Thursday, April 3, 2008

Enough Is Enough

If I hear or read about another billionaire claiming that the current economic woes we are suffering as a nation is due to our “entitlement” programs, I am going to scream. The latest in the long line of billionaire apologist is Pete Peterson. Mr. Peterson, is a longtime opponent of Social Security, Medicaid, and any other government programs targeted to help the needy, who appeared on Charlie Rose. According to Mr. Peterson it is not greed and speculation that has reeked havoc on our economy for the past 30 years, it is the entitlement programs. All this time I have been thinking that not being able to know when you’ve had enough is the problem. Come to find out I am looking in the wrong direction. Greed has been around for a long time, entitlements have not. The Crash and the Depression occurred prior to entitlements; I wonder who Mr. Peterson blames those on.

I believe the Social Security Trust Fund belongs in the first tier of classic oxymorons. In the first place, the Social Security Trust Fund should not be trusted, and it is not funded. We anesthetize the public with highly reassuring long-term statements that the trust funds are solvent for decades. Yet, we do not tell the public that the payroll taxes of our children and grandchildren would have to double to cover the costs of Social Security and Medicare. That is an unthinkable burden. We do not tell the public that whether you have a trust fund or not, you still face the same three hard choices: increased taxes, cut benefits, or try to borrow unprecedented amounts.

Now how much would we have to borrow? I think it’s time we started thinking in cash flow terms, because these programs are obviously pay-as-you-go programs. The projected cash flow deficits for Social Security and Medicare go from a modest $25 billion in 2003, to a projected $783 billion in 2020, and trillions of dollars thereafter.

These statements on the surface seem reasonable enough, we have not done a good job funding and fixing the entitlement programs. Instead of facing some tough realities and questions the politicians have continued to ignore them, afraid of providing the American public the ugly truth, ugly truths do not win elections. The problem I have with these guys is they present the picture as though the entitlements were the only item in the budget. So rather than saying it is a matter of priorities they present the picture as a zero-sum game. Nowhere do they mention the military budget, the tax-cuts, or the other government programs that make up the complete budget. We are left to believe that the entitlements exist on some island, isolated from the other expenditures.

Mr. Peterson discussed the Prescription Drug benefit that was added to Medicaid as an example of making a bad situation worse. I agree, but he doesn’t mention that he is a Republican and it was the Republicans who created the Bill that forbid the Government from negotiating prices for the prescriptions. I wish just once these guys would take responsibility for the messes they make. The Republicans built in astronomical profits for the benefit of the big pharmaceuticals, just as they did for big oil who is recording unprecedented profits. Nowhere does he mention the billions of dollars that were made during the mortgage meltdown by those same companies who are now crying bankruptcy. Is it me or did billions of dollars just disappear into thin air? Someone had to profit from all of those loans, why is this information never debated? Nor, did he mention that it is the Republicans who are trying to bankrupt the system to force its collapse.

Mr. Peterson stated that he supports John McCain and was asked about Senator McCain’s flop on the tax-cuts, he presented the standard line that what McCain was against was not tax-cuts per se but tax-cuts without spending cuts. McCain and his supporters are backpedaling so fast from statements like the following it blows the mind:

“Mr. President, the principle that guides my judgment of a tax reconciliation bill is tax relief for those who need it the most—lower- and middle-income working families. I am in favor of a tax cut, but a responsible one that provides significant tax relief for lower- and middle-income families. And I commend Sen. Grassley for moving in that direction. But I am concerned that debt will overwhelm many American households. That is why tax relief should be targeted to middle-income Americans. The more fortunate among us have less concern about debt. It is the parents struggling to make ends meet who are most in need of tax relief.

“I had expressed hope that when the reconciliation bill was reported out of the Senate Finance Committee, the tax cuts outlined would provide more tax relief to working, middle-income Americans. However, I am disappointed that the Senate Finance Committee preferred instead to cut the top tax rate of 39.6% to 36%, thereby granting generous tax relief to the wealthiest individuals of our country at the expense of lower- and middle-income American taxpayers.”

Senator McCain and Mr. Peterson have no problem today with the Feds bailing out Bear Sterns and the Wall Streeters, it is the average American who Senator McCain was concerned about in 2001 who don’t deserve any relief. Mr. Peterson said that while it was a dangerous precedence, he supported the bail-out to stem broader market drops. You have to love this line of, “we hate to do it and we know its bad business, but we have to. He gave the same excuse for all of the liquidity funds they have received from China. He didn’t seem to have any problem with China owning large sections of our banking industry. I’m no Nobel economist but even I know that can’t be a good idea.

Oh, by the way Mr. Peterson is making a donation of a billion dollars to help teach Americans how to save. First of all, how rich do you have to be to give away a billion dollars? Secondly, what he failed to mention is why the American family is in the situation it finds itself. Due to flat wage pressure being exerted by Mr. Peterson and his billionaire friends for the past 30 years, the wife has had to go to work to increase household buying power. After that money was spent, they began mortgaging their homes and running up credit card bills for expense money. Now that they have spent that money the well is now dry. And Mr. Peterson says if they had just saved money the economy wouldn’t be in this predicament. He wants consumers in a consumer economy to not consume or reduce consumption. That horse is already out of the barn, we have been bombarded since the age of television to buy. Where were the commercials for saving money?

[2] —Senate floor statement during debate over President Bush’s tax relief package, May 21, 2001.

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