Today's American right is burdened with a highly specialized and hyper-amplified sense of outrage. That outrage was triggered during this week's State of the Union speech, especially by the president's off-the-cuff response to a group of Republicans who sarcastically applauded the line, "I have no more campaigns to run."
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Author/activists Nancy Altman and Eric Kingson discuss Social Security expansion on The Zero Hour
The president will deliver his State of the Union speech next Tuesday amid a new flurry of Republican attacks on Social Security. Will he stand firm and defend the popular program, or step aside and let the attacks continue?
Changing the Rules
No wonder Republicans despise Social Security. It's extremely popular among Americans of all political persuasions. It provides better benefits and service than any comparable private-sector program, and does so at a fraction of the cost. Social Security's very existence undermines the GOP's free-market, anti-government ideology.
Republican candidates certainly didn't campaign in 2014 on a platform of gutting Social Security. But now that they control both houses of Congress, that's been their first order of business. Their arguments are based on bad arithmetic. They've also relied on phony "crises," and the new Congress moved to trigger another one on its very first day in office by blocking a minor shift of funds between the retirement and disability funds with a procedural "rule change."
This adjustment's been made 11 times before. But the Republicans characterized it in histrionic terms, describing a shift of one-tenth of one percent of the retirement fund as a fundamental threat to its stability. Their action, if upheld, would lead to a 20 percent cut in disability benefits by late next year.
The disabled are being used pawns in a larger, and very cynical, game. The House's action can only be undone if changes are made to the overall Social Security program -- which, in this Congress, can only mean cuts to retirement benefits.
The GOP's latest move is part of its escalating rhetorical war against Social Security. Rep. Sam Johnson, the head of the Social Security Subcommittee, inflated two recent court cases in order to argue that the disability program is "plagued by fraud conspiracies." The fraudsters were caught in both cases, and they represented only a tiny fraction of disability claimants. Nevertheless, Johnson said "The public is fast losing faith in Social Security, and I don't blame them, because I have too."
Republicans have been asserting widespread disability fraud for years, but the Social Security Administration's Office of the Inspector General (OIG) has found no evidence to support them. Still, the histrionics keep coming. The new chairman of the House Budget Committee, Rep. Tom Price, told a conservative gathering that Social Security "is a program that right now on its current course will not be able to provide 75 or 80 percent of the benefits that individuals have paid into in a relatively short period of time ..."
This assertion, like those of Price's GOP colleagues, is flatly untrue. Without any other changes, Social Security will be forced to reduce its retirement benefits by approximately one-fourth in the mid-2030s -- not by 75 or 80 percent, as Price asserts. But even that relatively modest shortfall is easily addressed, primarily by "lifting the cap" (so that wealthier people pay into the fund at the same rate as other Americans.
Why don't the Republicans ever mention "lifting the cap"? Because they hate taxes as much as they hate government, and because they've received a great deal of financial support from people who would pay more if the "cap" were lifted -- people like hedge-fund billionaire Pete Peterson, a major backer of anti-"entitlement" initiatives. Social Security privatization, another Republican goal, would also bring trillions of dollars under Wall Street's control.
Normally one would expect a Democratic president to be one of Social Security's most stalwart defenders. Together with Medicare, it's one of the Democratic Party's signature achievements. Unfortunately, the party's so-called "centrist" wing has also embraced the Peterson crowd's spin.
Economist Monique Morrissey of the Economic Policy Institute told Talking Point Memo's Dylan Scott that "advocates do not trust the President on Social Security." There are reasons for that. President Obama appointed two Peterson-backed anti-Social Security operatives, Alan Simpson and Erskine Bowles, to head a "deficit commission" whose mandate included Social Security. He proposed the "chained CPI" benefit cut in his budget for the 2014 fiscal year. And he has repeatedly expressed interest in a "Grand Bargain" with Republicans, which includes benefit cuts.
Now there are worrisome signs that the "Grand Bargain" may be coming back. And the White House refused to comment on the Republican move to slash disability benefits, and perhaps the entire program, despite Scott's repeated attempts to get the administration on record.
What Will the President Do?
We agree with Mark Miller of Reuters, who said "the new Republican-controlled Congress has handed (Obama) another opportunity to act boldly ..."
But is that even a possibility? It could happen. The president has taken a firmer stance against the Republicans in recent months. He's shown more inclination to use his executive authority, and less inclination to meet Republicans further than halfway in his rhetoric. (Perhaps he's tired of all the rabbit punches they've thrown when he does.)
The White House now seems to sense that over-eagerness to compromise was perceived as weakness. It paid a steep political price for offers which were too generous toward the Republicans. It knows it must also now deal with Democrats in the House and Senate who are less willing to sign on to unprogressive and unpopular agreements.
It's also time for the president to consider his legacy. Does he really want to be remembered for rolling back one of his own party's greatest achievements?
If the president is feeling especially bold he could join with Senators like Elizabeth Warren, Bernie Sanders, and Sherrod Brown by endorsing an increase in Social Security. Although that would represent a sharp break with his past positions, the idea is very popular with voters. (See the video clip above for more on this topic.)
At a minimum, the president must take a firm stand against the Republicans by drawing a line in the sand and opposing any cuts to Social Security.
That's not to say he will. He may remain silent on the issue, forgoing an opportunity to draw a sharp distinction between the parties. Or he may offer Republicans a new "Grand Bargain." But that could create a rift with members of his own party, and would further weaken the once-striking political advantage his party once enjoyed on this issue.
Social Security is a critical issue for Americans. The Republicans' unexpectedly fierce attacks on it offer the president an opportunity to set the political tone for the next two years. Next Tuesday we'll see whether he seizes that...
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How does the right justify the kind of action Congress took this week, when it moved to cut disability benefits for millions of people by 20 percent? Answer No. 1: With buzzwords and rhetorical dodges. Answer No. 2: Not very well.
For details on the House's action, we pointed
It is striking that on their first day -- their very first day! -- congressional Republicans moved against Social Security's disability insurance fund, before some of them had even found the restrooms or put out their family photos.
As Jerry Seinfeld might ask, "Who does that?"
Although the move was...
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They're calling it a "Christmas gift" for Wall Street. Last week the Federal Reserve announced that it's giving U.S. banks yet another extension on the "Volcker Rule" provision in the Dodd/Frank financial reform bill. As a result of this latest decision, banks won't have to comply until mid-2017.
The Dodd/Frank bill was passed in 2010.
Banks wanted a delay because they claimed they needed the time to prepare. Does anybody really think the nation's largest and most powerful financial institutions need seven years to restructure the casino-like aspect of their operations? It would be easier to imagine them doing in seven days -- at least if there were money to be from it.
What's really going on? For one thing, every year that the rule is delayed is another year the banks can maximize their earnings. But the game may be even deeper than that. The Fed delay makes a kind of sense -- if you believe Congress plans to revoke the Volcker Rule altogether.
The ghost of big-bank futures.
It's almost as if Wall Street's been expecting a break all along -- but then, maybe it has. After all, instead of shoring up Dodd/Frank by restoring Glass-Steagall and breaking up too-big-to-fail banks, lawmakers have looked the other way. The Fed and other regulators have routinely dragged their feet on the rule-making that accompanies a law like Dodd-Frank. The Justice Department has ignored overwhelming evidence of banker criminality and given a free pass to lawbreakers on Wall Street.
And this month Congress ran the same game it's used in the past: It attached a corporate-friendly provision to a "must pass" bill, using the implicit threat of a shutdown and the shallow reporting of a compliant news media to slip its machinations past the American people.
This time it was the "Cromnibus" funding measure, and the corporate giveaway was the "Citigroup" amendment -- literally written by lobbyists for that bank. The amendment revoked a provision removing taxpayer insurance protection from risky derivatives investments by large financial institutions. That provision, originally set to take effect in 2013, had been delayed until July of 2015. Now it won't take effect at all.
If you want a dark glimpse of the coming year for this holiday season, the "Cronybus" deal points its bony finger toward 2015 like the Ghost of Christmas Future. Ask not for whom the bell tolls. It tolls for thee... and thy economy.
Running out the clock
It's government of Wall Street, by Wall Street, and for Wall Street. The lesson of the "Citigroup amendment," which only benefited a handful of our largest banks, seems to be this: If the rule-making is delayed long enough, there's a good chance Congress will eventually repeal the rule altogether -- that is, if it gets in the way of Wall Street's profits.
At the close of last year, Citigroup held $63.5 trillion in derivatives, and $62.3 trillion was protected by Federal insurance. That's "trillions," with a "t." And while the bank isn't on the hook for the full amount, you can believe that these bets involve enormous sums of money.
We're on the hook for those sums too -- and now that's not going to change.
That gets us to the Fed's decision. The Volcker Rule was designed as a milder alternative to the Glass-Steagall protections which kept our banking system safe for nearly 75 years. It limits banks' ability to gamble on risky investment instruments like those which contributed to the financial crisis.
The "Citigroup" amendment showed us how likely the new, more Republican Congress is to roll back portions of the Dodd-Frank law -- and how much cooperation it will receive from Wall Street Dems when it does.
It's easy to be angry at the Fed, and it's often understandable. An institution created by the American people to serve the greater good has instead become enmeshed in the banking industry it was meant to regulate. (See "The People's Fed" for more.)
Nevertheless, although we are often ill-served by this public institution, in this case the blame may lie elsewhere. Even a relatively well-intentioned officer of the Federal Reserve might reasonably conclude that it would be disruptive to force banks to prepare for a rule that will never take effect.
And if there's one thing that Congress demonstrated this month, it's that it is ready, willing, and able to eliminate rules that displease Wall Street.
When it comes to Wall Street reform, this month was bad news. But there were sprigs of green among December's funereal shades. A few feisty lawmakers fought back against the "Cromnibus" deal. Sen. Elizabeth Warren led the charge in the Senate, slamming both Wall Street's Republican water-carriers and Citigroup's cronies in the Clinton and Obama administrations. On the House side, progressives found an ally in a reinvigorated Nancy Pelosi.
Sen. Bernie Sanders says he will introduce a resolution to break up the big banks. It's not likely to pass, but it's a start. Democrats who resist the Wall Street takeover may find some allies among the Republicans as well, where Sen. David Vitter and others have sometimes taking populist economic stands.
Sen. Sherrod Brown will become the ranking Democrat on the Senate Banking Committee (which also handles housing and urban affairs, two other sensitive financial areas). In the clip above, Sen. Brown told us that he plans to use this position to keep calling for more comprehensive Wall Street reform Sen. Brown says he'll reach across the aisle for allies. He notes that some conservatives want Wall Street reform, but adds that even the most ardently among them are often seduced by its money when they come to Washington.
The Senator also notes that, when it comes to "keeping Wall Street in check," his committee "didn't have a majority for that (even) when Democrats were in the majority." That's where the public comes in.
We live in a cash-driven political age. We won't get the reform we need if we rely on elected officials to enact it for us. That will take an independent movement which isn't beholden to any party or special interest. Building it will be a major challenge, and nobody else will do it for us.
It won't be easy. Banks are already gearing up for a "lobbying blitz" aimed at rolling back more of Dodd-Frank. The President is likely to renominate banker Antonio Weiss to a key economic position. Wall Streeters are likely to join with other wealthy interests in another attempt to cut Social Security, a move which could keep their tax bills low while bringing new investment income to their coffers.
There will be other economic battles. The President will be pushing for the Trans-Pacific Partnership, an onerous and destructive trade bill, and he'll be asking Congress to prevent debate on its controversial provisions by using a parliamentary trick known as "fast track." Congress will be fighting to give even more tax breaks to corporations and wealthy individuals, and to undermine even more employee protections for working Americans.
Some in Congress will make positive and even brave proposals -- to break up the big banks, increase Social Security benefits, raise wages, and take other much-needed steps to repair our damaged economy. But, overall, our elected officials will only have as much courage as the public demands of them. It will take a reinvigorated movement, on the scale of the Occupy movement and the transformative movements which preceded it, to enact major populist reforms.
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