Just days after the Commission on Fiscal Responsibility proposed cuts to Social Security, Medicare and federal employee benefits, along with tax cuts for the rich and for corporations, the Bipartisan Policy Center has proposed more of the same. Headed by former Clinton budget director, Alice Rivlin and former Republican Senator, Pete Domenici, the Bipartisan Policy Center panel wants to tie Social Security benefits inversely to life expectancy, so that as the population ages, benefits decline. They also propose a regressive 6.5% national sales tax, cuts to Medicare and Medicaid, ending the cost of living adjustment to social security, and a reduction of high-end income tax rate from 35% to 23%.
It is clear from these two parallel proposals that the ruling elite are preparing a frontal assault against the rest of us. They portray the recession as a natural crisis that we all must help resolve, when they are not only the cause of the crisis, but the sole beneficiaries of the bailouts. While unemployment still soars, foreclosures continue, and record numbers of Americans are going hungry, bankers and investors are enjoying record incomes. Now they are trying to use the deficit to scare us into accepting more austerity. Yet the main causes of the deficit are the Bush tax cuts for the wealthiest Americans (costing $70 billion per year), the wars in Iraq and Afghanistan (costing $4-6 trillion) and the Wall Street bailout (over $14 trillion).
It is curious that they are attacking Social Security, as it is prevented by law from operating at a deficit and therefore has no connection to the current budget deficit. Also, the social security wage limit is $106,800 per year, resulting in a maximum contribution of $6621 per year, regardless of whether you’re a millionaire, billionaire, or simply making $100k per year. Yet even this seems to be too much for the wealthy to tolerate. Wall Street hopes that by weakening social security, they will force more people into mutual funds and other risky investments that will line their pockets. For the rest of us it means working longer or becoming paupers. If we are really concerned about the solvency of social security, which is a totally separate issue from the budget deficit, then we should raise the cap, so that the rich pay social security on ALL of their income, and not just the first $100,000.
Along those same lines, if we want to really lower the deficit, then we should end the wars and raise taxes on the rich. The Iraq and Afghanistan wars are the first wars in history to be launched while lowering taxes. Politicians and pundits argue that raising taxes during a recession is bad because it will stifle investment. Yet, in the wake of the Great Depression, the highest tax rate went up from 24% in 1929, to 81% in 1940. Even under Regan, the rich paid more taxes than they do today. (This links to a Brookings Institute table showing the history of the marginal tax rate going back to the beginning of the 20th century).
Instead, what we’re getting is class war by the rich against the rest of us, with the collaboration of both parties and the mainstream unions. Edward McElroy, a former AFL-CIO vice president and American Federation of Teachers president, is on the Bipartisan Policy Center panel, as is Marc Morial, president of the Urban League.
Meanwhile, many states are also facing staggering budget deficits. State legislators, in collaboration with unions, are devising additional austerity measures of their own. For example, in California, the SEIU is pushing an agreement that will reduce salaries and benefits for state and city workers. They are trying to spin it as a victory for workers because it includes a one-year moratorium on furlough days. Yet, the contract includes 12 furlough days and a 4.6% pay cut. The SEIU is well-connected with governor-elect Jerry Brown, having donated millions of dollars in membership dues to his campaign, even while Brown campaigned on a platform that included cutting state worker pensions. The California Teachers Association (CTA) was another big backer of Brown. Now that he has been elected, he will try to use the unions to further squeeze workers under the guise that times are tough and we all must do are part. Teachers should expect more layoffs and furloughs, increased class sizes and continuing demands to work more and work harder to raise test scores and reduce the achievement gap which, despite our efforts, will likely worsen, as increasing numbers of students become impoverished to feed the fat cats.
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