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September 20, 2010

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Paul Krugman: The Angry Rich

Posted: 20 Sep 2010 01:17 AM PDT

The "rage of the rich" is broadening and intensifying:

The Angry Rich, by Paul Krugman, Commentary, NY Times: ...These are terrible times for many people in this country. Poverty, especially acute poverty, has soared in the economic slump; millions of people have lost their homes. Young people can't find jobs; laid-off 50-somethings fear that they'll never work again.
Yet if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won't find it among these suffering Americans. You'll find it instead among the very privileged, people who don't have to worry about losing their jobs, their homes, or their health insurance, but who are outraged, outraged, at the thought of paying modestly higher taxes.
The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. ... When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him.
Now, however, as decision time looms for the fate of the Bush tax cuts ... the rage of the rich has broadened, and ... craziness has gone mainstream. It's one thing when a billionaire rants at a dinner event. It's another when Forbes magazine runs a cover story alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, "anticolonialist" agenda, that "the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s." When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply.
At the same time, self-pity among the privileged has become acceptable, even fashionable. Tax-cut advocates used to pretend that they were mainly concerned about helping typical American families. Even tax breaks for the rich were justified in terms of trickle-down economics, the claim that lower taxes at the top would make the economy stronger for everyone.
These days, however, tax-cutters are hardly even trying to make the trickle-down case. ... Instead, it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet.
And among the undeniably rich, a belligerent sense of entitlement has taken hold: it's their money, and they have the right to keep it. "Taxes are what we pay for civilized society," said Oliver Wendell Holmes — but that was a long time ago.
The spectacle of high-income Americans, the world's luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way. Never mind the $700 billion price tag for extending the high-end tax breaks: virtually all Republicans and some Democrats are rushing to the aid of the oppressed affluent.
You see, the rich are different from you and me: they have more influence. ... And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they'll say; we all have to be willing to make sacrifices.
But when they say "we," they mean "you," Sacrifice is for the little people.

Older Workers: Fears of Never Working Again

Posted: 20 Sep 2010 01:08 AM PDT

What does this say about plans to increase the age at which Social Security recipients can retire with full benefits (as opposed to other solutions such as raising the income cap that are progressive rather than regressive)? This is a worry in normal times as well, but what will we do when there's a recession and large numbers of the elderly but not yet retired cannot find jobs no matter how hard they try?:

For the Unemployed Over 50, Fears of Never Working Again, NY Times: ...Since the economic collapse, there are not enough jobs being created for the population as a whole, much less for those in the twilight of their careers.

Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. ... After other recent downturns, older people who lost jobs fretted about how long it would take to return to the work force and worried that they might never recover their former incomes. But today, because it will take years to absorb the giant pool of unemployed at the economy's recent pace, many of these older people may simply age out of the labor force before their luck changes. ...

Older workers who lose their jobs could pose a policy problem if they lose their ability to be self-sufficient. "That's what we should be worrying about," said Carl E. Van Horn, professor of public policy and director of the John J. Heldrich Center for Workforce Development at Rutgers University, "what it means to this class of the new unemployables, people who have been cast adrift at a very vulnerable part of their career and their life."

Forced early retirement imposes an intense financial strain, particularly for those at lower incomes. ... But even middle-class people who might skate by on savings or a spouse's income are jarred by an abrupt end to working life and to a secure retirement. ...

People need jobs, or more social support until jobs appear, and both the Congress and the Fed are failing to do all that they can do to help. Apparently, imagined fears of deficits and inflation are more important than the real struggles of the unemployed.

"GOP Aims to Erode White House Agenda"

Posted: 20 Sep 2010 12:24 AM PDT

Will this promise from the GOP to be as obstructionist as possible (what's new?), particularly with health care legislation, backfire? :

GOP Aims to Erode White House Agenda, WSJ: Eyeing a potential Congressional win in November, House Republicans are planning to chip away at the White House's legislative agenda—in particular the health-care law—by depriving the programs of cash. ... Rep. Paul Ryan (R., Wis.), who could potentially chair the House budget panel, says the GOP must show it's 'serious about limiting government.' ...
A vote in the House to repeal the health-care overhaul would be among the GOP's top priorities. Republican leaders are also devising legislative maneuvers that might have a bigger impact, using appropriations bills and other tactics to try to undermine the administration's overhaul of health care and financial regulations and its plans to regulate greenhouse gases. GOP leaders also hope to trim spending, return unspent stimulus funds and restore sweeping tax cuts.
Business groups have compiled lists of impeding regulations they hope to see stopped under a GOP House majority. ...
At its core, the GOP plan will focus on spending and whittling away the health-care law, the Democrats' landmark achievement, which extends insurance to 32 million Americans. House Republicans say a full repeal would pick up a few Democratic votes, but acknowledge the effort would fail in the Senate.
Instead, they plan other means to chip away at it, by trying to choke off appropriations funding for key pieces, since House approval is required to pass such spending.
Republican congressional aides and advisers say their focus would including blocking funding to hire new Internal Revenue Service agents, who are needed to enforce the law's tax increases. They also would consider barring spending for a new board that approves Medicare payment cuts as well as on research that compares the effectiveness of medical procedures.
Other potential targets include funds to pay for a long-term care insurance program and money to help states set up insurance exchanges where consumers will be able to use tax credits beginning in 2014.
"By having the capacity to block funding for it, you get to very much shape how it turns out," said Douglas Holtz-Eakin, a director of the Congressional Budget office under Mr. Bush.

Republicans would also bring to a vote measures that attack the law's least popular parts, including the requirement that most Americans carry health insurance and cuts to payments for privately run Medicare plans. Such other stand-alone bills would struggle to get through the Senate. But House Republicans say they will bring them to the floor anyway to pave the way for a broader attack on the health law should they recapture the White House in 2012. ...

There don't seem to be any new ideas here, just a promise to undo what's been done since the Republicans lost power. Why would we want to return to the policies that brought us a stagnant middle class even in the best of times, widening inequality, out of control financial markets, the biggest recession in recent memory, declining rates of health care coverage, threats to Social Security and to social insurance more generally, tax policies that reinforce trends in inequality and create big holes in the budget (amid false claims that tax cuts more than pay for themselves), and two wars whose total costs to the nation go far beyond the large budgetary costs that have brought programs such as Social Security and Medicare -- programs vital to middle and low income households -- under increasing financial pressure?

links for 2010-09-19

Posted: 19 Sep 2010 11:01 PM PDT

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