Tuesday, March 11, 2014

NATIONAL DEBT CRISIS IN PERSEPCTIVE

The debt crisis is not hard to understand. With understanding, the prediction is that it will get worse. To put these statements in perspective, we have to go back to a tremendously important book, Shock Doctrine written by Naomi Klein. She explains how “advantage takers” work. She frames her story in terms of international economic crises, which reflects financial institutions; in that context, financial institutions mean World Bank and International Monetary Fund. She points out that people can easily translate this into domestic political terms. Either nationally or internationally, the fundamental thinking is straightforward; the greater the crisis, the more people are willing to accept things they normally would not even consider under normal circumstance. This is easy for us to understand at a country level because it is the same at the personal level. You often see it manifested in the form of headlines such as “Unemployed father of three arrested for attempting to rob a bank” or “Homeless Yale graduate sleeps on street”. This behavior is in responses to crisis.

Politically, in 1935, when President Roosevelt initiated his program, all liberals and a majority of conservatives agreed that Social Security is a good program and accepted the truth, which was that the program essentially eliminated old age poverty. To me as a Democrat is a good thing. The program was structure in such a way that workers paid in so others could retire on the premise that when it came time for them to retire the money would be there because the incoming generation would pay for their retirement. The government in the form of the U.S. treasury guaranteed capitalization of the program by holding a large percentage but loaning much of the accumulated money to financial institutions such as commercial banks. The Social Security money investments had a low rate of return but these types of loans were the safest for of investors. From beginning to end, this strategy proved correct over time—80-years.

However, for politicians, to having a pot of money setting there was too tempting. They worked and manipulated until they found a way to move it into the markets but like banks, it was the law they had to hold a large amount in reserve. Obviously, the more the bankers, or in this case the politicians, could loan, the greater the return so they cut the amount need to be held in reserve. It should not be surprising that the politicians loaned the money to programs that benefitted people who would vote for the politicians. This is slight of hand economics; the politicians loaned the Social Security reserves to other government programs. That is politicians were spending money meant for retirees. In summary, the Social Security program everyone loves remained intact while politicians receive credit for providing social program or the pentagon with operating money—in other words; they received credit for saving the program while they jeopardized  its solvancy.  

Conservatives hate the program because they claim it is socialism. The truth is that workers pay their own way. In addition, it was a mandated for employees to contribute to a workers pension; therefore, they treated that as a pay raise, which it was. It was a great victory for conservatives to have the Social Security payroll deduction, including their “wage” contribution, labeled as a ‘tax”; of course everyone hates taxes.  

In addition to condemning Social Security as a socialistic program, a Republican sees all that reserve money setting there earning a low of return, is like our Gov. McCrory sees what he imagines to be  great amounts of natural gas obtainable by fracking as a deplorable waste. To a conservative the environment can go to hell is there they see they can make a dollar, so it is with Social Security reserves. If they can privatized it, Wall Street brokers would make billions of dollars investing that money into stocks and risky bonds; as most people know the more risky the investment the higher the return. George W. Bush was blatant in his attempts to do just that. The votes were just not there because to many people, both Conservatives and Democrats, think it is a good program. Everyday, if you care to listen, you can hear conservatives claim that Social Security reserves are depleted, that the only way to save Social Security is to privatize it, and that the best way to treat retirees correctly is to invest in the stock market where they will receive a rate of return on their money they deserve.

The more radical right wing maintains it is socialism, and as such has not place in “their America”; this part of their “take back America” logic. Therefore, given the chance, they would use the Vietnam  village logic: they  would argue that they have to destroy it to save it. The truth is that the reserves are not depleted, that the; program is not going broke, and while it is true there could be a higher rate of return on investment, we can not risk old age poverty to the wild fluctuations of the stock market.

The only way Republicans could possible achieve their goal is to create a Naomi Klein level crisis, which would cause them to vote against their own interest; like a 17 trillion dollar national debt; that is every person in the United States “personally” owes an alarming $53,000. Can you pick up a conservative article, or listen to a conservative radio host, or watch a right wing TV show, and not hear repeatedly that we have a great economic crisis several times and hour; the country is on the verge of ruin. The only way to save America they say is to destroy all the social programs to pay the debt.

The way they created a crisis was to fight an unfunded war, cut taxes on the rich, impoverish the working class so they cannot pay any taxes, and shift all the money to people on the top, who then buy politicians to prevent raising taxes on those who can pay; that is a plutocracy; that is Reaganomics; that is Republicanism. Are you tied of being told it is both Republicans and Democrats; when all you have to do is count those who against you. No, it is not both; it is republicans. We are paying dearly for the years 1981 to 1989.

Have you seen the debt clock ticking away your economic doom? Did that relentless ticking cause you to panic? Are you now willing to vote against your own interest to save your county as a patriotic American? Assuming you are working class, are you ready to vote so you can live in poverty in the richest country in the world. Are you ready to live without health Insurance to do so? Do you want to see old people bagging on the streets or people who should be in institutions walk about the streets?  Do you want to try to live on $7.25 an hour and then be accuse do being irresponsible because you did not save for your retirement.
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