Government and governing: December 2009 Archives

The country is trying to pass health care reform but a single Senator is able to block the popular "public option" and "Medicare buy-in" plans, because he says it is wrong to let the public have any choice besides for-profit companies.  Actually it is one Senator plus the entire Republican caucus - but we already understood that they do the bidding of the big corporations that fund them. The rule of the Senate allow minorities to thwart the will of the people and block bills.

An NBC/WSJ poll that came out yesterday showed that 45% of the public found it unacceptable that the public option was removed, and 42% acceptable, but 58% wanted the Medicare buy-in and only 32% didn't.  But never mind, both of those are out because of one Senator (joining all the Republicans.)  This is a clear example of democracy thwarted.

In California we can't pass a budget or tax corporations or the wealthy to pay for our schools, colleges and universities, reads, etc. for the very same reason.  Our legislature is structures to that a minority can thwart the will of the people.  It requires a 2/3 vote to pass a budget or raise revenue.  And we have a minority that is funded by the big corporations, with one corproate PAC funded by Wal-Mart, Blue Cross of Ohio (?), Reliant Energy and others putting almost $1 million of into just one race last year.

It is time to trust the people and change the system in Washington and the system in Sacramento. It is time for majority rule.

 

(This article originally appeared in the San Jose Mercury News)

While America has always been a place where a person could get rich, it used to be that you got rich a bit more slowly, and everyone benefited in the process. This is because we used to have very high tax rates at the top.

A person could do very well, but income that came in above a certain level was highly taxed and used to pay for the teachers, police, courts and roads that enabled businesses to thrive. Just how high were taxes? During America's "golden years" of 1951-1963, tax rates were over 90 percent on income over $400,000. Then through the 1960s and 70s, they were 70 percent on income above $200,000.

This had many beneficial results -- especially for the people who paid higher taxes. Back then, government could afford to invest in programs that improved everyone's standard of living, including health, knowledge and technology, all without borrowing. History recalls these as the years we created and grew our prosperous middle class, built our public universities, conducted our economy-changing scientific research and developed a culture of thriving entrepreneurial businesses.

Back when it took time to make a fortune, business people had to rely on the health of the greater community to nurture their own enterprises. They had to think and act long-term. They had to carefully build solid businesses that satisfied their customers. They had to hold on to workers because their experience was valuable.

Meanwhile, the roads and bridges used by their trucks were kept in repair, our schools provided excellent education to their potential employees, and our courts were well funded to properly enforce contracts. Businesses and communities depended on each other to do well.

But once top tax rates were lowered, vast personal fortunes could be realized from a single quick deal. This created incentives for people to engage in activities that we can now see helped make our country a worse, and less prosperous, place.

Corporations became predatory, caring little for the community because executives planned to get rich quick and leave soon. Short-term business models that cut employees to the bone and took advantage of customers began to make sense.

Because of reductions in tax revenue, we cut spending on schools and infrastructure. Yet even with all these cuts, our federal government had to borrow to make up a shortfall. Now we have a massive debt that costs us hundreds of billions in interest each year.

Once businesses' interdependence with the community went out the window, it became more profitable to outsource or sell off our manufacturing capacity. Then, as communities fell apart, those few who benefited from such business practices could just fly away in their private jets. The greater community was of no use to them except as a crop to be harvested.

We can see the effects of this quick-buck, short-term thinking all around us today. Our roads and bridges and schools are falling apart. The experiment in low taxes has nearly destroyed our economy, too, and may yet if we don't stop borrowing instead of asking the wealthy to pitch in.

So it is time to change the formula. It is time to make our businesses part of our communities again. The way to do this is to continue to help people become wealthy -- just a bit more slowly, please, and bring us all along. Bring back the top tax rates of our golden years so we can all enjoy the benefits of our economy again.

California Senator Dianne Feinstein has joined a group of Senators threatening to allow the nation to default on its debt unless a commission to "fast track" cuts to Social Security is created. 

Talking Points Memo describes what is going on,

Moderate and conservative Democrats want to empower an outside entitlement commission to reshape major domestic spending programs like Medicare and Social Security, and they're threatening a truly nuclear option to get their way. If Congress does not create this commission, they say, they will vote against must-pass legislation to raise the nation's debt ceiling, which would trigger a default, and, perhaps, economic calamity.

"I will not vote for raising the debt limit without a vehicle to handle this," Sen. Dianne Feinstein (D-CA) told McClatchy. "This is our moment."

About this commission,

As proposed, it would hand a significant amount of Congressional authority over entitlement programs to an outside body. That body would make recommendations that Congress would have to vote on, up or down--no filibusters. That's a bridge way too far for liberals, who see the commission as a backdoor approach to gutting Social Security.

Here's the problem.  Many people believe that there is a problem with Social Security - that it is "going broke."  But the fact is that Social Security has a huge reserve in the bank.  Social Security runs a huge surplus, and that surplus has been added to this reserve every year for decades.  Social Security will continue running a surplus until at least 2017, and can then draw on that trust fund to make up any shortfalls for at least the next 30-40 years.

Ah, but where is that trust fund?  According to a recent Washington Post story, 

The Treasury Department has for decades borrowed money from the Social Security trust fund to finance government operations. If it is no longer able to do so, it could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors. And at some point, perhaps as early as 2017, according to the CBO, the Treasury would have to start repaying the billions it has borrowed from the trust fund over the past 25 years, driving the nation further into debt or forcing Congress to raise taxes.

So there is the problem in a nutshell. They spent it. They spent it on tax cuts for the rich, and now that people are retiring and want that money, Senator Feinstein and the others don't want to raise taxes on the rich to pay back what was borrowed from the nation's retirement account.

This is the same as the situation in California. They cut taxes and made up the shortfall with various gimmicks, until the gimmicks ran out.  So now that the bill is due the protectors of the wealthiest talk about "spending" - which is government coming through for the people - as the area to cut, instead of turning to the people who received all the benefits of the earlier actions.

Senator Feinstein, keep your hands off of my -- and everyone else's -- retirement account.  You borrowed that money, now pay it back.  Don't think you can solve this problem by asking me to accept less than what I was promised because you handed that money out to the wealthy.  The people who got it should be the ones paying it back, not the people it was taken from.  You already took money from the taxpayers to bail out the wealthiest, don't do it again.