The Supercommittee of the One Percent Goes Down in Flames
from Dean Baker
Congress gave us a wonderful Thanksgiving present when we got word that the supercommitee was hanging up its capes. While many in the media were pushing the story of a dysfunctional Congress that could not get anything done, the exact opposite was true. The supercommittee was about finding a backdoor way to cut Social Security and Medicare, and create enough cover that Congress could get away with it.
It is important to remember the basic facts about the budget and the economy. Contrary to the conventional wisdom in Washington, it is easy to show (by looking at the website of the Congressional Budget Office) that we do not have a chronic deficit problem. In 2007, prior to the collapse of the housing bubble and the resulting economic downturn, the deficit was just 1.2 percent of GDP.
The deficit was projected to remain near this level for the immediate future, even if the Bush tax cuts did not expire as scheduled in 2011. If the tax cuts were allowed to expire than the budget was projected to turn to surplus.
All this changed when the collapse of the housing bubble wrecked the economy. The story is simple, the housing bubble generated over $1 trillion in annual demand by stimulating record levels of construction and causing a home equity-driven consumption boom. This demand disappeared when the bubble burst. This is what created the large deficits that we are now seeing.
The trillion-dollar-plus deficits are replacing lost private sector demand. Those who want lower deficits now, want higher unemployment. They may not know this, but that is the reality since employers are not going to hire people because the government has cuts its spending or fires government employees. The world does not work that way.
While this is the reality, the supercommittee was about turning reality on its head. Instead of the problem being a Congress that is too corrupt and/or incompetent to rein in the sort of Wall Street excesses that wrecked the economy, we were told that the problem was a Congress that could not deal with the budget deficit.
To address this invented problem, the supercommittee created an end-run around the normal congressional process. This was a long held dream of the people financed by investment banker Peter Peterson. Their idea was that it would not be possible to make major cuts to Social Security and Medicare through the normal congressional process because these programs are too popular.
Both programs enjoy enormous support across the political spectrum. Even large majorities of self-identified conservatives and Republicans are opposed to cuts in Social Security and Medicare. For this reason, they have wanted to set up a special process that could insulate members of Congress from political pressure. The hope was that both parties would sign on to cuts in these programs, so that voters would have nowhere to go.
However this effort went down in flames this week. Much of the credit goes to the Occupy Wall Street (OWS) movement. OWS and the response it has drawn from around the country has hugely altered the political debate. It has put inequality and the incredible upward redistribution of income over the last three decades at the center of the national debate. In this context, it became impossible for Congress to back a package that had cuts to Social Security and Medicare at its center, while actually lowering taxes for the richest 1 percent, as the Republican members of the supercommittee were demanding.
Now that the supercommittee is dead, Congress must be forced to address the real crisis facing the country: the 26 million people who are unemployed, underemployed, or out of the labor force altogether. This would not be difficult if we had a functional Congress.
The teen unemployment rate is 25 percent, the unemployment rate for African American teens is 45 percent. A youth employment program putting people to work cleaning up parks and abandoned buildings could put many of these people to work. If we got adequate funding to state and local governments, they would not be paying off 30,000 workers a month.
We have a serious need for rebuilding our infrastructure. Major projects take time, but fortunately we have time. No projections show the economy recovering until at least 2016 or 2017. And, we can promote work sharing which would encourage employers to keep workers on the job instead of putting them on the unemployment rolls.
These are the sorts of things that Congress should be debating right now. As the financial markets keep telling us, the budget deficit is not a problem; otherwise the interest rate on 10-year Treasury bonds would not be 2.0 percent.
There is a long-term issue with the deficit, but as every budget analyst knows, this is a health care story. If the United States fixes its health care system, then the deficit will not be a major problem. If we don’t, then our broken health care system will wreck the economy regardless of what we do with Medicare, Medicaid and other public sector health care programs.
So everyone should enjoy their Thanksgiving knowing that the huge supercommittee turkey is dead. If the 99 percent can keep up the pressue, Congress will return to reality after the holiday.
You’re doing some good reality altering drugs if you think that OWS had anything to do with the failure if the super committee. And the top 10 to 15% of the “99%” aren’t associated with nor want to be associated with OWS. The super committee failed because it was never meant to succeed. Unfortunately the sheepeople of the US won’t become active in governing themselves the way that the founding fathers hoped and meant for us to do. Until that happens Wall Street, Oil, Pharma, and Hollywood will keep running the country.
@bwp
OpenSecrets Blog: Most Members of Congress Enjoy Robust Financial Status
Explore congressional lawmakers’ personal investments at OpenSecrets.org
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http://www.opensecrets.org/news/2011/11/goldman-sachs-congress-investors.html
Many Influential Lawmakers Invested in Wall Street Giant Goldman Sachs
By Seth Cline on November 22, 2011 3:55 PM
[excerpt]
“Nine of them sit on either the most powerful committee in their chamber or committees charged with regulating the Wall Street giant. Moreover, seven of them are among the 25 wealthiest members of their respective chambers, according to the Center’s research.
And of the six lawmakers who fall into neither category, two are the most influential Republicans in the U.S. House of Representatives: House Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.).”
http://www.opensecrets.org/news/2011/11/goldman-sachs-congress-investors.html
“Other Goldman investors with this kind of power include two members of the Joint Select Committee on Deficit Reduction, better known as the debt supercommittee.”
This was a rigged set up from the start. It was planned to initiate a Republican agenda one way or another. Even failing its pretend goal, it provides impetus to another initiative towards ‘crisis” consequences that will evoke a just cause to implement policies that the right wing think tanks have been wrenching their hands over for more than two decades. This is tyranny in the form of the minority dictating to the majority. It is an orchestrated agenda and Obama is as much a part of this fallacy of distinction regime as Boehner.
The movement into the street by OWS clearly upped the anti and created noise that threatened the stability of confidence. It undoubtedly has played a part, and just like the media wants to downplay its focus points as meaningless, it will deny any influence from the street pressure across the Nation. The candidates all stand clear of the movement despite the fact that THAT is where true political leadership should be centered with open ears. Instead, we are getting Hocus Pocus don’t believe the focus repetition from the consolidated media which has also abused the public trust and needs to be torn down!
Check these links as basic exposure to what Peter G. Peterson Foundation has been doing with a tax exempt foundation agenda:
http://usabudgetdiscussion.org/?page_id=196
http://usabudgetdiscussion.org/?page_id=186
http://usabudgetdiscussion.org/?page_id=268
http://usabudgetdiscussion.org/?page_id=17
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Also consider this excerpt from Ellen Brown@
URL of this article: http://www.globalresearch.ca/index.php?context=va&aid=17881
“When billionaires pledge a billion dollars to educate people to the evils of something, it is always good to peer closely at what they are up to. Hedge fund magnate Peter G. Peterson was formerly Chairman of the Council on Foreign Relations and head of the New York Federal Reserve. He is now senior chairman of Blackstone Group, which is in charge of dispersing government funds in the controversial AIG bailout, widely criticized as a government giveaway to banks. Peterson is also founder of the Peter Peterson Foundation, which has adopted the cause of imposing fiscal responsibility on Congress. He hired David M. Walker, former head of the Government Accounting Office, to spearhead a massive campaign to reduce the runaway federal debt, which the Peterson/Walker team blames on reckless government and consumer spending. The Foundation funded the movie I.O.U.S.A. to amass popular support for their cause, which largely revolves around dismantling Social Security and Medicare benefits as a way to cut costs and return to fiscal responsibility.”
[and Ellen goes on to disclose}...
"That raises the question, are the advocates of fiscal responsibility merely misguided? Or are they up to something more devious? The Presidents Executive Order is vague about the sorts of budget decisions being entertained, but we can get a sense of what is on the table by looking at the earlier agenda of Petersons Commission on Budget Reform. The Peterson/Walker plan would have slashed social security entitlements, at a time when Wall Street has destroyed the home equity and private retirement accounts of potential retirees. Worse, it would have increased the social security tax, disguised as a mandatory savings tax. This added tax would be automatically withdrawn from your paycheck and deposited to a Guaranteed Retirement Account managed by the Social Security Administration. Since the savings would be mandatory, you could not withdraw your money without stiff penalties; and rather than enjoying an earlier retirement paid out of your increased savings, a later retirement date was being called for. In the meantime, your mandatory savings would just be fattening the investment pool of the Wall Street bankers managing the funds.
And that may be what really underlies the big push to educate the public to the dangers of the federal debt. Political analyst Jim Capo discusses a slide show presentation given by David M. Walker after the I.O.U.S.A. premier, in which a mandatory savings plan was proposed that would be modeled on the Federal Thrift Savings Plan (FSP). Capo comments:
The FSP, available for federal employees like congressional staff workers, has over $200 billion of assets (on paper anyway). About half these assets are in special non-negotiable US Treasury notes issued especially for the FSP scheme. The other half are invested in stocks, bonds and other securities. . . . The nearly $100 billion in [this] half of the plan is managed by Blackrock Financial. And, yes, shock, Blackrock Financial is a creation of Mr. Peterson’s Blackstone Group”
This scavenger has reaped personal gain with a warm handshake for many years and then took his scavenger ship to Dubai…and who really knows who the full ownership is anymore.
Needless to say that it and its affiliates have a powerful grip on acquisition strategies that include a great deal of our working capital and infrastructure…including Banking and land grabbing tactics as well as schemes that provide “contingency” labor in medical delivery.
He works in the shadows and the media praises his every move…he is clearly a well connected man…of wealth and fame…but I have no sympathy for the devil.
The current attack on what is euphemistically called Obamacare (a term that is designed to create negative assignment to a false attribute of the Obama “socialist” agenda…and therefore made (false flagging) to appear as an encroachment (read “entitlement” in the making…which is another loaded term); which in turn evokes and provokes red scare reactionary sentiment against democratic infringement on individual freedom.
Obama’s health reform played out the same cloak and swagger tactics as this “super” committee was supposed to do. Whittle down false options and then put the “compromised” capitulation in place; later…claw back any terms of the agenda that was not actually intended. The gameplan is rigged from the start. We get Florida elections in the Supreme Court dramatically legitimating stealth and wealth decisions made offshore…where they keep the bulk of their money; or, worse case scenario…outsourced from Dubai!
Basics of political theory in play:
Washington consensus follows consensus theory and
Coalition theory …the minority dictates to the majority.
Who’s who of the Washington consensus basically puts political machine operations to full scope and scale under covert cover of National Security …but clearly operatives are acting out of privileged private interest. The intelligence “collective” has its own rationale, agenda, and special interests at its disposal. It is not just about control fraud and captured positions, it is about corrupted power and back room strategic planning usurping control as much as any “centralized” model from the KGB. But here these guys are the Americans, and we are the hapless and worthless mouths. Feed them pepper spray and austerity will lead us through the media blitz of chaos and frenzy on a Right Wing and a prayer.
http://econ161.berkeley.edu/economists/keynes.html
John Maynard Keynes, 1931
On Politics:
“The proposals “are simply another move in the game, by which the players at any rate are no longer taken in. Mr. Lloyd George feels that he is making progress (perhaps he is) when he succeeds in persuading M. Briand to agree with him that 2 plus 2 does not make 12 but only 8; M. Briand hopes that, being eloquent, he may after all be able in the French Chamber to make a good enough song about 8 to defeat M. Poincare as to how much better it would be for France if 2 plus 2 made 12…”
http://econ161.berkeley.edu/economists/keynes.html
John Maynard Keynes on the potent weapon of capturing the money system: 1919
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. In the latter stages of the war all the belligerent governments practised, from necessity or incompetence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weakness the same malpractices…
In this autumn of 1919 in which I write, we are at the dead season of our fortunes. The reaction from the exertions, the fears, and the sufferings of the past five years is at its height. Our power of feeling or caring beyond the immediate questions of our own material well-being is temporarily eclipsed…. We have been moved already beyond endurance, and need rest. Never in the lifetime of men now living has the universal element in the soul of man burnt so dimly. For these reasons the true voice of the new generation has not yet spoken, and silent opinion is not yet formed. To the formation of the general opinion of the future I dedicate this book…”
Well now, I think the generation to heed his warning has arrived…Power to the American People…
….God Bless the OWS generation!
Great to find y’all still fightin the good fight, exposing the realities of The Problem in greater depth to a greater extent. I especially appreciate the unsurprisingly realistic revelations of Lord Keynes. He and Lenin are clearly right.
Dean, great stuff, but before we got a totally dysfunctional Congress we had a dysfunctional money system & debauched currency that bamboozled & corrupted 999,999 out of a million to some extent. So, we now have a predominantly inadequate, corrupted socioeconomic paradigm that fosters and ensures ongoing corruption, degradation, and destruction.
Now, when can we get down to the solution?
Before making up your minds, you may want to review “Awareness & Value” at the Greenbook site > mm-greenbook.blogspot.com & join the Facebook group: Green Community Credit System. It will be helpful to review the material & resources at EcotectureNOW.wordpress. com before deciding what’s possible & impossible.
Dean, Where did you get the notion that there may be some relief by 2017? Are you smoking too much or planning on massive popular support for the alternative to Plutonomy’s end game, the nonprofit Green Community Credit System and the new socioeconomic paradigm emerging from the toxic ashes & fumes of the old one?
Without cultural exorcism and a new, healthy, sustainable basis of cultural economy, how do you imagine a solution within 5 years without a violent overthrow of the parasitic 1% and its brainwashed minions?
BTW, “Awareness & Value” is being upgraded & expanded. Your comments are welcome at >> http://mm-greenbook.blogspot.com/p/awareness-value.html