"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘U.S. Debt Crisis’

The U.S. & The Five Stages Of Collapse

In Uncategorized on August 6, 2011 at 1:59 pm

Oldspeak: When I first read this 3 years ago, I could shrug it off. Today, in the wake of the first downgrading of U.S. debt EVER; it’s glaringly obvious that in the U.S. Stage 1. Financial collapse is very far along. Stages 2 and 3, Commercial and political collapse are in progress. Stages 4 and 5 social and cultural collapse are in progress in many parts of the U.S. At some point all the communitainment in the world won’t prevent us from acknowledging the actual reality happening around us.  We’ve seen this movie before in the 1920s-30s. Extreme inequality, oligarchy, rampant joblessness, austerity, deflationary policy, Acute consolidation of power and influence in the hands of a monied few. It’s unfortunate that the U.S. has not learned the lessons of its history. At some point we will have no choice but to heed the lessons from The U.S.S.R., Rome, The Maya, Mesopotamia, and other great empires the have risen and fallen in much the same way. U.S. Default is not a matter of if, but when. Printing money and raising the debt ceiling can only put off the inevitable for so long. We have to have serious discussion about what happens after. ”

By Dmitri Orlov @ Energy Bulletin:

Hello, everyone! The talk you are about to hear is the result of a lengthy process on my part. My specialty is in thinking about and, unfortunately, predicting collapse. My method is based on comparison: I watched the Soviet Union collapse, and, since I am also familiar with the details of the situation in the United States, I can make comparisons between these two failed superpowers.

I was born and grew up in Russia, and I traveled back to Russia repeatedly between the late 80s and mid-90s. This allowed me to gain a solid understanding of the dynamics of the collapse process as it unfolded there. By the mid-90s it was quite clear to me that the US was headed in the same general direction. But I couldn’t yet tell how long the process would take, so I sat back and watched.

I am an engineer, and so I naturally tended to look for physical explanations for this process, as opposed to economic, political, or cultural ones. It turns out that one could come up with a very good explanation for the Soviet collapse by following energy flows. What happened in the late 80s is that Russian oil production hit an all-time peak. This coincided with new oil provinces coming on stream in the West – the North Sea in the UK and Norway, and Prudhoe Bay in Alaska – and this suddenly made oil very cheap on the world markets. Soviet revenues plummeted, but their appetite for imported goods remained unchanged, and so they sank deeper and deeper into debt. What doomed them in the end was not even so much the level of debt, but their inability to take on further debt even faster. Once international lenders balked at making further loans, it was game over.

What is happening to the United States now is broadly similar, with certain polarities reversed. The US is an oil importer, burning up 25% of the world’s production, and importing over two-thirds of that. Back in mid-90s, when I first started trying to guess the timing of the US collapse, the arrival of the global peak in oil production was scheduled for around the turn of the century. It turned out that the estimate was off by almost a decade, but that is actually fairly accurate as far as such big predictions go. So here it is the high price of oil that is putting the brakes on further debt expansion. As higher oil prices trigger a recession, the economy starts shrinking, and a shrinking economy cannot sustain an ever-expanding level of debt. At some point the ability to finance oil imports will be lost, and that will be the tipping point, after which nothing will ever be the same.

This is not to say that I am a believer in some sort of energy determinism. If the US were to cut its energy consumption by an order of magnitude, it would still be consuming a staggeringly huge amount, but an energy crisis would be averted. But then this country, as we are used to thinking of it, would no longer exist. Oil is what powers this economy. In turn, it is this oil-based economy that makes it possible to maintain and expand an extravagant level of debt. So, a drastic cut in oil consumption would cause a financial collapse (as opposed to the other way around). A few more stages of collapse would follow, which we will discuss next. So, you could see this outlandish appetite for imported oil as a cultural failing, but it is not one that can be undone without causing a great deal of damage. If you like, you can call it “ontological determinism”: it has to be what it is, until it is no more.

I don’t mean to imply that every part of the country will suddenly undergo a spontaneous existence failure, reverting to an uninhabited wilderness. I agree with John-Michael Greer that the myth of the Apocalypse is not the least bit helpful in coming to terms with the situation. The Soviet experience is very helpful here, because it shows us not only that life goes on, but exactly how it goes on. But I am quite certain that no amount of cultural transformation will help us save various key aspects of this culture: car society, suburban living, big box stores, corporate-run government, global empire, or runaway finance.

On the other hand, I am quite convinced that nothing short of a profound cultural transformation will allow any significant number of us to keep roofs over our heads, and food on our tables. I also believe that the sooner we start letting go of our maladaptive cultural baggage, the more of a chance we will stand. A few years ago, my attitude was to just keep watching events unfold, and keep this collapse thing as some sort of macabre hobby. But the course of events is certainly speeding up, and now my feeling is that the worst we can do is pretend that everything will be fine and simply run out the clock on our current living arrangement, with nothing to replace it once it all starts shutting down.

Now, getting back to my own personal progress in working through these questions, in 2005 I wrote an article called “Post-Soviet Lessons for a Post-American Century”. Initially, I wanted to publish it on a web site run by Dale Alan Pfeiffer, but, to my surprise, it ended up on From The Wilderness, a much more popular site run by Michael Ruppert, and, to my further astonishment, Mike even paid me for it.

And ever since then, I’ve been asked the same question, repeatedly: “When? When is the collapse going to occur?” Being a little bit clever, I always decline to give a specific answer, because, you see, as soon as you get one specific prediction wrong, there goes your entire reputation. One reasonable way of thinking about the timing is to say that collapse can occur at different times for different people. You may never quite know that collapse has happened, but you will know that it has happened to you personally, or to your family, or to your town. The big picture may not come together until much later, thanks to the efforts of historians. Individually, we may never know what hit us, and, as a group, we may never agree on any one answer. Look at the collapse of the USSR: some people are still arguing over why exactly it happened.

But sometimes the picture is clearer than we would like. In January of 2008, I published an article on “The Five Stages of Collapse,” in which I defined the five stages, and then bravely stated that we are in the midst of a financial collapse. And ten months later it doesn’t seem that I went too far out on a limb this time. If the US government has to lend banks over 200 billion dollars a day just to keep the whole system from imploding, then the term “crisis” probably doesn’t do justice to the situation. To keep this game going, the US government has to be able to sell the debt it is taking on, and what do you think the chances are that the world at large will be snapping up trillions of dollars of new debt, knowing that it is being used to prop up a shrinking economy? And if the debt can’t be sold, then it has to be monetized, by printing money. And that will trigger hyperinflation. So, let’s not quibble, and let us call what’s happening what it looks like: “financial collapse”.

2.
So here are the five stages as I defined them almost a year ago. The little check-mark next to “financial collapse” is there to remind us that we are not here to quibble or equivocate, because Stage 1 is pretty far along. Stages 2 and 3 – commercial and political collapse, are driven by financial collapse, and will overlap each other. Right now, it is unclear which one is farther along. On the one hand, there are signs that global shipping is grinding to a halt, and that big box retailers are in for a very bad time, with many stores likely to close following a disastrous Christmas season. On the other hand, states are already experiencing massive budget shortfalls, laying off state workers, cutting back on programs, and are starting to beg the federal government for bail-out money.

Even though the various stages of collapse drive each other in a variety of ways, I think that it makes sense to keep them apart conceptually. This is because their effects on our daily life are quite different. Whatever constructive ways we may find of dodging these effects are also going to be different. Lastly, some stages of collapse seem unavoidable, while others may be avoided if we put up enough of a fight.

Financial collapse seems to be particularly painful if you happen to have a lot of money. On the other hand, I run across people all the time, who feel that “Nothing’s happened yet.” These are mostly younger, relatively successful people, who have little or no savings, and still have good paying jobs, or unemployment insurance that hasn’t run out yet. Their daily lives aren’t much affected by the turmoil on the financial markets, and they don’t believe that anything different is happening beyond the usual economic ups and downs.

Commercial collapse is much more obvious, and observing it doesn’t entail opening envelopes and examining columns of figures. It is painful to most people, and life-threatening to some. When store shelves are stripped bare of necessities and remain that way for weeks at a time, panic sets in. In most places, this requires some sort of emergency response, to make sure that people are not deprived of food, shelter, medicine, and that some measure of security and public order is maintained. People who know what’s coming can prepare to sit out the worst of it.

Political collapse is more painful yet, because it is directly life-threatening to many people. The breakdown of public order would be particularly dangerous in the US, because of the large number of social problems that have been swept under the carpet over the years. Americans, more than most other people, need to be defended from each other at all times. I think that I would prefer martial law over complete and utter mayhem and lawlessness, though I admit that both are very poor choices.

Social and cultural collapse seem to have already occurred in many parts of the country to a large extent. What social activity remains seems to be anchored to transitory activities like work, shopping, and sports. Religion is perhaps the largest exception, and many communities are organized around churches. But in places where society and culture remain intact, I believe that social and cultural collapse is avoidable, and that this is where we must really dig in our heels. Also, I think it is very important that we learn to see our surroundings for what they have become. In many places, it feels as if there just isn’t that much left that’s worth trying to save. If all the culture we see is commercial culture, and all the society we see is consumer society, then the best we can do is walk away from it, and look for other people who are ready to do the same.

3.
There is nothing particularly deep or magical about the five stages I chose, except that they seem convenient. They correspond to the commonly distinguished aspects of everyday reality. Each stage of collapse also corresponds to a certain set of beliefs in the status quo, that is about to go by the wayside.

It is always an impressive thing to observe when reality shifts. One moment, a certain idea is seen as preposterous, and the next moment it’s being treated as conventional wisdom. There seems to be a psychological mechanism involved, where nobody wants to be seen as the last fool to finally get the picture. Everybody starts pretending that they’ve thought that way all along, or at least for a little while, for fear of appearing foolish. It is always awkward to ask people what caused them to suddenly change their minds, because with the fear of looking foolish comes a certain loss of dignity.

The most compelling example of lots of minds suddenly going “snap” is, to my mind, the sudden demise of the USSR. It happened with Boris Yeltsin standing atop a tank, and being asked the question: “But what will become of the Soviet Union?” And his answer, pronounced with maximum gravitas was: “Henceforth I shall only refer to it as the FORMER Soviet Union.” And that was that. After that, whoever still believed in the Soviet Union appeared as not just foolish, but actually crazy. For a while, there were a lot of crazy old people parading around with portraits of Lenin and Stalin. Their minds were too old to go “snap”.

Here in the US, we are yet to experience any of the really major, earth-shattering realizations, the ones that look preposterous immediately before and completely obvious immediately after they occur. We have had minor tremors, mostly relating to financial assumptions. Is real estate a good investment. Will private retirement allow you to retire? Will the government bail us all out? All the major realizations are yet to come, or, as my die-hard Yuppie friends keep telling me, “Nothing’s happened yet.”

But by the time something does happen, it will have been too late for us to start planning for it happening. It doesn’t seem all that worthwhile for us to sit around waiting for the happy event of everybody else feeling foolish all at the same time. Arrogant though that may seem, we may be better off accepting their foolishness before they do, and keeping a safe distance ahead of the prevailing opinion.

Because if we do that, we may yet succeed in finding ways to cope. We may learn to dodge financial collapse by learning to live without needing much money. We may create alternative living arrangements and informal production and distribution networks for all the necessities before commercial collapse occurs. We may organize into self-governing communities that can provide for their own security during political collapse. And all of these steps put together may put us in a position to safeguard society and culture.

Or we can just wait until everyone starts agreeing with us, because we wouldn’t want them to look foolish.

4.
The important dynamic, when it comes to financial collapse, is obvious by now. It’s the collapse of credit pyramids, “the whole house of cards” as President Bush put it. The technical term is “deleveraging,” and the response is the bailout. The federal government will be bailing out the banks and the insurance companies, the auto companies, and state governments. Call it the bail-out treadmill: we are borrowing faster and faster just to keep from falling down. The treadmill is actually a good metaphor. Imagine what would happen if you went to a gym, got on a treadmill machine, and just kept punching up the speed, as high as it will go. What happens is you trip and fall, and find yourself flying backwards.

It is instructive to ask the question, Who are we borrowing this bail-out money from? People will tell you that we are borrowing it from “the taxpayer.” But it’s not as if federal tax receipts have automatically shot up by a few trillion over the past couple of months, and so this begs the question, Who is “the taxpayer” going to borrow this money from in the meantime? From other Americans? No, because our savings rate has been abysmally low for quite some time now, and what little we have saved is in housing equity, which is dwindling, and in stocks and bonds, through mutual funds and 401ks and such, which are down by a third or so. The value of these investments is crashing, and if we dumped these investments to raise the cash to fund this new debt, that would just make them crash even faster. In effect, we’d only be moving money from one pocket to another. So, really, the bailouts have to be financed by foreigners. And what if these foreigners decide not to trust us with any more of their savings? Then our only recourse is to “monetize” the debt: to print money.

And so the next question is, how much money would we have to print? The purpose of the bailouts is to provide liquidity to insolvent companies, to avoid deleveraging. To understand what that means, we have to understand that for every actual dollar within the economy, in the sense of it not being borrowed, there are over 13 dollars of borrowed money, which only exists while the debt can be rolled over. If our credit is maxed out while the economy is growing, that’s bad enough, but the US economy is shrinking because of the recent oil shock. A smaller economy cannot carry as much debt, and this is part of the reason why we have deleveraging. Once the process of debt going sour gets started, it is hard to stop, and if deleveraging were to run its course, we would be down over 1300%. To monetize that much debt would require over 1300% inflation. And once that gets started, it becomes very hard to stop.

And, that, believe it or not, is actually the good news. Because most of our debt is denominated in our own currency – the US dollar – the US will not have to declare sovereign default, like Russia was forced to do in the 1990s. Instead, we can inflate our way out of national bankruptcy, by printing a lot of dollars. We will repay our national debt, but we will do so in worthless paper money, bankrupting our international creditors in the process. There is sure to be plenty of pain for everyone, especially everyone who is used to having plenty of money, because their money will no longer make the world go around. Once the US has to start earning foreign currency in order to pay for imports, you can be sure that imports will become quite scarce.

5.
Here are before and after snapshots of the most salient characteristics of financial collapse, as they will affect the vast majority of the population. Here, I am assuming that commercial and political collapse are slower in arriving, and that government is still there to step in with emergency aid of various sorts, and that a market economy of some sort continues to function. It could come down to everyone walking around with their little food stamps debit cards, and the only place they can use them that’s within walking distance is McDonalds, but I am assuming some semi-stable period during which other adjustments can occur before other stages run their course.

The adjustments would have to do with major aspects of the living arrangement, from where we live to how we grow food to how we relate to each other. With money scarce and not particularly potent, other ways of winning the cooperation of others would need to be evolved in a hurry. The financial realm can be seen as a complex system of fences: your bank account is fenced off from my bank account. This arrangement allows you and me to not worry too much about each other, provided each of us has enough to live on. Though this is largely a fiction, we can fancy ourselves to be independent economic players on a level playing field. But once these conceptual fences become irrelevant, because there is nothing behind them, we become each others’ burden, in an immediate sort of way, that would come as a shock to most people. The indignity of such physical interdependence would be psychologically devastating to many people, raising the human toll from financial collapse beyond what you’d expect from a problem that really only exists on paper. This is going to be particularly hard for a nation brought up on the myth of rugged individualism.

6.
Commercial collapse, when it arrives, will again cause much more of a psychological crack-up than you’d expect from a purely organizational problem. The quantities of immediately available goods and services right before and right after the collapse would remain about the same, but because market psychology is so ingrained in the population, no other ways of coping would be considered. Hoarding would become widespread, with looting as the obvious antidote. There would be an instant, huge black market for all sorts of necessities, from shampoo to vials of insulin.

The market mechanism works well in some cases, but it doesn’t work at all when key commodities become scarce. It leads to profiteering, hoarding, looting, and other pernicious effects. There is usually a knee-jerk reaction to regulate the markets, by imposing price controls, or by introducing rationing. I found it quite funny that the recent clamoring for re-regulating the financial markets was greeted with cries of “Socialists!” Failing at capitalism doesn’t make you a socialist, any more than getting a divorce automatically make you gay.

If by the time commercial collapse is upon us, there is still enough of the political system left intact to implement rationing and price controls and emergency distribution schemes, then we should count these among our blessings. Such heavy-handed governance is certainly not a crowd-pleaser during times of plenty, when it’s also unnecessary, but it can be quite a life-saver during times of scarcity. The Soviet food distribution system, which was plagued with chronic underperformance during normal times, proved to be paradoxically resilient during collapse, allowing people to survive the transition.

7.
If prior to commercial collapse the challenge is finding enough money to afford the necessities, afterward the challenge is getting people to accept money as payment for these same necessities. Many of the would-be sellers will prefer to be paid in something more valuable than mere cash. Customer service comes to mean that customers must provide a service. Given that most people won’t have much to offer, other than their now worthless money, should they still have any, most purveyors of goods and services decide to take a holiday.

With the disappearance of the free and open market, even the items that still are available for sale come to be offered in a way that is neither free nor open, but only at certain times and to certain people. Whatever wealth still exists is hidden, because flaunting it or exposing it just increases the security risk, and the amount of effort required to guard it.

In an economy where the vast majority of manufactured items is imported, and designed with planned obsolescence in mind, it will be difficult to keep things running as imports dry up, especially imports of spare parts for foreign-made machinery. The pool of available equipment will shrink over time, as more and more pieces of equipment become used as “organ donors.” In an effort to keep things running, entire cottage industries devoted to refurbishing old stuff might suddenly come together.

8.
It is sometimes hard to discern political collapse, because politicians tend to be quite good at maintaining the pretense of power and authority even as it dwindles. But there are some telltale signs of political collapse. One is when politicians start moonlighting because their day job is no longer sufficiently gainful. Another is when regional politicians start to openly defy orders from the political center. Russia experienced plenty of each of these symptoms.

One thing that makes political collapse particularly hard to spot is that the worse things get, the more noise the politicians emit. The substance to noise ratio in political discourse is pretty low even in good times, making it hard to spot the transition when it actually drops to zero. The variable that’s easier to monitor is the level of political embarrassment. For instance, when Mr. Nazdratenko, the governor of the far-east Russian region of Primorye, stole large amounts of coal, made strides in the direction of establishing an independent foreign policy toward China, and yet Moscow could do nothing to reign him in, you could be sure that Russia’s political system was pretty much defunct.

Another telltale sign of political collapse is actual disintegration, where regions declare independence. In Russia, that was the case with Chechnya, and it led to a prolonged bloody conflict. Here, we might have a “Reconquista” where former Mexican territories become ever more Mexican, the South might rise again. New England, California, and the Pacific Northwest might decide to go their separate ways. Once the interstate highway system is no longer viable and the remaining domestic airlines are extinct, there is not much to keep the two coasts together. What once united the country was the construction of the continental railroad, but railroads have been too neglected to hold it together now. A country consisting of two halves tied together via Panama Canal is de facto at least two countries.

Yet another thing to watch for is foreign incursions into domestic politics. When foreign political consultants start stage-managing elections, as happened with Yeltsin’s reelection campaign, you can be sure that the country is no longer in charge of its own political system. In the US, there is a gradual surrender of sovereignty, as sovereign wealth funds buy up more and more US assets. That sort of thing used to be considered akin to an act of war, but these are desperate times, and they are allowed to do so without so much as a nasty comment. Eventually, they may start making political demands, to extract the most value out of their investments. For instance, they could start vetting candidates for public office, to make sure that we remain friendly to their interests.

Lastly, the power vacuum created by the collapse of legitimate authority tends to be more or less automatically filled by criminal syndicates. These often try to commandeer the political establishment by getting their heads elected or appointed to political offices. Examples include Russian oligarchs, such as Boris Berezovsky, who got himself elected to Duma, the Russian parliament, and Mikhail Khodorkovsky, who thought he could use his oil wealth to buy his way into the political establishment. Luckily for Russia, Berezovsky is in exile in England, and Khodorkovsky is in jail.

9.
A great many people in the US insist that they do not need government help, and that they would do just fine if only the government would leave them alone. But this is really just a pose; there is a great deal that that government does to make their lives possible. In the United States, the federal government keeps many people alive through programs such as Medicaid, Social Security, and food stamps. Local governments provide for trash removal and water and sewer line maintenance, road and bridge repair, and so on. Police departments try to defend people from each other.

When all of that starts to unravel, it is likely to do so from the bottom, not from the top. Local officials are more accessible than remote Washington bureaucrats, and so they will be the first to be overwhelmed by the anger and confusion of their constituents, while Washington remains unresponsive. One likely exception may have to do with the use of federal troops. It seems almost a given that troops repatriated from the more than 1000 foreign military bases will see action right here at home. They will be reassigned to domestic peacekeeping duties.

10.
Aside from the big government programs, there is little available in the US to help those in need. Again, Americans make a big show of their philanthropy, but, compared to other developed countries, they are in fact quite stingy when it comes to helping those in need. There is even a streak of political sadism, which, for example, shows up in people’s attitudes toward welfare recipients. This sadism can be seen in the so-called welfare reform, which has forced single mothers to work jobs that barely cover the cost of daycare, which is often substandard.

Aside from the government, there are charities, many of which are church-based, and so they have the ulterior motive of recruiting people to their cause. But even when a charity does not make any specific demands, its real purpose is to reinforce the superiority of those who are charitable, at the expense of those who are the recipients. There is a flow of forced gratitude from the beneficiary to the benefactor. The greater the need, the more humiliating is the transaction to the beneficiary, and the more satisfying it is to the benefactor. There is no motivation for the benefactor to provide more charity in response to greater need, except in special circumstances, such as immediately following a natural disaster. Where the need is large, constant, and growing, we should expect charities to matter very little when it comes to satisfying it.

Since neither government largesse nor charity is likely to provide for those who cannot provide for themselves, we should look for other options. One promising direction is a revival of mutual help societies, which take membership contributions and then use them to help those in need. At least in theory, such organizations are vastly better than either government aid or charities. Those who are helped by them do not have to surrender their dignity, and can survive difficult times without being stigmatized.

To make it intact through times of great need, the only reasonable approach, it seems to me, is to form communities that are strong and cohesive enough to provide for the well-being of all of their members, that are large enough to be resourceful, yet small enough so that people can relate to each other directly, and to take direct responsibility for each other’s well-being.

11.
If this effort fails, then the outlook becomes dire indeed. I would like to emphasize, once again, that we must do all we can to avoid this stage of collapse. We can allow the financial system, and the commercial sector, and most of the government institutions to collapse, but not this.

What makes this particularly challenging is that the existence of finance and credit, of consumer society, and of government-imposed law and order has allowed society, in the sense of direct, mutual help and of freely accepting responsibility for each others’ welfare, to atrophy. This process of social decay may be less advanced in groups that have survived recent adversity: immigrant and minority groups, or people who served together in the armed forces. The instincts that underlie this behavior are strong, and they are what helped us survive as a species, but they need to be reactivated in time to create groups that are cohesive enough to be viable.

12.
Culture can mean a great many things to people, but what I mean here is a specific very important element of culture: how people relate to each other face to face. Take honesty, for instance: do people demand it of themselves and others, or do they feel that it is acceptable to lie to get what you want? Do they take pride in how much they have or in how much they can give? I took this list of virtues from Colin Turnbull, who wrote a book about a tribe in which most of these virtues were almost entirely missing. Turnbull’s point was that these personal virtues are also all but destroyed in Western society, but that for the time being their absence is being masked by the impersonal institutions of finance, commerce, and government.

I believe that Turnbull has a point. Ours is a cold world, in which the citizens are theoretically expected to fend for themselves, but in reality can only survive thanks to the impersonal services of finance, commerce, and government. It only allows us to practice these warm virtues among family and friends. But that is a start, and from there we can expand this circle of warmth to encompass more and more of the people who matter to us and we to them.

13.
In his amazing book about the legacy of European colonialism, Exterminate all the Brutes, Sven Lindqvist makes the stunning observation that violence renders one unrecognizable. The aggressor, whether active or passive, becomes a stranger.

The violence does not have to be physical. One subtle type of mental violence that abounds in our world is the act of refusing to acknowledge someone’s existence. We may believe that it makes us safer to walk past people without making eye contact. That is certainly true if our look is blank and indifferent, and it is then better to avert one’s gaze than to look, and in effect to say: “I do not recognize you.” That definitely does not make you any safer. But if your look says “I see you, you are OK,” or even “I recognize you,” then the effect is quite the opposite. Dogs understand this principle perfectly well, and so should people.

14.
When I was doing a radio tour to promote my book, a lot of the AM radio motor-mouths who interviewed me would sum up the interview with something like “So this is all doom and gloom, isn’t it.” And then I would have maybe 15 seconds for a rebuttal. So here is my standard 15 second rebuttal: “No, my message is actually quite hopeful. I want to let people know that they can find ways to lead happy, fulfilling lives even as this doomed system crumbles all around them.” Here, I can give you a longer answer.

I believe that the financial pyramid scheme and globalized consumerism are done. But I think that having no government at all is not an option. Forget entitlements, forget military bases on foreign soil, forget the three-ring circus that passes for representative democracy here, but we will still need agencies to print passports, to control the nuclear stockpile, as well as many other mundane but essential services that only a central government can provide. For most other needs, local self-government may be the best we can do, but that may not be bad at all.

Commercial collapse need not be final. It is quite possible that a new economy will arise spontaneously, one without all the frills and the waste, but able to provide for most of the basic needs. In the places that are socially and culturally intact, this is almost inevitable, as people take charge and start doing what’s necessary without waiting for official sanction.

As far as social and cultural collapse, as I already mentioned, to some extent they have already happened, but this is being masked, for the time being, by the availability of finance, commerce, and government. But they can be undone, not everywhere, of course, but in quite a few places, because the instincts are there, and a dire common predicament can be the catalyst that changes society, bringing it closer to the human norm.

15.
Knowing what to expect can provide us with peace of mind, even in the midst of collapse. Wallowing in nostalgia over the good old days, or denying that sweeping changes are before us — these responses are definitely unhealthy.

If we know what’s coming, we can start ignoring the things that we will not be able to rely on. If we do enough of this, we may find ourselves in a different world, quite possibly a better one, rather quickly. Here is a personal example. Some years ago, I decided to give up the car, finding it quite impractical, and started bicycling instead. It wasn’t that easy at first, but once I got used to it, a strange thing happened to my perception: I started seeing cars quite differently. On the way to work in the morning, I would ride along a stretch of highway, which was always packed with cars. When you are driver, you see it as normal, because you are part of this herd of mechanized insects. But what I saw was sheet metal boxes with people imprisoned inside them, strapped down to a chair inside a tiny padded cell, and most of these poor crazies were just pictures of misery: an angry, desperate, lonely mob, condemned to move about in circles. And then I would happily pedal away, through a park and around a pond, and leave that horrible, dying world behind.

And so it is with a great many things. We can wait until the lifestyle that is killing the planet and is making us crazy and sick is no longer physically possible, or we can opt out of it ahead of time. And what we replace it with can be difficult at first, but quite a lot better for us in the end.

16.
So let us summarize our findings. Financial collapse is already quite far along, and is guaranteed to run its course. Bailouts can make insolvent institutions look solvent for a time by providing liquidity, but one thing they cannot provide is solvency. For instance, no matter how much we bail out the auto companies, making any more cars will still be a bad idea. Similarly, no matter how much money we give to banks, their loan portfolios, loaded down with houses built in places that are inaccessible except by car, will still end up being worthless. By continuously nationalizing bad debt, the country will make itself into a bad credit risk, and foreign lenders will walk away. Hyperinflation and loss of imports will follow.

17.
Commercial collapse is likewise guaranteed to happen. One key import is oil, and here the loss of imports will cause much of the economy to shut down, because in this country nothing moves without oil. But it should be possible to come up with new, far less energy-intensive ways to provide for the basic needs.

18.
Political collapse is guaranteed as well. As tax receipts dwindle, municipalities and states will no longer be able to meet the minimal maintenance requirements for existing infrastructure: roads, bridges, water and sewer mains, and so forth. Municipal services, including police, fire departments, snow removal and garbage collection, will also be curtailed or eliminated. The better-organized communities may be able to find ways to compensate, but many communities will become impassable and uninhabitable, generating a flood of internal refugees.

Currently, the political class couldn’t be farther from understanding what is about to happen. I listened in on one of the recent presidential debates (I don’t have a television set, but I caught a chunk of it on NPR). It struck me that the two candidates spent most of the time arguing over ways of spending money that they don’t have. For me, listening to them was a waste of time that I didn’t have. I suspect that my book, would sell better if McCain got elected; nevertheless, I choose to remain selflessly apolitical. National politics is a distraction and a waste of time.

Actually, I should be gratified. A while ago I proposed a whimsical Collapse Party. The Collapse Party platform featured planks such as the freeing of prisoners to whittle down the prison population before a general amnesty becomes necessary due to lack of funds, a jubilee – forgiveness of all debts – to wipe the slate clean of all these bad loans, and a few others. Elsewhere, I proposed that it is a good idea to stop making new cars – just run down the ones we already have, and we’ll run out of cars just as we run out of gas. I am happy to report that this has been banner year for the Collapse Party. Without fielding a single candidate, we managed to push through much of our agenda: many states are releasing prisoners due to the fiscal crisis, the federal government is now involved in avoiding foreclosures, a huge credit card debt write-off is in the works (not quite a jubilee, but still…) and now automakers are ready to consolidate or declare bankruptcy. Next year, perhaps we will repatriate troops and shut down overseas military bases, also in line with the Collapse Party platform.

19.
Continuing with our recap, I see social collapse as avoidable, but not in all places. In many places, the task is to reconstitute society before the first three stages run their course, and it may already be too late. But this is where we need to make a stand, if only to be remembered for something more than the sum total of our mistakes.

20.
Lastly, cultural collapse is something that’s almost too horrible to contemplate, except that in some places it seems to have already happened, and is being masked by the various institutions that still exist, for the time being. But I believe that a lot of people will come around and remember their humanity, the better parts of their natures, when dire circumstances force them to rise to the occasion.

Also, there are some intact pockets of culture here and there that can be used as a sort of cultural seed stock. These are communities and groups that have seen some adversity in recent times, and have some social cohesion left over from the experience. They may also be those who made certain conscious decisions, to simplify their living arrangements in order to lead saner, more fulfilling lives. We must do all we can to avert this final stage of collapse, because what is at stake is nothing less than our humanity.

21.
I hope that, if you have been following along, by this point this slide is self-explanatory. Collapse is not one monolithic thing. Each kind of collapse requires a response, be it jumping clear ahead of time, sitting it out, or opposing it with all you got. At this point, if anyone in this room got up and tried to tell us what to do to avoid financial collapse, we would probably find that quite funny. On the other hand, if we stand by and let social and cultural collapse unfold, then what’s the point of any of this?

That’s all. Thank you for listening.

Editorial Notes

This article is a talk that was originally given by Dmitry Orlov at the Community Solutions Conference in Michigan in November 2008.

Thanks to SO and KS for the formatting. This was an especially difficult job.

-BA

After Months Of Partisan Wrangling, Wall Street & Pentagon Emerge Victorious On Debt Deal

In Uncategorized on August 3, 2011 at 2:00 pm

Oldspeak:“Fun fact #1: For every dollar spent by the U.S. Government, 56 cents goes to The Pentagon. And since there were no significant cuts to its funding in this “debt deal” that percentage will likely grow. Fun Fact #2: ‘The debt ceiling was put in in 1917 during World War I, and the idea was to prevent President Wilson from committing even more American troops and money to war. The whole purpose was to limit a government’s ability to run into debt for war, because that was the only reason that governments ran into debt. Almost all governments, for hundreds of years, have been in balance in their domestic spending. War is what pushes up debt, as it has done in the United States‘ –Michael Hudson. Rather ironic then that so much fuss has been raised over  non- military government spending  and “entitlement programs” for sick old and poor people have been held up as drivers of U.S. debt, when in reality, the biggest entitlement program of all, Defense Spending is one of the primary drivers of inevitable U.S. Default, and is the only fucking reason there’s a debt ceiling to begin with! So the only logical and truthful way to connect deficit reduction and the debt ceiling is THE PENTAGON. Unfortunately for the American people, since Wall Street profits handsomely from the death destruction and wars of The Pentagon, there is no substantive discussion of this in dominant media. Meanwhile the U.S. is waging 6 wars hastening its imminent collapse. “War is Peace”

Related stories

By Amy Goodman @ Democracy Now:

After months of a bitterly partisan stalemate, the U.S. House of Representatives has voted 269 to 161 in favor of raising the federal borrowing limit and avoiding a default on the national debt. The final count showed 174 Republican ayes, with Democrats split evenly—95 on each side. The vote came just hours before a Department of Treasury deadline that potentially would have seen the United States run out of cash and default for the first time in its history. The bill is expected to be approved by the Senate and signed into law by President Obama today. The deal includes no new tax revenue from wealthy Americans, provides no additional stimulus for the lagging economy, and will cut more than $2.1 trillion in government spending over 10 years, while extending the borrowing authority of the Treasury Department. The debt deal was a victory of sorts for the Pentagon. Rather than cutting $400 billion in defense spending through 2023, as President Barack Obama had proposed in April, it trims just $350 billion through 2024, effectively giving the Pentagon $50 billion more than it had been expecting over the next decade. We speak with William Hartung, director of the Arms and Security Project at the Center for International Policy, and Michael Hudson, professor of economics at the University of Missouri, Kansas City

William Hartung, director of the Arms and Security Project at the Center for International Policy. He is the author of the book Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex.
Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and author of Super Imperialism: The Economic Strategy of American Empire

AMY GOODMAN: After months of a bitterly partisan stalemate, the U.S. House of Representatives has voted in favor of raising the federal borrowing limit and avoiding a default on the national debt. The final count showed 174 Republican ayes and 66 Republican nays, with Democrats split evenly, 95 on each side. The vote came just hours before a Treasury deadline that potentially would have seen the U.S. run out of cash and default for the first time in its history. The bill is expected to be approved by the Senate and signed into law by President Obama today.

The deal includes no new tax revenue from wealthy Americans and will provide no additional stimulus for the lagging economy. It will cut more than $2.1 trillion in government spending over 10 years while extending the borrowing authority of the Treasury Department. The deal will also create a new joint congressional committee to recommend broad changes in spending to reduce the deficit.

The compromise deeply angered right-wing Republicans and progressive Democrats alike. Republicans were upset the bill did not further curtail government spending. Meanwhile, both the Progressive Caucus and the Black Caucus rejected the deal for placing the burden of deficit reduction on poor people. Democratic Congress Member Jim McGovern of Massachusetts said, quote, “I did not come to Washington to force more people into poverty.” Congressional Black Caucus chair Emanuel Cleaver blasted the final debt deal on his Twitter account, writing, quote, “This deal is a sugar-coated Satan sandwich. If you lift the bun, you will not like what you see.”

Several other senators said they were struggling with how to vote but suggested if it became a matter of their yes vote or default, they would back the measure. The White House dispatched Vice President Biden to lobby congressional liberals, and House Minority Leader Nancy Pelosi also urged her colleagues to come off the fence.

REP. NANCY PELOSI: It’s hard to believe that we are putting our best foot forward with the legislation that comes before us today. I’m not happy with it, but I’m proud of some of the accomplishments contained in it, and that’s why I am voting for it. Please think of what could happen if we defaulted. Please, please, please come down in favor of, again, preventing the collateral damage from reaching our seniors and our veterans.

AMY GOODMAN: Enough Democrats and Republicans reluctantly joined forces to see the proposed legislation through by a vote of 269 to 161 last night.

In a stunning emotional moment during the extended roll call, Democratic Congress Member Gabrielle Giffords of Arizona received a standing ovation as she voted yes on the bill, her first vote since a near-fatal shooting in Tucson, Arizona, in January.

REP. NANCY PELOSI: Her presence here in the chamber, as well as her service throughout her entire service in Congress, brings honor to this chamber. We are all privileged to call her colleague, some of us very privileged to call her friend. Throughout America, there isn’t a name that stirs more love, more admiration, more respect, more wishing for our daughters to be like her, than name of Congresswoman Gabby Giffords. Thank you, Gabby, for joining us today.

AMY GOODMAN: Congress Member Gabrielle Giffords was among the 95 Democrats who voted for the bill.

White House spokesman Jay Carney called the deal “a victory for the American people.” The debt deal was also a victory of sorts for the Pentagon. Rather than cutting $400 billion in defense spending through 2023, as President Barack Obama had proposed in April, the current debt proposal trims only $350 billion through 2024, effectively giving the Pentagon $50 billion more than it had expected over the next decade. Speaker John Boehner had met earlier with the House Armed Services Committee to assuage alarm about the potential spending cuts from the Pentagon.

For more, we’re joined in studio by William Hartung, director of the Arms and Security Initiative at the New America Foundation, author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex.

We’re also joined by Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, author of Super Imperialism: The Economic Strategy of American Empire.

We welcome you both to Democracy Now! Michael Hudson, what about this vote? What does it mean?

MICHAEL HUDSON: Well, it’s an anti-stimulus package, primarily. The feeling among the Democrats that I’ve spoken to, I’ve never seen them so depressed. And what depresses them so much is that the irony is it could probably only be passed under a Democratic administration. Yves Smith has called it a “Nixon goes to China moment in reverse.” And that’s because only a Republican could have made an opening to a communist country and not be accused of communism. Only a Democratic president could have drawn along a Democratic Congress in supporting a law that is going to essentially ad tax deflation to the debt deflation we already have in the economy.

AMY GOODMAN: What does that mean, “tax deflation to the debt deflation”?

MICHAEL HUDSON: That means that the government is going to be sucking money out of the economy. Normally, government is supposed to provide the economy with money, provide it with purchasing power. By government running a deficit, this is what, traditionally, for 5,000 years, in every country, has supplied money. And now the government isn’t going to do it. There’s a kind of junk economic belief that governments shouldn’t run a deficit, and yet it’s by running a deficit that an economy expands. That’s what injects the purchasing power in it. That’s why a few years ago Mr. Obama had the $700 billion stimulus package. The idea was government spending will stimulate employment and make it more than it otherwise would have been, and you stop the unemployment.

Right now, the economy is shrinking. It needs some kind of spending to overcome the shrinking. And since the government can’t supply the credit, that means that the economy is going to have to rely on commercial banks. And they’re going to charge interest. And it means that all of the growth that does occur in the economy is basically going to be paid to Wall Street, not to the people who produce the wealth, not to industry or its employees. The economy is going to shrink. Industrial corporations will shrink. Real estate will shrink. And the government isn’t doing anything to prevent this shrinkage into a deeper and deeper recession.

AMY GOODMAN: So, why did Obama go this route? What were his alternatives?

MICHAEL HUDSON: He had many—

AMY GOODMAN: And what about the relationship that was touted between Obama and Boehner, ultimately people saying it was the Tea Party that broke with Boehner, and so he just couldn’t follow through for Obama?

MICHAEL HUDSON: It wasn’t the Tea Party. Suppose that a Republican were president, or George Bush. If George Bush would have been president, or another Republican, McCain, and would have proposed this, you would have had the whole Democratic Congress voting against it. And you would have a lot of progressive Republicans voting against it. They’re not going to vote against a Democratic president. And in fact, that’s why it was called a “Nixon goes to China in reverse.” Only a Democrat could have imposed so deflationary, so negative, regressive a policy. And that’s why the Democrats felt so frustrated when they were split, as you pointed out, 95 to 95. They felt that they had to support the government.

The reason that they’re disappointed is there were many alternatives. All last week, while all of this fight was building up, you didn’t have a squiggle in the bond market. Wall Street was not at all worried that there was going to be any problem at all. So, as far as the real monetary economy is concerned, there wasn’t a problem. Obama could have invoked the 14th Amendment, saying that the government is going to always pay the debts, it can’t be questioned. He could have issued a $1 trillion platinum coin, worth maybe $50, to the Federal Reserve and retired the government debt. There were all sorts of technicalities that he could have done. He didn’t do any of them. And that’s because, as he explained to the people last week in his speech, he really believes in running a budget surplus. He believes that that’s good for the economy. And that’s the tragedy of all this, that it’s not good.

AMY GOODMAN: I want to turn to Obama. Unveiling the deal on Sunday night, he said the agreement was borne out of a need to compromise.

PRESIDENT BARACK OBAMA: Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required, on entitlement reform and tax reform, right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need and gives each party a strong incentive to get a balanced plan done before the end of the year. Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America.

AMY GOODMAN: Your assessment of what President Obama said and how this could have been averted? I mean, there was a person, a journalist at a press conference in December, when he went along with the Bush tax cuts for the wealthy, saying, why didn’t you attach this, a guarantee of a debt ceiling, if you were going to do that at the time? And Obama said he wasn’t afraid.

MICHAEL HUDSON: Well, the real question is the reverse. How did these tax issues get attached to a debt ceiling issue? Since 1963, the debt ceiling has been raised every eight months, on the average. It’s just automatically been raised. Nobody in any of these 83 times has ever tried to attach a policy rider to the debt ceiling. It’s always been like an accountant just signing off on everything. This is the first time that a debt ceiling has ever been linked to tax policy. That’s never been done before. So there didn’t have to be a compromise. Mr. Obama could have simply said, “Tax policy is tax policy. If you want to argue over that, spend a year in doing that. But a debt ceiling is something all by itself.”

AMY GOODMAN: But clearly, people already saw that this might be an issue, because the Tea Party Republican activists were already talking about it.

MICHAEL HUDSON: Yeah. I think that Mr. Obama actually didn’t anticipate that it would be made an issue. He was thinking like a lawyer and thinking this is how it’s normally done, there’s no connection. What he could have done is gone to the people and explained why he believed that. He could have said, “Look, I didn’t anticipate it, because this is outrageous. This has never been done, and I’m not going to do it. I’m not going to let the Republicans link. I don’t have to compromise, because this isn’t the point to compromise.” Compromise is when the Senate and the House debate a tax law, but this isn’t the time for debate. This is the time to approve what the Congress has already agreed to spend.

AMY GOODMAN: We’re going to go to break, then come back. Michael Hudson is with us, author of Super Imperialism: The Economic Strategy of American Empire, a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. We’ll also be speaking with Bill Hartung of the New America Foundation. Stay with us.

[break]

AMY GOODMAN: Our guests are Bill Hartung of the Center for International Policy and Michael Hudson of the University of Missouri, Kansas City, an economist. I want to turn to who won and who lost. Now, let’s be clear on what this commission is and what’s going to happen to Medicare, Medicaid, Social Security. Michael Hudson?

MICHAEL HUDSON: The commission is going to be composed of three people, suggested by the House leader, Republican and Democratic leaders each, and the Senate Republican and Democratic leaders. The Republican—six Republican appointees to the commission are already pledged no taxes, and especially no closing of loopholes, nothing that will increase the money paid by their campaign contributors to the Republican Party. We don’t know who the Democratic appointees are going to be. But in the last commission that Mr. Obama appointed, the deficit reduction commission, they were all Democrats who were in favor of cutting Social Security. They were Wall Street Democrats, or what used to be called the Democratic Leadership Council. So the worry is that the Democrats are going to push their own tax cutters and that really there’s not going to be very much difference between the Democrats and the Republicans in what they propose for Social Security and Medicare. Mr. Obama had threatened that there wouldn’t be enough money to send out Social Security checks, and that simply isn’t true. The Social Security Administration has its own holdings of Treasury bills, just like an individual would hold their own savings. Of course they could have cashed in the Treasury bills.

AMY GOODMAN: What about the credit agencies, the rating agencies?

MICHAEL HUDSON: They have played a very bad role in this. Here’s what happened. Under the Frank—the bank reform—

AMY GOODMAN: With Congress Member Frank.

MICHAEL HUDSON: —the credit rating agencies were changed. The government was very angry at them for giving AAA ratings on junk, and their defense in courts saying, “Well, yes, we gave AAA ratings on junk mortgages, but they’re legally only opinions.” So the Dodd-Frank bill said, “You rating agencies are liable for your opinions.” Well, that—the rating agencies said, “We want to make money on selling our opinions, and we don’t want to have to take any responsibility for them, so we’re going to get you. We’re going to threaten to downgrade the U.S. government, until you say, ‘OK, we don’t want to hear your risk assessments anymore, because you’re hurting us.’”

But the proper response is to say, look, the rating agencies are just out to make money selling their opinions that are up for sale. The rating agencies are trying to get brownie points with Wall Street for opposing Social Security, for essentially yelling fire when there isn’t any fire. And at the same time, they want to weaken the Dodd-Frank bill so that they don’t have to ever be liable for making a warning about a country and they can continue to go back to giving AAA ratings for junk, which is how they make their money.

AMY GOODMAN: Bill Hartung of the Center for International Policy, what happened to the Pentagon in this? They were actually surprised in the other direction, that they did so well.

WILLIAM HARTUNG: They did reasonably well. President Obama, as you mentioned, had talked about $400 billion in cuts over about a decade. That would have allowed the Pentagon to still grow with inflation, so that wasn’t even a real cut. So this is less than that, at $350 billion, and it counts other things. They can cut veterans’ benefits. They can cut the Department of Energy. They can cut international affairs. They can cut Homeland Security. So even down at $350 billion, the Pentagon will not bear all of it. And that was John Boehner’s contribution to the package, was to protect the Pentagon and that larger basket of agencies.

AMY GOODMAN: How powerful were the military contractors, the lobbyists, in what has taken place, in the final deal?

WILLIAM HARTUNG: Well, they weren’t too vocal about it, because they didn’t want to look like special interests, but they worked on the inside. They had Boehner on their side. They had Buck McKeon, the head of the House Armed Services Committee, whose biggest contributor is Lockheed Martin, who’s got big military facilities in his district. They had people like Randy Forbes, whose district is near the Newport News Shipbuilding complex, which builds attack submarines and aircraft carriers. So they used their influence to get people on the inside, their allies in the House, to push their agenda.

AMY GOODMAN: Let me ask you, Michael Hudson, how the debt ceiling was put into place to begin with? In fact, it was linked to the military, right?

MICHAEL HUDSON: It was put in in 1917 during World War I, and the idea was to prevent President Wilson from committing even more American troops and money to war. In every country of Europe—England, France—the parliamentary control over the budget was introduced to stop ambitious kings or rulers from waging wars. So the whole purpose was to limit a government’s ability to run into debt for war, because that was the only reason that governments ran into debt. Almost all governments, for hundreds of years, have been in balance in their domestic spending. War is what pushes up debt, as it has done in the United States.

Now, the irony of all this is that three weeks ago you had Dennis Kucinich and Ron Paul trying to stop the Libyan—

AMY GOODMAN: Democrat and Republican.

MICHAEL HUDSON: —the Libyan war by introducing a rule to deny Mr. Obama the funding to continue to wage war on Libya and to enforce the War Powers Act to the president, to say, look, the president can’t go to war for more than three months without getting congressional approval. Mr. Obama said we’re not at a war. When we bomb people, that’s not a war; only if our people are killed while we’re bombing them are we at war. And none of our people are getting killed. Bombing people is not war. And then you had, all of a sudden, this fortuitous budget deficit issue coming up, and that untracked the whole discussion of limiting the budget from the discussion about war, where Mr. Kucinich and his Republican colleague had tried to prevent the American military expansion in the Near East. That worries them, and it worries a lot of the Congresspeople, too, but somehow, despite the fact that war is always the main cause of budget deficits, that wasn’t an issue in this time around.

AMY GOODMAN: Bill Hartung, your response to that, and also, the whole issue of how—the kind of lobbying power the Pentagon itself has, not just the military contractors, and when there are cuts, where those cuts go, who is hurt most?

WILLIAM HARTUNG: Well, first of all, I think on the issue of war spending driving the debt, that’s absolutely true. If you look at Korea, you look at Vietnam, you look at the Bush administration, along with the tax cuts, that’s been the huge driver of the deficit. So it’s ironic now we’re dealing with that deficit without touching the Pentagon, essentially.

In terms of the distribution of cuts, if you’re giving more money to Lockheed Martin and Northrop Grumman, it’s going to come from feeding programs, from housing programs, from administration of justice, from environmental protection. The whole rest of the budget, other than Social Security and a few entitlement programs, is discretionary. The Pentagon gets 56 cents on the dollar out of that already. And if they suffer almost no cuts, they’ll be a bigger part of the discretionary budget when this is all over.

AMY GOODMAN: And then, in terms of overall what someone wants their nation to be, when you are a first-rate military power—and there’s no question that the U.S. is the most powerful military on earth—but other parts of your country—the economy, the health levels of the people, all of the different aspects that make a country great—are much lower, are second-rate, isn’t this a problem, when it comes to how you approach problems, the first—your first point of attack will be to attack, because it’s your strongest way to deal, Michael Hudson and Bill?

MICHAEL HUDSON: This is what the whole fight of classical economics in the 18th and 19th century was all about. Parliamentary reform was intended to stop the power of the kings and the aristocracy from going to war, and to refocus the economy on developing national industrial power, national power. For hundreds of years, this was the essence of economics. And all of a sudden, this is no longer being discussed now. The war is—ever since the Vietnam War, the military spending has been deindustrializing the American economy. If you have a Pentagon contract—a Pentagon contract is cost-plus. The higher they spend on airplanes, on armaments, the more money they get. So you have them engineering not to cut costs, but to maximize costs, because that’s how they make their profit. So you have a warping of American engineering, American technology, towards the military, and that’s why the industrial core has been shifting to Asia, because they don’t have this military. The economy is being sacrificed to the military. And that’s somehow evaded discussion here. And yet, in Europe, for hundreds of years, this is what economics was all about.

WILLIAM HARTUNG: Well, it’s interesting.

AMY GOODMAN: Bill Hartung?

WILLIAM HARTUNG: This year is the 50th anniversary of Eisenhower’s military-industrial complex speech. He talked about the need for a balanced economy, for a healthy population. Essentially, he’s to the left of Barack Obama on these issues. And—

AMY GOODMAN: The general turned president.

WILLIAM HARTUNG: Yes.

AMY GOODMAN: Of course, a Republican, Dwight Eisenhower.

WILLIAM HARTUNG: And we’re spending twice as much on the military as we did when Eisenhower gave that speech. So, we’ve got a huge imbalance in our budget. You can’t really defend your country if people are sick, people aren’t healthy, people aren’t educated. So it’s kind of undermining the roots of the ability to defend the country, going forward, to throw money at weapons makers, to throw money at this huge military base infrastructure that isn’t needed for defense proper of the country. So, it’s completely out of balance, and we’re going to pay a price for that if we don’t turn that around.

AMY GOODMAN: Well, I want to thank you both for being with us. Bill Hartung, author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex, now at the Center for International Policy. And also, Michael Hudson, professor of economics at the University of Missouri, Kansas City. His website Michael-Hudson.com.

THE TRUTH ABOUT THE DEBT DEAL: It’s Pretty Much Meaningless

In Uncategorized on August 1, 2011 at 5:33 pm

Oldspeak:Other than cuts to federally subsidized student loans to graduate and professional school students, the debt deal actually cuts NOTHING now and only promises future reductions that may never materialize…In short, for the past month, Congress has been arguing about little more than an agreement to reach an agreement at some point in the future. Your tax dollars at work. If the ‘Super-Committee’ can’t reach an agreement, or their recommendations cannot pass Congress, deep “real” spending cuts, which are painful to both sides, would take effect. For Democrats, entitlement cuts are at risk, while Republicans would see cuts to defense spending.” –Zeke Miller  This ‘deal’ sucks for the American people. It fails to address the root causes of America’s crushing debt: Lack of revenue generation via job loss and unemployment, multiple unpaid for ‘entitlement programs’ in the form of wars, and tax subsidies for the nations wealthiest “persons”: multinational corporations. “Yet it puts the nation’s most important safety nets, public investments, education, infrastructure, and everything else Americans depend on the chopping block. It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.” –Robert Reich” More change I can’t believe in.

Related Story

To Escape Chaos, A Terrible Deal

By Zeke Miller @ Business Insider:

The “historic, bipartisan compromise” reached to raise the debt limit does not end the struggle to reign in the federal deficit — in fact, it pushes the most difficult decisions off into the future.

More surprising, the debt deal actually cuts almost nothing now–it just promises future cuts that may or may not materialize.

There are very few specific cuts in the deal — and the $1 trillion in immediate cuts are almost entirely constituted of caps on future spending. And those caps are not required to be honored by future congresses.

The “real” spending cuts to current programs will come out of a bipartisan committee of Representatives and Senators, which is charged with finding an additional $1.5 trillion in savings from the federal deficit.

But White House and Republican leaders appear split on exactly what the so-called “Super Committee” can do.

In a presentation to his caucus, Speaker of the House John Boehner said it would “be effectively…impossible for [the] Joint Committee to increase taxes,” even though it could consider reforming the tax code.

White House officials strongly pushed back on that remark, saying revenue-increasing reform is possible — even though it almost certainly would not be able to get through Congress.

The committee is modeled on “BRAC” or the Base Realignment and Closure Commission, whose recommendations are presented to Congress for a straight up-or-down vote with no amendments allowed. Instead of non-partisan commissioners, each congressional leader will appoint three members of Congress to the committee.

If the Super-Committee can’t reach an agreement, or their recommendations cannot pass Congress, deep “real” spending cuts, which are painful to both sides, would take effect. For Democrats, entitlement cuts are at risk, while Republicans would see cuts to defense spending.

Additionally, President Barack Obama has the ability to veto an extension of the Bush tax cuts if he deems the committee’s solution insufficiently “balanced.”

So, again, other than cuts to federally subsidized student loans to graduate and professional school students, the debt deal actually cuts NOTHING now, and only promises future reductions that may never materialize.

In short, for the past month, Congress has been arguing about little more than an agreement to reach an agreement at some point in the future. Your tax dollars at work.

America Held Hostage To Two-Party System Failure: Government Of, By & For The Corporations

In Uncategorized on July 28, 2011 at 10:41 am

Oldspeak:There is no correlation between who drove the economic crisis and who is paying the price. The disparity of wealth is stark, as compensation at publicly traded Wall St. firms hit a record $135 billion in 2010. “Austerity” and “shared sacrifice” are Washington code for preserving tax advantages and privilege for the wealthiest, while transferring private debt and risk to the public, onto the backs of the working/middle class.” –Michelle Swenson.  The Peoples Budget, written by the Congressional Progressive Caucus is not even being considered even though it is the most sensible, would create a surplus in 10 years, eliminate the deficit sooner than the Obama or Ryan budget and reflects the will of most of the American people. “It would end the main budget deficit drivers – the Bush tax cuts and Middle East wars; restore progressive income and estate taxes; add negotiation of bulk drug rates to Medicare and preserve Medicare, Medicaid Social Security; eliminate tax subsidies for oil, gas and coal companies; close loopholes for multinational corporations; and tax speculative financial transactions“- Michelle Swenson. In other words, Oligarchy rules the day in the U.S.A.

By Michelle Swenson @ Truthout:

Washington rhetoric waxes Orwellian in proportion to inside-the-Beltway disconnect around cause and effect of the US economic crisis. Ranging from the Ryan Budget – “kill Medicare to save it” – and some Democrats – “cut Medicare and Social Security to save them” – to claims that deficit reduction (not jobs) is “what the people want,” to the “greed is good” creed that assigns entitlements in the form of taxpayer bailouts to wealthy financial institutions that take for granted the ability to shift risk for their liar’s loans and speculative transactions. “Austerity” and “shared sacrifice” are Washington code for preserving tax advantages and privilege for the wealthiest, while transferring private debt and risk to the public, onto the backs of the working/middle class.

Phil Angelides, chair of the Financial Crisis Inquiry Commission, notes that 24 million Americans lack work and nearly $9 trillion in household wealth has vanished since the 2008 economic crisis. The commission’s January report detailed “the recklessness of the financial industry and the abject failures of policymakers and regulators that brought our economy to its knees in late 2008.”

Writes Angelides, there is “no correlation between who drove the crisis and who is paying the price.” The disparity of wealth is stark, as “compensation at publicly traded Wall St. firms hit a record $135 billion in 2010.” He notes that, in the face of overwhelming evidence of the causes of economic catastrophe, Wall Street and its allies are revising history, e.g., Republicans like Paul Ryan ignore the fact that “our federal budget deficit has ballooned more than $1 trillion annually since the financial collapse.” Instead of confronting the real causes of the deficit, budget shortfalls are conflated with “the long-term challenges of Medicare” as an excuse to shred the social safety net. Rather than rein in widespread lending abuses, Republicans seek to weaken the authority of the new consumer Financial Protection Bureau.

Economist Joseph Stiglitz calls out the titans of finance, who continue to make mega bonuses for their companies’ mega losses, even after they set the global economy in a tailspin and shifted all risks for their unregulated credit default swaps onto taxpayers. He describes a nation of, by and for the 1 percent that enjoys 25 percent of economic benefits, largely purchased by Washington lobbyists. The Republican (Ryan) budget plan would cut $5.8 trillion from government spending over the next decade and reduce the corporate tax rate to 25 percent, while increasing next year’s Pentagon budget by $17 billion. The highly touted Bowles-Simpson proposal for deficit reduction is a recipe for a weaker economy, warns Stiglitz, as it will decrease jobs, and in turn, decrease revenues. A primary means to decrease the deficit is to increase jobs, a goal that ultraconservatives wrongly equate with large tax breaks for the wealthy – so-called “job creators” – never mind that the Bush tax cuts failed to provide jobs over a decade.

It is easier to destroy than to build democracy. Concerted assaults on democracy over four decades serve the ends of those who deem it their right to rule and reign: Republican religious ideologues and acolytes of Milton Friedman economics. Disaster capitalists precipitate crises by running up huge deficits (during the Reagan and Bush one and two regimes), followed by demands for balanced budgets and deficit reduction, as a means of drastically cutting domestic spending and gutting public education, government jobs and public pensions and shifting all wealth upward.

The political right has laid waste to democratic principles by sabotaging elections and the economy and auctioning government to the highest bidder. Some rightists deem it a “citizen’s duty” to challenge the legitimacy of the “ruling regime” by refusing to obey the law – i.e., “destroy the nation to save it.” Certain issues should be advanced “for the purpose of prompting a constitutional crisis,” pronounced law professor Russell Hittinger. The 2000 Supreme Court majority selection of George W. Bush reset the bar for challenges to the constitution, as did Citizens United vs. FEC in 2010.

The 1994 Gingrich revolution ushered in the large-scale sell-off of government to corporate interest groups. Corporate lobbyists were invited to write legislation to eradicate regulations for worker safety, labor rights and environmental protections – the so-called “Project Relief” part of the Republican agenda. Simultaneously,Republican House Whip Tom DeLay (“The Hammer”) pressured corporate political action committees (PACs) to contribute solely to the GOP, reasoning, “People that are pro-free enterprise should support people who are pro-free enterprise.”

In 1995, then-GOP Conference Chair John Boehner handed out tobacco PAC money checks to Republicans on the floor of the House, even as Newt Gingrich warned lobbyists, “For anyone who’s not on board now it’s going to be the two coldest years in Washington.” Republican leaders in a private 1997 meeting with 200 top corporate executives of the Business Roundtable demanded that all contributions to Democrats cease, or corporations would forfeit access to the Republican Congressional majority. Grover Norquist, riding herd over the “K Street Project,” demanded that big business hire GOP-credentialed lobbyists and fire those with Democratic connections. By the 108th Congress, it fell to Sen. Rick Santorum to reward party loyalty by vetting the hiring decisions of major lobbyists. “If you want to play in our revolution, you have to live by our rules,” pronounced DeLay.

The “defund-the-left” campaign was abetted by Virginia Lamp Thomas, Supreme Court Justice Clarence Thomas’ wife, and a key staff member for then-House Majority Leader Dick Armey, who compiled a hit list of liberal groups and nonprofit groups. More recently, Virginia Thomas reportedly received hundreds of thousands of dollars from groups that had expressed direct interest in the outcome of cases that came before her husband, including Citizens United vs. Federal Election Commission, which struck down any limitations on corporate contributions to elections, sealing the Republican deal to crush democracy.

In the ’90s, Democratic leadership, reinforced by such corporate-backed groups as the Democratic Leadership Council, turned increasingly to corporate money, away from working people. With both major parties in thrall to corporate money and influence, “we the people” has effectively become “the silenced majority,” discounted voices sought out only for votes during election years, an increasingly futile exercise as big money buys candidates and outcomes.

The majority (53 percent) of Americans who opposed the 2010 extension of the Bush tax cuts watched in dismay as President Obama started with compromise and met his Republican hostage-takers more than half way. Neither did majority popular support result in passage of strong financial regulation, importation of lower-cost drugs or government-payer universal health care.

The fatal flaw of Barack Obama’s presidency seems to be the compulsion to compromise with the likes of Norquist, bent on destroying democracy by “drowning government in a bathtub.” The deficit in public investment imperils us more than the budget deficit, observes former Labor Secretary Robert Reich, citing tax revenues that are less than 15 percent of the total economy, the lowest in 60 years. Large reductions in federal taxes affect state and local revenues, placing more locales on the brink of bankruptcy – thus fulfilling Norquist’s fondest wish for state bankruptcies and “bitter nastiness and partisanship” in state capitals.

The president’s failure to lead by using the bully pulpit to educate about the true nature of economic crisis and recovery has resulted in Democrats’ surrender to Republicans of the economic narrative around deficits, spending, taxes, health care etc. More than the Tea Party corporate shills, disingenuous rhetoric around the economy and the lack of any counter-narrative by the president discouraged voters from going to the polls in 2010 and will likely discourage them again in 2012.

In 1995, a highly secretive umbrella group of America’s right-wing leaders, the little known
Council for National Policy Action, circulated a confidential memo urging members to push for a governmental shutdown in order to force President Clinton to cave to their budget demands. Rep. Mark Souder (R-Indiana) was quoted: “This is our maximum point of leverage to insist that parts of the revolution are executed.” The brief government shutdown that followed failed to achieve their goals. Republicans have willingly upped the ante, holding the country hostage to the threat of economic catastrophe in order to achieve their long-time goal of gutting all New Deal and Great Society programs, while codifying tax cuts for the wealthy. Americans are again being held for ransom in a naked high-stakes grab for total wealth and power.

The majority of people are hungry for a truth teller/leader, like Sen. Bernie Sanders. Instead, corporate media reloops the one-note deficit propaganda of the right-wing sound machine, not seeing fit to even mention The People’s Budget, written by the Progressive Caucus. The People’s Budget would eliminate the deficit sooner than either the proposed Obama or Ryan Budgets and raise a $31 billion surplus in ten years. It would end the main budget deficit drivers – the Bush tax cuts and Middle East wars; restore progressive income and estate taxes; add negotiation of bulk drug rates to Medicare and preserve Medicare, Medicaid Social Security; eliminate tax subsidies for oil, gas and coal companies; close loopholes for multinational corporations; and tax speculative financial transactions. All are goals supported by the majority of people.

Likewise, Medicare-for-All would contribute substantially to economic recovery. Reich writes that expanding the Medicare risk pool to include all healthy young and sick elderly would save $58 billion to $400 billion annually and sharply reduce the budget crisis, while also permitting negotiation of lower rates with hospitals, doctors and pharmaceutical companies. Payment reform to reward quality not quantity care would provide additional savings.

Circular talk around the deficit short circuits meaningful action around the creation of jobs and financial and election reforms. Sorely needed to counter the corruption of money in elections are the Fair Campaigns Now Act, free media time for all serious candidates and other remedies such as instant runoff voting and reversing the notion of corporate “personhood.” Humboldt County, California, passed a county ordinance in 2006 to prohibit nonlocal corporate contributions to elections and also asserting that corporations cannot claim the First Amendment right to free speech. Counties nationwide should follow the lead of a number of counties that have drafted ordinances to deny corporate personhood.

The two main political parties are failing to serve the people, both locked in a dance of dysfunctional political posturing in service of power. In a candid moment this spring, speaking to Charlie Rose, some New York Times correspondentsacknowledged the sorry state of our politics: Tom Friedman remarked that we are trapped in a “corrupt duopoly.” Crony capitalism is the norm in Washington, lamented David Brooks. Both expressed the wish for a reputable third party to break the Washington gridlock.

Now is the moment for voices that have been willfully ignored in recent years to come together to form a true grassroots movement to advocate for progressive change. Sponsored by over 100 groups led by MoveOn.org, “Rebuild the American Dream” house meetings across the country convened starting July 16 and 17, providing the opportunity for participants to begin writing a “Contract for the American Dream” to serve the people.

The time is a now or never to restore the promise of democracy stolen by the oligarchs.


U.S. Debt Crisis Being Used To Implement Shock Doctrine To Steal More Money From The American People To Give To The Richest 1%

In Uncategorized on July 26, 2011 at 7:51 pm

Oldspeak: “As a progressive, I am absolutely TERRIFIED that President Obama, quoted RONALD REAGAN last night. That tells you all you need to know about how far to the right this man has moved in his thinking. While he tried to sell his deficit reduction proposal as “balanced” and a “fairly shared burden”, The details he didn’t “want to bore you with” are these: Public assets and lands (some oil and gas rich) would be sold to private entities, and potential government revenue will be lost to the private sector. A ‘tax holiday’ would be provided to corporations to continue to internalize their off-shored profits in the form of bonuses. The corporate tax rate will be reduced from 35% to a range of 23-29%. Loopholes which taxes income on wealth (stock and bond returns) at a lower rate than income on work (salaries and wages) will not be closed. That insures that the richest Americans pay a lower rate of taxes than their chauffeurs.”It will cut retirement deductions, the mortgage deduction and the tax benefits for employer-based health care. This is likely to hurt middle-class homeowners, and workers whose employers provide decent health care. It will add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth.” –Robert Borosage. World Bank/IMF style austerity measures have come home to roost. Bottom line, the rich continue ‘winning’ and you continue to get fucked.”

By Washington’s Blog:

noted in 2008:

The powers-that-be have used the “Shock Doctrine” to pass anti-American, fascist legislation while the public was in a state of shock.

This applies to economic shocks, as well as physical attacks like 9/11.

Indeed, right now, Paulson and Bernanke are using the shock doctrine to try to ram through legislation that would help out the fat cats at the expense of taxpayers, and give the government control over the free market.

But there is some resistance. For example, Senator Leahy and the New York Times are questioning Paulson’s use of shock and awe:

  • Senator Leahy said “If we learned anything from 9/11, the biggest mistake is to pass anything they ask for just because it’s an emergency”
  • The New York Times wrote:

    “The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress.”
    ***

    Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.

    Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq. Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.

    “This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.”

The Tarp bailouts were passed using apocalyptic – and false – threats. For example, as I’ve previously reported

The New York Times wrote last year:

In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis — yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.

Indeed, Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed. That is especially interesting given that the financial crisis had actually been going on for a long time, but – instead of dealing with it – Paulson and the rest of the crew tried to cover it up and pretend it was “contained”, and that it was obvious to world leaders months earlier that it was not a liquidity crisis, but a solvency crisis (and see this).

Bait And Switch

The Tarp Inspector General has said that Paulson misrepresented the big banks’ health in the run-up to passage of TARP. This is no small matter, as the American public would have not been very excited about giving money to insolvent institutions.

And Paulson himself has said:

During the two weeks that Congress considered the [Tarp] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.

So Paulson knew “by the time the bill was signed” that it wouldn’t be used for its advertised purpose – disposing of toxic assets – and would instead be used to give money directly to the big banks?Senator McCain also says that Paulson pulled a bait-and-switch:

Sen. John McCain of Arizona … says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.

“Obviously, that didn’t happen,” McCain said in a meeting Thursday withThe Republic‘s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.”

Even the New York Times called Paulson a liar in 2008:

“First [Paulson’s Department of Treasury] says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.

Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either.”

What tax breaks is the Times talking about? The article explains:

A new tax break [pushed by Treasury], worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”

Indeed, all of the other “emergency” economic and monetary measures – like quantitative easing – didn’t help the American people, but just helped the richest 1%. And most of the bailout and “easy” money went to foreign banks (and see thisthis and this).

The Same Thing Is Happening With the Debt Ceiling

The same thing is now happening with the debt ceiling debate.

We know that the productive actions which would reduce the debt and fix the economy arenot being discussed. See thisthisthisthisthis and this.

What is being discussed would just steal more money from the American people and give it to the richest 1%. For example, Congress is planning on selling off “unused federal property”. Selling off and privatizing public assets and resources is a core tactic in shock doctrine schemes.

As Matt Taibbi shows, another tax holiday for big corporations is one of the main focuses of discussion in D.C.

MSN Money reports

The plan proposes three [tax brackets] (we now have six) and would lower the top rate — and the corporate tax rate — from 35% to a range of 23% to 29%. That would be great news for rich folks. “That could provide a windfall for wealthy taxpayers because the 35% tax bracket currently applies to taxable income above $379,150,” said The Associated Press.

 There are numerous other giveaways to the biggest fatcats, which will be paid for by slashing social security and otherwise fleecing the elderly.

Robert Borsage notes that the proposed debt agreement:

Would add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth, and lards even more tax breaks on the rich.

The Nation writes:

The [proposed debt ceiling agreement] proposal shafts those who have already borne so much of the burden of the financial crisis and its fallout—lost pensions, lost homes, lost wealth—while the very people who brought the economy to its knees through their recklessness make out like banksters and bandits. In fact, at a time of inequality akin to that of the Gilded Age, the top marginal tax rate would be lowered—lowered!—to 23 to 29 percent, while there would be massive cuts in Social Security, Medicare and Medicaid.Dean Baker, co-director of the Center for Economic and Policy Research (CEPR),notes that JP Morgan CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein would save approximately $2 million to $3 million on their tax bills. But in twenty years, a 90-year-old living on a Social Security income of $15,000 would lose more than $1,200 a year in benefits.

How’s that a “bargain” for this nation and who exactly finds it “grand”?

All along, the alternatives that reflect the popular idea of shared sacrifice have been marginalized—by the political establishment (and, tragically, the Democratic leadership) and the corporate media.

***

This is not about left and right. This is about right and wrong. And that’s something the political and media establishment just don’t seem to get. 

And Senator Sanders points out today that there is no shared sacrifice by the top 1%, but that the government may take from the poor and middle class in numerous ways for years to come:

There will be major cuts in Social Security … Medicare … Medicaid and other health care programs … education … nutrition program[s] … environmental protection.
***
There are very, very clear provisions making sure that we are going to make massive cuts in programs for working families, for the elderly, for the children. Those cuts are written in black and white. What about the revenue? Well, it’s kind of vague. The projection is that we would rise over a 10-year period $100 billion in revenue. Where is that going to come? Is it necessarily going to come from the wealthiest people in this economy? Is it going to come from large corporations who are enjoying huge tax breaks? That is not clear at all. I want middle-class families to understand that when we talk about increased revenues, do you know where that comes from? It may come from cutbacks in the home mortgage interest deduction program, which is so very important to millions and millions of families. It may mean that if you have a health care program today, that health care program may be taxed. That’s a way to raise revenue. It may be that there will be increased taxes on your retirement programs, your I.R.A.’s, your 401(k)’s.

 Note: As usual, it’s not liberal-versus-conservative, but the top 1% versus the rest of the country, and you versus the giant corporations. See thisthisthisthisthisthisthisthisthisthis and this.

And – no – the top 1% are not using the money to create more jobs. It’s being used for prostitutes and other hanky panky.

“They’re Going To Try To Panic The Population Into Acquiescing In A Democratic Party Sellout By Cutting Back Payments To The People, While Making Sure They Pay The Pentagon, Foreign Aid, And Wall Street”

In Uncategorized on July 16, 2011 at 2:19 pm

Bought and Paid For: Laughing all the way to the Bankers.

 

Oldspeak:”Only a crisis, real or perceived produces real change” –Milton Friedman.The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few.” –Dennis Kusinnich. What you are seeing is textbook disaster capitalism, which is the practice (by a government, regime etc) of taking advantage of a major disaster to adopt neo-liberal economic policies that the population would be less likely to accept under normal circumstances. We’ve seen this movie most recently after 9/11, when the country was gripped with fear of terrorism, the Bush Administration and U.S. Congress passed the U.S.A. Patriot Act, depriving Americans of their rights not to be spied on, searched and seized or  indefinitely detained without charge, and created the Department Of Homeland Security, which has morphed into a gargantuan surveillance and ‘security’ apparatus. Now they’re using fear of financial catastrophe ram through draconian cuts to social programs. All while continuing to enrich the wealthy, finance client states, and the military-industrial complex on the backs of the other 99% If anything, these budget talks make it clear to anyone paying attention, who U.S. Politicians’ most important constituents are, and they sure ain’t the American people. Sadly in Washington money talks, and Change You Can Believe In walks.

Debt Ceiling Charade A Move To The Right

By Washington’s Blog:
pointed out last year that Ronald Reagan’s budget director said that the tax cuts for the wealthy were “the biggest fiscal mistake in history”.

noted yesterday:

Plugging the major holes in our economy is more important than either cutting spending or raising taxes.

And stopping bailouts and giveaways for the top .1% of the richest elite (which weaken rather than strengthen the economy, as shown herehere and here) and slashing spending on unnecessary imperial wars (which reduce rather than increase our national security, as demonstrated here and here) is what the budgetreally needs.

As I wrote last year:

Why aren’t our government “leaders” talking about slashing the military-industrial complex, which is ruining our economy with unnecessary imperial adventures?

And why aren’t any of our leaders talking about stopping the permanent bailouts for the financial giants who got us into this mess? And see this.

And why aren’t they taking away the power to create credit from the private banking giants – which is costing our economy trillions of dollars (and is leading to a decrease in loans to the little guy) – and give it back to the states?

If we did these things, we wouldn’t have to raise taxes or cut core services to the American people.

pointed out the next month:

If there’s any shortfall, all we have to do is claw back the ill-gotten gains from the fraudsters working for the too big to fails whose unlawful actions got us into this mess in the first place. See thisthisthisthis and this.

Dennis Kucinich wrote in a post entitled “Debt Political Theater Diverts Attention While Americans’ Wealth is Stolen”:

The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few.

***

We have to realize what this country’s economy has become. Our monetary policy, through the Federal Reserve Act of 1913, privatized the money supply, gathers the wealth, puts it in the hands of the few while the Federal Reserve can create money out of nothing, give it to banks to park at the Fed while our small businesses are starving for capital.

Mark my words — Wall Street cashes in whether we have a default or not. And the same type of thinking that created billions in bailouts for Wall Street and more than $1 trillion in giveaways by the Federal Reserve today leaves 26 million Americans either underemployed or unemployed. And nine out of ten Americans over the age of 65 are facing cuts in their Social Security in order to pay for a debt which grew from tax cuts for the rich and for endless wars.

There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most Americans pay dearly for debts they did not create.

These are symptoms of a government which has lost its way, and they are a challenge to the legitimacy of the two-party system.

And Michael Hudson – who is as far from a knee-jerk conservative as possible – hits the same theme with both barrels blazing:

[Interviewer]: So, what do you think? Good versus evil. We’re playing out the debt struggle and the debt ceiling issue. And if we don’t raise the debt ceiling, we’ll be in the apocalypse. What do you make of it all?

HUDSON: I think it’s evil working with evil…. If you have to choose between paying Social Security and Wall Street, pay our clients, Wall Street.

***

What’s inefficient? Paying for people on Medicaid. Got to cut it. What’s inefficient? Medicare. Got to cut it. What’s inefficient? Paying Social Security. What is efficient? Giving $13 trillion to Wall Street for a bailout. Now, how on earth can the administration say, in the last three years we have given $13 trillion to Wall Street, but then, in between 2040 and 2075, we may lose $1 trillion, no money for the people?

***

It’s not about the debt ceiling. It’s about making an agreement now under an emergency conditions. You remember what Obama’s staff aide Rahm Emanuel said. He said a crisis is too important to waste. They’re using this crisis as a chance to ram through a financial policy, an anti-Medicare, anti-Medicaid, anti—selling out Social Security that they could never do under the normal course of things.***

They’re not going to cut back the war in Libya.

***

They’re going to have to decide what to cut back. So they’re going to cut back the bone and they’re going to keep the fat, basically. They’re going to say–they’re going to try to panic the population into acquiescing in a Democratic Party sellout by cutting back payments to the people–Social Security, Medicare–while making sure that they pay the Pentagon, they pay the foreign aid, they pay Wall Street.

[Interviewer]: Yeah. But what–I hear you. But what I’m–I’m saying, what could be an alternative policy? For example, don’t raise the debt ceiling. Number two, raise taxes on the wealthy. Number three, cut back military spending. I mean, there are ways to do this without having to borrow more money, aren’t there?

HUDSON: Of course.

***

Of course they could cut back the fat. Of course what they should do is change the tax system. Of course they should get rid of the Bush tax cuts. And the one good thing in President Obama’s speech two days ago was he used the term spending on tax cuts. So that’s not the same thing as raising taxes. He said just cut spending by cutting spending on tax cuts for the financial sector, for the speculators who count all of their income that they get, billions of income, as capital gains, taxed at 15 percent instead of normal income at 35 percent. Let’s get rid of the tax loopholes that favor Wall Street.

***

Mr. Obama has always known who has been contributing primarily to his political campaigns. We know where his loyalties lie now. And, basically, he promised change because that’s what people would vote for, and he delivered the change constituency to the campaign contributors…

U.S. Debt Political Theater Diverts Attention While Americans’ Wealth Is Stolen

In Uncategorized on July 15, 2011 at 11:47 am

Oldspeak:“There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most vulnerable Americans pay dearly for debts they did not create”-Dennis Kucinich

By Dennis Kucinich @ Common Dreams:

The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few. Let me give you some examples.

Take war. War takes the money from the American people and puts it into the hands of arms manufacturers, war profiteers, and private armies. The war in Iraq, based on lies: $3 trillion will be the cost of that war. The war in Afghanistan; based on a misreading of history; half a trillion dollars in expenses already. The war against Libya will be $1 billion by September.

Fifty percent of our discretionary spending goes for the Pentagon. A massive transfer of wealth into the hands of a few while the American people lack sufficient jobs, health care, housing, retirement security.

Our energy policies take the wealth from the American people and put it into the hands of the oil companies. We could be looking at $150 a barrel for oil in the near future.

Our environmental policy takes the wealth of the people — clean air, clean water — and puts it in the hands of the polluters. It’s a transfer of wealth, not only from the present but from future generations as our environment is ruined.

Insurance companies, what do they do? They take the wealth from the American people in terms of what they charge people for health insurance and they put it into the hands of the few.

We have to realize what this country’s economy has become. Our monetary policy, through the Federal Reserve Act of 1913, privatized the money supply, gathers the wealth, puts it in the hands of the few while the Federal Reserve can create money out of nothing, give it to banks to park at the Fed while our small businesses are starving for capital.

Mark my words — Wall Street cashes in whether we have a default or not. And the same type of thinking that created billions in bailouts for Wall Street and more than $1 trillion in giveaways by the Federal Reserve today leaves 26 million Americans either underemployed or unemployed. And nine out of ten Americans over the age of 65 are facing cuts in their Social Security in order to pay for a debt which grew from tax cuts for the rich and for endless wars.

There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most Americans pay dearly for debts they did not create.

These are symptoms of a government which has lost its way, and they are a challenge to the legitimacy of the two-party system.

Dennis Kucinich is US Congressman from Ohio and a former presidential candidate in the United States.

The U.S. Will Not Balance It’s Budget On The Backs Of The Poor, Elderly, Disabled, And Working Families

In Uncategorized on July 12, 2011 at 1:33 pm

Oldspeak:“Oh how I wish Sen. Bernie Sanders was U.S President. He’s one of the few U.S. politicians speaking the truth and articulating the concerns of real people.  Social Security, Medicare & Medicaid did not create America’s debt crisis. Decades of wage stagnation, de-industrialization, job outsourcing, wildly irresponsible & illicit financial speculation, subsequent taxpayer bailouts of wall street, tax cuts for millionaires and corporations, multiple unpaid for and misguided wars and ever expanding military and surveillance budgets did. Why should poor, elderly, disabled and disenfranchised people be made to suffer for the folly of reckless, hedonistic, anti-democratic monied interests? #ChangeICan’tBelieveIn.”

By Senator Bernie Sanders @ Bernie Sanders’ Senate Web Site:

Mr. President, this is a pivotal moment in the history of our country.  In the coming days and weeks, decisions will be made about our national budget that will impact the lives of virtually every American in this country for decades to come.

At a time when the richest people and the largest corporations in our country are doing phenomenally well, and, in many cases, have never had it so good, while the middle class is disappearing and poverty is increasing, it is absolutely imperative that a deficit reduction package not include the disastrous cuts in programs for working families, the elderly, the sick, the children and the poor that the Republicans in Congress, dominated by the extreme right wing, are demanding.

In my view, the President of the United States of America needs to stand with the American people and say to the Republican leadership that enough is enough.  No, we will not balance the budget on the backs of working families, the elderly, the sick, the children, and the poor, who have already sacrificed enough in terms of lost jobs, lost wages, lost homes, and lost pensions.  Yes, we will demand that millionaires and billionaires and the largest corporations in America contribute to deficit reduction as a matter of shared sacrifice.  Yes, we will reduce unnecessary and wasteful spending at the Pentagon.  And, no we will not be blackmailed once again by the Republican leadership in Washington, who are threatening to destroy the full faith and credit of the United States government for the first time in our nation’s history unless they get everything they want.

Instead of yielding to the incessant, extreme Republican demands, as the President did during last December’s tax cut agreement and this year’s spending negotiations, the President has got to get out of the beltway and rally the American people who already believe that deficit reduction must be about shared sacrifice.

It is time for the President to stand with the millions who have lost their jobs, homes, and life savings, instead of the millionaires, who in many cases, have never had it so good.

Unless the American people by the millions tell the President not to yield one inch to Republican demands to destroy Medicare and Medicaid, while continuing to provide tax breaks to the wealthy and the powerful, I am afraid that is exactly what will happen.

So, I am asking the American people who may be listening today that if you believe that deficit reduction should be about shared sacrifice, if you believe that it is time for the wealthy and large corporations to pay their fair share, if you believe that we need to reduce unnecessary defense spending, and if you believe that the middle class has already sacrificed enough due to the greed, recklessness and illegal behavior on Wall Street, the President needs to hear your voice, and he needs to hear it now.

Go to my website: sanders.senate.gov and send a letter to the President letting him know that enough is enough!  Shared sacrifice means that it’s time for the wealthiest Americans and most profitable corporations in America to pay their fair share and contribute to deficit reduction.

Mr. President, as you know, this country faces enormous challenges.

The reality is that the middle class in America today is collapsing and poverty is increasing.

When we talk about the economy, we have got to be aware that the official government statistics are often misleading.  For example, while the official unemployment rate is now 9.1%, that number does not include the large numbers of people who have given up looking for work and people who want to work full-time but are working part time.

And, when you take all of those factors into account, the real unemployment rate is nearly 16%.

Further Mr. President, what we also must understand is that tens of millions of Americans are working longer hours for lower wages.  The reality is that over the last 10 years, median family income has declined by over $2,500.

As a result of the greed, recklessness and illegal behavior on Wall Street, which caused this terrible recession, millions more have lost their homes, their pensions, and their retirement savings.

Unless we reverse our current economic course our children will have, for the first time in modern American history, a lower standard of living than their parents.

Mr. President, we throw out a lot of numbers around here.  But, I think it is important to understand that behind every grim economic statistic are real Americans who cannot find a decent paying job, and are struggling to feed their families, put a roof over their heads or to just stay afloat.

Last year, I asked my constituents in Vermont to share their personal stories with me — explaining how the recession, which started more than three years ago, has impacted their lives.  In a matter of weeks, more than 400 Vermonters responded and I also heard from people throughout the country who are struggling through this terrible recession.

Their messages are clear. People are finding it hard to get jobs or are now working for lower wages than they used to earn.  Older workers have depleted their life savings and are worried about what will happen to them when they retire.  Young adults in their 20s and 30s are not earning enough to pay down college debt. People of all ages, all walks of life, from each corner of Vermont — have shared their stories with my office.

Let me just read a few of these letters:

The first is from a 51 year old woman from West Berlin, Vermont who wrote “Dear Mr. Sanders, Don’t really know what to say, I could cry.  My significant other was out of work for a year, now he works in another state.  I’ve been out of work since April.  Our mortgage company wants the house because we can’t make the payments.  I can’t find a job to save my soul that will pay enough to make a difference.  How bad does it have to get!  My mother went through the Great Depression and here we go again.  I figure that I’m going to lose everything soon!  I’m a well educated person who can’t see through the fog.”

A gentlemen in his mid-50’s from Orange County, Vermont wrote: “After being unemployed three times since 1999 due to global trade agreements, I now find myself managing a hazardous waste transfer facility that pays about 25% less than what I was making in 1999.  My wife’s children have moved back in, unemployed.  And we are saving very little for retirement.  If things don’t improve soon we will likely have to work until we die.  We consider ourselves lucky that we are employed.  Our children’s friends tend to show up around meal time.  They are skinny.  We feed them.  This is no recession, it’s a modern day depression.”

A woman in her late 40s from Westminster, Vermont wrote: “I am a single mom in Vermont, nearly 50.  I patch together a full time job making $12 an hour and various painting jobs and still can’t afford to get myself out of debt, or make necessary repairs on my home.  No other jobs in sight, I apply all the time to no avail.  Food and gas bills go up and up, but not my income.  I have no retirement at all, can’t afford to move, feeling stuck, tired, and hopeless.”

And a 26 year old young man from Barre, Vermont wrote: “In 2002, I received a scholarship to Saint Bonaventure University, the first in my family to attend college.  Upon graduation in 2006, I was admitted to the Dickinson School of Law at Penn State University, and graduated in 2009 with $150,000 of student debt.  In Western New York I could find nothing better than a $10 an hour position stuffing envelopes … I live in a small studio apartment in Barre without cable or internet … I have told my family I don’t want them to visit because I am ashamed of my surroundings … My family always told me that an education was the ticket to success, but all my education seems to have done in this landscape is make it impossible to pull myself out of debt and begin a successful career.”

Mr. President, just over the last two weeks, nearly 500 people from Vermont and throughout the U.S. have written me about their experiences with trying – often in vain – to find affordable dental care.  One wrote: “I can’t afford health insurance so dental work is definitely out. I agree [that] … we are so backward in this country, even though studies have linked bad dental care to heart problems and cancer.”

Mr. President, when the Republicans are talking about trillions of dollars in savage cuts this is what they are talking about.  They’re talking about throwing millions and millions of people off of Medicaid.  Let me tell you what that means.

Earlier this year Arizona passed budget cuts that took patients off its transplant list.  As a result people who were kicked off the list have died.  Not because they couldn’t find a donor but because the state decided it could no longer afford to pay for their transplants.  To make matters worse Arizona’s Governor has gone further, asking the federal government for a waiver to kick off another 250,000 from its Medicaid program.

They’re talking about making it impossible for working class families to send their kids to college.  They’re talking about cuts in nutrition programs which will increase the amount of hunger in America, which is already at an all time high.  According to a 2009 study, there are over 5 million seniors who face the threat of hunger, almost 3 million seniors who are at risk of going hungry, and almost 1 million seniors who do go hungry because they cannot afford to buy food.  The Republicans in Congress would make this situation much, much worse.

Mr. President, this is a lot of pain that the Republicans are tossing out while they want to protect their rich and powerful friends.  In my view, the president has got to stand tall, take the case to the American people, and hold the Republicans responsible if the debt ceiling is not raised and the repercussions of that.

That, Mr. President, is what’s going on in the real world. People fighting to keep their homes from falling into foreclosure; struggling with credit card debt; marriages have been postponed; lives have been derailed; and retirement savings have been raided to pay for college tuition, to keep their businesses afloat, or simply to keep gas in their car and pay their bills.  That is what is going on in the real world.

And, Mr. President, while the middle class disappears and poverty is increasing, there is another reality and that is that the gap between the very rich and everyone else is growing wider and wider.  The United States now has, by far, the most unequal distribution of wealth and income of any major country on earth.

Today, the top one percent earns over 20 percent of all income in this country, which is more than the bottom 50 percent earns.  Over a recent 25 year period, 80 percent of all new income went to the top one percent.  In terms of the distribution of wealth, as hard as it may be to believe, the richest 400 Americans own more wealth than the bottom 150 million Americans.

The rich get richer, the poor get poorer, and the middle class continues to disappear.  That is what is going on in this country in the year 2011, and we have all got to understand that.

Mr. President, everybody knows this country faces a major deficit crisis and we have a national debt of over $14 trillion. What has not been widely discussed, however, is how we got into this situation in the first place. A huge deficit and huge national debt did not happen by accident. It did not happen overnight. It happened, in fact, as a result of a number of policy decisions made over the last decade and votes that were cast right here on the floor of the Senate and in the House.

Let’s never forget, as we talk about the deficit situation, that in January of 2001, when President Clinton left office, this country had an annual federal budget surplus of $236 billion with projected budget surpluses as far as the eye could see. That was when Clinton left office.

What has happened in the ensuing years? How did we go from huge projected surpluses into horrendous debt? The answer, frankly, is not complicated. The CBO has documented it. There was an interesting article on the front page of the Washington Post on April 30, talking about it as well. Here is what happened.

When we spend over $1 trillion on wars in Afghanistan and Iraq and choose not to pay for those wars, we run up a deficit. When we provide over $700 billion in tax breaks to the wealthiest people in this country and choose not to pay for those tax breaks, we run up a deficit. When we pass a Medicare Part D prescription drug program written by the drug companies and the insurance companies that does not allow Medicare to negotiate prescription drug prices and ends up costing us far more than it should — $400 billion over a 10-year period — and we don’t pay for that, we run up the deficit.  When we double military spending since 1997, not including the wars in Afghanistan and Iraq, and we don’t pay for that, we drive up the deficit.

Further, Mr. President, the deficit was also driven up by the greed, recklessness and illegal behavior on Wall Street, which caused the worst economic crisis since the Great Depression.  Millions of Americans lost their jobs and revenue was significantly reduced as a result.

Mr. President, the end result of all of these unpaid-for policies and actions – year after year of the deficits I just described – is a staggering amount of debt.  When President Bush left office, President Obama inherited an annual deficit of $1.3 trillion with deficits as far as the eye could see, and the national debt more than doubled from when President Bush took office.

The reality is Mr. President, if we did not go to war in Iraq, if we did not pass huge tax breaks for millionaires and billionaires, who didn’t need them, if we did not pass a prescription drug program with no cost control written by the drug and insurance companies, and if we did not deregulate Wall Street, we would not be in the fiscal mess that we find ourselves in today.  It really is that simple.

In other words, the only reason we have to increase our nation’s debt ceiling today is that we are forced to pay the bills that the Republican leadership in Congress and President Bush racked up.

Now, Mr. President, given the decline in the middle class, given the increase in poverty, and given the fact that the wealthy and large corporations have never had it so good, Americans may find it strange that the Republicans in Washington would use this opportunity to make savage cuts to Medicare, Medicaid, education, nutrition assistance, and other lifesaving programs, while pushing for even more tax breaks for the wealthy and large corporations.

Unfortunately, it is not strange.  It is part of their ideology.  Republicans in Washington have never believed in Medicare, Medicaid, federal assistance in education, or providing any direct government assistance to those in need.  They have always believed that tax breaks for the wealthy and the powerful would somehow miraculously trickle down to every American, despite all history and evidence to the contrary.  So, in that sense, it is not strange at all that they would use the deficit crisis we are now in as an opportunity to balance the budget on the backs of working families, the elderly, the sick, the children and the poor, and work to dismantle every single successful government program that was ever created.

And, that’s exactly what the Ryan Republican budget that was passed in the House of Representatives earlier this year – and supported by the vast majority Republicans here in the Senate just last month – would do.  Here are just a few examples:

The Republican budget passed by the House this year would end Medicare as we know it within 10 years.

The non-partisan CBO estimates that under the Ryan proposal, in 2022, a private health care plan for a 65-year-old equivalent to Medicare coverage would cost about $20,500, yet the Republican budget would provide a voucher for only $8,000 of those premiums.  Seniors would be on their own to pay the remaining $12,500 – a full 61% of the total.  How many of the 20 million near-elderly Americans who are now ages 50-54 will be able to afford that?  This approach would transfer control of Medicare to insurers and there would be no guaranteed benefits, essentially ending Medicare as we know it.

The Republican budget would force 4 million seniors in this country to pay $3,500 more, on average, for their prescription drugs by re-opening the Medicare Part D donut hole.

Under the Republican budget, nearly 2 million children would lose their health insurance over the next 5 years by cuts to the Children’s Health Insurance Program, according to the Congressional Budget Office.

At a time when 50 million Americans have no health insurance, the Republican budget would cut Medicaid by over $770 billion, causing millions of Americans to lose their health insurance and cutting nursing home assistance in half – threatening the long-term care of some 10 million senior citizens.

The Republican budget would completely repeal the Affordable Health Care Act preventing an estimated 34 million uninsured Americans from getting the health insurance they need.

At a time when the cost of a college education is becoming out of reach for millions of Americans, the Republican budget would slash college Pell grants by about 60% next year alone – reducing the maximum award from $5,550 to about $2,100.

At a time when over 40 million Americans don’t have enough money to feed themselves or their families, the Republican budget would kick up to 10 million Americans off Food Stamps, by slashing this program by more than $125 billion over the next decade.

At a time when our nation’s infrastructure is crumbling, the Republican budget passed in the House and supported by all but a handful of Republicans here in the Senate would slash funding for our roads, bridges, rail lines, transit systems, and airports by nearly 40 percent next year alone.

Yet despite the fact that military spending has nearly tripled since 1997, the House Republican budget does nothing to reduce unnecessary defense spending.  In fact, defense spending would go up by $26 billion next year alone under the Republican plan.

Interestingly enough, at a time when the rich are becoming richer, when the effective tax rates for the wealthiest people, at 18 percent, are about the lowest on record, at a time when the wealthiest people have received hundreds of billions of dollars in tax breaks, at a time when corporate profits are at an all-time high and major corporations making billions of dollars pay nothing in taxes, my Republican colleagues, in their approach toward deficit reduction, do not ask the wealthiest people or the largest corporations to contribute one penny more for deficit reduction.

In fact, the Republican budget would keep the good times rolling for those who are already doing phenomenally well – it provides over $1 trillion in tax cuts to millionaires and billionaires by permanently extending all of the Bush income tax cuts; reducing the estate tax for multi-millionaires and billionaires; and lowering the top individual and corporate income tax rate from 35 to 25 percent.

Mr. President, the Republican idea of moving toward a balanced budget is to go after the middle-class, working families, and low-income people, and to make sure the millionaires and billionaires and largest corporations in this country that are doing phenomenally well do not have to share in the sacrifices being made by everybody else. They will be protected.  The Republican approach to deficit reduction in Washington is the Robin Hood philosophy in reverse: taking from the poor and giving to the rich.

And it’s not as if it’s good for our economy.  Mark Zandi, the former economic advisor to John McCain when he was running for president, has estimated that the Republican budget plan will cost 1.7 million jobs by the year 2014, with 900,000 jobs lost next year alone.

The House Republican budget is breathtaking in its degree of cruelty.

But, don’t take my word for it.

In a letter to Congressional leaders after the House GOP plan was introduced, nearly 200 economists and health care experts wrote, “turning Medicare into a voucher program would undermine essential protections for millions of vulnerable people. It would extinguish the most promising approaches to curb costs and to improve the American medical care system.”

Jeffrey Sachs, an economics professor at Columbia University, who was a key economic adviser to the World Bank, the IMF, and the World Health Organization, told MSNBC last April that the House Republican plan, “goes right out to destroy Medicaid within the next few years, slashing it drastically. And then on Medicare, it delays [cuts] for 10 years, and then [the House Republican plan] goes out to destroy it, to make sure that elderly people will not have a guaranteed access to health care. They will be getting some premium [support] but they`re going to have to put a lot of money out of pocket.”

Robert Greenstein, the President of the Center on Budget and Policy Priorities, said last April that the House Republican budget “proposes a dramatic reverse-Robin-Hood approach that gets the lion’s share of its budget cuts from programs for low-income Americans — the politically and economically weakest group in America and the politically safest group for Ryan to target— even as it bestows extremely large tax cuts on the wealthiest Americans. Taken together, its proposals would produce the largest redistribution of income from the bottom to the top in modern U.S. history, while increasing poverty and inequality more than any measure in recent times and possibly in the nation’s history.”

Ezra Klein, a columnist at the Washington Post wrote last April that “the budget Ryan released is not courageous or serious or significant. It’s a joke, and a bad one.  For one thing, Ryan’s savings all come from cuts, and at least two-thirds of them come from programs serving the poor. The wealthy, meanwhile, would see their taxes lowered, and the Defense Department would escape unscathed. It is not courageous to attack the weak while supporting your party’s most inane and damaging fiscal orthodoxies. But the problem isn’t just that Ryan’s budget is morally questionable. It also wouldn’t work.”

Harold Meyerson, a columnist for the Washington Post wrote on April 5th that “If it does nothing else, the budget that the House Republicans unveiled provides the first real Republican program for the 21st century, and it is this: Repeal the 20th century … Ryan achieves the bulk of his savings through sharp reductions in projected spending on Medicare and Medicaid … Ryan’s budget would also reduce projected spending on discretionary domestic programs — education, transportation, food safety and the like — to well below levels of inflation … The cover under which Ryan and other Republicans operate is their concern for the deficit and national debt. But Ryan blows that cover by proposing to reduce the top income tax rate to just 25 percent. He imposes the burden for reducing our debt not on the bankers who forced our government to spend trillions averting a collapse but on seniors and the poor.”

Mr. Meyerson, concludes by saying this: “There’s talk that we have a president who’s a Democrat — the party that created the American social contract of the 20th century.  Initially, he focused on reshaping and extending that contract into the 21st.  Now that the Republicans want to repeal it all, he’s nowhere to be found. Has anybody seen him? Does he still exist?”

Mr. President, the deficit has been caused by unpaid-for wars, tax breaks for the rich, the Medicare Part D prescription drug program, the bailout of Wall Street, a declining economy, and less revenue coming in.  The Republican “solution” in Washington is to balance the budget on the backs of the sick, the elderly, the children and the poor, to cut back on environmental protection, to cut back on transportation, while providing even more tax breaks to the wealthy and well connected.  That is unacceptable and that is what we have got to stop.

Mr. President, it’s not just rich individuals who are making out like bandits.  As hard as it may be to believe, some of the largest, most profitable corporations in this country are not only avoiding paying any federal income taxes whatsoever, but they are actually receiving tax rebates from the IRS.  And, the Republican response to this reality is to provide even more tax breaks to these corporate freeloaders.  That may make sense to someone.  It does not make sense to me.

Earlier this year, my office published a top ten list of the worst corporate tax avoiders in this country.  I would like to take this opportunity to read this list.  These are just a few of the corporations that the Republicans want to protect, while they are trying to deny millions of Americans health insurance, a college education, and nutrition assistance.  Here are the top ten corporate freeloaders in America today:

1)      Exxon Mobil.  In 2009, Exxon Mobil made $19 billion in profits.  Not only did Exxon avoid paying any federal income taxes that year, it actually received a $156 million rebate from the IRS, according to its SEC filings.

2)      Bank of America.  Last year, Bank of America received a $1.9 billion tax refund from the IRS, even though it made $4.4 billion in profits and just a couple of years ago received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.

3)      General Electric.  Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.

4)      Chevron.  In 2009, Chevron received a $19 million refund from the IRS after it made $10 billion in profits.

5)      Boeing.  Last year, Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS.

6)      Valero Energy.  Last year, Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.

7)      Goldman Sachs.  In 2008, Goldman Sachs paid only 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion bailout from the Federal Reserve and U.S. Treasury Department.

8)      Citigroup.  Last year, Citigroup made more than $4 billion in profits but paid no federal income taxes, even though it received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.

9)      ConocoPhillips.  ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction during those years.

10)    Carnival Cruise Lines.  Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.

In other words, Mr. President, at a time when major corporations such as General Electric and ExxonMobil make billions of dollars in profit, and pay nothing in federal income taxes, the Republican plan is to provide them with even more tax breaks.

Mr. President, large corporations are sitting on a record-breaking $2 trillion in cash.  The problem is not that corporations are taxed too much.  The problem is that consumers don’t have enough money to buy their products and the Republican agenda would make that far worse.

Corporate tax revenue last year was down by 27% compared to 2000, even though corporate profits are up 60 percent over the last decade.

Large corporations and the wealthy are avoiding $100 billion in taxes every year by setting up offshore tax shelters in places like the Cayman Islands, Bermuda and the Bahamas.  Ending that anti-American shell game could raise $1 trillion over 10 years toward deficit reduction.

In 2005, 1 out of 4 large corporations paid no income taxes at all even though they collected $1.1 trillion in revenue.  The simple truth is that if we are going to reduce the deficit in a responsible way, we have got to make sure that profitable corporations pay their fair share.

Now, I understand that my Republican friends, and quite frankly some of my Democratic friends, will do everything they can to protect the wealthy and the powerful, even if it means destroying the lives of millions of Americans in the process.

But, what we need to understand, what the President needs to understand, is that poll after poll after poll shows that the Republican plan to make savage cuts to Medicare, Medicaid and education, while providing even more tax breaks to the wealthy and large corporations, is way out of touch with what the American people want.

Let me just read to you a few of these polls.

According to a recent Boston Globe poll of likely voters in New Hampshire, perhaps the most anti-tax state in this country, 73% support raising taxes on people making over $250,000 a year; 78% oppose cutting Medicare; 71% oppose cutting Medicaid; and 76% oppose cutting Social Security.

Now, Mr. President, you may be saying to yourself well, that was just one poll, and it was only polling one state.  Clearly, that must have been an aberration.

Wrong.  National poll after national poll have almost mirrored what New Hampshire voters are saying.

A recent NBC News/Wall Street Journal poll found the following:

  • 81 percent of the American people believe it is totally acceptable or mostly acceptable to impose a surtax on millionaires to reduce the deficit.
  • 74 percent of the American people believe it is totally acceptable or mostly acceptable to eliminate tax credits for the oil and gas industry.
  • 68 percent of the American people believe it is totally acceptable or mostly acceptable to phase out the Bush tax cuts for families earning over $250,000 a year.
  • 76 percent of the American people believe it is totally acceptable or mostly acceptable to eliminate funding for weapons systems the Defense Department says are not necessary.
  • 76 percent believe it is totally unacceptable or mostly unacceptable to cut Medicare to significantly reduce the budget deficit.
  • 77 percent believe it is totally unacceptable or mostly unacceptable to cut Social Security to significantly reduce the deficit.
  • 67 percent believe it is totally unacceptable or mostly unacceptable to cut Medicaid to significantly reduce the deficit.
  • 77 percent believe it is totally unacceptable or mostly unacceptable to cut funding for K-12 education to significantly reduce the deficit.
  • 56 percent believe it is totally unacceptable or mostly unacceptable to cut Head Start.
  • 59 percent believe it is totally unacceptable or mostly unacceptable to cut college student loans.
  • And, 65 percent believe it is totally unacceptable or mostly unacceptable to cut heating assistance to low income families.

And, while the leaders of the Tea Party movement in Washington are fighting to dismantle Medicare and Medicaid and getting the vast majority of Republicans in Congress to follow their marching orders, 70% of those who identify themselves with the Tea Party outside of the beltway oppose cutting Medicare and Medicaid to reduce the deficit, according to a recent McClatchy Poll.

Mr. President, here is the last poll I would like to highlight.  It was done by the Washington Post and ABC News, and here is what it says:

  • 72% of Americans support raising taxes on incomes over $250,000 to reduce the national debt – including 91% of Democrats; 68% of Independents; and 54% of Republicans.

Yet, Mr. President, there does not seem to be one Republican in Washington, DC, who would support raising taxes on the wealthiest two percent of Americans – those earning over $250,000 a year to reduce the deficit.  Only in Washington is it considered a controversial idea to make the wealthy and large corporations pay their fair share.

Instead of listening to millionaire and billionaire campaign contributors, it is time for our leaders in Washington to start listening to the overwhelming majority of Americans who want the wealthiest people in this country and the most profitable corporations in this country to contribute to deficit reduction.  It is time for shared sacrifice.  The middle class, the elderly, the sick, the children, and the poor have already sacrificed enough in terms of lost jobs, lost wages, lost pensions, and lost homes.  When are the wealthiest Americans and most profitable corporations going to be asked to pay their fair share?  If not now, when?

And, the fact of the matter is, Mr. President, that moving towards deficit reduction in a way that’s fair is not quite as complicated as the American people have been led to believe by the corporate media and right wing think tanks.

In fact, if you are not beholden to Wall Street, large corporations and wealthy campaign contributors, and you are not scared to death of the unlimited number of 30 second ads they may run against you, it is actually quite easy.

I know many people have different ideas about how we might move towards a balanced budget.  I am not saying that I have all of the answers.  But, let me just give a few examples of how we can reduce the deficit by more than $4 trillion dollars over the next decade that asks the wealthy and large corporations to pay their fair share and does not unfairly harm ordinary Americans.

First, if we simply repealed the Bush tax breaks for the top two percent, we could raise at least $700 billion over the next decade.  The Republicans claim that repealing these tax breaks would increase unemployment.  They are wrong.  These tax breaks have been in place for over a decade and they have not led to a single net private sector job.  In fact, under the eight years of President Bush, the private sector lost over 600,000 jobs and the deficit exploded.  When President Clinton increased taxes on the top two percent, over 22 million jobs were created, and the revenue generated from this policy led to a $236 billion budget surplus.

Secondly, a 5.4 percent surtax on millionaires and billionaires would raise more than $383 billion over 10 years, according to the Joint Tax Committee.  As I said earlier, a millionaire’s surtax has the support of 81 percent of the American people according to NBC News and the Wall Street Journal.

Third, Mr. President, the U.S. government is actually rewarding companies that move U.S. manufacturing jobs overseas through loopholes in the tax code known as deferral and foreign source income.  This is unacceptable.  During the last decade, the U.S. lost about 30% of its manufacturing jobs and over 50,000 factories have been shut down.

If we ended the absurdity of providing tax breaks to companies that ship jobs overseas, the Joint Tax Committee has estimated that we could raise more than $582 billion in revenue over the next ten years.  Right now we have a tax policy that says that if you shut down a manufacturing plant in America, and move to China, the IRS will give you a tax break.  That may make sense to corporate CEOs.  It doesn’t make sense to me.

Fourth, Mr. President, if we ended tax breaks and subsidies for big oil and gas companies, we could reduce the deficit by more than $40 billion over the next ten years.  The five largest oil companies in the United States have earned about $1 trillion in profits over the past decade.  Meanwhile, in recent years, some of the very largest oil companies in America like Exxon Mobil and Chevron, as I pointed out earlier, have paid absolutely nothing in Federal income taxes. In fact, some of them have actually gotten a rebate from the IRS.  That has got to stop.

Fifth, Mr. President, if we prohibited abusive and illegal offshore tax shelters, we could reduce the deficit by up to $1 trillion over the next decade.  Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations.  The situation has become so absurd that one five-story office building in the Cayman Islands is now the “home” to more than 18,000 corporations.  That is wrong.  The wealthy and large corporations should not be allowed to avoid paying taxes by setting up tax shelters in the Cayman Islands, Bermuda, the Bahamas or other tax haven countries.

Sixth, Mr. President, if we established a Wall Street speculation fee of less than one percent on the sale and purchase of credit default swaps, derivatives, stock options and futures, we could reduce the deficit by more than $100 billion over the next decade.  Both the economic crisis and the deficit crisis are a direct result of the greed and recklessness on Wall Street.  Establishing a speculation fee would reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and significantly reduce the deficit without harming average Americans.

There are a number of precedents for this. The U.S had a similar Wall Street speculation fee from 1914 to 1966. The Revenue Act of 1914 levied a 0.2% tax on all sales or transfers of stock.  In 1932, Congress more than doubled that tax to help finance the government during the Great Depression. And today, England has a financial transaction tax of 0.25 percent, a penny on every $4 invested.

Number seven, Mr. President, if we taxed capital gains and dividends, the same way that we tax work, we could raise more than $730 billion over the next decade.  Warren Buffet has often said that he pays a lower effective tax rate than his secretary.  And, today the effective tax rate of the richest 400 Americans, who earn an average of more than $280 million each year, is just 18 percent, lower than most nurses, teachers, firefighters, and police officers pay.  The reason for this is that the wealthy obtain most of their income from capital gains and dividends, which is taxed at a much lower rate than work.  Right now, the top marginal income tax for working is 35%, but the tax rate on corporate dividends and capital gains is only 15%.  Taxing wealth and work at the same rate could raise more than $730 billion over a ten-year period – and it’s the right thing to do.

Number eight, if we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $70 billion over 10 years.  Last year, I introduced the Responsible Estate Tax Act that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans who lose a loved one would never have to pay a dime in federal estate taxes.

Number nine, we have got to reduce unnecessary and wasteful spending at the Pentagon, which now consumes over half of our discretionary budget.  Since 1997, our defense budget has virtually tripled going from $254 billion to $700 billion.

Defense experts such as Lawrence Korb, an Assistant Secretary of Defense under Ronald Reagan, has estimated that we could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.

For example, as a result of four separate investigations that I requested, the GAO has found that the Pentagon has $36.9 billion in spare parts that it does not need and which are collecting dust in government warehouses.  We have got to do a much better job than that.

And, much of the huge spending at the Pentagon is devoted to spending money on Cold War weapons programs to fight a Soviet Union that no longer exists.  That has got to stop.

Further, we also must end the unnecessary War in Iraq and the War in Afghanistan as soon as possible.  These wars have gone on long enough.  Reducing Pentagon spending by at least $900 billion over 10 years is something that we can and must do.

Number 10, if we required Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry, we could save over $157 billion over 10 years.  As a result of the Medicare Part D prescription drug legislation signed into law under President George W. Bush, Medicare is prohibited from negotiating with the pharmaceutical industry to lower drug prices for seniors.  This is wrong.  Requiring Medicare to negotiate for lower drug prices could save the federal government and seniors over $15 billion a year.

Number 11, if we enacted a robust public option or a Medicare-for-all health insurance program, we would be able to save more than $68 billion over the next decade and provide affordable health insurance coverage for millions of Americans.

Number 12, Mr. President, as almost everyone knows, China is manipulating its currency, giving it an unfair trade advantage over the United States and destroying decent paying manufacturing jobs in the process.  If we imposed a currency manipulation fee on China and other low wage countries, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.

Finally, Mr. President, I think just about everyone agrees that there is waste, fraud, and abuse in every agency of the federal government.  Rooting out this waste, fraud, and abuse could save about $200 billion over the next 10 years.

Mr. President, if we did all of these things we could easily reduce the deficit by well over $4 trillion over the next decade, if not much more.  It would be done in a fair way, and it would not unnecessarily and needlessly ruin the lives of millions of Americans who are struggling desperately just to make ends meet.

Mr. President, the radical right wing agenda of more tax breaks for the wealthy paid for by the dismantling of Medicare, Medicaid, education, nutrition, and the environment may be popular in the country clubs and cocktail parties of the rich and powerful, but it is way out of touch with what the overwhelming majority of Americans want.

Mr. President, as you know, late last week, Congressman Eric Cantor, the Republican Majority Leader in the House and Senator Jon Kyl, the Republican Minority Whip in the House walked out of the budget negotiations being led by Vice President Joe Biden.

And, the reason they walked out was clear.  They were not willing to close one single loophole in the tax code that allows the wealthy and large corporations to avoid paying taxes by stashing their money in the Cayman Islands.  They were unwilling to stop tax breaks for companies that ship jobs overseas, or close tax loopholes that give billionaires like Warren Buffet the ability to pay lower effective tax rates than their secretaries.

There is apparently no end as to how far the Republican leadership will go in Washington to protect their wealthy campaign contributors, even if it means allowing the federal debt limit to expire and causing another depression.

My sincere hope is that the President will use this Republican walkout as an opportunity to rally the American people and make it clear that he will never support Republican demands to move toward a balanced budget solely on the backs of working families, the elderly, the children, the sick, and the poor.

But, I don’t think that the President will do this unless the American people send him a message that enough is enough!  The American people have got to write to the President and tell him not to balance the budget on the backs of the most vulnerable people in this country.  Do not decimate Medicare, Medicaid, Pell Grants, education, and the environment to pay for more tax breaks for the rich and powerful.  Stand up for the millions, who have seen their homes, jobs, and savings vanish, instead of the millionaires, who have never had it so good.

For those of you who are listening to this speech, if you believe that enough is enough, if you believe in shared sacrifice, if you believe that it is time for the wealthiest Americans and most profitable corporations to contribute to deficit reduction, go to my website: sanders.senate.gov.  At this website, you will find a letter to the White House that you can sign – let me read what it says:

“Dear Mr. President,

This is a pivotal moment in the history of our country. Decisions are being made about the national budget that will impact the lives of virtually every American for decades to come. As we address the issue of deficit reduction we must not ignore the painful economic reality of today – which is that the wealthiest people in our country and the largest corporations are doing phenomenally well while the middle class is collapsing and poverty is increasing.  In fact, the United States today has, by far, the most unequal distribution of wealth and income of any major country on earth.

Everyone understands that over the long-term we have got to reduce the deficit – a deficit that was caused mainly by Wall Street greed, tax breaks for the rich, two wars, and a prescription drug program written by the drug and insurance companies. It is absolutely imperative, however, that as we go forward with deficit reduction we completely reject the Republican approach that demands savage cuts in desperately-needed programs for working families, the elderly, the sick, our children and the poor, while not asking the wealthiest among us to contribute one penny.

Mr. President, please listen to the overwhelming majority of the American people who believe that deficit reduction must be about shared sacrifice. The wealthiest Americans and the most profitable corporations in this country must pay their fair share.  At least 50 percent of any deficit reduction package must come from revenue raised by ending tax breaks for the wealthy and eliminating tax loopholes that benefit large, profitable corporations and Wall Street financial institutions.  A sensible deficit reduction package must also include significant cuts to unnecessary and wasteful Pentagon spending.

Please do not yield to outrageous Republican demands that would greatly increase suffering for the weakest and most vulnerable members of our society.  Now is the time to stand with the tens of millions of Americans who are struggling to survive economically, not with the millionaires and billionaires who have never had it so good.”

If you’re listening out there, and agree with what I am saying, but are wondering what you can do to make a difference, I would urge you to consider signing this letter.  Staying silent and doing nothing is not an option.  Your voice needs to be heard and you can make a difference.

Mr. President, we have seen this movie before.  The Republicans, led by their extreme right wing, have been successful in getting their way because of their refusal to compromise and their willingness to hold the good credit and economic security of the American people hostage.

In December, the Republican leadership was prepared to hold the middle class tax cuts and unemployment benefits hostage in order to extend the Bush tax breaks for the top two percent.  The Republicans won and as a result over $200 billion was added to the deficit over the next two years.

Specifically, the December tax cut agreement extended the Bush income tax rates for those earning more than $250,000; maintained lower tax rates on capital gains and dividends; and lowered the estate tax which only benefits the top 0.3 percent.

Let me remind, my colleagues who the biggest winners were from last December’s tax cut agreement.

According to Citizens for Tax Justice, extending the Bush tax breaks for the top 2 percent has provided Rupert Murdoch, the CEO of News Corporation, with an estimated $1.3 million tax break.

Tom Donohue, the head of the U.S. Chamber of Commerce, who has urged American corporations to ship jobs overseas, will receive an estimated $215,000 tax break from this deal.

Jamie Dimon, the head of JP Morgan Chase, whose bank received a bailout of over $160 billion from the Federal Reserve, will receive an estimated $1.1 million tax break from this deal.

Vikram Pandit, the CEO of Citigroup, a bank that got more than $2.5 trillion in near zero interest loans from the Fed, will receive an estimated $785,000 tax break by extending the Bush tax cuts.

Ken Lewis, the former CEO of Bank of America, a bank that got nearly a trillion dollars in low interest loans from the Fed, will receive an estimated $713,000 tax break.

The CEO of Wells Fargo (John Stumpf), whose bank got a $25 billion bailout, will receive an $813,000 tax break from this deal.

The CEO of Morgan Stanley (John Mack), whose bank got more than $2 trillion in low interest loans from the Fed, will receive a $926,000 tax break from this agreement.

The CEO of Aetna (Ronald Williams) will receive a tax break worth $875,000.

The CEO of Cigna (David Cordani) will receive a $350,000 tax break.  And, on and on it goes.

The rich get richer, the poor get poorer, and the middle class disappears.  That is what is going on in this country today.

Then, Mr. President, In April, the Republicans in Congress were prepared to shut down the government, disrupt the economy, and deny paychecks to 800,000 federal workers if they couldn’t get their way in slashing programs for low and moderate income Americans.  As a result, the President and this Congress agreed to virtually everything the Republicans wanted by enacting a budget that slashed $78 billion from the President’s request.

Let me give you just a few examples of what kinds of cuts were included in this year’s spending agreement:

At a time when college education has become unaffordable for many, Pell grants are now being reduced by an estimated $35 billion over 10 years.

At a time when 50 million Americans have no health insurance, at a time when we have a crisis in access to primary care, and at a time when 45,000 Americans die each and every year because they delay seeking care they cannot afford, the 2011 spending agreement cut $600 million from community health centers and $3.5 billion from the Children’s Health Insurance Program.

At a time when we should be putting Americans to work rebuilding our crumbling infrastructure, federal funding for new high-speed rail projects was eliminated.  In other words, the rich get richer, while the needs of ordinary Americans are attacked.

And, today, the Republican Leadership has made it clear that, unless they get their way on implementing a significant part of the Ryan budget in 2012, they are prepared to vote against raising the debt ceiling.  If the debt ceiling is not extended, the United States will, for the first time in history, default on its debt and likely plunge the world’s financial markets into a major crisis.  Yet that is just what the Republican leadership and its members are threatening to do.  Shame on them.

Mr. President, in many ways, the Republicans in Washington have been acting like school yard bullies.  And, as we know, bullying is a serious problem in our schools.  Every educator worth his or her salt will tell you that when you’re dealing with a bully, you must not give into their tactics or tolerate their temper tantrums – you have to deal with them sternly and consistently.  You cannot allow them to win by dictating the rules of the game and trampling over everyone else if they don’t get their way.

Mr. President, we have a serious deficit problem that must be solved, no one would deny it.

But the problem is not that we spend too much on the needs of the elderly and have to slash Social Security; the problem is that we have provided hundreds of billions in tax breaks to millionaires and billionaires who don’t need them and in many cases don’t want them.

The problem is not that we spend too much money on financial aid for college and have to slash Pell Grants.  The average college senior today is graduating with $24,000 in debt.  The problem is that each and every year, large corporations and the wealthiest in our society are avoiding $100 billion in federal taxes through tax shelters in the Cayman Islands, Bermuda and other places throughout the world.

The problem is not that we are spending too much on childcare.  Childcare is increasingly becoming out of reach for too many American families.  The problem is that about one out of four large and profitable corporations in this country do not pay any federal income taxes, and in many cases get a tax rebate from the IRS.

The problem is not that we spend too much money to reduce childhood poverty in this country.  We have the highest childhood poverty rate in the industrialized world!  The problem is that when all is said and done we will have spent $3 trillion on the unnecessary and misguided Iraq War.

Mr. President, the problem is that this deficit was caused by actions voted for by nearly all of my Republican friends: the wars, tax breaks for the rich, Medicare Part D, and the Wall Street Bailout.  In the middle of a recession when the middle class and working families are already hurting, when poverty is increasing it is not only immoral, it is bad economics to balance the budget on working families and the most vulnerable people in this country.

When people are hurting, when they have lost their jobs, when their incomes are going down, you do not say to those people: We are throwing you off Medicaid. We are going to end Medicare as we know it, we are going to cut back on Federal aid to education so your kid cannot go to college. That is not what you say in a humane and fair society.

On the other hand, at the same time as the wealthiest people are becoming phenomenally wealthier, and when large corporations are making huge profits, and in many cases not paying any taxes at all, it is entirely appropriate – in fact, it is a moral imperative – to say to those people: Sorry, you are also American. You have got to participate in shared sacrifice. You have also got to help us reduce the deficit.

That is where we are right now. We are at a pivotal moment in the midst of a major debate, but it is not only on financial issues. It is very much a philosophical debate. It is a debate about which side you are on. Do you continue to give tax breaks to the very rich and make savage cuts for working families, for children, the elderly, the poor, the most vulnerable?

Mr. President, another thing that is rarely mentioned on the floor of the Senate is the $3 trillion Federal Reserve bailout, that was only fully made public after I inserted an amendment into the Dodd-Frank Act last year to require that it be made public.

As it turns out, while small business owners in the State of Vermont and throughout this country were being turned down for loans, not only did large financial institutions receive substantial help from the Fed, but also some of the largest corporations in this country also received help in terms of very low interest loans.

And, here is something we also learned: this bailout was not just about American banks and corporations but foreign banks and foreign corporations also received hundreds of billions of dollars from the Fed as well.

Then, on top of that, a number of the wealthiest individuals in this country also received a major bailout from the Fed. The “emergency response,” which is what the Fed described their action as during the Wall Street collapse, appears to any objective observer to have been the clearest case that I can imagine of socialism for the very rich and rugged free market individualism for everybody else.

In other words, if you are a huge financial institution, like Goldman Sachs, whose recklessness and greed caused this great recession, no problem. You get almost $800 bilion in near zero interest rate loans from the Fed.  If you are a major American corporation, such as General Electric or McDonald’s or Caterpillar or Harley-Davidson or Verizon, no problem. You received a major handout from the U.S. Government.

But if you are a senior citizen living in a nursing home paid for by Medicaid, well, guess what, you are on your own.

If you are an elderly person who cannot afford to heat their homes in the winter when the temperature is 20 below zero, tough luck.  We don’t have any money for you.  But, if you happen to be the state-owned Bank of Bavaria — not Pennsylvania, not California, but Bavaria — the Federal Reserve has enough money to loan you over $2.2 billion by purchasing your commercial paper.

The Fed said this bailout was necessary in order to prevent the world economy from going over a cliff.  But over 3 years after the start of the recession, millions of Americans remain unemployed and have lost their homes, their life savings, and their ability to send their kids to college.  Meanwhile, huge banks and large corporations have returned to making incredible profits and paying their executives record-breaking compensation packages, as if the financial crisis they started never occurred.

Mr. President, everyone understands that over the long-term we have got to reduce our record-breaking $14.2 trillion national debt.  But, we must reduce the deficit in a fair way and not balance the budget solely on the backs of the middle class, the sick, the elderly, the children and the poor.

That means we absolutely must tell the wealthy and large corporations that it is high time that they to pay their fair share in taxes.  And, that means that the President has got to stand tall and stand firm and let the American people know that if we do default on our debt obligations, if America and the world economy is plunged into a depression, it was because the Republicans refused to raise the taxes of the wealthiest Americans and most profitable corporations in this country by one red cent.

Shared sacrifice isn’t just good public policy, it is also what the American people want.  Overwhelming majorities of the American people believe that the best way to reduce the deficit is to end tax breaks for the wealthy, big oil, Wall Street, and that we must bring our troops home from Afghanistan and Iraq.

It’s about time that Washington listened to the American people.  Let’s reduce the deficit.  But, let’s do it in a fair and responsible way that requires shared sacrifice from the wealthiest Americans and most profitable corporations.

I thank the President and I yield the floor.