Saving Social Security: Stopping Obama's Next Bad Deal
by: Dean Baker,
t r u t h o u t: 20 December 2010
President Obama insists that he is a really bad negotiator, therefore, the
deal he got on the two-year extension of the Bush tax cuts and the one-year
extension of unemployment insurance benefits was the best that he could do.
This package also came with a one-year cut in the Social Security tax.
This cut will seriously threaten the program's finances if, next year, the
Republican Congress is no more willing to end a temporary tax cut than this
year's Democratic Congress.
The logic here is straightforward. Under the law, the Bush tax cuts were
supposed to end in 2010. Tax rates returned to their pre-tax cut levels in
2011. However, the Republicans maintained a steady drumbeat about the evils
of raising taxes in the middle of a downturn, even if the tax increase would
just apply to the richest 2 percent of the population.
As we saw, President Obama and the Democratic Congress could not muster the
votes needed to overcome the Republicans and ended up extending the tax cuts
for the richest 2 percent of the population. The Democrats will be faced
with a similar situation at the end of 2011 when the Social Security tax cut
is scheduled to expire, except that, this time, the tax cut in question will
apply to an overwhelming majority of working people.
Also, the House will be controlled by the Republicans and the Senate will be
considerably less Democratic. This raises the possibility, if not the
likelihood, that the tax cut will remain in place indefinitely, more than
doubling the size of Social Security's projected long-term shortfall.
Before we even get to this juncture, the Republicans will have another
opportunity to impose a really bad deal on President Obama. Sometime in the
spring, the government will run up against its debt ceiling. This will
prevent the government from any further borrowing.
Since the government has a substantial deficit, with spending exceeding
revenue, hitting this limit would mean that the government would not have
sufficient funds to pay for all its programs. It also would mean that the
government could not pay interest or principal on debt that is coming due;
in effect requiring it to default on its debt.
The prospect of the US government defaulting on its debt creates the sort of
end-of-the-world scenario in which Congress rushed to pass the TARP in 2008.
Back then, President Bush, Fed Chairman Ben Bernanke, and all sorts of other
luminaries told members of Congress and the public that we would have a
second Great Depression if the Wall Street banks were not immediately bailed
out, no questions asked. And the money flowed.
The prospect of defaulting on the debt will create a similar outbreak of
shrill warnings of disaster. This would likely to lead to scenario in which
President Obama signs whatever debt ceiling package House Republicans hand
him, even if it includes the privatization of Social Security and Medicare
and major cuts and/or elimination of other important programs. The argument
from the administration will be that they have no choice.
In order to avoid this train wreck, supporters of Social Security and
Medicare have to restructure the options. They have to push President Obama
to announce in advance that he will never sign a debt ceiling bill that
includes cuts to Social Security and Medicare, the country's two most
important social programs.
These programs are crucial to the financial security and health of tens of
millions of people. If there are to be changes in these programs, then they
should occur after a full public debate in the light of day, not as the
result of Republican trickery and parliamentary game playing.
This would be a hugely popular position since not only Democrats, but also
independents and even Tea Party Republicans, overwhelming support Social
Security and Medicare. Furthermore, the gun, in the form of a potential debt
default, is actually pointed at the Wall Street banks, not the public.
A debt default would be a very bad situation and one that we absolutely
should try to avoid. But the day after the default, the country would still
have the same capital stock and infrastructure, the same skilled labor force
and the same technical knowledge as it did the day before the default. In
other words, the ability of our economy to produce more than $15 trillion in
goods and services each year will not have been affected.
One thing that would not be around the day after a default is Wall Street.
The default would wipe out the value of the assets of the Wall Street banks,
sending Goldman Sachs, Citigroup, and the rest into bankruptcy. The recovery
for the economy from such a situation will be difficult, but the
shareholders of the Wall Street banks would be wiped out and their top
executives unemployed.
For this reason, the threat of a default is a gun pointed most directly at
Wall Street. Given the power of Wall Street over Congress, it is
inconceivable that they would ever let the Republicans pull the trigger.
This means that, if President Obama is prepared to take the right and
popular position of supporting Social Security and Medicare, he will win.
This is both good policy and great politics. The public just has to force
President Obama to stand up and show some leadership.
***
http://www.informationclearinghouse.info/article27122.htm
Cambodia Redux
"Nixon adopted this tactic in Vietnam.
It won't work any better now than it did then"
By Patrick Cockburn
December 23, 2010 "The Independent" - -Could US Special Forces make a lunge
across the Pakistan border in pursuit of the Taliban just as American and
South Vietnamese troops briefly invaded Cambodia in pursuit of the Vietcong
and North Vietnamese forces in 1970?
The precedent is not good. What US officers have in mind for the Pakistan
border regions is much smaller in scale than President Nixon's venture, but
is unlikely to be any more successful. Possible military gains are limited,
while the danger of a political backlash is acute.
American frustration is great, because so long as the 2,500km
Afghan-Pakistan border remains open, the Taliban can retreat to relatively
safe havens to rest, re-equip and re-supply. Their fighters can recover from
every tactical setback. It was this open border that prevented the Soviet
army from crushing the Afghan guerrillas in the 1980s.
But would forays by US Special Forces or associated American-controlled
Afghan militias really make much difference?
Even if it wanted to, the Pakistan military could hardly police a frontier
through mountainous terrain that is as long as the distance from London to
Moscow. Moreover the hinterland, of which the Taliban takes advantage, is
not confined to the Federally Administered Tribal Areas or the border of
Baluchistan. It extends into a much wider area and includes the vast city of
Karachi, with its population of 17 million and sizeable Pashtun minority.
The purpose of the leaks may be to intimidate the Pakistan army into being
more co-operative with the US in making a ground attack on North Waziristan,
seen by the US as the main redoubt of al-Qa'ida and the Haqqani network.
So far the Pakistan army has resisted this and there is no evidence it is
going to change its mind.
The US often focuses its criticism of Pakistan's security policy on the ISI,
Pakistan's military security agency, or even pro-Taliban "rogue elements" in
it, but in practice, covert support for the Taliban is the policy of
Pakistan's 600,000-strong army. Most ISI personnel are regular officers on
secondment to the agency.
The White House under President Obama has long been aware that its main
problem in the region is with Pakistan, but it has yet to find a way of
dealing with it. Military aid - and the US pays a third of Pakistan's
military budget - has produced a modicum of Pakistani compliance with US
needs, though not enough to tip the balance against the Afghan Taliban.
The army has been prepared to act against the Pakistan Taliban, which it
sees as being entirely different. The main military action of the US in
Pakistan is through CIA-controlled drones which take off from a base in
Pakistan and have been effective.
The CIA also has a 3,000-strong Afghan army of its own across the border in
Afghanistan.
The drones are only as effective as the intelligence on which their
targeting is based and the CIA has built up an intelligence network in
border areas.
At the same time ISI officers claim privately that up-to-date information
enabling the drones to attack the houses and vehicles of militants comes
from them.
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