Fighting Multiple Levels of Social Security Control Fraud

Every wage earner in the USA should feel very, very angry, and in fact, enraged, once they understand the depth & duration of the Big Lie behind Social Security and FICA taxes.

That anger, however, is something to both acknowledge, worry about, and productively manage. Don’t get angry, get even, by getting free. Reflect on the bitter fact that you, your family, your parents, and your grandparents never even needed to pay FICA taxes the last 70-some years. That will really cause some resentment.  Revolutions are always justified, but rebellions are always betrayed.  So please use your head and consider how to right this perpetuated wrong, not just be angry about it.  Let's go back to FDR's concluding statement some time after enactment of the Social Security pact.

 In the course of ... discussion [Luther Gulick] raised the question of the ultimate abandonment [of] the pay roll taxes in connection with old age security and unemployment relief in the event of another period of depression. 

   ...

  [Gulick] suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was originally adopted. 

   ...

FDR said, “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”


Please re-read that several times, and let it sink in for a moment.  Justice, fairness and logic were all sacrificed to politics, right from the start.  Like with many political processes, later remedies were pre-conceived, but never fulfilled.  In fact, the baked in wrongs only became more entrenched with time, through the filter of intense lobbying & propaganda.

I wonder how my grandparents stood for it at the time.

Someone tell Simpson & Bowles that we have millions of sub-contractors clamoring to suckle at the national "tit" they're so fond of alluding to, all in the name of serving the electorate they mindlessly want to suck initiative from in the form of fiat currency.  The core mission & policy given Congress in the US Constitution is to direct policies & public contracting so as to care for the welfare of the people.  Simpson & Bowles have it so squarely backwards that one is embarrassed for them, and for those whom they're misleading.

Jumping to the present, how would YOU tell 150 million salaried adults that their wages needn’t ever have BEEN taxed their entire, working life?

And furthermore, that they were taxed ONLY to keep one class of people over-taxed and under-funded relative to another class of people? Worse, that the same was true of the FICA taxes levied on their parents, AND their grandparents! Them’s fightin’ words!

There could and should be hell to pay for all that have contributed to that truly disgusting crime, through silence, fear or complicity. If that’s not treason of the highest order, then we may as well all emigrate to some country where honesty, courage, morality & national ambition still reign.

The scale of the Social Security fraud leaves one nauseous. It’s not what one wants to think of one’s own country.

To realize that there are whole foundations dedicated solely to maintaining a regressive tax on labor, only exacerbates the shame. For instance, staff at the supposed Social Security Works campaign still actively promote the self-deceiving myth that FDR desperately resorted to.  A main plank of SSW is that the regressive FICA taxes do not regressively tax labor, but actually protect the rights of working people to an adequate pension by providing them with a unique, tax-based citizen's right.   Whew!   Talk about Control Frauds perverting our own thinking, and then expecting us to thank them for the benefit of sharing unequally in national output!

Following adoption of a fully-fiat currency system in 1933, taxing labor cannot be accepted as the prerequisite for any public policy whatsoever.  If we can  - as simple policy - vote subsidies for highways, space exploration, worldwide military capabilities, corporate farming, and endless corporate supports - from agriculture to research - then we can also support our own elderly citizens as a simple policy.  Over-taxing working citizens throughout their productive years is an incomprehensible burden on national Output.   What were we thinking?   Why have we let this proceed so long?   Do we WANT the USA to be far, far less than it could be, not merely less?

For any person who perpetuates a fraud after being advised of operational reality, the fraud is no longer innocent. It is self-defeating for their own family, children & country. It is treason.

Innocent Fraud As a Business Model = saying regulation must NOT be n-dimensional … and succeeding with that propaganda.

We have burdened lower-income classes with huge penalties relative to the wealthy & frauds - since 1934 - by taxing the poor through FICA taxes, to pre-charge for the pittance an increasingly richer aggregate “may” give them “if” they live long enough.

That’s essentially just a way for one class or clan to over-tax & under-fund a perceived competitor class; instead of working together productively. It’s a tragic travesty, the bitterness of which should bring any thinking person to tears!

By doing this we’ve drastically curtailed the return-on-coordination that would have been possible the last 70+ years. Why are we working hard to be less, rather than more, than the sum of our parts?

Of course professional jargons and semantic diversity are problems, and of course public policy can’t be guided by accounting alone. Understanding the reserve-accounting underlying a fiat currency system is a necessary but not sufficient step in aggregate agility. So is recruiting people from the 2000 & growing NAICS fields so that they can openly discuss & explore our constantly growing options.   To realize even a pittance of our insanely great public options, we need to be acknowledging & using & fusing distinct jargons, and above all else COORDINATING graciously & gracefully!

2005 Video of Greenspan Admitting Social Security Can't Go Broke

commentary by Roger Erickson

PAUL RYAN: “Do you believe that personal retirement accounts can help us achieve solvency for the system and make those future retiree benefits more secure?”

ALAN GREENSPAN: “Well, I wouldn’t say that the pay-as-you-go benefits are insecure, in the sense that there’s nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase.”

Seems to go right over Paul Ryan's head. In one ear, and nothing blocking exit out the other.

Many thanks to Selise for for finding and clipping this video, and Senexx for adding it to the YouTube MMTChannel.

MARCH 2, 2005, house committee on the budget hearing:

transcript:

full cspan video:

quote is in clip from 02:42:00 to 2:42:57


This should open up a can of worms for every person in America capable of rational thought.

And that rational thought leads inescapably to the conclusion that FICA taxes to "fund" a national elder-care policy were never needed, and should never have been enacted.

"We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren't a matter of economics, they’re straight politics.”  FDR

FDR's Cabinet realized early on that FICA taxes had been a mistake, and in any event discussed removing them in the case of another depression. Then admitted they were all politics, not for any real economic reason.

Sane policy should have been the best reason - from the start - for not enacting FICA taxes.  [Sounds more like the best face FDR could put on a policy debacle & political loss - and also an act of either personal cowardice or baffling ignorance.]

[We got off the gold std, but stayed on the class-war & Control Fraud standard!]

Our entire political operations are built on Control Frauds, ... frauds that simply can't scale with the diversity of our national expansion.

With scale, we end up in the disastrous position of being afraid to jettison known frauds, for fear that the future might be worse!

A nation started on courage, and now stalled by outright cowardice, afraid of all the options the future holds.

Yet what do we do when the kinetics of politics is a generation ... or two ... behind the kinetics of most other operations?

Build "cathedrals" anyway? When any honest person knows they won't scale? And that lives will be ruined, if not sacrificed?

What happens when that divergence exceeds survivable tolerance limits for the nation? Slink out of town, with funds sequestered in hopefully safe Swiss bank accounts? If the truth were known, no Swiss citizen would be welcome in any country on earth - simply for endorsing that global fraud as a national policy!

It's clearly time for new methods. Another Constitutional Assembly? Something better?
Or something worse?

How would YOU tell 150 million salaried adults that their wages needn't ever have BEEN taxed for FICA their entire life? And that they were taxed ONLY to keep one class of people over-taxed and under-funded relative to another class of people? Worse, that the same was true of the FICA taxes levied on their parents & grandparents!

Them's fightin' words! There will someday be hell to pay for all that have contributed to that truly disgusting crime, through silence, fear or complicity. If that's not treason of the highest order, then we may as well all emigrate to some country where honesty, courage, morality & national ambition still reign.

The scale of the "FICA-tax for Social Security" fraud leaves one nauseous. It's not what one wants to think of one's own country.

To realize that there are whole Foundations dedicated solely to maintaining a regressive tax on labor, only exacerbates the shame. Taxing labor cannot be accepted as the prerequisite for any public policy whatsoever. If we can - as simple policy - vote subsidies for highways, space exploration, worldwide military capabilities, corporate farming, and endless corporate supports - from agriculture to research - then we can also support our own citizens as a simple policy.  That's not even mentioning bailouts to frauds under the guise of the FDIC negotiating reductions in corporate debts to FDIC-seized banks.

For any person who perpetuates a fraud after being advised of operational reality, the fraud is no longer innocent. It is self-defeating for their own family, children & country. That is, it is treason.

FDR's words, and SocialSecurityWorks current adherence to them, are a Big Lie that would make any Fascist proud. Certainly more fiendishly distributed & hidden than most fascist strategies. And, it's worked! Tens of millions of Americans have proudly walked into voluntary indentured servitude.  Right now it's too nauseous for me to expand on it further. The whole topic just makes me want to cuss & kick something. It's on the scale of the Pope & Warlords inventing permanent royalty, for the masses to permanently revel in serfdom to.

Worse, it's so damn stupid it's insulting to America. What happened to American ingenuity?

Alan Nasser — How Franklin D. Roosevelt Botched Social Security

FDR not a progressive, or even a liberal?

The seeds of neoliberal economic policy were planted during the founding years of twentieth century liberalism. The Democrats’ current embrace of fiscal conservatism is claimed by contemporary self-proclaimed New Dealers to be a repudiation of the founding bequest, a capitulation to reactionary Republican dogma. Budget deficits, we are told, were legitimated by Franklin D. Roosevelt during the New Deal as a legacy to future Democratic regimes. The political obligation to enhance social welfare is supposed to have trumped the old-time Hooverian taboo against government expenditures beyond government receipts. 

Objections to this policy are thought to have been refuted not merely by Keynesian economic theory but mainly by successful practice: once Roosevelt put into place large scale deficit-funded projects like the Works Progress Administration, the economy was launched into its steepest cyclical expansion to this day, from 1933 to 1937. Reagan’s tirades against budget deficits are said to be a throwback to pre-Rooseveltian times and outdated orthodoxy. Imagine the chagrin of “the Democratic wing of the Democratic Party” when Clinton and Obama betrayed the heritage of the New Deal by seconding the Republican commitment to fiscal orthodoxy. The rustling sound you are supposed to hear is FDR tossing in his grave.

This story is the most recent supplement to the myth of the Democratic Party as the “Party of the working man.” It fails to recognize that fiscal orthodoxy and the correlative tethering of social benefit to work and wage level was central to Franklin Roosevelt’s political values and bequeathed to postwar American liberalism a distinctly conservative, anti-social-democratic thrust....

Counterpunch
How Franklin D. Roosevelt Botched Social Security
Alan Nasser
(h/t Dan Lynch)

What FDR and Two Former Fed Chairs Understood About Social Security — Stephanie Kelton

It’s a shame more people don’t understand that the entire debate over “solvency” is rooted in a flawed understanding of our monetary system and the mechanics of government finance....

he Lens
What FDR and Two Former Fed Chairs Understood About Social Security
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders
https://stephaniekelton.substack.com/p/what-fdr-and-two-former-fed-chairs

Why FDR's Fed Chair Opposed His Plan to Expand Social Security — Stephanie Kelton

The Fed chair at the time was held by Marriner Eccles, who understood government monetary and fiscal operations. That has since been forgotten, ignored, or suppressed.

The Lens
Why FDR's Fed Chair Opposed His Plan to Expand Social Security

Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders
https://stephaniekelton.substack.com/p/why-fdrs-fed-chair-opposed-his-plan

Obama Carries Through on Promise to Campaign Donors ... to Gut Social Security

Commentary by Roger Erickson

Obama formalizes the Great Sellout. Close the New Deal & go back to the Old Deal.

It's now clear. While masquerading as the next FDR, Obama is actually the inverse, the un-FDR, and a massive fraud. This duplicity is as bad as slipping anti-matter in where it should matter.

Either that or he's dumber than a post, and a complete dupe for the banking lobby. Either way, America better speak up now, or lose Social Security.

What's the ultimate Control Fraud? Not enough to plant your stooge as CEO of Lincoln Savings, or even Goldman Sachs? Fine. Let's plant a banker's-stooge as POTUS. The KGB did that in Russia. Why can't the TBTF banking lobby do that in the USA? Indeed. As long as the public doesn't understand basic currency operations or MMT, anything is still possible, with enough propaganda.

Looks like make or break time. We'll see if the American public takes this sitting down.

Alan Minsky — This Democratic Party Is Going Nowhere. Can Progressives Take it Over and Change the World?

The electoral left has a secret, albeit underutilized, asset. Almost no one in this benighted land knows that the Congressional Progressive Caucus is larger now than the Tea Party Caucus ever has been—yet given its relative influence on the national discourse, the CPC’s anonymity is no surprise. The progressive caucus is simply not as aggressive or as focused a political force as the tea party. 

This has to change, and if it does, progressives will go into the next election cycle holding a winning hand. All they have to do is boldly introduce themselves to the public, establish very clearly what they stand for and present themselves as a unified front in 2016. Even if they just hold on to the seats they currently hold, the results will have the appearance of a national victory for a unified insurgent movement. 

This might seem like petty gamesmanship, but it’s not. The GOP has been running on economic populism, claiming to represent the interests of working people, and winning elections. To date, the Democrats have failed pathetically to expose this lie—and only leftist progressives can really make the case.

Translation: Maybe Democrats would have a better chance of winning running as Democrats rather than GOP Lite.

We all know the right-wing media machine would create a cacophony about the horrors of Big Government, but if you list the components of what a leftist progressive platform might look like, it’s clear that many of the policies would have majority support:

- Social Security funded for the next century (with the possibility of expanding it) by raising the cap on income levels contributing into the system, while maintaining a cap on payments
- A single payer (Medicare for all) health system
- Free public education through college
- A sharp increase in the national minimum wage and two weeks of paid vacation for all workers
- Rapid citizenship for immigrant workers and their families
- Ending the war on drugs and decriminalization
- Ending government spying
- Sane gun laws
- Support for a woman’s right to choose and equal pay legislation
- Reform of the justice system so that it applies equally to all people
- Invest in green energy and take the lead in combating global warming globally
- Shift foreign policy to support people and not every region’s 1 percent
- As for funding fiscal policy, there’s no need for making income tax levels more progressive (since the change in Social Security achieves that already)—but, in accordance with “Capital in the Twenty-First Century” author Thomas Piketty, raise the rate on capital gains. Also bring corporate taxes back in to line with pre-Reagan era levels by both closing loopholes and raising the tax rate on profits.
- And finally, a program dear to my late father’s (economist Hyman Minsky) heart—an employer of last resort (ELR) program, like Roosevelt’s CCC. (This is probably too radical a proposal for many members of the current CPC, but not for some.) And if not this ambitious plan, a basic national income. I think ELR would work much better and also make a real contribution to elements of the economy that the market addresses inadequately; and it can be organized so that localities have control over ELR projects. ELR’s possibilities for transforming society are immense, but either ELR or a basic income program would conquer poverty like nothing we’ve seen in our lives and empower workers who would no longer fear leaving wretched jobs.
- If the tax increases on the wealthy and corporations aren’t enough to cover the costs, there’s a bloated military budget to shrink.

A program like this would take America off of its neoliberal course. It directly addresses the fears and anxieties of a precarious, under-compensated citizenry, and it’s no more radical than the approach espoused by the greatest Democrat of the 20th century, FDR.
Will it win majority support in the 2016 election cycle? Unlikely, but given the security of progressives already in office, there’s no harm in trying—and if leftist progressives get it in front of Americans for consideration, the next time the economy implodes … let’s just say it’s going to prove mighty compelling.

Truthdig

This Democratic Party Is Going Nowhere. Can Progressives Take it Over and Change the World?Alan Minsky |  program director of KPFK Radio Los Angeles

Alan Minsky is the son of Hyman Minsky.

Ryan Grim — Chained CPI Only Acceptable As Part Of 'Balanced Package,' White House Says

OMG. What's the superlative of moronic?

The president's move makes him the first Democratic president to propose cutting Social Security.

House Speaker John Boehner (R-Ohio) responded to the president's offer on Friday by suggesting that if he wants to cut Social Security, he should just go ahead and do it. “If the president believes these modest entitlement savings are needed to help shore up these programs, there is no reason they should be held hostage for more tax hikes. That’s no way to lead and move the country forward," he said in a statement. 

There it is, folks. President Obama has just dropped a bomb on the Democratic Party. It will be interesting to watch the fall out. This is the moment of truth for Democratic politicians.

The president knows exactly what he is doing. This is a direct strike at the left in an effort to solidify the Democratic Party as the moderate Republican Party in the belief that American politics is center right, ending the Democratic coalition built by FDR in an effort to "capture the center."

Will the base roll over again to prevent the take over of the country by right-wing extremists? I would not be putting any money on that bet. There is already a firestorm rising. Obama Budget Proposal Cuts Are 'Unconscionable,' Says AFL-CIO. Make that moronic and unconscionable.

The Huffington Post
Chained CPI Only Acceptable As Part Of 'Balanced Package,' White House Says
Ryan Grim

Thomas Frank — The problem with Thomas Piketty: “Capital” destroys right-wing lies, but there’s one solution it forgets

After "Capital," we'll never talk income inequality or meritocratic myths the same way. But we must talk unions...

Is revising the unions the solution? Frank thinks so.

Piketty’s biggest blind spot is that he has virtually nothing to say about labor unions. He starts Chapter 1 of “Capital” with an anecdote about a bloody strike in South Africa and he returns to that same tragic episode at the very end of the book, but in between he addresses the matter almost not at all. Piketty talks a good game about democracy, but like other economists who have made inequality their subject, he prefers solutions that are handed down from the lofty heights of expertise.

The best remedy for inequality, however, is the one that comes up from below. Economists may not think very highly of those hardened people in SEIU t-shirts—some of them smoke too much, some are suspicious of “free trade,” some of them (gasp!) didn’t go to college—but the fact remains that in nearly every particular they represent the obvious and just about the only social force on the ground in America that might bend the inequality curve the other way....

Consider the crazy imbalance in the current capital-labor split, which is the central thread holding together Piketty’s enormous book. Well, having strong unions that are able to negotiate effectively would remedy this situation almost by definition. That’s the idea of unions in the first place....

The disappearing middle class? This is labor’s grievance par excellence. The minimum wage? Labor is always the loudest voice calling for an increase. Stratospheric college tuition and student debt? The AFL-CIO has been admirably forthright on the issue. Social Security and the rest of the welfare state? There is no more dedicated supporter than organized labor. Were labor strong instead of weak, privatization and the other attacks on the welfare state would probably never even come up. Certainly no Democratic president would be able to say, as Barack Obama did in one of his debates with Mitt Romney, that his own position was “somewhat similar” to the Republican’s on this issue.

Salon
The problem with Thomas Piketty: “Capital” destroys right-wing lies, but there’s one solution it forgets
Thomas Frank
(h/t Lambert Strether at Naked Capitalism)

On Thomas Jefferson and hereditary wealth and privilege:

As Gustavus Myers tells the story, there were victories and defeats in America’s long war against inherited privilege, until finally we get to the twentieth century and the estate tax, which make up the final chapters in the journalist’s account. Although it was established in 1916, the tax on inheritance was raised to deliberately confiscatory levels in 1935. The rationale then was as plain as it was in Jefferson’s day: Americans raised that tax because Americans detest aristocracy. “Great accumulations of wealth cannot be justified on the basis of personal and family security,” said President Roosevelt, on the occasion of demanding the massive increase in estate taxes. “In the last analysis such accumulations amount to the perpetuation of great and undesirable concentration of control in a relatively few individuals over the employment and welfare of many, many others.”

Check the IRS website today, however, and you will find that critical moment in tax history explained not as the expression of a leveling social policy but merely as a way to “generate needed funds.” Our contemporary debate over inequality is the same: a bland, technical matter of thinktanks and academic conferences and debates among professional economists—just another problem for the experts to solve. It is as though we have completely forgotten the democratic passions that drove our ancestors.

Well, the right certainly hasn’t. Their policies may give us things like perpetual trusts—legal instruments designed to cement the privileges of the plutocracy many generations into the future—but the right’s rhetoric always goes back to sympathetic souls like Jeffersonian family farmers who are supposedly put at risk by the “death taxes” of those grasping government elites....

As Gustavus Myers told us back in 1939, bringing the aristocracy to heel is entirely within our power and our tradition, and American statesmen from Jefferson to FDR (the man on the nickel, the man on the dime) have taken enthusiastic part in the business of leveling. There is nothing utopian about it at all. It is not an opium dream to imagine that Grover Norquist and company might one day be defeated or that the estate tax might be brought back in full Rooseveltian force; both are eminently possible, if only the Democrats would pull their heads out of their butts.

The political problem now is that both parties represent different cohorts of the wealthy.

Michael Lind — GOP’s noxious, misguided edge: Why Dems need a coherent economic plan

This is a longish piece but worth reading in full. Here is the gist of it.

It may be bad, but Republicans have an economic strategy. Democrats can't say the same -- and are paying the price.…

Another election has come and gone, and the Democrats are still missing a plan. By a plan I mean a coherent economic strategy shared by most Democratic activists and presented to voters as a reason to vote for the Democratic Party.  

The GOP Plan

In contrast, the Republican right has a plan. It’s a misguided plan, in my opinion, but it is a plan. Republican donors and voters alike can rally around it and the plan can be marketed to voters as a solution to the nation’s major economic problems. 

Like a Platonic idea, the Republican plan has various earthly incarnations, most recently the budgets proposed by House Republican budget guru Paul Ryan. But whatever form it takes on paper at the moment, the Republican economic strategy has maintained its identity, election after election, decade after decade, since it was hammered out by right-wing policy wonks in the 1970s and 1980s. 

Republican economic ideology yokes together two different schools of thought. One is the secular creed of free market libertarianism, which comes in different denominations — the extreme Ayn Rand school or the more moderate Milton Friedman kind. 

The other strain of Republican political economy is Jeffersonian-Jacksonian white working-class populism, based in but not limited to the South. In spite of its talk of “freedom,” Jacksonian populism is a kind of illiberal white Christian tribalism or communitarianism (think gun-packing vigilantes on the southwestern border and grimacing Church Ladies insisting that local school libraries ban “The Diary of Ann Frank” and”Catcher in the Rye”).…

The right’s plan is sometimes called “market populism.” This may seem like an oxymoron — don’t free-market libertarians dread populism, and aren’t populists suspicious of markets and rich capitalists? But “market populism” accurately captures the strange-bedfellow alliance behind the plan to dismantle the post-New Deal federal state and turn over half to Wall Street and the other half to neo-Confederate state legislatures. 

In my view, it’s a pernicious plan — but it is a plan. Where’s the Democratic alternative?

 Democratic alternative

There isn’t one. Oh, to be sure, there are particular plans by particular Democratic groups, like the Congressional Progressive Caucus. There are plans put forth by the Democratic White House. There are progressive activists and center-left think tanks with their own plans and manifestos. But there is nothing as simple and straightforward as the plan of the contemporary American right to dismantle the post-FDR federal government and replace it with a mixture of voucher systems and state-level programs. There is no Platonic Plan of the center-left, existing more or less unchanged in various documents and manifestos, comparable to the familiar Platonic Plan of the right. 

Why? When it comes to economic policy both the Democrats, as a party, and the center-left, as a movement, are divided among far more factions than the two big factions of the right, the libertarians and Jacksonians. If we ignore foreign policy divisions and non-economic issues, and also ignore the truly radical left, we can identify several distinct, and somewhat incompatible, schools of political economy all lumped together under the rubric of the “center-left” in American politics.

Democratic factions

1. Neoliberals. Sometimes called “Rubinites” after Clinton Treasury Secretary Robert Rubin, neoliberals combine social liberalism on issues like gay rights and feminism with moderate economic conservatism — for example, cutting Social Security and Medicare payments to the middle class in the name of “fiscal responsibility.” They are generally in favor of free trade and kid-glove treatment of the Wall Street financial industry where they or so many of their donors are employed.

2. Labor liberals. Now that unions have been all but annihilated in the private sector in the U.S., unionized workers are mostly public employees, like public school teachers, police officers and first responders.

3. Social Democrats. These are supporters of a larger, more European-style system of social insurance and public services, financed by higher taxes.

4. Small-is-beautiful Brandeisian progressives. There has always been a strain of progressivism, going back to Louis Brandeis and Woodrow Wilson, that supported small businesses and local communities against what Brandeis called the “curse of bigness.” Theodore Roosevelt and his Democratic cousin Franklin mostly sided with bigness — big government, big industry and big labor — but the old Brandeisian vision revived in the 1960s and 1970s with Naderism and today it is very influential among college-educated white liberals.

The Democratic Challenge

Coming up with an economic platform or a plan that can satisfy all of these Democratic factions is much more difficult than reconciling the localism of the Jacksonian right with the free-marketism of the libertarian right.  For example, the neoliberals favor international trade agreements that secure the interests of big banks and multinational corporations — the very embodiments of evil for Brandeisian progressives of the small-is-beautiful school.…

The Result

To date it has manifestly been impossible for Democrats to devise an economic master plan that can unite neoliberal proponents of free trade and global financial deregulation, labor liberal champions of employer-based pensions, social democrats in favor of expanded social insurance, Brandeisian “locavores” and suburb-hating Greens behind a single, agreed-upon economic plan, comparable to the economic strategy that unites libertarians and populists on the right in their campaign to carve up the federal government among them. Politics, like nature, abhors a vacuum. If one party can agree on a consistent economic plan and its rival can’t, it is pretty clear which side will set the terms of debate.

Salon

GOP’s noxious, misguided edge: Why Dems need a coherent economic plan
Michael Lind | author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation

Steve Randy Waldman — There’s nothing smart in surrendering bargaining power for policy details

While we are taking lessons from the ugly compromises FDR accepted in order to get Social Security passed, we might also consider other events. FDR, you probably don’t recall because it has oddly been erased from conversational history, pursued almost as an idée fixe a cap on incomes of $25,000 (call it $360K in today’s money). The idea was as divisive then as it would be today, and despite dogged efforts, the proposal did not succeed. But, as Sam Pizzigati reminds us.…

You always want to start negotiating from the strongest position. Count on counter-parties to do so.

Interfluidity
There’s nothing smart in surrendering bargaining power for policy details
Steve Randy Waldman

Patrick Iber and Mike Konczal — Karl Polanyi for President

This is making a splash. Polanyi, like Minsky, may be getting a second life. They were not well known in their time but both are being resurrected as prophets now.

Should health care and education be rights, or products that those with enough money can purchase in markets? About seventy-five years ago, in response to the Great Depression, Franklin D. Roosevelt offered, through the programs of the New Deal, an expanded definition of freedom founded on economic security—immortalized as “freedom from want” in his famous speech of 1941. In our own time, severe inequality and the most serious economic crisis since the Great Depression have once again brought the issue of what should count as a right to the surface of political debate.

One candidate, Bernie Sanders, has argued explicitly that health care and education—two things that the New Deal mostly left alone—should be rights and therefore accessible to all. While public policy pundits fight over the specifics, they miss that Sanders, by discussing these things as rights instead of just policies, has changed the nature of the debate. This key distinction helps explain why tens of thousands have turned out to Sanders rallies across the country—not to mention the millions who have supported him online and at the polls—demonstrating enthusiasm for a politics that he explicitly identifies as “democratic socialism.” But what kind of socialism?

The vast majority of Sanders’s supporters are not Marxists clamoring for a dictatorship of the proletariat or the nationalization of industry. Most are, probably without knowing it, secret followers of Karl Polanyi. Polanyi’s classic, The Great Transformation, was published in 1944—the same year that FDR promised a “Second Bill of Rights” guaranteeing employment, housing, social security, medical care, and education to all Americans. Today, Polanyian arguments are once again in the air. Since his ideas seem to be everywhere but he is rarely mentioned, a (re-)introduction to his thinking, and its relevance to politics in 2016, is in order.

Dissent
Karl Polanyi for President
Patrick Iber, assistant professor of history at the University of Texas at El Passo, and Mike Konczal, fellow at the Roosevelt Institute and a contributing editor at Dissent

Known Stock Market Leverage Hits WTF High. Out the Other Side of Its Mouth, the Fed Warns About Hidden Leverage that Blew up Archegos — Wolf Richter

Margin is form of private debt. It is secured by the equity borrowed against as collateral, but margin calls can result in forced selling at scale. This is what happened at the start what became the Great Depression, when the tumbling of a house of cards in equities led to "knock on effects" that paralyzed the American and global economies.

The Great Purge was on and it lasted until John Maynard Keynes convinced FDR that the treatment was abandoning the gold standard and using the expanded fiscal space to address the issues. The rise of the welfare state as a result of the New Deal was aimed at preventing that from happening again by providing fiscal support beforehand, e.g., in the form of social security. 

It is often overlooked that the New Deal was not only social but also economic, based on Keynes's General Theory as a replacement for the then current neoclassical economics, "sound money," and the Treasury view. It was a new way of managing the economy based on institutional analysis instead of the economic "laws"of neoclassical economics that mimicked the laws of nature discovered by physics.

The problem now is that with the pandemic and looming climate change, uncertainty prevails. The result of a debt crisis could be a catalyst for a wider financial and economic crisis, as Michael Hudson has been warning. "History does not repeat itself but it rhymes" is attributed to Mark Twain without sourcing, but it may be a paraphrase of he did say.

Low interest rates are being blamed mostly, but, as Warren Mosler has pointed out this overlooks the regulatory power of the Fed as the financial authority, as well as subsidiary regulators, in managing private credit growth and exposure. Subsequently, MMT-oriented legal scholars like Rohan Grey have also written on this.

On the other hand, critics will point out that free market capitalism is about creative destruction aka purging the weak in order to keep the system healthy and growing. However, this also has disproportionate effects on the economic strata without deep pocket to weather the storm. This is where fiscal policy can count, allowing for restructuring capital while protecting the innocent.

The good news is that strong fiscal policy from the past administration and continuing in the present one is already supportive, so the situation today is quite different from the events leading to the Great Depression.

Naked Capitalism

Known Stock Market Leverage Hits WTF High. Out the Other Side of Its Mouth, the Fed Warns About Hidden Leverage that Blew up Archegos

Wolf Richter

John T. Harvey — The Green New Deal: Would It Turn Brown And Die For Lack Of Funding?

To reiterate, we didn’t need people’s money to fund the war effort. And in case you don’t believe me, take the word of someone who was there. Beardsley Ruml, Chair of the Federal Reserve Bank of New York, published a piece in American Affairs in 1946 entitled “Taxes for Revenue are Obsolete.”

Guess what he says!

John Harvey might also have pointed out that this how the US government self-funds the military now, and everything else it spends money on, including Social Security. FDR knew this at the time but tied SS to a tax to make it look like "insurance" rather than welfare in order to head off attacks on the programs as a "give-away" (transfer).

As Alan Greenspan testified to Congress, the only constraint on government spending is the availability of real resources in the present and future. There is no financial constraint regarding funding, although inflation can result from generating effective demand in excess of the ability to expand supply to meet it in a timely fashion.

Forbes — Pragmatic Economics
The Green New Deal: Would It Turn Brown And Die For Lack Of Funding?
John T. Harvey | Professor of Economics, Texas Christian University

Harold Meyerson — Can Bernie Sanders’s followers create a true leftist movement?

When Sanders says — as he does in every speech — that he’s seeking to build “a revolution,” that’s not just rhetoric. What Sanders understands in his bones is that every period of progressive reform in U.S. history has come as a result of massive street heat, of energized movements that push policymaking elites to the left. Abolitionists pressured the Lincoln Republicans toward a policy of emancipation. Militant workers and a socialist left, whose general strikes shut down several major cities in 1934, prompted Franklin D. Roosevelt’s Democrats to legalize collective bargaining and create Social Security in 1935. The civil rights movement enabled the Kennedy-Johnson Democrats to pass the landmark legislation of the ’60s. Progressive reform doesn’t happen absent a large and vibrant left.

A large and vibrant left, however, has been missing from the American political landscape since the ’60s. Precisely because Sanders has staked out the most distinctly leftist terrain of any major candidate in decades, and because so many Americans (young Americans in particular) have rallied to his cause, his campaign holds the promise of recreating that missing left.…

Both promise and problems. If he wins, much more promise and less problems than if he loses. FDR created a long-lived legacy. The McGovern left fizzled after his loss.

The Washington Post
Can Bernie Sanders’s followers create a true leftist movement?
Harold Meyerson

The Ecclesian Renaissance

They say that "ideas never really die, they just get recycled" This adage has become increasingly true of macroeconomics in the modern era.

It is quite depressing to see not just economists, but government policymakers from the 1930's and 40's describing all the same realities of a fiat currency issuing government that MMTers are pushing for today. There has been such a dark age of Macroeconomics since World War Two, with the current crop of economists having been brought up in the myopic age of neoliberalism.

For example, self described conservative, Mariner Eccles was the Chairman of the Federal Reserve during the New Deal/WW2 era and clearly understood many thingsabout modern economic systems that current policymakers and economist are hopelessly confounded by. Various MMTers have found and disseminated some of Eccles more important documents recently, which have painfully revealed how dumb modern macro has become.

Even before Keynes published his seminal "General Theory" in 1936,  Eccles clearly and repeatedly stated that federal taxes serve not to raise revenue, but as a way to control inflation. He openly acknowledged that post gold standard, the federal government's only spending constraint was inflation, not any arbitrary dollar amount or debt/gdp ratio. He strongly advocated for lower taxes and higher spending to boost the depressed economy, and even fought FDR over the funding Social Security with payroll taxes, arguing correctly that such a "tax and savings" process was economically meaningless and counter-stimulative (sound familiar?!?!)

Godammit. There's nothing new under the Red, White and Blue. Since the name of Lord Keynes has been dragged through the mud by the right wing propaganda machines, lets call ourselves "Ecclesians". Its new and has an almost biblical sound to it. Obviously Eccles was smart enough that they named the Fed Board of Governors building in Washington, DC after him. Plus Eccles has the benefit of being an American who worked in government, and was not, to my knowledge, an "effete homosexual" as Keynes was described by the always-classy Niall Ferguson a few months ago.

We need an Ecclesian Renaissance in macroecon policymaking.

Others Recognizing that the Debt-Ceiling Crisis is Phony

commentary by Roger Erickson:

The Grand Bargain: What It Is and Where It Comes From

"On August 2, 2011, wielding the pretext of a phony debt-ceiling crisis, the U.S. Congress approved legislation aimed at ... $900 billion in cuts to ... Social Security, Medicare and Medicaid ..."

Ok, these particular "others" may be union, liberal and socialist S.O.B.s ... but they're OUR union, liberal and socialist S.O.B.s! [With apologies to FDR.]

Brad DeLong — You Can Say What You Want About Modern American Libertarianism, But at Least It's an Ethos!

Whaaat?

Do Brad DeLong and Noah Smith really believe that there is no strong impetus toward fascism in the US?

What don't they understand about a corporate state — Citi calls it "plutonomy" — with the world's largest military, whose policy is permanent political, economic and military hegemony such that it will brook no rivals.

Don't they get that national "exceptionalism" is the soil from which fascism sprouts, racism is the fertilizer, and militarism is the manifestation.

Can't they see that the incorporation of a military positioned around the globe, clandestine services conducting total surveillance, and centralized (DHS) and militarized domestic security, and a deep state ensuring policy continuity is the essence of totalitarianism, especially when combined with suspension of civil rights and constitutional liberties due to endless war against manufactured enemies.

We report on this here at MNE just about every day. As far as the US is concerned social, political and economic liberalism are the pretext for employing realpolitik cynically to achieve global political, economic and military hegemony, as well as a compliant domestic population, and permanently maintain this through force as necessary.

Neoliberalism, neo-imperialism, and neo-colonialism are joined at the hip and they represent the rule of translational corporatism through the deep state that has captured the apparatus of the state. Liberal democracy is really plutocracy.

The rule of an ownership class though capture of a political apparatus — here the deep state, the Establishment that supplies the top level of the bureaucracy, and the selection of political candidates through campaign finance —is fascism.

Under such as system, elections are a periodic farce that changes almost nothing of importance to the ruling elite, which exercises total control in all matters regarding its interests.

The preferred method of control is indoctrination and interest politics to "divide and conquer" by exploiting issues that the electorate perceives as important but which the ruling elite does not. Contested social issues are used to distract from economic ones. The military issues are now largely out of the way since the abolition of the draft and the introduction of a professional military, clandestine operations, and the use of proxies.

Brad and Noah are very smart people and well read. The propaganda must be truly blinding if they don't see what's happening right under their eyes.

In fairness, where I think that problem lies is that Brad and Noah are talking about political positions that are actually being expressed. It can be argued that no faction in US politics is espousing "fascism" as either national authoritarianism or corporate statism. But that doesn't mean that neither of these isn't either a hidden agenda or else the consequence of policy that is being advocated under the guise of spreading liberal democracy.

I would argue that this has been a hidden agenda for decades, at least since the Reagan Administration but the deep state was launched in the Truman administration. (Remember that Harry Truman was selected instead of Henry Wallace as the Democratic vice-presidentail nominee.)

It also underlies the Republican advocacy of limited government, which is code for replacing the welfare state with a market state. A market state is implicitly a corporatocracy in a modern developed economy.

General and then President Eisenhower cautioned about the growing power of the military-industrial complex, recognizing as a military man the danger of an alliance between business and the military, with the revolving door linking business, the military, lobbying, and political office.

Grasping Reality
You Can Say What You Want About Modern American Libertarianism, But at Least It's an Ethos!Brad DeLong | Professor of Economics, UCAL Berkeley

Here's the other side of the story, from the right.

Jonah Goldberg, Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Change (2009) — publishers' description at Amazon:

“Fascists,” “Brownshirts,” “jackbooted stormtroopers”—such are the insults typically hurled at conservatives by their liberal opponents. Calling someone a fascist is the fastest way to shut them up, defining their views as beyond the political pale. But who are the real fascists in our midst?

Liberal Fascism offers a startling new perspective on the theories and practices that define fascist politics. Replacing conveniently manufactured myths with surprising and enlightening research, Jonah Goldberg reminds us that the original fascists were really on the left, and that liberals from Woodrow Wilson to FDR to Hillary Clinton have advocated policies and principles remarkably similar to those of Hitler's National Socialism and Mussolini's Fascism.

Contrary to what most people think, the Nazis were ardent socialists (hence the term “National socialism”). They believed in free health care and guaranteed jobs. They confiscated inherited wealth and spent vast sums on public education. They purged the church from public policy, promoted a new form of pagan spirituality, and inserted the authority of the state into every nook and cranny of daily life. The Nazis declared war on smoking, supported abortion, euthanasia, and gun control. They loathed the free market, provided generous pensions for the elderly, and maintained a strict racial quota system in their universities—where campus speech codes were all the rage. The Nazis led the world in organic farming and alternative medicine. Hitler was a strict vegetarian, and Himmler was an animal rights activist.

Do these striking parallels mean that today’s liberals are genocidal maniacs, intent on conquering the world and imposing a new racial order? Not at all. Yet it is hard to deny that modern progressivism and classical fascism shared the same intellectual roots. We often forget, for example, that Mussolini and Hitler had many admirers in the United States. W.E.B. Du Bois was inspired by Hitler's Germany, and Irving Berlin praised Mussolini in song. Many fascist tenets were espoused by American progressives like John Dewey and Woodrow Wilson, and FDR incorporated fascist policies in the New Deal.

Fascism was an international movement that appeared in different forms in different countries, depending on the vagaries of national culture and temperament. In Germany, fascism appeared as genocidal racist nationalism. In America, it took a “friendlier,” more liberal form. The modern heirs of this “friendly fascist” tradition include the New York Times, the Democratic Party, the Ivy League professoriate, and the liberals of Hollywood. The quintessential Liberal Fascist isn't an SS storm trooper; it is a female grade school teacher with an education degree from Brown or Swarthmore.

These assertions may sound strange to modern ears, but that is because we have forgotten what fascism is. In this angry, funny, smart, contentious book, Jonah Goldberg turns our preconceptions inside out and shows us the true meaning of Liberal Fascism.

See Michael Lind's rejoinder:

Why libertarians apologize for autocracy