By Lynn Parramore, a senior editor at Alternet. Cross posted from Alternet
A gang of brazen CEOs has joined forces to promote economically disastrous and socially irresponsible austerity policies. Many of those same CEOs were bailed out by the American taxpayer after a Wall Street-driven financial crash. Instead of a thank-you, they are showing their appreciation in the form of a coordinated effort to rob Americans of hard-earned retirements, decent medical care and relief for the poorest.
Using the excuse of a phony, manufactured crisis known as the “fiscal cliff” – which isn’t a crisis at all, as economist James K. Galbraith has succinctly explained — they are gearing up to pull the wool over the public’s eyes by cutting Social Security, Medicare and Medicaid. The CEOs are part of the Fix the Debt campaign run by the
-backed Center for a Responsible Federal Budget, which plans to unleash tens of millions pushing for a deficit reduction deal that favors the rich.
You can be sure that many more CEOs in addition to the names on the list below sympathize with plans to shred the social safety net and enjoy windfall tax breaks. But these Scrooges are so bold as to publicly announce their desire to pick the pockets of fellow Americans while simultaneously pigging out at the corporate welfare trough. Multitasking!
A generation ago, an American CEO would think twice about announcing utter disregard not only for his neighbors and employees, but also for the economy, which can’t prosper when income is consistently redistributed upward (see Nobel laureate Joseph Stiglitz’s The Price of Inequality for more on that theme). But in the present culture — even after the Occupy Wall Street movement – these business barons feel perfectly comfortable trumpeting their desire to get richer at your expense.
Here’s a sample of the Fix the Debt CEO Council Hall of Shame. (Download the complete list at the organization’s Web site.)
1. Lloyd Blankfein, chairman and CEO, Goldman, Sachs & Co. Blankfein, infamous for describing his financial activities as “God’s work,” shared his attitude toward society with CBS news recently. He explained his keen desire to see Americans lowering their sights for the future. You really have to watch the interview to get the full flavor of Blankfein’s smug assurance that predation can be sold as concern for the nation’s well-being. In addition to trotting out several myths about Social Security’s design and functions, including the bogus notion that retirement age must be raised, he gives a pithy summary of what life is going to be like for the 99 percent:
You’re going to have to do something, undoubtedly, to lower people’s expectations of what they’re going to get, the entitlements, and what people think they’re going to get, because you’re not going to get it.
Not if Lloyd Blankfein has anything to do with it. He calls it managing expectations. Here’s another word: theft.
Since the financial crash, Blankfein’s company, Goldman Sachs, has received tens of billions of dollars in what the Economic Policy Journal describes as “direct and indirect succor from the Fed.” In sharp contrast to average Americans, when Goldman needed help in the 2008 crisis, a friendly Federal Reserve let Goldman turn into a commercial bank almost overnight, so it could go to the Fed for help 24/7.
2. Jeffrey Immelt, chairman and CEO, General Electric Company. In 2011, President Obama welcomed outsourcing pioneer Jeffrey Immelt to his White House inner circle as chair of a newly created jobs council – a move that was a sharp slap in the face to American workers. Immelt returned the favor by dumping Obama in favor of Mitt Romney in the recent election.
Obviously, supporting disastrous financial deregulation, dodging taxes and helping to destroy American manufacturing has not satisfied Immelt. He’d like to add insult to injury by making sure that people who have been screwed by the reckless activities of short-sighted corporate titans like himself are left to starve in their golden years and go without medical care. And as for the poor, well, couldn’t they be just a little bit poorer? Immelt thinks that would be swell.
After the 2008 crash, the government gave a giant boost to hard-pressed GE Capital, the company’s financing arm, through the Temporary Liquidity Guarantee Program. GE has also helped itself to enormous taxpayer-funded subsidies, especially in green energy. And guess how much GE paid in taxes in 2010? Nothing. In fact, using what the New York Times describes as its “innovative accounting practices,” it claimed a tax benefit of $3.2 billion!
3. Jamie Dimon, chairman and CEO, JPMorgan Chase & Co. At a recent gathering of the Council on Foreign Relations, Jamie Dimon vented his feelings about a number of things that peeve him, from a federal lawsuit brought against JPMorgan Chase to Obama’s failure to adopt the harmful and misguided Simpson-Bowles deficit reduction plan, which, among other things, recommended reducing the tax rate for top earners. Dimon has claimed that his bank did not need the TARP funds bestowed on it by the federal government, but there is no question that today his bank borrows funds more cheaply than smaller banks because of the federal government’s implicit too-big-too-fail guarantee.
Dimon is deploying a familiar scare tactic on the topic of the so-called fiscal cliff. He’s claiming that his company will be forced to cut down on hiring and so on if a budget plan is not tailored to enrich the wealthy. During a recent visit to India, he issued warnings to CNBC-TV18:
I’ve spoken to CEOs who say, you know, absolutely, we are making decisions to protect ourselves from the ‘fiscal cliff’ and those are like investment decisions and hiring decisions.
Maybe Dimon’s company would be better served figuring out what happened to the $6 billion that recently went up in smoke in the “London Whale” derivatives fiasco.
4. W. James McNerney, Jr., chairman, president and CEO, the Boeing Company. McNerney launched at Procter & Gamble, reached high altitude at GE and shot to the stratosphere by becoming head honcho at Boeing in 2005.
Boeing has been a long-time beneficiary of the government’s Export-Import Bank, which has financed sales of many of its planes. McNerney chairs President Obama’s Export Council, where he works hard to arrange policies that benefit his company. He spent much of 2011 slugging it out with the National Labor Relations Board over moving assembly plants from Washington to South Carolina, a right-to-work state. That got settled, but now the profitable company is in a fight with engineers who don’t want their pensions chopped nearly in half. Boeing’s excuse? It wants to keep the engineers “competitive.” Union members have reported intimidation from the company’s management as the dispute has intensified.
The Boeing boss is now crying “deficit” and asks for your retirement money. Pretty brassy, considering that the company paid not a single penny in taxes between 2008 and 2011. In fact, Citizens for Tax Justice calculates that Boeing actually got money back from the U.S. government over the past decade, “paying a negative 6.5 percent tax rate, even though it was profitable every year from 2002 through 2011.”
5. David Cote, chairman and CEO, Honeywell International Inc. David Cote is a veteran of GE and also sits on the board of JPMorgan Chase, where he is one of three members of the risk committee that failed to prevent the disastrous $6 billion trading loss mentioned above. Cote has led Honeywell, one of the world’s largest industrial conglomerates, since 2002. Along with GE and Boeing, Honeywell shares the distinction of being a top corporate polluter.
Obama invited Cote to join the Simpson-Bowles deficit commission in 2010, where he worked hard to create a flawed plan meant to reward the rich and cut vital services for the 99 percent. Meantime, sales of mostly aerospace-related Honeywell products sold to the government make up about 12 percent of Honeywell’s total revenues.
Here’s the 2009 figure for what Cote raked in as Honeywell’s CEO: $12,839,038. In response to the recession, Cote forced Honeywell’s employees to take unpaid furloughs of between two and five weeks during 2008 and 2009.
6. Glenn Britt, chairman and CEO, Time Warner Cable Inc. Maybe the head of one of the world’s largest media conglomerates is ticked off because his compensation dropped from $17.4 million in 2010 to $16.4 million in 2011. Whatever it is, he is channeling his frustration by setting his sights on your wallet.
As a telecom giant, TWC is part of one of the most despised industries in America, and it’s no wonder. Whether it’s offering terrible customer service (Britt is devising a special “white glove” package for the affluent), leaving customers disconnected during Hurricane Sandy, or lobbying for laws that squash competition and lead to telecom oligopolies, Britt seems out to prove that his company can only succeed if the rest of the country suffers.
And with his Fix the Debt campaign, he’d like to make that suffering just a little more intense.
7. Reid Hoffman, cofounder and executive chairman, LinkedIn Corporation. Reid Hoffman brought us LinkedIn, possibly the most annoying social media network on Planet Earth. Why is it necessary to send scores of nagging emails to accept invitations to “link” to people you don’t even know? No one can say. But it sure is irritating. LinkedIn, along with his investments in companies like Facebook, has made Hoffman a billionaire. He’s ready to start giving – to the rich.
Hoffman hails himself as the champion of entrepreneurship. What he fails to mention is that entrepreneurship gets stifled when people don’t have a decent social safety net. You can’t take risks starting a new business if there’s nothing to fall back on. That’s why Norway is considered an entrepreneur’s heaven: the social safety net is strong and there’s far less shoveling income toward the rich.
Fix the Debt proposals would shred the social safety net, increase income inequality and make entrepreneurship less attractive for Americans. Hoffman’s presence on this list means only one thing: he wants to make it harder for you to be an entrepreneur like him. He’s made his money. And now he’s bent on kicking the ladder out from under the rest of us.
8. Richard Anderson, CEO, Delta Air Lines, Inc. Historically, airlines have been recipients of enormous subsidies from the federal government; after 9/11, many of those subsidies increased.
Delta CEO Richard Anderson enjoyed a 10 percent raise in 2011, bringing his compensation to $8.9 million. Not bad for a year when the company’s stock price fell by more than a third. Delta employees didn’t fare so well as the boss. In 2010, Delta flight attendants lost their battle to protect their pay and benefits. According to Labor Notes, Anderson was quite creative in his effort to crush the American dream of those hard-working folks:
[Anderson] played up a culture clash between Northwest’s Northern base and Delta’s Southern workforce, attacking AFA [Association of Flight Attendants] in one company-called meeting for being ‘un-Christian’ and ‘immoral.’ A DVD of the meeting was sent to every flight attendant.
As the head of an airline, Anderson knows that his business would not have been possible but for the taxpayer-funded research and development that led to the creation of passenger jets, along with enormous air mail subsidies. He returns the favor by screwing workers and attempting to pass austerity measures designed to stick it to working people whose tax dollars make his job possible.
9. Dave Barger, president and CEO of JetBlue Airways Corp. Sky’s the limit to Dave Barger’s fondness for right-wing politicians. And he’s quite proud of being the only major U.S.-based airline that’s “100% union free.” Several grassroots attempts at unionization have failed in recent years, much to his delight.
JetBlue has been running Fox shows on its in-flight entertainment network since 2004. Recently, the company pulled its sponsorship of Yearly Kos, a convention held by liberal Web site DailyKos, in response to pressure from Fox’s Bill O’Reilly.
Like Delta CEO Richard Anderson, Dave Barger understands very well that the airline industry has enjoyed enormous benefits thanks to the U.S. taxpayer, from the massive airports built at government expense to air traffic control infrastructure, which is heavily subsidized. And, like Anderson, he’d like to deliver a sharp kick in the teeth to the customers who support his business and would like to have a decent retirement and, oh, maybe some quality care when they’re sick.
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I was talking to a successful financial advisor today, so one would think he was fairly savvy about fiscal matters. He’s in his mid-30’s and is convinced that social security benefits will be dramatically reduced when his generation retires. He personally promotes means-testing which would rule out benefits for himself, so he isn’t looking to scrap the program. The reason I mention it is because of how effective the messaging has been regarding the “insolvency” of SS even among what would be considered “high-information” voters. My two 20-something “low-information” daughters don’t believe they will get any SS benefits. Given that kind of pessimism over the long-term viability of the program, how long can SS survive? Why would the working class be willing to pay for a program they believe will be scrapped before they receive any benefits?
Tangentially related, Warren Buffett was on the Daily Show tonight promoting the need for the rich to pay more taxes. When Stewart asked Uncle W to respond to the claim that higher taxes would depress investment, he had a great answer. He said when he calls somebody to tell them he has a great investment deal for them, he hasn’t found they ever ask about what taxes they’ll have to pay. Duh. Anybody who could consider earning no profits preferable to earning marginally reduced profits obviously makes waaaay too much money.
I thought Buffett and Obama were great buddies. Did that relationship go the same way as Obama’s initial kinship with Volker? Must one be selfish and greedy to make it into the inner circle? Never mind, don’t answer.
Meanwhile, Uncle W was on National Petroleum Radio last night proclaiming the virtues of JP Morgan’s Jamie Dimon as a replacement for Timothy Geithner. A plutocrat is a plutocrat is a plutocrat. No qualifiers are required.
Warren Buffett is still Obama’s pet billionaire.
Or perhaps Obama is Pet President of Mr Buffet and the .01%?
That’s much more logical.
Valic, who administers the 403(b) at my job, was doing a presentation on retirement and, they too, said not to count on Social Security. This was not company propaganda. When I emailed information that Social Securtiy was not in crisis, the presenter was genuinely thankful for the informmation.
I’d still not count on social security.
Why?
It’s like doing a 5 year forecast of expenses and revenues, only using a 40 year timeline.
If you make such forecasts as a business practice, you know that they are useless after a year, much less 40.
Which ultimately means that you should not place your trust in government….
Except they are using a 75 year time line to say SS has a terrible short fall out there.
Paul P, Social Security is probably in crisis right now in the sense that powerful forces are aligned to use whatever tactics are necessary to avoid, or at least substantially delay, the redemption of its Trust Fund. In broad strokes, redemption of the Trust Fund is a multi-trillion dollar transfer from the a wealthy group to a much less wealthy group, since general revenues are progressively raised and when net Trust Fund redemption really starts to kick-in it will likely require ramping the progressive nature of those revenues still higher. If you need $8 and have $10, you still have a big problem if a powerful force is determined to take the $10 away from you.
hahaha but lloyd’s a close second
Fiscal Cliff Primer: Should Congress Take Social Security Advice From Bailed-Out Goldman Sachs CEO Lloyd Blankfein?
http://www.huffingtonpost.com/2012/11/20/fiscal-cliff-lloyd-blankfein-social-security_n_2166099.html
Five Senior Goldman Sachs Execs Gave $130K To ‘Obama Victory Fund’ WHILE Eric Holder Was Deciding Whether To File Criminal Charges
http://dailybail.com/home/convicted-bush-1300-clinton-1000-obama-00.html
JPMorgan Employees Join Goldman Sachs Among Top Obama Donors
http://www.bloomberg.com/news/2012-03-20/jpmorgan-employees-join-goldman-sachs-among-top-obama-donors.html
I’ve just been spammed by the White House to lend my voice to the “don’t raise taxes on the middle class” lobby. This was my response:
“While $2,000 a year is a useful contribution to us here and now, it will be a lot more important in our retirement years. To that end I have a disquieting feeling that the Administration’s exclusive propagandizing on “Don’t raise taxes on the middle class” seems designed to divert attention away from what happens to Social Security. As you know, the Treasury is in debt to the Social Security fund to the tune of $2.6 trillion. It is therefore quite a few years away from being ‘insolvent’. The only fair way to address imbalances in SS contributions are to extend the cap, and index link it. Increasing the retirement age or reducing benefits are simply not acceptable alternatives”.
Lend your voice here:
http://www.whitehouse.gov/my2k?utm_source=email186&utm_medium=text&utm_campaign=middleclass
Stephen, could you post the spam? It’s a prime candidate for shredding.
Greed of the few is shocking, but the sense of entitlement by the many is socially undermining. I am all for reigning in a system that has rewarded absurd risk taking and benefited the uber-rich at the expense of the taxpayer, but to think that Social Security and Medicare are rights, and that means testing and raising eligibility ages are somehow denying the public its just benefits is absurd. My New Year’s hope is that someone, anyone goes to jail for the amazing fraud that has been perpetrated on the American public during the financial crisis, but also that Americans remember what made our country so unique and successful. It was hard work, innovation and immigration. We seem to have lost sight of that. And term limits would be a nice touch as well. Too much to hope for? Not really…wake up America.
Raising an eligibility age isn’t a benefit cut? It’s cutting a year or two of benefits from what the beneficiary would otherwise receive over his/her lifetime. How is cutting those benefits not cutting those benefits?
Means testing isn’t a benefit cut? It’s cutting or eliminating benefits from those who paid into the system. Same question as above.
‘sense of entitlement of the many is socially undermining’?
You equate corporate pigs at the trough with the fantastic idea that benefits for which people have paid throughout a working lifetime should be delivered? Have you considered that the escalating cost is wholly due to irresponsible speculation by the pigs and their captive banks? I doubt you will get much traction with that message around here. Try Fox News. Oh, wait, I don’t think they will let you mention ‘greed of the few’.
What amazes me is that Yves can keep track of the names of these corporate pigs and their various and sundry stage managed oinks. Whoever listens to these clowns must have a very old TV, one without a mute button. I haven’t listened to a word uttered by Jack Welch and his hand picked protege on that Business Disinformation Network of theirs in twenty years. Incidentally, had it not been for the Fed’s Commercial Paper Facility, GE would have gone the way of Lehman Brothers. Borrow short and lend long. There’s a recipe for building wealth. Not one of these guys could manage a pay toilet without a government backstop. Croney capitalism now and forever, that’s the new American way.
President Obama will make a short speech on the “fiscal cliff” (now there is a misnomer if there ever is one) today.
The article sourced below states that he will be meeting with (para) “….CEO’s and ‘middle income earners'”…..
Read the list and it should make you puke.
(I’m a registerd non-partisan voter and have not use for either major party)
Here is the list of attendees, as provided by the White House:
• Frank Blake, Chairman and CEO, the Home Depot
• Lloyd Blankfein, Chairman and CEO, Goldman Sachs Group
• Joe Echeverria, CEO, Deloitte LLP
• Ken Frazier, President and CEO, Merck and Co.
• Muhtar Kent, Chairman and CEO, Coca Cola
• Terry Lundgren, Chairman, President and CEO, Macy’s Inc.
• Marissa Mayer, CEO and President, Yahoo!
• Douglas Oberhelman, Chairman and CEO, Caterpillar
• Ian Read, Chairman and CEO, Pfizer
• Brian Roberts, Chairman and CEO, Comcast
• Ed Rust, Chairman and CEO, State Farm Insurance Co.
• Arne Sorenson, President and CEO, Marriott
• Randall Stephenson, Chairman and CEO, AT&T
• Patricia Woertz, President and CEO, Archer Daniels Midland
http://news.yahoo.com/blogs/ticket/obama-spotlights-middle-class-meets-ceos-fiscal-cliff-141910370–politics.html
Must be a legitimate cross section; they invited two broads and I bet there’s a Black in there somewhere. What can be more fair minded than that?
Marissa Mayer is definitely a “girl power” thing.
ok, i give up, who is the “middle income earner”? The Pres.?
For the record, I agree that the plutocrats are using the government for competitive advantage, and are trying to consume as much as possible of wealth that they ahve not earned.
However, I need duct tape for my head when I see statements like this:
“You equate corporate pigs at the trough with the fantastic idea that benefits for which people have paid throughout a working lifetime should be delivered?”
Out of curiosity, have you examined how much was paid by each person versus the total benefit received?
I ask this because it becomes apparent that its the same kind of activity, and only varies in scale.
This is what makes looting by the elite possible; promise the little people that they will have their small loot, and then walk away with the big loot knowing that the people who should righteously object to that looting and call for your hide to be nailed to a wall will allow you to get away with it as long as they have their little piece.
Then the elite can rattle their saber about cutting SS, secure their tax breaks for capital gains, dividends, and exempt income in exchange for not touching the program, stick income tax increases to ordinary income earners, and still deficit spend as they walk away with the cash.
Not to mention that SS users will thank them to do so…
Amazing how enslaved you can be when you receive more than you’ve paid for.
Huh? How is receiving SS benefits looting?
True looting involves capturing economic rents. Where’s the rent being captured in SS?
There is a form of looting that is common at both large and small scales. It’s called “land ownership in the absense of extremely high land value taxation.”
well said Jack. funny how something that you’ve paid into your entire life is referred to as an “entitlement”.
sorry, I meant Jake.
“the sense of entitlement by the many is socially undermining”
What a bizarre misconception: “the many” are the American People. It is OUR country. It is OUR government. They are OUR laws. The social safety net belongs to the American People, not to Barack Obama and Warren Buffett and Jamie Dimon. it is not theirs to cut. They aren’t kings.
You’re right. They aren’t kings. But they will act like monarchs as long as we let them.
So, my fellow 99 percenters, let’s stop acting like serfs. Write, demonstrate, petition, yell our heads off and don’t shut up until they get the message.
Sign the petition at http://www.movetoamend.org and start the process for local ballot initiatives in your own communities. Two such passed in Cleveland suburbs earlier this month; dozens more are in process across Ohio and hundreds across the country.
And speaking of action, don’t forget the easiest of all: go to http://www.fixthedebt.org/blog and let them know what you think in their obviously unmoderated comments, along with everyone else who sees through this totally discredited bs.
Austerity may be the next unstoppable tidal wave from above, but the people can most likely slap down this “Fix The Debt” astroturf the way we made “America Speaks” into such a big nothing back in 2010.
Carla – you can write, march, petition, call, all you want but if you didn’t/don’t take it to the polls it doesn’t matter – they don’t give a flying fart – if you have a big checkbook, they are all ears – otherwise the only time they “listen” is on election day. Seeing as how only ~1.5% of the voters refused to give them their proxy for carrying out policy they can now proceed with an honest claim to a “mandate” for their BS as they made no secret of the fact that if you voted for them this was the BS you could expect.
The first time around one could conceivably (and i am being generous here) argue that one was “deceived” (self deception counts) but this time? Ha – this dude has been out front with his agenda – so if folks voted for him, they voted for the Grand Betrayal – period …
utterly ridiculous to blame the VICTIMS=workers for Wall $treet “criminogenic accounting fraud” (William K Black), here:
http://www.nakedcapitalism.com/2011/11/bill-black-on-the-real-news-network-on-his-three-big-simple-demands.html
and here:
http://www.youtube.com/watch?v=Rz1b__MdtHY
scapegoating will not cure, nor arrive at accountability for…this: 2000, “financial sectory” (Wall $treet) accounted for 19% of U.S. economic activity…by
2007, 41%. This is huge transfer of wealth from labor to financial sector…those who blame labor are as corrupt as those who perpetrated the $600 trillion+paper debt fraud…follow the $$$$.
” but to think that Social Security and Medicare are rights”
That’s ridiculous. People pay into Social Security, so they should get money back from it when it’s their turn to retire. And people also have a right to not die just because illness happened to strike them rather than someone else, hence Medicare.
Out of curiosity, should they be paid out more than they paid in?
Out of curiousity, why do you think people get more out of the system than they paid in, unless you’re disallowing a reasonable notional rate of return?
Some people at the inception of the system got a lot more out than they paid in, but nowadays?
Fallacious. Absolute $ does not reflect time value of money. And the benefits are paid out over a period of years, again reducing their “worth”.
Go to the back of the class.
Adding: Plenty of people die before they receive anything.
“…. that Americans remember what made our country so unique and successful. It was hard work, innovation and immigration.”
Hmm – did these hard working, innovative immigrants not decide to write “We hold these truths to be self evident, that all men (sic) are created equal, that they are endowed by their Creator with certain inalienable rights and that among these are life, liberty and the pursuit of happiness, that to secure these rights governments are instituted among men …”
That’s what SS, Medicare, et.al. are all about – the gov.t, or “We the people” as the Const. so quaintly puts it, acting to secure these rights among “men” …..
(I suppose you could argue that we could stay within the “original intent” by stripping these rights from women in the name of balancing the budget ….. but methinks there would be more than a few XYs who would be singing in a different key should that be suggested …)
I am sick and tired of hearing Social Security described as an entitlement! The word entitlement sounds like a person wants something for nothing. Social Security is paid for with taxes that come out of every pay check. That is NOT an entitlement! Next time I hear the word entitlement I’m gonna say Entitlement that I paid for!
Social Security reform is THEFT plain and simple. The American taxpayers paid for that SS surplus which the govt spent. The greedy rich don’t want to have their taxes raised to pay the money back (which they effectively stole with the tax cuts for the rich). Reform SS and presto chango, the suprlus disappears and taxes on the rich don’t have to be raised. Social Security reform is theft.
Your brainwashing is showing. Neither Social Security nor Medicare are entitlements – they are paid for via taxes.
More generally, health care and income in our old age are not entitlements, they are necessities. We will need to pay for them one way or another, and the only question is how we go about it. Should it be via a centralized program with standardized contributions and outcomes? (Via taxation and defined benefits). Or should individuals be left to make their own arrangements as best they can?
I would argue that the former is more efficient, less likely to generate economic collateral damage (via lower economic activity from hoarding behavior due to uncertainty about the future – see Keynes on the propensity to consume) and comes with fewer side effects in the form of societal problems. If you leave it up to individuals, what do you do about those that don’t make plans due to lack of foresight or lack of means? How about those that invest unwisely or fall victim to scams and miss their targets? Should we be aiming to provide them with any kind of support? If so, how if not through a government program? Charities? How could we be certain there would be enough for the scale of the problem? (And anyway, wouldn’t a collection of ad hoc and local solutions to the problem be monstrously inefficient and impractical?) Or should we not support them and just leave them to starve? If so, just shooting them might be a more honest and humane solution.
I suspect that if Social Security was removed, the retirement situation in the US might end up looking much like health care does at present. I don’t think it would be politically or morally feasible to leave people on the street to starve, so they would be maintained somehow, probably around subsistence level, and after saddling them with a large symbolic debt that everyone concerned knew would never be paid. The funds from that would come from some kind of shadow budget somewhere, in the same way as emergency health care for the uninsured. Taxpayers would end up footing the bill for that, so they would likely not see much in the way of payroll tax saving, but they would lose the current benefit.
There would also be a large increase in the pool of funds available for private investment, most of it controlled by people without much investing background or knowledge. Wall Street would be happy to relieve them of this money in exchange for lofty promises of future rewards that, somehow, never seem to materialise. (“Black swan! 20 standard deviations! Hoocouldanode!”) Investors would then be told that it was their own fault for not doing their due diligence and they should have known better.
The whole thing would probably end up costing a lot more than the current system (once private sector contributions were taken into account) while delivering a lot less. Everyone would end up agreeing that it was a disaster and needed fixing, but political gridlock and opposition from rentiers would keep it place until the end of time.
Glenn Britt is not “the head of one of the world’s largest media conglomerates”. Time Warner Cable was spun off from Time Warner years ago.
Are the Trustees of the Social Security Administration partisan?
I have no idea, but this is their current analysis:
http://www.ssa.gov/oact/trsum/index.html
It seems to me some adjustments need to be made, which would cover the ground in between “cat food for the poor” and “cuts over my dead body!”
Removing the earnings cap on Social Security would mostly fix the 25% shortfall projected after 2033. But the Fix the Debt vultures want to reduce benefits now so they won’t be reduced later. Or something.
It isn’t about the deficit or debt. If it was, they would not be calling for lower tax rates, as Simpson/Bowles does. Yves is exactly right about what is going on here.
We will not have an honest conversation about what, if anything, needs to be changed in social insurance programs as long as people like this are involved in it.
Yep, isn’t that the most bogus argument ever?
So, SS might have a shortfall in benefit payments in 2033 and to fix that, we have to reduce benefits now and going forward, so that the actual benefits you get in 2033 will be 100% of the new, reduced benefits.
If that’s the plan, why do anything at all?
Actually, they should repeal the payroll tax and keep paying the benefits. They should stop financing government on borrowed money. Let the uber rich take some risk to get a return on their plundered wealth. Worried about the value of money? Stop financing useless wars and corporate welfare. Let our vibrant and imaginative and superproductive CEOs figure out how to make a profit without a customer of first and last resort. Has anyone done the numbers on that?
Honest conversation.
You suggest that with the tax hike that Social Security will have no need of general revenues to make benefit payments.
You suggest that FICA and SECA taxes, PLUS THE INCOME TAX ON Social Security BENEFITS IS ENOUGH TO PAY ALL BENEFITS.
yOU SUGGEST THAT THE TRUST FUND is liquid, and that utilization of interest and princiapl incurs no immediate expense and raising of the deficit.
Honest?
Don Levit
So instead of cutting funding for the wars and the Pentagon – which is ALL deficit spending – which no one was asked to pay for – isn’t that what all those “supplementals” were for? – we should cut benefits which were paid for?
Hmm, sounds like you are ready for a job in this admin …
Thanks for providing the trustees report. Here is an exceropt:
“Redemption of trust fund bonds, interest paid on those bonds, and transfers from the general funds provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending,or additional borrowing from the public.”
Don Levit
So you are saying the government should honor it’s debts to China, but not honor it’s debts to it’s own senior citizens? Oh yes, AND bail out it’s own super rich and give them endless multi-million dollar bonuses for bankrupting the country?
No, I am simply saying the way we honor our debts to China and our citizens are the same – paid with general revenues, an immediate budget expenses, and increase in the deficit.
Our debts to China, according to the GAO, are Explicit Liabilities, the most important debts to honor.
Our debts for Social Securiry and Medicare are Implicit Promises, the least important debts to honor.
If Social Security was more imnportant for the federal government to honor, maybe it would not have borrowed the surplus over the last 29 years.
Don Levit
Well Don – you are explicitly saying that, as far as our government is concerned, we the people are officially, by law, less important than foreign nationals –
I suspect that if we the people “realized”, as you apparently do, that this was not “just politics” but “a law”, wonder how they would react.
Methinks they do not agree – obviously droning foreign nationals is OK if they are considered threats to our security – so with that in mind, how should we behave toward foreign national debts whose payment is a threat to our social security?
In other words, you are saying that in order for you (Treasury’s General Fund) to repay the money you borrowed from me (Social Security Trust Fund), you must borrow money from somebody else? Borrow from Peter to pay Paul?
Why should the SSTF take a back seat for repayment? The system uses Treasury bonds so that there will be no political bickering. A bond is a promise to pay, and we have always honored our bonds.
Don Levit – “…Treasury…which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public…” If push comes to shove, then reduce other government spending. Why should defense contractors, for example, get paid before the Social Security Administration gets REPAID? If you need to borrow, then borrow to pay the defense contractors.
There should be no question about repayment of the Trust Funds. The bonds in the SSTF are backed by the full faith and credit of the United States, just like bonds sold on the open market. Whether you use a dollar of revenue, or a borrowed dollar, or a dollar created out of thin air, it doesn’t matter: the debt must be repaid. It’s like duty, or sacred honor.
The debt is not even considered a liability by the federal government, for it can wipe out the program at any time.
And you talk of sacred honor.
Don Levit
Your argument has no legs. The populace can riot in the streets at any time, yet we have not done so recently. Potentiality should not be equated with actuality. Would that I could contemplate my duty as though it were a lazy summer afternoon. Doing the right thing is not always easy.
“The debt is not even considered a liability by the federal government, for it can wipe out the program at any time.”
Bingo, Don – you got it! The gov’t can wipe out the debt at any time … There ya go, problem solved – folks have been pointing that out for some time here – glad you finally got on board :)
That’s an argument based on law, not on fairness.
In point of fact, we could wipe out the debt to foreign creditors and other private holders of debt, by inflating it away.
Not saying we should do that, but the fact remains that you’re not being very coherent on this issue.
The government borrows to repay all $11 trillion of it’s publicly traded debt. It’s called rolling over the debt.
Also, Don Levit has been trolling on and on like this for at least 3-4 years, starting at Angry bear, that I know of.
He’s got more perseverance and less smarts than the Ever Ready Bunny.
Looks like he’s now a self appointed expert on “honor” now too!
HT – that’s not so bad, we can consider him in the role of “devil’s advocate” giving folks such as yourself the opportunity to debunk this stuff for the benefit of those who might actually think like Don, and there are a lot of them out there. So the opportunity Don affords to folks like yourself to enlighten those others is a good thing, doncha think?
We need a movie like IOUUSA – NOT!
I get tired of typing.
Yeah, HT, i know what you mean – i got tired of fighting all that political TINA, “spoiler”, “can’t win” BS as well – it’s rather like whack a mole ….
But, it’s also like throwing a pebble in a pond – you don’t really know how far the ripples will travel or who/what they will reach …
Well that was the very explicit program designed by the Greenspan commission and implemented with the support of all parts of the political spectrum as best personified by Ronald Reagan and Tip O’Neill. This is one instance in which we completely know the answer to the common conservative rhetorical flourish ‘What would Reagan do?’. We know exactly what the former President would do, which is pay what’s owed, when it is owed, without a lot of nonsensensical posturing papering over highly self-interested and selfish motivations.
See this analysis. Long-term forecasting is dubious, and the scare is silly.
http://www.nextnewdeal.net/sites/default/files/wp-content/uploads/2010/12/a-world-upside-down
For instance:
The first yellow flag is Orzag’s frank acknowledgement that Social Security features barely at all in any putative budget short fall. “Social Security is not the key fiscal problem facing the nation. Payments to its beneficiaries amount to 5 percent of the economy now; by 2050, they’re projected to rise to about 6 percent.” 83 A rise of 1%! Even from the perspective of Rinehart and Rogoð’s 90% threshold, this is a drop in the bucket.
Blankfein would make for an interesting study. His dad was a postal worker, and Lloyd grew up in a NYC housing project before he headed off to Harvard.
Apparently, he doesn’t go back to his old stomping grounds too often to schmooze with his elementary and high school pals.
The term “class traitor” comes to mind.
Blankfein’s Father received a government pension and SS – and he “expected” and received the payments – lloyd used that income stream from his father to go to various schools and put a roof over his head
Nah. They shoulda shut down the damn post office, turn the housing project into upscale condos, then orphan Lloyd would have been forced to live in Gotham’s sewer system…and become… The Penguin!
Much better than Vampire Squid.
ar! ar! ar! ar! ar!
I’ve known people like that. Most people who come from struggling backgrounds have compassion for others in the same boat, but some say “never again!” and try to get as much money as they can no matter what, and to hell with anyone who tries to get in their way.
From the web site:
Contributions to the Campaign to Fix The Debt are tax deductible for income tax purposes.
I’m thinking it is time to scrap the charitable donation deduction.
Or at least end it for people who think government generosity is our country’s main problem.
Simplist solution is to eliminate the gravy train that Congress enjoys. Put them on Social Security/Medicare and see how fast they tell the CEO’s to get – – – – – – !
Take away their health care, too.
As all republinos believe: “I have mine and who cares about you?”
or Dems: I have mine, but I’ll pretend to care about you.
Ding!
(QED: Congresspeople and their fabulous taxpayer financed platinum health insurance policies VERSUS Obamacare.)
This excerpt from Lynn Parramore’s article illustrates the root of the problem we face:
“A generation ago, an American CEO would think twice about announcing utter disregard not only for his neighbors and employees, but also for the economy, which can’t prosper when income is consistently redistributed upward (see Nobel laureate Joseph Stiglitz’s The Price of Inequality for more on that theme). But in the present culture — even after the Occupy Wall Street movement – these business barons feel perfectly comfortable trumpeting their desire to get richer at your expense.”
For most of American political history, being rich was a liability with the American People when it came to affinity, political leadership and trust. Now the Rich feel free to blatantly insert themselves into politics and promote their own selfish interests at the expense of the American People. And the American People inertly absorb the insults. (This, of course, is of a piece with the recent election where self-loathing fauxgressives embraced a president and party that routinely mocks them, when it isn’t ignoring them altogether.)
How did we get here? It started, I’d say, with the Powell Memorandum in 1971, which is actually the One Percent Manifesto. If you haven’t read it, you should because it lays out the blueprint for how Right Wing corporatists have captured America.
http://reclaimdemocracy.org/powell_memo_lewis/
It’s all in there: propaganda, using the Chamber of Commerce, taking over the schools and the media, etc. Most importantly, the Powell Memorandum set the stage for the plutocratic takeover of the Democratic Party. The plutocrats’ plan has worked so well that the American People today, far from being engaged in a class war, have instead lobotomized all class consciousness. That permits the Rich to do what the Rich are now doing.
The solution? Beats me. But it seems a necessary starting place is to reignite class consciousness and undo the damage done by the plutocrats’ four-decade propagandistic coup. “When the people shall have nothing more to eat, they will eat the rich.” (Rousseau) So, yes indeed, Eat the Rich. Because it is the way it must be. The Rich are the enemies of the People. It has ever been so and so it must be. Time to wake the fuck up. Eat the Rich.
Eat the Rich! Simple, succinct, understandable to low-information citizens . . . fits on a bumper sticker. Maybe this should become the rallying cry for the 99%
..here one can find one helluva lota truth, and solutions, having been practiced all over world:
http://www.amazon.com/Hoodwinked-Economic-Reveals-Economy-IMPLODED/dp/0307589943/ref=sr_1_1?s=books&ie=UTF8&qid=1354120730&sr=1-1&keywords=hoodwinked+by+john+perkins
you want the 2011 revised edition-Perkins also wrote “Confessions of An Economic Hit Man”…
Whatsamatta? You don’t like the American Dream?
This is what Americans think they want. Then they lose their job, their house, their health and all hope. After Corpoarte America has raped them and beaten them to the ground, they finally realize who is really to blame: Jews, Blacks, immigrants, French, commies, socialists, fascists, and Muslims.
It’s fucking great to be an American!
See the piggy image of Blankfein here: http://www.taylormarsh.com/blog/2012/11/goldman-sachs-bailout-king-blankfein-to-powwow-with-house-republicans-while-obama-rules-out-social-security-for-now/
Have you seen the little piggies… http://www.youtube.com/watch?v=sXdKlpBOvs0
Who is backing the Center for a Responsible Federal Budget?
Pete Peterson
They are “partners” of Pete’s Fix The Debt make-Americans-serfs org.
these guys are out to Murder by Neglect 160 million citizens – they want them dead as quickly as possible – once SS and Medicare are gone along with Medicaid, unemployment benefits, SNAP – coupled with a value added tax imposed that will make sales taxes by the states look like small beer – the country will be perfect
the jobs transfer to china is not complete- there will be none left but a fraction of service jobs within ten years before anyone figures it out – they want the rules changed so there is no blow back to them on their wealth accumulated
no, it’s actually much, much worse=”Trans Pacific Partnership”:
“While the Occupy movement has forced a public discussion of extreme corporate influence on every aspect of our lives, behind closed doors corporate America is implementing a stealth strategy to formalize its rule in a truly horrifying manner. The mechanism is the Trans-Pacific Partnership. Negotiations have been conducted in extreme secrecy, so you are in good company if you have never heard of it. But the thirteenth round of negotiations between the United States and eight Pacific Rim nations will be held in San Diego in early July.
Tom Hayden and Lori Wallach
The TPP has been cleverly misbranded as a trade agreement (yawn) by its corporate boosters. As a result, since George W. Bush initiated negotiations in 2008, it has cruised along under the radar. The Obama administration initially paused the talks, ostensibly to develop a new approach compatible with candidate Obama’s pledges to replace the old NAFTA-based trade model. But by late 2009, talks restarted just where Bush had left off.
Since then, US negotiators have proposed new rights for Big Pharma and pushed into the text aspects of the Stop Online Piracy Act, which would limit Internet freedom, despite the derailing of SOPA in Congress earlier this year thanks to public activism. In June a text of the TPP investment chapter was leaked, revealing that US negotiators are even pushing to expand NAFTA’s notorious corporate tribunals, which have been used to attack domestic public interest laws.
Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny. Indeed, only two of the twenty-six chapters of this corporate Trojan horse cover traditional trade matters. The rest embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.
The stakes are extremely high, because the TPP may well be the last “trade” agreement Washington negotiates. This is because if it’s completed, the TPP would remain open for any other country to join. In May US Trade Representative Ron Kirk said he “would love nothing more” than to have China join. In June Mexico and Canada entered the process, creating a NAFTA on steroids, with most of Asia to boot.
Countries would be obliged to conform all their domestic laws and regulations to the TPP’s rules—in effect, a corporate coup d’état. The proposed pact would limit even how governments can spend their tax dollars. Buy America and other Buy Local procurement preferences that invest in the US economy would be banned, and “sweat-free,” human rights or environmental conditions on government contracts could be challenged. If the TPP comes to fruition, its retrograde rules could be altered only if all countries agreed, regardless of domestic election outcomes or changes in public opinion. And unlike much domestic legislation, the TPP would have no expiration date.
Failure to conform domestic laws to the rules would subject countries to lawsuits before TPP tribunals empowered to authorize trade sanctions against member countries. The leaked investment chapter also shows that the TPP would expand the parallel legal system included in NAFTA. Called Investor-State Dispute Resolution, it empowers corporations to sue governments—outside their domestic court systems—over any action the corporations believe undermines their expected future profits or rights under the pact. Three-person international tribunals of attorneys from the private sector would hear these cases. The lawyers rotate between serving as “judges”—empowered to order governments to pay corporations unlimited amounts in fines—and representing the corporations that use this system to raid government treasuries. The NAFTA version of this scheme has forced governments to pay more than $350 million to corporations after suits against toxic bans, land-use policies, forestry rules and more.
The slight mainstream media coverage the TPP has received repeats the usual mantra: it’s a free-trade pact that will expand US exports. But trade is the least of it. The United States already has free-trade agreements that eliminated tariffs with most TPP countries, which highlights the fact that the TPP is mainly about new corporate rights, not trade. Besides, under past free-trade agreements, US export growth to partner countries is half as much as to countries with which we do not have such agreements. Since NAFTA and similar pacts went into effect, the United States has been slammed by a massive trade deficit, which has cost more than 5 million jobs and led to the loss of more than 50,000 manufacturing plants.
How could something this extreme have gotten so far? The process has been shockingly secretive. In 2010 TPP countries agreed not to release negotiating texts until four years after a deal was done or abandoned. Even the World Trade Organization, hardly a paragon of transparency, releases draft negotiating texts. This means that although the TPP could rewrite vast swaths of domestic policy affecting every aspect of our lives, the public, press and Congress are locked out. Astoundingly, Senator Ron Wyden, chair of the Senate committee with official jurisdiction over TPP, has been denied access even to US proposals to the negotiations. But 600 corporate representatives serving as official US trade advisers have full access to TPP texts and a special role in negotiations. When challenged about the conflict with the Obama administration’s touted commitment to transparency, Trade Representative Kirk noted that after the release of the Free Trade Area of the Americas (FTAA) text in 2001, that deal could not be completed. In other words, the official in charge of the TPP says the only way to complete the deal is to keep it secret from the people who would have to live with the results.
The goal was to complete the TPP this year. Thankfully, opposition by some countries to the most extreme corporate demands has slowed negotiations. Australia has announced it will not submit to the parallel corporate court system, and it and New Zealand have rejected a US proposal to allow pharmaceutical companies to challenge their government medicine formularies’ pricing decisions, which have managed to keep their drug costs much lower than in the United States. Every country has rejected the US proposal to extend drug patent monopolies. This text was leaked, allowing government health officials and activists in all the countries to fight back. Many countries have also rejected a US proposal that would forbid countries from using capital controls, taxes or other macro-prudential measures to limit the destructive power of financial speculators.
However, we face a race against time—much of the TPP text has been agreed on. Will the banksters, Big Pharma, Big Oil, agribusiness, tobacco multinationals and the other usual suspects get away with this massive assault on democracy? Will the public wake up to this threat and fight back, demanding either a fair deal or no deal? The Doha Round of WTO expansion, the FTAA and other corporate attacks via “trade” agreements were successfully derailed when citizens around the world took action to hold their governments accountable. Certainly in an election year, we are well poised to turn around the TPP as well. To learn more and get involved, go to tpp2012.com.”
“A generation ago, an American CEO would think twice about announcing utter disregard not only for his neighbors and employees, but also for the economy”
What corporate titan need be concerned about the state of the economy when US fedgov can just hand him the MMT money?
Yeah, I have never been able to figure out how MMT would “fix” the current inequities. In general, the people who control the financial system are going to remain in control of the system and therefore will be the primary beneficiaries of whatever system is in place… whether that’s MMT or whatever.
” I have never been able to figure out how MMT would “fix” the current inequities.”
Simple: someone familiar with MMT knows the claim that there isn’t enough money to give everyone health care, food, and housing is totally bogus. It’s just that simple.
I actually do understand that basic point of MMT. It’s just that I am not a “believer.” This is not the same thing as saying MMT is wrong, though people seem to have a hard time grasping this. I’m in the skeptics camp…. skeptical of all great dreams and schemes of economists, financial thinkers, etc, to make the world a better place, no matter how well meaning and sincerely thought out.
@Valissa. Try reading Bill Mitchell’s blog for a better understanding of how MMT works.
Been there, done that, not interested.
It does not fix the current inequalities (I think proponents who state or imply that it does are overselling it). In fact I think the current problems are among the biggest barriers to implementation of MMT the way it’s described here. Inflation is not the only consequence of MMT-style stimulus – it also has the effect of redistributing wealth (it doesn’t make the pie any bigger, just changes the way it’s sliced). Redistribution of wealth will generally be opposed by those that currently possess the lion’s share of it. In a captured democracy they will generally have the power to ensure that it doesn’t occur.
I agree with other comments that there is often a conflation of MMT as a model of how the financial system works with MMT as a label for recommendations that arise out of the model. However I think that attempting to separate the two might be a little naive. You could say that the theory of gravity was a description and not an agenda, for example, but if you encountered someone who was about to jump off a cliff with the conviction that they could flap their arms and fly to the horizon, you’d probably try to stop them.
Its not “MMT” money, its corporate welfare. MMT does not prescribe shoveling the national wealth into the gaping greedy maw of capitalist owners and their henchmen. It prescribes use of the fiat, debt-free currency for public purpose, including a jobs guarantee. The first priority of MMT is that the government can print currency without selling debt. That move alone would do more to cut the wealthy off the public teat than any other in history. No longer would they be able to earn interest off of government, and would have to actually find solid investments for their ill-gotten gains. Its not MMT but crony capitalism and neoliberal economic practice that have managed to impoverish the people and enrich the scum. Wake up.
Who is “the government” of which you speak? That seems very abstract to me. “The government” that you refer to will be made up of human beings who will be in positions of influence, and these are not going to be selfless altruists or honorable civil servants. The problem I have with MMT is that it is too idealistic/utopian. Getting from here to there requires some type of deus ex machina to wrest the power from the existing establishment to folks who will (in theory) do things differently and better. Good luck with that! Orwell’s Animal Farm comes to mind here.
That would be President Jeffrey Immelt, Treasury Secretary Jamie Dimon, Labor Secretary Petreus and Congress getting elected the same way they do now.
Plus biz as usual at the banks.
Nirvana in a nutshell.
MMT is no more idealistic or utopian than Boyle’s law or the theory of evolution. It merely describes how today’s monetary system functions. What is done with that knowledge is up to us. One can like or dislike the fact that the government can print as much money as it wants under certain conditions, but that doesn’t change the reality.
…Boyle’s law or the theory of evolution… One can like or dislike the fact that the government can print as much money as it wants under certain conditions, but that doesn’t change the reality. @TK421
Love it. A description of a social arrangement is on a par with Boyle’s law and evolution.
The US Government is reimbursed printing costs alone for paper money. Just 7.7 cents for a $100 bill.
http://www.federalreserve.gov/faqs/currency_12771.htm
But it’s reimbursed full face value for coins. Same link. Hence the proof-platinum coin proposal.
And no, the FedBanks’ repatriation of profits to Treasury has nothing to do with seigniorage. It’s forgiveness of interest on the portion of US debt that the private FedBanks own.
the gov’t that is implied would have to be the treasury.The constitution delegated sole authority for the treasury of the US solely, to create money.The federal reserve act in 1913,solidified this power in the hands of a private corporation,operating as federal reserve banks.THIS IS SOMETHING THAT THE KUCINICH BILL is very clear on.(HR2990,last congress)MMT has no such clarity.I think this is an extremely important point.It makes sense that there is a cycle that needs to be stopped.The creation of money, by the federal reserve, for use by the gov’t which then creates a debt of the us gov’t to be repaid is one of many moving parts in what needs to be fixed. The financial nexis that is the banking/insurance giants that create all this stuff that is denominated in US dollars….adds to our money supply…these products of theirs are also left with little to no regulations, which is why all of these debts/default swaps/obligations/etc…supposed value so completely dwarfs anyones ability to repay….which has fueled these bubbles and creates all this paper wealth that in turn funds/finances our political/legislative processes,that in turn neuters the population as a whole…
MMT dollars theoretically refer to the same thing the kucinich plan would denominate in.US DOLLARS.what we have now is fiat money of the banks. loaned to america.paid back with whatever the columns need, be it bond sales,taxes,duties,investments,etc…the money in my pocket says it belongs to the federal reserve. I want treasury dollars.The GREENBACK was an example of this….obviously, the civil war period wasn’t something people can draw much from, as far as what happened to US debt levels… it is a “one off” so far.
I agree with you it is utopian, because it has changed the fundamental dynamics of borroweing we have lived with for thousands of years. There ae 2 distinct parties in a laon transaction. Who are those 2 distinct parties in MMT? The only time I am aware of when interest was not party of the transacton was when Jews loaned money to fellow Jews at no interest. Of course, back then, loan proncipal was taken seriously, and was actually repaid.
Don Levit
MMT does not prescribe shoveling the national wealth into the gaping greedy maw of capitalist owners and their henchmen. It prescribes use of the fiat, debt-free currency for public purpose, including a jobs guarantee. @YankeeFrank
That’s the PPC (proof-platinum coin) rendition of MMT. There’s also a rendition in which public debt equals private surplus.
But once a recipient of a public purpose check deposits it in the bank, the currency is debt-free no longer. The bank thereupon owns the reserve, the high-powered money, to spend and lend, rehypothecate and leverage dozens of times over. The depositor becomes merely a USG-guaranteed creditor of the bank.
“MMT does not prescribe–”
Those professing something called “MMT” declare “MMT” to be no more than that monetary system which we currently have, while also declaring “MMT” to be their own personal policy platform, (which I don’t necessarily support in any case).
That apparent terminological confusion is something those professing something called “MMT” would be wise to clear up. “That monetary system which we currently have” doesn’t look too auspicious.
Who are “those” of which you speak? I’ve never seen anyone write “MMT says that the government should, nay must, do X Y and Z.”
I don’t regularly read the Moslers and the Auerbachs (or their fanboys) because as soon as they state that
1) “‘MMT’ is just that monetary system which we currently have” and also state that
2). the minimum wage job guarantee “is a central tenet of ‘MMT'” that is non-negotiable–and countless people have tried denying, negotiating, and bargaining with them about this like mourners at a grave site, to little avail–
I figure that they are either
1). suffering from sophomoric terminological confusion, or 2). the next neoliberal policy entrepreneurs set to come down the pike.
I do regularly read Michael Hudson and Bill Black because they aren’t wallowing in terminal obfuscation, which is another way of saying I think they’re honest.
That’s all. Meanwhile, I can’t help it that what the MMT money is actually doing is funding all the worst tendencies of the the worst classes politically active in the US today and that it would be a far, far better thing to turn off their spigot.
People are probably right that that’s not going to happen and that people should just try to “get their’s” too, but that doesn’t mean I have to lie about it.
I do regularly read Michael Hudson and Bill Black because they aren’t wallowing in terminal obfuscation, which is another way of saying I think they’re honest.@JTFaraday
I was with you on Black, until this breathtaking paragraph in October:
Second, if the Fed is buying our debt, then it is not in fact debt. It is simply an accounting game. If Division A of Corporation Z “sells” bonds to Division B of Corporation Z there is no change in Corporation Z’s debt levels. That fact should have led Whitehead and Romney to ask why Treasury was bothering to “sell” U.S. debt to the Fed. The Fed’s surplus goes to the Treasury, so the Whitehead and Romney theory cannot be that Treasury has “run out of money” and the Fed has a trillion dollars in “extra” “money” that it is lending to the Treasury as a last gap effort to delay the inevitable default on U.S. bonds. The Fed could simply send its hypothetical $1 trillion in “extra” “money” to the Treasury as a component of its annual “distribution” to the Treasury.
http://neweconomicperspectives.org/2012/10/romney-is-shocked-to-learn-how-the-fed-creates-money.html
FedBank is a USG creditor, a private entity with shareholders, dividends and an immense payout written into law, should USG ever attempt to extricate itself. FedBank can and does sell the USG debt that it owns to whoever it cares to, in competition with new USG issues. As it’s conducting monetary policy, FedBank forgives the interest, some mere tens of billions per year, on its share of Treasury debt. That’s the payout. Yet here’s Black discerning that FedBank’s portion of the debt is nondebt, and that FedBank could return an extra trillion dollars of principal to Treasury.
Great idea to use the liabilities of a private corporate entity to fund government, but how to get that entity to go along?
Agreed Frank. MMT works fine, it’s just that the money is directed upwards instead of downwards.
There is no “MMT money”. MMT simply describes how the modern economy works. That’s like falling off a ladder and blaming Isaac Newton.
You’re just saying what I said above. Those professing something called “MMT” declare “MMT” to be no more than that monetary system which we currently have.
Therefore, we didn’t fund the permanent war in the mid east or bailout the banks with, say, trillions of “gold standard dollars.” We did it with trillions of “MMT dollars.”
Based upon the rhetoric on those professing something called “MMT”, this would seem to be non-controversial.
People don’t seem to like the idea that the MMT money is funding the worst tendencies of the current global hegemon, but I can’t help that. That’s just the way it is.
I’m not going to lie about for you.
The problem is that you want to say “MMT”– this reputed ability to spend without limit– is inherently good, whereas the truth is that it’s no such thing.
I am inclined to agree that it is definitely a two edged sword, however at this point maybe it would be good to get folks to understand that it is, in fact, the way it is – the gov’t in funding the wars and the bailouts is certainly living the MMT scenario – we can throw out as much money as we want for whatever we want – so in that case we should be able to argue with just as much credibility, then you can finance all this other stuff, too – hey, gov – if we can’t “afford” SS and medicare, then we can’t “afford” all the money you keep throwing at these goons, either ..
ISTM, at the very least it is a way to get a “logical, legitimate” foot in the door of the discussion …
The problem, as always, however, seems to be that we the people don’t behave as if such a “logical” approach would even matter or actually influence our approach to our pols ….
Actually, I was just wondering if Arlo Gunthrie had to learn MMT before he wrote Alice’s Restaurant. The mind works in strange ways sometimes….
But really, I thought that we were off the gold standard and had fake money made by a printing press all the way back in high school. Then in Econ 101 they told us that too, so I was sure then because an economists said so. Then I had the rest of the econ course, but re-convinced myself we really did have fake money, because it vs. the price of gold changed so much all the time. The I read a book in the early 80s about how the Fed does monetary policy.
So I don’t think it is a huge revelation to most of the adult population out there that the USG really does have a printing press. But MMTers make it sound like they just discovered that a short while ago.
So I don’t think it is a huge revelation to most of the adult population out there that the USG really does have a printing press. But MMTers make it sound like they just discovered that a short while ago. @Hypothetical_Taxpayer
MMTers believe that USG can fund itself via the printing press. Despite being credited only 7.7 cents on a $100 Federal Reserve Note (and paying that out to run Engraving and Printing.)
If USG wants paper money seigniorage, it will have to issue US Notes rather than print Federal Reserve Notes. Lincoln did this; JFK attempted it. Both attempts terminated with extreme prejudice. Ours is a private money system, which is why USG must borrow in such immense amounts, and why we’ve turned ever-deepening indebtedness into a global way of life. With an attendant threat to liberty itself.
Well, there are many schools of MMT it seems. Almost as many as there are MMTers from what I can tell reading blogs. Maybe you a having fun including paper money seigniorage. Why not? If we do the $60 trillion platinum coin thing I’m afraid we’ll get hit with a $59 trillion tax bill.(if we do MMT)
This may sound old school to you, but we used to say there are reasons fiat currency has value.
1) You can buy stuff with it
2) You can get interest or investment return on it. This makes it a store of value – at least once you invest it.
3) The final test – people want to steal it
The trick is you want to earn money from an employer or your own business and not go into excessive debt. Everything works well then.
Post War, the banks and money system worked reasonably well for a few decades. We could turn back the clock and return to what is sometimes refered to “utility banking”, and things may work ok again.
Same goes for the government. They do ok if the money they borrow – which can be our store of value, is not foolishly wasted and government services are paid for by taxes. Then there are the Keynesian wrinkles like counter cyclical fiscal policy – to fight recessions/safety net – but then you need to tax in good times to keep debt from growing out of control.
Oh, yes. We need SOME USG debt otherwise there would be NO MONEY. The amount that did work pre 2008 was a Fed balance sheet of $900B. (I’ve found I always need to add that comment, from blog comment experience)
“you want to say “MMT”– this reputed ability to spend without limit– is inherently good”
Really? Who has said that?
“there are reasons fiat currency has value”
Don’t forget
4) that fiat currency is the only one which your government will accept as payment. You could try to pay your property tax with gold bars, or canned goods, but that won’t work.
“I am inclined to agree that it is definitely a two edged sword”
This is frequent concern here: that if the government realizes it has an endless supply of money, then it will go crazy with wars, giveaways to the rich, etc. But everyone here has enough experience to know that the people in charge will do those things whether they believe in the printing press or not. George W. Bush didn’t care about paying for his wonderful wars, didn’t even give it a second thought. Someone else would pick up the check for his deeds later on, he figured, like with everything else in his life. Same with his tax cuts for the rich.
President Obama feels much the same way. The reason we haven’t invaded Libya is because we don’t have enough soldiers, not because we don’t have enough money. If America had 500,000 troops sitting around doing nothing, Obama would send them in, costs be damned. How did Reagan pay for all the bombers and submarines and missiles he built? He didn’t. Same thing.
They don’t care about covering the costs of what matters to them. When times are good, they say we need to cut taxes to give people back their money. When times are bad, they say we need to cut taxes to stimulate the economy. When the government was running a surplus, Bill Clinton wanted to cut social programs. Now that the government is running a deficit, President Obama wants to…cut social programs.
There is precisely zero chance that anyone will walk up to Barack Obama or Harry Reid or Nancy Pelosi and hand them a bill for the Afghanistan surge, so they don’t care, spend away. But ask them to give every American health care, or eradicate hunger, or buy a home for every homeless person, and all of a sudden it’s “gosh, we just don’t have the money.” Which wouldn’t be a problem if so many other people didn’t believe them.
Well, let’s be honest here: the people who pushed for invasion of Iraq believe that that misstep must now be paid for, hence their drive to cut Social Security payouts, heating supplements for the poor, medical care for the destitute, etc. to lower government debt. On the other hand, someone who recognized what MMT says would simply say “there is no reason to ‘find money’ for what we need to fund.”
The big finance bailouts are a little different. The government simply went into various bank accounts, added a zero here and a zero there, and called it good. That’s because the government has much more leeway to create new money than most people think. So if we can create new money for rich schmucks, why not for starving people as well?
None of these horrible decisions were MMT’s fault. I don’t see why describing a portion of reality deserves blame for people who abuse reality.
Like I said, I don’t have a huge problem with the peons who want to “get their’s” too. But that’s as far as it goes.
“None of these horrible decisions were MMT’s fault. I don’t see why describing a portion of reality deserves blame for people who abuse reality.”
Well, when you use the same term to describe the permanent war and bailout monetarists “that we currently have” and your own policy agenda, you kind of set yourself up for that.
MMT is not an agenda, it is a description. I don’t know how to say it any clearer.
Right. Like I said this morning, what corporate titan need be concerned about the state of the economy when US fedgov can just hand him the MMT money?
So nice to come full circle.
MMTers (The Big Guys – UMKC economists) are taking it much, much further than just a description of how our pre 2008 FOMC used to buy and sell modest amounts of 90 day T-Bills to influence interest rates. They think they have an all encompasing economic theory now, which is mostly keynesian except spoken in something akin to pig latin thru a kazoo.
It has lots of goofy conclusions too. For instance, the USG can spend as much as it wants until inflation picks up, then they raise taxes at that point to quell inflation. HA! – we can’t even let the Bush Tax Cuts expire. Then we have one more thing to worry about in life – a tax bill that acts like a variable rate mortgage – irregardless if you have the money to pay it or not. Then they like talking about debt prison. Or that the rich people got away with all the money and the serfs got stuck with the bill. Real Brain Trust there in Kansas.
“we can’t even let the Bush Tax Cuts expire”
Probably not, but then again our current regime isn’t about to employ modern monetary understanding to boost spending for social good anyway, so it’s a moot point.
The rich buy power with money, and aren’t MMTers concerned with aircraft carrier inflation?
jesse has aptly described the psychological disease of these enemies to you and America as the czar nicholas syndrome
I heard the Orifice of Obama/Omaha bloviating on that interview Hiriam Bilgewater cites. The Orifice said several unbelievable things, two of which I will cite because they are so disgusting. First, that Obama should appoint Lyin Dimon to Treasury Secretary to prove to Wall Street that he wants to mend fences and that the past is “water under the bridge.” I say tell that to the people Living under the Bridge who lost their homes to the fraud of these bansgters.(Of course, I never figured out after shoving $17 bilion dollars down the banksters throats what fences were even put to leaning just a bit, let alone, broken.)
Second of all, his fawning biographer(a woman, and Bershire investor) who was also on the interview, paused while giving him a luscious hand job under the desk, mentioned the best thing about the Orifice is that everything is just numbers to him. His emotions never get in the way. The Orifice joyfully concurred.
So,now we know that all of this worrying about taxes, forcing sped-up foreclosures through his BofA and Wells puppet banks so Berkshire can buy them cheap (thanks Fannie and Freddie for financing us) and then rent them back to the people under said bridge.
No mention of social responsibility, nada. The Orifice is just a more Big Brotheresque version of Mittens Romney, also famous for the “just the numbers.”
Here is the latest – shave it to save it – argument being made by Dems right now;
http://www.huffingtonpost.com/2012/11/28/fiscal-cliff-_n_2203616.html?utm_hp_ref=politics
This is all part of an orchestrated and choreographed fracas which will ultimately end up with real and serious cuts to Medicare, but very possibly to Social Security as well.
It’s like making a theatrical production out of hanging someone, “Oh maybe we won’t, oh maybe we will”, where everyone knows in advance that sooner or later we are going to hear the sound of the neck snapping.
The nine steps up to the gallows given by name in the post, are truly the scum of humanity.
I like your comment but I can’t find that Durbin quote in the HuffPo article you linked.
You’re right, but not only have they have taken it out, They have also removed the article from both their Main and their Politics page.
I can’t find the quote anywhere, but I cut and paste it from that link about an hour ago.
Amazing, HuffPo told or decided on their own to get rid of it.
For some reason this link won’t post, I’ll try it a different way:
click here
I’m stubborn:
one last shot, http://nation.time.com/2012/11/28/senate-dems-divided-over-cuts-to-benefit-programs/
It worked above (and also below).
I think this is an AP story and that HuffPo got switched after a default period to the abbreviated version. I don’t know how long the above link to “nation.time.com” will work, but it works right now.
Thanks. Didn’t mean to cause you extra work.
Durbin really has some nerve. Spoken like a true Senator with the best health insurance (tax)payer money can buy.
Besides his non-sequitur baloney about “we hafta give on Medicare or we’ll never get respect from the other side” (when did he become an invertebrate?) is it really that had for Durbin and the rest of the Forked-Tongue Congress to go with lifting the cap on SSI/Medicare payments (assuming, without conceding, that Medicare needs more funding, which is itself a falsehood).
Yes, it is that hard, because it would mean ending the most regressive tax scheme in this country.
Jeff Immelt takes the cake. He keeps his job despite lying to shareholders, the public and about anyone else you can think of while we seem to be required to pay GE for the pleasure of their existence. Break up the company.
There is a word for the merger of government and business, it’s called economic fascism. It’s a different animal than straight-forward nationalization, which is plagued by the government idiocracy. With economic fascism, the giant corporations use their business acumen to help the government more fully fleece the populace, while government helps the giant corporations with tax gifts and de-facto monopolization through regulation. A very symbiotic relationship. Oh,by the way, the rest of us get stuck with the bill.
I think the model they are going after is like the AHC, where 1)profligate private corporations exact fealty from the public in the form of intolerable sums of money for sh*t insurance and then 2) the government acts like Guido the enforcer/collector so as to take the cost and drugery of bone-breaking off the back of business and finally 3) there is a handsome, very handsome, kick back to politicians so they can sleep at night and get re-elected by day.
” … the government acts like Guido the enforcer/collector so as to take the cost and drugery of bone-breaking off the back of business and finally.”
Well put. The only disagreement I have is that our government is already Guido the Enforcer, as amply demonstrated in its performance since 2007 (and of course for several decades before that) in (1) being the collection arm for banks against the working class victims of the Kleptocrats (finance sector and (2) running Potemkin “regulatory” and “law enforcement” departments designed to (a) suck workers’ cash into Kleptocrats greasy hands and then to grant waivers and make rules and regulations to make the process (which we now know cannot function without fraud by the Kleptocrats) smoother and (b) stand as buffers between pitchforks and bankers (via nonprosecution of Kleptocracy’s crimes against stuffees and other victims of Finance’s Fraud-Based Business Model(s).)
Read more at http://www.nakedcapitalism.com/2012/11/9-greedy-ceos-trying-to-shred-the-safety-net-while-pigging-out-on-corporate-welfare.html#KwlJLSdCZK74AIg0.99
mussolini said it best,he called it “corporatism”…..and ever since, that has been the best word.It doesn’t elicit the programmed response people have to the word”fascism”,,which may be perfectly accurate,but makes people recoil into thinking bush/obama/clinton are JUST LIKE hitler….which in their mind isn’t computing as they shine you on while they think”this person is so naive, I’ll just shine them on while I pay absolutely no attention to what they have to say…”
Well, the analogy is really not far fetched — castor oil (“olio di ricine” — the substance that Mussolini force fed to “traitors” to Il Duce and prisoners) has now been used as an image to describe what the 99% need to “take” as part of this Grand Bargain hideousness.
“Tthe liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism.”
― Franklin D. Roosevelt
For some reason this link won’t post, I’ll try it a different way…
click here
Regarding MMT, and there being plenty of money for all who need food, etc., it sounds simple, but also very confusing.
People respond with “Then why not write every American a check for $1 million?”
The MMTer says that is preposterous. Well, why not write everyone a check for $25,000?
What might be the result of such an action?
Don Levit
The reason not to give everyone a pile of money is the threat of inflation. Since the dictionary definition of inflation is an increase of the money supply over the supply of capital, newly-created money should be used to create capital (factories, education, roads, power lines, etc.) rather than scattered willy-nilly.
@TK421. My understanding of MMT is that hyperinflation would only become a problem when too much demand is chasing too little supply. We are in the exact opposite situation right now. If we were to get to 1-2% unemployment and people were flush, that could be attenuated by raising taxes and interest rates.
Exactly. That’s a good way of putting it: all supply and little or no demand.
You’d eliminate poverty at a stroke.
America has a ruling class made up of criminals and traitors. They all deserve to be in prison for the rest of their lives.
DownSouth long ago pointed out this passage from Niebuhr’s Moral Man and Immoral Society. It remains the best description I know of of how elites think:
They equate their good with the general good. Thus no matter how draining, destructive, undeserved, and/or disproportionate the costs of their privileges are these must always come first because their good is THE good.
That is a powerful statement.
I am going to get the book.
It is incredible the lengths people go to to justify their actions and thoughts, particularly those who have accrued wealth. Certainly, their are justified, to an extent, for the wealth they have wortked so hard for over so many years. But, takem to an extreme, one thinks he did it virtually alone, as if he was a self-made man.
Don Levit
Sorry if the link’s posted above, Michael Hudson on the “crisis”.
http://blackagendareport.com/content/fiscal-cliff-fake-crisis-real-news-network-interviews-economist-michael-hudson
If pocket A is loaning to pocket B of Pants C, then interest is not as valuable, as if there were 2 distinct pockets in 2 distinct pants!
Don Levit
In my study of CALPERS pension funds it is clear that these CEO’s and big banks were directly responsible for wiping out retirement funds of millions of Americans in private markets. Now they also want to wipe out the government safety nets for the elderly. They should all shut up and be thankful they are not sitting in jail for the rest of their lives for worldwide financial crimes. Why does the media even ask the opinion of people who are criminals? Americans need to wake up and take the Country back from the financial elite before we are all living in total poverty.
GENUFLECTING AT THE ALTAR OF MAMMON
Is it just the CEOs? Some figure that greed has become a central artifice of the “American Way”.
America’s Income Disparity had begun long before outrageous greed manifested itself on Wall Street. The present economic context is its ultimate consequence, some 30 years after Reckless Ronnie tinkered with upper-income taxation.
It started when he lowered upper income taxation to 28% from above 60% where it had been since four years after the inception of Income Tax (in 1913) during his administration in the 1980s.
See historical chart of Top Bracket rates here. (Scroll down to the chart just below.)
Income Tax was established in 1913. The Top-Bracket tax in the US had been consistently above 60% (and sometimes much higher) since 1917, with the exception of only one year, 1925. And what happened four years later in 1929? How long did it take us to get out of the Great Depression? Ten long, long years.
The history-chart shows the reduction in upper-level taxation dips below 40% in 1987, having first been brought down to 50% by Reckless Ronnie in 1982 – barely his second year in office. He ultimately brought the tax rate down to 28% before leaving.
Just twenty years later, history repeats itself – we have had yet another economic cataclysm from which we have yet to fully recover.
History repeats itself in time, but always in different ways. For every causal action there is ultimately a reaction, even in economics. Lowering income tax rates too far set’s primes an economy’s dynamic with worst possible incentives in a modern democracy. Why?
Because it inculcates people into a “get-rich-quick and the means-justify-the-ends mentality”, as well as the syndrome of “I’ve got mine and Eff-You!”.
Is that what we want for a society? One fixated upon obtaining and accumulating riches by all means possible – be that illegal banksterism on Wall Street or a perfectly legal state lottery worth hundreds of millions of dollars?
Because that is the kind we’ve got … a society genuflecting at the Altar of Mammon.
MY POINT?
What insanity in a nation with 15% of its people below the poverty threshold. What about them? Or another 30% struggling to maintain the semblance of a middle-class existence?
They are all just “Road-kill on the Highway of Life”? Which seems to have installed itself in our culture – our Way of Life. It’s not just the OnePercenters or TenPercenters – it’s the effect that such hallucinatory accumulation of capital – first by income, then by wealth – from which they benefit.
It destroys any sense of fairness and level-playing-field that were once cornerstones of our existence. Now, it’s all about money – no more, no less.
And this is the mentality that we, the present generation, shall bequeath to our children. Because, for most us 90Percenters, there will not be much financial wealth that we will be giving them – given the slow but inexorable degradation of 90Percenter shares of income.
But is financial wealth what we really should be leaving to them?
Are we not better off with a society that is proud of its Social Democracy, based upon equitability? And to obtain such a “Social Justice” where income distribution is fair if unequal, would not a far more progressive Tax Code be more effective? Rather than waiting for “revenue” to assure us a better or acceptable standard of living.
This is what happens in Social Democracies in Europe, where tax rates are much more progressive than in the US. Health Care is universal and far less expensive to the population than in the US. A postsecondary education is available without commencing to save for it at a child’s birth. Are these not important to assuring that level-playing-field?
If not, then what is? Is a lottery ticket a better chance? Nope, given the odds, it isn’t …