a simple, equitable, and fair way out but they do not want to hear about paying their fair share.