Budget Stalemate: No More Cuts & No New Taxes

As usual, most Democrats want to preserve the government programs of FDR's New Deal that the vast majority of Americans, who at some time, come to rely on (e.g. Social Security, Medicare, etc.); while all the Republicans are far more concerned about preserving the extremely low tax rates that a few ultra-wealthy Americans currently enjoy.

Yet the the Grand Old Party of Rich White Guys always denies being the party of the super-rich and mega-corporations, and usually has to dig really far back in history to find good examples of what the GOP has done for the poor and middle-class (like emancipating the slaves, for example).

Formal congressional negotiations over a budget opened this week but Republicans and Democrats remained far apart on taxes and changes to entitlement programs like Social Security and Medicare.

Republicans are as unwilling as ever to retreat from their position that the budget deficit must be reined in via spending cuts alone without additional tax revenues, consistently sticking to their talking points: "We don't have a revenue problem, we have a spending problem". The GOP never wants the rich to help pay for programs that only the poor need.

Both Obama and the Democrats believe that new tax revenues should play a part in closing the gap. Most Americans agree --- why shouldn't we tax multi-billionaires on their capital gains (such as unearned income on stocks) at the same tax rate as our regular income? Why shouldn't we eliminate the $113,700 "cap" on Social Security taxes and tax capital gains for Social Security, the same way we're taxed on our regular (but meager) wages?

Why is one percent of the population, who rakes in so much more than everyone else, getting much better tax rates in a "progressive" tax system? Those with the ability to pay, are supposed to may more in taxes --- as a percentage of their of their income. But the GOP argues, that because they earn more, they already pay more in taxes.

And when it comes to cuts, the GOP ignores the large-scale budget cuts that have already been in place. And they play down the costs of steep deficit reduction in an economy that remains far short of its potential. If anything, the bigger problem is the exact opposite: severe budget cutting has been shrinking the federal government too much and too fast. But we rarely hear about this in the mainstream media, and NEVER on Fox News.

Very few countries can match the speed with which the United States has involuntarily embraced fiscal austerity, pushed upon them by the GOP. According to the Congressional Budget Office, in 2013 the federal deficit shrank at its fastest pace in more than four decades, dropping to 3.9 percent of the nation’s gross domestic product, from 6.8 percent the year before.

And according to the International Monetary Fund, the general government deficit of the United States, which includes states and municipalities, will fall by about two-thirds as a share of G.D.P. from 2009 to 2014. Most of the decline will come from reductions in spending.

Yet for all the cuts already in place, calls in Washington for further retrenchment remain strong. "None of us can be proud of the way we spend the money," said Oklahoma Republican Tom Coburn from the Senate floor (Remember, he voted against disaster relief for Hurricane Sandy, but voted for disaster relief for his own home state, as well as voting for farm subsidies while favoring huge cuts in food stamps).

Tom Coburn also recently held a hearing regarding fraud in Social Security disability, using anecdotal evidence trying to prove that wide-spread fraud was going on, when the Congressional Budget Office says that in fact, at most, maybe 1% was made in fraudulent payments. The GOP is just flat out trying to kill any and all government programs --- they hate "government" that much (but yet, they don't mind corporate subsidies to help wealthy CEOs --- like those in Big Oil.)

A recent analysis by the research firm Macroeconomic Advisers estimated that cuts to discretionary government spending — roughly everything the government spends money on except for Social Security and Medicare — trimmed growth by seven-tenths of a percentage point a year since 2010 --- and it cost some 1.2 million jobs.

As even Larry Summers pointed out in congressional testimony last May, the sequestration’s $64 billion in cuts this year might reduce federal debt by 0.39 percent of G.D.P. But if the G.D.P. shrinks by 0.6 percent (as estimated by the Congressional Budget Office) it will make the debt burden heavier, not lighter.

One lead negotiator, Senator Patty Murray, a Democrat from Washington, said "While we scour programs to find responsible savings, Republicans are also going to have to work with us to scour the bloated tax code and close some wasteful tax loopholes and special interest subsidies, because it is unfair and unacceptable to ask seniors and families to bear this burden alone."

On the other side, another lead negotiator, Representative Paul Ryan, a Republican from Wisconsin and chairman of the House Budget Committee said "Taking more from hardworking families just isn’t the answer." Most likely when he says taking more from hardworking families, he really means raising taxes on the most affluent "hardworking" families --- for people like Mitt and Ann Romney.

Mr. Ryan made clear that he believed changes to the tax code should be determined by negotiations in the Senate and House tax-writing committees (which will never happen with those on the committee now), not the budget negotiations. "If this conference becomes an argument about taxes, we’re not going to get anywhere," he said. In other words, read his lips --- NO NEW TAXES.

In a perfect world, the top one percent should be paying almost double than what they are paying today, by raising the capital gains tax rate from 23.8% to the top marginal tax rate of 39.6%, and then taxing that income for Social Security.

But even President Obama (and few Democrats) have entertained the idea of imposing chained-CPI on cost-of-living-allowances for the elderly and disabled on Social Security, just to "compromise" with the Republicans. But the if the Democrats where willing to allow the Republicans to put that big fat stingy foot in the door, real hardworking Americans in their 40's and 50's would see thousands of dollars less to live on when they finally retire --- and those in their 20's and 30's would have to work until the day they die (if they could find and hold a job until that time -- because the GOP also wants to raise the age for retirement to 70 or higher, while they (with their congressional desk jobs) could retire much earlier.

The lead budget negotiators have already indicated that they are not aiming for a sweeping "grand bargain" but are aiming at an accord that would stave off the next round of across-the-board spending cuts, known as sequestration, while building confidence for a larger agreement in the near future, but even that deal will not be easy.

Recently Senator Dick Durbin, the second most powerful Democrat in the Senate, appeared on Fox News and told host Chris Wallace that he would support cuts to Social Security and Medicare as part of a grand bargain with Republicans.

And Senator Ron Wyden, a Democrat from Oregon, said he was willing to address the cost of Medicare, which is he said is swelling with the aging population. (Damn all those Baby Boomers! When will they all finally die???) Yes, rather than bringing down healthcare costs, or investigating rampant fraud, some Democrats want to blame old sick people just for existing. But most Democrats don't feel this way.

Representative James E. Clyburn of South Carolina, the most senior Democratic leader in the negotiations, came out firmly against cutting benefits to the recipients of government programs, a position echoed by Senator Bill Nelson, Democrat of Florida, who said a budget deal should not be made "on the backs of Medicare and Social Security beneficiaries." (Just as Senator Bernie Sanders from Vermont has been saying for months, if not for years.)

On the other side of the aisle, Senator Charles E. Grassley, a Republican from Iowa, spoke for most of his party when he declared the deficit a one-sided problem of overspending. "I will not entertain a so-called balanced plan that punishes small businesses and job creators with higher taxes," he said using the usual GOP talking points. No one in the GOP ever comes up with a new and original idea; they all follow the old party line when it comes to "entitlements" and taxes --- and they have been, for the past 40 years.

Of course Grassley, just like most Republicans, are just plain full of crap. Most multi-billionaires generally don't own small businesses and they would not be "punished" near as much as those at the very bottom, those who would have to go without such things as food and healthcare. And multi-billionaires, with record high profits and CEOs with record high salaries, have not been creating jobs either.

The better paying jobs keep being offshored to low-wage countries, or American citizens have had their jobs displaced by H-1B visas and other guestworker programs. That's when they aren't deliberately bankrupting companies, stealing their employee's pensions, and/or laying off workers to make their remaining employees work much harder (This is called "increased productivity", which has steadily risen for the past 40 years, whereas wages have not).

So much for the Republican's "job creators".

50% of all wage earners currently take home a measly $27,000 a year or LESS. Corporations these days pay less tax as a percentage of G.D.P. than they did 40 years ago --- they're "effective" tax rate being much lower because of all the loopholes in the tax code that they lobbied for (some paid ZERO tax). And with over $2 trillion in untaxed earnings being held in offshore banks (not to mention the $2 trillion in bankruptcies they filed), these "job creators" could create plenty of jobs if they wanted to, but why bother? Currently we have almost 20 million Americans who are either unemployed or want (and need) a full-time job.

Again, so much for the "job creators".

Counting "discouraged workers" and high school grads (who have never entered the labor force over the last 5 years), we have 1 out of every 5 adults who don't have jobs that would otherwise normally be in the labor force. And for THOSE people who are without jobs, there is only one job opening for every 6 jobless people. And of THOSE job openings, they might only be for a temporary and/or part-time low-paying jobs.

Again, so much for the Republican's "job creators".

The congressional budget negotiators and their staffs will now begin fleshing out possible areas of agreement ahead of the next formal meeting, which Mr. Ryan called for on November 13th.

Some Democrats have suggested means-testing Social Security and Medicare, with the likely result that people who worked and saved more during their lifetimes will find themselves with fewer benefits from those programs, compared with people who worked and saved less. And Republicans have also proposed means-testing Medicare, as part of transforming it to a health insurance premium-support program.

But it's funny though, because no mention is ever made about means-testing members of Congress for their taxpayer-paid congressional salaries or their government benefits. From 1789 to 1815 members of Congress received $6 a day, but only on the days they showed up. These days, they're either always on vacation or they're spending most of their congressional time fund-raising (when they're not making media appearances). They haven't been doing the people's work.

Today the minimum congressional salary is $174,000 a year (plus all the opulent perks, like healthcare and elaborate offices.) But yet, they complain, even though 47% are millionaires. Congress today is not at all like the 56 who signed the Declaration of Independence -- those who pledged their lives, their fortunes, and their sacred honor.

As for the Republicans, they still falsely claim they are only doing what the majority of Americans want. Of course, we all know this is a ridiculous and silly lie, as do they. Chuck Todd, on MSNBC, discussing that Republican myth:

"Let's remember, this is a gerrymandered House; Democrats actually won the generic ballot in 2012. More people voted for a Democratic member of Congress than a Republican one in 2012, and yet there are more Republican-held congressional seats --- 234. Democrats only have 201, even though they won a majority of the vote in 2012."

Quote of the Day: "Poor people, on the Malthusian margin*, retire when they die (or die when they retire). Rich people retire before they die." (*A Malthusian catastrophe was originally foreseen to be a forced return to subsistence-level conditions once population growth had outpaced agricultural production.)