What to Do with the Anti-Government Outrage

alan simpsonA “send this to 20 of your friends” e-mail landed in my inbox, brimming with indignation about government malfeasance. Its target: Alan Simpson, a decorum-challenged former Senator who suggested that Social Security recipients were parasites. The energy of the outrage was attractive, but the e-mail itself was so full of inaccuracies and omissions, it skated past the real issues.

Inaccuracy #1: “Social Security [is] a Ponzi scheme.” Ponzi schemes require a) fraud, and b) someone profiting from it, and neither is true of Social Security. Social Security costs 2% to administer while privatized systems like Pinochet introduced in Chile (since the recipient of a government bailout) need roughly 11%.

Inaccuracy #2: “[You government] idiots mismanaged the economy.” The genesis of the Great Recession came from the unregulated private sector. Yes, the government did deregulate lenders, making it all possible, but even that was at the private sector’s initiative. And even though Fannie Mae did buy some sub-prime loans, at no time were they more than 14% of their portfolio, and they were clearly following, not leading the charge into “Liar Loans.” (Paul Krugman’s blog has details.)

Omission #1: Wall Street’s criminality. Eighty percent of public pension problems stem from this. It may be a shame that the Obama administration continued Bush’s wars and torture, but it’s worst failing is a Justice Department that has prosecuted less than a dozen cases in a scandal 40 – 100 times larger than the S&L scandal of the Reagan/Bush 41 years–a scandal that prompted literally thousands of prosecutions. Bernie Madoff is in jail because he turned himself in.

Omission #2: Tax favors for the wealthy. Congress did not spent too much, it lowered taxes on the rich without cutting spending–a strategy called “Starve the Beast,” explicitly endorsed by the right. The needless “debt crisis” stems from this starvation.

About that “crisis”:

Q: Does lending to a government that legally issues money, unconstrained by commodity (gold / silver) backing entail risk?

A: Lending to government is riskless; it can no more run out of its sovereign currency than a scorekeeper can run out of points at a sporting event.

The Fed knows this too: it created more than $16 trillion to help to failing businesses during the worst days of the sub-prime meltdown. The real outrage is that private banks receive far more money than any social safety net program would need, but the proposed cuts impact only safety net programs.

Omission #3: Government, it is not some alien “other.” It’s us. At least Obama got this much right.

Ironically, our government is clearly corrupt. Given the lack of Wall Street prosecutions from the Obama Justice Department this administration will be the most corrupt in U.S. history. True corruption allegations, like those cited above, are seldom mentioned since prosecuting Wall Street would jail some politically powerful people. Far more likely you’ll hear “Social Security is a Ponzi scheme,” or that “Spending is out of control,” or, if all else fails, that the gay married Hispanic terrorists in the woodpile are coming to get you.

Nevertheless, government is one of the last few barriers preventing a kind of feudal oligarchy (if that hasn’t already arrived). The constant drumbeat of false corruption allegations like those above is in the service of those oligarchs. Targeting a right-winger like Alan Simpson is just incidental misdirection, designed to confuse.

My advice: beware of outrage. As hard as it is to remain alert in guiding your emotions, that beats turning away in disgust. Then the oligarchs can do anything they want.

Adam Eran

Comments

  1. says

    It is true that government is a problem. Government starts wars, gives tax credits to the rich, removes regulations that protect the citizens, changes taxes to benefit the wealthy.

    But government changes – most of the damage was done under Republican Administrations except for Johnson who with his Texan Cronies benefited from the Vietnam War. And then when the Republicans have gotten all they are able to and the people elect Democrats they must spend their time in power trying to dig us out of the mess. When they can’t people elect Republicans again.

    We forget that government is for the purpose of protecting American Citizens. The problem is when the Citizens no longer protect the government from the influence of those who would like to use it for their own selfish benefit.

    We just need to give the right leadership to go beyond the recovery stage and get to the benefit for the people stage. Social Security is not a Ponzi Scheme – these are just words that the likes of Karl Rove might have thought up to hand the system over to the private investment bankers for greater profit.

  2. Steve Lamb says

    Well, Senator Simpson deserves outrage for his comments, if for no other reason than the fact that he helped build the Social Security system he now criticizes people for relying on, while he has a pension they paid for that they can not even dream of. First needed reform: ALL government employees get social security as their pension plan, period. They can but into the market and be exposed to the wall street wolves like the rest of us for the other 2/3rds of money they will need as a old person. That reform will lead to rather rapid Wall Street reform.

    I think we as Progressives need to admit that very often government or its employees ARE the problem. Then we need to work on fixing the problem, We need to be at the forefront of not only calling for new regulations, but calling for the death of needlessly burdensome and often ineffective regulation. We need to be for smart regulation. We need to be against regulation, rules and laws that increase inequity, for example pension plans for government employees that are the kind of thing only CEO’s can dream of, and underfunded social security, medi care and medical for the rest of us.

    The outrage at anyone who has a government pension calling for social security, medical or medicare benefit cuts and couching those calls in a moral tone is totally reasonable and justified. Reform, not sending endless go nowhere emails, is what we should do about it.

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