Tuesday, July 12, 2011

Medicare cuts and bankruptcies, and other bad news

I’ve heard that medical expenses account for more than half of the bankruptcies. If the GOP succeeds in forcing cuts in Medicare to protect the Bush tax cuts, which caused most of the National debt, how many seniors will be forced into bankruptcy?

Are the Republicans in Congress willing to forfeit their political careers to protect the Bush tax cuts, corporate subsidies and high-end tax breaks or are they just cocksure that a majority of the voters in 2012 will either be beneficiaries of the tax cuts and subsidies or they are so misinformed that they don’t know they’re getting screwed.

I recently read an article by Mike Lofgren (copy at the bottom of this post), who retired early this year after 28 years in Congress as a Republican staffer. During the last 10 years at least he was part of the Senate Budget Committee supporting the Republican committee members. The opening paragraph called Obama’s fiscal policies a mess. The balance of his article condemns his Republican party for most of the National Debt and for wrongly refusing to accept changes to increase tax revenue. Lofgren reminded us that the 400 wealthiest Americans have as much wealth as the bottom 125 million Americans. Although Lofgren didn’t mention it in his article, a few years ago, and perhaps still, the Bush tax cuts for the wealthiest 400 Americans equalled the combined budgets of 4 of the departments of the federal government. Not the total tax they pay – just the reduction in their taxes due to the Bush tax cuts. That much money is hard to imagine. I find it impossible to believe that the majority of the 400 wealthiest Americans want the Bush tax cuts to continue, considering the state of our economy and the national debt, and obviously none of them “needs” the tax cut to continue. I think we should survey the “400” and ask them if they would be willing to (1) give up the Bush tax cuts and (2) accept an added income tax for the purpose of paying down the debt and only until the debt is paid.

Now you might be saying that those 400 Americans are already paying a hell of a lot of tax so why should they pay more. They are currently paying a tax rate lower than before GW Bush and a whole lot lower than they paid before Reagan. Prior to WWI the wealthiest paid a 7% federal income tax. During WWI their tax rate increased to 77% but soon dropped back to 25% until the depression. From the depression through WWII it rose steadily to 92% in the 50’s. At that time the lowest tax bracket was paying at the rate of 22%. Throughout the 60’s and 70’s the tax rate for the wealthiest was about 70%. After Reagan got into the oval office the top tax rate dropped from 70% to 28%, while the tax rate for the lowest income bracket went up from 14% to 15% and entitlements were cut by changing the qualifications. The FPL based on the Consumer Price Index for a family of four has risen from $3,022 in 1960 to $22,350 in 2011 for a family of four – an increase of 640%. Although the median income between 1960 and 2011 rose from $5,620 to $50,200 in 2010 – an increase of 790% - the median income relative to CPI increased on average only 0.4% per year for the past 50 years. At the high end of the income scale, “the median compensation for CEO's in all industries as of early 2010 is $3.9 million; it's $10.6 million for the companies listed in Standard and Poor's 500, and $19.8 million for the companies listed in the Dow-Jones Industrial Average. Since the median worker's pay is about $36,000, then you can quickly calculate that CEOs in general make 100 times as much as the workers, that CEO's of S&P 500 firms make almost 300 times as much, and that CEOs at the Dow-Jones companies make 550 times as much,” (from “Wealth, Income, and Power” by G. William Domhoff, September 2005 and updated January 2011). Fifty years ago the average CEO earned 42 times as much as the average employee. So… I think the 400 wealthiest Americans can well afford to pay a larger percentage of their income. Furthermore, I think Americans with incomes over $1 million per year can also afford to pay more. And, the Bush tax cuts shouldn’t continue for anybody regardless of income.

Cuts will not stop at Social Security, Medicare and Medicaid. Education, public safety, the public infrastructure, to name a few, have already been compromised and more cuts are on the way. These cuts, as promised by the GOP and demonstrated on the state level, will be used to reduce both personal and corporate taxation. The GOP promises that new jobs will be created but the last 30 years has taught us expect a far different result. A look at our ranking among other nations with respect to Income Inequality tells us where we have been going and what we are likely to become. Out of 134 countries the U.S. has the 95th highest inequality, Mexico is 107, Brazil is 125 and South Africa is 133. There are no other industrialized nations that have greater inequality than the U.S. The first ten countries that have a greater inequality are Uruguay, Jamaica, Uganda, Philippines, Malaysia, Rwanda, Nepal, Mozambique, Madagascar and Ecuador. The first ten countries that have less inequality are Cameroon, Côte d'Ivoire, Iran, Nigeria, Guyana, Nicaragua, Cambodia, Thailand, Kenya and Burundi. This doesn’t look good to me and it certainly doesn’t promise to get better.

"Borrowing and spending the GOP way"


The big deficit facing the U.S. is mostly Republican in origin, the Congressional Budget Office says. The Bush tax cuts alone have added $3 trillion in red ink, yet the party wants to double down on its failed policy.

June 26, 2011
By Mike Lofgren

President Obama's fiscal policies are a mess. Whatever one thinks of the need for stimulus in a severe recession, it is obvious that running trillion-dollar deficits for years on end is unsustainable. Moreover, his proposals are dishonest. The nonpartisan Congressional Budget Office concluded that his proposed 2012 budget underestimates spending while overestimating revenues.

Sadly, the Republicans have offered no viable alternative.

The failure of our leaders to offer realistic budget proposals was a major reason I decided to retire after 28 years in Congress, most of them as a professional staff member on the Republican side of both the House and Senate Budget Committees. My party talks a good game, railing about the immorality of passing debt on to our children. But the same Congressional Budget Office that punctured Obama's budget also concluded that the major policies that swung the budget from a projected 10-year surplus of $5.6 trillion in 2001 to the present 10-year deficit of $6.2 trillion were Republican in origin.

Consider the two signature GOP policies of George W. Bush's presidency: the wars and the tax cuts. Including debt service costs, Bush's wars have cost about $1.7 trillion to date. Additionally, as part of being "a nation at war," the Pentagon has spent about $1 trillion more than was expected in the last decade on things other than direct war costs, which has been a bonanza for military contractors but a disaster for the federal budget. And finally, there has been another trillion dollars spent domestically in response to 9/11, including spending on such things as establishing the Homeland Security Department and increasing the budgets for the State Department and the Veterans Administration.

The Bush tax cuts have added another $3 trillion in red ink. While Republican leaders wail that Americans — particularly their rich contributors — are overtaxed, the facts say otherwise: U.S. taxpayers, particularly the wealthiest, pay far less in taxes than they would in most other developed countries. Today, the 400 wealthiest Americans have as much wealth as the bottom 125 million. The GOP insists that those wealthy people use their money to create jobs, and that taxing them more heavily would ultimately hurt the economy. But, if that's so, why was the rate of job creation in the decade after the Bush tax cuts the poorest in any decade since before World War II?

Like a drunk swearing off hooch for the hundredth time, Republicans are now trying to show they are serious about controlling the deficit by saying they won't raise the debt ceiling unless they get through some of their cost-saving projects, like privatizing Medicare. Meanwhile, they want revenue increases "off the table," even though, at 14.8% of GDP, revenues are at their lowest level in 60 years. And the budget passed by the Republican-controlled House further cuts taxes on the wealthy, a fact it glosses over with optimistic growth forecasts.

Raising the debt ceiling isn't, as the GOP tries to say, Congress giving itself permission to continue excessive spending: It's something that's necessary to pay for past congressional decisions on taxes and spending, and those decisions were made primarily when Republicans were in charge.

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