Saturday, December 18, 2010

Goodbye, Social Security, Hello Screw Deal

Under the Screw Deal between President Barack Obama, most of the Republican Party members of Congress, and most of the Democratic Party members of Congress, the Social Security payroll deduction is being cut by 2%. One might wonder why, after two decades of official government moaning about Social Security being endangered by insufficient funding, they would choose to reduce funding. The only logical answer is they intend to dismantle Social Security; this is the first step.

Where is the public outrage? Workers are happy to have a slight reduction in the Social Security tax in 2011, and seniors already on Social Security are not too worried. The crisis is probably still about a decade away. Everyone is too worried about the short term to worry about the long term. Retired workers will starve some time in the future, but they have no political representation to speak of. Certainly the Democratic Party gave up representing workers decades ago.

Everything is going according to plan, if you are rich. The rich shall pay no taxes. And I really mean no taxes, because even though rich people in theory pay a 15% long term capital gains tax, in reality they can delay payment forever. The other taxes rich people pay, the ones that everyone pays like sales tax, are trivial to them.

A lot of government spending is ongoing, but no one wants to pay for it. Current Social Security taxes pay for current Social Security recipients. In turn current payers are supposed to have their retirements subsidized by future payers. But once erosion begins (and it has now officially begun) no one wants to be there when the levee breaks. So younger current workers will join the rich in calling for reducing the SS tax even further. Until the cycle is complete and we are back to 1929.

Social stratification is growing. The traditional conveyor belt from the working class to middle class, the low-cost college education, is drying up faster than roadkill on a desert highway at midday in summer. Talented people will be trapped in the working class, no-talent rich kids will increasingly become the decision makers of this nation. They will decide to tax the workers and repeal the minimum wage laws. If you want work your options will be the Army, homeland security, and mopping the floors of their yachts.

The working class is not just unorganized, it is disorganized. Socialist parties and revolutionary groups have all but disappeared. The Democratic Party and most unions are rotten or at best incompetent. Even the middle class seems paralyzed by free-market rhetoric.

In the next year or two the economy will continue its normal business cycle recovery. It would have even without the new tax cuts. Given the depth of the recent recession, a recovery cycle might even last five to ten years. The cycle will end when the national debt it too big to repay and interest rates on that debt start spiraling out of control. The rich will be so powerful you can count on both the dismantling of any remaining social programs and the imposition of higher taxes on everyone who is not tax-sheltered.

Of course, other scenarios are possible. But they would take effort. The real problem was the New Deal and the Great Society combined with American global economic dominance post World War II to create an imperialist working class. No one complained about getting $30 an hour to make the steel and explosives dropped on rebellious peasants. Remember when the unions organized workers to attack peace protesters during the Vietnam War? Our unions thought they were indispensable, but they were wrong. Surprise, steel can be made anywhere. Factories can be dismantled and put together somewhere else.

Hopefully Barack Obama will put himself out of his misery and not run for President in 2012. I admit that Obama may have proven to be a better President if he did not have the Republican Party to deal with. But the President can veto any bill passed by Congress, and there should be enough Democrats in Congress to sustain a veto. He could have stopped the tax cut extensions for the rich. He could have gotten a much better deal for the American people in return for those cuts, if he had wielded his veto.

Imagine it being, say, March 2011, three months into taxes going back up to pre-Bush levels. Who would be hurting, who would be willing to make a deal? The rich and their wholly owned politicians. This whole "we have to do it in December" bit was another Big Lie.

What did Barack Obama get in return for himself? Two years of cooperation with Republicans in Congress?

Forget the old deal. Welcome to the Screw Deal. Next Act: Return to the Dark Ages.

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