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The Great Neocon Budget Hoax

August 9th, 2010 · 2 Comments · Capitalism, Economics, Lobbying, Politics, Populism, taxes, Wall Street

Representative Paul Ryan, Neocon-Republican of Wisconsin, has laid out an economic plan for the future of the country. The problem with his plan, however, is that it makes several flawed assumptions.

First of all it assumes that the American People will never figure out that tax cuts for those in brackets from over $350,000 a year up to a billion will provide monetary benefits to them but that those benefits will never return in any measurable way to the economy. The bi-partisan Congressional Budget Office, truly non-partisan, has demonstrated and issued a report, under a former Bush Republican boss, that tax cuts do not pay for themselves. Tax cuts remove revenues and do not replace them. Simple as that.

In that report, the CBO says that–at most–they could generate 1% more than they cost in revenue to the government. As far as recovering their actual costs, the most we can get back for every dollar we give away to the richest Americans is 22 cents.

That is why Alan Greenspan, now after decades of making assumptions and running the Federal Reserve based on those assumptions, when asked if tax cuts pay for themselves, said: “No. They do not.” Period.

So why would Paul Ryan as the front man and the rest of the Republicans come out with such an outrageous falsehood? Well, first of all, the entire Reagan revolution was based on the idea that tax cuts will stimulate the economy and pay for themselves many times over. This was an idea, still held by many, especially those stalwart economists, Rush Limbaugh and Glenn Beck, first promulgated by an economist named Arthur Laffer, not particularly highly estimated, but given credibility through the support of Nobel-prize winner Milton Friedman.

It was the theory that if you cut taxes it would stimulate the economy and the more you cut the better it would be for the economy. Well, it was tried through Reagan, Bush I, Clinton (to some degree) and Bush II. And the result was a cumulative $13 trillion deficit…all of it caused by the very people Paul Ryan is fronting for…the Neocons. So where did the money go?

The $13 trillion was largely the accumulated value that went to the rich from the tax cuts. About $3 trillion was war, unpaid for. About $2 trillion is the cost of this recession we are now in. What do you think happens when the stock market crashes and 700,000 jobs a month are being lost…five million jobs in the last 9 months of the Bush Administration?

Do you think that unemployed people who were making $75,000 a year and suddenly only got a few hundred bucks a week were still active taxpayers? What about the tens of thousands of companies that were struggling before and the Bush Recession forced them out of business? Those taxes were gone.

But the needs of the People from the government go up. Result: $2 trillion in unemployment payments and lost tax revenues added to the $3 trillion already lost from the 2001-2003 tax cuts, added to the $3 trillion costs of two wars that have gone on for 8 years. Add that to the $5.6 trillion that Bush had when he came in. …that as has been said….never comes back. That gives you your $13 trillion in debt.

So now Ryan’s Party, doing a reverse Robin Hood, stealing from the poor and the middle class to give to the rich…wants to continue it. He wants to make the Bush tax cuts permanent. So now you would lose even more money…this time they say it would be something like another $4 trillion.

Ryan, hoping that no one will really look into what he is saying, says that, first of all, he wants to maintain the country’s “historic levels of revenue.” It is pretty clear that in times of emergency…until now when we have Neocons in power who say that we can have all the wars we want and still cut taxes…this country has always raised taxes on the wealthiest individuals, to more than 90% top marginal rate.

Here is the Neocon Republican logic…and this is really it…this is it exactly. Cut taxes on the very wealthy. That will reduce revenues. In order to make up for those cuts in revenues, move the retirement age for Social Security up to 70. That still won’t pay for all the money in tax breaks given away to the rich nor will it pay for the war debts…all of which add up to about $11 trillion. Nor will it get us out of the Bush Recession, which cost us another $2 trillion.

But then, they say, Medicare and Medicare are “unsustainable.” What does that mean exactly? It means this–and this is the truth. It means that when we were running up all these debts because we were giving big rebates to the very rich, and when we were then taking in less than the costs of running government, we removed from the Social Security fund, the surpluses that had been there from 1984 through 2008. Those were the funds that were done to provide retirement for the Baby Boomers.

The money literally went out of Social Security funds and into the pockets of the rich. It is no more complicated than that. Those are the facts. Of course the Republicans continued to spend at the same rates or more…government contractors got huge, multi-billion-dollar contracts and if they didn’t they cried that the Democrats were not “supporting the troops,” and were “unpatriotic.”

Ryan brushes over the income part by saying that “If needed, adjustments can be easily made to the specified rates to hit the revenue targets and maximize economic growth.” Let’s see. That is like saying that we can bind up Brett Favre’s arms and legs and he will still hit the same passing targets as he projected before the game. We have not been able to raise revenues by one dollar since Clinton. During during Clinton, only the vote of Al Gore in the Senate was able to overcome the votes against raising revenues by the Republicans. He raised the top rate and had budget surpluses.

So is Ryan a liar? Yes. Of course he’s lying. He can’t do any of this and being an economist, he knows it. So yes, he’s not stupid. It’s a lie…all of it.

He says that what we need to do is to “get spending in line with revenue.” We haven’t increased spending on Social Security. It is legislated to reach a certain number of people and it does. It doesn’t suddenly pay them some huge bonus.

Medicare and Medicaid costs have increased not only because of more people on them… a problem that more jobs will help solve…but because the health care providers, the private hospitals, clinics, health insurance companies and doctors, particularly specialists, are charging a fortune. The new health care bill will reduce that and a public option would remove half the costs in a year. We have more people in Social Security, but actuaries plan for these things. The Neocons get on the air and tell the uneducated that this just happened yesterday. What did happen, that they won’t tell you, is that the money that was supposed to be there–plenty of money–was removed for tax cuts and other things like…wars…which are expensive.

We can’t raise taxes, Ryan says. Nonsense. That coming from a man whose Party has bankrupted the country by giving tax breaks to the rich, cutting government spending by 50% at one point and allowing a shortfall of an average of about $600 billion a year for the most recent 22 years of Republican governments, in particular that of George W. Bush from 2001 up to 2009.

Before Ronald Reagan came to office, we had a great economy, prosperous people, a growing number of people attending college, a nearly living minimum wage, more good union jobs with pensions on which people are retired comfortably to this very day…and a top marginal tax rate of 74%. We had a negligible amount of debt as a percentage of GDP. Ryan’s job is to distract you from the fact that we have the lowest volume of revenues going into the Treasury from taxes since 1950, when we only had half the population.

You are being lied to, at point blank range. Ryan and the Neocons are not only wrong, they are lying. And we know why. They are supported by the very, very rich, by huge international corporations and their CEOs like Rupert Murdoch, who owns Fox News and by big oil, pharmacy, mining and health care companies. What is the difference between $17 and $7? What is the difference between $7 and $.50? As long as Neocon Republicans can keep you from thinking about the fact that they are taking the spread on those numbers, $10, $6.50, or $16.50 times the number of workers in this country, times the number of hours they work each week, each month and each year….and putting that spread in their pockets, then Paul Ryan and the Necon Republicans have done their job for the corporations.

They are also supported by a certain segment of the super-rich who continue to lobby for lower taxes and for doing away with inheritance taxes so that a handful of people who never worked and never will can have hundreds of millions of dollars handed to them absolutely free.

How do we know this? We know it from their actions. The Neocons have prevented, by filibuster, a green jobs bill that would have created at least 500,000 new jobs but would have hurt the oil companies. They voted against allowing Medicare to ever negotiate better drug prices with pharmaceutical companies because the drug companies are their constituents. Billy Tauzin did the deal and the deal he got was a $2 million a year contract as head of the Pharmaceutial Association’s lobbying group. They are blatant, not the least bit graceful. They didn’t care because they owned Bush, Cheney and all the rest, including Tauzin.

The Neocons voted against unemployment benefits for American laid-off workers because the Democrats couldn’t find among all the dozens of spending cuts they offered to Republicans, ones that were acceptable. Why? Unemployment is good for large corporations. It creates a much more willing group of workers who will eventually do anything for any pay scale being offered. It is basically a return to pre-union days. Remember if they can pay $7 instead of $17 the difference goes in their pockets. And the top 1% own two-thirds of all the stock in all the corporations in America.

In their most recent effort to hurt the American People, the Neocon Republicans voted against health care benefits for the first responders to 9/11 who have become disabled from lung damage as a result of the dust particles that entered their lungs as they climbed the stairs to save the lives of as many people as possible before the buildings collapsed. Why would they do something like that? There must be some logical reason. They say that it is too expensive and that the big national debt (which they caused…$7 trillion in the last 8 years) will bring down the country.

So the Democrats offered a dozen different cuts and revenue raising propositions. But the only revenue generator the Democrats could find in the end was the logical one of eliminating the tax break given by Bush and Cheney to the American corporations who locate in the Cayman Islands. There are literally 26,000 U.S. international corporations who pay no taxes because they simply move their headquarters (nominally) to the Cayman Islands. So all the Neocon-Republicans voted to keep the tax breaks for big corporations and do nothing…absolutely nothing…to help the firemen, police and other people who responded to the 9/11 tragedy. Many of these people will die without special medical attention to a unique problem.

There are many ways to increase government revenues and there are many areas where we can improve government efficiency while cutting costs. We could start with the military industrial complex. We are 5% of the world’s population but we spend more than all the other nations of the world combined in military hardware and military support functions. We could easily….easily…cut two hundred billion dollars a year from the military budget and still have the world’s leading military force by a huge margin.

There is nothing new in the Neocon plan. Their whole idea is to throw out potential solutions that have no basis in reality. Then they call them something entirely different, like a plan to “reduce the enormous growth in entitlement programs.” Of course, the entitlement programs only grow at the pace of the population. The actuaries at Social Security are the best in the world. They are the ones who said for a long time…until we fixed it 20 years ago, that we will need to cover the post-WWII babies, the so-called “baby boomers.” That was done in the mid-1980s. Then the Neocon Republicans stole the money for wars and tax cuts. It sounds repetitious because it is true, and should be repeated over and over.

So we’ve known about the baby boomers for at least 40 years and have made those projections right along with all the other projections by private industry and private insurance companies. It’s not new. What is new is the current Neocon attempt to use their vast media network to pound away at the lie that we have an unsustainable social safety net. We don’t.

What we have is a revenue shortfall caused by un-paid-for tax cuts that caused deficits in at least 25 of the last 28 years. The richest one percent have gone from owning about 20% of the assets of the country in 1979 to owning about 40% today, including 64% of all corporate stock. In the last ten years they have made income gains of over 150% while the lower half of the country has not even hit a 25% increase in income. Those aren’t conjecture. They are hard statistics that come out of the Bureau of Labor Statistics.

CEOs make 300 times what the average worker makes. So if the average worker makes the U.S. average of about $40,000, then the average CEO makes $12,000,000. In the health care industry it is $14,000,000. And we have 15 million who make nothing at all and another 15 million who can’t find full time work. So, should we hold a person who has a manual labor job and is beginning to feel the effects of some illness or a hip problem from retirement until 70 so that some CEO who makes $15,000,000 a year can avoid taxes? The Neocons will tell you yes. It is their philosophy. Whatever you can get away with is fair. Being a corporate societal deviant is not punishable by law, so take what you can get, they will say. Not that way, of course.

This is no time in our history to begin to raise Social Security age eligibility or raise fees on Medicare or cut Medicaid payments to the states. This is the time to raise taxes on the rich. Call it class warfare or call it Yankee Doodle Dandy…who cares? But it is time to take the country back for the middle class. The Neocon proposal, just as the austerity plans of all the Right-Wing embedded Presidential commissions, are fake.

The wealthy, including those who got away with the money and didn’t go to jail during the Savings and Loan crisis, those who made huge fortunes and didn’t go to jail during the Wall Street crisis, the military contractors who cheated us of billions during Iraq and Afghanistan, and all the other corporate cheats, who made money on Enron and all the other companies that cheated American stockholders and taxpayers–it is their time in the barrel. We need to say: now it is your turn to step up for this country. It is time to give back to the U.S. a big hunk of those tens of millions so that this country can resurrect its economy and put people back to work.

Don’t believe in the idea that we have to cut what we have all paid into as members of society so that we can make room for $120,000 per year tax cuts to households who make $1,000,000 per year. That is nuts. The Neocons, and Rep. Ryan know it is nuts, but they won’t stop until you tell them that they are not fooling you any more. It is time for the Neocon supporters to step up to the window and start paying their fair share.

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2 Comments so far ↓

  • ultrasound technician

    What a great resource!

  • andrew martin

    neocons have been after entitlements long before the Reagan administration – and their political social and economic hegemony extends even further back – to the antebellum south (it was the conservative Democrats who insisted on maintaining slavery as a sacrosanct institution) – the only real break from the “conservative” economic strangle hold came after the economic disaster of the 20’2 and 30’s with the new deal initiatives of the FDR. unfortunately many have gone the way of Glass Stegal, but the barons are still unsatisfied. good article.