Robert B. Reich's Blog, page 151

The Birth of the People's Party

Look at the outrage in Madison, Wisconsin. Look at the crowds in DesMoines, Iowa. Look at the demonstrations in Indiana and Ohio and elswhere around America.

Hear what they're saying: Stop attacking unions. Stop making scapegoats out of public employees. Stop protecting the super-rich from paying their fair share of the taxes needed to keep our schools running.

Stop gutting the working middle class.

Are we finally seeing average Americans stand up and demand a fair shake in an economy now grotesquely tilted toward the wealthy and the privileged? Are Americans beginning to awake to the fact that our economy now delivers a larger share of total income to the very top than at any time in living memory? That big corporations are making more money and creating more jobs abroad than in the United States?

That this concentration of income and wealth has so corrupted politics that corporations can extort whatever they want from the government — tax breaks, loan guarantees, subsidies — while the super-rich can take most of their income as capital gains (taxed at 15 percent), and the rest at the lowest top rate in 25 years? And that because of this our kids are crowded into classrooms, our streets and highways and bridges are falling apart, and our healthcare bills are out of control?

The Tea Party grew out of indignation over the Wall Street bailout — an indignation shared by the vast majority of Americans. But the Tea Party ended up directing its ire at government rather than at big business and Wall Street. Was this because billionaires Charles and David Koch and their like funneled money to the Tea Party through front organizations like Dick Armey's Freedom Works, and thereby co-opted it?

Now we may be seeing the birth of a genuine populist movement. Call it the People's Party. Like the Tea Party, the People's Party doesn't have a clear organization or hierarchy or single address. It doesn't have lobbyists in Washington. It's not even yet recognized by the mainstream media.

But the People's Party seems to be growing in numbers and in intensity. And it's starting to push elected officials — first at the state level — to listen and respond.

Why the Democrats Should Never Have Started Paying Ransom to Avoid a Shutdown

It's called ransom. That's what Republicans are demanding from the White House and congressional Democrats for not pulling the plug on the government.

Problem is, when you pay ransom once, you're almost begging to pay it again. And that's exactly the pickle the Obama administration is finding itself in.

In order to avoid a shutdown last week and buy time until March 18, the White House agreed to more spending cuts for the remainder of this fiscal year than it originally put on the table. Now, in order to get past March 18, Republicans want even more. Democrats have offered to cut an additional $10.5 billion but Republicans want $61 billion. The White House is hinting it's ready to compromise further.

Of course it is. Both sides want to look as if they're willing to compromise because neither side wants to be blamed by the public if a shutdown happens.

That means they'll have to agree to split the difference - which will result in around $35 billion of additional cuts. Not in Social Security or Medicare or national defense - no, those programs are too popular or politically potent for any short-term political deal. The $35 billion will come out of what's called non-defense discretionary spending for the rest of this year.

Non-defense discretionary is 12 percent of the federal budget. It's also where most federal education programs appear, as well as most programs for the poor apart from Medicaid. In effect, a third of non-defense discretionary spending is handed over to states and locales. Which means cities and states will be taking a huge hit. Detroit is already making plans to put 60 students in each of its high school classrooms.

This is ludicrous.

Yes, fix the budget deficit when we're safely out of the gravitational pull of the Great Recession. Raise taxes on the super-rich, contain the explosion of health-care costs, cut the defense budget, end agricultural subsidies, stop corporate welfare.

But don't hurt the most vulnerable members of our society.

And don't cut anything now — not with unemployment still hovering around 9 percent, and 15 million people without jobs. Not just as the federal stimulus is coming to an end.

Not at a time when state and local governments are slashing their own budgets a total of more than $100 billion this year and next.

Where will demand come from? Consumers won't be able to make up the shortfall. They're still under a huge debt load. A quarter of homeowners are still under water.

And with fuel prices heading toward $4 a gallon consumers will have no choice but to pull in their horns.

Compromising over budget cuts this year isn't just unfair in terms of who will be hurt the most. It also compromises the fragile recovery, and puts the entire economy at risk.

The White House should never have started paying ransom. Once ransom starts, there's no end to it.

The Real News on Jobs

Are we making progress on the jobs front? The Bureau of Labor Statistics reports 192,000 new jobs in Februrary (220,000 new jobs in the private sector and a drop in government employment), and a drop in the overall unemployment rate from 9 to 8.9 percent.

We're heading in the right direction but far too slowly to make a real dent in unemployment. To get the unemployment rate down to 6 percent by 2014 we'd need over 300,000 new jobs a month, every month, between now and then.

Overall, the number of unemployed Americans – 13.7 million – is about the same as it was last month. The number working part time who'd rather be working full time – 8.3 million – is also about the same.

But to get to the most important trend you have to dig under the job numbers and look at what kind of new jobs are being created. That's where the big problem lies.

The National Employment Law Project did just that. Its new data brief shows that most of the new jobs created since February 2010 (about 1.26 million) pay significantly lower wages than the jobs lost (8.4 million) between January 2008 and February 2010.

While the biggest losses were higher-wage jobs paying an average of $19.05 to $31.40 an hour, the biggest gains have been lower-wage jobs paying an average of $9.03 to $12.91 an hour.

In other words, the big news isn't jobs. It's wages.

For several years now, conservative economists have blamed high unemployment on the purported fact that many Americans have priced themselves out of the global/high-tech jobs market.

So if we want more jobs, they say, we'll need to take pay and benefit cuts.

And that's exactly what Americans have been doing.

Employers have demanded wage and benefit concessions from their unionized workers and often got them. Detroit is creating auto jobs again — but new hires are getting about half the pay that auto workers were getting before. Airline workers are taking home 30 to 50 percent less than they did years ago. And so on.

Conservatives say it's not enough. That's why unions have to be busted – and why some governors are seeking to abolish laws requiring workers to become dues-paying union members in order to get certain jobs. Hence, the fights brewing in the Midwest.

Meanwhile, millions of non-union workers have accepted cuts in pay and benefits just to keep their jobs. Health benefits have been slashed, pension contributions from employers dramatically cut, wages dropped or "frozen."

Millions of private-sector workers have been fired and then re-hired as contract workers to do almost exactly what they were doing before, but without any benefits or job security.

The current attack on public-sector workers should be seen in this light. The charge is they now take home more generous pay and benefit packages than private-sector workers. It's not true on the wage side if you control for level of education, but it wasn't even true on the benefits side until private-sector benefits fell off a cliff. Meanwhile, across America, public-sector workers have been "furloughed," which is a nice word for not collecting any pay for weeks at a time.

At this rate, the unemployment rate will continue to decline. But so will the pay and benefits of most Americans.

Conservative economists have it wrong. The underlying problem isn't that so many Americans have priced themselves out of the global/high-tech labor market. It's that they're getting a smaller and smaller share of the pie.

Clarence Thomas and the Politicization of the Supreme Court

Justice Clarence Thomas, in a speech last weekend to the Federalist Society, accused his critics of "undermining" the legitimacy of the Supreme Court – politicizing it in ways that jeopardize the Court's credibility in the eyes of the public. He warned:

You are going to be, unfortunately, the recipients of the fallout from that – that there's going to be a day when you need those institutions to be credible and to be fully functioning to protect your liberties. That could be either a short or a long time, but you're younger, and it's still going to be a necessity to protect the liberties that you enjoy now in this country.

Odd coming from Clarence Thomas — who has done more to politicize the Court than anyone in recent years, with the possible exception of his brother on the bench Antonin Scalia.

Last year, you'll recall, the votes of Thomas and Scalia swung the Court in the direction of the right-wing group Citizens United – plaintiffs in the case that struck down federal laws limiting corporate campaign contributions.

Before the decision, Thomas and Scalia also participated in a political retreat hosted by Tea Party billionaire financiers Charles and David Koch, driving forces behind loosening restrictions on big money in politics.

Back in 1991 when Thomas was nominated to the Supreme Court, Citizens United spent $100,000 to support his nomination. The in-kind contribution presumably should have been disclosed by Thomas.

At the very least you'd think that, given his connections with Citizen's United and with the Koch brothers, Thomas would have recused himself from the Citizens United decision in order to avoid the appearance of a conflict of interest. He would have recused himself, that is, if he were as concerned about the legitimacy of the Supreme Court as he says he.

Thomas has also failed to disclose financial information about his wife's employment. Virginia Thomas is the founder of Liberty Central, a Tea Party organization now receiving unlimited corporate contributions due to Citizen's United. Among the things she's lobbying for are the repeal of what she terms the "unconstitutional" healthcare legislation.

Because of his wife's direct involvement, seventy-four House Democrats have sent a letter to Justice Thomas asking him to recuse himself from any case questioning the constitutionality of the legislation."Your spouse is advertising herself as a lobbyist who has 'experience and connections' and appeals to clients who want a particular decision," the legislators wrote. "They want to overturn health-care reform."

Scalia isn't much better. In December he met in a closed-door session with Michele Bachmann's Tea Party Caucus, a group formed in large part to fight for the repeal of health-care reform. Can you imagine the firestorm if Justice Sonia Sotomayor met in secret with the House Progressive Caucus?

Even Thomas's choice last weekend of the Federalist Society as a venue to air his grievances about his critics reveals his affinity for partisan politics. The Federalist Society, after all, is a well-established network of conservative lawyers and politicians dedicated to rolling back regulations. It's financed in part by the Koch brothers.

Look, I'm not so naive as to believe that Supreme Court justices don't have political views and values. The point is precisely the one Thomas himself made last weekend: If the Court is perceived by the public to be politically partisan, it loses the public's confidence. That confidence, as described by Justice Stephen Breyer in his impassioned dissent in Bush v. Gore (a case like Citizens United that could be understood only in partisan political terms) "is a public treasure. It has been built slowly over many years" and is a "vitally necessary ingredient of any successful effort to protect basic liberty and, indeed, the rule of law itself."

When Clarence Thomas and Antonin Scalia go to secret political strategy sessions with Republican partisans they jeopardize everything the Supreme Court stands for. They make a mockery of the common sense of Americans.

If it wants to maintain its legitimacy the Court has to appeal to that common sense rather than to partisan politics. As Justice Lewis Powell's wrote in his dissent to Citizens United:

At bottom, the Court's opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt. It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.

Citizens United is an illegitimate decision, arrived at by at least two justices who should never have participated in it.

Rush Lumbaugh continues his distortion and demagoguery —...

Rush Lumbaugh continues his distortion and demagoguery — emulated by the right-wing-nuts of America.

How Democrats Can Become Relevant Again (And Rescue the Nation While They're At It)

Republicans offered Democrats two more weeks before the doomsday shut-down. Democrats countered with four. Republicans held their ground. Democrats agreed to two.

This is what passes for compromise in our nation's capital.

Democrats have become irrelevant. If they want to be relevant again they have to connect the dots: The explosion of income and wealth among America's super-rich, the dramatic drop in their tax rates, the consequential devastating budget squeezes in Washington and in state capitals, and the slashing of public services for the middle class and the poor.

It is not a complicated story. Begin with what's happened to the typical American, whose wages have been stagnant for thirty years. Today's typical 30-year-old male (if he has a job) is earning the same as a 30-year-old male earned three decades ago, adjusted for for inflation. (Although women are doing better than they did 30 years ago, their wages still trail men's.)

The bottom 90 percent of Americans now earn, on average, only about $280 more per year than they did thirty years ago. That's less than a 1 percent gain over more than a third of a century. Families are doing somewhat better but that's only because so many families now have to rely on two incomes.

But wait. The American economy is more than twice as large now as it was thirty years ago. So where did the money go? To the top. The richest 1 percent's share of national has doubled – from around 9 percent in 1977 to over 20 percent now. The richest one-tenth of 1 percent's share has tripled. The 150,000 households that comprise the top one-tenth of one percent now earn as much as the bottom 120 million put together.

Given this explosion of income at the top you might think our tax system would demand a larger share from them. But you'd be wrong. You're not taking account of the power of the super rich. As income and wealth have risen to the top, so has political power. As a result, their taxes have plummeted.

From the 1940s until 1980, the tax rate on the highest earners in America was 70 percent or higher. In the 1950s, it was 91 percent. Even if you include deductions and credits, the rich were paying a far higher share of their income than at any time since.

Under Ronald Reagan the top rate dropped to 28 percent. Under Bill Clinton it rose to 39 percent and then under George W. Bush dropped to 36 percent. As you recall, Republicans have managed to keep it there. Their avowed aim is to keep it there permanently.

Meanwhile, estate taxes (which hit only the top 2 percent) have been slashed, as have taxes on capital gains – which comprise most of the income of the super rich. In the late 1970s, capital gains were taxed at well over 35 percent. Under Bill Clinton, the capital gains rate was 20 percent. Now it's 15 percent.

So who's going to foot the bill for everything we need? Even before the Great Recession, the middle class's share of the nation's total income had shrunk. Yet their tax burden had grown. They were paying a bigger chunk of their incomes in payroll taxes, sales taxes, and property taxes than decades before.

Then came the Great Recession – and with it, lower tax revenues. That means all levels of government are squeezed. Obviously, the middle class can't pay more in taxes. But because the Democrats seem to lack the intestinal fortitude to suggest the obvious – that taxes need to be raised on the super rich – we're left with a mess.

Teachers are being fired, Pell grants for the poor are being slashed, energy assistance for the needy is disappearing, other vital public services shriveling. Regulatory agencies don't have the budgets to pay the people they need to enforce the law. Even if it wanted to the Securities and Exchange Commission couldn't police Wall Street.

All of which is precisely where Republicans want the nation to be. It sets them up perfectly to blame government, blame public employees, blame unionized workers. It lets them pit workers against one another, divide the Democratic base, and promote the false idea that we're in a giant zero-sum game and the nation can't afford to do more.

It diverts attention from what's happened at the top – so no one sees how well CEOs and Wall Street bankers are doing again, no one views the paybacks and tax giveaways engineered by their Republican patrons, and no one focuses on the tide of money flowing from the likes of billionaires Charles and David Koch into Republican coffers.  

Where are the Democrats? Shuffling their feet, looking at the floor. "Please oh please give us four weeks before you shut us down," they ask. "No," say the Republicans, "you'll get only two." "Well, alright then," say the Democrats.

Here's what Democrats should be saying:

Hike taxes on the super-rich. Reform the tax code to create more brackets at the top with higher rates for millionaires and billionaires. Absurdly, the top bracket is now set at $375,000 with a tax rate of 35 percent; the second-highest bracket, at 33 percent, starts at $172,000 for individuals. But the big money is way higher.

The source of income shouldn't matter – salary, wages, capital gains, other unearned income – all should be treated the same. There's no reason to reward speculators. (Don't penalize true entrepreneurs, though. If they're owners who have held their assets for at least twenty years, keep their capital gains low.)

And while you're at it, raise the ceiling on income subject to Social Security taxes. And bring back the estate tax.

Do this and we can afford to do what we need to do as a nation. Do this and you prevent Republicans from setting the working middle class against itself. Do this and you restore some balance to a distribution of income and wealth that's now dangerously out of whack.

Do this, Democrats, and you have a chance of being relevant again.

The Republican Shakedown

You can't fight something with nothing. But as long as Democrats refuse to talk about the almost unprecedented buildup of income, wealth, and power at the top – and the refusal of the super-rich to pay their fair share of the nation's bills – Republicans will convince people it's all about government and unions.

Republicans claim to have a mandate from voters for the showdowns and shutdowns they're launching. Governors say they're not against unions but voters have told them to cut costs, and unions are in the way. House Republicans say they're not seeking a government shutdown but standing on principle. "Republicans' goal is to cut spending and reduce the size of government," says House leader John Boehner, "not to shut it down." But if a shutdown is necessary to achieve the goal, so be it.

The Republican message is bloated government is responsible for the lousy economy that most people continue to experience. Cut the bloat and jobs and wages will return.  

Nothing could be further from the truth, but for some reason Obama and the Democrats aren't responding with the truth. Their response is: We agree but you're going too far. Government employees should give up some more wages and benefits but don't take away their bargaining rights. Private-sector unionized workers should make more concessions but don't bust the unions. Non-defense discretionary spending should be cut but don't cut so much.

In the face of showdowns and shutdowns, the "you're right but you're going too far" response doesn't hack it. If Republicans are correct on principle, they're more likely to be seen as taking a strong principled stand than as going "too far." If they're basically correct that the problem is too much government spending why not go as far as possible to cut the bloat?

The truth that Obama and Democrats must tell is government spending has absolutely nothing to do with high unemployment, declining wages, falling home prices, and all the other horribles that continue to haunt most Americans.

Indeed, too little spending will prolong the horribles for years more because there's not enough demand in the economy without it. 

The truth is that while the proximate cause of America's economic plunge was Wall Street's excesses leading up to the crash of 2008, its underlying cause — and the reason the economy continues to be lousy for most Americans — is so much income and wealth have been going to the very top that the vast majority no longer has the purchasing power to lift the economy out of its doldrums. American's aren't buying cars (they bought 17 million new cars in 2005, just 12 million last year). They're not buying homes (7.5 million in 2005, 4.6 million last year). They're not going to the malls (high-end retailers are booming but Wal-Mart's sales are down).

Only the richest 5 percent of Americans are back in the stores because their stock portfolios have soared. The Dow Jones Industrial Average has doubled from its crisis low. Wall Street pay is up to record levels. Total compensation and benefits at the 25 major Wall St firms had been $130 billion in 2007, before the crash; now it's close to $140 billion.

But a strong recovery can't be built on the purchases of the richest 5 percent.

The truth is if the super-rich paid their fair share of taxes, government wouldn't be broke. If Governor Scott Walker hadn't handed out tax breaks to corporations and the well-off, Wisconsin wouldn't be in a budget crisis. If Washington hadn't extended the Bush tax cuts for the rich, eviscerated the estate tax, and created loopholes for private-equity and hedge-fund managers, the federal budget wouldn't look nearly as bad.

And if America had higher marginal tax rates and more tax brackets at the top – for those raking in $1 million, $5 million, $15 million a year – the budget would look even better. We wouldn't be firing teachers or slashing Medicaid or hurting the most vulnerable members of our society. We wouldn't be in a tizzy over Social Security. We'd slow the rise in healthcare costs but we wouldn't cut Medicare. We'd cut defense spending and lop off subsidies to giant agribusinesses but we wouldn't view the government as our national nemesis.

The final truth is as income and wealth have risen to the top, so has political power. The reason all of this is proving so difficult to get across is the super-rich, such as the Koch brothers, have been using their billions to corrupt politics, hoodwink the public, and enlarge and entrench their outsized fortunes.  They're bankrolling Republicans who are mounting showdowns and threatening shutdowns, and who want the public to believe government spending is the problem. 

They are behind the Republican shakedown. 

These are the truths that Democrats must start telling, and soon. Otherwise the Republican shakedown may well succeed. 

The Coming Shutdowns and Showdowns: What's Really at Stake

Wisconsin is in a showdown. Washington is headed for a government shutdown.

Wisconsin Governor Scott Walker won't budge. He insists on delivering a knockout blow to public unions in his state (except for those, like the police, who supported his election).

In DC, House Republicans won't budge on the $61 billion cut they pushed through last week, saying they'll okay a temporary resolution to keep things running in Washington beyond March 4 only if it includes many of their steep cuts — among which are several that the middle class and poor depend on. 

Republicans say "we've" been spending too much, and they're determined to end the spending with a scorched-earth policies in the states (Republican governors in Ohio, Indiana, and New Jersey are reading similar plans to decimate public unions) and shutdowns in Washington.

There's no doubt that government budgets are in trouble. The big lie is that the reason is excessive spending. 

Public budgets are in trouble because revenues plummeted over the last two years of the Great Recession. 

They're also in trouble because of tax giveaways to the rich. 

Before Wisconsin's budget went bust, Governor Walker signed $117 million in corporate tax breaks. Wisconsin's immediate budge shortfall is $137 million. That's his pretext for socking it to Wisconsin's public unions.

Nationally, you remember, Republicans demanded and received an extension of the Bush tax cuts for the rich. They've made it clear they're intent on extending them for the next ten years, at a cost of $900 billion. They've also led the way on cutting the estate tax, and on protecting Wall Street private equity and hedge-fund managers whose earnings are taxed at the capital gains rate of 15 percent. And the last thing they'd tolerate is an increase in the top marginal tax rate on the super-rich. 

Meanwhile, of course, more and more of the nation's income and wealth has been concentrating at the top. In the late 1970s, the top 1 percent got 9 percent of total income. Now it gets more than 20 percent.

So the problem isn't that "we've" been spending too much. It's that most Americans have been getting a steadily smaller share of the nation's total income.

At the same time, the super-rich have been contributing a steadily-declining share of their own incomes in taxes to support what the nation needs — both at the federal and at the state levels.

The coming showdowns and shutdowns must not mask what's going on. Democrats should make sure the public understands what's really at stake. 

Yes, of course, wasteful and unnecessary spending should be cut. That means much of the defense budget, along with agricultural subsidies and other forms of corporate welfare.

But America is the richest nation in the world, and "we've" never been richer. There's no reason for us to turn on our teachers, our unionized workers, our poor and needy, and our elderly. The notion that "we" can no longer afford it is claptrap. 

The Republican Strategy

The Republican strategy is to split the vast middle and working class – pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don't believe these programs will be there for them, and the poor against the working middle class.

By splitting working America along these lines, Republicans hope to deflect attention from the big story. That's the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish.

Republicans would rather no one notice their campaign to generate further tax cuts for the rich – making the Bush tax cuts permanent, further reducing the estate tax, and allowing the wealthy to shift ever more of their income into capital gains taxed at 15 percent.

The strategy has three parts.

 

The battle over the federal budget.

The first is being played out in the budget battle in Washington. As they raise the alarm over deficit spending and simultaneously squeeze popular middle-class programs, Republicans want the majority of the American public to view it all as a giant zero-sum game among average Americans that some will have to lose.

The President has already fallen into the trap by calling for budget cuts in programs the poor and working class depend on – assistance with home heating, community services, college loans, and the like.

In the coming showdown over Medicare and Social Security, House budget chair Paul Ryan will push a voucher system for Medicare and a partly-privatized plan for Social Security – both designed to attract younger middle-class voters.

 

The assault on public employees

The second part of the Republican strategy is being played out on the state level where public employees are being blamed for state budget crises brought on by plummeting revenues. Republicans view this as an opportunity to gut public employee unions, starting with teachers.

Wisconsin's Republican governor Scott Walker and his GOP legislature are seeking to end almost all union rights for teachers. Ohio's Republican governor John Kasich is pushing a similar plan in Ohio through a Republican-dominated legislature. New Jersey's Republican governor Chris Christie is attempting the same, telling a conservative conference Wednesday, "I'm attacking the leadership of the union because they're greedy, and they're selfish and they're self-interested."

As I've noted, this demonizing of public employees is premised on false data. Public employees don't earn more than private-sector workers when you take account of their education. To the contrary, over the last fifteen years the pay of public-sector workers, including teachers, has dropped relative to private-sector employees with the same level of education – even if you include health and retirement benefits. Moreover, most public employees don't have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year.

Bargaining rights for public employees haven't caused state deficits to explode. Some states that deny their employees bargaining rights, such as Nevada, North Carolina, and Arizona, are running big deficits of over 30 percent of spending. Many states that give employees bargaining rights — Massachusetts, New Mexico, and Montana — have small deficits of less than 10 percent.

Republicans would rather go after teachers and other public employees than have us look at the pay of Wall Street traders, private-equity managers, and heads of hedge funds – many of whom wouldn't have their jobs today were it not for the giant taxpayer-supported bailout.

Last year, America's top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains – at 15 percent – due to a tax loophole that Republican members of Congress have steadfastly guarded.

If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of over 5 million teachers. Who is more valuable to our society – thirteen hedge-fund managers or 5 million teachers? Let's make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?

 

The Distortion of the Constitution

The third part of the Republican strategy is being played out in the Supreme Court. It has politicized the Court more than at any time in recent memory.

Last year a majority of the justices determined that corporations have a right under the First Amendment to provide unlimited amounts of money to political candidates. Citizens United vs. the Federal Election Commission is among the most patently political and legally grotesque decisions of our highest court – ranking right up there with Bush vs. Gore and Dred Scott.

Among those who voted in the affirmative were Clarence Thomas and Antonin Scalia. Both have become active strategists in the Republican party.

A month ago, for example, Antonin Scalia met in a closed-door session with Michele Bachman's Tea Party caucus – something no justice concerned about maintaining the appearance of impartiality would ever have done.

Both Thomas and Scalia have participated in political retreats organized and hosted by multi-billionaire financier Charles Koch, a major contributor to the Tea Party and other conservative organizations, and a crusader for ending all limits on money in politics. (Not incidentally, Thomas's wife is the founder of Liberty Central, a Tea Party organization that has been receiving unlimited corporate contributions due to the Citizens United decision. On his obligatory financial disclosure filings, Thomas has repeatedly failed to list her sources of income over the last twenty years, nor even to include his own four-day retreats courtesy of Charles Koch.)

Some time this year or next, the Supreme Court will be asked to consider whether the nation's new healthcare law is constitutional. Watch your wallets.

 

The strategy as a whole

These three aspects of the Republican strategy – a federal budget battle to shrink government, focused on programs the vast middle class depends on; state efforts to undermine public employees, whom the middle class depends on; and a Supreme Court dedicated to bending the Constitution to enlarge and entrench the political power of the wealthy – fit perfectly together.

They pit average working Americans against one another, distract attention from the almost unprecedented concentration of wealth and power at the top, and conceal Republican plans to further enlarge and entrench that wealth and power.

What is the Democratic strategy to counter this and reclaim America for the rest of us?

Budget Baloney (1): Why Social Security Isn't a Problem for 26 Years, and the Best Way to Fix It Permanently

New Jersey Governor Chris Christie, a Republican presidential hopeful, says in order to "save" Social Security the retirement age should be raised. The media are congratulating him for his putative "courage." Deficit hawks are proclaiming Social Security one of the big entitlements that has to be cut in order to reduce the budget deficit.

This is all baloney.

In a former life I was a trustee of the Social Security trust fund. So let me set the record straight.

Social Security isn't responsible for the federal deficit. Just the opposite. Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.

Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.  

But why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan's Social Security commission was supposed to have fixed the system for good – by gradually increasing payroll taxes and raising the retirement age. (Early boomers like me can start collecting full benefits at age 66; late boomers born after 1960 will have to wait until they're 67.)

Greenspan's commission must have failed to predict something. But what? It fairly accurately predicted how quickly the boomers would age. It had a pretty good idea of how fast the US economy would grow. While it underestimated how many immigrants would be coming into the United States, that's no problem. To the contrary, most new immigrants are young and their payroll-tax contributions will far exceed what they draw from Social Security for decades.

So what did Greenspan's commission fail to see coming?

Inequality.

Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation.

Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission's fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security's long-term (beyond 26 years from now) problem would be solved.

So there's no reason even to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.

Not incidentally, several months ago the White House considered proposing that the ceiling be lifted to $180,000. Somehow, though, that proposal didn't make it into the President's budget.