The Catfood Commission Launches generational warfare

[Alcibiades]

Now that we have had time to reflect on it, it is clear that what the catfood commission wants to do will be horrible, especially for folks in my generation. While it's pretty easy to get folks who are currently retired fired up about these things, it's harder for folk who won't retire for 30 years to see what these folks are up to--which is why generation x folks need to stand up and take notice now, because tomorrow will be too late.

If this is really about balancing the budget, why slash the top tax rate from 35 to 29%? If cutting taxes were the panacea that has been supposed, the Bush tax cuts would have broken the business cycle and ushered in an era of permanent prosperity. Instead, they have only added to the national debt, and unemployment stands at 10%--far worse than when the tax cuts were enacted. If anything, there is reason to suspect that low tax rates for the top bracket increase unemployment, because that has been our recent experience.

The deficit commission claims that this massive windfall for the wealthiest Americans is needed to offset ending certain tax expenditures, but this claim makes no sense. Why take away the mortgage interest deduction for the middle class and use the savings to slash the top tax rate? There is also a certain generational aspect to this that is profoundly unfair. For years, members of generation X saw the prices of homes go up and up and up. While this benefited the few who were in a position to own a home when they were quite young, for many more it kept them out of the market for single family homes and in the rental market. The one upside of the bursting of the housing bubble has been that many of these folks have finally been able to buy a home: part of their calculus in so doing has no doubt been the mortgage interest deduction. Now the deficit commission comes in and claims that these new homeowners, the few people whose decision to buy in a down market has been the only thing keeping prices from collapsing completely, are to be denied the mortgage interest deduction, a deduction enjoyed by the very people who kept voting for the folks who ran up the deficit in the first place. This is the worst sort of generational warfare, taking food out of the mouths of children in young families, and using the savings to finance tax cuts for the wealthiest Americans.

Taxing employer expenditures for health insurance is simply insane. The president's promise on health care reform was "If you like the insurance you have, you can keep it." So much for that. When you couple this with the plan to force people to buy health insurance, the net effect of this will be that most Americans will pay far more out of pocket for health care than they do today. Almost every private-sector employer will drop coverage.

Then there's the plan to steal from future retirees. When the Congress decided to open up the social security trust fund to finance profligate military spending in 1984, their critics said that they were ripping off retirees. Now, the deficit commission aims to prove these critics right. For years, the SSA has maintained that the non-marketable securities it holds are every bit as real as actual treasuries. Now, the deficit commission effectively wants to renege on these obligations by paying out less to generation x as they start to retire--the same people who will not have the benefit of the mortgage interest deduction, the same people who will be dropped by their employers, the same people who will be forced to buy their own insurance on the private market just as the baby boom becomes eligible for medicare.

We is screwn.

The folks in their late 30s and early 40s today will be the ones eating the catfood.

[OhioBlue]

1. Do you know of a good article that outlines the decision

of Congress in 1984 to open up the social security trust fund and the consequences of it? I'm going to google for more info - but if you can point me to a good article, I would be very appreciative.

I'm trying to gather info for a presentation that outlines specific decisions that helped propel the transfer of wealth from the lower and middle class to the upper.

[Alcibiades]

4. Here are a couple

I remember this pretty vividly from that time, though I was only 16 and didn't really think about how this would play out. It all goes back to the Social Security Act of 1984, when Reagan raided the SS trust fund to pay for military spending.

See Ravi Batra's 2005 book: Greenspan's Fraud on Alan Greenspan's role in the Social Security Act of 1984.

See also this excellent article from the International Longshore and Warehouse Union:

http://www.ilwu.org/dispatcher/2004/05/social-security.cfm

And, for a good review of what Reagan & Greenspan's critics were saying at the time about the Social Security Act of 1984, see this article from the February, 1983 issue of Monthly Review:

http://www.monthlyreview.org/0283morris.htm

But it all goes back to the Social Security Act of 1984.

[OhioBlue]

7. thanks a bunch!

I'm looking at the first now - and it looks very helpful.

:hi:

[Alcibiades]

15. Oops!

I meant the Social Security Amendments of 1983. (I had gotten them mixed up with the Disability Benefits Reform Act of 1984).

http://www.ssa.gov/history/1983amend.html

[stevedeshazer]

2. Good observation.

I wish more people realized this.

+1

[dana_b]

3. I'd expand that to all folks under 55 years of age

however do we know that the commission won't touch the SS for the people who are receiving it now or are near retirement? I don't trust anything they are doing/proposing.

I'm a gen x-er too but I do not believe for a moment that the boomers or anyone is safe.

[Alcibiades]

6. You're certainly right

I just cannot help but note that, with all this talk about the debt burdening "future generations", no one seems to notice that it is the folks currently in the prime of their lives who will bear much of the burden.

For years, I wished to own a home, but couldn't, mainly because the appreciation in prices was greater than the appreciation of our income. So we saved and saved, and looked for about three years. Then, just as the housing bubble began to unfold, we bought a house for $12,000 under tax value, because my wife was pregnant with our second child and I was concerned (rightly, as it turned out) that credit would dry up. Now that we finally have the privilege of making mortgage payments, they want to do away with the mortgage interest deduction. If they were really as concerned about equity as they claim, they could just cap it.

I do think current beneficiaries are in better shape because lots of teabaggers are in that boat. If Congress touches their checks, these small-government advocates will come down on them like a ton of bricks. Since teabaggers are all the next congress will care about, that should keep all current beneficiaries safe.

[TheWebHead]

5. taxes aren't being slashed

they're being raised since the common shelters are being trimmed back or eliminated. And it would hike the cap gains tax rate. total revenues from taxes would increase. compared to the $4 in cuts for every $1 in tax hikes in the UK, this plan is quite favorable, especially when considering government spending has increased from $3.2 trillion in 2001 to $6.4 trillion this year, much more than the combined inflation and population growth in the same period, or 100% vs about 35%.

[Alcibiades]

8. The question is, why do it at all?

The rates are being slashed. The catfood commission's mandate is to cut the deficit. Why eliminate tax expenditures and then offset them by such a large cut in the tax rate for the wealthiest households and corporations? Makes no sense from a budget-balancing standpoint.

There's nothing done to offset the massive shift in health care costs from employers to employees that this will engender. There's no way that employers will simply tack what they have been paying in healthcare onto people's paychecks.

Also, we should be concerned that what we saw today was vague on specifics on the defense cuts. They outline the cuts to social security and the tax cuts for the rich in great detail. These cuts are themselves a joke. $100 billion? A joke. I think that retirees who have played by the rules and paid into the system should take priority over our $700 billion war machine. You could cut $500 billion and still be spending twice as much as China.

[unblock]

9. they thoroughly discredited themselves by proposing tax cuts

there is simply no deficit-cutting rationale for a deficit commission to include a deficit-increasing tax giveaway.

hell, if you're going to go off topic, why not include as a plan to go to war on a few countries? why not address abortion or gay marriage or flag-burning? yeah, i know, because that has nothing to do with cutting the deficit. but then, why the tax cuts?

right, because they transparently have goals in mind other than cutting the deficit.

[Alcibiades]

10. Or the cap on the size of government

The commission is clearly stacked. Its members range from center-right to far-right. And yet it looks as if they will fail to get to 14 votes. I hope that's the case: this plan deserves no legitimacy.

You'll notice that, despite cutting Social Security benefits, there is no corresponding cut to FICA rates. Despite the manufactured "crisis" in Social Security, there's a far greater mismatch between revenues and outlays when it comes to the overall budget: there's a hue and cry that Social Security will go cash negative, but the overall budget has been cash negative for my entire lifetime.

When it comes to top marginal rates that only touch a minority of the richest, tax expenditures must, they say, be at least partially offset by a rate cut. But when it comes to Social Security benefits and FICA taxes that touch everyone, cuts in benefits are not offset in any way. This shows you what this commission's priorities are.

This is looking very much like the health care reform deal: it was predetermined that the outcome would be mandatory private insurance rather than single-payer, or even a "robust public option." Here, the predetermined outcome was cuts to the top marginal tax rate and benefit cuts for working Americans.

[Kalyke]

16. You bet it's stacked. Here are its members:

Commission Members

Co-Chairmen:
Sen. Alan Simpson. Former Republican Senator from Wyoming.
Erskine Bowles, Chief of Staff to President Clinton

Executive Director:
Bruce Reed, Chief Domestic Policy Adviser to President Clinton

Commissioners:
Sen. Max Baucus (D-MT)
Rep. Xavier Becerra (D-CA 31)
Rep. Dave Camp (R-MI 4)
Sen. Tom Coburn (R-OK)
Sen. Kent Conrad (D-ND)
David Cote, Chairman and CEO, Honeywell International
Sen. Mike Crapo (R-ID)
Sen. Richard Durbin (D-IL)
Ann Fudge, Former CEO, Young & Rubicam Brands
Sen. Judd Gregg (R-NH)
Rep. Jeb Hensarling (R-TX 5)
Alice Rivlin, Senior Fellow, Brookings Institute and former Director, Office of Management & Budget
Rep. Paul Ryan (R-WI 1)
Rep. Jan Schakowsky (D-IL 9)
Rep. John Spratt (D-SC 5)
Andrew Stern, President, Service Employees International Union



Seems we have far more corporate reps than labor reps and, without knowing a lot about every single Congressional member, a quick glance over the states that even the Dems represent here, I'd say the vast majority of them are Blue Dogs or barely center-left.

[Alcibiades]

18. Baucus and Simpson both had a hand in causing the "crisis"

Both voted for the 1983 Social Security Amendments that increased FICA and let Congress use it as a slush fund.

[deminks]

11. Prosperity for Uber Rich, Austerity for the rest of us.

That's the goal. So far, their plan is working perfectly.

[Alcibiades]

12. Then there's this:

http://www.npr.org/2010/11/15/131326969/the-new-republic-in-defense-of-the-deficit-proposal

"To be sure, the Bowles-Simpson approach to taxes is problematic. After eliminating over a trillion dollars in tax deductions and similar policies, the plan uses only $80 billion of it for deficit reduction. The rest gets plowed into lowering taxes. Some rate reduction would be necessary, both to win Republican support and because, in the absence of such cuts, the ending of tax deductions and other measures would effectively lead to a 50-percent tax hike. Still, the balance Bowles and Simpson have chosen doesn't make any sense. Why not split the trillion dollars evenly between the two priorities, rather than the 93-7 split they're pushing?"

The plan cuts a trillion in tax expenditures, many of which actually would constitute tax increases for folks who earn less than $250k a year, but only cuts $100 billion from defense. The fact that a $100 billion cut is a cut that is larger than the defense budget of any country does not mean that these are deep cuts, only that our spending is so bloated.

[spanone]

13. alan simpson can go fuck himself...greediest generation my ass

[bullwinkle428]

14. We're going to get screwed over TWICE regarding tax cuts for the rich -

Step 1 : Democrats roll over on the Bush tax cuts

Step 2 : The rich get ADDITIONAL tax cuts once this Catfood Commission mess gets implemented

K&R.

[Alcibiades]

17. Simpson Ruined Social Security personally.

Here's what's interesting: the whole fiasco involving the money the government owes the trust fund goes back to the Social Security Amendments of 1983. Can you guess who voted for it?



Senator Simpson of Wyoming.