Contrary to Claims -GOP Plan Hits Middle Class Seniors
Let?s be really clear about one thing?the GOP plan to hike Medicare premiums for ?upper income? retirees rather than raising taxes on millionaires may sound like a an effort to deal with our nation?s massive economic inequity?but it isn?t even close. The truth is this means-testing plan will hit middle class beneficiaries.So, once again the GOP has proposed middle class benefit cuts (these wrapped in flimsy ?upper income? wrapping) to preserve tax cuts for the wealthy.The Associated Press has a great description of what the GOP?s plan really means. The House is expected to vote on the GOP bill today.
Plan to raise Medicare premiums for upper-income retirees would affect middle class as well
WASHINGTON ? Raising taxes on millionaires may be a non-starter for Republicans, but they seem to have no problem hiking Medicare premiums for retirees making a lot less.The House is expected to vote Tuesday on a year-end economic package that includes increasing premiums for ?high-income? Medicare beneficiaries, currently those making $85,000 and above for individuals, or $170,000 for families.Just the top 5 percent of Medicare recipients now pay higher premiums, a policy that went into effect a few years ago. The new GOP proposal would expand that over time to include the highest-earning one-fourth of seniors.Some would pay as much as several hundred dollars a month more for Medicare outpatient and prescription coverage. Millions who don?t consider themselves wealthy would also end up paying more.On Monday the White House was mum on the Republican Medicare proposal, while AARP said it?s tantamount to a new tax. In the Democratic-led Senate, there?s not much enthusiasm.The plan is modeled on a proposal that President Barack Obama submitted earlier this year to congressional debt negotiators, when he was seeking a ?big deal? to cut federal deficits. Continuing pressure to curb spending means the proposal eventually could become the law of the land, even if there?s no consensus now.?This is an idea that seems to have some traction,? said Tricia Neuman, a Medicare expert for the nonpartisan Kaiser Family Foundation.It?s also creating a lot of confusion about who is wealthy and who is not.For example, when Obama talks about raising taxes on the rich, he means individuals making more than $200,000 a year and families above $250,000.But his health care law fixed the level for paying ?high-income? Medicare premiums at the current $85,000 and above for an individual, $170,000 for families.And the new Republican plan would drop the thresholds to $80,000 for an individual and $160,000 for families.?If we?re considering raising taxes on those with incomes above $250,000, then it seems to me very awkward to raise Medicare premiums on those with much lower incomes,? said John Rother, head of the National Coalition on Health Care, an advocacy group.Baby boomers just signing up for Medicare are more likely to be affected than long-term retirees, since incomes tend to be higher for the newly retired.AARP calls the proposed premium increases a tax hike. ?Most of the time, when you have a payment due to the government because of your income, we call it a tax,? said lobbyist David Certner. ?It?s a form of a tax.? High-earning workers already pay more in Medicare payroll taxes, he pointed out.No way it?s a tax, say Republicans. Taxpayers subsidize three-quarters of the cost of Medicare?s outpatient and prescription coverage. Reducing a subsidy for those who can afford to pay more is not the same thing as raising taxes, they contend.?The proposal doesn?t raise taxes,? said Michelle Dimarob, spokeswoman for House Ways and Means Chairman Dave Camp, R-Mich. ?The provision simply adjusts the subsidy they receive.?The premium hikes are to help pay for broader legislation that would prevent the Jan. 1 expiration of payroll tax cuts for workers and extra benefits for the long-term unemployed, while also staving off a steep cut in Medicare payments to doctors. With time running short, lawmakers of both parties are still far apart on key aspects of the package.Tax or not, higher Medicare premiums mean less money in the pockets of those who have to pay. Currently the high-income premiums start at 35 percent of the cost of Medicare?s outpatient and drug coverage for individuals making $85,000 year, and rise to 80 percent of the cost at the very top income brackets.Next year, a typical Medicare recipient will pay $131 a month for outpatient and drug coverage combined, according to Kaiser. Those paying the high-income premiums will pay from $183 to $417. That means beneficiaries at the highest income levels would pay nearly $300 a month more.The House GOP plan would increase the high-income premium by 15 percent in 2017 and lower the thresholds at which the higher fees kick in.Most significantly, it freezes those income thresholds indefinitely, until one-fourth of Medicare recipients are paying ?high-income? premiums. It?s unclear how long that would take, but currently only about 2 million out of 47 million Medicare beneficiaries pay higher premiums. Eventually that number would easily surpass 10 million.The GOP proposal would reduce taxpayer spending on Medicare by $31 billion over 10 years; Obama?s version saved about $20 billion.?There?s a lot of interest in asking higher-income people on Medicare to contribute more,? said Neuman.
Seniors Fire A White House Warning Shot in Advance of 2013 Budget
The National Committee Urges the White House to Reject Proposals that Target Middle Class Families
We’vewritten to President Obama and Budget Director, Jack Lew, urging the administration to protect programs vital to hard-working Americans and their families as the administration prepares its Fiscal Year 2013 budget. Social Security and Medicare provide lifelines to millions who still suffer in this economy, yet these programs continue to be targeted by those in Washington hoping to balance the budget by cutting benefits to seniors, the disabled, and their families. Our President/CEO, Max Richtman said:
?The vast majority of Americans, of all ages and political stripes, do not support cutting Social Security and Medicare to balance the budget; however, they do support allowing tax cuts for the wealthy to expire. In spite of this, benefit cuts for the middle-class continue to top the budget agenda for many in Washington. The President?s 2013 Budget will provide an opportunity for Washington to reverse the failed fiscal policies of the past and reconnect with an American middle-class still suffering in this economy. We look forward to working with the President to protect and strengthen our vital social insurance safety net. ?
Following are just some of the proposals discussed by the White House and others which the National Committee opposes and are highlighted inour letter:Raising Medicare’s eligibility age from 65 to 67. We are also deeply concerned about a plan to cut Medicare by raising the eligibility age from 65 to 67. This would not only shift the cost saved by the federal government to 65 and 66 year-olds losing Medicare coverage, but also to employers and employees, the states, and younger people buying health insurance through the new health insurance exchanges.Expanding Medicare means testing. Medicare Part B has been means tested since 2007. Additional means testing would undermine the social insurance nature of Medicare, and ultimately raise costs for middle and lower-income seniors who depend on it.Cutting the COLA by replacing the current the CPI-W with the chained-CPI. This would have the effect of reducing the cost-of-living adjustment (COLA) that seniors depend on in retirement to protect their Social Security benefits? purchasing power against the harmful effects of inflation. Recent analysis estimates that, over time, the annual benefit cut stemming from the chained-CPI will accumulate to almost $1,400. Rather than cutting the COLA for seniors we should adopt a more accurate measure of seniors? costs, by adopting the CPI-E.In the past few months, hundreds of thousands of concerned citizens have told Washington ?Hands Off ? No Cuts? during rallies, protests, marches and in email, phone and petition campaigns to Congress. Americans have engaged in the National Committee?s nationwide campaign in a big way and will continue to do so throughout this election cycle. Average Americans understand the value of Social Security, Medicare and Medicaid for the middle-class and they worry that Washington will turn its back on American retirees, workers and their families.You can see ourfull letter to the White House on the NCPSSM website.
Cutting Contributions to Social Security Isn’t the ONLY Way to Stimulate the Economy
While Congress negotiates with itself and the President takes his case for further cutting the payroll tax on the road, there?s one key point that seems to continually be overlooked in this Washington debate. Cutting the payroll tax isn?t the only way to provide stimulus to middle-class Americans?it?s just seen as the most politically feasible way.The Tax Policy Center?s TaxVox blog provides this great overview of why the payroll tax cut extension is notthe best way to provide stimulus toaverage Americans.
Obama Had It Right the First Time: Bring Back the Making Work Pay Tax Credit
Roberton Williams | Posted on December 5, 2011, 5:09 pm Last December, Congress replaced the two-year-old Making Work Pay tax credit (MWP) with this year?s payroll tax cut. That change cut taxes for higher-income workers, raised taxes for some low-wage workers, and nearly doubled the amount of lost tax revenue. And it most likely provided less bang-for-the-buck economic stimulus than the credit it replaced.Since our anemic economy still needs a boost, why not reverse course and bring back the MWP in a bulked-up form? That step would provide more powerful macro medicine for 2012.A quick review: MWP provided a credit in 2009 and 2010 of 6.2 percent of earnings up to $400 for singles and twice that for couples. It phased out between $75,000 and $95,000 of income (twice that range for couples). That meant that most of the tax savings went to low- and middle-income workers, the group most likely to spend rather than save the extra cash.In contrast, the 2011 payroll tax cut equals 2 percent of earnings up to a maximum of $2,136 per worker with no income limit. Tax savings for high-income recipients probably went largely into savings accounts and delivered little economic kick. On balance, the payroll tax cut almost certainly had less bang-for-the-buck than MWP but its doubled cost probably resulted in a greater overall boost to the economy.A Tax Policy Center analysis showed that replacing MWP with this year?s payroll tax cut raised taxes for about one-third of households (60 percent with income under $20,000) and lowered taxes for about half of households (nearly a third with income over $75,000). Shifting tax savings from low- to high-income households certainly diluted the stimulus.Congress could revert to the original MWP or go with a beefed up MWP with double the maximum benefits?$800 for singles and $1,600 for couples. TPC analysis shows that the latter would cost roughly the same as extending the payroll tax cut but would focus tax savings on low- and middle-income families, those most likely spend the extra money?half would go to households with income under $50,000 and 80 percent to those with income under $100,000. In contrast, 60 percent of an extended payroll tax cut would go to households making more than $100,000. Applying MWP?s greater bang-for-the-buck to the larger aggregate revenue loss would give the economy a bigger kick than continuing this year?s policy.My own tax cut this year?more than $2,000?went straight into savings and I?m not likely to spend it until sometime in the late 2020s when my grandsons head off to college. That certainly did nothing to help the economy now. And I?m sure I wasn?t alone.So, Congress, raise my taxes in 2012?along with the taxes of people like me?and give the money to lower-income workers who need cash today to make ends meet. They?ll spend every last cent, I?ll hardly notice the change, the economy will grow a little faster, the country will be better off, and we can all celebrate a more promising new year.
NCPSSM on CSPAN
NCPSSM President/CEO, Max Richtman, took calls and questions today on CSpan about the Supercommittee, Social Security, Medicare and Medicaid and ongoing efforts in Congress to cut these programs.
Let’s Give Thanks for Stopping the Supercommittee
For months, Hands Off-No Cuts activists have taken to the streets, met with their Members of Congress and placed literally thousands of phone calls and emails urging Congress to reject flawed fiscal policies that send the bill for those failures straight to the middle class. It?s been an incredibly successful campaign and we wanted tohighlight just some of your successes in this video.Economist Dean Baker also provides this wonderful perspective on how we got here and what?s ahead.
Since the supercommittee’s real agenda was to bypass Congress and cut social security, let’s give thanks for the 99%
Congress gave us a wonderful Thanksgiving present when we got word that the supercommittee “superheroes” were hanging up their 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% 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 originally scheduled in 2011. If the tax cuts were allowed to expire, then 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 $1tn 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 $1tn-plus deficits are replacing lost private-sector demand. Those who want lower deficits now also 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 cut its spending or fired 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 strategy was derived from the conclusion 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%, 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 teenage unemployment rate is 25%; the unemployment rate for African American teenagers is 45%. A youth employment program simply 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 unfortunately, time we have: no projections show the economy recovering until at least 2016 or 2017. In these circumstances, 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%.There is a long-term issue with the deficit, but as every budget analyst knows, this is a healthcare story. If the United States fixes its healthcare system, then the deficit will not be a major problem. If we don’t, then our broken healthcare system will wreck the economy regardless of what we do with Medicare, Medicaid and other public sector healthcare programs.So, everyone should enjoy their Thanksgiving, grateful that the supercommittee turkey is dead. If the 99% can keep up the pressure, Congress will return to reality after the holiday.
Contrary to Claims -GOP Plan Hits Middle Class Seniors
Let?s be really clear about one thing?the GOP plan to hike Medicare premiums for ?upper income? retirees rather than raising taxes on millionaires may sound like a an effort to deal with our nation?s massive economic inequity?but it isn?t even close. The truth is this means-testing plan will hit middle class beneficiaries.So, once again the GOP has proposed middle class benefit cuts (these wrapped in flimsy ?upper income? wrapping) to preserve tax cuts for the wealthy.The Associated Press has a great description of what the GOP?s plan really means. The House is expected to vote on the GOP bill today.
Plan to raise Medicare premiums for upper-income retirees would affect middle class as well
WASHINGTON ? Raising taxes on millionaires may be a non-starter for Republicans, but they seem to have no problem hiking Medicare premiums for retirees making a lot less.The House is expected to vote Tuesday on a year-end economic package that includes increasing premiums for ?high-income? Medicare beneficiaries, currently those making $85,000 and above for individuals, or $170,000 for families.Just the top 5 percent of Medicare recipients now pay higher premiums, a policy that went into effect a few years ago. The new GOP proposal would expand that over time to include the highest-earning one-fourth of seniors.Some would pay as much as several hundred dollars a month more for Medicare outpatient and prescription coverage. Millions who don?t consider themselves wealthy would also end up paying more.On Monday the White House was mum on the Republican Medicare proposal, while AARP said it?s tantamount to a new tax. In the Democratic-led Senate, there?s not much enthusiasm.The plan is modeled on a proposal that President Barack Obama submitted earlier this year to congressional debt negotiators, when he was seeking a ?big deal? to cut federal deficits. Continuing pressure to curb spending means the proposal eventually could become the law of the land, even if there?s no consensus now.?This is an idea that seems to have some traction,? said Tricia Neuman, a Medicare expert for the nonpartisan Kaiser Family Foundation.It?s also creating a lot of confusion about who is wealthy and who is not.For example, when Obama talks about raising taxes on the rich, he means individuals making more than $200,000 a year and families above $250,000.But his health care law fixed the level for paying ?high-income? Medicare premiums at the current $85,000 and above for an individual, $170,000 for families.And the new Republican plan would drop the thresholds to $80,000 for an individual and $160,000 for families.?If we?re considering raising taxes on those with incomes above $250,000, then it seems to me very awkward to raise Medicare premiums on those with much lower incomes,? said John Rother, head of the National Coalition on Health Care, an advocacy group.Baby boomers just signing up for Medicare are more likely to be affected than long-term retirees, since incomes tend to be higher for the newly retired.AARP calls the proposed premium increases a tax hike. ?Most of the time, when you have a payment due to the government because of your income, we call it a tax,? said lobbyist David Certner. ?It?s a form of a tax.? High-earning workers already pay more in Medicare payroll taxes, he pointed out.No way it?s a tax, say Republicans. Taxpayers subsidize three-quarters of the cost of Medicare?s outpatient and prescription coverage. Reducing a subsidy for those who can afford to pay more is not the same thing as raising taxes, they contend.?The proposal doesn?t raise taxes,? said Michelle Dimarob, spokeswoman for House Ways and Means Chairman Dave Camp, R-Mich. ?The provision simply adjusts the subsidy they receive.?The premium hikes are to help pay for broader legislation that would prevent the Jan. 1 expiration of payroll tax cuts for workers and extra benefits for the long-term unemployed, while also staving off a steep cut in Medicare payments to doctors. With time running short, lawmakers of both parties are still far apart on key aspects of the package.Tax or not, higher Medicare premiums mean less money in the pockets of those who have to pay. Currently the high-income premiums start at 35 percent of the cost of Medicare?s outpatient and drug coverage for individuals making $85,000 year, and rise to 80 percent of the cost at the very top income brackets.Next year, a typical Medicare recipient will pay $131 a month for outpatient and drug coverage combined, according to Kaiser. Those paying the high-income premiums will pay from $183 to $417. That means beneficiaries at the highest income levels would pay nearly $300 a month more.The House GOP plan would increase the high-income premium by 15 percent in 2017 and lower the thresholds at which the higher fees kick in.Most significantly, it freezes those income thresholds indefinitely, until one-fourth of Medicare recipients are paying ?high-income? premiums. It?s unclear how long that would take, but currently only about 2 million out of 47 million Medicare beneficiaries pay higher premiums. Eventually that number would easily surpass 10 million.The GOP proposal would reduce taxpayer spending on Medicare by $31 billion over 10 years; Obama?s version saved about $20 billion.?There?s a lot of interest in asking higher-income people on Medicare to contribute more,? said Neuman.
Seniors Fire A White House Warning Shot in Advance of 2013 Budget
The National Committee Urges the White House to Reject Proposals that Target Middle Class Families
We’vewritten to President Obama and Budget Director, Jack Lew, urging the administration to protect programs vital to hard-working Americans and their families as the administration prepares its Fiscal Year 2013 budget. Social Security and Medicare provide lifelines to millions who still suffer in this economy, yet these programs continue to be targeted by those in Washington hoping to balance the budget by cutting benefits to seniors, the disabled, and their families. Our President/CEO, Max Richtman said:
?The vast majority of Americans, of all ages and political stripes, do not support cutting Social Security and Medicare to balance the budget; however, they do support allowing tax cuts for the wealthy to expire. In spite of this, benefit cuts for the middle-class continue to top the budget agenda for many in Washington. The President?s 2013 Budget will provide an opportunity for Washington to reverse the failed fiscal policies of the past and reconnect with an American middle-class still suffering in this economy. We look forward to working with the President to protect and strengthen our vital social insurance safety net. ?
Following are just some of the proposals discussed by the White House and others which the National Committee opposes and are highlighted inour letter:Raising Medicare’s eligibility age from 65 to 67. We are also deeply concerned about a plan to cut Medicare by raising the eligibility age from 65 to 67. This would not only shift the cost saved by the federal government to 65 and 66 year-olds losing Medicare coverage, but also to employers and employees, the states, and younger people buying health insurance through the new health insurance exchanges.Expanding Medicare means testing. Medicare Part B has been means tested since 2007. Additional means testing would undermine the social insurance nature of Medicare, and ultimately raise costs for middle and lower-income seniors who depend on it.Cutting the COLA by replacing the current the CPI-W with the chained-CPI. This would have the effect of reducing the cost-of-living adjustment (COLA) that seniors depend on in retirement to protect their Social Security benefits? purchasing power against the harmful effects of inflation. Recent analysis estimates that, over time, the annual benefit cut stemming from the chained-CPI will accumulate to almost $1,400. Rather than cutting the COLA for seniors we should adopt a more accurate measure of seniors? costs, by adopting the CPI-E.In the past few months, hundreds of thousands of concerned citizens have told Washington ?Hands Off ? No Cuts? during rallies, protests, marches and in email, phone and petition campaigns to Congress. Americans have engaged in the National Committee?s nationwide campaign in a big way and will continue to do so throughout this election cycle. Average Americans understand the value of Social Security, Medicare and Medicaid for the middle-class and they worry that Washington will turn its back on American retirees, workers and their families.You can see ourfull letter to the White House on the NCPSSM website.
Cutting Contributions to Social Security Isn’t the ONLY Way to Stimulate the Economy
While Congress negotiates with itself and the President takes his case for further cutting the payroll tax on the road, there?s one key point that seems to continually be overlooked in this Washington debate. Cutting the payroll tax isn?t the only way to provide stimulus to middle-class Americans?it?s just seen as the most politically feasible way.The Tax Policy Center?s TaxVox blog provides this great overview of why the payroll tax cut extension is notthe best way to provide stimulus toaverage Americans.
Obama Had It Right the First Time: Bring Back the Making Work Pay Tax Credit
Roberton Williams | Posted on December 5, 2011, 5:09 pm Last December, Congress replaced the two-year-old Making Work Pay tax credit (MWP) with this year?s payroll tax cut. That change cut taxes for higher-income workers, raised taxes for some low-wage workers, and nearly doubled the amount of lost tax revenue. And it most likely provided less bang-for-the-buck economic stimulus than the credit it replaced.Since our anemic economy still needs a boost, why not reverse course and bring back the MWP in a bulked-up form? That step would provide more powerful macro medicine for 2012.A quick review: MWP provided a credit in 2009 and 2010 of 6.2 percent of earnings up to $400 for singles and twice that for couples. It phased out between $75,000 and $95,000 of income (twice that range for couples). That meant that most of the tax savings went to low- and middle-income workers, the group most likely to spend rather than save the extra cash.In contrast, the 2011 payroll tax cut equals 2 percent of earnings up to a maximum of $2,136 per worker with no income limit. Tax savings for high-income recipients probably went largely into savings accounts and delivered little economic kick. On balance, the payroll tax cut almost certainly had less bang-for-the-buck than MWP but its doubled cost probably resulted in a greater overall boost to the economy.A Tax Policy Center analysis showed that replacing MWP with this year?s payroll tax cut raised taxes for about one-third of households (60 percent with income under $20,000) and lowered taxes for about half of households (nearly a third with income over $75,000). Shifting tax savings from low- to high-income households certainly diluted the stimulus.Congress could revert to the original MWP or go with a beefed up MWP with double the maximum benefits?$800 for singles and $1,600 for couples. TPC analysis shows that the latter would cost roughly the same as extending the payroll tax cut but would focus tax savings on low- and middle-income families, those most likely spend the extra money?half would go to households with income under $50,000 and 80 percent to those with income under $100,000. In contrast, 60 percent of an extended payroll tax cut would go to households making more than $100,000. Applying MWP?s greater bang-for-the-buck to the larger aggregate revenue loss would give the economy a bigger kick than continuing this year?s policy.My own tax cut this year?more than $2,000?went straight into savings and I?m not likely to spend it until sometime in the late 2020s when my grandsons head off to college. That certainly did nothing to help the economy now. And I?m sure I wasn?t alone.So, Congress, raise my taxes in 2012?along with the taxes of people like me?and give the money to lower-income workers who need cash today to make ends meet. They?ll spend every last cent, I?ll hardly notice the change, the economy will grow a little faster, the country will be better off, and we can all celebrate a more promising new year.
NCPSSM on CSPAN
NCPSSM President/CEO, Max Richtman, took calls and questions today on CSpan about the Supercommittee, Social Security, Medicare and Medicaid and ongoing efforts in Congress to cut these programs.
Let’s Give Thanks for Stopping the Supercommittee
For months, Hands Off-No Cuts activists have taken to the streets, met with their Members of Congress and placed literally thousands of phone calls and emails urging Congress to reject flawed fiscal policies that send the bill for those failures straight to the middle class. It?s been an incredibly successful campaign and we wanted tohighlight just some of your successes in this video.Economist Dean Baker also provides this wonderful perspective on how we got here and what?s ahead.
Since the supercommittee’s real agenda was to bypass Congress and cut social security, let’s give thanks for the 99%
Congress gave us a wonderful Thanksgiving present when we got word that the supercommittee “superheroes” were hanging up their 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% 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 originally scheduled in 2011. If the tax cuts were allowed to expire, then 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 $1tn 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 $1tn-plus deficits are replacing lost private-sector demand. Those who want lower deficits now also 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 cut its spending or fired 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 strategy was derived from the conclusion 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%, 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 teenage unemployment rate is 25%; the unemployment rate for African American teenagers is 45%. A youth employment program simply 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 unfortunately, time we have: no projections show the economy recovering until at least 2016 or 2017. In these circumstances, 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%.There is a long-term issue with the deficit, but as every budget analyst knows, this is a healthcare story. If the United States fixes its healthcare system, then the deficit will not be a major problem. If we don’t, then our broken healthcare system will wreck the economy regardless of what we do with Medicare, Medicaid and other public sector healthcare programs.So, everyone should enjoy their Thanksgiving, grateful that the supercommittee turkey is dead. If the 99% can keep up the pressure, Congress will return to reality after the holiday.