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Erosion of democracy by any means possible has been a decades-old Republican goal - whether by voter suppression, stolen elections, judicial fiat for corporate rule, or distortion, distraction and demonization surrounding public policy and political opponents. Simultaneously, the neoliberal economic assault by corporate elites eviscerates the working class by suppressing wages, strangling social services and looting pensions. The war on the working class is a two-pronged effort to reorganize state social services by elimination or privatization, and to decimate public-sector unions, writes Arun Gupta. Slashing social services increases the pool of workers desperate for a paying job, further depressing wages and benefits.

The failure of the Democratic president to offer an alternative vision grounded in principle and instead to lean on Wall St. money for reelection, enables the Republican devolution of democratic government and the economic race to the bottom. Compounding his failure to relate a vision of economic recovery for working people has been President Obama’s willingness to deal away Democratic Party principles originating with the New Deal and Great Society programs, notably, Medicare, Medicaid and Social Security. Such cuts exacerbate the condition of already hurting Americans, and reduce the likelihood of long-term economic growth.

Democratic Leadership’s Complicity with Neoliberal Disaster Capitalism

The President has abetted the 40-year Republican goal to advance Milton Friedman economics, facilitating the large wealth transfer upward while privatizing profit and socializing risk, forcing working people to take the fall for Wall St. bubbles and speculation. The 40 year run-up of huge deficits is calculated to justify cutting social programs, benefits and wages, and to return to the extreme disparity of wealth of the 1920s, observes economics professor James Crotty. U.S. jobs are further displaced by huge defense expenditures and globalization that encourages capital to flee the country.

Rather than creating jobs, economist Dean Baker states that a primary goal of political right-leaning neoliberals for three decades has been to wipe out the labor movement, lock in regressive monetary policy, push trade and currency policy explicitly designed to redistribute income upward, and use huge deficits as excuse to wipe out public spending.

Just as “austerity” and “shared sacrifice” are Washington code for preserving tax advantages and privilege for the wealthiest while shifting cost burdens to the working class, Republicans use the false frame of “job creators” deserving huge tax breaks. Economics professor Richard D. Wolff recounts that over the long-term assault on workers, suppression of wages has been regarded as “solution” by both Washington and Wall St., who deem a depressed economy the means to cut wages. Wages have been held flat, jobs off-shored and workers’ benefits stripped away, while corporations have looted the government, investing growing profits toward buying politicians and writing self-serving policies of lowered taxes and deregulation.

Former chair of the Federal Reserve Board Alan Greenspan previously praised debt as a “cure” for the “labor problem” - a means to the ends of steadily falling wages. So, too, has the predominant mindset of the Obama-appointed deficit commission been to reduce labor’s wages, notes Michael Hudson, President of the Institute for the Study of Long-Term Economic Trends. He cites corporatists’ view that impoverishment of the economy is an opportunity to become richer by shifting the tax burden away from finance and industry onto labor. "What Greenspan and others call the post-industrial economy is really neo-feudalism, a financialized economy where all of the surplus goes to the banks," says Hudson.

Nor have workers benefitted from rising worker productivity over the past 30 years, as flat wages have made it necessary for employees to work longer hours and to borrow to stay afloat. Corporations and employers alone have benefitted from a 105 percent rise in average U.S. labor productivity. Even as productivity doubled since 1972, average American workers have taken a 7 percent pay cut.

Wolff, author of Capitalism Hits the Fan, cites the 40-year reversal of proportional corporate and individual taxation: For every tax dollar currently paid by individuals, corporations pay 25 cents. A 91% corporate tax rate in the ‘50s and ‘60s has shrunk to the current 35% top rate. Ironically, instead of creating U.S. jobs with their surplus, the private sector exports jobs, and corporations make money bylending their vast funds to the government with interest to fund the deficits. Wall St. saw record profits in the two years following the bailouts by taking advantage of Federal Reserve and U.S. Treasury monies. The economy has been further wrecked by the increasing trend since the ‘80s of financial speculation (shifting risk to taxpayers), reduced taxes on high incomes, and increased expenditures for the military-industrial and medical- insurance complexes.

Full employment does not even factor into the Washington economic calculation, though economics professor Robert Pollin thinks it should be a central policy goal, in place of patched-up neoliberal policies of fiscal austerity and business deregulation. Instead of hyper-speculative practices, incentives should force credit markets toward full employment investments. Pollin notes the effective alignment of creation of a full-employment economy with another fundamental policy aim - ending our dependence on fossil fuels and creating an economy powered by clean energy. A study by The Political Economy Research Institute, where Pollin is co-director, concluded that clean energy investments are the most effective source of job creation, after education.

Professor of Political Economy Jack Rasmus judges Barack Obama’s $447 billion Jobs Plan “too little, too late,” noting that 60 percent of the jobs bill consists of non-job-creating corporate tax cuts. Whereas the bill’s aid to small business counts on bank loans, Rasmus observes that because big banks are using money for speculation, not credit, it would be better to permit small businesses to borrow from government at near-zero percent like the major banks do. All efforts are compromised and the upward shift of wealth will continue, says Rasmus, as long as Wall St. controls the nation’s money.

The Great Wealth Shift Upward: Covering Tax Cuts For The Rich With Program Cuts For The Rest

Effectively short-circuiting policy dialogue, the president’s typical negotiation begins with Republican positions - e.g., extending Bush tax breaks for the wealthy despite popular opinion to end them; offering cuts to Medicare and Medicaid before discussions even begin; taking a pass on extension of unemployment benefits in 2011; and compromising the future solvency of Social Security with a payroll tax holiday. Economist Michael Hudson notes that Obama has swapped a $13 trillion bailout of Wall St. for cuts to Medicare, Medicaid and Social Security, as well as education.

Untouched, the Social Security trust fund of nearly $2.6 trillion can meet all its obligations through 2037. Having profited three times from the economic crisis - from the bubble itself, from the bailouts and from government bonds sold to them to pay for the bailouts - Arun Gupta notes that the wealthy are poised to profit yet again from a plan to raid Social Security funding to pay off bondholders. The fabrication of a deficit crisis became the excuse for Obama in 2010 to deal away Social Security by reducing payroll tax by two percentage points (and a subsequent plan to expand and increase the tax cut through 2012), which will divert an estimated $120 billion from the trust fund. The resulting debt is shifted to the general treasury for repayment, increasing the deficit and the excuse to link Social Security with the manufactured panic over the debt.

Failing to acknowledge the prime source of economic crisis - the housing bubble and Wall St. greed - Obama’s proposed budget in February 2011 included a 5-year freeze on annual domestic spending - regressing to Eisenhower levels the investment areas of the budget including health care, education and transportation - a prescription for dampening growth and increasing unemployment, observed Baker. The president’s gratuitous freeze of federal workers’ pay at the end of 2010 is yet another blow to labor, calculated to drive down wages.

Obama’s persistent lose-lose battle with Republicans concedes deficit hawks’ narrative for austerity and the false argument that the deficit is more dangerous than depression, writes Robert Reich. Large deficit reduction actually depresses job creation and economic recovery while slashing social programs and further exacerbating disparity of wealth. A win-win proposal would address economic recession by spending more in the short term to create jobs, and therefore increase spending money that stimulates employer hiring and job growth that will incidentally help reduce the long-term ratio of debt to GDP.

The pretense of deficit reduction by the President and Congress has served as justification for shifting responsibility to make up for $4 trillion in tax cuts for the wealthy over the past decade onto the working class, writes Rasmus. He cites the “Washington consensus” promoted by all of the various commissions, from Simpson-Bowles Deficit Commission to the Gang of Six and now the Super Committee of 12, for a minimum of $4 trillion in cuts from the budget, 75 percent of it spending cuts, mostly from social programs benefitting  the working poor, children (Medicaid, CHIP), students (loans, assistance to schools), retirees and seniors (Medicare, Social Security). The remaining 25 percent of deficit reduction is tentatively to be achieved by “closing tax loopholes.”

What passed as “shared sacrifice” in the “Gang of Six” plan actually increased net tax cuts for the wealthy by $1.5 trillion, notes Professor James Galbraith. The “sacrifice” is borne by working people who would experience a diminished Social Security Cost of Living Allowance (COLA) cumulatively over time. The “Gang” also sought repeal of the Class Act for Long Term home care for seniors (ultimately dropped by the Obama administration), at the same time eliminating existing taxes on offshore profits, encouraging more offshoring of jobs.

The manufactured “debt ceiling crisis” was political theater, named the height of dysfunctional politics by Professor Wolff. Both parties exploited the faux “crisis” for purposes of political posturing - Republicans to extort concessions from President Obama, and the Democratic leader as cover to proffer cuts to Social Security, Medicare and Medicaid. Galbraith called it terrible precedent, holding future budget decisions hostage to future debt ceiling increases.

A number of economists, including Galbraith, have cited Obama’s alignment with the Wall St. faction of the Democratic Party. Just as only Republican Nixon could go to China, only a Democrat can gut core party principles by slashing New Deal and Great Society programs. Glen Greenwald reported early signs that Obama sought to achieve what his Republican predecessor could not - to cut Social Security. Before his inauguration and apparently under the radar for most, Obama echoed George W. Bush’s right-wing talking points - that Social Security and Medicare are in crisis, producing “red ink as far as the eye can see.” Politico reported Obama’s vow that these programs would be a “central part” of his efforts to reduce the deficit, and he subsequently stacked his deficit commission with long-time advocates of Social Security cuts.

Selling Out Medicare

Ironically, the Democratic leadership has been quick to fulfill Republicans’ fondest dreams by dealing away Medicare as well as Social Security. Neither program is the source of ballooning deficits of the past decade. Obama’s capitulation occurred before he received any concession for taxation of wealthy recipients of huge tax breaks, which actually did balloon the deficit.

Having previously offered Medicare cuts of $320 billion prior to negotiations with Republican leaders, the President in his September 19 jobs speech again signaled his willingness to cut Medicare and Medicaid. In the same speech, he announced a goal of cutting the deficits and debt by $4.4 trillion, again failing to note that about $4.495 trillion of the $9 trillion debt added since 2000 has been due to non-job-creating tax cuts for the wealthiest.

The “fair and balanced” proposal touted by such Democrats as Super Committee co-chair Sen. Patty Murray consists of upfront cuts to Medicare, assuming that Medicare cuts are needed to address the deficit. By October 26 it was reported that Super Committee Democrats were offering $400 billion in cuts to Medicare, half each from benefits and provider reimbursements. Proposed cuts are ironic, considering Democratic health care reformers recently rejected the most cost-effective universal model of reform. A plan of improved Medicare-for-All has been estimated in numerous studies to save a minimum of $400 billion annually.

In early November, sixty House Democrats (including all three House Democrats from Colorado) offered cover for Committee Democrats by signing a letter addressed to the Super Committee encouraging broad budget cuts that would slash Medicare to achieve larger targeted deficit cuts of $4 trillion instead of the $1.2 trillion stipulated goal of the Super Committee.

The problem of rising U.S. health care costs is a function of the fact that per capita costs of providing health care in America is 50% higher than anywhere else on earth. Robert Reich has written that Medicare extended to all people, and including negotiation of bulk drug rates and medical equipment, is key to solving the economic crisis. The biggest debt driver, observes economist Mark Weisbrot, is the government-subsidized private sector of health insurance, and the long-term budget deficit can be turned into a surplus by adopting health care reform modeled on that of other countries, e.g., Medicare-for-All.

Raising the age of Medicare eligibility from 65 to 67 is also bad economics. A Kaiser Family Foundation study reveals that such an action operating in 2014 would result in a net total increase of annual health care costs in America of $2.5 billion, mostly borne by seniors and employers paying for retiree health care (not counting an additional projected 3% premium increase for remaining Medicare recipients and those insured through proposed exchanges). Some forecast cost shifts for increased emergency room visits by under- or uninsured, as even a significant number of seniors today put off medical care until they are eligible for Medicare.

Rasmus suggests simpler alternatives to the $4 trillion in budget cuts at the expense of seniors, retirees, students and the working class who have already paid for the economic crisis with lost jobs and homes, increased health costs, and soaring college debt. Four trillion dollars can be retrieved by reversing the $4 trillion in tax cuts of the previous decade; or the $4 trillion that multinational and big corporations and banks are sitting on and refusing to spend for job creation can be taxed; or the $4 trillion of investor wealth squirreled away in offshore havens can be taxed. Additionally, the four major causes of deficit spending should be addressed: wars, health care cost inflation, bank bailouts and poorly targeted stimulus spending.

Addressing Multiple Betrayals

Dealing away Democratic Party principles and support for working people is just one effect of President Obama’s strategy of positioning himself center-right to run for reelection against the extreme right “crazies,” as the “least of evils.”  Obama has traded away a presidency based on principles for one based on big money from Wall St.

Many within and without the Occupy movement have worked on formulating principles around which to organize. Whether the ten principles of the Working People’s Bill of Rights that came out of Madision, Wisconsin last winter or the evolving statement of principles of Occupy Wall St., it is important to re-imagine and redefine democracy for the people, building a movement grounded on immutable principles that conscientious leaders can step up to.

The alternative to corporatocracy, to revive moribund democracy, is to attempt an end run around corporate money - tracking the money trail to legislators/candidates and challenging those who take corporate PAC money. Former Colorado state senator Ken Gordon has formed, one of a number of groups, like and designed to trace the corrupt money trail. The ultimate goal is to track and stigmatize candidates/legislators who accept big-dollar PAC money. Attempts must be made to level the playing field in any way possible - a constitutional amendment reversing Citizens United vs. FEC, legislation of public financing, instant runoff voting, free media for candidates....

A circus environment surrounds never-ending presidential campaigns devoid of content and primed with copious corporate cash. Superficial sensation-centered corporate media covers elections like a horse race, determinedly avoiding substantive investigation and analysis. The populace taking to the streets represents an awakening to the realization that elite forces control what has become a crippled pretense of democracy, disregarding 99 percent of the people as superfluous to corporate interests.

Originally posted to Michele Swenson on Sat Dec 03, 2011 at 07:34 PM PST.

Also republished by The Democratic Wing of the Democratic Party, Trolls, and ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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