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Thursday, 11 April 2013 09:38

Elizabeth Warren Shocked by Obama CPI Proposal to Squeeze Blood Out of the Middle Class When the Wealthy Can Sustain Social Security

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ageoldElizabeth Warren is defying party allegiance -- and apparent Democratic leadership acquiescence (Pelosi and Reid) -- to oppose President Obama's chained CPI downward payment adjustment to Social Security recipients in his latest budget.

According to the Huffington Post she is, well frankly, astonished:

Senator Elizabeth Warren (D-Mass.) made it clear Wednesday in an email to supporters that not only would she oppose President Barack Obama's plan to cut Social Security benefits through a cost-of-living adjustment known as chained CPI, but that she was "shocked to hear" it was included in the White House's budget proposal at all.

Warren said her brother David lives on the $13,200 per year he receives in Social Security benefits. "I can almost guarantee that you know someone -- a family member, friend, or neighbor -- who counts on Social Security checks to get by," she wrote.

An excerpt from her e-mail to her followers reads:

That's why I was shocked to hear that the President's newest budget proposal would cut $100 billion in Social Security benefits. Our Social Security system is critical to protecting middle class families, and we cannot allow it to be dismantled inch by inch.

The President's policy proposal, known as "chained CPI," would re-calculate the cost of living for Social Security beneficiaries. That new number won't keep up with inflation on things like food and health care -- the basics that we need to live.

In short, "chained CPI" is just a fancy way to say "cut benefits for seniors, the permanently disabled, and orphans."

What is essential to understanding Social Security is that it is a regressive flat tax, like a retail tax.  It is the same rate for everyone regardless of income, and it is capped at $113,700.  This means that on income above that level, one doesn't have to pay Social Security tax.

As BuzzFlash at Truthout noted in its commentary on March 8, "Raise Social Security and Medicare (FICA) Taxes on the Rich, Don't Feed the Cat Food of Austerity to the Elderly," there is a solution at hand that will not turn our senior citizens into dumpster divers for food.

We noted in that column an analysis by Thomas Edsall of the New York Times (NYT):

Earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system…. [Bold and italics inserted by BuzzFlash.]

But Obama has either by his frequent maladroit negotiation -- or because he is actually a believer in the "austerity" frame of the GOP -- has not offered the option of Social Security increases for the rich.

The NYT, in an April 11 story, echoes the "conventional wisdom" that "entitlements" – which really are earned benefits – need to be cut back on working stiffs:

The president’s views put him at the head of a small but growing faction of liberals and moderate Democrats who began arguing several years ago that unless the party agrees to changes in the entitlement benefit programs — which are growing unsustainably as baby boomers age and medical prices rise — the programs’ costs will overwhelm all other domestic spending to help the poor, the working class and children.

“The math on entitlements is just not sustainable,” said Senator Mark Warner of Virginia, one of the few Democrats to unequivocally endorse Mr. Obama’s budget. “And if you’re not finding ways to reform, where do you squeeze? Well, then you squeeze early-childhood programs, you squeeze Head Start, you squeeze education and veterans.”

The answer is that you don't have to squeeze much of anything (except the Pentagon, CIA and Department of Homeland Security immigration budgets for a start).  Workers in America earn Social Security by the sweat of their brow.  Many of the very wealthy pay very little or nothing into the fund because they earn lavish profits from capital gains, which are not subject to Social Security and Medicare (FICA) taxes.  Just, as Edsall recommends, create a progressive FICA tax and eliminate the earnings cap.  And if you want to tax the massive Wall Street "sacred" capital gains profits to buttress Social Security, go at it.

BuzzFlash also wrote a commentary on March 14, "GOP and Obama Ready to Make Needy Seniors Pay for Bush Wars."
After all, it was the GOP that took a balanced budget left by Bill Clinton and ran it up trillions of dollars of debt and drove the economy into a wall. That's what has created the hypocritical GOP war cry of "austerity."

Why should a truck driver or a waitress struggle for basic needs in their senior years as a result of legislative negligence?  Not to mention that depending on who is doing the accounting, a few trillion has been "borrowed" from the Social Security Trust Fund to provide cash to help pay off the ongoing US debt.  

Obama is no longer an opponent of the trumped up "austerity" movement; he is driving the bus.

Not only that, from a political perspective, the GOP will have a field day in congressional districts in 2014 blaming the Democrats for lowering Social Security payments.

BuzzFlash at Truthout observed in its cat food commentary:

When Independent Vermont Senator Bernie Sanders delivered his fiery filibuster on income inequality and jobs in America last year, he nailed down the essence of the bellowing cries of the moneyed elite for "austerity":

The reality is, many of the nation's billionaires are on the warpath. They want more, more, more. Their greed has no end, and apparently there is very little concern for our country or for the people of this country if it gets in the way of the accumulation of more and more wealth and more and more power.

Sanders went on to make a provocative analogy:

The point that needs to be made is, when is enough enough? That is the essence of what we are talking about. Greed, in my view, is like a sickness. It is like an addiction. We know people who are on heroin. They can't stop….

How can anybody be proud to say they are a multimillionaire and are getting a huge tax break and one-quarter of the kids in this country are on food stamps? How can one be proud of that? I don't know.

It is not only income, it is wealth. The top 1 percent owns more wealth than the bottom 90 percent. During the Bush years, the wealthiest 400 Americans saw their wealth increase by some $400 billion. How much is enough?

Apparently, enough is never enough, for most millionaires and billionaires.  When success and value in a society are reduced to the monetization of one's assets, the culture has been debased to worshipping mammon.

Someone has to stop the mainlining of greed, and let it begin with progressive FICA taxation – without caps – on Social Security and Medicare.

Obama rode into office in 2008 promising systemic change in the ways of Washington; now he's offering seniors a change in eating habits: road kill.

(Photo: common license on flickr)