STATEMENT ISSUED BY THE GREEN SHADOW CABINET USA
October 24, 2013
By Dr. Jack Rasmus, ‘Shadow’ Federal Reserve Chair
“With the interim ‘debt ceiling/government shutdown’ agreement reached last week between the Obama administration and the Teaparty-driven U.S. House of Representatives, the real negotiations on deficit cutting—aka Austerity American Style—are about to begin again.
A long campaign peddling falsehoods around social security and medicare has created a myth that they are facing a budget and fiscal crisis. This claim will be rolled out by Democrats and Republicans alike, to justify cutting programs for the poorest Americans, while handing tax breaks to the richest corporation.
Both Obama and the Republicans in the House were agreed last summer, before the Teaparty faction upset the negotiations agenda by injecting the Obamacare issue, to proceed toward cutting ‘entitlements’ and seeking Tax Code Overhaul. With the Teapartyers in temporary retreat, Boehner and the Republicans have now returned to their initial strategy of of demanding entitlement cuts for a budget deal, and Obama has indicated that he is prepared to meet them halfway.
At the center of coming negotiations will be hundreds of billions of dollars in proposed cuts to social security and medicare, in exchange for a longer term debt ceiling extension beyond the November 2014 midterm congressional elections. In the ‘ mix’ for an agreement will also be big corporate tax cuts in exchange for token, ‘smoke and mirror’ tax loophole closings, as Tax Code legislation moving through Congress comes to a concurrent vote.
Obama recent record on social security and medicare cuts includes his 2014 budget – where he cut $630 billion. On the flip side of this austerity for the poor is Obama’s largess for business, and his support for dropping the top corporate tax rate from 35% to 28%.
It is important to make clear that neither social security or medicare are facing a long term financial crisis.
A closer look at the 2014 budget and at reports by social security-medicare trustees shows that problems exist for financials of Social Security Disability Insurance (SSDI) within the social security program, however, the retirement benefits program in social security does not suffer these issues. Nevertheless, Obama is proposing to cut future social security retirement benefits. The ‘fix’ goes beyond the problem.
Similarly, problems exist with funding for Part D prescription drugs program within Medicare, which has never been funded by a tax since its inception in 2005. Under the program drug companies are allowed to price gouge everyone on drug costs – so there is need for reform. However, Medicare’s basic hospital and physicians programs – Part A and Part B, are fully funded for the next decade, and these programs should not be painted with the same brush.
It is time to get the facts straight, before the hype and lies start to flow once again in the run up to the next deficit cutting-tax cuts for the rich deal that is now on the agenda once again.
For more analysis of Obama’s 2014 Budget follow link to this June 2013 interview, on the Progressive Radio Network.
~ Jack Rasmus serves as the Chairman of the Federal Reserve System in the Economy Branch of the Green Shadow Cabinet of the United States