Alliance for Democracy

Plutocracy in America

Posted in Class war, Plutocracy, Uncategorized by Alliance for Democracy Portland OR on December 26, 2010
We have seen it in Greece and Ireland recently. We will see it in Spain  and Portugal and other European nations.  In these nations, the rich have or will impose cuts in social benefits, higher prices, longer work hours, less vacation in order to put their financial houses in order.  That is to say, the order that international financial institutions like the International Monetary Fund and the World Bank and the central banks in America, the Federal Reserve) dictate.  They say that these nations have been irresponsible, that they have lived beyond their means and that the people must now pay the price to get their financial system in order. 

The reaction in Greece and Ireland was immediate.  People moved to the streets in protest.

Here in the United States the same policies are being instituted. But we remain docile.  Barely a voice is raised to defend the American working people as we are told that the government is too large, spends too much money on social programs like Social Security, Medicare/Medicaid and education. Certainly, the American people have not moved to the street. They don’t even dare talk about it amongst themselves.

Congress passed and President Obama signed another law in the attack on the middle class and the poor, be they white or minority.  The signing of the tax “reform” was declared a great example of bi-partisanship lawmaking.  In fact, it was a signal of the President’s continuing move to the right, a signal of the ever growing power of the wealthy and their corporations.

But it is only the latest stage of the attack of the rich and powerful on the middle class.  The attack began with President Kennedy when he said we needed to encourage business  by reducing the highest tax rates on the wealthy and on corporations.  It continued with President Reagan and his attacks on the unions. President Clinton pushed forward the Pres George H.W. Bush North American Trade Agreement to further empower the multinational corporations and dis-empower labor and environmental activists.  The tax cuts continued.  More so-called free trade agreements were imposed.  With each new law, the people continued to lose all power.

And then this year the US Supreme Court moved to further ensure that no voice would be raised against corporate power with their Citizen’s United v FEC decision.  This decision allows corporations to spend as much of their treasuries as they saw fit on political campaigns. If it was unclear before, it is now there for all to see: the United States is no longer a democracy; the United States is a plutocracy.  No longer “of the people, for the people, by the people”, but “of the wealthy, for the wealthy, by the wealthy.”

Jack Rasmus wrote the following for In These Times.  He predicts that during the first three months of 2011, drastic spending cuts will be instituted as the second of a three phase process “a new policy offensive designed to protect the incomes of the wealthy and corporate America for another decade, to be paid for directly by middle- and working-class America. Together, the three phases represent the emerging U.S. variant of a general austerity strategy, similar in objective but different in content to other austerity programs now emerging as well in the Eurozone, Japan and elsewhere.”

Read on.

David e. Delk, Alliance for Democracy – Portland,

The ‘Repo-Demo’ Party’s Three Phase Austerity Plan for America
Get ready for more of the same failed “job creation” policies, enacted by an increasely unified political elite.
Original article here
The Bush tax cuts are now extended. What cost $3.4 trillion over the past decade, 80% of which accrued to the wealthiest households and U.S. corporations, will now cost another $802 billion over the next two years and a projected $4 trillion over the coming decade.

But the Bush tax cut extension just passed by a political elite increasingly united on economic policy—a ‘Repo-Demo’ Party dominated by corporate interests—is only the first of three phases in a new policy offensive designed to protect the incomes of the wealthy and corporate America for another decade, to be paid for directly by middle- and working-class America. Together, the three phases represent the emerging U.S. variant of a general austerity strategy, similar in objective but different in content to other austerity programs now emerging as well in the Eurozone, Japan and elsewhere.

[President Obama's deal with Republican leaders, signed into law December 17, 2010, extended tax cuts for the wealthiest Americans for another two years.   (Photo by ALEX WONG/Getty Images)]President Obama’s deal with Republican leaders, signed into law December 17, 2010, extended tax cuts for the wealthiest Americans for another two years. (Photo by ALEX WONG/Getty Images)

Phase two: draconian spending cutsThe second phase will likely be implemented in the next three months, before the ceiling on the federal debt has to be lifted. It will take the form of massive spending cuts in the U.S. budget, targeting Social Security and Medicare in particular. (A parallel draconian slash in spending will occur at the state level, targeting Medicaid and education).

Social Security has been a prime target since the Reagan years. Unable to cut it in the early 1980s, Reagan instead settled on a major increase in the payroll tax in 1984, creating a $2.5 trillion surplus over the last 25 years. However, that surplus was ‘borrowed’ every year by Congress to cover up in part U.S. budget deficits created annually since the 1980s to pay for war spending and tax cuts.

All that remains of the surplus in the Social Security Trust Fund are government IOUs promising to replace the shortfall when necessary—a replacement we’ll never see in our lifetimes.

In 2003, Bush II re-opened the attack on Social Security by trying to privatize it, but failed. Despite the accumulated surplus having been drained, Social Security was still annually producing a surplus and was thus financially too stable to convince the public it needed basic change. In contrast, today, as a result of a chronic three year long recession, there is no longer an annual surplus being created. Social Security is just breaking even.

But implementing the pending payroll tax cuts—part of Phase One—will finally put Social Security in the red, creating for the first time the net annual losses conservatives and corporate America have always needed to push a major gutting of the program. The payroll tax cut is thus the first move in what will prove a general attack on social security that will gain momentum in the coming months. Reagan conservatives have argued it would first be necessary to ‘starve the beast’ in order to dismantle it. For the first time, that scenario will exist.

Phase three: revising tax code to help the wealthy

Following the imminent draconian cuts in spending and Social Security-Medicare-Medicaid-Education about to take place in 2011, which lie at the heart of the second phase, the third phase of the new austerity strategy will follow in the summer of 2012. It will take the form of a fundamental revision of the U.S. tax code.

As part of this general revision, the Bush tax cuts will likely be made permanent for the rest of the decade to come. In addition, personal income tax brackets for the wealthiest households will be reduced to no more than three, possibly two, with a top rate for the wealthy or no more than 28%, representing a return to Reagan years.

For corporations, depreciation write-offs, a de facto investment tax credit for business, will be accelerated to full deductions in the first year—a measure already just enacted for small business this year. For multinational corporations, the foreign profits tax will be restructured to their advantage. The corporate tax rate will be significantly reduced or even phased out entirely. Not least, the new 2% cut in payroll taxes could also be extended, forcing yet another round of further reductions in Social Security and Medicare benefits and still higher co-pays for retirees.

To pay for the tax code rewrite and even more concessions to wealthy households, investors and corporations, the middle class will pay more. Adjustments to the Alternative Minimum Tax, AMT, for the middle class will be phased out. And the mortgage interest tax credit will be eliminated in stages as well.

Same wine in same bottles, with new label

Obama and the ‘Repo Demo’ Party have launched a PR offensive in the wake of the Bush tax cut extensions, proclaiming that the Bush tax cuts plus unemployment insurance extension plus payroll tax cut together amount to a ‘Stimulus 2’ package that will result in more economic growth and new jobs.

This is the same old tired song of the Bush administration. In fact, every one of the four major Bush tax cuts passed between 2001-04 was officially called ‘job creation’ bills.

The result of these ‘job bills’ was the weakest job creation following a recession of all the nine prior recessions since 1945. It took 46 months to recover jobs lost from January 2001, the start of Bush’s first recession. The second recession of the Bush II era, which started in December 2007, was followed by a  $168 billion stimulus bill passed in spring 2008—about $90 billion of which was tax cuts. The result: 4.5 million full-time jobs lost in 2008. Then another $787 billion stimulus in early 2009, Obama’s ‘Stimulus 1’ package—about half of which was tax cuts. The result: Another 6.5 million full time jobs lost in 2009. In 2010, another half million lost jobs and dropped out of the labor market. Of the 900,000 private sector jobs created in 2010, more than two thirds were part-time and temp jobs.

At the close of 2010, now we have yet another tax cut heavy ‘Stimulus 2’.  Again the claim is that it will create jobs. However, except for the payroll tax cut of $112 billion there is nothing ‘net new’ in the so-called ‘Stimulus 2.’ It’s the same old wine poured into same old bottles—just a new label slapped on the side and a brand new cork (payroll tax cut) added to the opening.

The key question: Will any jobs be created?

Corporations are today sitting on a cash hoard of more than $2 trillion, according to the business press, not investing or creating jobs. Why should increasing that hoard another $500 billion or so result in anything different? That’s the key question conservatives and the ‘Repo-Demo’ Party elite must answer—but are avoiding. That’s the question the media should be asking, but about which they remain conspicuously silent.

Only the $112 billion payroll tax reduction represents a ‘net new’ contribution to stimulus. But is it sufficient to generate jobs? Not by a long shot. For those earning $50,000 a year to the top payroll tax rate of $106,800 a year, the payroll tax cut will, on average, lead to no more than $20/week in real spending power after adjustments for partial saving, debt paydowns and what will be accelerating costs for food, healthcare, and gasoline coming in 2011. Those below $50,000 will actually have less to spend, since the “Make Work Pay” credit is ending for them. That’s nowhere nearly sufficient to stimulate the economy and create jobs.

Obama’s 2011 ‘Stimulus 2’ will thus prove no more effective than his 2009 ‘Stimulus 1.’ The past decade has produced repeated tax-cut heavy policies targeting the rich and corporations: Bush II and a Republican Congress 2001-06. Bush II and a Democratic Congress 2006-08. Obama and a Democratic Congress 2008-10. And now Obama and a de facto Republican Congress.

The recent Bush tax cut extensions show the corporate-dominated political elite of both parties are now closing ranks as the economic crisis continues with no resolution for all but the wealthy and corporations. The ‘Repo-Demo’ Party, newly aligned around the same old failed policies, has just begun to do its work. Get ready for more of the same.

Jack Rasmus is the author of Epic Recession: Prelude to Global Depression, published in May 2010 by Pluto Press, Palgrave-Macmillan.

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