Updated: September 10, 2011 12:45AM
Don’t fall for the con. The fix is in. Working Americans are about to get fleeced — unless someone stands up for them.
Standard & Poor’s, the rating company, contributed directly to the mess we are in by making big bucks rubberstamping NINJA (no income, no job, no assets) mortgage packages as triple AAA secure investments. Now its managers have decided that U.S. bonds are worth less than those mortgage collateralized debt obligations — even though across the world, investors are rushing to buy U.S. bonds as a safe harbor for their money. (As of today, counting inflation, investors are paying the U.S. government to park money in our bonds).
Yet the S&P nonsense creates a panic. Even though the economy is dead in the water and 25 million people are in need of full-time work, the cry goes out to cut spending now.
Waiting in the wings is the “supercommittee” created in the debt ceiling deal. This rump group of 12 legislators is charged with finding $1.5 trillion in deficit reduction from some combination of cutting Medicare and Social Security or by increasing revenues. Whatever they propose must be voted up or down without amendments or significant debate.
Panic. Railroad. You can see how this will turn out.
Republican leaders have already announced that they won’t appoint any member to the supercommittee who supports raising taxes on the rich or the corporations. They will push for deep cuts in Social Security, Medicare and Medicaid. Democratic Senate Leader Harry Reid has said he wants to appoint people who have an open mind. Panic. Railroad. Democratic folly.
Anyone who has watched the negotiations over the past months can predict the deal. The president already reportedly accepted raising the eligibility age for Medicare to 67, and cutting the inflation adjustment to Social Security, reducing payments dramatically over time. Add to that turning Medicaid into a block grant and pushing the costs on already strapped states. To balance that, the insiders are talking about lowering rates on the rich and the corporations and eliminating deductions to raise more revenue. But the only deductions able to produce enough revenue to make up for lower rates are those available to working families — for their mortgage, their employer-provided health care, their retirement accounts.
Bipartisan balance. Cuts in Social Security and Medicare for the elderly and the poor. “Balanced” by cuts in mortgage and health deductions for working people.
The vast majority of Americans oppose this deal. Most Americans want Social Security and Medicare protected. Most support raising taxes on the rich. Most oppose cutting deductions for homes or health care.
That’s why panic, the railroad, the folly and the “bipartisan balance” are vital. It’s their only hope for selling this calamity.
Don’t fall for it. The reality is that S&P is as wrong about the U.S. debt as it was about exotic mortgage packages. With people paying us to take our bonds, we should be borrowing and spending the money to rebuild America, putting people to work.
We should be investing in schools, not forcing more and more cuts at a time when a majority of children in the U.S. don’t read or do math at grade level after the fourth grade.
We should create green corps and urban corps to put young people to work, not sit by as their hopes are crushed and they turn to drugs, despair and crime.
And in a time of extreme inequality when the wealthiest 1 percent is capturing a record percentage of the rewards of growth, we should be raising taxes on the rich and using that money to get the economy going here at home.
The fix is in. The only way to derail this deal is for the people to speak loudly — and let Washington know we aren’t falling for the con.