Despite ongoing squabbling, I anticipate that, within the next few days, the President and the Republicans in Congress will agree to a grand bargain that results in significant cuts to Social Security, Medicare and Medicaid, so much so with Medicaid that it will reduce it to an illusory program of medical care for the poor. Better to preserve a shell of a program, and the appearance of social support, than eliminate it altogether and make the reality of lower class distress all too obvious.

Of course, there is nothing surprising about this outcome, as the President expressed his intention to push for entitlement reform just prior to taking office. The Republican electoral victory last fall cleared away the obstruction of a Congress controlled by Democrats. The outcome was, as I posted at the time, Obama's Midterm Victory. For the vast majority of Americans who are struggling to survive in post-bubble world, the bargain, certain to be the centerpiece of Obama's 2012 campaign, will be a disaster. For the entirety of the Obama presidency, they have been subjected to a planned recession, a politically orchestrated recession, and the job losses and foreclosures that have come along with it, so as to bring about this result, the evisceration of Social Security, Medicare and Medicaid, in order to render their lives permanently insecure.

But there is an additional aspect of the situation that has only been glancingly addressed. Naturally, the military-industrial complex will escape the harsh austerity that is about to imposed on the middle and lower classes. Conflicts of varying degrees of intensity will continue across Africa, the Middle East and Central Asia. Going forward, the federal budget will reveal that the US has become a society of perpetual war, funded by the economic sacrifices of its own citizens, even more so than in the past. Economic growth, such as it is, will be significantly generated by sectors associated with the military-industrial complex, especially those involved in the development of surveillance technologies. Politically, this outcome confirms Zizek's criticism of the social democratic left for its failed strategy of contesting neoliberalism solely upon the terrain of the preservation of existing social welfare programs.

Labels: American Empire, Barack Obama, Democrats, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

Meanwhile, the Second Reagan Revolution proceeds unimpeded.

Labels: Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

As explained here. Not surprisingly, one of my senators, Dianne Feinstein, is primarily concerned about budget cuts that would affect water deliveries to agribusiness.

Labels: Democrats, Liberals, Neoliberalism, Second Reagan Revolution

Please help me with this question: why is it that liberals of the Daily Kos kind are now suddenly outraged, after having acquiesced to previous embraces of neoliberal policy by this President? Is it sincere, or merely an act of political self-preservation, a calculated decision to enter the fight after it has already been decided? With that said, my few remaining contacts in the Davis (California) liberal scene tell me that there has been a freak out by some heretofore Obama apologists. As usual, many days late and many dollars short.

Labels: Barack Obama, Democrats, Liberals, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

This is a godsend for wikileaks, millions of federal workers now incentivized to leak information to it, but causes one to wonder, yet again, whether this administration has any interest in bringing about an economic recovery. Of course, given that any significant reduction in the federal deficit is unlikely for the indefinite future, we can assume that this pay freeze is permanent.

Labels: Barack Obama, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

The domestic blueprint for the next two years of the Obama presidency:

A draft proposal released Wednesday by the chairmen of President Obama’s bipartisan commission on reducing the federal debt calls for deep cuts in domestic and military spending starting in 2012, and an overhaul of the tax code to raise revenue. Those changes and others would erase nearly $4 trillion from projected deficits through 2020, the proposal says.

The plan would reduce projected Social Security benefits to most retirees in later decades — low-income people would get higher benefits — and slowly raise the retirement age for full benefits to 69 from 67, with a hardship exemption for people who physically cannot work past 62. And it would subject higher levels of income to payroll taxes, to ensure Social Security’s solvency for the next 75 years.

The plan would reduce Social Security benefits to most future retirees — low-income people would get a higher benefit — and it would subject higher levels of income to payroll taxes to ensure Social Security’s solvency for at least the next 75 years.

But the plan would not count any savings from Social Security toward meeting the overall deficit-reduction goal set by Mr. Obama, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to balance the nation’s books.

The federal tax on gasoline, now 14.8 cents a gallon, would more than double between 2013 and 2015, so that revenue from the tax and similar user fees could cover all transportation and highway spending programs, and the funds set up for that purpose would no longer require money from the general treasury.

This is a document released by the co-chairs of the Deficit Reduction Commission, Alan Simpson and Erskine Bowles, so it does not necessarily reflect the final report that will be released in less than a month. But it does reveal the broad contours of the discussion that will take place between the President and the new Congress that will arrive in January. It is, of course, possible that the commission will come together around a compromise version of these proposals, and submit them to the lame duck Congress for more rapid action, such as, for example, the specific recommendations related to Social Security and Medicare (addressed elsewhere towards the end of this article by David Dayen), but this now looks unlikely.

Lost in the emphasis upon Social Security and Medicare is the overall supply side orientation of the proposed policies: reductions in the top rates of taxation, reductions in government expenditures and employment, enforced through spending caps, with 75% of the proposed deficit reduction accomplished through spending cuts and only 25% attained through tax increases, with many of those regressively imposed through a fee for service, cost sharing approach, as outlined by Dayen. One needn't rely upon Marxist economists to discover that the implementation of these measures is likely to increase the deficit instead of reducing it, disciples of Keynesians like Paul Samuelson will do. Reductions in expenditures by both the government and middle and lower middle income consumers will transform the deficit into a moving target than can never be reached, with each reallocation of revenue from them to supply side investors accelerating the growth of the deficit beyond the savings attained by cuts in expenditures.

But this is probably the intention. For circumstantial proof of this proposition, we need only wait to see if the Bush tax cuts are extended for everyone, including the exhorbitantly costly ones provided to the top 2% of the population, the ones that everyone acknowledges will significantly increase the deficit. If they are, we can conclusively say what we have always suspected, that concern about the deficit is a public relations effort on behalf of elites to further concentrate wealth and power within themselves. Apparently, they are confident that they can manipulate the social unrest that is likely to result from the economic stagnation that will ensue if these proposals are adopted in any meaningful respect.

Labels: Barack Obama, Democrats, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

UPDATE 2: Patrick Martin of the World Socialist News Website nails it:

Establishment liberalism is concerned about lifestyle issues and identity politics, but is utterly distant from the needs of the working people who are the vast majority of the population. It has moved so far to the right that the economic program of Obama and that of the incoming House Speaker John Boehner and the Republicans differs only on minor details.

Coming out of the election, Obama will renew the drive towards bipartisanship with which he began his administration, going out of his way from the moment of his election to rehabilitate a completely discredited Republican Party. All the compromises that he proposes will amount to acceptance of Republican demands for deeper reductions in social spending as well as further tax cuts and other concessions to corporate interests.

UPDATE 1: Embedded within a provocative, informed analysis of the midterm election results by lenin:

Frances Fox Piven and Richard Cloward argued, in Why Americans Still Don't Vote, that the exclusion of the working class from elections is actively desired by politicians. They suggest that if politicians were interested in crafting a policy mix that would appeal to the poor, the poor would respond, and they would be able to command electoral majorities. Pippa Norris of Harvard University concurs: the evidence suggests that turnout among the working class will increase at elections if there are left and trade union based parties that are capable of mobilising them. But it is again worth stressing that the exclusion of the poor from the electoral system is not wholly voluntary. Thomas E Patterson, in The Vanishing Voter (2009), points out that the electoral system in the US has had a long tradition of seeking to exclude the uneducated and the poor, and Patterson argues that voter registration rules still work to limit the size and composition of the electorate. He notes that the US has a disproportionately high number of non-citizens among its total population (7%), and ineligible adults (10%). Thus, 17% of the total adult population at any given time is legally excluded from voting. The exclusion of so many voters is the result of deliberate projects: in one case to manage labour migration flows to benefit capital (non-citizens cause less trouble than those permitted to naturalise); and in the other case to construct a carceral state that imprisoned more poor and black Americans than ever before. On any given day, 1 in every 32 American adults is directly in the control of the criminal justice system, either through jail, parole, probation or community supervision. This only hints at the wider effects that this behemoth has on American society, but suffice to say that it deprives millions of the right to vote where it would easily make a significant difference to the outcome.

In 2008, liberals and progressives apparently believed that Obama was a Moses or Spartacus that would empower these people within the existing political system. There was never any factual justification for it.

INITIAL POST: Political parties have been obsolete for quite some time, at least to the extent that they actually represent coherent ideological alternatives, and serve as the administrative mechanism for holding elected officials accountable to the people who vote for them. If you turn on the television, you will hear that the Republican Party will seize power in the House of Representatives and sharply narrow the Democratic majority in the Senate. It is, according the commentators, a huge defeat for the Democrats and the President. But they are wrong, because the political parties are merely fig leafs that conceal the actual operation of power within the US political system.

In fact, the President has achieved a result that he and his advisors have wanted for quite some time, the destruction of any remaining vestiges of progressive influence in Washington. One of the worst kept secrets of the campaign has been his deliberate effort to alienate core Democratic constituencies by refusing to move on initiatives important to them, such as the DREAM Act for Latinos and the repeal of Don't Ask, Don't Tell for gays and lesbians, and maligning progressive critics, so as to depress turnout and engineer a Democratic debacle. During the first two years of his term, he struggled with the public difficulties of disciplining balky liberals and concealing his true intentions. For example, it took over a year to get a health care reform measure passed on terms dictated by health insurance companies, health care providers and pharmaceutical companies, and, it took extreme measures to do so that generated no end of embarassment, such as strongarming any Democratic Senator who was considering requesting a vote for an amendment in favor of the public option. Meanwhile, he found himself subject to perpetual sniping from those in the Congress who objected to his implementation of economic policies that favored financial institutions at the expense of a more robust recovery.

The President has never been particularly interested in the hardships of those forlornly looking for jobs that don't exist while trying to avoid foreclosure and put off bill collectors. Instead, he has been envious of the bonuses that corporate executives, like the chief executive officers of J. P. Morgan Chase and Goldman Sachs Group Inc., Jaime Dimon and Lloyd Blankfein, received:

I know both those guys; they are very savvy businessmen. I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.

Of course, one can attribute the success of people like Dimon and Blankfein to many things, political influence, direct and indirect subsidies through the Treasury, the Federal Reserve and the tax code, even international trade agreements and the coercion of the US military, but the illusory free market is not one of them.

The President has implemented corporate friendly policies for the benefit of capital across the board, with his top priority, health care reform, transformed from a progressive priority of social support into one requiring the middle and lower middle class to purchase policies from providers without any meaningful cost containment, a massive transfer of income from workers to investors and corporate executives. Commitments made to environmentalists and labor unions were conveniently forgotten at the behest of advisors solicitous of needs of corporate donors and potential future employers. He aligned himself unequivocally with the military-industrial complex before taking office when he retained Robert Gates as Defense Secretary.

In effect, the President positioned himself and his presidency squarely within a bipartisan group of legislators, lobbyists, academics, financial institutions and corporate enterprises that dictate policy in the US. One can perceive their influence most clearly in the US Senate, where figures like Joseph Lieberman, Max Baucus, John McCain, Olympia Snowe, Charles Schumer, Dianne Feinstein and Harry Reid, among others, serve as gatekeepers, allowing House members to release populist pressures by passing measures more in tune with the public mood while relying upon the cloture rule to either kill them or eviscerate them before passage. In the rarified world where important political decisions are actually made, one's party affiliation has, at best, marginal significance. The elitism of the founding fathers, as expressed in their antipathy towards political parties as disruptive factions, has prevailed in an unanticipated way.

With the progressive peril, as puny as it was, exterminated, the path is now clear to remove the legislative barriers that were manipulated to prevent progressive measures from reaching the President's desk, despite substantial Democratic majorities in both houses. Influential senators have already been reaching across the aisle before election day to negotiate possible deals that would push federal fiscal and tax policy further to the right, although one of the participants, Russ Feingold, was not reelected:

Politicians from both parties are debating ideas on taxes and spending that move the discussion to the right, putting pressure on the White House and top Democrats to work with a newly empowered Republican Party after Tuesday's election.

Politicians from both parties are debating ideas on taxes and spending that move the discussion to the right, with the GOP expected to gain power following Tuesday's election.

Sen. Russell Feingold of Wisconsin, a liberal Democrat who is trailing in his reelection bid, is working with Sen. Tom Coburn (R., Okla.), a tea-party hero, on new legislation to trim billions in federal subsidies and other spending programs, Mr. Coburn said in an interview.

Two other Democratic Senate candidates, Chris Coons of Delaware and Joe Manchin of West Virginia, are bucking the Obama administration's bid to let the Bush tax cuts for the wealthiest Americans expire, as momentum builds for a broader extension of the cuts. Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R., Ky) have suggested they see room for negotiations on taxes and trade.

Most ominously, the President has finally come around to reforming the filibuster with the emergence of Republican and moderate Democrat control of the Congress. First up, cuts in Social Security and Medicare benefits, as recommended by the Deficit Reduction Commission, in the lame duck session as the first, admittedly huge step, that prefigures a broader agenda to be pursued in the next Congress.

As explained by the President's chief of staff, Pete Rouse, and his deputy chief of staff, Jim Messina:

Rouse and Messina see areas for possible bipartisan agreement, like reauthorizing the nation’s education laws to include reform measures favored by centrists and conservatives, passing long-pending trade pacts and possibly even producing scaled-back energy legislation. You’ll hear more about exports and less about public spending, a senior White House official said. You’ll hear more about initiative and private sector and less about the Department of Energy. You’ll hear more about government as a financier and less about government as a hirer.

The President now resides in what he and his advisors consider to be the best of all possible worlds, one in which he can more fully carry out what I have described as the Second Reagan Revolution, while simultaneously seeking to win a second term by contrasting himself with the extremists to his right that facilitate his program. But they may discover that they have been too clever by half.

Labels: Barack Obama, Democrats, Liberals, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

(snip)

According to a study by the Foundation for Child Development, 2010 will see the highest rate of children living in poverty in two decades. Study results reported in USA Today (June 7, 2010) showed staggering increases since the start of the recession: One in five children live in poverty, approximately 18% of families are unsure where they will obtain food and an estimated 500,000 children are homeless. As always, poverty and health problems go hand in hand. The president of the American Academy of Pediatrics states, Family poverty increases many risks for children, including low birth weight, premature delivery, learning problems, asthma and other health problems.

(snip)

The government reported this week that the real wage and salary income of finance industry employees based in Manhattan rose nearly 20 percent in the first quarter of this year. That surge helped make Manhattan the fastest-growing county in the United States in terms of terms of year-over-year gains in income.

Labels: Bailout of Finance Capitalists, Barack Obama, Democrats, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

(snip)

Many activists involved in Central America issues became aware of ham-handed snooping by Federal Bureau of Investigation agents in the early 1980's. In 1986 the Center for Investigative Reporting in California used the federal Freedom of Information Act to obtain FBI files which suggested a large-scale probe into CISPES. In 1987 testimony by a former FBI informant Frank Varelli also suggested a broad attack on CISPES by the FBI. Varelli later told reporters of the involvement of other governmental and private right-wing groups in targetting CISPES.

Some 1300 pages of additional FBI files released in 1988 by New York's Center for Constitutional Rights (CCR), on behalf of CISPES, reveal in sharp detail the extent and nature of the FBI probe into CISPES. More importantly, the files show that the FBI, to justify its actions, accepted as fact a right-wing conspiratorial world-view which sees dissent as treason and resistance to oppression as terrorism.

The first FBI investigation of CISPES was launched in September of 1981 to determine if CISPES should be forced to register under the Foreign Agents Registration Act. Among the documents used by the FBI to justify this CISPES probe, according to Congressional testimony by FBI official Oliver "Buck" Revell, was a 1981 article by a former FBI informant and ongoing right-wing private spy-John Rees. The Rees article appeared in Review of the News a magazine published by the paranoid ultra-right John Birch Society. This FBI investigation was terminated without indictments in December of 1981.

A second FBI investigation of CISPES began in March of 1983. It was premised on the right-wing conspiracy theory that CISPES was a cover for "terrorist" activity. To justify this view, the FBI relied not only on reports from its informant Varelli, but also in part on a conspiratorial analysis contained in a report written by Michael Boos, a staffer at the right-wing Young Americas Foundation. This FBI "counter-terrorism" investigation was terminated without indictments in 1985.

(snip)

FBI agents raided the homes of six activists in Minneapolis and two in Chicago on September 24, seizing computers, cell phones, CDs, files and papers. They left behind subpoenas ordering at least some of the targeted individuals to appear before a federal grand jury in Chicago. The FBI agents were seeking evidence of ties to "FTOs," or foreign terrorist organizations, including the Revolutionary Armed Forces of Colombia (FARC) and the Popular Front for the Liberation of Palestine (PFLP).

Steven Warfield, the FBI media coordinator, said that six warrants were issued in Minneapolis and two in Chicago as part of a terrorist investigation. The FBI agents were searching for evidence of "material support to terrorists." When asked about any subpoenas that were issued today, Warfield said "I can't tell you about any grand jury activities."

University of Minnesota Law Professor Peter Erlinder, who was arrested this summer near the Rwandan capital for representing Victoire Ingabire, attended a press conference at one of the homes that was raided on Park and 29th Street. He said that the raids today were not simply a small issue that happened on the South Side of Minneapolis. They were the result, he said, of a recent Supreme Court ruling, Holder vs. Humanitarian Law Project, which upheld a statute that made it illegal to support any organization that the Secretary of State deems terrorist because it is opposed to U.S. policies. The Supreme Court ruling makes providing "material support" to terrorist organizations a felony even if that support was peaceful. Thus, a lawyer providing legal services or a doctor providing medical services to a terrorist organization would technically be committing a felony, Erlinder said. "The individual doesn't have to intend to be furthering the illegal activities," Erlinder said.

NOTE: In Holder, the US Supreme Court adopted the legal reasoning of then Solicitor General Elena Kagan, an aspiring A. Mitchell Palmer of our times.

Labels: "War on Terror", Activism, Barack Obama, Colombia, FBI, Israel, Palestine, Second Reagan Revolution

Rarely is it so obvious:

President Obama's proposal to boost the research tax credit for businesses is widely seen as necessary to bolster American competitiveness in the global economy.

But even if the $100-billion plan is approved, it won't begin to address the fundamental question of how to turn that research and new technology into jobs and renewed prosperity for Americans.

Over the last two decades, U.S. scientists and engineers have discovered or pioneered the science behind one blockbuster product after another — from flat-panel screens and robotics to the lithium batteries that run next-generation power tools and electric cars.

Yet in almost every case, production, jobs and most of the economic benefits that sprang from those breakthroughs have ended up overseas.

America's innovative spirit may still be the envy of the world — major steps forward in nanotechnology and biomedical fields, among others, continue to be made in U.S. labs. But without more effective policies to translate those achievements into gains at home, the fruits of America's creative genius will probably continue to be reaped by others.

And new reports show that during the recession American companies ramped up investment overseas for plants and new hires, as well as research and development — even as they cut back domestically.

Foreign subsidiaries of U.S. corporations increased their spending on research and development by more than 7% in 2008 from the previous year, pushing the total to nearly $37 billion. But these same multinational companies sliced R&D expenditures in the U.S. that year 2.2% to $199 billion, Commerce Department data showed.

A similar but less dramatic difference was evident in hiring: Employment at these overseas units rose 1% in 2008 — and a stunning 15% in China — but was down 2% for the U.S. elements of the 2,200 multinational firms the Commerce Department studied.

Some of these jobs were lost to automation, but Obama and many independent economists said a big factor was the sharply different policy approaches of U.S. and foreign governments.

For decades, Washington has taken a largely hands-off, or laissez faire, approach, sometimes even adopting tax and other policies that critics said actively encourage the movement of manufacturing and other business activity overseas.

By contrast, export giants such as Germany, Japan and South Korea have embraced government policies — and even pressure tactics — that push businesses to maintain operations at home.

You mean, say, something like this?

Government officials here are confident they found the right approach, including a better solution to unemployment. They extended the Kurzarbeit or short work program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions.

At its peak in May 2009, roughly 1.5 million workers were enrolled in the program. The Organization for Economic Cooperation and Development recently estimated that by the third quarter of 2009, more than 200,000 jobs may have been saved as a result.

The German economy’s comeback is visible in smaller towns like Memmingen, in the historic region known as Swabia. The brightly painted market square in this prosperous town is straight out of a German fairy tale, but it is beyond the medieval fortifications of the old town that Memmingen’s part in the nationwide rebound of employment, which Chancellor Merkel has likened to a small miracle, took place.

After a record year in 2008, the family-owned firm Magnet-Schultz watched orders for its electromagnetic products plunge. Nearly one-third of the company’s more than 1,500 workers in Germany were put on the short-work program. Only 57 were laid off.

The firm’s chairman, Wolfgang E. Schultz, whose grandfather founded the firm nearly 100 years ago and whose son Albert joined as a vice president in January, said that his goal was to maintain the company in the long term by losing as few skilled workers as possible. He promised to try to rehire those who were let go when times improved. Forty of those workers have been rehired already.

It is essential to observe that the issue here is not a nationalistic one, but, rather, one as to whether the government is pursuing policies that benefit workers or capital. In the US, the Obama administration continues to emphasize programs that benefit capital, international capital, in fact, as shown by the research and development tax credit proposal, as well as by TARP, which expended funds that went to European as well as American banks. Indeed, it is almost impossible for the US to structure economic measures solely for the benefit of domestic capital, given the overseas units of US companies and the operations of foreign firms in the US.

Conversely, the German government, while unabasedly capitalist, did implement some policies that softened blow of the global recession upon the workforce, such as the one described in the New York Times article. Of course, one should not go too far with this, as German governments have imposed austerity measures upon workers in recent years. Even so, such governments have recognized that the preservation of a skilled workforce is essential for the future prospects of a manufacturing economy. Apparently, policymakers in the US, no longer so concerned with the manufacturing sector, consider such measures unnecessary, believing that the provision of services, including well compensated professional ones, have become fungible in a global economic system.

Perhaps, the conflation of the needs of the US economy with those of international capital explains the development of deficit reduction policies, with an emphasis upon social programs, Social Security and Medicare, despite the fact that they are minor contributors to the deficit:

Capitalists requires subsidy, so the US government has assidously provided it over the last 40 years, regardless of its impact of the federal budget. Capitalists also require the use of military force, or the threat of it, to open new markets and initiate the ruthless process of accumulation, so, again, the defense budget has grown, without concern as to the fiscal consequences. Meanwhile, social programs (roughly equivalent to the Domestic Discretionary Programs in the chart), Social Security and Medicare (pejoratively described as Entitlements in the chart) find themselves in the firing line, with everyone from President Obama on down frightening the populace about a non-existent crisis in the growth of such spending. Meanwhile, the various forms of subsidy provided to the financial sector through the Federal Reserve and the Treasury since 2008 remains an inappropriate subject in polite company.

Labels: American Empire, Bailout of Finance Capitalists, Germany, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America, US Military

How many times does this have to happen before people figure it out?

Labels: Barack Obama, Democrats, Joseph Lieberman, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

Ronald Reagan: 1981

Barack Obama: 2010

Labels: Bailout of Finance Capitalists, Barack Obama, Democrats, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

firedoglake has been doing an excellent job covering the activities of the Deficit Reduction Commission, aka the Catfood Commission. Partially through their efforts, the intention of a supramajority of commissioners to recommend an increase in the retirement age to receive social security benefits has become commonly known. Congressional representatives have already been discomforted by inquiries about it, thus demonstrating that Nancy Pelosi's strategy to push them through the House sotto vocce is already a failure.

Jane Hamsher is providing an essential service by having people do such important spade work, making firedoglake a excellent website for understanding the ongoing effort to dismantle what remains of the New Deal, even if you don't agree with the overall ideological perspective. Now, even Donna Smith of Reuters is reporting what the Commission wants to do:

Erskine Bowles and Alan Simpson made clear at a U.S. Chamber of Commerce event that the bipartisan panel is eying tax breaks, including the popular mortgage interest deduction, as well as slashing government spending in its effort to recommend ways to cut the estimated $1.4 trillion federal deficit.

It is all going to be very painful, Bowles said.

The 18-member commission has been tasked by Obama to deliver its recommendations in December, well after the November congressional elections in which the deficit and $13 trillion debt have become major issues.

Bowles and Simpson provided some insight into what the commission might suggest.

Bowles, who served as former President Bill Clinton's chief of staff, said most of the effort has to come from spending, a view that puts him at odds with some of his fellow Democrats who are looking to pare back President George W. Bush's tax cuts for the wealthiest Americans to reduce the deficit.

I just want to see the vast majority of it come out of spending, Bowles said.

He said about 75 percent of the deficit reduction effort should come from spending cuts and 25 percent from revenue increases.

The Deficit Reduction Commission is the instrument by which the sub-proletarianization of the US will be accomplished. Reduced social security benefits, the reduction, if not elimination of the home mortgage deduction and substantially less government assistance, this is the future, coming soon to your neighborhood. And, just in case there was any confusion:

(snip)

Bowles also called for capping government spending at 21 percent of the overall economy. Government spending now accounts for 24 percent of the economy and could rise to 27 percent, according to Republican Senator Judd Gregg, who is also a panel member.

(snip)

I would like to see us take a hard look at tax expenditures, Bowles said, adding that they amounted to government spending by a different name. Bowles said he favors lowering corporate and individual income tax rates and putting in place a tax on consumption.

If such measures are proposed and adopted, we will experience an exponential increase in already extreme disparities of wealth within this country. Governmental expenditures and income taxes are generally redistributive, while a tax on consumption is regressive, reducing the amount of taxes that the wealthy pay upon investment income while placing more of the tax burden upon the middle and lower class.

Approval of the sorts of measures suggested by Bowles would enshrine the imperialism of market "reason" so incisively critiqued by lenin earlier today. In the UK, it is manifesting itself in the most extreme form through plans to privatize much of the provision of health care by the National Health Service.

As described by lenin:

One aspect of this specious conception of reason is the encroachment of a set of analytical principles established by marginalist economics into other fields of social science. Though specifically concerned with the workings of markets, it is assumed by their advocates that these could apply universally. And, as Ben Fine and Dimitris Milonakis argue (From Economics Imperialism to Freakonomics, Routledge, 2009), the 20th Century saw a growing tendency for various authors, including the writers of such ordure as Freakonomics, to extend them as universally as possible. Freakonomics (and its Super- sequel) discovers a market logic behind a bewildering variety of social phenomena. Gary Becker finds that market logic explains a wide range of phenomena including crime and punishment. For Robert H Frank, economics explains everything, and he encourages his students to find ways to apply market laws to all manner of questions. Everything up to and including romantic relationships can be understood in terms of utility maximization. Thus, the search for a partner can be interpreted as a petty entrepreurial activity in a competitive market, in which - acting on information and incentives - couples form property-based relational contracts as a means for effectively utilizing resources, and the relationship is only sustained for as long as each maximises the utility that the other receives.

Underpinning this approach is three basic analytical principles. The first is individualism. The individual is taken to be the self-sufficient unit of all forms of behaviour, the real basis of all fictitious corporate entities. The second is rational self-interest. The individual behaves in ways that will maximise utility to herself, on the basis of a rational assessment of the information available in the market. Here, utility is purely subjective - whatever is useful to an individual is whatever she thinks is useful, while there is an assumption of an implicit market in all walks of life, even where there are no commodities, no price signals, and no currency. The third principle is exchange. Utility maximisation optimally takes place through the act of exchange, and that exchange can take place between the drug dealer and the addict as much as the lover and the pursued. This kookiness, where it is not merely circular and vulgar, descends into absurdity when the suitability of the theory can only be established through an ad hoc proliferation of conceptual innovations, as when - for example - Becker explains criminal recidivism in terms of a preference for risk. This naturalises and universalises the cut-throat self-advancement of career-minded bourgeois WASPs, distilling it into a set of puerile anthropological axioms. Middle market books such as The Economic Naturalist probably aggrandise the narcissism of the bourgeois, allowing them to read about themselves and their conduct in flattering terms, giving it a metaphysical twist, endowing it with transcendent validity. And small wonder that such people like to hear that everyone else has exactly the same petty, criminal mentality that they do - it is not capital that is self-maximising, it is humanity itself! - and that they have merely been more successful utility-maximisers than the majority of humankind.

There are three critical things to understand about the public statements by commissioners like Bowles and Simpson in relation to lenin's insight: First, and most obviously, the implementation of policies designed to facilitate such a philosophy, as the Commission intends to do, will inflict social hardships upon Americans to a potentially unprecendented degree, perhaps even worse than those experienced during the recessions of the 1870s and 1890s and the Great Depression of the 1930s.

Second, and also fairly evident, it will result in a period of violent unrest, again, perhaps worse than any comparable periods in American past. Given the lack of any publicly recognized left alternative, or for that matter, any political alternative, the prospects for horrible incidents like, say, the pogroms in Russia in the 19th Century, are more likely than we want to admit. Perhaps naively, I still hope that we won't descend something akin to the worst excesses of fascism.

Third, and more subtlely, there is, as emphasized by lenin, the effort to impose a vision of all human experience as one limited to the rationality of market transactions. Beyond intensifying the devastation of the global environment, it will further impair the ability to persuade people to act collectively and have a sincere interest in the well being of others. It will also result in harsh emotional dissonances for everyone subjected to it. People find fulfillment in life for many reasons other than personal economic success, and the inabililty to seek to attain such fulfillment will have nasty consequences for those frustrated by it, whether they are conscious of it or not. A fuller understanding of this emergent phenomenon awaits a 21st Century Freud or Jung, but, for now, the peril is that such repressed resentments will erupt violently, reordering society along explicitly authoritarian lines.

Labels: American Empire, Barack Obama, Democrats, firedoglake, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

Absent an explosion of public outrage, a Democratic President and a Democratic Congress are going to substantially cut Social Security and Medicare. The political party responsible for an unprecented era of social welfare is now going to bring it to an end. House Majority Leader Nancy Pelosi exposed the inevitability of it today when, at the last minute, she included a provision in the supplemental war funding bill that will permit the House to vote upon the recommendations of Obama's deficit reduction commission if they first pass the Senate. Of course, it promptly passed.

This has been a primary objective of President Obama since before he took office, and, within the next six to seven months, he will achieve it. Quietly, earlier this year, he appointed a commission, a purported deficit reduction commission, with a sufficient number of members in support of cuts to Social Security and Medicare. Predictably, the commission has adopted such a focus, prioritizing the financing military operations around the world instead of providing for the retirement of millions of Americans. The propaganda effort in support of these measures has been lead by America Speaks, a Pete Peterson funded organization dedicated to eviscerating Social Security and Medicare.

Last weekend, despite being subjected to rigged presentations about the perils of the deficit, attendees at forums organized by America Speaks rejected measures that would result in Social Security and Medicare cuts, opting instead for more government stimulus to spur economic recovery. Perhaps, it was this disasterous outcome that prompted Pelosi to take action today to ensure that the cuts are pushed through Congress before sufficient public momentum can develop to derail them. But what will the commission propose for adoption during the holiday season after the November election?

We have some good, reliable general ideas: an increase in the age for qualifying for full Social Security benefits from 67 to 70, means testing and the implementation of some form of limted investment in the stock market, either by the Social Security Trust Fund itself, or through personal retirement accounts. Meanwhile, as for Medicare, in addition to the successful stealth effort to cut Medicare through health care reform, the commission may find such proposals as increasing co-payments and other disincentives for seeking medicare care appealing. By early 2011, we shall have entered a brave new world, unless there is an unprecendented mass movement to stop the political and economic elites from implementing these policies. To be successful, it may well require civil disobedience on a scale not experienced since the civil rights movement.

Labels: Bailout of Finance Capitalists, Barack Obama, Democrats, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

Obama's catfood commission relies upon investment banker Pete Peterson to provide staff support. On Fridays, I co-host a public affairs program on KDVS 90.3 FM. I've been thinking about referring to Obama with a new name: Reagan. As in Reagan ordered more drone strikes in Pakistan, Reagan is allowing BP to run the federal government response to the oil spill in the Gulf, Reagan is . . . well, you get the idea.

Labels: Barack Obama, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

As advocated by David Leonhardt of the New York Times:

Democrats have more of a strategy — raising taxes on the rich and using health reform to reduce the growth of Medicare spending — but it is not nearly sufficient.

What would be? A plan that included a little bit of everything, and then some: say, raising the retirement age; reducing the huge deductions for mortgage interest and health insurance; closing corporate tax loopholes; cutting pensions of some public workers, as Republican governors favor; scrapping wasteful military and space projects; doing more to hold down Medicare spending growth.

Much of this may be unpleasant. But by no means will it doom us to reduced living standards or even slow economic growth. We can still afford to spend more on Medicare — even more per person — than we do today, and more on education, the military and other areas, too. We just can’t afford the unrealistic promises that the government has made. We need to make choices.

But, there is something missing here, what is it? Something has been, as they are now saying in the UK about the National Health Service, ring-fenced, meaning that it will relieved from the necessity of budget cuts. Let's look carefully, ah, yes, here's a clue: scrapping wasteful military and space projects.

Figured it out yet? Yes, you've got it. The purported war on terror, the wars in Iraq, Afghanistan, Pakistan and beyond. Trillions more for that, with only wasteful projects cut, while trillions are taken away from public sector workers, Medicare, middle income homeowners and pensioners. In the UK, a Tory-Liberal Democrat government ring-fences health care, whereas in the US, we ring-fence the military-industrial complex.

After all, someone has to pay for those drone strikes, and it can't be the people who profit most from them. For Leonhardt, unlike the effort to assist in the provision of the necessities of daily living, US militarism is not one of the unrealistic promises that government has made. Left unanswered is the extent to which consumer demand can survive such austerity and prevent a even greater decline in economic activity and government revenue.

Labels: "War on Terror", Neoliberalism, New York Times, Second Reagan Revolution, Sub-Proletarianization of America

Slowly, but surely, the Trojan Horse continues to move towards its destination.

Labels: Bailout of Finance Capitalists, Barack Obama, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

Turns out that, for the Obama administration, there are things other than intimidating Iran in which everything is on the table.

Labels: Barack Obama, Democrats, Liberals, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America

Teachers won't accept new duties without pay to improve school test scores? Fire them, fire ALL of them.

Labels: Bailout of Finance Capitalists, Barack Obama, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America, Unions

The critical aspect of Obama's intention to become a deficit hawk, signalled before he entered the White House, when he emphasized the importance of entitlement reform, is, as recognized by Gaius, the generational restructuring of the federal budget further away from social services and even more weighted towards the military industrial complex, financed by a system of increasingly regressive taxation. Such a restructuring is consistent with what is transpiring in the economy, with massive job losses and small business closures. Both the government and the economy are being reorganized to the benefit of a narrow capital class of large corporate enterprises. If it requires trillions of dollars of unprecented subsidy one year, and deficit reduction the next, so be it. In other words, policies are as changeable as the wind as long as they remain consistent with the ultimate goal, the concentration of power within a small global elite.

Labels: American Empire, Bailout of Finance Capitalists, Barack Obama, Global Recession, Neoliberalism, Second Reagan Revolution, Sub-Proletarianization of America