Month: October 2011

Wow, this Washington Post article about the Social Security system financing is so boldly bad that I fear it may change the debate forever. Every Villager who is smacking his or her lips over the prospect of “shared sacrifice” (that won’t hurt them because they’re wealthy) is having a wonderful morning, secure in the knowledge that average people will be suffering in their old age:

“Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went ‘cash negative.'”

I’ll let Dean Baker do the honors:

This “treacherous milestone” is entirely the Post’s invention, it has absolutely nothing to do with the law that governs Social Security benefit payments. Under the law, as long as their is money in the trust fund, then Social Security is able to pay full benefiits. There is literally no other possible interpretation of the law.As the article notes the trust fund currently holds $2.6 trillion in government bonds, so it is nowhere close to being unable to pay benefits. The whole point of building up the trust fund was to help cover costs at a future date when taxes would not be sufficient to cover full benefits. Rather than posing any sort of crisis, this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.The article makes great efforts to confuse readers about the status of the trust fund. It tells readers:”The $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.”This is the same situation the the government faces when Wall Street investment banker Peter Peterson or any other holder of government bonds decides to cash in their bonds when they become due. In such cases it “must raise taxes, cut spending or borrow more heavily from outside investors.” The Post’s reporters and editors should understand this fact.The article then goes on to incorrectly accuse Senate Majority Leader Harry Reid of misrepresenting the finances of Social Security:”In an MSNBC interview, he [Senator Reid] added: ‘Social Security does not add a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has and, for the next 30 years, it won’t do that.’Such statements have not been true since at least 2009, when the cost of monthly checks regularly began to exceed payroll tax collections. A spokesman said Reid stands by his comments and his view that Social Security is entirely self-financed.”

Of course Senator Reid is exactly right. The system is self-financed under the law. In 2009 it began drawing on the interest on the government bonds it held. That is exactly what the law dictates, when Social Security needs more money than it collects in taxes, it is supposed to draw on the bonds that were purchased with Social Security taxes in the past. This means it is self-financing.Again, this is like Peter Peterson selling his government bonds to finance one of his political ventures. Just like Social Security, he is drawing on his own money. The Post may have missed it, but there was a big debate last summer over raising the government’s $14.3 trillion debt ceiling. This $14.3 trillion figure included the $2.6 trillion borrowed from Social Security. If Social Security sells some of these bonds and this money is used to pay benefits, it does not raise the debt subject to the ceiling by a penny. This is very simple and very clear.

Read on. It gets worse.

(Cue Brad DeLong: “why, oh why can’t we have a better press corps?”)

I realize that it’s become a matter of faith that Rick Perry would be the frontrunner if it weren’t for his position on immigration. As a liberal, I don’t mind this because it would be really nice if the Republicans began to understand that scapegoating “illegals” for everything is an unpopular idea. (It would also be nice if our Democratic president understood that deporting record numbers of undocumented workers isn’t going to buy him a single vote — from anyone, not even the business community.)

Mother Jones reports:

Have you ever seen anyone so happy to receive a jug of maple syrup? Ward, who was in attendance, says the clip was not fully representative of the speech, but notes that the entire presentation was weird enough to prompt a tea party leader to tell him, “I think Obama would chew him up.”

Perry had surgery a few months ago. Maybe he’s unwell or maybe he’s taking some painkillers. But he’s “off”.

A 1% Christmas

Concerned Villagers
by David Atkins

Now that the Occupy movement has taken deficit hysteria out of the news, the Washington Post is wondering what happened to getting back to the business of feeding catfood to Grandma to please our Galtian overlords:

Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went “cash negative.”

For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.

Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.

But while talk about fixing the nation’s finances has grown more urgent, fixing Social Security has largely vanished from the conversation.

You know what else is a drain on the treasury and doesn’t pay for itself? The wars in Iraq and Afghanistan. Also, Bush’s deeply unpopular tax cuts for the wealthy. Those don’t pay for themselves either, and yet they seem oddly absent in the national conversation, too.

There’s also the inconvenient fact that the Social Security trust fund is still more than able to cover the costs of letting seniors retire with some dignity for the next several decades, in spite of the fact that the government has borrowed against the fund to pay for tax cuts for billionaires ever since Ronald Reagan’s presidency.

But don’t look to the Washington Post to tell you that. They’re clearly eager to turn the conversation back from inequality to cutting the safety net. I wonder why that is?

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Clueless in LA

by digby

They don’t even know how much they sound like out of touch assholes:

They even provided a link to the Wikipedia page for “Hoovervilles”. Here’s what it says:

A ‘Hooverville’ was the popular name for shanty towns built by homeless people during the Great Depression. They were named after the President of the United States at the time, Herbert Hoover, because he allegedly let the nation slide into depression. The term was coined by Charles Michelson, publicity chief of the Democratic National Committee.[1] The name Hooverville has also been used to describe any Tent city populated by the homeless in modern-day America.

Homelessness was present before the Great Depression, and hobos and tramps were common sights in the 1920s, but the economic downturn increased their numbers and concentrated them in urban settlements close to soup kitchens run by charities. These settlements were often formed on empty land and generally consisted of tents and small shacks. Authorities did not officially recognize these Hoovervilles and occasionally removed the occupants for trespassing on private lands, but they were frequently tolerated or ignored out of necessity. The New Deal enacted special relief programs aimed at the homeless under the Federal Transient Service (FTS), which operated from 1933-35.

Apparently whoever wrote that LA Times editorial didn’t click the link (or are just dumb as a pile of earthworms.) The comparison is pretty obvious.

Frank Rich heard the echoes and wrote about it in his column last week:

During the death throes of Herbert Hoover’s presidency in June 1932, desperate bands of men traveled to Washington and set up camp within view of the Capitol. The first contingent journeyed all the way from Portland, Oregon, but others soon converged from all over—alone, in groups, with families—until their main Hooverville on the Anacostia River’s fetid mudflats swelled to a population as high as 20,000. The men, World War I veterans who could not find jobs, became known as the Bonus Army—for the modest government bonus they were owed for their service. Under a law passed in 1924, they had been awarded roughly $1,000 each, to be collected in 1945 or at death, whichever came first. But they didn’t want to wait any longer for their pre–New Deal entitlement—especially given that Congress had bailed out big business with the creation of a Reconstruction Finance Corporation earlier in its session. Father Charles Coughlin, the populist “Radio Priest” who became a phenomenon for railing against “greedy bankers and financiers,” framed Washington’s double standard this way: “If the government can pay $2 billion to the bankers and the railroads, why cannot it pay the $2 billion to the soldiers?”

The echoes of our own Great Recession do not end there. Both parties were alarmed by this motley assemblage and its political rallies; the Secret Service infiltrated its ranks to root out radicals. But a good Communist was hard to find. The men were mostly middle-class, patriotic Americans. They kept their improvised hovels clean and maintained small gardens. Even so, good behavior by the Bonus Army did not prevent the U.S. Army’s hotheaded chief of staff, General Douglas MacArthur, from summoning an overwhelming force to evict it from Pennsylvania Avenue late that July. After assaulting the veterans and thousands of onlookers with tear gas, ­MacArthur’s troops crossed the bridge and burned down the encampment. The general had acted against Hoover’s wishes, but the president expressed satisfaction afterward that the government had dispatched “a mob”—albeit at the cost of killing two of the demonstrators. The public had another take. When graphic newsreels of the riotous mêlée fanned out to the nation’s movie theaters, audiences booed MacArthur and his troops, not the men down on their luck. Even the mining heiress Evalyn Walsh McLean, the owner of the Hope diamond and wife of the proprietor of the Washington Post, professed solidarity with the “mob” that had occupied the nation’s capital.

That the LA Times is clutching its pearls over fig trees and grass while nearly 3,000 people have been arrested at Occupations all over the country world says just about everything you need to know about disconnect between elites and everybody else.

By the way:

The Solipsists at Obama for America
by David Atkins

Today, every person on the Obama email list in California received this message:

David —

This movement is grown by people who pitch in wherever and whatever they can. Three years ago, thousands of us hopped into our cars or onto the bus and traveled to neighboring states to work side by side with volunteers there to make sure we were strongest in communities where it mattered most. No other campaign like this had ever done that on our size and scale.

It’s time to do that again.

On November 5th and 6th, volunteers from California will travel to Nevada to help out on the ground there. We’re starting this work now to help them grow the campaign early, knowing that this work will have a huge impact on the outcome in 2012….

This movement we’re a part of is bigger than any individual state — and what we stand for doesn’t stop at the state border. What happens in both their state and ours shapes what we can accomplish nationally. And while this volunteer weekend is being held a year out from when we cast our ballots, the fight for progress is about more than just the outcome of a single election. That’s why we all have to pitch in what we can, wherever that fight may be.

It is impossible to overstate the clueless irony of this email. November 5th and 6th is Get Out the Vote weekend for elections happening all around the state of California. The Obama campaign wants to drain California of its active volunteers to send them to Nevada, a year before the Presidential election, even as Californians themselves prepare to vote in just a few days.

This is a huge slap in the face to California Democrats who have been working hard in their own backyards for years. But it’s even worse: The Obama campaign doesn’t just hamstring California Democrats on election weekend. They have the gall to say “the fight for progress is about more than just the outcome of a single election. That’s why we all have to pitch in what we can, wherever that fight may be.“

Which is why the Obama campaign wants Californians to work on a single election over a year from now, instead of pitching in what they can where the fights actually are right now–namely, at home in California.

This is an incompetent move strategically, and disrespectful to the core volunteer base in California. But it’s pretty much par for the course for the Obama campaign of late.

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The Super Committee of the 1%

by digby

I don’t know whether or not Occupy Wall Street cares about any of this detail, but it is fairly urgent and I hope that the presence of the movement may make at least some of the Super Committee think twice. Nancy Altman writes:

The 1% is using the super-secret Joint Select Committee on Deficit Reduction (a.k.a. the Super Committee), to reach directly into the pockets of the 99% and steal hundreds of billions of dollars from them. This committee has unprecedented power. It has been meeting behind closed doors for weeks. Finally, though, its plans are leaking out, and they are not pretty.

In order to spare defense contractors, the pharmaceutical industry, and other fat cats, while appeasing the credit agencies, whose AAA ratings to crony-clients helped crash the economy, the Supercommittee has proposed slashing benefits for current and future beneficiaries of Social Security, Medicare and Medicaid, notwithstanding that the current deficit has nothing to do with these programs.

Neither Social Security, which by law, cannot borrow a penny, nor Medicare, nor Medicaid is to be found among the causes. That hasn’t stopped the Super Committee, though.

The following chart shows the causes of our current deficits:

This is happening right now. We can all hope that they deadlock, and there’s decent possibility they will. Or we can hope that the congress hates what it sees and simply ignores the process. But this is happening and the potential consequences for a long time to come are extreme.

The tax cuts, the wars and the meltdown are all attributable to the last ten years of fin de siècle lunacy as the conservative experiment reached its natural conclusion: gilded age economics. It took them a century to get back where they started but they did it. And now everyone is paying the price for that.

Sadly, my pathetic hope that the movement’s existence would affect these out of touch millionaires is probab ly in vain:

The 1% is particularly brazen in making these destructive proposals now when the 99% are making their voices heard across this nation in a multitude of ways. On Wednesday October 26th in Washington, DC, Rep. John Conyers stood with nine other members of Congress and more than 100 seniors and supporters, to deliver more than 2.3 million petitions from the 99% along with a resolution put forward by 82 members of Congress representing the will of the 99%, with a single message: Hands Off Social Security, Medicare and Medicaid!

Almost immediately after these 2.3 million petitions were delivered, the Democrats on the Super Committee completely ignored their message and pushed more cuts to the middle class and less tax increases for millionaires and billionaires than any previous “bipartisan” commission. According to an analysis by the Center on Budget and Policy Priorities the current Democratic proposal is to the “right of co-chairs of the bipartisan Bowles-Simpson commission and the Senate’s ‘Gang of Six,’ and even further to the right of the plan by the bipartisan Rivlin-Domenici commission”

The secretive and unaccountable Super Committee is meeting behind closed doors and proposing devastating cuts that would be shouldered by the 99%. We just released new reports in all of the Super Committee states detailing the $621 billion that Social Security, Medicare and Medicaid provide for real Americans in the Super Committee states.

I’m guessing they’re not going to hear that any more than they hear the rumbling of people taking to the streets.

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Arm of liberty

The dark side

by digby

This is what Occupy Wall Street is responding to:

On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.

The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.

That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.

When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.

Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.

A third photograph shows a corner of Baum’s office decorated to look like a row of foreclosed homes. Another shows a sign that reads, “Baum Estates” — needless to say, it’s also full of foreclosed houses. Most of the other pictures show either mock homeless camps or mock foreclosure signs — or both. My source told me that not every Baum department used the party to make fun of the troubled homeowners they made their living suing. But some clearly did. The adjective she’d used when she sent them to me — “appalling” — struck me as exactly right.

Between the crying billionaires, Erick Erickson’s “suck it up whiners” site, the snotty Wharton students, these disgusting foreclosure “jokesters” and the hippie bashing everywhere, it’s pretty clear that the strain of human nature that civilized people usually keep under wraps has been let loose in America again. (It’s not the first time …) We knew this was happening — we saw it when we lifted the taboo against torture without much resistance from the people. The “winners” turned on the “losers” some time ago — it’s just that the number of “losers” is so much bigger than it used to be.