Thursday, March 26, 2015

The GOP's Bloody Budget Axe

Unlike politically incorrect journalists in the mainstream media (including Fox News), one can't accurately report on the GOP's proposed bloody budget cuts — and then, just to appear non-partisan, say it's "Congress" who's proposing the cuts — when it's the Republicans within Congress who are the ones proposing all these bloody budget cuts.

OK — maybe "bloody" might have been an unfair adjective to use. So instead, let's use the word barbaric, bitter, brutal, brutish, callous, cold-blooded, cold-hearted, cruel, harsh, inhuman, immoral, grievous, harrowing, heartless, merciless, painful, pitiless, remorseless, ruthless, sadistic, savage, severe, traumatic, unkind or just plain vicious. There's no other way to sugar-coat the facts.

President Obama, recently remarking on the GOP's new budget proposals, said: "The budget that [the House Republicans] are putting forward and the theories they’re putting forward are a path to prosperity for those who have already prospered".

As the New York Times had observed, "Obama cast Republicans as naysayers clinging to the idea of tax cuts for the wealthy financed by slashing programs for everyone else. Obama said that they were doubling down on trickle-down economics while pretending to care about the middle-class." So finally, at least the President of the United States is no longer being politically incorrect (after years of playing nice and trying to "compromise" with Republicans).

But first, one question needs to be asked: Why do the Republicans always insist on passing legislation that they know Obama will always veto, rather than attempting to draft more palatable and bipartisan proposals — something that actually has a chance of passing — rather than grid-locking all government functions? Is it in the hope that something else (like an abortion amendment) might slip through the cracks when the Democrats aren't paying attention or caught napping?

The same can be said for both of the GOP's budget proposals. Currently, the House Budget Committee has 22 Republicans and 14 Democrats; while the Senate Budget Committee has 12 Republicans and 10 Democrats (including one Independent). According to the Center on Budget and Policy Priorities, the budgets recently adopted by both GOP dominated committees cut more than $3 trillion over ten years (2016-2025) from programs that serve people of limited means. These deep reductions amount to 69 percent of the cuts to non-defense spending in both the House and Senate plans.

Each budget plan derives more than two-thirds of its non-defense budget cuts from programs for people with low or modest incomes, even though these programs constitute less than one-quarter of federal program costs. Moreover, spending on these programs is already scheduled to decline as a share of the economy between now and 2025.

The Simpson-Bowles plan was already draconian, but the new Republican plans are even more radical; and as usual, impose their most severe cuts on people on the lower rungs of the economic ladder. (In contrast, here is the Democrats' newest proposed budget — and here is what the Progressive caucus had earlier proposed.

Politico reports that House Republican leaders are exploring a procedure that would allow for votes on both their budgets — and whichever gets the most votes, that one would be adopted as the party’s fiscal blueprint. (Read more at Roll Call about the GOP's political infighting on issues within their two partially-conflicting budget proposals.)

Infrastructure and Defense

As one commenter at Mark Thoma's blog noted: "What they did increase, instead of cutting, is our absurdly overblown defense spending. It should be turned around — with all the cuts in defense, and a slight increase in non-defense — as we desperately need to invest in infrastructure." Which, by the way, is currently at its historically lowest level. With low interest rates, what better time in invest in the country? Not to mention, what a great job creator it would be if we did as FDR had done.

The Center for Public Integrity reports that America still remains the top arms seller to the World (no surprise there.) Although the Pentagon’s budget has decreased in recent years, the Nation reports that had followed enormous growth in the post-9/11 decade — as much as 40% in real terms between 2001 and 2012. The White House's new budget request is supposed to take into account the end of two costly wars, yet even that still exceeds the cap called for by sequestration — and that base budget is only part of what we’re spending overall on American war-making.

According to Roll Call, the Budget Committee did not vote (as defense hawks had wanted) on an amendment that added more money to the Overseas Contingency Operations fund. So House Armed Services Committee Republicans have threatened to withhold their support for the budget if they don’t get additional dollars for the Pentagon. And if the 36 Republicans on the committee band together to vote against the budget, the measure would almost certainly fail. (No Democrat is expected to vote for the GOP budget.)

Unlike Social Security, the Department of Defense (with multimillion-dollar executive salaries, outsourcing and bogus parts) is rampant with waste, fraud and abuse. Whereas, a report by the nonpartisan Government Accountability Office found that only about 0.4 percent of disability beneficiaries were likely receiving improper payments. Another report by Social Security's inspector general came to the same conclusion.

As it is now, the Department of Defense budget is already so big that the Pentagon cannot keep track of where all our money goes. In a largely unnoticed admission the day before Sept. 11, 2001, former Defense Secretary Donald Rumsfeld said he couldn’t account for $2.3 trillion in transactions. Senator Bernie Sanders (the Independent from Vermont and the ranking member on the Senate budget committee) recently got an amendment passed which requires a full audit of the Pentagon.


Medicare has served our country’s retirees well for 50 years and the rate of health care spending is now slowing after decades of uncontrolled growth. The GOP budget puts those gains at risk and the needs of the privileged over the middle-class.

House Speaker John Boehner and Minority Leader Nancy Pelosi have been negotiating a long-term deal to resolve issues with Medicare funding. Currently, Medicare legislation requires a series of short term adjustments to the Sustainable Growth Rate (SGR), also known as "the Doc Fix", that prevents funding cuts to doctors. Richard Fiesta, the Executive Director for the Alliance for Retired Americans, said that, "We are monitoring the deal closely, as we have concerns that this agreement could put a significant burden on current beneficiaries."

According media reports, this deal would remove the SGR formula that determines changes in compensation, and replace it with a new payment system. Preliminary reports also indicate that beneficiaries with incomes higher than $133,000 would pay higher premiums and Medigap plans with first dollar coverage would incur a deductible.

Roll Call reports: The "doc fix" proposal has been championed by the speaker [John Boehner] as a long-overdue first step to reining in entitlement costs. A deal to come up with a more reliable Medicare payment formula for doctors had seemed in question for quite a while ... It looks like Congress is aiming to ditch the SGR and pay for it (some of it at least) by making wealthier seniors pay more for Medicare and by imposing small deductibles on Medigap plans ... The proposal sets a precedent for Democrats by not getting tax raises with any changes to Medicare or Social Security ... Senate Minority Leader Harry Reid thinks the SGR agreement “stinks.” Either way, Congress needs to come up with something before March 31, when the current SGR patch expires and Medicare payments to doctors would be reduced 21 percent.

Social Security

Richard Fiesta (of the Alliance) issued a statement saying the House Republican Budget for FY2016 contains cuts to Medicare beneficiaries and threatens Social Security. "The budget plan put forward by House Republicans is a frontal assault on the needs of seniors, persons with disabilities and working Americans. It would privatize critical aspects of Medicare, gut Medicaid and drastically reduce support for persons with disabilities. It also signals that the Republican leadership is interested in going after Social Security, which keeps 22 million older Americans out of poverty. It breaks promises to seniors regarding benefits they have earned over decades of work."

We’ve seen these tactics before — commissions to recommend so-called "reforms" and attempts to pit disabled workers against retired workers. If Republicans were truly concerned about Social Security’s future they would be working to expand benefits for beneficiaries and improve the program’s finances by lifting the earnings cap on Social Security contributions.

Alliance President Barbara Easterling also commented on these developments. "We can and must expand Social Security benefits and extend the financial health of the system." (Here's one of several petitions telling Congress to expand Social Security -- not cut it.)

Senator Bernie Sanders (I-Vermont) introduced legislation that would expand Social Security benefits by about $65 a month for most recipients. The bill also increases cost-of-living adjustments for Social Security recipients in line with the CPI-E and provides a minimum Social Security benefit for retirees.

Sanders' plan would also significantly improve Social Security’s financing by eliminating the cap on Social Security contributions. It would also expand the system's revenue base to include high-income households' unearned income. The Social Security Expansion Act would subject all income over $250,000 to the payroll tax. The tax is currently capped at $118,500 (less than congressional salaries). It would also subject unearned household income above $250,000 to a 6.2 percent tax. (NOTE: 98.9% of all wage earners make less than this.)

"Social Security is the most successful government program in our nation's history. Through good times and bad, Social Security has paid out every benefit owed to every eligible American," Sanders said in a statement. "The most effective way to strengthen Social Security for the future is to eliminate the cap on the payroll tax on all income above $250,000 so millionaires and billionaires pay the same share as everyone else."

Social Security is currently expected to pay out full benefits until 2033, after which it will be able to pay approximately 75 percent of all benefits. Sanders estimates his legislation would be able to extend Social Security through 2060. He says, "At a time when over half of the American people have less than $10,000 in savings and senior poverty is increasing, we should not be talking about cutting Social Security benefits. We should be talking about expanding benefits to make sure that every American can retire with dignity."

Rep. John Larson’s (D-CT) also introduced a bill to expand Social Security benefits. This legislation would also provide- larger cost of living increases for retirees and disabled workers and raise the income cap on Social Security taxes to $400,000. (NOTE: 99.6% of all wage earners make less than this.)

SNAP (Food Stamps)

According to the Huffington Post, the Republicans proposed budget could kick 11 million people off food stamps. The document didn't specify how much it would reduce funding for the Supplemental Nutrition Assistance Program — however— during a hearing, committee staff revealed the cut would be $125 billion over 10 years (about 34 percent of program funding). According to the Center on Budget and Policy Priorities, if the savings were achieved by reducing enrollment, States would need to kick 11-12 million people off the program. Another way to save $125 billion over a decade would be to chop everyone's monthly benefits by $55.

As of June last year, 46.5 million persons were participating in SNAP — and about 9% go to households with senior citizens (about 4 million). USDA: FACT vs. FICTION on SNAP.

Also from the Huffington Post: House Republican Budget Whacks Food Stamps And Medicaid: "In addition to repealing Obamacare, it reprises many of the safety net cuts Rep. Paul Ryan (R-Wis.) proposed in previous years. In his budget blueprint, Rep. Tom Price (R-Ga.), who took over for Ryan as chairman of the House Budget Committee this year, seeks to balance federal spending over 10 years by cutting assistance to the poor while boosting the defense budget ... The proposal would turn funding for Medicaid and the Supplemental Nutrition Assistance Program, informally known as food stamps, into "block grants" ... The second way in which Price proposes cuts to SNAP and Medicaid is through numerical reductions in both programs' budgets ... It calls for $1 trillion less in mandatory spending outside of health and retirement programs — a category in which SNAP is the largest program ... Ryan's budget last year called for SNAP cuts of $137 billion."


Raising taxes is out of the question. The new GOP tax plan is being described as the Bush tax cuts on steroids. In a newsletter from the Roosevelt Institute they write: "House Republicans claim their new budget plan will help the middle class by (surprise) cutting taxes for the rich, but as The Roosevelt Institute’s Tim Price notes, the IMF and Standard & Poor’s agree that a progressive approach to reducing inequality is the key to economic growth." As Talking Points Memo explains:

The new House budget collapses the tax code into two income brackets of 10 and 25 percent; and it repeals the Alternative Minimum Tax. The benefits would accrue disproportionately to high-income households and corporations.

The budget also calls for steep cuts to domestic programs such as food stamps and Pell Grants, more state control over Medicaid, higher defense spending and a call to balance revenues and spending within 10 years.

The budget keeps Ryan's "premium support" plan to convert Medicare into a private-public hybrid after a decade in which seniors would get a subsidy to buy a private insurance plan or stay in traditional Medicare. The budget repeals Obamacare in its entirety [but replaces it with nothing — or with a so-called "patient–centered health care plan".]

The GOP budget does not propose any changes to Social Security or Medicare benefits for the next decade, despite the party's warnings that the programs are going bankrupt and need to be reformed. But the budget sets the stage for a showdown next year on Social Security. Mirroring a new House rule adopted in January, the budget prohibits a "reallocation" from the Social Security retirement program to replenish funds for the Disability Insurance trust fund, which goes in the red in 2016.

The budget cuts taxes for the rich and big corporations, increases military spending, and doesn't fix the shortfall for disability. The parts of the budget it does cut is in domestic discretionary spending, which mostly assists the poor and working class.

As was noted in a comment at The Hill, the very wealthy own most of the stocks; and stocks produce the most capital gains, so the wealthy pay the most in capital gains taxes. Obamacare added a 3.8% sur-tax to the capital gains tax rate to expand Medicaid for the unemployed and very poor, the working poor, and the lower-middle-class. That might be the biggest reason why the GOP wants to repeal Obamacare — so that the very rich don't have to pay for the healthcare of the very poor.

But why not also tax billionaires on their capital gains for Social Security, rather than just have all that extra unused cash stuffed under their mattresses (or in offshore banks) doing no one, or humanity in general, any good at all. (It only serves to perpetuate multi-millionaire trust-fund kids 100 years into the future, and nothing else.)

Accounting Gimmicks and Obamacare

According to Roll Call, the House Republicans claim the budget achieves balance by 2024. It does so, however, by repealing Obamacare, something no Congress is likely to do any time soon. And in their 10-year projection, Republicans account for roughly $2 trillion of the $5.5 trillion overall in cost-cutting by trashing the health care law. Most of the rest of the savings — more than $2 trillion — would come from reducing growth costs associated with Medicare, Medicaid and the Supplemental Nutrition Assistance Program.

As Bloomberg reports, part of the GOP's plan is to repeal Obamacare, but still keep the revenue that was used to expand Medicaid for use elsewhere. And from the Huffington Post: Republicans Admit to Guessing on the Budget:

The [GOP] budget plan for 2016 says it achieves balance in 10 years entirely through making cuts, including repealing the Affordable Care Act, turning Medicaid into a block grant program run by states and chopping $759 billion from non-military spending programs, on top of cutting more than $1 trillion from nutrition assistance and other welfare programs. But the blueprint is entirely silent on two key questions related to taxes — and at a press conference Tuesday, [House Budget Committee Chairman] Tom Price (R-Georgia) admitted that there are no actual estimates related to either. The first question is how to replace the taxes that are currently slated to be raised through Obamacare — taxes that are expected to lower deficits, according to the Congressional Budget Office. And the second question is how the GOP would pay for making permanent some $900 billion in tax cuts that are due to expire. When asked how his budget deals with the lost revenue, Price did not point to any data, but insisted that the lower burden on taxpayers would spur more growth and therefore bring in more revenue."

Oh really? Maybe we should take another look at Kansas. It seems those tax cuts didn't work out very well after all.

Robert (aka "The Angry Bear") writes: "In his widely read book, What's the Matter with Kansas, Thomas Frank asks why lower middle-class people in middle America vote for Republicans against their own self interest. I wonder why wealthy investors also vote for Republicans against their self interest. It should be clear that rich investors have done poorly when the president is named Bush, and very well when Clinton or Obama were if office. In general the rich get richer even faster when a Democrat is president."

The GOP's Basic Principals

Are the Republicans REALLY for the middle-class, the working-class, the lower-class and the poor? From Senator Bernie Sanders —> Republicans Vote against raising Minimum Wage: (On the Senate Budget Committee, all 12 Republicans voted against it and all 10 Democrats voted for it). Millions of Americans are working longer hours for lower wages. In his newsletter it says , "Believe it or not, median family income, adjusted for inflation has gone down by nearly $5,000 since 1999. A way to raise wages for millions of Americans would be to increase the $7.25 federal minimum wage to at least $10.10 an hour. To Bernie, no one in America who works full time should be living in poverty. But Republicans voted against his amendment." (Bernie isn't politically incorrect either.)

And are the Republicans REALLY "patriotic" and "pro-democracy"? Again, from Senator Bernie Sanders —> Republicans Vote 12-10 Against Campaign Reform: (Again, all 12 Republicans voted against it and all 10 Democrats voted for it). Bernie proposed a way to undo the disastrous Supreme Court ruling in Citizens United that lets millionaires and billionaires spend unlimited sums on campaigns. Unless the disastrous ruling is changed, he told other senators on the committee, "You’re going to be paid-employees of the billionaire class." He called instead for public funding of elections, like America once had — before we had The Rise of the Plutocrats.

But in all fairness, the reality is, even the Democrats won’t reform election laws. They'll vote for reform now, when they know they’ll lose with only a minority, just to make themselves look good. They could have reformed campaign laws in 2009/2010 — as well as reformed the tax code (and fixed a host of other current issues).

Another commenter at Mark Thoma's blog wrote of the new GOP budget: "This is an immoral piece of proposed legislation. The wealthy in the United States are doing just fine, thank you, and don't need another gratuitous tax cut. Especially given the fact that it wouldn't do a thing to stimulate the U.S. economy — all the right-wing rhetoric to the contrary. The United States is a very wealthy country. We can afford to feed the hungry and help the down-trodden. In fact, if we truly were a Judeo-Christian country, we would be morally obligated to do so. Of course, most conservatives are phony Christians who care not a whit for the poor and broken. Shame on them." Odd that Rep. Paul Ryan's hero (Ayn Rand) was an atheist.

Other comments included "Slashing Medicaid, gutting Obamacare, and privatizing Medicare — the Republican plan to reducing poverty is to let them all die" and "Starving the poor and working classes to feed the already overstuffed rich has always been the conservative agenda." So basically, the GOP budget is everything we've come to expect from the Grand Ole Party — the same ole, same ole: Feed the rich and starve the poor.

Even though half the members of Congress are already millionaires, Senator Dean Heller (R-Nevada) introduced a bill called No Budget, No Pay to ensure that if Congress fails to pass a budget, it won’t get paid. Big frigging deal! Members of Congress (with just their government salaries alone) earn in 9 short weeks what 50% of all wage earners in the U.S. make all year long (and they have much better benefits too!)

With Hillary Clinton as the only possible Democratic contender in 2016 for President, and with our current GOP-dominated Congress, she might be our only hope. Because with the current batch of Republican hopefuls for President, may God help us all if one of THEM were ever elected.

How much blood do they already have on their hands? Expect much more if the GOP's bloody budget cuts are ever passed.



    1. In Singapore "low taxes" was substituted for "forced savings". The employee contributes 20% of their income and the employer contributes another 16%. Just swap the word "contributes" to "taxed". A third of the employee’s share is put into a private Medisave account. If this were a Medicare tax, a third of 20% would be 6.66%. (The current Medicare tax rate in the U.S. is 1.45% for the employer and 1.45% for the employee.)

      So in Singapore, the "tax rate" for those under 50 towards housing and college tuition is the balance: 13.32% for the employee and 10.66% for the employer. It would be nice if all employers in the U.S. contributed this amount (over and above a real living wage) into an employees savings plan for this purpose.

      Currently 50% of all wage earners in the U.S. make $28,500 a year or less. If they earned Singapore's per capita income of $52,000, I'm sure many Americans under 50 wouldn't mind being forced to save 20% of their income --- especially if their employers were also providing another 16%.

      $52,000 -- per capita income
      - $10,400 -- 20% forced savings rate (to be used for healthcare, a down payment on house and a college tuition)
      = $32,000 -- balance for an annual income to live on (which is $3,500 more than current median income of $28,500)

      If employers paid better wages in the U.S., employees could save more. As it is now, they can barely get by.

      ///////////////// From the link //////////////////

      Lee Kuan Yew, the first prime minister of Singapore (who died this week at age 91), made the economy his first priority in 1959. Back then, Singapore was a swamp, with no natural resources, and it even had to import its drinking water from Malaysia. Lee raised the per capita income of his country from $500 a year to some $52,000 a year today. Its average annual growth rate has averaged 7 percent since the 1970s.

      Singapore’s approach to the provision of health care, retirement income, and housing is in sharp distinction to that of other countries. People are required to make relatively high payments into savings plans from which they can later buy a home, pay tuition, and purchase a variety of [health] insurance policies.

      For those under age 50, the employee contributes 20 percent of his income, and the employer 16 percent. A third of the employee’s share is put into a private Medisave account. When the balance reaches 34,100 U.S. dollars, any excess funds can be used for non-health-care purposes. All are enrolled in a catastrophic-health-care plan, although they can opt out.

  2. They need robots in Singapore because there are not enough workers ...

    1. Not robots, just more domestic workers — because of low birth-rates and because natives aren't happy about immigration laws...

      From the article: "Over the past decade, the government has tried to supplement the sagging labor force by welcoming immigrants — only 3.2 million of the country's 5.3 million residents are actually citizens. Facing rising dissatisfaction with their plan to compensate for a low birth rate with new immigrants, Singapore's central planners are doing their best to recalibrate. Last year, they tightened quotas on the number of immigrants any business may employ.

      But since the unemployment rate among citizens is 1.2 percent, Singaporeans are hard to find, putting a ceiling on growth. Instead of creating more jobs, the government has asked businesses to make each worker more productive, through automation and if necessary longer hours

      CEO of the Singapore Business Federation: "What's happening now is you're a restaurant, you want a foreign worker to be approved, and they say, 'No you can't, because you already hit the quota. So you find that food establishment will be closing down because it can't find the workers."

      My note: If birth rates were UP and immigration was DOWN, wouldn't it be a "ZERO SUM"? And wouldn't there still be 6 people working for every retired person? So the problems are:

      1) The natives of Singapore aren't happy because, instead of competing and living with other natives from Singapore, they are living and working and competing with immigrants in the crowded malls and train stations.

      2) They worry that there won't be enough natives of Singapore to care for their elderly.

      3) The natives of Singapore want to change the quotas for birthrates to replace immigrants because they are going to be outnumbered by 2030.

  3. My apologies. I sent you the wrong link. Here is the correct one:

    1. The Government has incentives and schemes to support firms to upgrade productivity, whether by investing in technology, training workers or streamlining operations (and making the productivity drive a national effort).

      Second, foreign worker inflows are being controlled in order to put pressure on employers to upgrade their workers, instead of just hiring more. But companies still get enough access to foreign workers to complement their Singaporean workforce, so businesses can survive and Singaporean jobs do not disappear. (Mr Lee reiterated that he does not expect any further major measures to tighten foreign worker numbers.)

      (WOW! This statement stood out: "Customers must be ready to embrace new business models such as self- service formats.")

      Mr Lee was also given a brief demonstration of a flying robot waiter, which can deliver food and drinks to patrons.