Stock Tip: Buy Fancy Feast
If you thought the Republicans went nuts on Medicare cuts, wait until they get a hold of this. (And no, being total hypocrites on the matter will not stop them. Hypocrisy is no longer operative.)
Ben Bernanke has overseen the greatest expansion of the Federal Reserve's balance sheet in its history, pouring trillions of dollars into Wall Street firms at roughly zero interest rates.
His generosity, however, has a limit.
In testimony before the Senate Banking Committee today, where he's seeking re-appointment as the Fed's chairman, Bernanke called for cutbacks in Medicare and Social Security even as unemployment rises and the middle class is endangered.
Citing legendary bank robber Willie Sutton, Bernanke said of the retirement and health care funds that are the legacy of the New Deal: "That's where the money is."
Sen. Bob Bennett (R-Utah) sympathized with Bernanke, saying that, because of entitlement spending, "you're going to be looking at a situation where the Congress will be unable to provide any kind of fiscal discipline because of the mandatory spending. That puts an enormous burden on your plate."
"Well, Senator, I was about to address entitlements," Bernanke replied. "I think you can't tackle the problem in the medium term without doing something about getting entitlements under control and reducing the costs, particularly of health care."
Bernanke reminded Congress that it has the power to repeal Social Security and Medicare.
"It's only mandatory until Congress says it's not mandatory. And we have no option but to address those costs at some point or else we will have an unsustainable situation," said Bernanke.
Well we'll solve that with an blue ribbon commission that will tell them to take it or leave it, won't we?
I don't know how closely you are all following the current right wing assault on the medicare cost cutting in the health care reform bill, but it is beyond belief. This will piggyback right on top of it.
You see, they have a new constituency nowadays: older people who don't much like our young black president. (And there aren't many new constituencies for them out there.) They will obviously do anything to get their votes, particularly in the midterms, where the elderly traditionally turn out in greater numbers than others. Scaring the bejeezuz out of them with threats to their social security and medicare is just what the doctor ordered.
Bernanke may not technically be a member of the administration but that distinction will be lost on most elderly people. And don't think that these same elderly folks will find any inconsistency in this and their equally fervent insistence that the deficit is out of control. They believe it's out of control because the liberal president is giving away their well-deserved benefits to lesser people who don't deserve them. They want their benefits AND they want the government to stop spending what they consider their money on things like the stimulus or health care or anything else. They worked their whole lives but the rest of us are lazy and lacking in fortitude. This is how they think, believe me. (Maybe I will too when I get old, I don't know ...)
This deficit fetish is a political trap that Obama and his Whiz Kids are going to rue ever falling into. They may think they can finesse it in some way, but this is not finessable during a recession. Even FDR couldn't do it and he was a hell of a lot more experienced and battle hardened at the time he tried.
The administration and Bernanke are absolutely nuts to be talking about making Americans feel more insecure right now. I realize they believe they have to coddle the towering talents that run Wall Street and the banks or the sky will fall, but damn, they don't have to go this far. Can't they just have Larry, Tim and Ben call up all their bffs and tell them personally that they understand their concerns but that they simply can't go out and tell the people of this country to suck it up right now? isn't there any advantage at all to having Wall Street inside the white house and the Fed?
As for the substance of the argument: feh. There are far more pressing economic problems at the moment than social security's solvency in 2038.
Update: Atrios wrote:
As I see politicians continuing to fret over that evil deficit, I wish someone would inform them that a big cause of declining tax revenues/increasing deficit is... unemployment!
And that isn't just a short term thing. Longer term the unemployed find their job skills degrading, more are likely to move into gray market employment where income isn't necessarily taxed, labor force participation might decline, etc. There aren't these two separate things - unemployment and deficit - they're rather intertwined.
He's right of course. And I would guess that Pete Peterson and the boys know that very well. But the deficit fetish isn't really about deficits, particularly right now. They actually encouraged Bush to hand the surplus to the wealthy just a few short years ago. It's a shock doctrine move to eliminate the evil "entitlements."
They don't care about the real reasons --- they want to use this economic crisis as an excuse to eliminate the safety net once and for all. If unemployment has to stay high and the economy needs to remain sluggish in order for them to shove through their shock therapy, that's fine with them.