Obama Deficit Commission Report Cuts Social Security, Screws Middle Class

 

Co-Chairs Erskine Bowles and Alan Simpson Release Proposal to Increase Retirement Age As Obama Administration Prepares to Compromise on Tax Cuts for Rich

A draft plan representing the recommendations of Erskine Bowles and Alan Simpson, co-chairs of a Deficit Commission appointed by President Barack Obama, went public on Wednesday. The measures proposed aimed to cut domestic and military spending to reduce the deficit by $4 trillion over the next 10 years and included cuts in foreign aid, government workers, defense procurement, and entitlement programs like Social Security and Medicare.

ABC News reported the draft proposal calls for “$1 trillion in tax increases over the next decade…means-testing Social Security, raising the retirement age to 69, expanding the payroll tax, closing one third of overseas US military bases and raising the gasoline tax.” (Here's the released report.)

 

Several of the proposed ideas raised the ire of economists and Democrats. Paul Krugman expressed puzzlement at the thought that “large cuts” would be made to income taxes in order to ensure the “fiscal future” of America. Krugman asserted there is “zero” evidence to support the idea income taxes have been a drag on economic growth.

Worse, income tax rates would decrease for the highest bracket and drop from 35 to 23 percent and the corporate tax rate from 35 percent to 26 percent.

 

Simpson contends the commission has “harpooned every whale in the ocean – and some minnows.” But, some whales have thus far escaped unscathed. A financial speculations tax on Wall Street was not in the report. As Dean Baker of the Center for Economic Policy and Research (CEPR) pointed out, they have totally ignored targeting “Wall Street’s reckless greed” and ignored recommendations from the International Monetary Fund (IMF), which has called for “a substantial increase in taxes for the financial industry” in America.

 

Instead of going after those who destroyed the economy in the first place, the middle class are urged to be sacrificial lambs for getting the economy back on course as Wall Street and others continue to get what amounts to bailouts from government. Home mortgage exemptions the middle class benefit from cut. Health insurance deductions for employers and mortgage interest deductions for homeowners that have helped keep the housing market from going deeper into depression on the chopping block. And, federal salaries, bonuses and other compensation would be frozen for three years and the federal workforce would be cut by 10 percent plus 250,000 non-defense service and staff contractors would be eliminated.

 

Social Security was supposed to be off the table yet the debt commission proposal calls for an increase in retirement age and a limit to “yearly cost-of-living increases to the rate of inflation rather than of wage growth,” a cut that would surely affect retirees

 

The answer to why the poor, working and middle classes are being asked to shoulder the burden of significantly cutting the deficit and correcting the U.S. economy lies in key conflicts of interests. Bowles happens to be on Wall Street’s payroll and earned $335,000 last year as a member of the board of directors of Morgan Stanley, a bank bailed out by the US government in 2008. Alan Simpson has a history of wanting to disembowel Social Security through benefit cuts and privatization and he’s a seasoned revolving door lobbyist. And, the Washington Post has report demonstrating how outside influences have been steering the commission in a pro-rich, pro-Wall Street direction.

 

President Obama’s trip to India, Indonesia, and now South Korea for the G-20 (along with the fact that this isn't the commission's final report) has led the Obama Administration to be reluctant to respond to specific recommendations. However, a day later, President Obama did make a statement saying, according to ABC News, that he convened the commission precisely because he was “prepared to make some tough decisions” but he “can’t make them alone.”

 

Outgoing Speaker of the House Rep. Nancy Pelosi (D-CA) rejected the plan calling it "unacceptable.” Representative Anthony Weiner (D-NY) New York appeared on “Countdown” with Keith Olbermann and called it a plan to "reduce the middle class."

 

Americans should understand the current economic reality, which columnist Nicholas Kristof recently illuminated: the richest 1 percent now take home almost 24 percent of income in the United states, up from 9 percent in 1976, which means the distribution of wealth is more unequal than "traditional banana republics" like Nicaragua, Venezuela, and Guyana. CEO's of the largest American companies, as of 2001, earned 531 times as much as the average worker, up from 42 times in 1980. And, more than four-fifths of the total increase in American incomes have gone to the richest 1 percent in America.

 

Many of these recommendations, if supported by President Barack Obama and Democrats, can be expected to further transform America into a banana republic.

 

(Photo by Truthout.org)