You heard me right. This tax deal pushed by the president and too many Democrats in Congress except our heroes like Bernie Sanders and the like, inadvertently legitimizes Reaganomics whether anyone wants to admit it, cherry pick data to say otherwise, or not. This is the truth. Anyone who denies this truth has been denying some pretty fundamental shifts in our economy over the years during the Reagan revolution and again with GWB as it relates to our tax structure. I will explain below the fold.
I have laid out the fundamental flaws of this capitulation (and why it’s called as such) in my last diary where I cover everything from the threatening of SS and this severely flawed permanent in nature and political reality payroll tax holiday. Besides the fact that Nancy Altman of Social Security works lays it out succinctly (and she spends all her time on the program as opposed to anyone at OFA) and has written one of the two best books on the subject in 2008 The Battle for Social Security. (The other one is by Dean Baker: the Phony Social Security Crisis). But don’t take my word for it, though you should take Robert M. Ball’s word for it.
"I was the Commissioner of Social Security under three Presidents (Kennedy, Johnson, and Nixon), I began working on Social Security on January 1, 1939, and I have read just about every book written on the subject. The Battle for Social Security is the best Social Security book to come out in a long time, and indeed is among the best ever written on the subject. It is a lively and highly readable journey through the establishment of Social Security, its expansion, and the present attack on the program's principles. I believe everyone who has a stake in Social Security - that means everyone - should read this book. I enthusiastically endorse it."
-- Robert M. Ball, Foremost expert on Social Security alive today
In short, it doesn’t matter which kossacks will try to say this isn’t a big deal, because we know those are not substantial arguments. Because after all, if they did know what they were talking about they would know why it is a big deal and the facts show it; coming from people that know the program better than anyone here. As Nancy Altman says, Democrats have never allowed the payroll tax rate to be cut, even temporarily, in the history of the program, because payroll taxes feed the Social Security trust fund and create the political base of support for the program. That last part is so important and ties into the main point I am going for in this piece.
So why is assuming a tax raise will happen later in payroll or that accepting the 700 billion in debt from this capitulation with too little stimulus a bad thing besides the obvious shortfall in revenue/failure to create jobs, and overall waste of money? With deficit hawks circling around during a jobs crisis/net jobless recovery from the great recession in accordance with this capitulation amounts to falling into...
Admiral Ackbar is right. It’s a TRAP!
It pains me to see Democrats now trying to cherry pick the data in this deal without mentioning the nuance posted in my last diary and agreeing with Charles Krauthammer that somehow our president tricked Republicans into this deal for mostly our benefit. I’m seeing this naiveté on display on twitter and other places and it saddens me and angers me. As Dave Johnson lays out in his excellent work here I’m going to show you what Republicans know that many Democrats can’t seem to figure out, except those that agree with Bernie Sanders. Republicans know that tax cuts now force terrible budget cuts later. They’ve always known this so don’t think for a minute that our president tricked Republicans into anything; it’s the other way around.
Either we have a deficit crisis or we don't. If the country really is on an unsustainable budget path won't cutting taxes now mean that raising the retirement age, raising Medicare premiums, cutting home mortgage deductions and all the rest that the deficit commission proposed will, after these tax cuts, only get us back to the unsustainable budget path we are already on, thereby requiring even more cuts to gut the middle class?
If you think the currently-suggested cuts are bad, just wait until you hear what they want cut following even more deficit-creating tax cuts. The conservative plan all along has been to force a debt crisis that they can use to force "smaller government" -- meaning less for the people: less retirement security, less health security, less education, less transportation investment, less infrastructure investment, fewer health and safety inspectors, fewer mine and oil rig inspectors, less consumer protection, etc.
How is cutting taxes going to make this situation any better? Won't it just help the conservative argument for further gutting democracy's security and protections?
About that conservative plan, it’s been used before with this very same tactic. It’s what was behind the Reagan revolution. How quickly we forget while congratulating ourselves on a victory for the other side in waiting.
The Plan
There were the reasons for the tax cuts Reagan said, and there was the plan Reagan had. Reagan SAID that there was this thing called the "Laugher" Curve that he said proved cutting taxes would actually increase government revenue. But what they were saying was a smokescreen, something to tell the rubes. Increasing government revenue was the last thing Reagan and his cohorts wanted. They knew (and have since said so) cutting taxes would lead to terrible deficits. They called this a "strategic deficit." This was the plan.
Bankrupting our government (We, the People) was the plan and today we can see that it was what they did. They didn’t want revenue to increase because the idea was to "starve the beast." Reagan called it "cutting their allowance."
The plan was that by cutting the funding for government, government would have to cut back on what it does: regulating business, protecting regular people against powerful interests, building infrastructure, educating kids, taking care of the poor and elderly. With government (We, the People) out of the way businesses could be unleashed and really start to make money. And for those who could afford to pay, private companies would take over those other functions. That was called "privatization."
Snip
Now we're experiencing part two of The Plan: use the debt as a reason to cut the things government does for We, the People.
Now you see this has been done already and this is what is behind the Republicans plan to add more than 700 billion to the debt. Cherry picking the data to make this deal look good, without proper knowledge of multipliers and what makes a decent stimulus and restores demand, is denying economic facts, but it also denying historical facts. Many many people are deluding themselves that this is a good idea for the middle class and are being fooled by Charles Krauthammer(whom I now I hear some Democrats agree with. That’s strange given the utter outrage over Norquist/Jane Hamsher not too long ago) into thinking the GOP have been tricked. Oh it’s a terrible web he has now woven now that the suckers in their idolatry have now been chosen.
I have tied all of these references together because Republicans knew their proposals would not bring in revenue during the Reagan tax revolution where the debt was tripled and people were thrown out on the street just like they know the payroll tax holiday will be year round now. They will use these debts to tie SS to the deficit, which it can’t be logically, but they will regardless in order to cut/privatize it. Any infrastructure spending that we want in the future will be cut. I mean how do you think this rot happened in the first place? There is no reason to think Republicans feel threatened at all or that our president will truly use the bully pulpit (a real historical concept BTW coined by progressive Teddy Roosevelt used to bust up the trusts) or that they won’t think he will cave again and fight the Democratic Congress so that they cave along with him; only those with steadfast principles will refuse, but if things keep going like this, they probably will.
I have to admit it’s really hard to take a lecture on "pragmatism" from anyone who denies this or has not even brought it up, since every Democrat should be talking about this and worried about what the long term ramifications will be. Well now you know so please take a stand against Reaganomics and its cousin Rubinomics. Working peoples’ futures depends on it. If not, make no mistake about it, you have sold all of us out and Reagan would be proud of this Democratic Party and would have never left.
