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25 November 2010 By Stephen
Lendman Instead of vitally needed
stimulus, Washington and European governments dictate
austerity. The pretext of deficit reduction is being
used to transfer more wealth to those already with too
much, plus the usual canard over the urgency to save
national banking systems. In other words, make ordinary
people bear the burden of bailing out banking giants
responsible for the severest economic crisis since
the Great Depression. How? The usual IMF solution,
involving preservation of capital at the expense of
workers - a package including wage and benefit cuts,
less social spending, privatization of state
resources, mass layoffs, deregulation, lower "onerous"
taxes, maintaining corporate debt service, and harsh
crackdowns against resisters. In the 1980s, it was called
Reaganomics, trickle down, and Thatcherism. Today it's
destructive "shock therapy" called austerity, the same
scheme pitting capital against people - disposable
workers tossed out for big money's gain. It's how predatory capitalism
works, destructively for so many to enrich an elite
few - snake oil peddled as an economic elixir,
corrupted politicians and central bankers forcing
harmful policies that, in fact, don't work. Three years of failure showed
imposed measures have hurt, not helped, and the longer
they continue, the more sickness will spread and
deepen, causing imposed poverty. It's why independent
experts see long-term depression, rising unemployment,
human deprivation, and bigger than ever bonuses for
bankers until the inevitable house of cards collapses.
Welcome to the new world order, phase two. In America, the Fed furiously
monitized debt. First QE I, now II, likely III and IV
coming that could have worked the first time if
constructively, not destructively used. An earlier
article explained, accessed through the following
link: http://sjlendman.blogspot.com/2010/11/quantitative-easing-elixir-or-poison.html Swapping credit for toxic assets
helps banks, not the economy. However, using it for
productive investment works. In her September 8
Webofdebt.com article titled, "How to Reverse A
Deflation: Helicopter Ben Needs to Drop Some Money on
Main Street," Ellen Brown explained that: "Running the government's
printing presses to pay its bills has not seriously
been tried since the Civil War, when President Lincoln
saved the North from a crippling war debt at usurious
interest rates by printing greenbacks (US notes,
interest free). Other countries, however, have tested
and proven this model more recently. They include
Germany, which pulled itself out of a massive
financial collapse in the early 1930s by printing a
form of currency called "MEFO bills," and Australia,
New Zealand and Canada, all of which successfully
funded public works in the first half of the 20th
century simply by advancing the credit of the nation.
China, Malaysia, Guernsey, Jersey, India, Argentina,
and other countries" also tried it successfully during
hard times to revive their economies. Why not ailing America and
European ones today. Central bank money creation
(credit) for public projects and other productive
investments stimulates economic growth, creates jobs,
and turns depression into prosperity - inflation free
by keeping credit and productive investment in
balance. Whenever and wherever it's been tried, it
worked when done right. Instead, sweeping austerity
measures are dictated for America and Europe. Last
spring, an EU summit announced a Greece bailout
package, dependent on "budgetary discipline" and
imposed poverty, the same IMF prescription for Latvia,
Iceland, Hungary, Romania, and Ukraine. Now eurozone
shock therapy, what economist Michael Hudson calls a:
"neoliberal experiment....to
drastically change the laws and structure of how
European society will function for the next
generation. If (successful, they'll) break up Europe,
destroy the internal market, and render that continent
a backwater." Calling it a "financial coup
d'etat," he said "bankers are demanding (and getting
governments to) rebuild their loan reserves at labor's
expense," Washington using the same ugly scheme. Throughout the West, neoliberals
are empowered. "From Brussels to Latvia, (they) aim to
shrink their economies (by) roll(ing) back wage levels
by 30 percent or more - depression-style levels,"
making Europe and America banana republics. In late September, EU countries,
led by Germany, increased pressure on member states to
cut deficits by lower public spending, Chancellor
Angela Merkel, in fact, demanding sanctions on
offenders and suspending their voting rights for
continued policy breaches. At the same time, corporate
taxes have been cut, continuing a burden shift to
workers. Since 2000, 12 of the 27 EU countries raised
VAT rates, Hungary, Denmark and Sweden now charging
25% for commodity purchases while wages and benefits
are being slashed. Some new world. Across the continent, painful
worker hammering continues, Ireland the latest
troubled country making headlines. On November 13,
Wall Street Journal writers Neil Shah and Marcus
Walker wrote: "Ireland Stirs Specter of EU Default,"
saying: "Europe's debt crisis is still
smoldering (months) after relative calm," showing it
deceptively hid big trouble, awaiting its moment to
surface. The challenges facing Ireland "show few signs
of abating soon," a worrisome contagion affecting
Europe's largest economies, leading analysts to wonder
what shoe will drop next. Workers, of course, are most
affected, spending cuts and high unemployment taking a
punishing toll. More are coming, assuring greater
deprivation and added impetus for increased
emigration. Monthly, 1,250 students leave Ireland as
well as thousands of young workers, seeing no future
at home. Those remaining face growing burdens,
including homeowners to avoid forclosure. One in eight
mortgages is underwater. The worst is yet to come, and
similar trouble affects Greece, Italy, Spain,
Portugal, Britain, and elsewhere across the continent,
yet policy fixes assure worse ahead, not better. Also in America, planned
austerity the wrong solution for a sick economy, yet
bipartisan support and two deficit cutting commissions
back it. An earlier article explained, accessed
through the following link: http://sjlendman.blogspot.com/2010/11/obama-teams-deficit-cutting-proposal.html It covered Obama's proposed
social spending cuts, while leaving defense, banker
bailouts, and other corporate subsidies intact, a
prescription from hell promising harder than ever hard
times for millions. On November 10, Obama's deficit
cutting commission outlined its plan. The above link
discussed it, a thinly veiled scheme to serve capital,
not people when they most need it. The Bipartisan Policy Center (BPC)
was also mentioned, a lesser known group for the same
purpose, its proposal imminent at the time. Now it's
out with draconian measures as destructive as Obama's
commission - proposing Social Security, Medicare,
Medicaid, and other social benefit cuts, harming
working households most, the way elitists always cheat
ordinary people for themselves. Co-chaired by former Senator Pete
Domenici and Alice Rivlin, former director of the
Office of Management and Budget and the Congressional
Budget Office, it's called "Restoring America's
Future," saying: America "fac(es) two huge
challenges that can only be surmounted" by bipartisan
support "to curb the mounting debt (to) reinforce
recovery, not impede it." Typical elitist boilerplate, then
proposing punishing measures on working households for
greater enrichment for themselves. They include: -- indexing Social Security
benefits to life expectancy to reduce benefits as
longevity increases; in other words, "incentiviz(ing)
people to work longer to compensate for lower
benefits; -- eliminating annual cost of
living adjustments (COLAs), justified by claiming
inflation is overstated when, in fact, it's higher,
especially for retirees facing costly medical
expenses; -- over the next 38 years, "rais(ing)
the amount of wages subject to payroll taxes (now
capped at $106,800) to cover 90% of all wages" -
suggesting bonuses, capital gains, dividends, and
other executive compensation be exempt, for many, the
lion's share of their earnings; -- instituting a one-year payroll
tax holiday for workers and employers, Social Security
to get no funding for 12 months to save an estimated
$650 billion; supposedly, future general revenue will
replenish the shortfall; -- cutting Medicare benefits,
including by higher Part B premiums (from 25 to 35% of
total program costs), co-pays, and fees for
outpatients services; also establishing privately
owned, lower-cost, health insurance exchanges to be
given competitive cost advantages over Medicare - a de
facto Trojan horse to replace it eventually, leaving
recipients at the mercy of predatory insurers that
profit by denying expensive care; -- by 2018, cutting Medicaid by
the amount it grows faster than GDP, providing less
care to the indigent, perhaps eventually none; -- shielding insurers and drug
giants from malpractice lawsuits by making it harder
to file them; then capping non-economic and punitive
damage awards, suits to be adjudicated in "specialized
malpractice courts," that may, in fact, be civilian
equivalents of military commissions, used to deny
so-called "terrorists" due process and judicial
fairness; -- instituting a 6.5% national
sales tax (called a Debt Reduction Sales Tax - DRST);
like European VATs (value added taxes), they'll hit
ordinary people hardest and can be incrementally
raised anytime to hit harder; -- simplifying the tax code to
two brackets (15 and 27%), favoring the rich;
regressively cutting the top personal and corporate
tax rate from 35% to 27%, claiming it "will make the
tax system more progressive;" -- eliminating home mortgage and
most other deductions and credits; -- taxing employer provided
health insurance to encourage less comprehensive
coverage and make healthcare cost more; -- freezing non-defense
discretionary spending for four years, then capping it
according to GDP growth - a prescription to slash
social benefits, perhaps eliminating them later; -- freezing "discretionary"
defense spending for five years, then capping it with
GDP growth; doing it, among other ways, by "reforming
military health care;" in other words, cutting
veterans' (and perhaps active duty forces') health
benefits; and -- various other schemes hitting
working households hardest. BPC said "19 Americans (elitist
ones) from across the country, with diverse
backgrounds and views, examined a broad range of
spending and revenue options for the federal
government....We believe (their plan) provides a
comprehensive, viable path to restore our economy and
build a strong America for future generations and for
those around the world who look to the United States
for leadership and hope." More boilerplate, disguising a
scheme to enrich the few while denying equal
opportunity to growing millions, especially the poor,
disadvantaged, needy dependents, disabled and
retirees, leaving them more than ever on their own and
out of luck, the "future America" none of them want or
deserve. Stephen Lendman lives in
Chicago and can be reached at lendmanstephen@sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and
listen to cutting-edge discussions with distinguished
guests on the Progressive Radio News Hour on the
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