Super Collusion: Will Obama and Capitol Dems Betray the Middle Class, Seniors and the Poor?

It's a terrible mistake to ask the Americans who were wounded most by deficit-causing behavior to carry so much of the cost of fixing it. And to propose cuts to Medicare and Medicaid simply to preserve low tax rates for the wealthy is nothing less than a moral obscenity.
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Two new reports suggest that the President and Congressional Democrats are about to betray everything Democrats once stood for. Under pressure from Barack Obama, Democrats on the "Super Committee" have sketched out an appalling "compromise" proposal that would almost certainly doom both their 2012 electoral chances and his own.

They'd have it coming. Their draft plan literally takes crutches away from poor people to protect tax breaks for the wealthy.

Unfortunately, middle class and impoverished Americans would suffer much more than they would. Career politicians can always look forward to comfortable sinecures from the wealthy interests who will benefit from their proposal. But the rest of us would once again be punished for the excesses of the rich, then left to the untender mercies of our new Republican leaders.

That, and not the fate of a President or a party, would be the real tragedy.

Pain Threshold

The President's actively pressuring Super Committee members from both parties to come up with a budget-slashing deal, according to a report in today's Washington Post. In addition, Obama is also urging them not to cancel the automatic $1.2 trillion in cuts that would be triggered under current law if they fail to make an agreement.

Another story, from the Huffington Post's Sam Stein, gave details on the Democrats' latest proposed "compromise." These two stories paint the picture of a President and a party who are willing to keep taxes low for the wealthy, and who would pay for it by proposing cuts that punish seniors, doctors and the poor.

Why? So they can say they "successfully governed" with extremist Republicans? To please international markets that, in reality, couldn't care less? So the President can campaign as "above left and right," as if differences in principle are a bad thing? Because they've been spiritually suffocated by the cultural norms of Washington's insular culture?

There are more questions than answers. Here's one more: With Democrats like this, who needs Republicans?

Low rates for the wealthy

Stein reports that the Democratic proposal would keep tax rates for the wealthiest Americans at the historically low Bush-cut rate of 35 percent to please the GOP. (That rate was 91 percent under Eisenhower, 50 percent at the start of Reagan's term, and 39 percent under Clinton.) The very wealthiest among us would continue to savor these unusually low tax rates to sweeten the fruits of ever-increasing wealth inequity.

The Dems would also accept the principle of "corporate tax reform to enhance competitiveness," which sounds a lot like a bid for lower tax rates for corporations. That would be offset by reductions in overly indulgent tax breaks, such as those that apply to corporate jets. But corporations would still retain expensive accountants and even more expensive lobbyists. I'll bet you a big chunk of your future Medicare benefits how that would turn out.

Oh, wait. These Democrats are already placing that bet. We'll get to that shortly.

Those are the breaks

The party's internal discussion document includes "triggers" that would take effect if Congress can't cut these deductions itself. One of those triggers is described as "a Feldstein-type limitation on itemized deductions for higher income taxpayers." They're referring to Martin S. Feldstein, the former Reagan advisor who wants to eliminate tax breaks for solar panels or electric cars. More significantly, Feldstein also wants to cap tax deductions at 2 percent of income -- for everyone.

Feldstein's op-ed in the New York Times explained that " Taxpayers with incomes of $25,000 to $50,000 would pay about $1,000 more in taxes; those with incomes of more than $500,000 might pay $40,000 more." In other words, the poor must pay part of the bill for the excesses of the rich.

To be sure, the Democratic proposal says it would target "higher income taxpayers," which is not Feldstein's plan. But who'll have better lobbyists when those tax exemptions are being defined -- the rich and the corporations, or the middle class? And we learned what conservatives mean by "higher income" when the Concord Coalition suggested that anyone earning over $20,000 per year should be targeted for Social Security means testing when they retire.

That's the kind of person the Dems would be dealing with in their detailed tax negotiations.

Here's more thing these Democrats should understand and explain: Tax breaks for items like solar power or electric cars are a good thing. They serve the public interest, which is what public policy is supposed to do. They reduce our dependence on foreign oil, protect our environment, and improve public health. That saves us money, too.

The unkindest cuts of all

The Democratic proposal also includes cuts of $250 billion to providers under Medicare. Unless they're very well designed (they won't be), that will mean problems with access to doctors and adequacy of care.

There's also a cut of $100 billion in benefits for seniors. That would affect every single person in the United States who reaches retirement age, along with those who become disabled.

Depending on how those "Feldstein tax increases" were structured, many retired Americans could see their Medicare benefits reduced -- and lose a tax deduction for paying those costs out of their own pockets.

There would also be cuts to Medicaid's prevention and public health trust fund, one of the most "Democratic" aspects of last year's health care bill. So the proposal would subvert one of the provisions in the law they just passed. This cut doesn't just target the vulnerable. It's also economically foolish, since it cuts programs that can prevent costlier illnesses later on. And the Democrats would also cut $5 billion for Medicaid's "DME," which presumably means "durable medical equipment" like crutches and wheelchairs.

It looks like Democrats will literally propose taking wheelchairs away from poor people so we can keep tax rates low for the wealthy.

Tone Deaf

The White House issued a stunningly inappropriate statement about the Committee, saying the automatic "trigger" cuts the President's defending were "agreed to by both parties to ensure there was a meaningful enforcement mechanism to force a result from the Committee." The statement went on to say:

"Congress must not shirk its responsibilities. The American people deserve to have their leaders come together and make the tough choices necessary to live within our means, just as American families do every day in these tough economic times."

That's not merely an economically silly statement, although it's certainly that. The analogy between the U.S. budget and that of a family is fatuous (how many families print their own currency, which is the world's standard?), misleading (even families will invest in their future sometimes), and ruthless (few families would argue that a balanced budget is more important than a wheelchair or crutches for Grandma).

This statement revives the troubling question of whether this White House and this President have lost their moral compass along with their understanding of economics.

It's true that President and Congress should not "shirk their responsibilities" -- to provide jobs for the unemployed and reduce the swelling ranks of the impoverished. It's devastating that the President chose to apply those words to a lopsided, premature, and misguided exercise in austerity economics instead.

The Bottom Line

There comes a time when ethical people have to take a stand, and this is one of them. Democrats must reject the premise behind these negotiations. If they don't it raises serious questions about their party's values, future and social worth.

Today's deficits were caused by wild and reckless tax cuts for the wealthiest among us, along with the cost of two unnecessary wars and the consequences of bank greed and recklessness. It's a terrible mistake to ask the Americans who were wounded most by deficit-causing behavior to carry so much of the cost of fixing it. And to propose cuts to Medicare and Medicaid simply to preserve low tax rates for the wealthy is nothing less than a moral obscenity.

In these dark times, here are the President's and Congress's real and unshirkable responsibilities: To help 25 million un- or under-employed Americans get back on their feet. To stop Wall Street looters from making off with our nation's riches. To restore tax fairness and economic justice. To invest in our crumbling infrastructure. To create economic growth that will fix deficits in the long term. To ensure retirement security for all Americans. To ensure genuine access to health care for all. And to stem the growing tide of poverty.

Maybe these professional politicians are constitutionally hardwired to compromise and deal, and are therefore incapable of recognizing when doing so is to reinforce great wrongs. But if they can't see it, we'll have to show them -- with phone calls, emails and a very clear message about the consequences they'll face next November if they go through with this plan.

This proposal, along with the whole Super Committee process, is a dying gasp from the failed "bipartisan" economic consensus that brought us deregulation, the financial crisis, rampant banker criminality, and inequitable distribution of wealth. It must be discarded with all the other refuse of that cynical, tragical, failed experiment.

Politicians who don't understand that may wind up being discarded, too.

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