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Pearl Korn

Pearl Korn

Posted: August 23, 2010 07:50 AM

A Misguided Deficit Commission

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The Obama Administration's Deficit Commission is at best errant in its mission and at worst a bait-and-switch ploy being run on the American people. The Commission is chock full of major players in both the investing and financial-advising worlds, along with many of the same conservative "deficit hawks" who suddenly appeared out of nowhere, driving the country to near hysteria recently. Most tellingly, the Commission is being fueled by billionaire Peter G. Peterson, co-founder of the major investment cartel Blackstone Group. Peterson also set up the Peter G. Peterson Foundation (www.pgpf.org) in 2008 with $1 billion out of his own pocket to continue the mission he began in the 90's to bring down safety net programs such as Medicare and Social Security.

Advising the Deficit Commission are staffers from Peterson's foundation. Numerous conservatives also serve on the Commission, including former Republican Senator Alan Simpson as co-chair, Senator Tom Coburn, Rep. Judd Gregg, Rep. Paul Ryan - who believes people should be able to choose whether or not to accept Social Security and Medicare - and Republicrat Senator Max Baucus.

There is an alarming lack of information about the Commission and it's goals. Among the questions that must be answered:

1. Why does the Commission not include the likes of Economist Nobel Laureates Joseph Stiglitz, Paul Krugman, George Soros, Warren Buffet or James K. Galbraith - another one of our nation's most respected leading economists - as advisors? Galbraith testified in front of the Commission in June and had more than a few unflattering words to say about its misplaced agenda (read text of his testimony at this LINK. His comments, along with past statements by Commission members such as Simpson - who has referred to working Americans as "lesser people" - give us some chilling insight into the Commission's priorities.

2. Where is Robert Reich, former Labor Secretary in the Clinton administration and now a Professor of Public Policy at the University of California at Berkeley? His blog (http://robertreich.blogspot.com/) and articles have been critical of the measures taken by the Administration and Congress so far to "improve" the failed economy. His voice is needed. Just yesterday on ABC's This Week he said that we could be entering a "double dip" recession, when Americans have not even come out of the first dip yet!

3. Why is the Commission operating behind closed doors? They have been meeting in secret since April, yet we have not an inkling of what they are discussing or recommending to our President. Weren't we promised an open and accessible administration by candidate Obama, government once again for and by the people?!

4. Just what is the Commission's true agenda? In truth, this Commission should not be tinkering with Social Security and Medicare at all, which Galbraith pointed out in his testimony. This deficit was not created by these bedrock safety nets, but by irresponsibility in the preceding administration that took a surplus and trashed it, adding $5 trillion to the deficit. Add to that the housing bubble, two wars, unemployment at unprecedented levels since the Great Depression, the Bush tax cuts for the wealthy and stripped down regulations on big business that opened the flood gates to toxic gambling with derivatives and other shady investment instruments on Wall Street and you get a much better idea of the causes of our current malaise. And don't forget the creation of banks "too big to fail" - bring back Glass-Stegall or the Volker Rule, for heaven's sake!

Our President is expecting a report from the Commission in December, but before then, America needs to know exactly what the Commission is working on and addressing.

The financial wizards advising the Obama administration also need to find a new line of work, especially since many of them were instrumental in the economic meltdown and resulting mess in which we find ourselves. All of America's problems will not miraculously vanish with the slicing and dicing of Social Security and Medicare.

Unfortunately, instead of dealing frankly and openly with the tough issues we face as a nation, the daily mantra from the White House is that the economy is "improving." Yet just last month we lost another 130,000 jobs, with 16 million unemployed or underemployed (working at jobs today that pay less than the ones they lost) and 500,000 signing up last week alone for unemployment insurance - the highest rate in 9 months - along with 300,000 home foreclosures last month. Tim Geithner must be checking the economy on Mars.

The House rushed back to DC from its summer recess earlier this month to sign into law $26 billion in funding to help the states keep public employees, teachers, police and firefighters employed, saving hundreds of thousands of jobs. In New York alone, the jobs of 8,200 public school teachers will be saved - for now. But the states are still reeling in the economic down turn, with no salvation in sight. This funding will only serve as a stopgap amid new cries of excessive government spending and bailouts - a band-aid on a shotgun wound.

As we have heard repeatedly, 1% of our population now owns 70% of the nation's wealth. The disparities in income have increased over the past 30 years, with the rich getting richer and hard-working Americans losing their homes, jobs, savings and going into unprecedented debt. "Trickle down" economics has been gushing upwards instead, with workers incomes shrinking with each decade and the wealth at the top of the economic food chain only going up. Productivity is up while income is down; something is wrong with this picture. The nation is dancing as fast as it can and still standing still. Meanwhile conservatives take no ownership of their role in causing this catastrophic recession on a global scale and now sound like populists promoting fiscal austerity - "Social Security and Medicare are the problems, and if we downsize them we will get our fiscal house in order." Ha!

Social Security and Medicare are not in any immediate danger of going bankrupt or unable to provide benefits. Social Security has a $2.5 trillion dollar surplus and can provide benefits until 2037. This year, however, for the first time we are paying out more in Social Security than we are taking in - a clear warning that we must stop nibbling away at this trust-fund to support the nation's out-of-control spending. By 2037, Congress will have to raise revenues or cut benefits, so there is still time to deal with these realities, but it is not today's emergency as it is made out to be by Peterson and his crowd.

Medicare, which serves 46 million retirees and people with disabilities, will remain in the black until 2029, mainly due to projected cost-cutting measures in the recently passed health reform bill. Dems should make this point loud and clear during the midterm elections.

Medicare and Social Security have also not contributed to the national debt, and clearly the Commission must bring in economists of the stature mentioned above and visionary business leaders. A commission concerned with deficits and debt that does not include economists on it is laughable. This Commission is made up of partisans who will only seek to gut our safety nets.

So what should we look to cut to reduce the deficit?

1. The Pentagon and the Military Industrial Complex. For 2011 President Obama will be requesting a military budget of $708 billion. In 2001, the budget was $300 billion - an outrageous increase that must be reduced. How much obsolete Cold War material can be dispensed with, along with closing hundreds of military bases in numerous countries that no longer need us? Robert Gates spoke of cutting the Defense budget by $100 billion in five years and cutting 50 generals and admirals to help rein in the bureaucracy at the Pentagon. How about those costly contractors? Could Gates be his own man and rival McNamara? No doubt he will have to fight for these reductions against the Administration and Congress.

2. Our Nation's Security Agencies, numbering 17. Are they really the most efficient use if our intelligence and financial resources?

3. The lack of tax revenue pouring into the national treasury. JOBS, JOBS AND MORE JOBS MUST BE THE PRIORITY! The Deficit Commission should develop a 5-10 year economic plan - similar to the Marshall plan in the post-WWII years to rebuild a devastated Europe - to rebuild America with new technologies, new industries and new and renovated infrastructure. This will address the deficit without cutting services and continue to put Americans back to work and keep them out of poverty. A grand plan is needed, a chance for Obama to be as great as he billed himself to be, and not simply running from emergency to emergency as Congress is currently doing.

4. Increase taxes on the super-rich, their investments and their estates. By ending the Bush tax cuts for the wealthy alone, we would realize 36 billion dollars in new revenues that could be pumped into rebuilding 7,000 aging and crumbling infrastructures like bridges and highways nationwide. Certainly a much better use for this money.

5. More economic aid and tax relief must be given to small businesses to create jobs.

6. Withdrawing our troops from Afghanistan and those 50,000 "advisors" from Iraq would cut the deficit exponentially.

7. Pass real and IMPROVED MEDICARE FOR ALL, which has been estimated to save $400 billion per year.

8. Reviewing all of our government agencies to determine costs vs. services. Are we getting enough bang for our collective buck?

9. Closing offshore tax havens for corporations and individuals and stopping corporate welfare with a return of regulations and heavy penalties on offenders.

10. Trade agreements must be revised to stem the tide of American jobs being exported abroad.

There is some good news: Rep. Earl Pomeroy of North Dakota, the chair of the subcommittee on Social Security on the House Ways and Mean Committee, said in a press call: "(A)ny benefit cuts are completely unacceptable and should be taken off the table." Pomery added that "any age adjustment would change the terms of the deal" offered by Social Security. President Obama has also said "no privatization of Social Security."

Meanwhile, John Boehner, the House minority leader, is talking about the public needing a "reality check" and "dialogue" on Social Security and Medicare. He continues to trumpet slashing benefits and raising the retirement age for Social Security to 70, which could be on the horizon for the next crop of retirees. Surely investing Social Security money in the stock market will be brought up again - more examples of the Right-wing continuing to drive policy and tepid Dems going along with it.

Additional content by Jon Stone