Does Raising Taxes On The Rich And On Corporations Hurt the Economy?

Always a big mistake to let fascists set the rules of the field. When will President Obama ever learn that? As Chris Cillizza pointed out in the Washington Post earlier, Obama's "grand bargain" with GOP fascists means defeat for the American people and defeat for his own political party.

The news that President Obama is privately urging congressional Democrats to consider major changes to Social Security and Medicare as part of a so-called "grand bargain" on the federal debt has considerable political implications.

For months Democratic strategists have pointed to the House vote in favor of a budget proposal put forward by Wisconsin Rep. Paul Ryan that would transform Medicare into a voucher program as their silver bullet heading into the 2012 congressional election.

"Our three most important issues: Medicare, Medicare and Medicare," House Minority Leader Nancy Pelosi (Calif.) said recently when asked how her party could reclaim the majority in 2012.

So, might Obama's decision to put Medicare on the table rob his party of a prized political issue heading into the next election? There's an active debate within the party on that very question.

Democratic strategists are cautiously optimistic that such a scenario won't come to pass, insisting that making changes to strengthen Medicare-- if that comes to pass-- is a very different thing from what they describe as a drastic overhaul of the program being proposed by Ryan.

...The thinking among [progressives-- as opposed to Democratic Party careerists and hacks] is that voters won’t delve deeply enough into the specifics of the Medicare proposals to differentiate between what the Obama White House wants and what Ryan pushed.

"A grand bargain on Medicare will let Republicans who support the deal off the hook on their Ryan budget vote," said one senior Democratic operative granted anonymity to speak candidly about strategy. "If attacked on the Ryan budget they can easily counter they voted for the same thing Obama supported. Poof."

No matter where you come down on this particular debate, it does highlight an important political reality: what's good for the president is not always what's good for his party in the House and Senate.

That's why Obama is thick as thieves with the likes of Wall Street slime like Tiny Tim Geithner and Rahm Emanuel-- and why he doesn't give a hoot what people like Paul Krugman or Van Jones (see the video above) have to say. Today we've heard some of the initial reactions to Obama's "grand bargain" strategy. Corporate whores like Third Way, of course, are tickled pink. Bernie Sanders, Raúl Grijalva, Keith Ellison, AARP and the members of MoveOn are fuming. Even Nancy Pelosi says Democrats will not support Obama on this crazy jag right. Rhode Island Senator Sheldon Whitehouse adds, "It's time for a shared sacrifice. We need to unequivocally declare that benefit cuts to Social Security and Medicare are off the table. We cannot solve the deficit crisis on the back of our seniors. We need all Americans to pay their fair share."

And two dozen House progressives-- Raúl Grijalva, Keith Ellison, Mike Capuano, Judy Chu, Hansen Clarke, John Conyers, Danny Davis, Sam Farr, Bob Filner, Marcia Fudge, Luis Gutierrez, Mike Honda, Sheila Jackson Lee, Hank Johnson, John Lewis, Jim McGovern, Jerry Nadler, Grace Napolitano, Chellie Pingree, Ed Pastor, Pete Stark, Bennie Thompson, Maxine Waters and Lynn Woolsey-- sent Obama a letter laying out their demands that any final budget deal generate significant revenue and avoid cuts to Social Security, Medicare or Medicaid.

First, any cuts to Social Security, Medicare and Medicaid should be taken off the table. The individuals depending on these three programs deserve well-conceived improvements, not deep, ideologically driven cuts with harmful consequences... Second, revenue increases must be a meaningful part of any agreement. Tax breaks benefiting the very richest Americans should be eliminated as part of this deal... These points are essential for any deal on the debt ceiling, but more work to rebuild the economy will remain after these negotiations have concluded... We stand ready to work with the Administration responsibly to increase the debt ceiling. The middle class has experienced enough pain during the last three years. Republicans are willing to inflict even more. We will not join them.

Needless to say, California Blue Dog Mike Thompson would never sign on to a letter like this. And it now looks like redistricting will put him down into Lynn Woolsey's old district (Marin and Sonoma), where he'll be facing progressive champion Norman Solomon. We asked Norman, who has been endorsed by Blue America, where he stands on this debate between progressives and conservatives. Like all the Blue America candidates, he would certainly have signed on to the letter to Obama, plans to join the Progressive Caucus and told us:

Contrary to myth, Social Security is solvent-- and many of the proposals to fix what isn't broken would actually 'save' Social Security by doing irreversible damage. For instance, the cost-of-living adjustment for Social Security is already too low, yet now we're seeing a big push to cut COLA-- which would have devastating effects, especially harming women and low-income families. Let's keep in mind that about one-third of Social Security recipients depend on it for more than 90 percent of their income. The Obama administration should be protecting seniors and the most vulnerable among us, not using them as pawns in budget negotiations. The Republicans in Congress are out to destroy Social Security and Medicare-- while many Democrats in Washington, including the president, are putting those essential programs on the chopping block. This is outrageous. I will fight to protect Social Security and Medicare to my last breath.

Nick Ruiz, the Blue America-backed candidate in central Florida sees this much the way Norman does and thinks Democratic candidates need to speak out and speak out loudly.

"America's liberalism should never be one of fear and denial. Ours should be a liberalism of lions. There is an old wisdom that to lead one must often follow. But Barack Obama is following the wrong people. The citizen-voters that put him in office, did so because they believed he symbolized a change in the status quo, an opportunity to expand upon the great American event that is the New Deal.

It cannot be the case that the progressive citizens of America must be made to pass through the filter of the President. It must be the other way around. We embody what the majority of Americans desire for their country - and literally every survey confirms it.

Democracy requires not the mechanical reproduction of the status quo. It requires that truth challenges falsity. It requires that we challenge any leader that betrays our principles. Obama has not yet earned the Democratic nomination for 2012. Until he does he should be challenged. Who will rise to the occasion on behalf of the majority of Americans?"

I also heard from another Blue America-backed House candidate, Ed Potosnak (D-NJ), a very loyal Democrat who was astounded by Obama's connivance with the Republicans on the entirely manufactured debt ceiling "crisis." He told me this morning, sadly I think, that "our duly elected officials are turning their backs on one of our most vulnerable groups, our seniors, when what seniors really need is someone to fight for them. I am extremely disappointed the President has chosen to target struggling seniors in an attempt to reduce the deficit. Trillions of dollars and countless lives have been lost in recent unfunded wars. When I am in Congress I will fight against cuts to Social Security, Medicare, or Medicaid and will work to significantly reduce military spending (currently 63% of our nation's discretionary spending)."

You can support Norman's, Ed's and Nick's campaigns here, on a page dedicated to candidates who put American families first, not narrow partisan interests, let alone the demands from Wall Street and Big Business which drive most national politics. John Laesch, a union carpenter who hastened the political demise of then-Speaker Denny Hastert, hasn't declared his candidacy yet-- but he's likely to. When he does, Blue America will endorse him... the same day. I always turn to him for advise on matters of importance to working families. This morning he voiced profound disappointment in President Obama:

It is reprehensible that Republicans and President Obama want to cut Social Security and Medicare benefits on those who have played by the rules and paid into the system their whole lives. “Cutting” or even “saving” Social Security does nothing for senior citizens who are facing escalating costs for food, prescriptions and rent. If we want to get serious about protecting the most successful safety net program in American history, one thing we absolutely need to do is lift the cap on high income earners who make more than $106,800 per year.

The decision by Republicans and President Obama to shrink benefits from senior citizens who are already struggling on fixed incomes signals that a page has been turned in the painful saga known as the war on the middle class. During this recession-turning-depression, working people are taking it on the chin again, and again, and again while those who created the economic crisis are making out like bandits. It is wrong. It is un-American. It needs to be stopped.

That brings us to two final items: Bernie Sander's inspiring speech yesterday on the Senate floor (below) and Paul Krugman's late-in-the-day column for the Times. He thinks Democrats need to be very worried about Obama's sell-out to the Republicans and their-- and, let's be honest, his-- Big Business financiers.

On Thursday, President Obama met with Republicans to discuss a debt deal. We don’t know exactly what was proposed, but news reports before the meeting suggested that Mr. Obama is offering huge spending cuts, possibly including cuts to Social Security and an end to Medicare’s status as a program available in full to all Americans, regardless of income.

...It’s getting harder and harder to trust Mr. Obama’s motives in the budget fight, given the way his economic rhetoric has veered to the right. In fact, if all you did was listen to his speeches, you might conclude that he basically shares the G.O.P.’s diagnosis of what ails our economy and what should be done to fix it. And maybe that’s not a false impression; maybe it’s the simple truth.

One striking example of this rightward shift came in last weekend’s presidential address, in which Mr. Obama had this to say about the economics of the budget: “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”

That’s three of the right’s favorite economic fallacies in just two sentences. No, the government shouldn’t budget the way families do; on the contrary, trying to balance the budget in times of economic distress is a recipe for deepening the slump. Spending cuts right now wouldn’t “put the economy on sounder footing.” They would reduce growth and raise unemployment. And last but not least, businesses aren’t holding back because they lack confidence in government policies; they’re holding back because they don’t have enough customers-- a problem that would be made worse, not better, by short-term spending cuts.

In his brief remarks after Thursday’s meeting, by the way, Mr. Obama seemed to reiterate the Herbert Hooveresque view that deficit reduction is what we need to “grow the economy.”

People have asked me why the president’s economic advisers aren’t telling him not to believe in the confidence fairy-- that is, not to believe the assertion, popular on the right but overwhelmingly refuted by the evidence, that slashing spending in the face of a depressed economy will magically create jobs. My answer is, what economic advisers? Almost all the high-profile economists who joined the Obama administration early on have either left or are leaving.

Nor have they been replaced. As the Wall Street Journal recently noted, there are a “stunning” number of vacancies in important economic posts. So who’s defining the administration’s economic views?

Some of what we’re hearing is presumably coming from the political team, whose members seem to believe that a move toward Republican positions, reminiscent of former President Bill Clinton’s “triangulation” in the 1990s, is the key to Mr. Obama’s re-election. And Mr. Clinton did, indeed, rebound from a big defeat in the 1994 midterms to win big two years later. But some of us think that the rebound had less to do with his rhetorical move to the center than with the five million jobs the economy added over those two years-- an achievement not likely to be repeated this time, especially not in the face of harsh spending cuts.

Anyway, I don’t believe that it’s all political calculation. Watching Mr. Obama and listening to his recent statements, it’s hard not to get the impression that he is now turning for advice to people who really believe that the deficit, not unemployment, is the top issue facing America right now, and who also believe that the great bulk of deficit reduction should come from spending cuts. It’s worth noting that even Republicans weren’t suggesting cuts to Social Security; this is something Mr. Obama and those he listens to apparently want for its own sake.

Which raises the big question: If a debt deal does emerge, and it overwhelmingly reflects conservative priorities and ideology, should Democrats in Congress vote for it?

Mr. Obama’s people will no doubt argue that their fellow party members should trust him, that whatever deal emerges was the best he could get. But it’s hard to see why a president who has gone out of his way to echo Republican rhetoric and endorse false conservative views deserves that kind of trust.

Some claim that this whole dust-up is just more Obaman 18 dimensional chess and that he knows the Republicans will never sign off on their end of the "grand design" (tax increases on millionaires)... but, on a brighter note, let's take our fate into our own hands, leave Obama to his own, and help elect actual progressives who will fight for us not for Wall Street. More like this guy: