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Another Big Lie

Susie Madrak notes that the usual suspects are preparing to raid Social Security and Medicare again.

First of all the reality of the deficit. There are very few people in this country who don’t actually run a deficit. They call it different things to avoid recognizing it for what it is, but it’s a deficit.

If state and local governments issue bonds for a project, they have a deficit. If an individual has a mortgage, car loan, credit card balance, they have a deficit. If you spend more than you earn, you have a deficit.

One of the “gifts” that contributed to the current mess we are in is the belief that people shouldn’t pay off their debts and save money. This is based on the almost constant inflation that was finally reined in by the Fed. Unfortunately the Fed encouraged this behavior by making easy credit available, convincing a lot of people who should have known better, to use it.

Now, after ignoring the problems of the deficit during the Reagan, Bush I, and Bush II years, the deficit hawks are back on the attack during a Democratic administration. If they were really concerned about the deficit, they would be backing tax increases or cuts in defense spending, but those moves would affect them and their friends, so they want to steal the money from the FICA taxes, that are only paid by people who work for a living.

Bill Clinton’s surplus was all FICA taxes, not income taxes. The income taxes were close to paying for the government, but not quite there. The income tax cuts that the Shrubbery enacted were a redistribution of payroll taxes to the wealthy. They stole from the poor and gave to the rich. Now that they are going to have to repay all the money they looted, Pete Peterson and his fellow travelers want to steal from the poor again.

3 comments

1 Badtux { 01.05.10 at 12:49 am }

As I pointed out on my own blog today, you *want* to run a deficit when you’re in a deflationary cycle, because running a deficit is the easiest way to print money and thus head off deflation — i.e., run a deficit, have the Federal Reserve show up at the Treasury auctions and hand over a buncha freshly-printed dollars in exchange for freshly-printed T-bills, voila. Instant re-inflation of the currency.

And we *ARE* in deflation right now, and by and large have been for the past eight years unless you’re one of the top 5% of wage-earners. Wage deflation is horrific right now, people’s wages are dropping like rocks as they lose their jobs or find low-paying McJobs to replace higher-paying jobs, and even the CPI (excluding food and energy) was at 0% in November (last month we have data for). Printing money is the thing to do if you’re in this situation, and running deficits is the way you print money right now. This is a lesson we learned 80 years ago during the Great Depression, for cryin’ out loud. I realize that the tighty righties live in an alternate universe where the Great Depression was caused by FDR’s New Deal, but this deficit nonsense is being spread around by supposedly sane people, not Republicans… WTF is the matter with them?!

– Badtux the Frustrated Economist Penguin

2 Suzan { 01.05.10 at 10:22 am }

Thanks so much for spelling this out.

I’ve been writing about it for years and the “Pete Peterson liars” are back in force screaming (essentially) that after letting the Rethugs go crazy with tax cuts (that benefitted him and his friends generously) and unpaid-for wars that we need to extract (once again) the moolah to pay for it from the bottom-level of taxpayers (those who pay FICA taxes) just like Alan Greenspan did in the 80’s to make up for the Raygun tax cuts and military spending.

I watched my savings disappear with every paycheck then and eventually my good job in the software industry (as H1-B workers were brought in to solve the fraudulent “shortage of high-tech workers” problem), where I struggled daily to stop the waste, fraud and abuse that was the calling card of the company management, which allowed them to pad cost-plus contracts immensely.

If we allow them to sell the Fox Noise viewers on this solution again, we deserve the violent revolution that will undoubtedly ensue as people will not be content again to watch their livelihoods be taken away amid the furor over the next “American Id(iot)ol” winner.

S

Bill Clinton’s surplus was all FICA taxes, not income taxes. The income taxes were close to paying for the government, but not quite there. The income tax cuts that the Shrubbery enacted were a redistribution of payroll taxes to the wealthy. They stole from the poor and gave to the rich. Now that they are going to have to repay all the money they looted, Pete Peterson and his fellow travelers want to steal from the poor again.

3 Bryan { 01.05.10 at 10:07 pm }

Badtux, people will never accept a truth that makes their personal situation worse, they are paid not to believe it by all of the looting they can do during a period of deflation. The scavengers are buying property in Florida, which accounts for the home sales figures in some areas.

They benefited from the tax cuts and don’t want to pay it back. It’s really simple – they’re a bunch of greedy low-lifes.

This is why they dumped the FICA taxes in with the income taxes, Suzan, to hide the real deficits they were running under Reagan and the Bushes. They have been sticking it working people ever since.