The Austerity Confusion Continues

First, the notion that the measures just passed by the Congress are "not Austerian" is widespread and wrong, and this misperception would be hilarious if real people weren't being forced into poverty because of it.

Yet I've seen a lot of cant and rhetoric claiming that because "taxes were raised on the rich" -- yeah right -- the measures "can't be Austerian." Not only that, but there were some spending programs in the mix. (Like yet more corporate welfare?) AND unemployment benefits were extended! Yay!

Reducing the disposable income of the masses through increased taxation is Austerian pretty much by definition, and that's what's happened with the expiration of the payroll tax holiday. What makes it even more Austerian, by definition, is the fact that at least twice as much revenue will be raised from the increased payroll taxes on the masses as will be raised from increased income taxes on the rich. Isn't that wonderful? Isn't that the way it's supposed to be?

Second, the argument that the increased payroll taxes will be used to shore up Social Security is something of a crock. During the payroll tax holiday, the shortfall in Social Security revenue -- which is used to pay current benefits, not socked away for the future -- was made up dollar for dollar from the general fund, something like $110 or $120 billion per year. What it meant was that any shortfall in Social Security revenue to pay existing benefits was paid directly from the general fund, and guess what? That's exactly what happens all the time and will continue to happen for some time to come as the Baby Boomers retire in their multitudes. We can call it "cashing in" Social Security's Treasury Bonds if we want, but the effect is the same: any shortfall between SS revenues from payroll taxes and obligations to beneficiaries is made up from the general fund.

That's why there is such a push to curb, limit, cut, reduce, hack, and trim Social Security benefits now and going forward.

The Chained CPI being promoted as the "least bad" of options. The point is to reduce the amount SS draws from the general fund so as to avoid raising revenues from those who have the most in order to the benefits due seniors and other recipients of Social Security.

The increased payroll taxes are actually shoring up the general fund, making it less necessary to increase taxes on the rich in order to pay for Social Security and other benefits. But still, there is a drain on the general fund as SS Treasuries are redeemed, and any drain at all to pay for Old Farts is considered anathema by the Highest of the Mighty, so there will continue to be calls to cut benefits, no matter how much revenue is extracted from the masses. In the end, there is no dedicated Social Security money which cannot be taken for other purposes if Congress wants to do so and the White House agrees. If Congress and the White House want wars, for example, and need money to pay for them, they will get that money anywhere they can, and if that means raiding Social Security, they'll do it. In fact, Social Security has already been fully and repeatedly raided -- to pay for wars and tax cuts on the rich among many other things.

And there is nothing you and I can do about it.

But income tax rates were raised on the rich, né? Well, yes, slightly. And that increase -- which may not actually produce much revenue, we'll see -- is also by definition Austerian. Of course the effect of the income tax increase on the rich is nothing like the effect of the payroll tax increase on the working and middle classes. In fact, if  the rich actually pay the increase the effect on them will be almost imperceptible. The increased payroll taxes on the working and middle classes, on the other hand, can have a devastating effect for those on the financial edge.

I've seen lots of commentary from people who say "It's only $50 a pay period! I can afford that! And it's going to Social Security, so it's a good thing!" Well, a lot of people can't  afford it, especially not after their income has already taken such a battering from the Permanent Recession as it is. The revenue is not going to shore up Social Security, it's going to shore up the general fund so that taxes on the rich won't have to be raised to an appropriate level. Millions upon millions of Americans have already been forced into poverty during the course of this Perpetual Recession, and due to the increase in payroll taxes without any offset, millions more  will be forced into poverty. Oh, it's lovely that some working and middle class households can afford to lose 2% of their disposable income, but many cannot.

The fact that there was no effort to provide an offset for the loss of working and middle class disposable income is the tell here. The Neo-liberal/Austerian point, after all, is to make the masses pay for everything and insofar as possible to relieve the rich and powerful from taxation, even provide them with handsome emoluments and subsidies -- paid for by extractions from the masses.

And we should note -- though without surprise -- the extraordinary levels of corporate welfare included in the Neo-liberal/Austerian measures just passed and signed into law. My, my, my. But then, corporate welfare is part of the Neo-liberal/Austerian program, after all.

There has been a lot of argument regarding the fact that "Austerity doesn't work." But that avoids the point. "Doesn't work" for whom? It doesn't work to the benefit of the masses, of course not. It's not meant to -- no matter how it's sold. It is meant to enable a diminishing cadre of super-rich to accumulate a greater and greater and still greater number of assets (not "wealth" so much as assets)  through and by which they are able to exercise greater and greater levels of power. And for those purposes, Austerity works wonders.

Austerity is imposed in order to take assets from the masses at the lowest possible cost to the plunderers and predators, pure and simple. And it works.

The confusion about all of this is a factor of the propaganda that surrounds the imposition of the policies of Austerity (Shock Doctrine, Neo-liberalism.) Without the propaganda, these policies cannot be imposed. And the propaganda is everywhere. Surprisingly -- or maybe not -- it pervades the "progressive" new media, to the extent that it is almost impossible to avoid or in many cases to cut through the bullshit.

Under the circumstances, people by and large don't know what to believe. Confusion is inevitable (and desirable to the beneficiaries of these policies.) The People "go with their gut," and too often that means buying a lie. Grifters, hucksters and conmen have never had it better.

A Note Regarding the Payroll Tax Holiday Expiration

The 2% increase in payroll taxes that primarily affects the working and middle classes has a remarkable budget effect that has so far been essentially ignored by the media -- including the chest-thumping New Media.

It is this: the cumulative tax revenue gain from the expiration of the payroll tax holiday over the next ten years is in the neighborhood of $1.2 trillion dollars. This is far more than the projected revenue gains from the increases in income tax rates on the Rich (between $400 $150 and $600 $270 billion depending on how successfully they evade the increases.)

---------------------------------------------------
Furthermore, there still is no jobs program, and there are no realistic economic stimulus measures even being contemplated by Our Rulers as they lurch from crisis to crisis, cliff to precipice. Instead, there is a continuation of corporate welfare and military overspending that sucks revenue and provides little or no economic benefit.