Erskine Bowles

Blue Dog Democrat Erskine Bowles and former Republican Senator Alan Simpson, co-chairs of President Obama’s so-called deficit reduction commission, have, metaphorically speaking, delivered a big slap to the face of middle and low income Americans.  This slap has come in the form of 50 slides simply entitled Co-Chairs’ Proposal, which are loaded with technical terminology related to arcane aspects of Medicare, Social Security, and fiscal/tax policy.

Why is this document and the process by which it has been produced so contemptuous and disrespectful to all of America but Wall Street and the rich?  First, it was conceived in secrecy, without public input, and unloaded on the public as a tactic in a larger strategy to further lower the standard of living of the American middle class.  It is highly unlikely that these recommendations will be endorsed by the required 14 of the 18 members of the commission – a requirement for an up or down vote by congress. 

Simpson and Bowles knew that and also knew that their proposals would generate an extraordinary amount of noise and bloviation.  Their grand strategy is to enlist mainstream media in their propaganda, including such faux-liberal media outlets as the New York Times, NPR, PBS, and MSNBC’s Hardball.  They fully intend to push the entire package in a piecemeal fashion.

Second, it is no coincidence that this austerity program for the masses is being unleashed in conjunction with assaults on social programs throughout Europe.  We have to see this move as part of the globally integrated and financialized economic system.  The IMF, the World Bank, the WTO, and the OECD have evolved into a quasi World government on behalf of the financial services industry and investors. For the past several decades, these organizations have forced “bitter medicine” down the throats of Third World Countries, Southeast Asian countries (after the late 90s financial crisis), Russia (after Perestroika), and South American countries (since the 1970s).

 In every case, banks and investors were either enriched or bailed out while social programs were diminished and workers were put out of work.  It is now the masses of the advanced industrial societies, e.g., the U.S., England, and France who must pay the price for an economic collapse caused by the international financial casino.

Third, the whole package is duplicitous and dishonest.  It is supposed to be all about deficit reduction and saving the U.S. economic system.  Slides # 3, 4, 5, 6, and 7 contain 10 “guiding principles and values.”  For instance, principle one is stated as follows: “We have a patriotic duty to come together on a plan that make America better tomorrow than it is today.”  Other principles indicate that “the solution must be painful,” “it is cruel to make promises we can’t keep,” “protect the truly disadvantaged,” and on and on with platitudinous justification for some economic tough love.  But let’s look at what jumps off the pages of these recommendations:

• Slide 20:  Freeze non-defense federal salaries for three years and cut the federal workforce by 10%
• Slides 23, 24, 25, 26, 27:  Lower corporate and upper income level taxes and eliminate middle class tax deductions.
• Slide 29:  Increase gas tax by 15 cents and change to a “chained CPI” (the chained CPI will unfairly result in a reduction in Social Security and other cost of living increases).
• Slides 31, 32, 33,34, 35:  Increase co-pays for Medicare beneficiaries and reduce payments to doctors.
• Slides 43, 44, 45, 46, 47, 48, 49, 50:  These slides pertain to Social Security.  The recommendations include increasing retirement age (slide 45).  There are a few good things such as raising the taxable maximum to capture 90%; however, this would be phased in by 2050.  

Fourth, and finally, the proposal is as outrageous for what it doesn’t include as what it does include.  Although there are plenty of benefit reductions for the masses and tax cuts for the rich, you will not find the following amongst the proposals:

• A sensible inheritance tax.  As it stands now, there is no inheritance tax.  In fact, in 2010, there is literally no inheritance tax.  Heirs of multi-millionaires and billionaires this year will pay no taxes on what they inherit.  In other years, slick tax accountants help the super-rich and the not so super rich avoid inheritance taxes with gimmicks in the tax code.
• A financial transaction tax.  A small tax on financial transactions would be hardly be felt by the moguls on Wall Street but would generate enough revenue to cover a significant amount of the gap between expenditures and revenue.  Even though it was the speculation and gambling of financiers that caused economic collapses across the past few decades, they are not forced to bear even a small part of the pain.
• Increase in the capital gains tax, even for the billionaire hedge fund managers who should be paying taxes at the same rate as every other income earner (as opposed to investor).
• Elimination of the Bush tax cuts for the rich.  Need I say any more about that?  It looks as though President Obama is ready to cave on that one.  But you can bet he will take the Simpson-Bowles insult to salary and wage earning Americans seriously.

This post has been a very brief overview of the co-chairs recommendations.  The recommendations should not be taken seriously but they will be.  You will see the likes of Alice Rivlin on the PBS Nightly Business Report pontificating about the need to make hard choices.  But this whole process is all about the bond markets.  In spite of the bone or two thrown to the masses, the suffering will be felt by middle and low income Americans and benefits will accrue to investors and corporations.  Having commandeered the IMF and World Bank, this has been the pattern of the global economic elite for the past several decades.

I will keep blogging about this very serious attempt to take down the middle class.  Or, I should say, a serious attempt to take us further down.

Siemens Executives Selling Medical Imaging Equipment

By virtue of the U. S. Supreme Court majority opinion in Citizens United (slip opinion available at:  http://www.scotusblog.com/wp-content/uploads/2010/01/citizens-opinion.pdf), corporations have been rendered human with all the constitutional rights of any individual citizen.  It would seem to follow that corporations would also have all of the responsibilities and obligations of any regular human being.  It would also seem to follow that Siemens, the gigantic German conglomerate, could be hauled into the Hague and charged with war crimes for it role in extermination of Jews, Gypsies, homosexuals, communists, and anyone else who found themselves on the wrong side of Himmler’s SS.  Instead, it is a seemingly upstanding member of the U.S. Chamber of Commerce. 

In spite of the role this notorious natzified company and the natzified Siemens family in the Holocaust, Siemens is doing quite well at the expense of the U.S. taxpayer.  In particular, Medicare has been enormously profitable for this multinational conglomerate.  With the coming of health care reform, Siemens is looking to make unprecedented enormous profits.  I will discuss this “citizen corporation’s” past and then examine its U.S. health care business.

Siemens was a leading corporate participant in Hitler’s “death through work program;” with slave labor factories at the following death camps: Auschwitz, Buchenwald, Flossenberg, Gross Rosen, Mauthausen (Austria), Neuengamme, Ravensbruck, and Sachsenhausen (see Christopher Simpson, The Blond Beast: Money, Law, and Genocide in the Twentieth Century, Common Courage Press, 1995, pp. 290-310). 

In addition to the profitable business of working people to death at Nazi concentration camps, Siemens did quite well in the so-called “Aryanization Program,” which was essentially the expropriation of Jewish businesses for resale at bargain basement prices to approved German companies.  In 1936, the Frankfurter Zeitung, the mainstream business newspaper in Hitler’s Germany, listed “twenty-one very large transfers and consolidations in 1934; most were forced buyouts of multi-million dollar Jewish firms by their German competitors.  In 1935, thirty-two such large contracts were reported, including two major acquisitions of Jewish firms by the Siemens group… .” (Simpson, The Blond Beast, p. 62).

Siemens general director during the Holocaust, Rudolf Bingel, was one of the senior German business leaders active in the notorious Himmlerkreis, the Circle of Friends of Reichsfuhrer SS Heinrich Himmler.  “The companies represented in Himmler’s circle became pacesetters in Aryanization, exploitation of concentration camp labor, seizure of foreign companies in the occupied territories, and similar business ventures that depended on SS cooperation” (Simpson, The Blond Beast, p. 154-155).

As Benjamin Farencz documented in Less than Slaves: Jewish Forced Labor and the Quest for Compensation (1979, Harvard University Press, pp. 116-122), Siemens, due to its lack of willingness to own up to its enslavement of Holocaust victims and theft of Jewish property, has not exactly been a remorseful citizen.  In spite of the corporation’s image advanced through its “touchy feely” television ads, it is not a “moral” entity given to remorse and redemption.  It has fought “tooth and nail” against victim organizations’ attempting to obtain admissions of guilt and reparations.

For these multinational conglomerates, the guiding ethic – the summum bonum, if you will – is profit, i.e. the bottom line.  As a manufacturer of medical devices, Siemens has a large share of the health care business generated by the rapidly expanding medical imaging business.  According to a medical device trade publication, “Siemens, Royal Phillips, Toshiba, and General Electric are benefitting from a 30 percent-per-year increase in the use of imaging tests such as PET scans for elderly people with cancer” (http://www.topdevicecompanies.com/2010/04/siemens-philips-toshiba-ge-pet-scans-grow-by-third per-year.html).

The overuse of medical imaging is of increasing concern to medical researchers (see, e.g. Dinan, et al. “Changes in the Use and Costs of Diagnostic Imaging among Medicare Beneficiaries with Cancer, 1999-2006,” JAMA, 303-16, 1625-1631, November, 2010).  A report of the Congressional Budget Office in 2008 listed diagnostic imaging as a leading cause of health care cost inflation (“Technological Change and the Growth of Health Care Spending, p. 16).  In essence, rather than being treated as patients Medicare and Medicaid recipients are being treated as commodities for the profit of medical device manufacturers and physicians who purchase their equipment. 

Now that these multinational behemoths can pour money into Chamber of Commerce efforts to control the U.S. government, the commoditization and colonization of the U.S. population will only become more complete.  In fact, the U.S. Chamber, in an award to Siemens, described the company thusly: “a global powerhouse in electronics and electrical engineering, and operates in the industry, energy, and health care sectors” (http://www.uschamber.com/press/releases/2010/april/us-chamber-and-siemens-corporation-announce-finalists-national-sustainabil).  With 405,000 employees in 190 countries, Siemens reported worldwide revenue of $104.3 billion in fiscal 2009 with $21.3 billion in U.S. revenues.

The point of this post is that the global, capitalist elite, with the Citizens United decision for legal cover and operating through the U.S. Chamber of Commerce and other front groups, are treating the United States like a colony and taking excessive profits from government funded programs.  Given the past of Siemens, it is clear that humanness and morality have no bearing on corporate behavior.  While our jobs are shipped to Third World economies, we are forced to dump untold billions of our tax dollars into wasteful, unnecessary medical practices for the profit of multinational corporations.

In 1983, the strategy for destroying Social Security was clearly expressed in the Cato Journal (“Achieving a Leninist Strategy,” vol.3, no. 2).  The Cato Journal is the pseudo-scholarly publication of the Cato Institute, which is a Koch funded Washington, DC “think tank.”  The article, by Stuart Butler and Peter Germanis, recognized that “a firm coalition behind the present Social Security system” had been politically effective.  They concluded, therefore, that it is necessary for opponents to, “begin to divide this coalition and cast doubt on the picture of reality it presents to the public” (page 548).

Butler and Germanis stated that they must also construct a coalition “that will gain directly from implementation” of a plan to privatize Social Security.  They suggested that such institutions as banks and insurance companies, seeing the profits to be made from privatization would be likely allies (page 549).

Recognizing that “the elderly represent a very powerful and vocal interest group,” (page 549), the authors set forth their second main strategic element, which, as they stated, “involves what one might crudely call guerrilla warfare against both the current Social Security system and the coalition that supports it” (page 552).  And indeed, for nearly three decades, a “guerrilla war” has been waged on the Social Security system and the coalition that works to protect and maintain it. 

This war has been waged primarily with misinformation about the nature of the Social Security system and its impact on the fiscal problems of the federal government.  The Social Security program has amassed a 2.5 trillion dollar surplus and is adequately funded, without any adjustment, until 2037, and, with a small amount of tweaking, into the foreseeable future after 2037.  The misinformation, perhaps disinformation, however, is that Social Security is “going bankrupt” and is putting a strain on federal finances; i.e., it is a cause of the federal deficit.  This is absolutely false.  In covering a deficit caused primarily by wars and ill advised upper income tax cuts, the federal government is borrowing from the Social Security Trust Fund.

Has this guerrilla war on the elderly and the successful and well run Social Security safety net program been effective?  Yes.  The mainstream press overwhelmingly takes its cues from the anti-Social Security forces and passes along the misinformation disseminated by conservative think tanks.  Just today, a front page New York Times article on the deficit primarily blamed Social Security and Medicare for the current budget mess in Washington (“Divide on Deficit Likely to Grow After Election,” 10/26/2010).

The author, Jackie Calmes displayed her ignorance by blaming “an unsustainable combination of fast-growing entitlement programs like Social Security and Medicare and inadequate tax revenues” for the current budget deficit.  As usual, the “baby boomer” generation is scapegoated in this article.  Ms Calmes quoted David Cote, the chief executive of Honeywell International, and a known anti-Social Security hardliner on President Obama’s deficit reduction commission.  Here is what he had to say: “the thing that shocked me was that the debt crisis had been predicted for decades because of the costs of federal benefits for the baby boom generation.”

This imaginary entitlement crisis caused by the baby boomers is never questioned.  An objective, informed challenge to this slur on people in a single age range, is never presented in the New York Times, on PBS, NPR, or in any other mainstream media.  The maligned group of people born between 1946 and 1964 (and others) has paid enough into the Social Security system to pay benefits to the generation preceding them as well as enough to take care of themselves until 2037.  They are now scapegoated for one war costing several trillion dollars, another war running $100 billion per year (in its ninth year), tax cuts for the wealthy costing another $1 trillion over the next decade, and an on-going defense expenditure of $1.1 trillion per year.

This is how well-funded guerrilla war is supposed to work – especially when there is very little push back by powerful media entities.  Social Security, Medicare and the selfish baby boomers as causes of impending fiscal doom is accepted as nothing less than a truism in the mainstream press. 

The good news is that a network for taking on the anti-Social Security guerrillas is forming and forming rapidly.  For instance, labor unions, the NAACP, Older Women’s League, NOW, Gray Panthers, and hundreds of other organizations are coming together into one coalition know as “Strengthen Our Social Security.”  Check it out at http://strengthensocialsecurity.org/.  Local and regional coalitions are also coming together.  In Kansas and Missouri, the “Save Our Social Security (SOS)” coalition is coming together.  The http://sostakeapledge.com  website will be up in a matter of days.

Through billions of dollars poured into elections,  funding of political front groups, and fomenting of Tea Party protests,  Bill and David Koch are attempting to weaken democracy in the United States.  If you don’t know much about the modus operandi of these two fanatical right wingers, I suggest that you spend some time reading Jane Mayer’s article “Covert Operation” in the August 30, 2010 issue of the New Yorker. 

I appreciate articles exposing the Koch’s shenanigans and encourage anyone to write them and send them to The Tallgrass Activist.  People should know what Bill and David Koch are up to and how they go about their sleazy political business. 

The following letter by Clark Coan appeared in the Lawrence Journal World:

 Lawrence, KS

 September 26, 2010

Billionaire Charles Koch reportedly runs privately held Koch Industries as an autocrat, so a case can be made that he is responsible for any malfeasance.

In 2000, a federal grand jury issued a 97-count indictment against the company for knowingly releasing 91 metric tons of benzene and concealing this crime from regulators. The company was subject to $350 million in fines, and four Koch employees faced a combined total of 100 years in prison and $50 million in fines.

Also in 2000, the Justice Department imposed a $30 million fine against Koch, the largest civil penalty ever levied against a company under federal environmental laws. It was determined that Koch was negligent in causing more than 300 oil spills that polluted waters in six states, including Kansas.

A federal jury issued a verdict in 1999 that Koch Industries had, “purposely falsified oil measurements on federal and Indian lands, a practice that allowed it to collect more oil than it paid for. Several Koch employees testified that they were instructed to alter their measurements. Koch Industries admitted it received about $170 million worth of oil it didn’t pay for.”

To paraphrase Balzac, “Behind every great fortune lies a great crime.” Maybe several crimes.

For the second year in a row, there will be no cost of living adjustment for Social Security beneficiaries.  We are talking zip, de nada, zilch, nothing.  I have to wonder how many people realize that this is not based on any rational, scientific framework for calculating the actual growth of the economy and real increase in the cost of living.

The truth is that manipulation of inflation measures is done through voodoo economics for the purpose of political expediency.  As Kevin Phillips discussed in Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism, the GOP congress, in the mid-1990s, appointed the Boskin Commission under Michael Boskin, former head of George H. W. Bush’s Council of Economic Advisors.  This commission set about to scrap the market basket of goods and services utilized to calculate inflation up to that time and replace it with something that would result in the gradual reduction of Social Security benefits.

On page 82 and 83 of Bad Money, Phillips says the following:

“Social Security payments were not vulnerable to frontal political and legislative attack, so attention shifted to the CPI determination of how much retiree payments would rise each year.  Greenspan and Boskin charged that the CPI overstated inflation by as much as 1.5 percent, and the Boskin Commission recommended a set of revisions to the Bureau of Labor Statistics, which generally concurred.  These changes were implemented between 1997 and 1999, while the public and the politicians were preoccupied by bull market euphoria and the actions in Congress to impeach Bill Clinton.”

It is also worthwhile for readers to check out the website of John Williams, a respected economist, and expert regarding the CPI (http://www.shadowstats.com/).  According to Williams, the methodology scrapped and replaced with the Boskin Commission’s recommendation, would have resulted in an official inflation rate of 5 to 7 percent between 2005 and 2007 instead of the BLS determined 2 to 4 percent.

Thanks to the Republicans’ mean-spiritedness and the Democrats’ passivity, cluelessness, and compliance, for the past 20 years, fixed income retirees, workers with COLA clauses in their contracts, and average Americans in general, have been cheated by having their incomes suppressed by the power-elite’s cynical, dishonest manipulation of economic analyses.  Now Democrats are in charge of both houses of Congress and the White House and what do they do right before an election? 

They whack the elderly by increasing deductions for Medicare from Social Security checks while claiming zero inflation.  Brilliant Democrats!  Absolutely brilliant!  Brilliant, that is, if you are trying to lose elections by unjustly and unnecessarily hurting elderly voters a few weeks before an election.

It looks like Democrats are anxious to hand Congress and the Presidency back to the Republicans.  The party in charge of both houses of Congress and the Presidency could force the BLS to make a fair and accurate determination of the inflation rate.  But they choose not to do that. So, to relieve themselves of power, all they have to do is maintain their deluded belief that seniors are stupid enough to believe that the inflation rate is zero while at the same time their health care costs are increasing.

SOS (SAVE OUR SOCIAL SECURITY) is ready to collect pledges from candidates for the U.S. Congress that they will not vote to weaken Social Security.  We are serious about this.  We will not stand by and watch the most successful economic security program in the history of the United States “thrown under the bus.” 

We don’t want to hear that entitlements are busting the budget.  That isn’t true.  We don’t want to hear that Social Security must be “reigned in” and that reducing Social Security benefits “is necessary if we are willing to make the hard decisions we need to make.”

The truth is, Social Security has a 2.5 trillion dollar surplus.  The Social Security Trust Fund can fully fund the program payouts until 2037.  After 2037, the program is funded at 75% into the foreseeable future.  The 25% deficit after 2037 can be easily eliminated by a simple change in the cap of $106,800.  Currently, only 83% of taxable payroll is taxed.  Move this to 90% and voila, problem solved.

This information comes from the 2010 report of the Trustees of the Social Security Trust Fund.  We could make a very large number of arguments that would destroy the Social Security propaganda promoted by both Democrats and Republicans – but mainly by Republicans.

Candidates running around discussing Social Security had better have their facts in order.  We do.  And, whenever possible, we will be present where they show up.

Why is no one talking about the out of control, bloated defense budget?  See post below about spending by the military-industrial complex.

In his latest book, Dismantling the Empire, Chalmers Johnson explains that empire building and defense spending is not only leading to militarism and weakening of democracy in the United States, but that it is also leading to an economic disaster.  Consider the following from Dismantling the Empire:

1. “The Department of Defense’s planned expenditures for fiscal year 2008 were larger than all other nations’ military budgets combined.” (page 137)
2. “The supplementary budget to pay for wars in Iraq and Afghanistan, not part of the official defense budget, was itself larger than the combined military budgets of Russia and China.” (page 137)
3. “Some 30 to 40 percent of the defense budget is ‘black,’ meaning that these sections contain hidden expenditures for classified projects.  There is no possible way to know what they include or whether their total amounts are accurate.”  (page 137)
4. Relying on the reports of William D. Hartung of the New America Foundation’s Arms and Security Initiative and Fred Kaplan of Slate.org, Johnson provided the following breakdown (page 138): “In 2008, the Department of Defense requested $481.4 billion for salaries, operations (except in Iraq and Afghanistan), and equipment.An additional $141.7 billion was requested to fight the war on terror.

   $93.4 billion was requested to pay for “hitherto unmentioned war costs in the remainder of 2007.”

   An additional allowance of $50 billion to be charged to fiscal year 2009.

   $23.4 billion in the Department of Energy “goes toward developing and maintaining nuclear weapons.

   The Department of State receives $25.3 billion for foreign military assistance to Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates, Egypt, and Pakistan.

   “The Department of Veteran Affairs currently gets at least $75.7 billion, 50% of which goes for the long-term care of the grievously injured among the at least 28,870 soldiers so far wounded in Iraq and Afghanistan.”

   “Another $46.4 billion goes to the Department of Homeland Security.”

   The Department of Treasury receives $38.5 billion to the Department of Treasury for military retirement.

   Finally, let’s not forget the interest on debt for military outlays, which totals $200 billion.

Professor Johnson believes that the U.S. conservatively spent $1.1 trillion on the military-industrial complex in 2008.

The Democrats are probably going to take a bath in the November elections.  I wonder why?  Perhaps a clue is provided by this quote from a New York Times article today regarding pushing back Social Security retirement age:  “John A. Boehner, Republican of Ohio, and the House minority leader, has called for raising the age to as high as 70 in the next 20 years, and many Democrats have endorsed similar steps, against opposition from some liberal groups” (John Leland, “Retiring Later is Hard Road for Laborers”, NYT, September 13, 2010).

The Democrats control both houses of Congress and the White House.  They have not only failed to end futile, immoral wars in Iraq and Afghanistan, they have added 40,000 more troops to the Afghanistan invasion.  Instead of taking care of the common people, they are continuing to feed the military/war machine; they are keeping a regressive tax system in tact; they gave the store away to the medical-industrial complex in their so-called health care reform effort; and, Elizabeth Warren, adored by progressives and liberals alike, has still not been appointed as head of the new consumer protection commission. 

I could keep adding to the list of issues of grave importance to progressives and critical to the very survival of many poor and middle class Americans.  But what’s the point.  Most of us don’t need to be reminded of the great big kick in the teeth we received as a reward for flocking to the polls in 2006 and 2008.  Nor do we need to be reminded of the corrupt, out of touch Democrats in the House and Senate.

This is nothing new for the “new Democrats.”  The other day I came across an out of print book at the Dusty Book Shelf entitled Generations Apart: Xers vs Boomers vs the Elderly edited by Richard Thau and Jay S. Heflin (Prometheus Books, 1997).  Thau and Heflin were behind the now defunct Third Millennium, an organization dedicated to slamming the “Baby Boom” generation and promoting inter-generational conflict.  One chapter was co-written by former Democratic Senator J. Robert Kerrey (the Kerrey from Nebraska, not John Kerry of Massachusetts) and former Republican Senator John Danforth. 

The Kerrey-Danforth approach grew out of the Bipartisan Commission on Entitlement and Tax Reform:  Final Report to the President, January 1995 (Washington, D.C.), pp. 7-35. Here is what the Kerrey-Danforth approach would do: (1) raise the age for full retirement to 70, and (2) increase the age for Medicare eligibility to age 70.  John Danforth, Ralston-Purina heir, comes from one of the wealthiest families in the United States.  Kerrey and Danforth, both wealthy men, have Senate retirement plans that most of us would be thrilled to have.

Yes, 1995 was a long time ago.  But, this sentiment is widespread now in the Democratic Party.  Very rich Democrat senators in particular seem to be insensitive to the needs of the working people ( which is most of us).  Progressives are basically tired of working to elect Democrats who seem to expend most of their energy on behalf of Wall Street, the Pentagon, Big Pharma, etc., etc.  I will vote in November but I can certainly understand the disaffected Democrats who will be sitting home.