Congress Proposes A Chilling Resolution On Social Security

Submitted by Tyler Durden on 11/06/2015 13:13 -0500
http://www.zerohedge.com/news/2015-11-06/congress-proposes-chilling-resolution-social-security
Submitted by Simon Black via SovereignMan.com,
On August 14, 1935, President Franklin Roosevelt arrived at his desk to sign the Social Security Act into law.
It had been a contentious legislative process, something like the Obamacare of its day.
Fiscally conservative politicians derided the program for its obvious long-term costs, the massive bureaucracy that it would create, and the huge tax increase that it represented on workers.
But Roosevelt was able to find support, and the law was passed.
And just before signing it, he proudly proclaimed that the law would go down in history “as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy.”
Needless to say, that didn’t happen. Quite the opposite, actually.
Just like most western governments, the US government has gone deeply into debt to fund its social insurance programs.
Officially, the US government is now $18.5 trillion in debt, and Social Security is the biggest financial sinkhole in America.
Social Security’s various trust funds currently hold about $2.7 trillion in total assets; yet the government itself estimates the program’s liabilities to exceed $40 trillion.
And Social Security’s second biggest trust fund, the Disability Insurance fund, will be fully depleted in a matter of weeks.
The trustees who manage these massive funds on behalf of the current and future retirees of America are clearly concerned.
In the 2015 report of the Social Security and Medicare Board of Trustees they state very plainly:

“Social Security as a whole as well as Medicare cannot sustain projected long-run program costs…”, and that the government should be “giving the public adequate time to prepare.”

Wow.
Now, we always hear politicians say that ‘Social Security is going to be just fine’. So this Board of Trustees must be a bunch of wackos. Who are these guys anyhow?
The Treasury Secretary of the United States of America, as it turns out. Along with the Secretary of Health and Human Services. The Secretary of Labor. Etc.
These are the folks who sign their name to the report saying that Social Security is going bust, and that Congress needs to give people time to prepare.
And prepare they should.
The US Government Accountability Office recently released a report showing that tens of millions of Americans haven’t saved a penny for retirement; and roughly half of Baby Boomers have zero retirement savings.
This means that there’s an overwhelming number of Americans pinning all of their retirement hopes on Social Security.
Bad idea. In a recently proposed resolution, H. Res 488, Congress states point blank that Social Security “was never intended by Congress to be the sole source of retirement income for families.”
Apparently they got the message from the Social Security Trustees and they want to start preparing people for the inevitable truth.
This is no longer some wild conspiracy theory.
The Treasury Secretary is saying it. Congress is saying it. The numbers are screaming it: Social Security is going to fail.
Ultimately this is a just another chapter in the same story– that government cannot be relied on to provide or produce, only to squander and fail.
Sure, their intentions may be noble. But this level of serial incompetence can no longer be trusted, nor should we be foolish enough to believe that some new candidate can fix it.
If you’re in your fifties and beyond, you’re probably going to be OK and at least get 10-15 years of benefits.
If you’re in your 40s and below, you have to be 100% prepared to fend for yourself.
Fortunately you have time to recover. Time to build. And time to learn.
Financial literacy is absolutely critical here, which includes the ability to both generate income and manage money, two things that aren’t taught in the government controlled education system.
You might also consider some lifestyle adjustments, which may include moving abroad where your money can go much, much further.
Ultimately, learning to rely on yourself is no easy task, but it is an incredible opportunity to become more free.
And in doing so, one day you will no longer panic about the decisions being made by incompetent bureaucrats, because you will be the one in control of your own fate.

The Military-Industrial Complex's Latest Best Friend - Barack Obama

Submitted by Tyler Durden on 11/01/2015 21:35 -0500
http://www.zerohedge.com/news/2015-11-01/military-industrial-complexs-latest-best-friend-barack-obama
Submitted by Chuck Spinney via The Blaster blog,
The Pentagon just won another small skirmish in its long war with Social Security and Medicare. That is the unstated message of the budget deal just announced gleefully by congressional leaders and the President.  To understand why, let’s take a quick trip down memory lane.
Last January, President Obama submitted Fiscal Year (FY) 2016 budget to Congress, and he proposed to break the spending limits on both defense and domestic programs.  These limits are set by the long-term sequester provisions of the Budget Control Act of 2011  (BCA), which, for better or worse, is the law of the land, and Obama was asking Congress to change the law.  Mr. Obama wanted to finance his ramped up spending proposals by increasing taxes.  Of course, he knew that the Republican controlled Congress lusted for defense increases but hated domestic spending, particularly entitlements. Moreover, he knew increasing taxes was like waving the red cape in front of the Republican budget bulls.  So, he knew his budget would be dead on arrival.  Obama’s budget, nevertheless, had one virtue: it was up front about the intractable nature of the budget problem.  In effect, whether deliberately or not, Obama laid a trap that the Republicans merrily walked into during the ensuing spring and summer.
Obama's gambit set into motion a tortured kabuki dance in the Republican controlled Congress.  The Republicans, as Obama well knew, wanted to keep up the appearances of adhering to the BCA.  But at the same time, they wanted desperately to shovel money into the Pentagon’s coffers.  The net result was that Obama’s proposal triggered a series of increasingly irrational Congressional negotiations, bizarre back-room deals and weird budget resolutions.  These machinations came to a head with the passage of a National Defense Authorization Act (NDAA) that proposed to (1) keep the Pentagon’s base budget at the BCA level of about $499 billion, but (2) pack the accounts in the Pentagon’s Overseas Contingencies Operations fund (OCO) with a programs and pork that should have been in its base budget.  The reason for the dodgy OCO 'slush fund' rested in the politically irresistible fact that the OCO is a separate war-fighting fund** for the Pentagon that is exempt from the spending limits set by the BCA’s sequester provisions.  The net result of the smoke and mirrors by the Budget and Armed Services Committees of Congress was a total defense budget that was almost identical to Obama’s original submission, but one that was not accompanied by his domestic funding increases or his tax increases.  And this monstrosity was all wrapped up in a ridiculous pretense of adhering to the BCA limits.
Last week, President Obama seemed to close the trap by vetoing the 2016 NDAA. But this too was smoke and mirrors.
The veto put in motion yet another kabuki dance, this time behind closed doors between the White House and the leaders of Congress. The goal was to reach an overall budget deal that would avoid a government shutdown, which the majority Republicans were terrified of being blamed for on the eve of an election year.  At the same time, they wanted to dodge the BCA’s sequester bullet while they shoveled more money into the Pentagon. 
That deal has now been joined, and the Republic has been saved, albeit at an unknown price.  Nevertheless, some of the sordid details of that price are now beginning to seep through the chinks in the Hall of Mirrors that is Versailles on the Potomac.
According to this report in Defense News, the elements of the budget deal include:

The deal raises the BCA spending caps (again) by $80 billion over next two years; including $50 billion in FY2016 and $30 billion in FY2017.  It also increases the Federal Government’s debt limit. 

These spending increases would be split equally between defense and domestic programs, and they would be financed by two squirrelly provisions, to wit:

The first financing gimmick cuts back Medicare and Social Security disability benefits. But if past is prologue, the cut to Medicare is likely to be reversed again next year, which is an election year — because everyone in Congress wants the endorsement of the American Medical Association (AMA).  The cut to Medicare providers was first made permanent law by the Balanced Budget Act of 1997, and since then Congress has reversed the scheduled provider cut 17 times.

The second financing gimmick is to sell crude oil  from the US Strategic Petroleum Reserve. Ironically, this rather bizarre provision is peculiarly fitting to the culture of Versailles on the Potomac.  Few remember that the reserve was justified to the American people in 1975 as an insurance “cushion" to reduce the adverse effects of future rises in oil prices or supply disruptions engineered by OPEC, which is controlled by our supposed “ally” Saudi Arabia.  So why sell the reserve's oil when prices are near record lows (adjusted for inflation) compared to those of the last fifteen to twenty years, particularly since the Saudis are flooding the market to take out the US frackers?  Who benefits is a fascinating question with all sorts of twists and turns and is not yet answered.  But it is worth recalling the 1997 Balanced Budget Act had a provision to sell the Naval Petroleum Reserve at Elk Hills (sold in 1998) – at that time, the largest privatization of government assets in history, precisely when oil prices were at their lowest level (adjusted for inflation) since the 1960s. They sold it to Occidental Petroleum which made a killing.

There is one thing the deal makes clear, however. The Pentagon's share of the spending increases would be $33 billion in FY16, made up of a $25B increase in the Pentagon’s base budget and an $8B increase in the OCO. As for how the Pentagon’s $15 billion increase in FY17 will be allocated, the report in Defense News is silent.
So, there is good reason why champagne corks are popping in halls of the Military - Industrial - Congressional Complex (MICC) and its lobbying affiliates on K Street.  Indeed, to celebrate the triumph, the AF immediately announced it awarded Northrop-Grumman a huge concurrent engineering contract (Milestone B) to design and build the first 21 of 100 new long range strike bombers, which heretofore had been shrouded in heavy secrecy. No one knows what this bomber will even look like, let alone what the program will cost, but two years ago, there were reports of a “pre-cost-growth” total program cost estimate (R&D and production) reaching $81 billion. At least one of the MICC’s euphoric wholly-owned subsidiaries in the Fourth Estate has already written that 100 bomber is not enough, given the threats we face and the number of aging bombers that need to be replaced.
This new bomber program is  by far the largest weapon acquisition program yet started in the 21st Century.  Yet there has been no oversight, except by its advocates in the smoke-filled, super-secret secure compartmented information facilities (SCIFs) spread around Versailles.  Moreover, the bomber's heavy concurrency means that the production-related money will quickly start flowing to hundreds of congressional districts, well before it is designed.  So, before you can say sequester next year, the Bomber, like the troubled F-35 Joint Strike Fighter, will be unstoppable.  And, like the F-35, it will acquire a life of its own to live on, no matter how badly it fails to meet its cost goals, its capability specifications, or its production quotas — for the simple but powerful reason that a majority in Congress are being bought off today in a way that will ensure they vote for it tomorrow.
But there is more.  The new Bomber is just the beginning of the new defense boom that Mr. Obama and Congress are launching beneath the smoke and mirrors of their budget practices.  The Pentagon already has a  bow wave of increased spending for new weapons in its R&D pipeline.  In that sense, it is no accident that, a year ago, as he was departing the Pentagon, the Pentagon’s ineffectual comptroller Robert Hale characterized the new bomber as the “canary in the coal mine.” He was wringing his hands over the rapidly growing requirements for larger defense budgets in the future — requirements he helped to create.  Bow waves are a perennial feature in Pentagon planning.  I first heard the term in 1973.  The current bow wave, like its predecessors, will lead inexorably to more budget crises and more dodgy budget deals made by the best government money can buy.
So, once again, Mr. Obama had a shot at leading from the moral high ground, and once again, he blew it.  He had the Republicans on the ropes, with all their warts on full display, but then he squandered an opportunity to effect even a pretense of challenging a thoroughly corrupt system. Obama’s most recent performance is yet more proof that he is no change agent.  A better characterization would be that he is merely another Manchurian Candidate, whose role is to protect the interests of the factions making up the shadow government that is now running the show - what former congressional staffer Mike Lofgren calls the US Deep State.***
*  *  *
* This essay is the second in a series of occasional essays on the nature of defense spending. The first can be found here.
** The OCO is a George W. Bush gimmick, created in 2001 after 9-11 to capitalize on the national hysteria to pay for the Global War on Terror by taking its costs off the books.  All our previous wars — e.g., WWI, WWII, Korea, Viet Nam, Kosovo — were funded out of the “base” defense budget and there was no need set up a special war fighting account. 
*** Lofgren a former Republican congressional staffer on the House and Senate Budget Committees has written an important new book,  The Deep State: The Fall of the Constitution and the Rise of a Shadow Government. It will hit the stands next January.

Another Government Ponzi Scheme Starts To Crack - Do You Depend On It?

Submitted by Tyler Durden on 10/24/2015 15:58 -0400

http://www.zerohedge.com/news/2015-10-24/another-government-ponzi-scheme-starts-crack-do-you-depend-it 

Submitted by Nick Giamburino of International Man

Another Government Ponzi Scheme Starts to Crack - Do You Depend on It?

Government employees get to do a lot of things that would land an ordinary citizen in prison.

For example, it’s legal for them to threaten and commit offensive, rather than defensive, violence. They can take property from others without their consent. They spy on anyone’s email and bank accounts whenever they please. They go into trillions of dollars in debt and then stick the unborn with the bill. They counterfeit the currency. They lie with misleading statistics and use accounting wizardry no business could get away. And this just scratches the surface…

The U.S. government also gets to run a special type of Ponzi scheme.

According to the Merriam-Webster dictionary a Ponzi scheme is:

[A]n investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.

In the private sector, people who run Ponzi schemes are rightly punished for their fraud. But when the government runs a Ponzi scheme, something very different happens.

It’s no secret that the Social Security system is effectively one giant Ponzi scheme.

Actually, I think it’s worse. That’s because the government uses force and the threat of force to coerce people into it. People don’t have the option to opt out. They either pay the tax for Social Security or someone with a gun will show up sooner or later. I imagine Bernie Madoff’s firm would have lasted a lot longer had he been able to operate this way.

This whole practice is particularly egregious for young people. They have no chance at collecting the future benefits the government has promised to them. But they’re hardly the only people that are going to be disappointed in the system, which will eventually break down.

There are simply too many people cashing out at the top and not enough people paying in… even with the government’s coercion. That’s a function of demographics, but also the economic reality in which there are fewer people with quality jobs for the government to sink its fangs into. I expect both of those trends to increase and strain the system.

Actually, it’s already starting to happen.

Recently, the government announced that there would be no Social Security benefit increase next year. That’s only happened twice before in the past 40 years.

You see, the government links Social Security benefit increases to their own measure of inflation. If the government says “no inflation” then there are no benefit increases. It’s like letting a student grade his own paper.

So it’s no surprise that the official definition of inflation is not reflective of the real increases in the costs of living most people feel.

Medical care costs are skyrocketing. Rent and food prices are reaching record highs in many areas. Electricity and utility costs are soaring. Taxes, of course, are going nowhere but up.

But the government says there’s no shred of inflation. In actuality, it amounts to a stealth decrease in benefits.

One reason for this is that they constantly change the way they calculate inflation so as to understate it. Free market analysts have long documented this sham. If you take a global view, it’s easy to see that fudging official inflation statistics is standard operating procedure for most governments.

Incidentally, governments and the financial media don’t even understand what inflation is in the first place.

To them, inflation means an increase in prices. But that is not at all how the word was originally used. Inflation initially meant an increase in the supply of money and nothing else. Rising prices were a consequent of inflation, not inflation itself.

It’s not being overly fussy to insist on the word’s proper usage. It’s actually an important distinction. The perversion of its usage has only helped proponents of big government. To use “inflation” to mean a rise in prices confuses cause and effect. More importantly, it also deflects attention away from the real source of the problem…central bank money printing.

And that problem shows no signs of abating. In fact, I think the opposite is the case. The money printing is just getting started.

At least this is what we should prudently expect as long as the U.S. government needs to finance its astronomical spending, fueled by welfare and warfare policies.

As long as the government spends money, it will find some way to make you pay for it - either through direct taxation, money printing, or debt (which represents deferred taxation/money printing).

It’s as simple as that.

Wall Street Going After Your Social Security by Claiming that the Fund is Broke

— December 30, 2014
Sen. Bernie Sanders (I-VT) is one of Social Security’s biggest defenders in the federal government.
In a recent speech, Sanders addressed the false claims that the program is going broke.
“Today, Social Security has a surplus in the trust fund of $2.76 trillion. A surplus of $2.76 trillion, and can pay out benefits to every eligible American for the next 19 years, to the year 2033,” said Sanders.
“Social Security is not an investment program,” continued the senator. “You can invest money in Wall Street – sometimes you do well. You can invest money in Wall Street – sometimes you lose your shirt. Social Security is a social insurance program. It has never failed one American in 79 years.”
Watch Sen. Sanders’ full remarks.
http://www.ringoffireradio.com/2014/12/wall-street-going-after-your-social-security-by-claiming-that-the-fund-is-broke/

Exposing the Republican Party's Sleazy Playbook to Destroy Social Security

The new Congress is busy manufacturing a Social Security crisis.

By Thom Hartmann / AlterNet

February 10, 2015

In one of its first actions, the Republican House of Representatives of the 114th Congress, changed its rules to manufacture a Social Security crisis.
GOP Representatives Tom Reed and Sam Johnson introduced a procedural rule change, which was buried on page 30 of 32 in House Resolution 5.   It forbids the House from transferring money between the Social Security Retirement Fund and the Social Security Disability Fund - a move that Congress has made 11 times in the past, irrespective of which party was in control. The result is that the Disability Fund, which is expected to run out of reserves next year, cannot be helped using money from the Retirement Fund.  Without this “easy fix” - as the New York Times called it - recipients of Social Security Disability will see a 19% cut in benefits.
At a glance, this move by the GOP-led House seems irrational, cynical - counterproductive.  But if you consider Jude Wanniski’s playbook - it makes complete sense...
Odds are you've never heard of Jude, but without him Reagan never would have become a "successful" president, Republicans never would have taken control of the House or Senate, Bill Clinton never would have been impeached, and neither George Bush would have been president.
When Barry Goldwater went down to ignominious defeat in 1964, most Republicans felt doomed (among them the then-28-year-old Wanniski). Goldwater himself, although uncomfortable with the rising religious right within his own party and the calls for more intrusion in people's bedrooms, was a diehard fan of Herbert Hoover's economic worldview. In Hoover's world (and virtually all the Republicans since reconstruction with the exception of Teddy Roosevelt), market fundamentalism was a virtual religion. Economists from Ludwig von Mises to Friedrich Hayek to Milton Friedman had preached that government could only make a mess of things economic, and the world of finance should be left to the Big Boys – the Masters of the Universe, as they sometimes called themselves – who ruled Wall Street and international finance.
Hoover enthusiastically followed the advice of his Treasury Secretary, multimillionaire Andrew Mellon, who said in 1931: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down... enterprising people will pick up the wrecks from less competent people."
Thus, the Republican mantra was: "Lower taxes, reduce the size of government, and balance the budget." The only problem with this ideology from the Hooverite perspective was that the Democrats always seemed like the bestowers of gifts, while the Republicans were seen by the American people as the stingy Scrooges, bent on making the lives of working people harder all the while making richer the very richest.
This, Republican strategists since 1930 knew, was no way to win elections. Which was why the most successful Republican of the 20th century up to that time, Dwight D. Eisenhower, had been quite happy with a top income tax rate on millionaires of 91 percent. As he wrote to his brother Edgar Eisenhower in a personal letter on November 8, 1954:

[T]o attain any success it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything--even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon 'moderation' in government. Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt [you possibly know his background], a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.

Goldwater, however, rejected the "liberalism" of Eisenhower, Rockefeller, and other "moderates" within his own party. Extremism in defense of liberty was no vice, he famously told the 1964 nominating convention, and moderation was no virtue. And it doomed him and his party. And so after Goldwater's defeat, the Republicans were again lost in the wilderness just as after Hoover's disastrous presidency.
Even four years later when Richard Nixon beat Hubert Humphrey in 1968, Nixon wasn't willing to embrace the economic conservatism of Goldwater and the economic true believers in the Republican Party. And Jerry Ford wasn't, in their opinions, much better. If Nixon and Ford believed in economic conservatism, they were afraid to practice it for fear of dooming their party to another forty years in the electoral wilderness.
By 1974, Jude Wanniski had had enough. The Democrats got to play Santa Claus when they passed out Social Security and Unemployment checks – both programs of the New Deal – as well as when their "big government" projects like roads, bridges, and highways were built giving a healthy union paycheck to construction workers. Democrats kept raising taxes on businesses and rich people to pay for things, which didn't seem to have much effect at all on working people (wages were steadily going up, in fact), and that made them seem like a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class.
Americans loved it. And every time Republicans railed against these programs, they lost elections. Everybody understood at the time that economies are driven by demand. People with good jobs have money in their pockets, and want to use it to buy things. The job of the business community is to either determine or drive that demand to their particular goods, and when they're successful at meeting the demand then factories get built, more people become employed to make more products, and those newly-employed people have a paycheck that further increases demand.
Wanniski decided to turn the classical world of economics – which had operated on this simple demand-driven equation for seven thousand years – on its head. In 1974 he invented a new phrase – "supply side economics" – and suggested that the reason economies grew wasn't because people had money and wanted to buy things with it but, instead, because things were available for sale, thus tantalizing people to part with their money. The more things there were, the faster the economy would grow.
At the same time, Arthur Laffer was taking that equation a step further. Not only was supply-side a rational concept, Laffer suggested, but as taxes went down, revenue to the government would go up! Neither concept made any sense – and time has proven both to be colossal idiocies – but together they offered the Republican Party a way out of the wilderness.
Ronald Reagan was the first national Republican politician to suggest that he could cut taxes on rich people and businesses, that those tax cuts would cause them to take their surplus money and build factories or import large quantities of cheap stuff from low-labor countries, and that the more stuff there was supplying the economy the faster it would grow. George Herbert Walker Bush – like most Republicans of the time – was horrified. Ronald Reagan was suggesting "Voodoo Economics," said Bush in the primary campaign, and Wanniski's supply-side and Laffer's tax-cut theories would throw the nation into such deep debt that we'd ultimately crash into another Republican Great Depression.
But Wanniski had been doing his homework on how to sell supply-side economics. In 1976, he rolled out to the hard-right insiders in the Republican Party his "Two Santa Clauses" theory, which would enable the Republicans to take power in America for the next thirty years. Democrats, he said, had been able to be "Santa Clauses" by giving people things from the largesse of the federal government. Republicans could do that, too – spending could actually increase. Plus, Republicans could be double Santa Clauses by cutting people's taxes! For working people it would only be a small token – a few hundred dollars a year on average – but would be heavily marketed. And for the rich it would amount to hundreds of billions of dollars in tax cuts. The rich, in turn, would use that money to import or build more stuff to market, thus increasing supply and stimulating the economy. And that growth in the economy would mean that the people still paying taxes would pay more because they were earning more.
There was no way, Wanniski said, that the Democrats could ever win again. They'd have to be anti-Santas by raising taxes, or anti-Santas by cutting spending. Either one would lose them elections.
When Reagan rolled out Supply Side Economics in the early 80s, dramatically cutting taxes while exploding (mostly military) spending, there was a moment when it seemed to Wanniski and Laffer that all was lost. The budget deficit exploded and the country fell into a deep recession – the worst since the Great Depression – and Republicans nationwide held their collective breath. But David Stockman came up with a great new theory about what was going on – they were "starving the beast" of government by running up such huge deficits that Democrats would never, ever in the future be able to talk again about national health care or improving Social Security. And this so pleased Alan Greenspan, the Fed Chairman, that he opened the spigots of the Fed, dropping interest rates and buying government bonds, producing a nice, healthy goose to the economy.
Greenspan further counseled Reagan to dramatically increase taxes on people earning under $37,800 a year by increasing the Social Security (FICA/payroll) tax, and then let the government borrow those newfound hundreds of billions of dollars off-the-books to make the deficit look better than it was. Reagan, Greenspan, Winniski, and Laffer took the federal budget deficit from under a trillion dollars in 1980 to almost three trillion by 1988, and back then a dollar could buy far more than it buys today. They and George HW Bush ran up more debt in eight years than every president in history, from George Washington to Jimmy Carter, combined. Surely this would both starve the beast and force the Democrats to make the politically suicidal move of becoming deficit hawks.
And that's just how it turned out. Bill Clinton, who had run on an FDR-like platform of a "new covenant" with the American people that would strengthen the institutions of the New Deal, strengthen labor, and institute a national health care system, found himself in a box. A few weeks before his inauguration, Alan Greenspan and Robert Rubin sat him down and told him the facts of life: he was going to have to raise taxes and cut the size of government. Clinton took their advice to heart, raised taxes, balanced the budget, and cut numerous programs, declaring an "end to welfare as we know it" and, in his second inaugural address, an "end to the era of big government."
He was the anti-Santa Claus, and the result was an explosion of Republican wins across the country as Republican politicians campaigned on a platform of supply-side tax cuts and pork-rich spending increases. Looking at the wreckage of the Democratic Party all around Clinton by 1999, Winniski wrote a gloating memo that said, in part: "We of course should be indebted to Art Laffer for all time for his Curve... But as the primary political theoretician of the supply-side camp, I began arguing for the 'Two Santa Claus Theory' in 1974. If the Democrats are going to play Santa Claus by promoting more spending, the Republicans can never beat them by promoting less spending. They have to promise tax cuts..."
Ed Crane, president of the Libertarian CATO Institute, noted in a memo that year: "When Jack Kemp, Newt Gingich, Vin Weber, Connie Mack and the rest discovered Jude Wanniski and Art Laffer, they thought they'd died and gone to heaven. In supply-side economics they found a philosophy that gave them a free pass out of the debate over the proper role of government. Just cut taxes and grow the economy: government will shrink as a percentage of GDP, even if you don't cut spending. That's why you rarely, if ever, heard Kemp or Gingrich call for spending cuts, much less the elimination of programs and departments."
George W. Bush embraced the Two Santa Claus Theory with gusto, ramming through huge tax cuts – particularly a cut to a maximum 15 percent income tax rate on people like himself who made their principle income from sitting around the pool waiting for their dividend or capital gains checks to arrive in the mail – and blowing out federal spending. Bush even out-spent Reagan, which nobody had ever thought would again be possible. And it all seemed to be going so well, just as it did in the early 1920s when a series of three consecutive Republican presidents cut income taxes on the uber-rich from over 70 percent to under 30 percent.
In 1929, pretty much everybody realized that instead of building factories with all that extra money, the rich had been pouring it into the stock market, inflating a bubble that – like an inexorable law of nature – would have to burst. But the people who remembered that lesson were mostly all dead by 2005, when Jude Wanniski died and George Gilder celebrated the Reagan/Bush supply-side-created bubble economies in a Wall Street Journal eulogy:"...Jude's charismatic focus on the tax on capital gains redeemed the fiscal policies of four administrations. ... [T]he capital-gains tax has come erratically but inexorably down -- while the market capitalization of U.S. equities has risen from roughly a third of global market cap to close to half. ... These many trillions in new entrepreneurial wealth are a true warrant of the worth of his impact. Unbound by zero-sum economics, Jude forged the golden gift of a profound and passionate argument that the establishments of the mold must finally give way to the powers of the mind. ... He audaciously defied all the Buffetteers of the trade gap, the moldy figs of the Phillips Curve, the chic traders in money and principle, even the stultifying pillows of the Nobel Prize."
In reality, his tax cuts did what they have always done over the past 100 years – they initiated a bubble economy that would let the very rich skim the cream off the top just before the ceiling crashed in on working people. The Republicans got what they wanted from Wanniski's work. They held power for thirty years, made themselves trillions of dollars, cut organized labor's representation in the workplace from around 25 percent when Reagan came into office to around 8 of the non-governmental workforce today.
Next year, when the Disability Trust Fund runs out of money, the GOP’s plan is for force Democrats to become the anti-Santa, yet again. If Congress does nothing because the “easy fix” is unavailable due the Republican rule change, Disability Santa will take a 19% cut.
Reed said of his rule change, “Anyone who cares about finding a fair solution for both the catastrophically disabled who depend on SSDI and senior citizens who depend on Social Security knows that we must find a long-term solution which protects both of them rather than a short term band aid which threatens them both.” It is clear that the GOP plan is to use this unnecessary, manufactured crisis as an opening to “reform” Social Security - translated: cut and privatize.  Thus, forcing Democrats to become the Social Security anti-Santa a different way.
When this happens, Democrats must remember Jude Wanniski - and accept neither the cut to disability payments, nor the entree to Social Security “reform”They must demand the the House rule be changed back, and that the fix used many times in the past, be used again.

Thom Hartmann is an author and nationally syndicated daily talk show host. His newest book is "The Crash of 2016: The Plot to Destroy America — and What We Can Do to Stop It."
http://www.alternet.org/tea-party-and-right/exposing-republican-partys-sleazy-playbook-destroy-social-security

Why are they in such a rush to cut Social Security??

AlterNet / By Elizabeth Warren

Elizabeth Warren: It's the Right of Every American to Retire with Dignity -- Why We Must Expand Social Security

"Instead of taking on the retirement crisis, instead of strengthening Social Security, some in Washington are actually fighting to cut benefits."

 For a generation now, working families have been squeezed by stagnant wages and rising costs for housing, health care, and college. Even as families have cut back on expenses for things like food, clothing, furniture, and appliances, it hasn't always been enough; many have been forced to take on more and more debt just to pay for necessities. One major consequence of these increasing pressures on working people is that the dream of a secure retirement is slowly slipping away. Families haven't been able to save as much as they used to, and only 18 percent of private-sector workers have defined benefit pensions today compared with 35 percent two decades ago. Forty-four million workers have no workplace retirement savings plan.
With less savings and weaker private retirement protection, retirees depend more than ever on the safety and reliability of Social Security. Social Security also protects retirees' spouses and children, disabled workers, and family members who survive the death of the family's earner. Whenever I visit senior centers in places like Malden and Medford, I hear from retirees about how much they rely on Social Security benefits to make ends meet. Here in Middlesex County alone, 236,275 people receive Social Security benefits.
Social Security works; no one runs out of benefits and the guaranteed payments don't rise and fall with the stock market. Two-thirds of seniors rely on it for the majority of their income in retirement, and for 14 million seniors, this is the safety net that keeps them out of poverty. And yet, instead of taking on the retirement crisis, instead of strengthening Social Security, some in Washington are actually fighting to cut benefits.
The most recent discussion about cutting benefits has focused on something called the chained CPI. Supporters of the chained CPI say that it's a more accurate way of measuring cost of living increases for seniors. That statement is simply not true. Chained CPI falls short of the actual increases in costs that seniors face, pure and simple. Chained CPI is just a fancy way of saying "cut benefits."
The Bureau of Labor Statistics has developed a measure of the real impact of inflation on seniors, called the CPI-E. If we adopted CPI-E today, it would generally increase benefits for our retirees, not cut them.
This is just one example of how the national debate about Social Security is starting in the wrong place. The fact is that today, Social Security has a $2.7 trillion surplus. If we do nothing, Social Security will be safe for the next 20 years and even after that will continue to pay most benefits through the end of the century. With some modest adjustments, we can keep the system solvent for many more years, and could even increase benefits.
The tools to build a future are available to us now. We don't start the debate by deciding who gets kicked to the curb. We are Americans. We start the debate by figuring out how to create better efficiencies, how to make small changes that will make the system fairer, how to grow the pool of those who contribute, how to rebuild a system that every single one of us can rely on to make sure that there is a baseline in retirement that no one falls below.
Social Security isn't the answer to all of our retirement problems. We need to find ways to tackle the financial squeeze that is crushing our families. We need to help families start saving again. We need to make sure that more workers have access to better pensions. But in the meantime, so long as these problems continue to exist and so long as we are in the midst of a real and growing retirement crisis -- a crisis that is shaking the foundations of what was once a vibrant and secure middle class -- the absolute last thing we should be doing is talking about cutting back on Social Security. The absolute last thing we should do in 2013 - at the very moment that Social Security has become the principal lifeline for millions of our seniors -- is allow the program to begin to be dismantled inch by inch.
The decisions we make about Social Security benefits are not just about math. At their core, these decisions are about our values. I believe we must honor our promises, make good on a system that millions of people paid into faithfully throughout their working years, and support the right of every person to retire with dignity and that means protecting and expanding Social Security. 
http://www.alternet.org/economy/elizabeth-warren-its-right-every-american-retire-dignity-why-we-must-expand-social-security