The Beat Goes On

It’s probably best to forget 1967 – but maybe you had to be there. That was the year that Sonny and Cher were singing The Beat Goes On – one of the most irritating pop songs of all time. It was more of chant, actually, with something like lyrics – stuff happens all the time, and keeps happening. Indeed it does. So what? This was market-tested schlock, but it was a big hit, and Sonny Bono eventually ended up in Congress, as a sour Republican mad at everything. He never did get the sixties, and then he died in office – a skiing accident in 1998. Cher sang that song at his funeral, and those four words are on his tombstone. Visit his grave at Desert Memorial Park in Cathedral City out here, next door to Palm Springs, if you like irony. The beat didn’t go on.

The song, however, is a bit of an earworm – it’s easy to find yourself humming at as you follow the news, as this is the start of another cycle of folks announcing that they’re running for president. The beat goes on. Ted Cruz announced. He wants to repeal all of Obamacare. The wrong sorts of people are getting government help buying health insurance, and the new insurance standards offend all Christians. In fact, everything Obama has done offends all Christians, and Israel, so Cruz’s notion is to mobilize all the angry white social conservatives in America and get every last one of them to finally vote, to overwhelm the ungodly. They’d elect him. That’s his vision, but a few days later Rand Paul announced. Paul has a libertarian vision – but not as nutty as his father’s musings of course – that government is useless and should do next to nothing, here and abroad. If you elect him to run the government, he’ll get the government out of your hair. He’ll keep it from doing much of anything. That’s freedom. That’s his vision. Jeb Bush will announce soon, as the “good” Bush after two duds. Hillary Clinton announced. She just wants the job, because she wants the job. That’s a much as we know. When Scott Walker announces he’ll present his vision. Everyone knows that already – stupid regulations and greedy, whining American workers (who are lucky they get paid at all, and, by the way, labor unions are no more than terrorist organizations) are ruining things for the rest of us. His vision of America is one where businesses thrive. Elect him and they will.

Others will follow – Mike Huckabee and Bobby Jindal and perhaps Donald Trump, maybe – but this vision thing does present a problem for those who haven’t jumped in yet. What’s so special about them? What’s their unique vision? Others have grabbed all the good ones already.

That’s the problem that the big guy from New Jersey faced, but Colin Campbell reports that Christie solved it:

New Jersey Gov. Chris Christie (R) is hoping to jumpstart his expected presidential campaign by touching the so-called “third rail” of American politics: cutting Social Security benefits.

Christie, who is facing dismal 2016 poll numbers, made a major speech in New Hampshire on Tuesday about reforming what he repeatedly described as the “entitlement beast.” In his remarks, Christie embraced the potential unpopularity of the idea.

“I mean, there’s no political upside to this, right? Okay, so why would I come here and say all these things if they weren’t true. I’d love to come here and just give you a happy time. Make you feel good,” Christie said. “The only reason I’m here to say this is because it’s an unavoidable truth.”

According to The Wall Street Journal, Christie has a specific plan for cutting entitlement benefits. He wants to raise the retirement age to 69 and eliminate Social Security entirely for seniors making more than $200,000. Seniors making more than $80,000 would also see their benefits reduced.

That’s bold, or nuts:

Because seniors vote in such disproportionately high numbers, the proposal carries obvious political risks.

“I guess [Christie] needs to throw Hail Mary to get into the 2016 mix. But the ‘truth teller’ lane is a path to the political graveyard,” Politico reporter Ben White wrote on Twitter. “Find me people who really LOVE raising the retirement age. I’ll wait here.”

The counterargument:

Christie appears to think directly tackling Social Security and Medicare benefits will burnish his reputation for blunt talk. Christie is famous – or infamous, depending on whom you talk to – for confronting hecklers and other critics at town hall events, sometimes going as far as to tell them, “Sit down and shut up!” Indeed, Christie’s New Hampshire event at Saint Anselm College was billed as part of a “Tell it like it is” tour of the state.

“I will not pander. I will not flip-flop. And I’m not afraid to tell you the truth as I see it, whether you like it or not,” Christie promised in his speech. “We need to recognize that solving our biggest problems, like the growth of entitlements, can be done but only with real leadership that tells people the truth. We need to tell the truth to the very people that some of us aspire to lead.”

Okay, fine – he has his unique hook now – but the Los Angeles Times’ Michael Hiltzik thinks Christie just doesn’t understand a few things:

Christie’s fundamental premise is wrong. He says, “Washington is afraid to have an honest conversation about Social Security, Medicare and Medicaid with the people of our country.”

Maybe he just hasn’t been listening, but America has been having honest conversations about Social Security virtually since its enactment in 1935. We had an honest conversation in 1982, when the program was facing a genuine crisis. Under Ronald Reagan, the crisis was addressed and fixed.

We had an honest conversation in 2005, when George W. Bush proposed privatizing the program. That conversation showed that Bush’s plan would benefit no one but Wall Street investment brokers, and the outcome was that the plan was scrapped.

We’re having an honest conversation now, with lawmakers like Sen. Elizabeth Warren (D-Mass.), observing correctly that Social Security is the only retirement pillar that still works as designed, and in fact should be expanded. Warren and others have placed on the table details about how to do so, what it would cost, and how it would affect today’s beneficiaries and tomorrow’s.

There’s a conceptual issue here:

Christie imagines that Social Security is merely an anti-poverty insurance program, “there so our seniors, after a lifetime of hard work, don’t fall into poverty.”

He’s wrong. Social Security was designed from the start as a universal program for all workers, regardless of their income. It’s not welfare; it’s not designed to be means-tested. Christie wants to make it into a means-tested welfare program, but that’s the first step toward killing it.

Accordingly, Christie proposes “a modest means test that only affects those with non-Social Security income of over $80,000 per year, and phases out Social Security payments entirely for those that have $200,000 a year of other income.”

This is a truly ancient chestnut, right out of the playbook of hedge fund billionaire Pete Peterson, whose campaign to undermine Social Security I described in 2012.

As Dean Baker and Hye Jin Rho of the Center for Economic and Policy Research showed in 2011, the gain from such means-testing would be virtually invisible, amounting to less than a half of one percent of benefits.

If Christie really wanted to achieve savings by means-testing, he would have to start phasing out benefits for people with non-Social Security income of $20,000-$30,000. If he’s not acknowledging that, then it is he who isn’t having an “honest conversation” with the American people.

There’s more:

Christie also proposes raising the Social Security retirement age to 69 from 67 at the rate of two months per year, starting in 2022. He would raise the early retirement age to 64 from 62 on the same schedule.

This is another chestnut, and an especially cynical and damaging one. To begin with, every year’s increase in the normal retirement age is the equivalent of a 7% benefit cut.

As Kathy Ruffing and Paul Van de Water of the Center on Budget and Policy Priorities explain here, that’s because it increases the reduction in annual benefits charged to those who retire early, and reduces the bonus paid to those who defer taking their benefits past the normal age. Raising the retirement age will also prompt older workers to file for disability instead of retirement, which only places more strain on Social Security’s already strained disability program.

Moreover, this proposal overlooks demographic and socioeconomic differences in life expectancy. Put briefly, it will pose a disproportionate burden on black workers and especially on black males. Here are the figures: typical workers who have reached the age of 65 can expect to live to the age of 84. For black males, the figure is less than 81. For all whites, the life expectancy from birth is about 79 today. For black males, it’s less than 72.

If Christie doesn’t acknowledge this, he’s not having an “honest conversation” with the American people.

Other than that, it’s a fine idea, except for this:

He wants to tie Social Security cost-of-living increases to an inflation index known as the chained CPI; we’ve shown in the past that this isn’t a more “accurately” inflation index, as he claims – its only virtue is that it rises more slowly than the currently used index, so it’s a stealth benefit cut.

No voters are going to go for this, but perhaps that wasn’t the point. Jeb Bush has been sucking up all the cash from the big donors, and Rubio has grabbed some of that too. Christie wants to be president. He doesn’t need votes. He needs donors, as Salon’s Elias Isquith explains here:

Now that the Supreme Court has all but annihilated the regulation of campaign finance, U.S. politics – which was already quite plutocratic – is starting to operate according to the logic of oligarchy, not a democratic republic. Candidates of both parties have to spend an obscene amount of their time raising money for the next election; and the number of Americans who make up that bipartisan donor class is, relatively speaking in a nation of more than 300 million, vanishingly small. As you’d expect, one of the consequences is that, unless you’re a member of the 1 percent, most politicians don’t care what you think.

So rather than jockeying over which politician is most likely to make good on their campaign’s promises, candidates in the primaries spend their time trying to persuade donors that they’ve got the best chance of winning the general election. “Someone is going to do what you want them to do,” the candidates say to their party’s donors, more or less, “so here’s the reason that someone should be me!”

This is why every Republican candidate wants to cut social insurance programs, despite the fact that even Tea Party voters would rather they didn’t – because that’s near the top of the 1 percent’s to-do list. The will of the people still calls the shots; it’s just that “the people” are few and far between.

Isquith makes it simple:

Why, for example, would Chris Christie hope to revive his flat-lining presidential campaign by making big promises to slash Medicare and Social Security? Not because that’s the issue GOP primary voters care the most about, I’d argue, but because Jeb Bush, the presumed standard-bearer of the Republican donor class, has failed to convince these moneymen that he can overcome his surname and defeat Hillary Clinton. It’s likely that Christie’s read the same reports of donors giving Rubio a second look; he probably figures that his tough talk about “entitlement reform” may earn him a second appraisal, too.

But the clearest sign that White House campaigns are not about voters (at least during the primary phase) is who most candidates choose to tell the big news first – not the press, not the voters, not even the men and women who occupy influential positions within the infrastructure of the party. No, more often than not, it’s the would-be donors who get a heads up before anyone else.

Chris Christie is doing exactly what he needs to do to become president, in an oligarchy, which is what we have, given this:

The House is gearing up to vote Thursday on repealing the estate tax, an issue that has energized the base in both parties – and that Democrats and Republicans see as a political winner.

On the one side there’s this:

Republicans are making the vote the centerpiece of their agenda during a week when millions of taxpayers face the annual IRS filing deadline and anti-tax groups regularly hold protests. For the GOP, repealing the estate tax – or the “death tax,” as they’ve long called it – is more than just a proposal favored by their supporters in the business community.

Republican leaders insist it’s patently unfair that people pay taxes as they accumulate wealth through the years, only for their heirs to pay additional taxes on that wealth after they die.

House Majority Whip Steve Scalise (R-La.) said Tuesday that it is “morally wrong” for a family’s toughest decision after a death to be figuring out the next steps for their business. “That’s not supposed to be something people have to deal with when they’re grieving for the loss of a loved one,” he told reporters.

Republicans believe that voters agree with them on that point, even as polls have long suggested that most people believe the wealthiest Americans don’t pay enough in taxes.

On the other side there’s this:

President Obama won his second term in 2012 after explicitly campaigning for higher taxes on the wealthy. And Democrats say they’re more than happy to have a debate over a repeal proposal that would add $270 billion to the federal debt over a decade, according to the Congressional Budget Office, while affecting only a small fraction of estates in the U.S.

“I guess when it comes to helping the wealthiest people in the country, it’s never enough,” Sen. Debbie Stabenow (D-Mich.) said Tuesday with a laugh.

This is hot, even if this estate tax proposal won’t make it through the Senate – there aren’t quite enough Republican votes for that – and if it did, there’d be presidential veto. But that doesn’t matter:

The messaging from the two parties in recent weeks suggests that both sides could continue to hammer the issue ahead of a 2016 campaign. Under current law, the Joint Committee on Taxation estimates that 5,400 estates will have to deal with the tax over the next several years, out of the well over 2 million deaths that occur annually.

That’s because individuals with estates valued at less than $5.43 million this year, and married couples with estates worth less than $10.86 million, are exempt. The 2013 “fiscal cliff” deal set the current parameters, which also include a 40 percent rate and linking the exemption parameters to inflation.

Those 5,400 households out of more than two million shouldn’t get special treatment, so there’s this:

Obama and other senior Democrats want to expand the tax, hitting more estates with a higher top rate. White House officials have gone out of their way this week to point out that the president’s proposals to give tax breaks for child care and education and to two-earner families would help far more people than the GOP’s estate tax repeal.

On Tuesday, the administration threatened to veto the House measure, calling it even more extreme than a temporary repeal of the estate tax passed early in George W. Bush’s administration. The White House also noted that the House GOP’s recently passed budget relied on revenues from the estate tax, and that the Republican proposal would also save heirs from capital gains taxes on their relative’s assets.

Obama himself got into the action this month, calling out the estate tax repeal proposal in Senate Majority Leader Mitch McConnell’s back yard of Louisville, Ky.

“That’s fewer than 50 people here in Kentucky who would on average get a couple million dollars in tax breaks,” Obama said. “For that amount of money, we can provide thousands of people the kind of training they need.”

The other side thinks they have a better argument:

Republicans like Rep. Kevin Brady (Texas) and Sen. John Thune (S.D.), the sponsors of the repeal proposals, say they don’t believe Democrats will be as successful with that sort of rhetoric this time around. Brady argued Tuesday that the wealthiest of the wealthy are often able to avoid paying the tax through the use of complicated estate planning.

Republicans also maintain that many of the heirs that get hit by the estate tax own family farms, ranches or businesses that might sit on valuable land but find it difficult to come up with the cash to pay the estate tax. That’s especially the case, Brady said, for minority- and women-owned businesses.

“This is an attack on success,” Brady said.

This is also an oligarchy, as the Washington Post’s Dana Milbank sees it:

A tax cut costing the treasury $269 billion over a decade that would exclusively benefit individuals with wealth of more than $5.4 million and couples with wealth of more than $10.9 million. That’s a tax break for only the 5,500 wealthiest households in the country each year, according to the Joint Committee on Taxation. Of those, the 318 wealthiest estates each year – those worth $50 million or more – would see an average windfall of $20 million each, according to the Center on Budget and Policy Priorities.

And this at a time when the gap between rich and poor is already worse than it has been since the Great Depression? Never in the history of plutocracy has so much been given away to so few who need it so little.

Here again, voters have been left out:

This is the ultimate perversion of the tea party movement, which began as a populist revolt in 2009 but has since been hijacked by wealthy and corporate interests. The estate tax has been part of American law in some form since 1797, according to the advocacy group Americans for Tax Fairness, a shield against the sort of permanent aristocracy our founders fought to rid themselves of.

It had long been a conservative ideal, and the essence of the American Dream, to believe that everybody should have an equal shot at success. But in their current bid to end the estate tax, Republicans could create a permanent-elite of trust-fund babies.

That would be the Republican donor class, but it wasn’t always this way:

The estate tax was a meaningful check on a permanent aristocracy as recently as 2001, when there were taxes on the portion of estates above $675,000; even then there were plenty of ways for the rich to shelter money for their heirs. As the son of a schoolteacher and a cabinetmaker, I’d like to see the estate tax exemptions lowered – so that taxes encourage enterprise and entrepreneurship while keeping to a minimum the number of Americans born who will never have to work a day in their lives. The current exemption of $5.4 million (the current estate tax has an effective rate averaging under seventeen percent, according to the Urban-Brookings Tax Policy Center) does little to prevent a permanent aristocracy from growing – and abolishing it entirely turns democracy into kleptocracy.

And Milbank smells bullshit here:

House Ways and Means Committee Chairman Paul Ryan (R-Wis.), appearing late Tuesday before the Rules Committee, claimed that the estate tax is “absolutely devastating” to family farms, and he claimed the repeal would remove “an additional layer of taxation” from assets that had already been taxed.

Double taxation? Americans for Tax Fairness, citing Federal Reserve data, notes that 55 percent of the value of estates worth more than $100 million comprises unrealized capital gains that have never been taxed.

Hurting family farmers and small businesses? In the entire country, only 120 small businesses and farms (100 of them large farms) were hit by the estate tax in 2013. And for that tiny number affected, there are all sorts of provisions already in place to soften the blow: low valuation rules, delayed tax payments and other breaks and discounts.

Something doesn’t add up:

GOP leaders such as Senate Majority Leader Mitch McConnell (Ky.) and House Speaker John Boehner (Ohio) have begun to recognize that the vast gap between rich and poor is detrimental – and to blame the problem on President Obama. Their solution, so far, has been to propose cuts of hundreds of billions of dollars from food stamps, Pell grants, Medicaid and other programs for those without means – and, on Tax Day, to give $269 billion to the few who already have the most.

There you have it. As usual, a bunch of Republicans are running for president, president of the oligarchy they’re working, in Washington, to protect. Hillary Clinton is running for president of the democracy, such as it is, but she says she needs to come up with two and a half billion dollars this time, to run effectively against the last Republican hopeful left standing next summer, and that money has to come from somewhere. There are those she will owe, and Chris Christie just said “screw you” to his potential voters – he needs that cash from the wealthy few, who have different ideas about what the government should do. He’ll worry about the voters later. They can be bamboozled easily enough. And the beat goes on. Damn, that’s an awful song.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
This entry was posted in American Oligarchy, Chris Christie, Estate Tax, Social Security and tagged , , , , , , , , , . Bookmark the permalink.

One Response to The Beat Goes On

  1. Rick says:

    Just to clarify, on the off chance that it needs it, but people shouldn’t conflate “oligarchy” and “plutocracy”, as we so often do (although not necessarily in this column):

    oligarchy |ˈäliˌgärkē; ˈōli-|
    noun ( pl. -chies)
    a small group of people having control of a country, organization, or institution

    plutocracy |ploōˈtäkrəsē|
    noun ( pl. -cies)
    government by the wealthy.

    Something can be both an “oligarchy” and a “plutocracy” — government by the few who happen to be wealthy — or it can be one without being the other.

    Also, regarding this:

    Hillary Clinton is running for president of the democracy, such as it is, but she says she needs to come up with two and a half billion dollars this time, to run effectively against the last Republican hopeful left standing next summer, and that money has to come from somewhere.

    Not necessarily, at least if we can believe what we learned in your column the other day, in which someone (I forget who) explained that money in presidential campaigns really only matters in the primary — of which Hillary Clinton will likely have next to none? — and not in the general election, since by the time a candidate gets that far, everybody already knows what the candidate stands for, and no amount of money will change it.

    As for Chris Christie’s message to potential big donors that he’s willing to pander to them instead of to voters, he might have been better off emailing this directly to them, rather than announcing it in public, since I would think donors wouldn’t be crazy about the idea of wasting big money on somebody who voters will probably eventually shun at the polls because of their unpopular stance on issues.

    In fact, I’m pretty sure Sheldon Adelson’s got buyer’s-remorse for that bet he placed on Newt Gingrich, the value of which turned out to be nothing more than that of a social experiment, an expensive lesson that all his fellow oligarchic plutocrats can learn from.

    Rick

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