Recent Articles of Interest

Social Security by any measure is among the most important programs in the United States. Directly and indirectly, it affects almost every person in the country. It provides life insurance for minor dependents of workers along with disability insurance for the working population, while it greatly enhances Americans’ independence by relieving most of the younger and middle-aged of having to support their elderly relatives. At the same time it gives independence and dignity to the aged themselves.

A large majority of America’s retirees, some 65% or so, rely on Social Security benefits for half or more of their total income. As reported by the Social Security Administration, a sizeable minority of our aged population, some 30%, receive 90% or more of their income from Social Security. Two-thirds of these?one-fifth of all older people in the United States?have no income at all except their Social Security benefits. To put this in absolute numbers, Social Security lifts nearly 13 million elderly Americans above the poverty line. Without their Social Security benefits, nearly half of all elderly Americans (46.8%) would fall into poverty; with Social Security, only 8.7% are so classified. This is still too many, to be sure, but these figures nonetheless demonstrate the vast positive effect of America’s social insurance system.

These positive effects certainly place Social Security among the most popular program in American history. Unfortunately, though, it has come to be among the most misunderstood. For a quarter of a century or so, much of the information directed toward the public about Social Security has ranged from the misleading to the incorrect. Considering the program’s importance?which includes not only enormous size, but also direct effects on people’s lives?the lack of understanding is troublesome. The late Will Rogers is supposed to have remarked, “it ain’t what people don’t know that’s so dangerous; it’s what people know that just ain’t so!” As this article will make clear, that comment certainly pertains to Social Security.

Much of the misunderstanding results from a deliberate campaign?now quite well documented?to undermine America’s highly successful system of social insurance. Funding for this effort comes from investment bankers and assorted financial interests that hope to profit from privatizing the system. Ideological enthusiasm comes from a number of organizations.

The Concord Coalition, for example, has been among the most successful. It manages to present itself as bi-partisan and “reasonable,” while working diligently to foster its agenda, which is to create doubt about “entitlements.” Concord reflects the attitudes of Peter Peterson, former secretary of commerce under President Nixon and an anti-Social Security zealot.

Considerable intellectual energy comes from the libertarian Cato Institute. Years ago, as Cato’s “Project on Social Security Privatization” was getting underway, I debated the project’s director, the able and urbane Michael Tanner. When I accused him of heading a project that had spent two million dollars in a deliberate effort to undermine confidence in Social Security, he corrected me, saying smugly?and no doubt accurately?that the amount had been three million dollars. It has been vastly more than that now, of course, and, under pressure from the Bush White House Cato has changed the name?not the aim?of its project to the more focus-group friendly “Project on Social Security Choice.”

Cato and its libertarians are quasi anarchists. Similar, or even more extreme, sentiments exist elsewhere. A few “anarcho-capitalists”?ironically, often from comfortable academic positions, and sometimes even in state colleges and universities?are devoted to minimizing government and eliminating social programs, especially Social Security. To be sure, being sheltered from the “real world” may help ideologues remain ideologues, and enable them, as the saying goes, to swallow camels while they strain at gnats. The more extreme of these extremists reflect ideas from Herbert Hoover rather than any historical evidence. They take the gnat-straining position that Social Security, health care, and similar programs constitute government threats to liberty. Swallowing the camel, many of them ignore the very real violations from such things as warrantless wiretapping, security requirements at airports that range from inconvenient to humiliating, asset forfeiture under the “drug war” and other programs, the suspension of habeas corpus (which assumes guilt and denies the arrested person even the opportunity to demonstrate proof of citizenship, let alone to present evidence of innocence), and issuance of “National Security Letters” that can lead to jail for recipients if they even reveal that they have received the letters. They also ignore genuine economic threats to liberty from unemployment, low wages, high health care costs, and the like.

Certainly, reasonable people will disagree, but consensus is possible. That is the essence of democratic politics. The more complicated an issue, the more genuine disagreement there likely will be, but thoughtful discourse and sound information can bring consensus. Social Security, of course, is a complicated subject. Developing an informed opinion requires more than becoming familiar with the positions of its opponents and its supporters. First, it is necessary to examine the nature of the program itself. Then, it is important to do something that few people have done: that is to examine critically the government’s own official projections. Therein lies the path to sound information.

What is Social Security?

In the broadest sense, “social security” can apply to any program protecting the health or income of citizens. That use is common in countries abroad. In the United States, it can technically mean any program that originated under the Social Security Act of 1935, or any one under the Act as subsequently amended. That could include such things as unemployment insurance, the original programs of Aid to the Blind and Aid to the Permanently and Totally Disabled, or to the various incarnations of “welfare,” as it has progressed from ADC (Aid to Dependent Children) to AFDC (Aid to Families with Dependent Children) to TANF (Temporary Assistance to Needy Families). In both popular and professional usage, however, American “Social Security” generally means contributory social insurance. Although such a definition could include Medicare, which certainly is “contributory social insurance,” Medicare is usually considered separately. That will be the usage in this article. “Social Security” will refer to the contributory social insurance programs of income maintenance (Old-Age, Survivors,’ and Disability Insurance). It will not include Medicare unless the text so indicates.

How Does Social Security Function?

The financing for Social Security comes from the FICA tax (Federal Insurance Contributions Act) levied on workers’ wages with a matching tax on employers. The tax rate is 6.2% on each, with an additional 1.45% levied on each for Medicare. The amount of wages subject to FICA taxes is capped; Medicare taxes apply to all wages with no limit.

Benefit levels are calculated on a thirty-five year period, the worker’s thirty-five years of highest wages. Their levels are progressive. The average earner receives benefits equal to just over 40% of wages at retirement; the high earner receives around 27%, while the low earner receives almost 56%. Note that these figures are for retirees only. They do not include additional benefits paid to dependents.

For 2007, the worker pays FICA taxes on the first $97,500 of income from covered employment, with the employer paying a matching tax. Thus, wages above that amount are free from FICA taxes. As indicated, all wages in covered employment, regardless of amount, are subject to taxation for Medicare. In declaring income for income-tax purposes, workers cannot?and despite allegations to the contrary on the Internet, have never been able to?deduct FICA taxes nor Medicare taxes. Some economists argue that workers pay a 12.4% tax for Social Security, assuming that the employer’s share is “part of the worker’s wage.” That is a philosophical, not a practical, position. If Social Security were eliminated, only under the most rosy scenario would employers add their match to workers’ salaries. In this age of downsizing and restricting benefits, it would be foolishly unrealistic to assume that employers voluntarily would do so. Moreover, if a worker earns $50,000, she reports that $50,000 to the IRS, not $50,000 plus the employer’s FICA payment on her behalf of 6.2%. Consider further that a $50,000 worker would hardly be able to make the case when applying for a loan that his salary is not really $50,000, but is actually $53,100. Lenders know better. Thus, in the real world, the worker pays 6.2% for Social Security, not the full 12.4%

What are Social Security’s Benefits?

Social Security provides partial replacement for lost wages resulting from a number of factors. Retirement (“old-age”) is the most common. So prominent is the retirement benefit, that many criticisms of Social Security consider it as solely a retirement system and evaluate it accordingly, thus producing evaluations that are incomplete and misleading. Social Security pays benefits to retirees, to their retirement-age spouses, and to any minor dependents. A spouse’s benefit, assuming retirement at full retirement age, will be 50% of the wage earner’s. If the spouse has his or her own wage record, the benefit will equal that from whichever record produces the greatest benefit; the spouse cannot draw the full benefit from both.

Wage-earner death, similarly, brings benefits to qualified survivors. Widows or widowers of retirement age receive benefits, as do the wage earner’s minor dependents. Under certain conditions, there may be benefits even to dependent parents of the wage earner. Inability to work because of physical or mental impairment is another cause of lost wages. Disability benefits go to those with serious health conditions that prevent them from holding substantial jobs. Nearly one-third of Social Security’s benefit checks go to those who are younger than retirement age. These are the disabled, and the survivors of deceased wage-earners. Social Security benefits, in fact, are responsible for raising one million American children from poverty. It is apparent from all this that it is misleading to think of Social Security solely as a retirement program. It is also misleading to think of it as an investment scheme, and to attempt to evaluate its “rate of return.” Moreover, in contrast to investment plans, all Social Security benefits are protected against inflation; they rise with the cost of living.

How Do the Trust Funds Operate?

FICA taxes go into one of two trust funds (5.3% goes to the Old-Age and Survivors’ Insurance Trust Fund; 0.9% goes to the Disability Insurance Trust Fund). Medicare operates through a separate Hospital Insurance Trust Fund. The trust funds pay current benefits and administrative expenses, and invest the surplus in special government bonds that mature regularly, paying interest back into the funds. OASDI administrative expenses are extraordinarily low, less than one cent for every dollar paid in; no private income program can come close to matching Social Security’s efficiency. There are two foremost concerns about the trust funds. One is based on the charge that the government has drained their contents to use for non-Social Security purposes. The second is that they are financed inadequately; that they some day will be depleted causing Social Security to become “bankrupt.” Bankruptcy, though, is not a notion that can be applied accurately to any program of the U.S. government. At the current time, virtually every federal program is running at a deficit?the FBI, Homeland Security, the U.S. Marine Corps, the White House Office, etc.?except for Social Security, which is accumulating robust surplus funds; yet which is it that causes concern? It is correct that government has borrowed the funds for current expenses. It is decidedly not correct, though, to charge that the funds have been misused, or that the trust funds have no assets, only “worthless IOUs,” as even President Bush has said. If the president were to announce to Japanese, Korean, or Chinese governments or private investors here or abroad that the US bonds they hold were “worthless IOUs,” the world financial system would be shaken. The trust funds hold US bonds with equally valid claims on the US Treasury. It is ignorant and irresponsible to claim otherwise. If it were to become necessary to tax or borrow to pay off the bonds, that would not be taxing or borrowing to pay Social Security benefits. Rather, it would be taxing or borrowing to pay for the purposes for which the money originally was spent (almost assuredly military expenditures). The huge and increasing national debt does not result from Social Security. It results from deficit spending. Our elected officials in recent years have been determined to keep taxes at low levels regardless of the consequences. In other words, they have been unwilling to levy taxes sufficient to cover the amounts they have voted to spend. Acting to reduce taxes at the same time as undertaking vast new military expenditures is only the most flagrant example.

Critics of the trust funds actually contradict themselves in a glaring manner. If the funds are truly meaningless?if they do, indeed, contain only “worthless IOUs” and nothing of value?then it makes absolutely no difference whether or not they are depleted. If depletion does matter?as they assure us it does?then clearly the trust funds matter; that is, they do, indeed, contain bonds of value. Although the conventional wisdom is that Social Security functions in a pay-as-you-go manner, that is not entirely correct. It was largely true at one time, but the Reagan administration supported a change to a partially pre-funded plan implemented in the 1983 amendments. In 1982, a looming cash-flow problem developed. Its magnitude was exaggerated, but certainly it was real. To correct this, the 1983 amendments incorporated the recommendations of a bi-partisan commission that President Reagan appointed. The commission included prominent senators from each party, including Robert Dole, Republican, and Daniel Patrick Moynihan, Democrat. Its director was future Fed chairman Alan Greenspan.

The Greenspan Commission made a number of recommendations, including accelerating the implementation of tax increases already scheduled, and the like (there are no more scheduled tax increases). Congress added two years to the age for full retirement, thus reducing benefits accordingly (each beneficiary, that is, will receive benefits for two fewer years than would have been the case without the change). For those born in 1960 or later, that age became 67, rather than 65. The full retirement age begins creeping up in small increments beginning with those born in 1938. It is important to note that the 1983 amendments caused a generation of workers to be taxed more than was necessary to pay current benefits. The purpose was to accumulate huge trust funds to pre-fund the benefits that would be required to cover the retirements of the baby boomers. Thus, the 1983 amendments created a partially pre-funded system. This replaced the previous pay-as-you-go arrangement that required periodic adjustments of taxes and benefits to keep the trust funds at appropriate levels; levels that had been relatively small.

How Secure is Social Security’s Funding?

From a strictly economic point of view, there is no need for trust funds. The programs could be strictly pay-as-you-go, with the current generation paying for its dependents. The trust funds do, though, have a political purpose. As FDR recognized, they establish a claim on the Treasury, and they serve to reassure the public. Ironically, Social Security’s opponents have used unfavorable projections to turn the funds themselves into cause for concern, rather than a symbol of stability. They argue that because of projected insufficiency of the trust funds decades in the future, it is urgent to take radical action now (that action ranges from benefit reductions to elimination of the system, that is, privatization). It is important to note, however, that the entire overhaul of the system resulting in the 1983 amendments took only a matter of months. It did not require action decades in advance of a perceived problem, nor did it require radical restructuring of Social Security’s principles of social insurance.

The major cause for concern regarding Social Security is that the public, and for that matter policy makers also, have been told that the trust funds at some date will be inadequate to pay Social Security’s benefits. Such assumptions have resulted from reports by the Social Security Trustees. Two of the six trustees are public members; the remaining four are administration figures: the commissioner of social security, plus three cabinet secretaries from the Departments of Labor, the Treasury, and Health and Human Services. The law requires the trustees to issue annual reports, and to project the status of the trust funds over thirty-year and seventy-five-year periods. It is a mistake to consider the Trustees to be non-partisan or disinterested observers, independent of administration policy. As for their reports, the Social Security Administration’s chief actuary must certify them as incorporating sound actuarial practice. This in no way, though, guarantees that the Trustees will be evenhanded in selecting from an enormous variety of acceptable alternatives to arrive at their conclusions. To say this is merely to state the facts, not to draw conclusions about the quality of the Trustees’ performance.

Economist and Social Security scholar Arthur Benavie put it well. Without questioning “the skills or the integrity of the trustees,” it should be recognized that “a projection like this is an educated guess, which could be miles off the mark and often is. It’s based on a battery of assumptions, each of which is also an educated guess, about future births, deaths, interest rates, wage rates, productivity, immigration, and health care costs.” In every report, the trustees warn that long-term projections cannot be reliable, and should be taken with caution. One struggles in vain, however, to find any caution in politicians’ and journalists’ public warnings of impending trust-fund exhaustion. The public reads that the trustees report for 2007 has projected that the funds will be depleted in 2041, and that continuing income will be sufficient then to pay roughly only three-quarters of the benefits projected. Even if this were to be the case, that level of benefits is projected to be higher than the benefits currently being paid. But is this really what the report says? Rarely, if ever, does the public hear that the reports include three projections. The only one publicized is the “intermediate projection,” the trustees’ “alternative II.” This is the one that the trustees believe to present the most likely scenario, but nowhere do they say definitively that 2041 will be the “doomsday year,” or in fact that the funds will definitely be depleted someday. The “low-cost projection,” their “alternative I,” projects a continuing surplus indefinitely, and for years the alternative I projections have been much closer to actual economic conditions than have the intermediate projections. The alternative III, or high-cost, projection is so pessimistic that no one takes it seriously.

The consulting actuary, David Langer, has studied the projections closely, and has demonstrated that for years, the trustees’ reports have been far too pessimistic in their intermediate projections than conditions have warranted. He compared the projections for given years with what the actual trust fund assets turned out to be. The intermediate projections for 2002 in the reports from 1992 to 1996 turned out to be too pessimistic by 20%; for the reports from 1997 to 2001, they were 3% too pessimistic; for the overall reports from 1992-2001, the underestimation of assets averaged 11%. The low cost, or alternative I projections for each of these periods were accurate. Langer “concluded that, since the low cost basis was on target, it should replace intermediate cost, which has served as the official standard for thinking about and developing Social Security legislation. Further, intermediate cost should be renamed high cost and a new low cost should be developed.” The trustees have chosen intermediate assumptions that guarantee pessimistic projections. For instance, in arriving at their intermediate projections in the 2003 report, they assumed that the annual increase in the GDP for the 75-year period from 2003-2078 would average only 2%. This, despite the average growth rate since 1930 of 3.3%, and 3% in the decade prior to 2004. Langer pointed out that the 2003 report’s alternative I, or low-cost, projection assumed a future growth rate of 2.6% (still lower than past performance), and he calculated that such a rate would result in a surplus at the end of the 75-year period of at more than a trillion dollars (a figure that the trustees did not include in their report).

Projections, especially over the long term, are extremely sensitive to small variations in assumptions. In the 1983 report, the trustees projected that the trust funds would maintain a small balance indefinitely. Yet shortly thereafter, they began to project a deficit. Where did the surplus go? The more pessimistic projections resulted not from deteriorating conditions, but rather from the trustees’ decision to use different assumptions. Almost no one, though, thinks to look behind the intermediate projections to determine why it is that the surplus suddenly became a deficit. There are several points that one should bear in mind. First, the low cost, or alternative I, projections still call for balance in the trust funds indefinitely. Second, no such projection can be assumed accurate over a long period, but the alternative I projections thus far have consistently been closer to actual developments than the alternative II, intermediate, projections. Third, even the pessimistic intermediate projection has never called for trust fund exhaustion sooner than thirty-two years in the future. Fourth, any deficit that did appear to be developing could be remedied relatively quickly, as it was in a period of a few months when a bi-partisan commission developed the foundation for the 1983 amendments. Fifth, if anyone still believes that 2041 is a precise date for trust fund exhaustion, consider that over a decade the intermediate projection’s exhaustion date has varied by twelve years, from 2029 in 1997 until 2041 today. Obviously, those dates cannot all be correct, yet journalists and policymakers have accepted each of the variations, year by year, without question. If the date is accurate, it will?by definition?remain the same. If economic conditions change and thus cause the date to change, then the projection was inaccurate in not having foreseen the economic changes. If the projection varies and economic conditions have not changed, then certainly something else is wrong. The bottom line is that, as Arthur Benavie put it, the projected dates are educated guesses?let us say that at best they are educated guesses. Do keep in mind that there is at least a possibility that political considerations may affect the calculations. In no case are the projections sufficiently sound to serve as the basis for wrenching revisions?benefit cuts, privatization, or anything similar?for a program that is so important to millions of people.

What are the possible political considerations that might affect the Trustees’ reports? The Trustees select from a wide range of actuarial calculations to arrive at their projections. Thus it would be simple for them to slant their choices to make their projections regarding Social Security’s future either reassuring or alarming. Conspiracy theorists sometimes conclude that the Trustees, being predominantly members of the administration, do just that: they deliberately design their projections to fit the Bush administration’s position that Social Security is “unsustainable.” Such a conclusion is overly cynical, and probably unfair. In any case, it falls apart upon analysis. Clinton’s Trustees produced similar, overly pessimistic, projections and these of course had absolutely nothing to do with pleasing George Bush. Certainly there were conservatives serving under Clinton, but the more likely explanation of the pessimism of the advisory boards serving under each of the last three presidents is that their members simply have exercised the caution that one might expect from successful figures in business. In other words, the members likely have tended to assume that it is better to err on the side of caution.

Nevertheless, one might reasonably conclude that the Trustees, especially from a highly ideological administration such as that of the second Bush, might quite honestly be more impressed with projections that fit their ideological presuppositions than with those that do not. Therefore, “political considerations” could certainly enter into the picture, even when there is no conscious attempt to alter the projections either way, as political appointees select those options that seem to them to be most sound. This would be the case, of course, regardless of the political persuasion involved. In addition to those already described, there is yet another factor that should serve to settle fears for Social Security. The important factor is not the number of aged as opposed to others. Rather, it is the dependency ratio; that is, the percentage of the population in the work force compared to those who are dependent?those who cannot work because they are disabled, too old, or too young. Currently, the work force includes about 46% of the population. In 2030, when the baby boomers will be in retirement, that figure will drop to around 44%. In 1965, though, only 37% of the population was in the workforce, and there was no difficulty maintaining Social Security. The reason why an aging population will not result in a dramatic shrinking of the workforce is because women have moved into employment in great numbers. Remember that nearly one-third of Social Security’s benefit checks go to those younger than retirement age. Their relative numbers will shrink as the population ages. Thus, there is little ground for serious concern regarding the future of Social Security. The question is one of political will, not of economics. There should be no doubt that an economy such as that of the United States will be able to continue to support Social Security, or even an expanded system of social insurance.

Privatization certainly is not an answer even for those who continue to have doubts about Social Security’s financing. First, a privatized scheme would introduce risk into the system. That risk would all fall on the individual worker, rather than be spread among the whole population. Some would do well, while others would fall short. Second, many things would be lost. There would no longer be coverage for disability, for survivors, or for spouses. There would no longer be guaranteed protections against inflation. The income-transfer features would be lost, and the poor and middle class would suffer accordingly.

Experience in other countries bears this out. Although the Cato Institute and other privatization advocates long pointed to the systems in Great Britain and Chile as unqualified successes, reality intruded into their glowing descriptions. Britain was their first disappointment. The partially privatized system that the Thatcher government instituted turned out to be a failure. The Wall Street Journal summed it up in the headline of a front-page article on 10 August 1998, “Social Security Switch in U. K. Is Disastrous,” and the Journal asked whether Britain’s experience should be “a caution to the U. S.?” Huge numbers of pensioners were left with far smaller amounts than they had been led to believe would be the case, and the government had to step in with an $18 billion bailout. Interestingly, those who had touted the British system did not stop their campaign for privatization. They merely ceased to refer to the U. K.

The Chilean experience is similar. The military dictatorship of General Pinochet had imposed a privatized system on Chile’s population. Cato hired José Piñera, one of the architects of the Chilean system, as a speaker. “Every worker a capitalist,” was his enthusiastic phrase in tribute to the Pinochet system as he spoke for years around the United States. Cato’s spokesmen ignored the troubling aspects of Chile’s system?including its astronomical administrative costs which contrasted with Social Security’s unparalleled efficiency. Chile’s retirees, though, were under no illusion. Their retirement checks were far smaller than they would have been under the public system.

A telling fact is that the one most privileged group under Pinochet, the army, wisely stayed out of his privatized system. The army’s personnel retained their public pensions. A soldier’s retirement therefore now is many times that of a civilian worker’s. President Bush had called Chile’s system “a great example,” and said the U. S. could “take some lessons from Chile.” Nevertheless, the Pinochet system’s performance has been so bad that Chile recently announced that it was shifting back in the direction of a public system.

Social Security is a tried and true system, popular, successful, and highly efficient. It would be foolish to revise it radically based upon tenuous long-term projections that some critics charge have been influenced by political ideology. The principle of a private system is that “you’re on your own, and if things don’t work out well, then tough!” One may genuinely prefer a completely private system and accept its risk and variable results, but this is a value judgment, an ideological position, not one dictated by economic principles.

Finally, since Bush’s privatization proposals aroused great public opposition, and his party lost control of Congress, might it be alarmist to be concerned about Social Security? Is it not true that the opponents have been beaten?

My answer is that opposition assuredly will continue. Bush himself has asserted that he will maintain his efforts. Given the decline in his standing that is unlikely to amount to anything, but there is no doubt that opposition to Social Security remains strong and well-financed. The danger is less from a clumsy Bush strike at the program?such as when his “60 cities in 60 days” tour brought increasing rejection of his proposals with each city he visited?than from the widespread public misunderstanding that the opponents have succeeded in creating.

So long as there is fear that Social Security is unstable, so long as even many of its supporters continue to believe that some sort of “reform” is necessary to “save” it, and so long as mainstream journalists continue to foster that idea there is danger. There remains the possibility that a misguided and misrepresented “reform” could gain acceptance. The resulting revisions would have the potential to damage the social insurance severely, and even ultimately to eliminate the most popular and successful program in American history.

The United States once had a completely private system of retirement, and lacked the protections that we now take for granted from social insurance. That system proved to be inadequate. That is why we now have Social Security.

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Real Reforms to Enhance, Not Curtail, Social Security

By:George S. McGovern and Max Skidmore

THE MONTANA PROFESSOR

November 2007

The preceding article discusses the importance of Social Security. Countering the conventional wisdom, it demonstrates that the system is in good condition and is likely to remain so. This is not to say that Social Security could not be improved. We have studied its characteristics and effects, and have devised a plan that will make a fine program even better.

We are discussing our ideas with various officials in and out of government, and Skidmore’s forthcoming book, Securing America’s Future Rowman and Littlefield), is scheduled to be on the market in March 2008. This book will discuss and analyze the situation fully, and will provide the plan and the argument in considerable detail. Its timing should enable these innovative ideas to be considered during the election campaign.

Certainly there would be no chance that President Bush would approve legislation incorporating our ideas, even if the current Congress would accept them and could overcome a Senate filibuster to pass such a bill. The chances look strong, though, that the next president will be a Democrat, less ideologically rigid than President Bush, and that Democrats will substantially increase their majorities in both the House and the Senate. The climate after January of 2009 should therefore be much more favorable to the kind of positive reforms benefiting the vast majority of Americans that we suggest. Social Security’s benefit structure is progressive. Those of lower earnings receive benefits that reflect a higher percentage of their final earnings than do those of higher earners. The system’s financing is not. In fact, it is regressive. Workers pay into the system 6.2% of all wages up to the maximum amount taxed, $97,500 (for 2007). Not only does a worker earning above the FICA maximum pay a lower rate?one earning $195,000, for example, pays a total rate of only 3.1%?but the very lowest paid workers must pay $6.20 of the every dollar earned, starting with the very first.

To be sure, the Earned Income Tax Credit does lessen that burden on those at the very bottom of the wage scale. Still, since the FICA tax is regressive (it is flat only when considered in relation to those earning $97,500 or less; it definitely is regressive with regard to the total workforce), it falls most lightly on those of higher earnings. Because the taxable wages are capped, those earning very high wage levels barely feel the tax’s effects. Those at the astronomical levels now characteristic of corporate CEOs, the most successful entertainers and sports figures, and a handful of broadcasters satisfy their entire annual obligation to Social Security well before lunch on the first day of the year.

The McGovern-Skidmore Plan

First? Eliminate Workers’ FICA Taxes on Their Initial Earnings:

We are proposing a plan that would increase the paycheck size of the vast majority of workers, yet would not reduce their benefits. Our plan would make the first $20,000 of wages free from FICA taxes on the employee; the employer would still pay the 6.2% currently paid. Thus, workers earning below $20,000 would pay no FICA tax, but would still be covered by Social Security (the Social Security Administration calculates benefits on the amount of wages in covered employment, not on the amount of FICA tax paid in, so the first $20,000 would still generate Social Security credits). This would help compensate for the very low minimum wages paid to the workers at the lowest end of the scale.

All workers in covered employment earning between $20,000 and $97,500, by far the majority of the workforce, would see an increase in their paychecks of $1240 per year. Such a broad tax reduction for the majority of Americans would result in considerably more economic stimulation than do large tax cuts for those of high earnings.

Our plan to be sure would divert money from the trust funds, but we propose to compensate for that. Note that President Bush’s idea for Social Security also would have diverted money away from the trust funds, but with no provision whatever for replacing the money lost to Social Security. The Bush plan was not fully developed, and made no headway even in the previous Congress that Republicans controlled. It would have permitted workers to divert $1,000 per year of their FICA taxes away from the trust funds into private accounts?but only into those accounts that had government approval. We propose a tax cut that would permit most workers to have increased take-home pay over which they would have complete control. Workers could use the money from their reduced taxes for whatever purpose they wish?including, as Bush would have them do, opening savings accounts should they so choose. Bush’s plan not only would have dictated what would be done with the money diverted from the trust funds, but by proposing a diversion with no way to compensate for the reduced income to the Social Security system, it also would constituted a huge raid on those funds.

Second? Enhance the Trust Funds:

First Enhancement? Eliminate Cap on Taxable Wages

Our proposal not only would protect the funds, but in fact would enhance them. First among our enhancements would be eliminating the cap on the amount of earnings subject to FICA taxes. We believe that everyone should support the system. It should be embarrassing to argue that the manager making $195,000 per year or the $400,000 account executive cannot “afford” to pay 6.2% to support the Social Security system, when $40,000 teachers, or even $15,000 clerks, do manage to do so.

This proposal would not result in enormous benefits for those of very high earnings, because increasing earnings would bring progressively smaller increases in benefits until they reach a reasonable maximum. There is precedent for removing the cap on taxable wages. Medicare has no limit on the amount subject to taxation. The wealthy therefore pay far more than those of low earnings do for precisely the same Medicare hospitalization benefits. The only additional cost to employers from our proposal would be the need for them to pay additional FICA taxes for those employees earning more than $117,500 annually. Many employers would pay little or no additional taxes at all. Those relatively few employees earning more than $117.500 would be the only workers subject to greater FICA taxes.

Thus, our proposal would cause few Americans to pay more in taxes. For the most part, those who would pay more, whether employers or employees, already have received substantial tax reductions.

Second Enhancement? Dedicate an Inheritance Tax to the Trust Funds:

We agree with a number of authorities who have suggested that an estate tax, actually an inheritance tax, be dedicated to Social Security. The common argument that such levies result in double taxation is a red herring. In modern economic systems, money is taxed over and over. A worker pays income tax on money earned from work, but still must pay sales taxes, real estate taxes, and assorted other levies from funds that already have been taxed. In any case, the bulk of large estates consists of appreciated funds, capital gains, upon which no tax has been paid. The label “death tax” is pejorative nonsense. An estate tax does not tax “death.” Rather, it taxes an exchange of money. In this instance, it affects only a large estate that passes from one hand to another upon death. We would propose an exemption of at least $5 million. Only estates exceeding that amount would pay the tax, and the tax would apply only to the amount above $5 million?that is, an estate of, say $6 million, would pay the tax only on $1 million. A tiny number of estates would be the only ones to pay any tax at all under our proposal.

The estate tax, one should note, does not derive from the New Deal or the Great Society, nor even from the progressive era of Theodore Roosevelt. Inheritance taxes have been features of American society almost from the beginning. By the early 1900s, well over half the states had inheritance taxes, and the federal tax was a feature of American tax policy for nearly the entire twentieth century. Before that time, according to Steven Weisman who has studied America’s tax system extensively, “the inheritance tax already had a distinguished history in America, going back to taxes on the probating of wills in the colonial era. A broad inheritance tax was briefly considered during the War of 1812, and during the Civil War, it passed Congress with little debate because of the widespread demand in the North for sacrifice, especially from the wealthy.”

Although there is a great propaganda campaign against inheritance taxes, the charge that they inevitably cause the breakup of small businesses and family farms is simply false. When the American Farm Bureau Federation, a conservative organization representing primarily the owners of larger and corporate farms, lobbied Congress on behalf of estate tax repeal, it used the family farm argument. Farm Bureau officials had to concede, though, that in all their research, they could uncover not one single instance of a family farm being lost because of the tax. If there were any undesirable and unintended effect on small business, it could easily be remedied by reform, rather than repeal. The fascinating aspect of the discourse regarding the estate tax is the way in which its opponents succeeded in presenting an intensely regressive measure, elimination of the tax, as a populist issue. It is dishonest, and in fact should be laughable, to imply that most citizens pay the estate tax when in reality that tax falls only upon a wealthy elite that includes fewer than 2 percent of the population. In no way could it be “populist” to free the richest Americans from a tax that only they would ever pay.

Third enhancement? Suggestions from a Past President of the American Economics Association

The late Northwestern University Professor Robert Eisner, onetime president of the American Economics Association, suggested a number of ways to enhance the trust funds. We endorse his suggestions. They were deceptively simple, but ingenious. He urged that the Treasury simply increase the rate of interest that it pays on the bonds that it sells to the trust funds. Additionally, he called for the earmarking of a portion of the income tax to the trust funds. Americans pay FICA taxes, but have never been able to deduct those payments from income when calculating their income taxes. Eisner said that the portion of the income tax that results from such a “tax on tax” should be credited to the trust funds, in the same manner that income tax levied on the Social Security benefits of higher-income beneficiaries is. All of these measures would be simple bookkeeping arrangements, but would serve to enhance the trust funds, and reassure a public that has been deliberately frightened by misleading propaganda.

Third? Ensure that Trust Fund Loans Reduce the National Debt:

Our plan’s final feature relates to our burgeoning national debt that does portend a future economic crisis. So long as there is a huge national debt, we would restrict the use of money borrowed from the trust funds to paying down that debt.

This is not double counting. Now, the government borrows from the Trust Funds and has to redeem (pay off) the bonds (or roll them over) while the national debt continues to escalate. Under our plan, it would still be necessary to redeem the trust fund’s bonds just as it now is. In contrast to the current situation, though, the amount of the national debt remaining to be paid would be reduced by the extent of the borrowing from the trust funds. This, in a sense, would truly be a “lock box.”

This is our proposal. It would make Social Security’s financing mildly progressive, and would ensure trust fund stability while avoiding benefit cuts and requiring the wealthy to pay their fair share. We have another suggestion in addition to our reform plan. Although we arrived at this proposal independently, it is not unique with us. The consulting actuary David Langer has also suggested something similar. We are confident that he would agree that it bears repeating.

Countering the Conventional Wisdom:

Expanding Social Security

Social Security was not designed to be a complete retirement system. The original metaphor was that Social Security was “one leg of the three-legged stool.” The other two legs were company pensions, and private savings and investments. Unfortunately, in far too many cases, Social Security today is forced to become a complete retirement, and it cannot do adequately what it was never designed to do. As he preceding article noted, a fifth of all retirees in America have no income at all other than their Social Security benefits. For nearly one-third of America’s retirees Social Security provides almost all of their income, 90% or more. This is unacceptable.

It is time to discard the “three-legged stool” metaphor. In spite of the attacks on Social Security, it is the only leg of the stool that remains intact. Companies are rapidly retreating from any obligation they once felt to ensure pensions for their retirees. America’s workers by and large have no savings. Rather, they have debt, often paying inexcusably high interest on large credit card balances; the savings rate is negative.

Arguments condemning workers on moral grounds, “they should be more responsible,” not only are heartless and cruel, they are unrealistic. The workforce today is not paid sufficiently to live at an acceptable standard, while still putting enough aside to ensure a comfortable retirement. Most families today require two incomes to survive. However frugal they may be, they are unable to save for their children’s higher education, or for any major unanticipated expenses?and all families at some time do face major, unanticipated, expenses. A medical emergency, or ongoing health-care expenses, can destroy the financial position of even an upper-middle-class family. Many of those who believe they have full coverage, discover when their insurance refuses to cover expenses, or cancels their policies, that they do not.

A number of business leaders in this country are beginning to recognize?as their counterparts in other countries did long ago?that it would be to industry’s advantage to have universal health care. Surely, they soon will recognize also that it would be to their advantage to have a complete retirement system for the workers. The nucleus for such a system already exists: Social Security. Rather than cut Social Security benefits, as its opponents would do (prior to eliminating the program), Social Security should be expanded to provide two or three times its current level of benefits. This would give American workers security, retirement, and general income protection that would be completely portable. Of course this would be good for the workers, but it also would help their employers. Employers no longer would have to worry about funding and maintaining a pension system?an obligation that more and more employers are rejecting in any case. The overall cost would be less in the long run because of the unparalleled efficiency of the Social Security system. The free market does many things well, but it, like all human endeavors, is far from perfect. Any informed student of America’s health care delivery system can hardly fail to recognize that in this field the market is a failure. It does not guarantee quality, it has led to enormous inefficiency, waste of resources, and the most expensive health-care system in the world (without the benefits that should come from such huge expenditures). Moreover, it has completely failed in ensuring even basic services for the population as a whole.

Similar dynamics are at work regarding retirement. The free market is not working to provide retirement. The Social Security System, on the other hand, does superbly what it was designed to do. It makes sense to expand it to provide that complete retirement, with its other benefits being scaled up accordingly.

GOP’s Iraq Problem

By: Robert Dreyfuss

The Nation

September 20, 2007

All spring and summer, the Republicans ducked the question of what to do about Iraq. Their mantra was: Wait for General Petraeus. Among Washington insiders, it was no secret why: The hugely unpopular war was largely responsible for the party's massive defeat in November 2006, and as party officials scanned confidential internal polls, things weren't looking any better for 2008. Rather than answer questions about the need to change course in Iraq, the GOP hoped and prayed that the general--dubbed by some "Petraeus ex machina"--would fly in from Baghdad with good news to report, so Republicans could relax.

He didn't, and they can't.

Though the new Republican mantra is that the surge is working and that Petraeus needs more time, there is little evidence the American public was swayed by the general's report that the war in Iraq is turning around. Four and a half years into the grinding conflict, public opinion has decisively shifted against the war, and it isn't going back, according to GOP pollsters and consultants. "The American people have turned the page on Iraq," says Kellyanne Conway of The Polling Company, a GOP firm.

George W. Bush's damn-the-torpedoes determination to stay the course in Iraq has thus created an excruciating dilemma for the GOP. By sticking with the White House, Republicans in Congress can block the Democrats' efforts to end the war, either by filibuster or by upholding an almost certain veto of any bill challenging the war. But any such victory will be Pyrrhic, costing them dearly in next year's election. Between now and then, they'll remain trapped between a White House that isn't ready to give an inch and a Democratic caucus in the House and Senate that can force them to cast vote after embarrassing vote in defense of Bush's war over the next thirteen months, in full public view.

Although Democrats have the stronger hand, Iraq poses a significant challenge for them, too. Having largely adopted an antiwar stand, the Democrats can look forward to 2008 secure in the knowledge that public opinion is overwhelmingly on their side. Still, since they don't have the votes to force a shift in the war, they may find themselves caught between their disappointed, left-leaning antiwar base and a GOP attack machine describing them as "Defeatocrats." Even with public support, it will require some real political skill for the Democrats to highlight the White House's sorry record in Iraq--from the rigged intelligence that justified the war to the mismanagement of the occupation to its enormous cost in lives and treasure--while insuring that the Republicans pay the price. On the Hill, Republicans are mightily aware that pollsters, pundits and politicians predict sweeping Democratic gains in 2008 if Iraq is still an issue. With twenty-two GOP-held Senate seats up for grabs next year--many from states that are hotbeds of antiwar sentiment such as Oregon, Minnesota, New Hampshire, Maine and New Mexico--the Democrats have an outside shot at winning a filibuster-proof, sixty-vote majority in the Senate. In the House, Democrats could pick up as many as thirty additional seats. Plus, of course, the White House.

According to Anna Greenberg, a Democratic pollster with Greenberg Quinlan Rosner Research, the GOP is weak everywhere, and Iraq is the main driver. An August 2007 survey of the seventy most competitive Congressional districts Greenberg's firm carried out for the Democracy Corps showed that even in Republican-held districts, 61 percent of voters "want their member of Congress to vote to change President Bush's direction on Iraq and start requiring a reduction of troops." Perhaps the most stunning result of her polling: In the thirty-five most competitive districts now held by a Republican member of Congress, voters favor the Democratic candidate by 49 to 44 percent. "The war hurts Republicans among swing voters, among seniors and older voters, especially older women, in urban/suburban districts, and in rural areas," says Greenberg. Just in urban/suburban districts, where antiwar sentiment is strong, Democrats could pick up eight or nine seats, she says. In Republican-held urban/suburban districts--typified by those held by Representatives Christopher Shays of suburban Connecticut and Mark Kirk of Chicago--fully two-thirds of voters support legislation that would set a deadline or timetable for withdrawal.

Even in rural areas, where the Republican base is traditionally rock solid, the war in Iraq has soured GOP voters on the party. "Given the current national climate, Republicans must win rural areas to see success in 2008, while Democrats in turn have an historic opportunity to strike deep into the Republican base," says a June report by Greenberg Quinlan Rosner. And it won't matter how the White House tries to spin the news from Iraq if the news continues to be bad. "Spin is so secondary to substance," says GOP pollster William Greener. "Reality dominates what people are going to think or not think. It won't make any difference what the spin is, if the substance is bad."

Desperate for help from the White House, GOP Congressional delegations visited Bush to express their concern. A group of eleven endangered moderate GOP House members, including Shays, trekked down Pennsylvania Avenue in early May to see if Bush would budge. So did a more select group of senior senators. All were rebuffed. "When the party bulls went to the White House, they said, 'We know for a fact that in eighteen months your policy will be reversed. Are you telling us that for the sake of the next eighteen months, you're willing to destroy the party?'" says Steve Simon, a former national security aide to Bill Clinton. "And the President's answer was, 'Thanks for your interest.'" "It's clear by now that President Bush is going to let his allies on the Hill twist in the wind," says Stephen Biddle of the Council on Foreign Relations, who has informally advised General Petraeus. "The Administration's vote-counting tells them that they're not going to lose enough Republicans to allow Congress to override a veto."

Inside the White House, the worry about 2008 seems not to have penetrated Bush's inner circle. The political people-- from former White House politics czar Karl Rove, who quit in August, on down--don't have much input into the President's national security decisions. "I've talked to guys who are high-ranking inside the White House, but they're constantly being told, This isn't your department," says Grover Norquist, the right-wing activist who keeps close tabs on Republican politics. "Part of the problem is, they're not allowed to have an opinion on this. Only the experts are allowed to have opinions."

Doug Bandow, a libertarian-conservative foreign policy expert and former aide to President Reagan, says that neither Bush nor Cheney will be moved by politics when it comes to Iraq. "We see a stubbornness in the President that is virtually unique. What does he care about the party's future? He parachuted into politics on his father's coattails. He's never been much of a party guy, and I think he could care less," says Bandow. "Cheney is more of a Republican, and he might be expected to be more concerned about politics and the party's future. But he's at the end of his career, and he just might be ready to bring the whole house down on top of them if that's what it takes." Adds Larry Wilkerson, who was a top aide to former Secretary of State Colin Powell, "Cheney's always been an ultra-nationalist cowboy from Wyoming, and he's the kind of guy who would indeed sacrifice the party for what he sees as America's best interests."

Signs of the Republican Party's distress over Iraq began to emerge even before the 2006 election. Early that year a phalanx of moderate and mainstream Republicans, led by Representative Frank Wolf and quietly backed by Senator John Warner, then chair of the Senate Armed Services Committee, put together the Iraq Study Group, led by former Secretary of State James Baker and former Representative Lee Hamilton. The task force assembled a bipartisan plan to begin winding down the war, and many in the GOP hoped that Bush would embrace it. But Bush, backed by Cheney and a team of ideologues from the American Enterprise Institute, announced the surge, escalating the war instead. Checkmated, some Republicans on Capitol Hill gradually began to express their doubts publicly. One by one, with one eye on the war and the other on the 2008 elections, prominent Republican senators began to break with the President--first Chuck Hagel of Nebraska, then Gordon Smith of Oregon and Susan Collins and Olympia Snowe of Maine, and finally George Voinovich of Ohio, Pete Domenici of New Mexico and Dick Lugar of Indiana. Vulnerable senators up for re-election in '08, such as Norm Coleman of Minnesota and John Sununu of New Hampshire, began to express concern. And a handful of key GOP senators signed on to a bipartisan bill to enact into law the recommendations of the Iraq Study Group, including Lamar Alexander of Tennessee, Judd Gregg of New Hampshire, Robert Bennett of Utah and, surprisingly, minority leader Mitch McConnell of Kentucky.

Feeling heat from his constituents, and under pressure from an organized antiwar effort led by Americans Against Escalation in Iraq, McConnell began singing loudly in the waiting-for-Petraeus chorus, suggesting--wrongly, it turns out--that perhaps the Bush Administration would change course come September. "I anticipate that we will probably be going in a different direction in some way in Iraq, and it will be interesting to see what the Administration chooses to do," said McConnell in June.

Another Republican senator who sounded off was North Carolina's Elizabeth Dole, also up for re-election in 2008. With little fanfare, she issued a statement raising concern over the Administration's July interim report on the surge, in which the White House admitted that almost none of the benchmarks had been met thus far. "Our commitment in Iraq is not indefinite, nor should the Iraqi government perceive it to be," said Dole. "It is my firm hope and belief that we can start bringing our troops home in 2008." During General Petraeus's appearance before the Armed Services Committee in September, Dole pointedly declared that she would now support "what some have called action-forcing measures."

But during the spring and summer, when forced to vote, only a tiny handful of Republicans turned their unhappiness with the Administration's Iraq policy into votes to end the war. Just four GOP senators--Hagel, Smith, Snowe and Collins--voted in favor of a bill to set a timetable for withdrawal, along with only four GOP House members. With Petraeus and Ambassador Ryan Crocker having testified, the Democrats intend to call the Republicans' bluff. "All these people saying September is the time, they're going to have to belly up to the bar and decide how to vote," said majority leader Harry Reid of Nevada.

On both sides of the aisle there is pessimism that enough Republicans will break with the White House to make a difference. The mainstream Democratic legislative vehicles for ending the war are those proposed by Carl Levin and Jack Reed in the Senate and David Obey and Jim McGovern in the House. These measures call for the withdrawal of US forces to begin within 120 days of passage, to be completed by April 30, 2008, with a residual American force to combat Al Qaeda, train Iraqi forces and protect US personnel. "I don't think there's a chance of getting another eight to ten Republicans on Levin-Reed," says a top Democratic staffer on Capitol Hill. (Last time around, in mid-July, with four Republican votes, the Democrats mustered a total of fifty-two votes for the bill. They need sixty to overcome a filibuster and sixty-seven to override a veto.)

Conservative Republicans unhappy with Bush's Iraq policy, from libertarians to mainstream fiscal conservatives to right-wing activists like Norquist, aren't optimistic that House and Senate Republicans will break with Bush's war policy. "In the meetings I've attended, they're circling the wagons," says Mike Ostrolenk, founder of a new conservative defense think tank, the American Conservative Defense Alliance, established in part to create an alternative to the neoconservatives on foreign policy. "They get very defensive on the question of supporting the President's policy, and they discount as oddballs the Republicans who've broken with that policy."

Republican pollster Kellyanne Conway puts it this way: "There is this feeling that to abandon the White House is to shack up with the Democrats, that there is no 'third way.' And so leaving Bush is like joining up with the enemy."

In the wake of Petraeus's testimony, Harry Reid and Speaker of the House Nancy Pelosi have declared their willingness to water down the Democratic antiwar bills, or perhaps to support more modest legislation, in order to attract additional Republican support. But it's a risky strategy, since by doing so they're certain to infuriate hard-core antiwar Democrats on the Hill, with no guarantee that whatever emerges as a result can survive an almost certain presidential veto. In addition, the atmosphere on the Hill is so poisonous that compromise is exceedingly difficult. "The degree of partisanship is so high, the trust so low, that it's really hard for either side to move toward each other," says a staffer for a leading Democratic senator.

Meanwhile, the White House is doing everything it can to prevent even a modest compromise on the Hill. "The White House posture of complete resolve and grim determination is aimed at undermining deals on the Hill," says former aide Steve Simon. "Because there won't be any payoff. You're not going to get anything for it." A top staffer on the Democratic side agrees. In the end, he says, "a veto is a veto is a veto." Lacking the courage and the political muscle to confront the White House directly, most Republicans are glumly resigned to fighting another election in which Iraq is the central concern. "In polls I've seen, including internal Republican polls, it is abundantly clear that Iraq is the issue," says Conway.

Many Republicans, desperate to proclaim a light at the end of the tunnel, will point to the end of the surge as a harbinger of further withdrawals to come. But, pollsters say, while the end of the surge may briefly boost Republican hopes and trigger a temporary uptick in the polls, it isn't likely to last long when measured against the toll of continuing US casualties, hundreds of billions of dollars spent on the occupation, and Iraq's chaotic ethnic and sectarian civil war. "If in the end, the [impact] of the Petraeus-Crocker report is, We're here indefinitely and we don't know how long it's going to take, that's very bad news for Republicans," says Tony Fabrizio, a leading GOP pollster.

Meanwhile, GOP worry continues to grow. "I'll tell you where senators and House members are seeing the impact of Iraq: in fundraising," says Conway. "The committees, including the NRCC [National Republican Campaign Committee], the NRSC [National Republican Senatorial Committee] and the RNC [Republican National Committee], are having a devil of a time raising funds." At last report, the Democrats had $20.4 million in cash for Senate races and Republicans just $5.8 million. Similar disparities prevail for House fundraising and among presidential candidates.

If, as expected, Congressional Republicans stay tethered to the White House, a real change could occur if and when one of the top-tier GOP presidential candidates makes a definitive break with Bush on Iraq, GOP pollsters say. "The 'Sister Souljah moment' for Republican presidential candidates will be on Iraq," predicts Conway. According to Fabrizio, at least one or two of the leading GOP contenders may read the post-Petraeus/Crocker tea leaves and break with the White House. "Don't discount the presidential side of the equation," says Fabrizio, who says he has heard that former Massachusetts Governor Mitt Romney could be the first to go. "I wouldn't underestimate the impact on Capitol Hill if one of the major candidates breaks," he says. So far, however, all of the major Republican candidates remain vociferous supporters of the President's Iraq policy.

Meanwhile, the Democrats intend to keep the pressure on, even if they can't force Bush to bring the troops home. Beginning in mid-September and continuing into October, the House and Senate will have to deal with defense appropriation and defense authorization bills, along with a White House request for as much as $200 billion to fund the war and the continuing surge. If the Democrats are unable to use those bills to impose a timetable, their fallback strategy may be to vote only enough money for forty-five or sixty days. That would compel Republicans in Congress to defend Bush's war over and over again into 2008. Among other measures, Senator Jim Webb is backing a bill to impose longer home-leave and readiness requirements, making it harder to find US forces to send to Iraq. In July Webb's plan won fifty-six votes, seven of them Republican, and might get enough this time to overcome a GOP filibuster--only to face a presidential veto. "We'll try to keep 'em on a very short leash," says a top Democratic staffer in the House. "It's clear that the President's strategy is to keep the war going until he leaves office and then blame the Democrats for losing the war," says a House staffer with close ties to the antiwar caucus. "We've got to frame the debate. Politically, we can't stop Bush as long as he's in the White House. But he has to be held accountable. We're not going to do anything that gives the Republicans any cover, and we'll do what we can to clarify the differences. The next step is a unified, strategic position on our part to make sure that the President gets the blame for the fiasco in Iraq."

The War Party

Unrepentant over the GOP's disastrous invasion of Iraq, Republican candidates are determined to stay the course - and change the subject

By: Matt Taibbi

Sep 06, 2007

The Rolling Stone

Quietly and miserably, like an anxious mother tiptoeing away from an autistic child who has fallen asleep with his helmet on, the Republican Party continues its hopeless search for a viable nominee while backpedaling from its own disaster in Iraq. The candidates, all of them -- I exclude here Congressman Ron Paul, who is an uninvited guest to this ball -- are fourth-rate buffoons, not one of them qualified to hold down the last ten minutes of a weekday open-mike night in a Skokie comedy club. They are divided into two categories: those who try to avoid talking about Iraq by saying nothing at all, and those who try to avoid talking about Iraq by talking loudly about something else.

One Monday a few weeks back in Newark, New Jersey, I met one of the members of the latter group, Rep. Tom Tancredo. The vengeful Colorado midget's rap is immigration, i.e., convincing Middle America that the War on Terrorism is actually taking place in Mexico. But when he shows up in the ugliest city in America to gloat about three kids allegedly murdered by illegals from Latin America, he is greeted by a crowd of pro-immigrant protesters chanting, Tancredo! You liar! We'll set your ass on fire! They're yelling so loudly that no one can hear Tancredo speak from a distance beyond two feet.

The actor Paul Winfield was once asked what was the artistic key to his performance as Don King in a made-for-HBO movie about Mike Tyson. Winfield shrugged and held up his spiky Don King wig. His was a one-trick performance. Tancredo also has only one trick on the campaign trail. Whenever he mentions the words "illegal aliens," he follows them with the word "including." As in:

"Sanctuary cities," he says in Newark, "are safe havens for all illegal aliens, including gang members, drug dealers, rapists and murderers, further exposing the law-abiding citizens of such a city to greater crime." In other words, who cares about Iraq when you might get raped by a Mexican busboy?

In the face of the awesome political catastrophe that has befallen the Republican Party in the form of George W. Bush, the response of its new leaders has not been to re-examine their perverted values, their vicious tactics or even their position on Bush's singularly idiotic and supremely characteristic policy mistake, the Iraq War. Instead, the party is closing its eyes and trying, Dorothy-like, to wish its way back to Kansas, back to the good old days of mean-spirited, blame-the-darkies politics of Newt Gingrich, a time when electoral blowouts could be won by offering frightened Americans a chance to pull a lever against gays, atheists and the collective rest of onrushing modern reality.

If this were ten years ago, when America was safely suckling on the Internet bubble and restricting its overseas dabbling to military exhibition games like Kosovo, this back-to-the-good-old-days bullshit would be mere vileness. But thanks to the GOP's excellent leader, Mr. Bush, America is no longer in any position to hide from reality. We are now fully and catastrophically engaged in reality. And reality is kicking our ass, in Iraq and Afghanistan and everywhere else in this world that hates us more and more with each and every passing day. The party's response is to blow that off, pretend it's not happening. Six years after 9/11, Bush's would-be replacements are still reading My Pet Goat. Their solution to the Iraq dilemma is to keep talking tough, as if our kids were not getting arms shot off from Basra to Tal Afar, as if bin Laden weren't still scoring record recruiting numbers in between bong hits on Al Jazeera. Tancredo's idea for repairing America's relations with the Islamic Middle East is to threaten to nuke the innocent holy cities of Mecca and Medina. "That's the only thing I can think of that might deter somebody from doing what they otherwise might do," he said recently. At the tail end of his Newark appearance, as a means of trying to get him to say something, anything, about the Middle East, I ask Tancredo about that comment.

"That's for a different press conference," he grumbles, and slithers away.

***

Polls may be the devil's currency, near the top of the list of campaign evils, but in this case they tell the whole story. A recent CBS News poll indicates that thirty-one percent of Americans want to begin pulling at least some troops out of Iraq right away. Another thirty percent want to completely withdraw from Iraq, right now. That's nearly two-thirds of the country that wants to start bringing troops home.

Among young people, the numbers are even more striking. According to another poll, voters ages eighteen to twenty-nine now trust the Democrats more than the Republicans on every single issue surveyed, including the War on Terror. A mind-boggling sixty-six percent of young people are against giving the president's Iraq War plan a chance. Even among young Republicans, nearly four in ten favor an immediate withdrawal.

Anyone with an IQ above ten can see what these polls mean; what they should tell the Republican Party is that it simply cannot win a general election unless it changes its tune on Iraq. Instead, after two decades of Reagan-esque macho campaigning, decades in which Republican electoral success so spooked both the national media and the Democratic Party that it became axiomatic that only the toughest-talking and most warmongering politicians had even the slightest chance at the presidency, the Republicans find themselves cornered by their own conventional wisdom. Indeed, they are experiencing a sort of mirror image of the electoral/ideological malaise that has stricken their opponents in recent years. Democratic candidates have generally refused to sell out on social issues like abortion and minority rights but have quickly surrendered on military spending, worker rights and deregulation in a desperate attempt to win swing voters and corporate contributions. Now, with doomed figures like Mitt Romney, Rudy Giuliani and John McCain headlining this season's primary choices, the Republican Party offers the opposite: candidates willing to betray traditional party orthodoxies on abortion and gay rights but unwilling to budge on the toughness thing. After so many years of watching Democrats crucify themselves on the altar of missile envy -- saddling national tickets with pint-size fist-shakers like Joe Lieberman and turning the Kerry convention into a fatigue-clad orgy of Band of Brothers-style grunt-humping -- witnessing this sad procession of stay-the-course Republicans engaged in the political version of the Bataan Death March is a delicious comedy.

To wit: I checked in with former Massachusetts Gov. Mitt Romney outside Orlando, where he gave a speech to local Republicans before opening up the floor for his goofy-ass "Ask Mitt Anything" town-hall routine. Romney is an utter tool; he represents nothing so much as the very banality of our system of campaigning, a poll-chasing stuffed suit with a Max Headroom hairdo who will say (or won't say, for that matter) whatever the fuck it takes to get elected. The winner of the less-than-meaningless Iowa straw poll, he might end up the front-runner solely by virtue of the fact that he lacks the obvious hideous deformities of most of the rest of the field, in particular the human car wreck John McCain and the electoral incarnation of Tommy Lee Jones' acid-bath-surviving Two-Face character, Rudy Giuliani.

Romney's plan is clearly to wear a straight tie, call Hillary Clinton a commie (she's "out with Adam Smith and in with Karl Marx") and say almost nothing else. And it might work; that's what makes his stump shtick so interesting. In Orlando, he surfs through a nervous presentation that carefully avoids the Iraq thing, taking a shot at John Edwards' plan to create a $250 tax deduction for low-income Americans ("It wouldn't buy John Edwards a haircut," he cracks to pseudoapplause, trying not to touch his own perfectly sculpted hair helmet) and railing against those damned perverts the Democrats won't keep from raping our kids. "There are 29,000 convicted sex offenders on MySpace alone!" Romney cries. He's big on the whole protect-our-poor-innocent-children thing, blabbering about how we have to "clean up the water our kids are swimming in."

Not, of course, our kids in Iraq, who have some interesting water of their own to swim in lately, but our poor kids at home who have to brave the real dangers of the Internet, Hollywood movies and men holding hands. Nor, for that matter, Romney's own kids -- five sons who, rather than fighting in Iraq, he said recently, are "showing support for our nation" by working on their dad's campaign.

Of course, some of our kids are enemies themselves; one audience member picked by Romney's staff of breasty volunteer chicks to "Ask Mitt Anything" is a middle-aged white woman with a fine command of Rovian code words. Explaining that she is a teacher who works in a "socioeconomically low" area, she complains that her students are not motivated to get better test scores because, they tell her, "We don't have to work -- we'll get a check just like my mama does." Romney delivers a heartfelt solution to the lazy-Negro problem, saying you can predict which black kids will fail in school by seeing which ones have two parents come to parent-teacher night.

Romney is easy to make fun of, but he knows his business; in a world where bullshit rules the day, he does bullshit better than anyone. Hence, it is significant that this candidate -- who only a few months ago was gamely clutching his balls in a South Carolina debate and making macho pledges to "double Guantanamo" -- has suddenly abandoned his foreign-policy bluster. In Orlando, he doesn't touch Iraq until asked about it in Q&A -- and even then only mumbling something about how "the surge is, in my view, the right thing to be doing." Then it is quickly back to the usual stuff, commies and perverts and immigrants and lazy black people, the real sources of trouble in this country.

After the event, I actually find a few people who express muted enthusiasm for Romney's performance. Jim Broughton, an Orlando native who proudly describes himself as "to the right of Attila the Hun," is a Tancredo man who likes Romney as a second choice. He thinks we should "hurry up and end the war," but Iraq isn't his top concern. "Our culture and civilization, it's under . . . let's just say I don't want to learn Spanish," he says, frowning.

Another man at the event who appears to be mentally disturbed says he likes Romney because the candidate's slogan, "True Strength for America's Future," communicates to him that "the Space Center makes the United States a superpower." And a couple emerging after the speech say they now much prefer Romney to Giuliani; when I ask what they think the difference between the two is, they say they don't know, but that "Romney talks good." ***

There is a joke to be made here, but it's probably best left unmade. Suffice to say that this is not the year for any party to feel positive about relying on voters who are content with "talking good" or who worry more about dirty Mexicans than a bloody trillion-dollar war. But that is where the Republican Party is right now -- and there are signs that some of the candidates are finally collapsing under the weight of this painful equation.

Take rapidly decaying political rape victim John McCain, who has become the symbol of America's newfound impatience with the war. The one-time consensus front-runner was recently humiliated by a poll that shows him trailing Barack Obama among Iowa Republicans. (In fact, Obama outpolled McCain, former Arkansas Gov. Mike Huckabee and U.S. senator/Christian lunatic Sam Brownback combined). Pilloried for his "principled" stand of refusing to give up on the war, McCain is now, hilariously, trying to reposition himself as a war critic. "I was the greatest critic of the initial four years," McCain claimed on CNN, failing to note that his "criticism" is that there are too few troops in Iraq.

McCain has taken the biggest beating in the press for his war stance, but really there is no meaningful difference on Iraq between any of the Republican candidates, who all waver along the same narrow spectrum of embarrassing self-delusion ("the surge is working") and blind idiocy ("taking the fight to the terrorists"). Brownback, a candidate of the Tancredo school who mostly avoids Iraq talk by yammering the loudest about dead fetuses, talks about needing a "political compromise" -- one that does not include withdrawal, that is. Rep. Duncan Hunter is trying to sell war-weary Americans on a really tall fence to keep rape-seeking Mexicans out of San Diego; his Iraq position is the same as everyone else's, except that he stresses the need for more training -- something, apparently, that the Bush administration hasn't thought to try in the past four years.

Huckabee offers the most novel explanation for why the candidates keep skirting the war. "The reason you don't hear a lot of Republicans bringing Iraq up in the front end of their stump speeches is that, frankly, we don't have to," he tells me at a fund-raiser in Great Falls, Virginia. "It seems to dominate so much of our interaction with the media, so therefore, that part's covered pretty well."

Wait, I think. Isn't that . . . bullshit?

"So you're saying," I ask Huckabee, "that if the poll numbers were different, if people approved of the war, you still wouldn't be talking about it in your stump speeches?" "I think," Huckabee says cheerfully, "that we would be talking about it if there was no other forum in which we could be asked about it."

Yep, that's bullshit, all right. Like the Republican candidates wouldn't all be ramming it down our throats if Bush had turned Baghdad into Geneva, instead of Kinshasa. Like we wouldn't be listening to Rudy Giuliani propose sedition charges against the Dixie Chicks and Michael Moore to roaring crowds in Manchester and Des Moines.

Which brings us to Giuliani. His position, while not substantively different from the others, is certainly interesting from a stylistic perspective. While the other candidates avoid Iraq in their stumpery, Rudy proudly plunges into the issue from the start of his speeches, snarling at crowds like a wild, bald beast. He unabashedly talks about the need to "stay on offense" and howls at the mere suggestion of a pullout, insisting that any withdrawal would be a "terrible mistake" and "worse than Vietnam."

In a testament to the astonishingly low standards of the American voting populace, it appears that this approach is succeeding on the level of "charisma." Giuliani leads his nearest Republican competitor by twenty points and would only lose to Hillary Clinton by six measly points if the election were held now.

Oh, wait, he would still lose, even to a supposed Marxist witch like Hillary Clinton. That's the best-case scenario for the Republican Party at the moment. First they screwed up, sending thousands of Americans to their deaths. Then they refused to apologize. And now they're going to pay.

FIGHTING FOR AMERICA’S FUTURE

Demanding Fiscal Responsibility, Investing in Key Priorities, and Confronting Our Long-Term Challenges
Remarks of the Honorable Steny H. Hoyer, House Majority Leader

The National Press Club Washington, DC

September 28, 2007

I first want to thank Alan Greenspan for putting the issue of fiscal responsibility back on the political map. This is a very healthy development, even though it pains and embarrasses the Administration.

In his new book, the former Federal Reserve Board Chairman writes: “Most troubling to me was the readiness of both [the Republican-controlled] Congress and the Administration to abandon fiscal discipline.” And this: “‘Deficits don’t matter,’ to my chagrin became part of the Republicans’ rhetoric. . . . Deficits must matter.”

I was tempted to come here and deliver the shortest speech of my professional life. Eight words in all. “Chairman Greenspan is correct. Are there any questions?”

But the bar is higher today. So, I intend to convince you of four main points: First, this Administration has pursued the most fiscally irresponsible policies in American history.

Second, the Democratic Party is the party of fiscal responsibility today – which is a very under-reported story.

Third, the President needs to put down his veto pen and pick up the telephone. Our differences on funding levels for domestic appropriations for Fiscal Year 2008 – which begins on Monday – are relatively minor. We need to work out those differences, rather than engage in political posturing.

And finally, we must not allow our disagreement on appropriations to distract us from the ominous, long-term fiscal challenges that confront our nation. The United States of America is on an unsustainable fiscal path – and the longer we wait to address our challenges, the more difficult it will be to avert a fiscal crisis.

THE REPUBLICANS’ FISCAL TRAIN WRECK

There’s no other way to say it, the Republicans’ fiscal record is like a decades-long train wreck. For 18 of the 26 years that I have served in Congress, a Republican has occupied the White House.

And, in every single year of those Republican Administrations, the federal government ran a budget deficit. The cumulative deficits under Presidents Reagan, George Herbert Walker Bush, and George W. Bush total more than $4.1 trillion.

In contrast, the Clinton Administration had a cumulative surplus of nearly $63 billion over eight years. Under President Clinton’s stewardship, the federal government reduced the deficits he inherited and recorded four consecutive surpluses – the first time that had happened in 70 years.

So, forgive me for dismissing the Republican Party’s claim that it is fiscally responsible.

Forgive me for rejecting the Republicans’ repeated assertion that supply-side tax cuts pay for themselves – an assertion that has been challenged by the Treasury Department, the Congressional Budget Office, and the current Chairman of the Federal Reserve, who told the Senate in 2005: “I think it’s unusual for a tax cut to completely offset the revenue loss.”

In fact, revenues have grown by just 3.6 percent since the President’s 2001 tax cut was enacted – less than half the 8.4 percent annual growth during the Clinton Administration.

And forgive me for being somewhat amused by the Administration’s defensive push-back on Alan Greenspan’s recent comments.

The President claimed last week that his fiscal record is “admirable and good.” Does he really believe this? He came to office inheriting a projected 10-year budget surplus of $5.6 trillion, and proclaimed, “We can proceed with tax relief without fear of budget deficits, even if the economy softens.”

But then, the Republican-controlled Congress passed and the President signed the largest tax cuts in a generation – tax cuts disproportionately skewed toward the wealthiest citizens – while increasing spending at a rate (7.1 percent) nearly twice that of the Clinton Administration. At a time of war!

As predicted, these irresponsible policies turned surpluses into massive deficits: $158 billion in Fiscal 2002, $378 billion in Fiscal 2003, $413 billion in Fiscal 2004, $319 billion in Fiscal 2005, and $248 billion in Fiscal 2006.

On Sunday, when we close the books on Fiscal 2007, we’ll record another $158 billion deficit. The President will crow that he is reducing the deficit, ignoring the fact that, but for his policies, we would not even have deficits. And consider: The Administration projected a budget surplus of $573 billion this year when it took office. So, Fiscal 2007 really represents a swing of three-quarters of a trillion dollars, virtually all of it the result of policies enacted by a Republican Congress and signed by President Bush.

The exploding national debt is equally disturbing. Today, the debt stands at more than $9 trillion, a 56-percent increase (or $3.3 trillion) under President Bush. That’s $29,728 for every man, woman and child in our nation.

All these figures can be mind-numbing. So, let’s put them in perspective:

In 2007, the interest payments on the national debt – the fastest growing major category of spending in the budget – are a projected $235 billion. That’s more than Congress appropriates in discretionary spending for any government department or agency other than Defense. It’s four times more than we spend on education, and seven times more than we spend on the Department of Homeland Security.

In other words, these interest payments – which increasingly are paid to foreign governments that hold our debt – cannot be used to build roads and bridges; to invest in research and development; to improve education, to protect our nation, or, yes, to provide tax relief.

The Republicans’ record of fiscal irresponsibility speaks for itself. As Republican Congressman Jeff Flake of Arizona said last year: “Whether we want to admit it or not, the Republican Congress’s failure to discipline itself is sending us all down a flower-strewn path to fiscal insolvency.”

DEMOCRATIC MAJORITIES WORK TO RESTORE FISCAL DISCIPLINE

The truth is, Democrats are the party of fiscal discipline in Washington today.

In one of our first acts after regaining the Majority, we reinstated the pay-as-you-go budget rules (or PAYGO) that are widely credited with producing record budget surpluses during the Clinton Administration. In a nutshell, PAYGO means the federal government must offset tax cuts or spending increases elsewhere in the budget. It’s a common-sense rule that millions of American families apply to their own personal budgets.

Adopted on a bipartisan basis in the 1990s, PAYGO was even rhetorically supported by President Bush in his first three budgets – although he exempted his 2001 tax cuts from the rule and Republicans allowed it to expire in 2002.

The President’s new Director of OMB, former Budget Committee Chairman Jim Nussle – who supported PAYGO in the ‘90s – later had a change of heart, explaining: “We don’t believe you should have to pay for tax cuts.”

And so, Republicans didn’t. They just kept on billing the costs of tax cuts and spending increases to future generations through higher deficits.

Today, Democrats are fighting to restore the fiscal discipline that has been sorely lacking since 2001. Why? Because we believe deficits and spiraling debt threaten our future prosperity and national security. And because we believe that it is simply immoral to force our children and grandchildren to pay this generation’s bills.

That’s why we passed a budget for Fiscal 2008 that would bring the budget back to balance by 2012. Last year, the Republican Congress failed to even pass a budget.

And, that’s why we have honored our commitment to PAYGO. We have not violated the PAYGO rule once in the approximately 30 bills with direct spending or revenue provisions of more than $1 million, as will be detailed in a report next week by John Spratt, Chairman of the House Budget Committee.

If you examine the four major House bills with mandatory spending increases – children’s health insurance, the farm bill, higher education and energy – you’ll see that approximately 80 percent of the spending increases have been financed by spending cuts.

For all their talk about being tough on spending, our Republicans friends in the House actually have opposed the spending cuts that we have put forward. House Democrats, for instance, paid for our SCHIP bill by, among other things, cutting subsidies for insurers – cuts Republicans opposed. We have made the tough decisions with respect to spending priorities that Republicans never made when they were in power.

And, as we enter the final stages of this Session of Congress, I want to make one thing clear: The House will not waive PAYGO for any tax cuts or entitlement spending increases that are not offset.

Today, we are examining different proposals to permanently reform the alternative minimum tax, as well as a temporary AMT fix that would be offset by closing tax loopholes and cracking down on special interest tax breaks. In either case, simply waiving PAYGO is not an option – even if some members of the other body prefer that we do so.

THE CURRENT APPROPRIATIONS FIGHT IN CONTEXT

Now, let me focus on the current disagreement between Democrats in Congress and the Administration over domestic appropriations. Don’t be fooled. This is not a fight about spending. This is a fight about our priorities as a nation.

Let me say, I am not pleased that we have not completed our appropriations work on time. The Administration’s unjustified veto threats have only impeded our progress. Nonetheless, we have passed a continuing resolution to ensure that our government is funded and functioning, and to give us time to work out our differences.

But the bottom line is, the Administration is itching to instigate an appropriations fight with Congress in a vain effort to establish its bonafides with its conservative base.

After failing to veto even one appropriations bill or other legislation that substantially added to the deficit during his first six years in office, the President is now threatening to veto eight of the 12 annual spending bills for Fiscal 2008 over a total of $23 billion.

There is no question that $23 billion is a lot of money. However, let’s put it in perspective: $23 billion is about eight-tenths of 1 percent of a total federal budget of nearly $3 trillion.

Twenty-three billion dollars is not quite half of the $42 billion in additional funding for Iraq that the Administration requested on Wednesday, and about 12 percent of the Administration’s total request of $190 billion for the war for 2008 – a war the White House estimated would have a total cost of $60 billion.

The truth is, $16 billion of the $23 billion that Democrats are fighting for would simply restore cuts proposed by the President to key programs – a 50-percent cut in vocational education; the elimination of student aid other than work study and Pell Grants; and deep cuts in medical research, law enforcement grants and rural health programs, to name a few.

This is a fight about whether we adequately fund No Child Left Behind, special education, medical research, Head Start and the clean water programs.

Please, Mr. President, do not lecture us about fiscal responsibility. And please, do not tell us that we cannot find funding to invest in our children, our infrastructure, and our future when you are proposing to spend another $190 billion on the war in Iraq.

Democrats believe the President’s priorities are deeply misguided, and not supported by the American people. We believe, in this appropriations fight, the President is playing politics, pure and simple.

If you doubt that, just consider that funding for non-defense appropriations in 2008 (when adjusted for inflation and population growth) is actually below the funding levels passed by the Republican Congress and signed by the President for Fiscal 2002, 2003, 2004 and 2005.

I know that Chairman David Obey remains hopeful that in the next few weeks the Congressional leadership and White House will sit down and negotiate a reasonable agreement on funding levels.

But as the rhetoric heats up, ask yourself: If the President is really fiscally conservative, why didn’t he veto one appropriations bill in six years? Why didn’t he veto the corporate tax bill in 2004 – a bloated monstrosity that doled out $139 billion in corporate welfare when all that was needed was a $5 billion tax fix?

Democrats are not just going to roll over in this appropriations fight like compliant poodles. We are going to fight for the priorities of the American people. The President should not try to rehabilitate his fiscal record by vetoing responsible appropriations bills – or the bipartisan children’s health insurance bill.

OUR LONG-TERM FISCAL CHALLENGES

Finally, let me say that as important as this disagreement over appropriations is, we must not be distracted from the long-term fiscal challenges that face our nation. Fiscal responsibility is not some virtue that exists in a vacuum. It’s vital to our future.

As Bob Bixby of the Concord Coalition points out: “The basic facts [of our fiscal challenges] are a matter of arithmetic, not ideology. Two factors stand out: demographics and health care costs.”

With the imminent retirement of 78 million Baby Boomers, and the attendant demands on Social Security and Medicare, we are on the cusp of a fiscal tsunami that threatens to drown our nation in a sea of red ink.

Over the next quarter century, the number of Americans 65 and older will nearly double – from 12 percent of the population today to 20 percent.

Medicare and Medicaid will grow by nearly five times as a share of the economy by 2050, if we assume the growth of health care costs does not slow. And these programs will absorb as much of our nation’s economy by the late 2040s as the entire federal budget does today.

According to the 2006 Financial Report of the United States – signed by Treasury Secretary Paulson – our fiscal exposures (explicit liabilities and implicit obligations) had a present value of $44 trillion, or about as much as the net worth of all household assets.

We are not going to grow our way out of this problem. The GAO estimates that it would require inflation-adjusted average annual economic growth in the double-digit range every year for the next 75 years to close the gap through growth alone.

It is imperative that we get serious about our long-term fiscal challenges. There is plenty of room for debate over the mix of options that should be considered. But we do not have time to waste.

Senators Conrad and Gregg and Congressmen Cooper and Wolf have put forward proposals for a bipartisan task force. While I would like to believe that Congress could address these issues through the regular legislative process, the experience of recent years suggests that this is extremely unlikely in the current political environment.

Thus, I support the Conrad-Gregg and Cooper-Wolf proposals in concept, although I have serious concerns about several specific provisions.

My preference certainly would be to have Members of Congress and this Administration make recommendations that are considered in this Congress. But there are two problems with that: First, this is now an outgoing Administration, with little over a year left. And second, despite the good-faith efforts of Secretary Paulson, this Administration is loathe to put all options on the table.

As a result, I believe that we must move forward with such a task force after our new President is inaugurated in January 2009, with a process allowing the President and Congress to consider alternatives.

Turning a blind eye to our long-term challenges would not only be irresponsible, it would be unforgivable. As Comptroller General Walker has warned: “Continuing on the unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security.”

Our fiscal future need not be filled with peril – if we have the courage and will to recognize and address these challenges.

The War as We Saw It

By BUDDHIKA JAYAMAHA, WESLEY D. SMITH, JEREMY ROEBUCK, OMAR MORA, EDWARD SANDMEIER, YANCE T. GRAY and JEREMY A. MURPHY

August 19, 2007
New York Times

VIEWED from Iraq at the tail end of a 15-month deployment, the political debate in Washington is indeed surreal. Counterinsurgency is, by definition, a competition between insurgents and counterinsurgents for the control and support of a population. To believe that Americans, with an occupying force that long ago outlived its reluctant welcome, can win over a recalcitrant local population and win this counterinsurgency is far-fetched. As responsible infantrymen and noncommissioned officers with the 82nd Airborne Division soon heading back home, we are skeptical of recent press coverage portraying the conflict as increasingly manageable and feel it has neglected the mounting civil, political and social unrest we see every day. (Obviously, these are our personal views and should not be seen as official within our chain of command.)

The claim that we are increasingly in control of the battlefields in Iraq is an assessment arrived at through a flawed, American-centered framework. Yes, we are militarily superior, but our successes are offset by failures elsewhere. What soldiers call the “battle space” remains the same, with changes only at the margins. It is crowded with actors who do not fit neatly into boxes: Sunni extremists, Al Qaeda terrorists, Shiite militiamen, criminals and armed tribes. This situation is made more complex by the questionable loyalties and Janus-faced role of the Iraqi police and Iraqi Army, which have been trained and armed at United States taxpayers’ expense.

A few nights ago, for example, we witnessed the death of one American soldier and the critical wounding of two others when a lethal armor-piercing explosive was detonated between an Iraqi Army checkpoint and a police one. Local Iraqis readily testified to American investigators that Iraqi police and Army officers escorted the triggermen and helped plant the bomb. These civilians highlighted their own predicament: had they informed the Americans of the bomb before the incident, the Iraqi Army, the police or the local Shiite militia would have killed their families. As many grunts will tell you, this is a near-routine event. Reports that a majority of Iraqi Army commanders are now reliable partners can be considered only misleading rhetoric. The truth is that battalion commanders, even if well meaning, have little to no influence over the thousands of obstinate men under them, in an incoherent chain of command, who are really loyal only to their militias.

Similarly, Sunnis, who have been underrepresented in the new Iraqi armed forces, now find themselves forming militias, sometimes with our tacit support. Sunnis recognize that the best guarantee they may have against Shiite militias and the Shiite-dominated government is to form their own armed bands. We arm them to aid in our fight against Al Qaeda.

However, while creating proxies is essential in winning a counterinsurgency, it requires that the proxies are loyal to the center that we claim to support. Armed Sunni tribes have indeed become effective surrogates, but the enduring question is where their loyalties would lie in our absence. The Iraqi government finds itself working at cross purposes with us on this issue because it is justifiably fearful that Sunni militias will turn on it should the Americans leave.

In short, we operate in a bewildering context of determined enemies and questionable allies, one where the balance of forces on the ground remains entirely unclear. (In the course of writing this article, this fact became all too clear: one of us, Staff Sergeant Murphy, an Army Ranger and reconnaissance team leader, was shot in the head during a “time-sensitive target acquisition mission” on Aug. 12; he is expected to survive and is being flown to a military hospital in the United States.) While we have the will and the resources to fight in this context, we are effectively hamstrung because realities on the ground require measures we will always refuse — namely, the widespread use of lethal and brutal force.

Given the situation, it is important not to assess security from an American-centered perspective. The ability of, say, American observers to safely walk down the streets of formerly violent towns is not a resounding indicator of security. What matters is the experience of the local citizenry and the future of our counterinsurgency. When we take this view, we see that a vast majority of Iraqis feel increasingly insecure and view us as an occupation force that has failed to produce normalcy after four years and is increasingly unlikely to do so as we continue to arm each warring side.

Coupling our military strategy to an insistence that the Iraqis meet political benchmarks for reconciliation is also unhelpful. The morass in the government has fueled impatience and confusion while providing no semblance of security to average Iraqis. Leaders are far from arriving at a lasting political settlement. This should not be surprising, since a lasting political solution will not be possible while the military situation remains in constant flux.

The Iraqi government is run by the main coalition partners of the Shiite-dominated United Iraqi Alliance, with Kurds as minority members. The Shiite clerical establishment formed the alliance to make sure its people did not succumb to the same mistake as in 1920: rebelling against the occupying Western force (then the British) and losing what they believed was their inherent right to rule Iraq as the majority. The qualified and reluctant welcome we received from the Shiites since the invasion has to be seen in that historical context. They saw in us something useful for the moment.

Now that moment is passing, as the Shiites have achieved what they believe is rightfully theirs. Their next task is to figure out how best to consolidate the gains, because reconciliation without consolidation risks losing it all. Washington’s insistence that the Iraqis correct the three gravest mistakes we made — de-Baathification, the dismantling of the Iraqi Army and the creation of a loose federalist system of government — places us at cross purposes with the government we have committed to support.

Political reconciliation in Iraq will occur, but not at our insistence or in ways that meet our benchmarks. It will happen on Iraqi terms when the reality on the battlefield is congruent with that in the political sphere. There will be no magnanimous solutions that please every party the way we expect, and there will be winners and losers. The choice we have left is to decide which side we will take. Trying to please every party in the conflict — as we do now — will only ensure we are hated by all in the long run.

At the same time, the most important front in the counterinsurgency, improving basic social and economic conditions, is the one on which we have failed most miserably. Two million Iraqis are in refugee camps in bordering countries. Close to two million more are internally displaced and now fill many urban slums. Cities lack regular electricity, telephone services and sanitation. “Lucky” Iraqis live in gated communities barricaded with concrete blast walls that provide them with a sense of communal claustrophobia rather than any sense of security we would consider normal. In a lawless environment where men with guns rule the streets, engaging in the banalities of life has become a death-defying act. Four years into our occupation, we have failed on every promise, while we have substituted Baath Party tyranny with a tyranny of Islamist, militia and criminal violence. When the primary preoccupation of average Iraqis is when and how they are likely to be killed, we can hardly feel smug as we hand out care packages. As an Iraqi man told us a few days ago with deep resignation, “We need security, not free food.”

In the end, we need to recognize that our presence may have released Iraqis from the grip of a tyrant, but that it has also robbed them of their self-respect. They will soon realize that the best way to regain dignity is to call us what we are — an army of occupation — and force our withdrawal.

Until that happens, it would be prudent for us to increasingly let Iraqis take center stage in all matters, to come up with a nuanced policy in which we assist them from the margins but let them resolve their differences as they see fit. This suggestion is not meant to be defeatist, but rather to highlight our pursuit of incompatible policies to absurd ends without recognizing the incongruities.

We need not talk about our morale. As committed soldiers, we will see this mission through. Buddhika Jayamaha is an Army specialist. Wesley D. Smith is a sergeant. Jeremy Roebuck is a sergeant. Omar Mora is a sergeant. Edward Sandmeier is a sergeant. Yance T. Gray is a staff sergeant. Jeremy A. Murphy is a staff sergeant.

Historian: Bush use of quote 'perverse'

By Avi Zenilman

Aug 23, 2007

A historian quoted by President Bush to help argue that critics of the administration’s Iraq policy echo those who questioned the U.S. effort to bring democracy to Japan after World War II angrily distanced himself from the president’s remarks Thursday.

“They [war supporters] keep on doing this,” said MIT professor John Dower. “They keep on hitting it and hitting it and hitting it and it’s always more and more implausible, strange and in a fantasy world. They’re desperately groping for a historical analogy, and their uses of history are really perverse.”

In a speech on Wednesday, Bush quoted “one historian” as suggesting that foreign policy experts – and, by implication, critics of Bush’s approach to Iraq – aren’t always right. “An interesting observation, one historian put it, ‘Had these erstwhile experts’ — he was talking about people criticizing the efforts to help Japan realize the blessings of a free society — he said, ‘Had these erstwhile experts had their way, the very notion of inducing a democratic revolution would have died of ridicule at an early stage.’ ” [Update: See clip of the president's speech and MSNBC interview with Dower, courtesy of Breitbart.tv, here.]

A search of Google books revealed that the “one historian” is Dower. The quote is from his book, “Embracing Defeat: Japan in the Wake of World War II,” which won the National Book Award and the Bancroft Prize, among other awards, in 1999.

Dower was decidedly unhappy with his 15 minutes of fame. “I have always said as a historian that the use of Japan [in arguing for the likelihood of successfully bringing democracy to Iraq] is a misuse of history,” he said when notified of the Bush quote.

He immediately directed me to a November 2002 New York Times op-ed where he outlined 10 reasons why “most of the factors that contributed to the success of nation-building in occupied Japan would be absent in an Iraq militarily defeated by the United States.”

In March 2003, Dower wrote an essay for Boston Review, entitled “A Warning From History: Don’t Expect Democracy in Iraq.”

And what about the specific quote Bush used – that experts on Japan were wrong about the country’s capability for democracy?

“Whoever pulled that quote out for him [Bush] is very clever,” Dower said, acknowledging that “if you listen to the experts prior to the invasion of Japan, they all said that Japan can’t become democratic.”

But there are major differences, Dower said. “I’m not being misquoted, but I’m being misrepresented.”

“In the case of Iraq,” Dower said, “the administration went in there without any of the kind of preparation, thoughtfulness, understanding of the country they were going into that did exist when we went into Japan. Even if the so-called experts said we couldn’t do it, there were years of mid-level planning and discussions before they went in. They were prepared. They laid out a very clear agenda at an early date.”

White House spokesman Tony Fratto said that Bush used Dower’s quote “to in no way endorse his view of Iraq, only his view of Japan.”

Added Fratto: “While professor Dower may disagree with the applicability of the quote, the president in no way endorses his view of Iraq.”

A Simple Fact: Republicans Can't Manage the Economy

By Robert Weiner and John Larmett

from AlterNet

August 20th, 2007

At last week's news conference, President Bush again said that he's reduced the deficit to $239 billion, created 8 million jobs and generated unemployment at a low 4.5%. He said the economy is strong, largely due to his tax cut policies. On the other side, Rep. David Obey (D-Wis.), House Appropriations Committee chairman, has complained of our limited resources now because of Bush's "gargantuan deficits he created with that stupid war and those stupid tax cuts paid for with our money."

There is a widely held belief that Republicans are better for business than are Democrats. Let's look at the facts. The wild stock market ride of recent weeks does not compare to the two worst stock events, the crash of 1929 and the 1987 free fall, which also occurred under Republican administrations. Since 1900, Democratic presidents have produced a 12.3% annual return on the S&P 500, Republicans only 8%. Gross Domestic Product growth since 1930 is 5.4% for Democratic presidents and 1.6% for Republican presidents.

Bush inherited from President Clinton an annual federal budget surplus of $236 billion, the largest in American history. Clinton balanced the budget for the first time since 1969. Budget surpluses were expected to total $5.6 trillion between fiscal year 2002 and 2011.

Despite this, Bush transformed the surpluses into a $1.1 trillion annual deficit in just three years because of the Iraq war and his relentless push for permanent tax cuts for wealthy Americans, a new iteration of Herbert Hoover's equally catastrophic "trickle-down" theory. Bragging about a $239 billion deficit sets such a low standard that Bush can claim horrific failure as a good thing for the country. The Bush administration's annual loss of three-quarters of a trillion dollars is unprecedented. Bush presided over the loss of 2 million American jobs in his first 2 1/2 years and has net gained 5.6 million in six years, the worst since Hoover. Clinton created 23 million jobs.

It's not rocket science to figure out the difference. Clinton: tax breaks for the middle and lower incomes who actually spend the money, no Iraq war. Bush: disproportionate tax breaks for the wealthy (50% to the wealthiest 1% by 2010), $750 billion for a war monetarily benefiting only a few military contractors and a financial sieve for the country. Democratic presidents spread the wealth through spending on needed social programs and targeting tax cuts to lower- and middle-income Americans, stimulating the economy more broadly. Republicans pump into defense contractors and high-income Americans, creating a significant detriment to the whole economy with larger deficits and higher interest rates. Economist John Maynard Keynes was right in 1936: When you "prime the pump" into people programs (like jobs or lower income tax cuts to help Americans buy what they need), you get people results. On the other hand, when you move money from the economy into tax cuts for the rich and a military vacuum, you don't prime the economic pump; you deplete it.

Contrary to opinion, we do not have record high stocks. It would take 14,300 for the Dow Jones industrial average just to match for inflation the 11,750 under Clinton in 2000. We're now around 13,000, meaning, in real terms, a stagnant market with a loss for the past six years. Democrats empower the buyers, Republicans the sellers. Misdirected tax cuts, plus the Iraq war, have taken the money not just from America's working class but from America's businesses as well. Economic Indicators: Democratic Versus Republican Presidents

In six major criteria - GDP growth, per capita income growth, job creation, unemployment reduction, inflation reduction, and federal deficit reduction - for the ten post-World War II presidencies until Bush, there is a record to track the reality of Democratic versus Republican economic success.

Democrats

Lyndon B. Johnson's "Great Society" created robust economic expansion, first in both GDP and personal income growth. He also reduced unemployment from 5.3% to 3.4%. Economic growth remained robust through most of LBJ's presidency.
John F. Kennedy campaigned on the idea of getting America moving again, and he did. Under Kennedy, America entered its largest sustained expansion since WWII. GDP and personal income growth were second only to Johnson, all with minimal inflation. Contrary to Republican attempts to say Kennedy's tax cuts are like Bush's, Kennedy's were targeted at middle and lower incomes.
The economy added 10 million jobs under Jimmy Carter despite high inflation; Carter ranks first in job creation next to Clinton during just four years in office. Carter also reduced government spending as a percentage of GDP.
Harry Truman's second term saw the fastest GDP growth and the sharpest reduction in unemployment of any president surveyed (of course, FDR's post Hoover-depression New Deal jobs are first).

Republicans

Ronald Reagan focused on reducing the cost of capital through cutting tax bracket highs for the rich and reducing the size and scope of government. But, instead of lowering spending, Reagan shifted money to the military (i.e. Star Wars) and the deficit tripled with the tax cuts and military spending - as under Bush II.
Under Gerald Ford, the deficit soared and the unemployment rate grew from 5.3 - 8.3% in just 2 years. His "WIN" (Whip Inflation Now) buttons were no match for economic inactivity.
It was under Richard Nixon that inflation started to spiral out of control, from 4.4% to 8.6%, and the deficit shot up from $2.8 billion to $73.7 billion.
The Eisenhower years were characterized by slow growth (2.27% annualized GDP growth) and relatively high unemployment (7.7% at end of term).
George H. W. Bush had the poorest record for both GDP and income growth. During his single term, the deficit ballooned (from $152 billion to $255 billion) more than under every president but his son and Ford.

(Sources: White House Office of Management and Budget (OMB), U.S. Department of Labor (DOL), and White House Council of Economic Advisors

Robert Weiner is a former Clinton administration public affairs director. John Larmett, senior policy analyst at Robert Weiner Associates, was a legislative assistant to Sen. Gaylord Nelson (D-Wis.) and a

Wyandotte County Democrats

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