U.S. Austerity Measures: Putting the Cart before the Horse

After discovering the first attempt at an on-location promotion of austerity measures in the U.S., one very important element seems to be missing from the conversation. Liability.

Robert Bixby jerks the microphone from Alison McLeod.
McLeod began speaking after the meeting and QnA session
was finished.  The microphone probably belongs to the house
or Giffords' staff.

Arizona's 8th Congressional District is experiencing a temporary power vacuum since the shooting of Gabrielle Giffords last January. Regardless, guests David Walker, CEO of the Comeback America Initiative and Robert Bixby, Director of the Concord Coalition, were comfortable visiting this remote, ambiguous neck of the woods to begin the promotional push for austerity measures aimed at reducing deficit spending and the national debt. One question noticeably absent from this conversation is, "why are they tapping the public citizenry to pay the bill?"

Criminal Recklessness

After the persistent, behind-the-scenes, unceremonious gutting of the U.S. Treasury these last thirty years, there seems to be an assumption that U.S. taxpayers are going to pay for the party. U.S. taxpayers had nothing to do with the illegal wars in Central America, the Savings and Loan bailouts, NAFTA, GATT, the missing trillions from the Pentagon, 9/11, the oil spills, the trillions of dollars for the Middle East adventures and the bank bailouts to cover the phony housing bubble.

Lame Duck Power Structure

The Walker/Bixby team took great pains to describe how this current bankrupt state diminishes the amount of available capital, requires interest payments, reduces flexible spending for new needs and increases the number of fiscal crises. A fairly mild warning compared to seasoned economists predicting a worldwide economic train wreck. Regardless, that's not our problem. It's a situation that must be dealt with by those who have screwed up the country not by the people who were dragged to this point kicking and screaming.

Going Through the Motions

Perhaps the players like Walter and Bixby don't believe they need a consensus or public support. After all, when you look at the list of targets put together in the 256 page Congressional Budget Office Report, you find every last reference and detail thick with this inherent assumption of citizen sacrifice. Our last article posted an account by SPNOW member Lee Stanfield of the heavy handed tactics designed to build a phony consensus. Stanfield teamed up with others in Tucson to develop a handy worksheet entitled: "COUNTERTACTICS FOR ANTI-ACTIVIST PSEUDO PUBLIC MEETINGS".

Giffords' staff worked very hard in conjunction with the suits from out of town for this illusion of austerity enthusiasm. These heavy handed tactics, however, became so painfully obvious to the disgruntled crowd that Giffords' staff didn't bother picking up or recording the responses from each table.

A Restaurant Analogy by Mike Rivero

Probably the most succinct analogy illustrating why the the people should not be charged with feeding our currently bankrupt system is the restaurant analogy from my favorite web author, Mike Rivero of whatreallyhappened.com.  Here is a portion:

"If the proprietor of the restaurant has miscalculated the cost of meeting his agreed-to obligation to the customer [a hamburger for $10.00], is the customer obligated to cover the shortfall? No. The proprietor of the restaurant is responsible for the error, and if he cannot meet his agreed-to obligations for the agreed-upon price, he should declare bankruptcy, go out of business, and make way for a new restaurant with better fiscal sense.

Simple common sense.

Let us imagine for a moment that you live in a nation, and you request some benefits. The government tells you the cost is $1000 for the benefits, and you pay $1000 in taxes for the benefits. You get your benefits. No problems. Well worth the money you paid for them. No complaints.

Then when you have your benefits, the government shows up at your door, apologizes profusely, explains that it underestimated the real cost of providing you with the benefits it agreed to provide and hands you a bill for an additional sum it had to borrow in order to provide the services, plus interest since the start of your use of the benefits. Do you pay it? Of course not. You, the citizen, entered into a verbal contract with the government to provide you with your benefits at the taxes agreed to by all parties prior to the transaction."

The following list below from that Congressional Budget Office Report may be the blueprint for what austerity measures in the United States will actually look like.  As with the WTO Summits from Seattle and Georgia, expect the shipment of stout, less than empathetic police from remote cities flush with overtime pay, coated in Kevlar and wielding consensus-building billy clubs for your curious noggins.

J.T. Waldron




Reducing the Deficit:  Spending and Revenue Options
Apendix D:  Options by Major Program or Category

Business and Finance

Discretionary Spending, Option 18 Increase Fees for Use of the Inland Waterway System

Discretionary Spending, Option 19 Eliminate the International Trade Administration’s Trade Promotion Activities or Charge the Beneficiaries 

Revenues, Option 18 Increase Corporate Income Tax Rates by 1 Percentage Point

Revenues, Option 19 Set the Corporate Income Tax Rate at 35 Percent for All Corporations

Revenues, Option 20 Repeal the “LIFO” and “Lower of Cost or Market” Inventory

Accounting Methods

Revenues, Option 21 End the Expensing of Exploration and Development Costs for

Extractive Industries

Revenues, Option 22 Extend the Period for Depreciating the Cost of Certain Investments

Revenues, Option 23 Repeal the Deduction for Domestic Production Activities

Revenues, Option 24 Eliminate the Source-Rules Exception for Exports

Revenues, Option 25 Tax the Worldwide Income of U.S. Corporations As It Is Earned

Revenues, Option 26 Exempt Active Foreign Dividends from U.S. Taxation and Change the Tax Treatment of Overhead Expenses

Revenues, Option 33 Impose a Fee on Large Financial Institutions

Education

Mandatory Spending, Option 10 Eliminate Subsidized Loans to Graduate Students

Mandatory Spending, Option 11 Change the Interest Rate Structure for Student Loans

Discretionary Spending, Option 27 Eliminate Certain Grant Programs for Elementary and Secondary Education

Discretionary Spending, Option 28 Restrict Pell Grants to the Neediest Students

Revenues, Option 15 Eliminate Certain Tax Preferences for Education Expenses

Energy

Mandatory Spending, Option 2 Transfer the Tennessee Valley Authority’s Electric Utility Functions and Associated Assets and Liabilities

Mandatory Spending, Option 3 Reduce the Size of the Strategic Petroleum Reserve

Discretionary Spending, Option 15 Eliminate the Department of Energy’s Grants to States for Energy Conservation and Weatherization

Discretionary Spending, Option 16 Reduce Department of Energy Funding for Energy Technology Development

Revenues, Option 21 End the Expensing of Exploration and Development Costs for

Extractive Industries

Health

Mandatory Spending, Option 12 Add a “Public Plan” to the Health Insurance Exchanges

Mandatory Spending, Option 13 Limit Medical Malpractice Torts

Mandatory Spending, Option 14 Adopt a Voucher Plan and Slow the Growth of Federal Contributions for the Federal Employees Health Benefits Program

Mandatory Spending, Option 15 Convert the Federal Share of Medicaid’s Payments for Long-Term Care Services into a Block Grant

Mandatory Spending, Option 16 Reduce the Floor on Federal Matching Rates for Medicaid Services

Mandatory Spending, Option 17 Consolidate and Reduce Federal Payments for Graduate Medical Education Costs at Teaching Hospitals

Mandatory Spending, Option 18 Raise the Age of Eligibility for Medicare to 67

Mandatory Spending, Option 19 Impose Cost Sharing for the First 20 Days of a Stay in a Skilled Nursing Facility Under Medicare

Mandatory Spending, Option 20 Require a Copayment for Home Health Episodes Covered by

Medicare

Mandatory Spending, Option 21 Reduce Medicare Costs by Changing the Cost-Sharing Structures for Medicare and Medigap Insurance

Mandatory Spending, Option 22 Increase the Basic Premium for Medicare Part B to 35 Percent of the Program’s Costs

Mandatory Spending, Option 23 Reduce Medicare’s Payment Rates Across the Board in High-Spending Areas

Mandatory Spending, Option 24 Eliminate the Critical Access Hospital, Medicare-Dependent

Hospital, and Sole Community Hospital Programs in Medicare

Mandatory Spending, Option 25 Require Manufacturers to Pay a Minimum Rebate on Drugs Covered Under Medicare Part D for Low-Income Beneficiaries

Discretionary Spending, Option 32 Finance the Food Safety and Inspection Service Through Fees

Discretionary Spending, Option 33 Reduce or Constrain Funding for the National Institutes of Health

Revenues, Option 29 Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon

Revenues, Option 30 Accelerate and Modify the Excise Tax on High-Cost Health Care

Coverage

Revenues, Option 31 Increase the Payroll Tax Rate for Medicare Hospital Insurance by 1

Percentage Point

Revenues, Option 32 Repeal the Individual Health Insurance Mandate

Housing

Mandatory Spending, Option 8 Lower the Loan Limits on Mortgages Guaranteed by Fannie Mae and Freddie Mac

Mandatory Spending, Option 9 Increase Guarantee Fees Charged by Fannie Mae and Freddie Mac

Discretionary Spending, Option 34 Increase Payments by Tenants in Federally Assisted Housing

Revenues, Option 4 Gradually Eliminate the Mortgage Interest Deduction

Income Security

Mandatory Spending, Option 26 Base Cost-of-Living Adjustments for Federal Civilian and Military Pensions and Veterans’ Benefits on an Alternative Measure of Inflation

Discretionary Spending, Option 34 Increase Payments by Tenants in Federally Assisted Housing

Revenues, Option 8 Include Employer-Paid Premiums for Income Replacement Insurance

in Employees’ Taxable Income

Indexation Factors

Mandatory Spending, Option 26 Base Cost-of-Living Adjustments for Federal Civilian and Military Pensions and Veterans’ Benefits on an Alternative Measure of Inflation

Mandatory Spending, Option 27 Base Social Security Cost-of-Living Adjustments on an Alternative Measure of Inflation

Revenues, Option 3 Use an Alternative Measure of Inflation to Index Some Parameters of

the Tax Code

Medicaid

Mandatory Spending, Option 15 Convert the Federal Share of Medicaid’s Payments for Long-Term Care Services into a Block Grant

Mandatory Spending, Option 16 Reduce the Floor on Federal Matching Rates for Medicaid Services

Mandatory Spending, Option 17 Consolidate and Reduce Federal Payments for Graduate Medical Education Costs at Teaching Hospitals

Medicare

Mandatory Spending, Option 17 Consolidate and Reduce Federal Payments for Graduate Medical Education Costs at Teaching Hospitals

Mandatory Spending, Option 18 Raise the Age of Eligibility for Medicare to 67

Mandatory Spending, Option 19 Impose Cost Sharing for the First 20 Days of a Stay in a Skilled Nursing Facility Under Medicare

Mandatory Spending, Option 20 Require a Copayment for Home Health Episodes Covered by

Medicare

Mandatory Spending, Option 21 Reduce Medicare Costs by Changing the Cost-Sharing Structures for Medicare and Medigap Insurance

Mandatory Spending, Option 22 Increase the Basic Premium for Medicare Part B to 35 Percent of the Program’s Costs

Mandatory Spending, Option 23 Reduce Medicare’s Payment Rates Across the Board in High-Spending Areas

Mandatory Spending, Option 24 Eliminate the Critical Access Hospital, Medicare-Dependent

Hospital, and Sole Community Hospital Programs in Medicare

Mandatory Spending, Option 25 Require Manufacturers to Pay a Minimum Rebate on Drugs Covered Under Medicare Part D for Low-Income Beneficiaries

Revenues, Option 31 Increase the Payroll Tax Rate for Medicare Hospital Insurance by 1

Percentage Point

Military Personnel and Veterans

Mandatory Spending, Option 1 Introduce Minimum Out-of-Pocket Requirements Under TRICAREFor Life

Discretionary Spending, Option 2 Cap Increases in Military Basic Pay

Discretionary Spending, Option 3 Increase Medical Cost Sharing for Military Retirees Who Are Not Yet Eligible for Medicare

Discretionary Spending, Option 4 Limit the TRICARE Benefit for Military Retirees and Their Dependents

Discretionary Spending, Option 5 Increase Cost Sharing for Pharmaceuticals Under TRICARE

Discretionary Spending, Option 6 Consolidate the Department of Defense’s Retail Activities and Provide a Grocery Allowance to Service Members

Discretionary Spending, Option 35 End Enrollment in VA Medical Care for Veterans in Priority Groups 7 and 8

Military Procurement

Discretionary Spending, Option 7 Replace the Joint Strike Fighter Program with F-16s and F/A-18s

Discretionary Spending, Option 8 Cancel the Navy and Marine Corps’ Joint Strike Fighters and Replace Those Aircraft with F/A-18E/Fs

Discretionary Spending, Option 9 Cut the Number of Aircraft Carriers to 10 and the Number of Navy Air Wings to 9

Discretionary Spending, Option 10 Cancel the Expeditionary Fighting Vehicle

Discretionary Spending, Option 11 Delay Fielding of the Army’s Ground Combat Vehicle

Discretionary Spending, Option 12 Terminate the Medium Extended Air Defense System Program

Discretionary Spending, Option 13 Terminate the Precision Tracking Space System Program

Natural Resources, Environment, and Agriculture

Mandatory Spending, Option 4 Prohibit New Enrollment in the Conservation Stewardship Program

Mandatory Spending, Option 5 Limit Enrollment in the Conservation Reserve Program

Mandatory Spending, Option 6 Reduce the Premium Subsidy in the Crop Insurance Program

Mandatory Spending, Option 7 Reduce by 20 Percentage Points the Share of a Farmer’s Base Acreage Eligible for USDA Payments

Discretionary Spending, Option 15 Eliminate the Department of Energy’s Grants to States for EnergyConservation and Weatherization

Discretionary Spending, Option 17 Eliminate Federal Grants for Wastewater and Drinking Water Infrastructure

Discretionary Spending, Option 18 Increase Fees for Use of the Inland Waterway System

Revenues, Option 21 End the Expensing of Exploration and Development Costs for

Extractive Industries

Revenues, Option 28 Increase Excise Taxes on Motor Fuels by 25 Cents

Revenues, Option 34 Reinstate the Superfund Taxes

Revenues, Option 35 Impose a Price on Emissions of Greenhouse Gases

Private Health Insurance

Mandatory Spending, Option 12 Add a “Public Plan” to the Health Insurance Exchanges

Mandatory Spending, Option 13 Limit Medical Malpractice Torts

Revenues, Option 30 Accelerate and Modify the Excise Tax on High-Cost Health Care

Coverage

Revenues, Option 32 Repeal the Individual Health Insurance Mandate

Retirement

Mandatory Spending, Option 26 Base Cost-of-Living Adjustments for Federal Civilian and Military Pensions and Veterans’ Benefits on an Alternative Measure of Inflation

Revenues, Option 9 Include Investment Income from Life Insurance and Annuities in

Taxable Income

Revenues, Option 12 Reduce Limits on Contributions to Retirement Plans

Social Security

Mandatory Spending, Option 27 Base Social Security Cost-of-Living Adjustments on an Alternative Measure of Inflation

Mandatory Spending, Option 28 Link Initial Social Security Benefits to Average Prices Instead of Average Earnings

Mandatory Spending, Option 29 Raise the Earliest Eligibility Age for Social Security

Mandatory Spending, Option 30 Raise the Full Retirement Age in Social Security

Mandatory Spending, Option 31 Lengthen by Three Years the Computation Period for Social Security Benefits

Mandatory Spending, Option 32 Apply the Social Security Benefit Formula to Individual Years of Earnings

Revenues, Option 16 Increase the Maximum Taxable Earnings for the Social Security

Payroll Tax

Revenues, Option 17 Expand Social Security Coverage to Include Newly Hired State and

Local Government Employees

Transportation

Discretionary Spending, Option 20 Limit Highway Funding to Expected Highway Revenues

Discretionary Spending, Option 21 Eliminate Grants to Large and Medium-Sized Hub Airports

Discretionary Spending, Option 22 Increase Fees for Aviation Security

Discretionary Spending, Option 23 Eliminate Intercity Rail Subsidies

Discretionary Spending, Option 24 Eliminate the Transit Starts Programs

Revenues, Option 28 Increase Excise Taxes on Motor Fuels by 25 Cents

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