We've seen this mania before and the source the last times are the same as this time. This is the right-wing wealthy oligarchs and the neocons acting together to panic the voters into supporting crap that is self-destructive to America.
The most memorable previous such effort to cause panic was the right-wing orchestra saying "We don't want the smoking gun to be a mushroom cloud." They got their unnecessary war, and look how well that turned out.
This is worse. This will saddle the productive middle class under the domination of the parasitic investment class. As David Sirota wrote, this is the money class practicing class warfare against the working class. Entrepreneurship is practiced by individuals and very small businesses, not by big business, big banks or big investors. That is proven fact.
I wrote my initial post in such a hot rage over the proposal the cut Social Security and Medicare benefits that I didn't take the time to edit my blog post (sorry about those strange sentence structures), or take the time to look at the details of the proposal. So now that I have calmly taken some time to do that, I have to admit that I was wrong: this thing is even worse than I originally thought, and I way understated the problems with it. The co-chairs and staff found every conceivable way to screw the middle class in ways big (very big) and small, but barely nicked the bankers who caused the meltdown of the economy, or the wealthy whose massive tax cuts ended the big budget surpluses as far as the eye could see coming out of the Clinton years. Look at some of the different ways middle class and poor people will be gauged by this proposal (and I am probably missing some):
1. Raises the retirement age for Social Security and Medicare to 69.
2. Cuts Social Security benefits.
3. Ends the mortgage tax deduction.
4. Ends the tax deduction for workers' health benefits.
5. Freezes salaries for federal workers for 3 years.
6. Establishes co-pays for veterans at VA health services.
7. Raises fees to visit the national parks and the Smithsonian.
8. Merges the Small Business Administration into an agency (Commerce) that has always prioritized helping bigger businesses, and cuts their budget.
9. Eliminates the Office of Safe and Drug Free Schools.
Bowles and Simpson claim that they are being progressive by raising the Capital Gains Tax, but they make up for that by cutting corporate taxes and flattening the tax rates, so there is actually less progressivity in the tax code. They do claim some savings in defense spending and contracting, but a bare fraction of what could be saved if you got serious at all about reforming government contracting. And what they don't do is stunning: they don't go back to the Clinton era's tax rates on the wealthy that actually helped balance the budget. They don't impose a financial transactions tax on the speculative trading that did so much to crash this economy. They do nothing to create the jobs of the future that would actually spur the economic growth of the 1990s that were key in creating the budget surpluses of that era.
You know what is most bizarre: all this pain for the economically stressed working and middle class, and they still don't actually balance the budget until 2037. This is one of the worst policy documents I have ever seen- and I lived through the George W. Bush era! The President that Erskine Bowles, Bruce Reed, and I worked for dug our way out of the big budget deficits of the Reagan/GHW Bush era and created a balanced budget and long term surpluses by doing modest budget cuts, taxes on the wealthy, and strong economic growth. Clinton did it without gouging the middle class in all the terrible ways listed above. We have a bigger hole to dig out of now because of the economic crisis of the George W. Bush era, but we can create a long term balanced budget with the same kind of formula, plus adding a financial transactions tax that would help curb dangerous financial speculation. There is absolutely no call for punishing the very people who have taken all the pain of the economic policies of the last decade. My old friends Erskine and Bruce should know better.
Another old friend of mine, Jon Cowan, writes today in Politico that this proposal is "the only game in town" for reducing the deficit. Not to put too fine a point on it, but what a crock. All we have to do is revisit the policies of the 1990s, minus the financial deregulation. The middle class has been burdened enough to pay for the excesses of Wall St and government contractors. Let's reduce the deficit the right way: by finally asking the people who caused it- the wealthy who got huge tax increases, the big banks who caused the economic collapse, and the government contractors who rip off taxpayers- to make things right.
In a surprising, and ominous, move, tonight the House of Representatives, by a 215-210 vote, passed a rule guaranteeing a vote on the deficit commission recommendations in December, if--and this is a big if--those recommendations pass the Senate:
FDL has learned that in a last minute move, Nancy Pelosi sneaked language into the rule that the House is voting on tonight regarding war funding.
Embedded in the rule is the requirement that the House will vote on the deficit commission's recommendations in the lame duck session if they pass the Senate.
Now, its pretty bloody unlikely that you will round-up unanimous consent on any deficit commission vote in the Senate, so you would need a cloture vote to pass it (Senate rules will not be changed before January). In order for there even to be a cloture vote, you would need consent from the Senate leadership, and 60 Senators in favor. That is all unlikely for multiple reasons, including inevitable absentee Senators during any lame duck session, getting any Republicans to vote for a recommendation that raises any taxes at all, progressive objections to benefit cuts, and more.
It is, however, not impossible. Elites all have deficit fever, and it is attacking the intestinal linings of this country. Further, the weeks immediately following what will be a relatively successful election for Republicans (even if they don't take back either branch of Congress, they will pick up a significant number of seats) are bound to be a perfect moment for Democrats to act scared, and cave. Finally, President Obama has often used the language of crisis to discuss Social Security, and bends over backward to appear bipartisan and reasonable, so he may well support the recommendations. Given Obama's proven ability to persuade the base, his support would result in significant backing of the commission's recommendations from both activist and rank and file Democrats.
With little time to organize opposition to the recommendations once they are announced, the end result of this could be a perfect storm where there are 60 Senators in favor of those recommendations. It isn't likely, but it is possible, and given the damage it would do it is something that requires immediate organizing attention.
On a related note, here is a good video from Rep. Grijalva and Grayson on deficit hypocrisy:
After passing literally nothing of substance into law in June, Congress will be in recess off starting on Friday, July 2nd and resuming on Monday, July 12th. Considering how little they got done over the past five weeks, there is a long list of issues they will struggle with during the break, and when they return:
Dems need one more vote to pass unemployment extension. Passing a nearly stand-alone unemployment extension (it is coupled with an extension of the homebuyer's tax credit) is the only thing that could actually happen before recess. However, it might not, since Democrats are one vote short and Byrd's replacement won't be around until after recess. Annie Lowrey has the state of play:
Senate Majority Leader Harry Reid (D-Nev.) is telling reporters that he has the votes of two Republicans for his extension of federal unemployment insurance benefits. He also says he is one vote away from having 60 senators to vote for cloture on the bill, which would then move forward to a final vote.
Though there are currently 58 members who caucus with the Democrats, meaning the addition of two Republicans brings the number to 60, Sen. Ben Nelson (D-Neb.) is not in support of Reid's bill. "If we had Senator Byrd's replacement we would have 60," Reid told The Hill. "We have to wait and see what a couple of Republicans do." The two Republicans are most likely Sens. Susan Collins and Olympia Snowe of Maine, both of whom have signaled they would be willing to vote for a standalone measure.
A Senate Democratic aide says gaining the 60th vote with both Collins and Snowe likely on board is proving extremely difficult - because Sen. Scott Brown (R-Mass.) has indicated he will not vote for the proposal.
This bill originally had nearly $200 billion in new domestic spending. It included tens of billions, each, to prevent laying off teachers, preventing reduced Medicare payments to doctors, funding Medicaid, infrastructure projects, the extension of a variety of tax breaks, AND unemployment benefits. It was, in effect, a second stimulus bill. Now, even worn down the the nub, it is still in serious danger of being defeated.
Update: The bill was defeated last night by one vote. Dems will wait until Byrd's replacement is appointed to pass it.
Wall Street reform definitely will not be finished this week: This evening, House passed the conference report on Wall Street reform, 237-192 (with 3 Republican votes, actually). However, we are still going into the recess on this one. Harry Reid says Wall Street reform will not be done before the July recess:
Senate Majority Leader Harry Reid (D-Nev.) told reporters Wednesday that Senate procedures would not allow him to bring the bill to the floor on Thursday.
Members of the Senate will be away from Washington on Friday to attend the funeral of Sen. Robert Byrd (D-W.Va.) in Charleston.
"I can't because I can't procedurally get to it," Reid said.
The current plan is to file cloture on July 12th, the day Congress returns. So, Wall Street gets a chance to peel off enough votes to defeat the bill.
War supplemental legislation also headed until after recess: Yesterday, House Democrats stripped $3.9 billion in aid to the Afghanistan government from the war supplemental bill, citing corruption. That change alone guaranteed that this fight would not be finished before the break, since any changes to the bill have to also be approved by the Senate (which passed war supplemental that included the $3.9 billion). Today, House Dems are proposing a further change that would provide $10 billion in aid to states:
House Democrats today proposed adding $10 billion to a pending war-funding bill to prevent layoffs of an estimated 140,000 school teachers as part of an effort to revive a stalled jobs agenda
Given the fate of the second stimulus bill in the Senate, I am not confident about this passing. However, given that it will likely further delay passage of the war supplemental, I am all for it. No domestic economic relief funding, then no war funding. Block the bill until we get relief here at home.
Kagan continues to sail through confirmation hearings. No trouble spots have appeared for Kagan yet in her confirmation hearings. Don't expect any problems to appear, either. As Chriis Hayes said:
Just occurred to me that these hearings are MUCH easier when you don't have decades of decisions you need to both recall and defend.
Compromises continuing on climate change. Once Wall Street reform is passed or defeated in the first week after recess, it will be on to the energy / climate bill. Just in case you missed it, yesterday John Kerry beautifully summarized the state of that bill:
"We believe we have compromised significantly, and we're prepared to compromise further," Kerry said.
Yesterday, the compromise talk was of only putting a price on carbon when it came to utilities.
That's what's on tap in the Senate for the next month. And really, that is what's on tap in Congress until the elections. Once Congress adjourns in early August, they won't be back until after Labor Day. And, even when they do return, don't expect much to get done so close to the elections.
Immediately after the elections, there are two big fights:
Reforming Senate procedure:: On this subject, a new Brookings Institute paper on that subject is worth a read. It provides a good background on recent procedural fights in the Senate, and examines possibilities for reform. Of particular interest, it argues that just forcing the minority to engage in a "real filibuster" won't work.
Deficit commission report: Personally, I still think anything the deficit commission recommends (report due in Decemeber) in will be too unpopular to ever pass Congress. A coalition also seems impossible legislatively, as proposing just one tax increase, and one benefit reduction, would sink the whole enterprise. However, with even Andy Stern, one of the more progressive members of hte deficit commission, suggesting that some of the Social Seccurity trust fund should be invested in Wall Street, it seems like this is going to be a big fight we have to negage anyway.
That is what is on tap for the next six to seven months in Congress--plan accordingly.
An article in The Hill this morning claims that the U.S. is standing practically alone among G-20 nations in fighting "austerity" and promoting new spending to break out of the economic crisis.
The idea that the U.S. Is fighting austerity is preposterous. Here is what is actually happening in U.S. policy right now:
Democratic leaders in the Senate have apparently failed to win enough support to overcome a Republican filibuster of a bill to help the poor, the old and the jobless, despite making a series of cuts to the measure over the past several weeks to appease deficit hawks.
"It looks like we're going to come up short," said a senior Democratic aide on Wednesday evening.
Congressional leaders and the White House have agreed on a three-year freeze in non-military discrentionary spending, and the White House has ordered federal agencieis to trim their budgets by 5% on top of that freeze. While agencies will be allowed to cut half of the latter cuts, that still represents a 2.5% cut in discretionary, non-military spending.
The leader of the Obama administration's "deficit commission" is pushing zombie lies on social Security's supposed bankruptcy, and openly talking about how Social Security's funding has already been spent. From everything I have heard, even from the center-left members of the commission, the final report will recommend cuts to entitlement programs.
the Obama administration is pushing new line-item veto legislation that would allow for further spending cuts.
How all of this adds up to the U.S. fighting austerity and promoting spending is beyond me. Public policy in the United States has been captured by the forces of austerity, too.
