Wednesday, July 27, 2011

Michael Hudson exposes Obama


Mr. Obama’s scare tactics to get Democrats to vote for his Republican Wall Street plan


The Wall Street bailout melodrama should be viewed as a dress rehearsal for today’s debt-ceiling non-crisis.

You know that the debt kerfuffle is as melodramatically staged as a World Wrestling Federation exhibition when Mr. Obama makes the blatantly empty threat that if Congress does not “tackle the tough challenges of entitlement and tax reform,” there won’t be money to pay Social Security checks next month. In his debt speech last night (July 25), he threatened that if “we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.”

This is not remotely true. But it has become the scare theme for over a week now, ever since the President used almost the same words in his interview with CBS Evening News anchor Scott Pelley.

Of course the government will have enough money to pay the monthly Social Security checks. The Social Security administration has its own savings – in Treasury bills. I realize that lawyers (such as Mr. Obama and indeed most American presidents) rarely understand economics. But this is a legal issue. Mr. Obama certainly must know that Social Security is solvent, with liquid securities to pay for many decades to come. Yet Mr. Obama has put Social Security at the very top of his hit list!

The most reasonable explanation for his empty threat is that he is trying to panic the elderly into hoping that somehow the budget deal he seems to have up his sleeve can save them. The reality, of course, is that they are being led to economic slaughter. (And not a word of correction reminding the President of financial reality from Rubinomics Treasury Secretary Geithner, neoliberal Fed Chairman Bernanke or anyone else in the Wall Street Democrat administration, formerly known as the Democratic Leadership Council.)

It is a con.



8 comments:

Dan said...

Mr Hudson's statement about Social Security Treasuries has shaken my understanding of them as just accounting gimmicks. For years SS payroll taxes have exceeded SS payments and reduced the gov deficit. The special Treasuries kept a tab of excess SS funds used. Soon when payouts exceed taxes the Treasuries in the Trust Fund will be redeemed adding to the deficit. So, it would seem to me that the liquidity of these Treasuries would be caught up in any default.
Please set me straight.

beowulf said...
This comment has been removed by the author.
Clonal said...

Tom,

I think you have an incorrect link. the article may also be found at Counterpunch.org

Anti said...

Here are some comments by Robert Reich on Obama and this situation:

http://robertreich.org/post/8149639042

googleheim said...

You'd think that Peter Schiff would be coming out all over the news if he was so smart.

Tom Hickey said...
This comment has been removed by the author.
Tom Hickey said...

Thanks Clonal. Fixed.

Tom Hickey said...

Anonymous: "As far as I know polls show a majority in favor of reining in government spending so I'm not clear what it is the overwhelming majority opposes in your reference above."

Cutting "the big three" — SS, Medicare, and Medicaid — by reducing the benefits. The public is fine with reducing "waste, fraud and abuse," but not cutting benefits.

The public is in favor of cutting spending and reducing the deficit in principle, but without spending cuts that affect "me and mine." When it comes down to actually making cuts, there is a political risk. That is why the Shock Doctrine is useful. Then the excuse is TINA, "there is no alternative." Then politicians can say, "I hate to have to do this, but there is no other choice that doesn't risk falling in to the abyss."