Wednesday, February 3, 2010

Goodbye Democracy ... Hello Plutocracy

For the President, last week brought the State of the Union speech and a grilling at the Retreat for House Republicans. And — since I'm retired, I had the opportunity to watch both events live — as opposed to watching the news media's take on its favorite 10-15 second soundbites. Having watched both live and after-the-event media coverage, I found it interesting how the main-stream media (MSM) framed the content.

As I watched the State of the Union, my perception was that the President appeared to direct a good portion of his speech at Congress, dressing them down for their partisan bickering, filibustering tactics, and being so locked into their individual ideologies that they've forgotten that their constituents are THE PEOPLE, not their individual party ideologies. The MSM apparently missed that or chose to make little to no comments related to the dress-down. Instead, they chose to focus their coverage on the President's going forward proposals and on Justice Alito's discomfort when called out for his judicial activism.

As I watched the Republican Retreat Q&A, I thought the President did a fine job of refuting the GOP (Gang of Prevaricators) talking points that are tantamount to fabrications, distortions and sometimes, outright lies. I also noticed that as the President arrived, he was presented with a booklet, and that no mention was made as to where the general public might be able to find a copy of that document. Well, I think I figured out he was presented with: "A Roadmap to the Future, Version 2.0" (the Republican plan to solve America's long-term fiscal and economic crisis). Whether you're a Democrat or a Republican, you should make time to read this 99-page document, because if their approach were to be enacted, it has some serious ramifications for the people of this nation and gives a serious shove at moving our fragile democracy toward full-blown corporate plutocracy.

While I agree that the USA is in serious debt and that entitlement programs are rapidly becoming an unsustainable segment of the federal government, I'm not so sure I agree with how they propose to remedy the situation. For example, let's take Medicare. The Roadmap would create a two-tiered set of available benefits under Medicare. Those who are currently 55 or older, would continue to receive benefits under Medicare using current rules. However, those individuals who are currently under 55 would receive a payment of $11,000 and told to go out and purchase their own Medicar certified plan. It also would define tax-free rules for MSAs (Medical Savings Accounts), reform high-risk pools for Medicaid and allow Medicaid recipients to take part in the same variety of options and high-quality care available to everyone through the tax credit option

So, for years, ordinary Americans have been working their butts off so their kids could have a better life. But, that will come to an end under this 2-tiered proposal. Throughout our working careers, we've paid an ever-escalating FICA tax on our wages/salaries into the Social Security Trust Fund, which has been matched by our employers. Today, that combined amount equates to 15.3% of wages/salaries. For those of us lucky enough to be over-55, we'd receive the benefits we paid for throughout our careers, but for those not yet 55, the Republican's solution is privatization. They'll just give you a payment and tell you you're on your own to find effective insurance, either privately or through the exchanges they'd create.

The Roadmap would replace the current Medicaid system (currently administered by States) with "direct assistance" (from the federal govt) for privatization of those plans as well, taking States out of the mix and giving $11,000 to medicaid beneficiaries to purchase their own plan.

The Roadmap goes even further at stomping all over "State's rights" by "allowing consumers to shop across State lines ... (so) individuals no longer will have to pay for health benefits mandated by their home state legislatures." They believe that in placing health care plan decisions in the hands of individuals and families, it will encourage insurance companies to offer more variety, higher quality, and more cost-effective plans to meet the needs of their customers. There assumption then is that health care quality will improve through this increased competition among providers. That process worked real well for the banking industry don't you think?

Their plan is a bit vague as to high-risk individuals. Here's what it says: "Ensuring that “high-risk” individuals – those with the greatest medical costs – can obtain high-quality coverage is critical to the success of any plan to reform health care. High-risk individuals face an insurmountable burden in medical expenses themselves, and that burden is often transferred to taxpayers in the form of uncompensated care expenses from hospitals, or the placement of these individuals in Medicaid after having exhausted their financial resources paying for their medical costs." Well, it acknowledged that they have difficulty, but what is the mechanism that "ensures" they can obtain coverage at affordable costs?

I talked about FICA earlier as it related to medicare, but FICA has two components: medicare and retirement benefits. Most Americans believe that having paid FICA taxes throughout their working careers, they're guaranteed retirement benefits once they attain the legislated retirement age. Well, maybe that's true and maybe that's not. You see, the SS Trust Fund only has the authority to pay benefits from its current revenues and existing balances [in the form of treasury bonds (IOUs) ... paper with nothing but debt owed to foreign governments behind it]. As our nation continues to amass debt, at what point will the Treasury no longer be able to make good on those bonds as our foreign competitor's begin calling in our debt as the baby boomers begin retiring. Social Security's ability to make full payments once annual benefits to be paid exceed FICA revenues depends in part on the federal government's ability to make good on those Treasury bonds to the Social Security Trust Fund. Thus, the federal government's ability to repay Social Security is contingent on fiscal policies taken today and in the future.

To assure solvency of the SS Trust Fund, the Republican's Roadmap again chooses a set of 2-tiered benefits. If you're 55 or older, you'll be able to continue under Social Security rules as they stand today. However, those individuals who aren't yet 55 will have a choice. They can choose to stay with the current system and hope the Treasury will have the funds to redeem all those bonds the SS Trust Fund holds, or, they can choose to contribute to a personal account, using a significant portion of their payroll taxes, and place those monies into a series of funds managed by the Federal Government. The Roadmap claims this will "reduce demand on government spending, lead to a larger overall benefit for retired workers, and restore solvency to the Social Security Program." Here again, this seems to me like just another smoke screen to hide the government's insolvency. They borrowed from the Social Security Trust Fund (Treasury Bond IOUs instead of real cash money). The Roadmap may claim that your "contributions will be guaranteed," but will they grow over the term of your career in such a way to sustain you in retirement? If you read nothing else in their Roadmap, I would encourage you to not just read, but 'study' the section on retirement benefits.

Like Medicare and Retirement, the Roadmap also would create a 2-tier system for income taxes for individuals, repeal the AMT and eliminate Corporate income taxes (imposing a single-digit business consumption tax instead). Under the Roadmap, individuals could opt to continue paying taxes under the existing tax schedules, or they could opt for a simplified postcard-sized tax process with no deductions and a 10% for AGI up to $100,000 for joint filers, and $50,000 for single filers, and 25% tax rate on taxable income above that. So if I understand them, they think they can reduce taxes to increase federal income that could then be applied to eliminate not just the budget deficit, the our national debt as well. I don't know about you, but I want some of what they've been smokin'. Hello ... we're darn near $13 Trillion dollars in debt and reducing and/or eliminating taxes is only going to but is further in debt!

The U.S. has some serious fiscal and economic problems. If the Republicans prevail and HR 4529 (their Roadmap) becomes the road to the future, I do believe the next downturn will be much more devastating than the one we in which we now find ourselves. Given the Supreme Court's recent decision to give Corporations rights of free speech as though they were individuals, implementing the Republican's Roadmap will take us even further down the road toward a Corporate Plutocracy and further away from the Democracy we've enjoyed for all these years.

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