Thursday, December 20, 2012

Lions, and Tigers, and Fiscal Cliff... Oh My!

Young Turks from last June

Jon Stewart

President Obama

Entitlement: noun: The fact of having a right to something. The amount to which a person has a right.

   I saw the new "Lincoln" movie the other night... I had no idea that our 16th President was a  vampire killer.
   Well someone's got to do it I suppose.  
   Sadly, this may be the very last post here at Joyce's Take, as tomorrow marks the end of the Mayan 13th b'ak'tun of the  Mesoamerican Long Count calendar, which of course will trigger a huge solar flare, which will spew huge amounts of massless neutrinos at our planet, which will cause the huge core of the Earth to heat up, which will cause the end of the world (except for those lucky enough to get on those damn arks in Tibet).
   On the off chance that this doesn't happen, and we somehow survive... we'll continue with this post.
   I suppose we should discuss all of the manufactured brouhaha surrounding this so-called fiscal cliff that's been in the news since the election.
   What is the fiscal cliff? Glad you asked.
   The actual term (popularized by chairman of the Federal Reserve and fear monger Ben Bernanke) refers to automatic cuts in federal revenue (taxes) and spending (in defense (yes, yes, yes!) and domestic programs (everything except Social Security, Medicaid, federal pay (including military pay and pensions), and veterans' benefits)  to the tune of about a trillion smackaroos.
   What are the consequences of this happening if it were to occur? Good question!
   Our country would go a long way toward reducing the federal deficit and balancing the budget, which the Republicans claim to be oh so concerned about ("It's the single greatest problem our nation faces," they are always saying. But they seem to only care about it when a democratic President is in office, because they sure didn't care about it when Bush was around. Wonder why?).
   Well, isn't that a good thing?
   Yeah, I guess so. I mean that's what the Republicans say they want more than anything else, so of course, the Democrats let them frame the debate and follow them along like little doggies (although most real economists state the deficit is not the greatest problem our nation faces. What is? Lack of economic growth (i.e., jobs)).
   But there is one little problem... and this is where the "cliff" part comes in, those pesky economists also claim that such a rapid reduction in revenue and spending at the same time will throw the country into a minor recession.
   Oh my!
   But that's unlikely to happen for a number of reasons that we'll go into a little bit.
   As the Jon Stewart clip above suggests, when you listen to the corporate media about the Republican House of Representatives and the Democratic Senate can't coming up with a deal to avoid these automatic cuts you would think the world was ending (could this be tied in with the Mayan doomsday scenario somehow? Coincidence or no? We'll see tomorrow, won't we?)
   So how did we get into this predicament? Another good question!
   The lovely but brain dead Sarah Palin blamed Obama for the fiscal cliff just yesterday, as she cried about him being named Time's Person of the Year ("What has he done?! Please tell me?! What has he done to deserve this!?")
   Well President Obama didn't have anything to do with it. The present fiscal cliff situation we find ourselves in is a direct result of Congress not doing it's job.
   You're not hearing that in most media outlets right now I bet. Oh no, they'd like everyone to forget about that little fact.
   Yeah, it's true. Last year during the debt ceiling debacle their answer to the deadlock between the House and Senate (with the support of the President) was to set up a Super Committee to come up with a bipartisan  resolution to the problems like the very same issues we're talking about now, revenue vs spending cuts. This Super Committee (not a regular committee mind you, but a Super one) was created with this stipulation; if they couldn't come up with a solution to the problem, said problem would be kicked down the road in the form of the fiscal cliff we now face, and therefore giving Congress permission to do what it loves to do the most... nothing.
    The Super Committee, being bipartisan, failed completely, and now we have the fiscal cliff.
   If we were to fall over this cliff what exactly would happen, and who would it happen to?
   The Bush tax cuts would expire, for one thing. Not just for the wealthy but for everybody, and as President Obama pointed out in the third clip above, a family making $50,000 a year would wind up paying about $2,000 more in taxes. But everything is negotiable, and even if we were to fall over the cliff, tax hikes for the middle class don't have to happen.
   "If the nation goes over the so-called "fiscal cliff" and tax rates return to what they were under Bill Clinton, Democrats can then introduce a tax cut for everyone earning under $250,000 and make it retroactive to the start of the year.
   They can combine it with a spending bill that makes up for most of the cuts scheduled to go into effect in January. Republicans would be hard-pressed not to sign on." -Robert Reich
   Mr Reich, economist and former Secretary of Labor under Bill Clinton, wrote the above today wondering why it was that the President and democratic members of Congress are considering offering a cut in Social Security benefits (the first time Social Security has been offered up as a bargaining tool since it's creation, which in itself represents a troubling precedent, considering Social Security has been the greatest and most successful social program ever created and does not add a single penny to the national deficit) in the form of reduced cost of living increases that occur each year for beneficiaries (this is what the Republicans like to call "Entitlement Reform." As the definition of the word "entitlement," seems to be connected to a "right," that is bestowed upon us by a bestower. But this isn't the case with Social Security. Social Security is an insurance program that workers pay into throughout their working lives. It's an insurance policy against becoming disabled or getting old. One of the two are probably going to happen to us as time goes by. Now I don't know about you, dear readers, but I wouldn't call a similar program, such as collecting on a health insurance, or life insurance policy an entitlement)
   Mr. Reich continues: "Even Social Security's current cost-of-living adjustment understates the true impact of inflation on elderly recipients, who spend far more on health care than anyone else - including annual increases in Medicare premiums."
   Who would benefit the most by avoiding the fiscal cliff? Defense contractors, the health industry, companies that pay large dividends, financial services companies... in other words the entities that control Congress.
   Still, even with all the concessions the Democrats seem willing to make at the expense of the middle class (it's unlikely the President or people in Congress will ever have to rely on Social Security), the Republicans in the House are so screwed up they can't even pass their own budget plan, let alone compromising with their Democratic counterparts to stave off the cliff that's coming.
   I think we're going to go over, and you know what, I don't care. I'm tired of the games and BS. They'll have to come to some compromise early next year. Will see what happens then.
   Of course if the President and the members of Congress really wanted to fix the budget deficit and balance the economy, there are many other actions that could be applied to help do just that. Below is a list of 10 things that Zach Carter, the Huffington Post's Senior Political Economy Reporter, came up with, along with some comments of mine, and the odds that they'll be put into effect:
1. Prison Reform. Releasing elderly convicts unlikely to commit crimes, offering treatment or counseling as an alternative to prison for non-violent offenders, slightly shortening the sentences of well-behaved inmates, and substituting probation for more jail-time -- Savings = Approximately $68 billion a year. Probability of it happening: It depends. State run facilities have a higher chance of initiating reform than private prisons like Corrections Corporation of America where the incentive is to house as many prisoners as possible. The cost/benefit ratio of using private prisons has not proven to be beneficial to state governments.
2. End the Drug War. The federal government spends more than $15 billion a year investigating and prosecuting the War on Drugs. As drug war budgets balloon, drug use escalates. In addition to saving all the money spending investigating, prosecuting and incarcerating drug offenders, the government could actually regulate and tax drugs like marijuana, generating new revenue. It is estimated that California alone could earn $18 billion a year in American dollars by fully legalizing pot and taxing it. If the federal government reversed it's nonsensical stance on marijuana it's tax revenue increase would be even greater, not to mention the effect this policy would have on foreign drug cartels. Probability of it happening: In the current political environment... 0%.
3. Let Medicare Negotiate With Big Pharma. This is a no brainer. Medicare currently spends about $50 billion a year on prescription drugs. According to economist Dean Baker, Americans spend roughly 10 times more than they need to on prescription drugs as a result of our unique intellectual property standards.
   These savings for the government, of course, would come from the pockets of major pharmaceutical companies, currently among the most profitable corporations the world has ever known. They also exercise tremendous clout inside the Beltway. President Barack Obama even guaranteed drug companies more restrictive -- and lucrative -- intellectual property standards in order to garner their support for the Affordable Care Act.
Probability of it happening: 0% during the remainder of President Obama's second term.
4. Offshore Tax Havens. Estimated savings of tax revenue approximately $500 billion a year by some. Mr. Carter estimates... $100 billion. I don't care who is right. That's a lot of money. Probability of it happening: 20% during the remainder of Obama's time in office.
5. De-privatize Government Contract Work. Over the past decade, the federal government's staffing has held steady, while the number of federal contractors has increased by millions. On average, contractors are paid nearly double what a comparable federal employee would receive for the same job, according to the Project On Government Oversight. Probability of it happening: 0% during the remainder of President Obama's second term.
6. Print More Money. Inflation -- isn't such a bad idea during periods where much of the citizenry is drowning in debt. Since the United States borrows money in its own currency, the government always has the option of printing more money to finance its deficits. This can ultimately lead to inflation.  Today, when 10.8 million homes are underwater -- meaning borrowers owe banks than their houses are worth, moderate inflation could ease that debt burden. By effectively reducing monthly bills, moderate inflation could actually put more money in the pockets of these homeowners to spend elsewhere, thus stimulating the economy.
   This may be one of the reasons that folks like Rick Perry of Texas got so upset with the idea of the federal government printing more cash last year. He must of realized that policy just might work, and thus hurt his, and the Republican's chances to gain the White House. Probability of it happening: The Federal Reserve can do this anytime it wishes.
7. Print Less Money. The government prints a lot of $1 bills. But it turns out that minting $1 coins is much, much cheaper. Over the course of 30 years, the government could save $4.4 billion by switching from dollar bills to dollar coins. Probability of it happening: 0% during the remainder of President Obama's second term.
8. Immigration: Less Detention, More Ankle Bracelets. The government spends $122 per person, per day [that's almost like $44,530 a year. Considering 369,000 immigrants are detained annually these days, and let's say the average time of detention equals six months, that adds up to approximately $82,165,785,000 a year in annual costs] detaining immigrants who are considered safe and unlikely to commit crimes. The government has plenty of other options available to monitor such people, at a cost of as little as $15 per person [which comes to an annual cost of $1,010,137,500, a savings of $81,155,647,500.27]
   For the first 205 years of America's existence, there was no federal system for detaining immigrants. The process began in 1981. Under who? Ronnie Reagan. Just one of the wonderful things he did to screw up this country.  Probability of it happening: 0% during the remainder of President Obama's second term.       
9. Financial Speculation Tax. Some estimate revenue might be between $350 billion and $1.5 trillion a decade. Mr. Carter estimates about $150 billion a year, which is almost exactly $1.5 trillion every ten years. Who is right? Again, who cares?! That's a lot of money!  And money that's not coming from the middle class, social programs, and Medicare and Medical, or Social Security. Probability of it happening: 0% during the remainder of President Obama's second term.       
10. Carbon Tax. Taxing greenhouse gases would generate $80 billion a year right now, and up to $310 billion a year by 2050, according to an analysis by the Brookings Institution. It would also help avert catastrophic ecological and economic damage from climate change. It might help, but it looks like we've already passed the point of no return concerning climate change. We'll discuss this in more detail shortly, but for now here's a harrowing article by Chris Hedges:
Stand Still for the Apocalypse (and not Mayan):
   Probability of it happening: 0% during the remainder of President Obama's second term.   
   Here's a link to Mr Carter's article:
   And as myself, and Mr Reich, and Paul Krugman, and a host of others have repeatedly stated, here's Mr. Carter's argument for stimulus spending:
   There's an old axiom in the investment business that applies to the federal government, as well: You have to spend money to make money. Paradoxically, the U.S. fiscal position would likely be better off if the government simply spent more money. When the economy is booming, government spending can easily be wasteful. But when the economy is not meeting its capacity, the government needs to step in to give it a boost, according to several schools of economic thought. At a time when there are more than four job applicants for every job opening, the economy is clearly not meeting the demand for work, and the government can productively step in by spending money to hire people and get things back on track. By boosting long-term economic growth through short-term spending, the government could actually ease the deficit by ponying up money right now.
   Oh, another idea. Reform business subsidiary entitlements (true entitlements that businesses think they are entitled to), as in ending them.
   Oh yeah, we could lift the cap on taxing Social Security payments, taxing all income, not just the first $100,000. That would solve the entire budget deficit problem right then and there.
   But it seems that Congress and the President aren't really interested in doing that.
   They say they are.
   But they lie.

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