The Eternal Shutdown of the Capitalist Mind

 The Eternal Shutdown of the Capitalist Mind

Jim Kavanagh

Am I missing something or is there much less concern than one might expect in the country over the fact that the government is shut down?

I understand that each of the protagonists—the Trump administration and the Democrats—knows its own fundamental weakness in this situation and hopes it can turn the other’s weakness to its advantage, if played carefully enough. But I repeat: the government is shut down, for over a month now, with no end in sight. Thousands of people are getting laid off, thousands of businesses and millions of people aren't being paid or receiving services, scores of programs and agencies are being suspended or eliminated. Forty-two million people are about to lose their SNAP benefits, and millions will see their health insurance premiums soar. Flights are being cancelled as air traffic controllers are laid off. The country should be up in arms. Why isn’t it? Why the big—actually, moderate—yawn?

Well, maybe because paralysis is the normal state of affairs for the U.S. government. The budgetary process is now comprised of an infinite chain of Continuing Resolutions, Supplementary Appropriations, and Debt Ceiling fights. There is no agreed-upon concept of what the federal government is or what it should be doing.  Though our entire social economy depends on and is structured by it, there is no understanding of why this is so or how it works. People perceive “the government” as some kind of strange animal they have to live with that sometimes brings food and favors, sometimes goes wild and attacks the neighbors or the siblings, and spends a lot of time busying itself with tasks that no one understands. And, of course, an animal that lives off the food (taxes) it eats from our hands. Or something like that. It’s more than that people don’t have a dog in the fight; it’s that they don’t know what the dog in it is.

This is a nice example, a political instance, of what Marxism calls alienation —the phenomenon where social subjects become estranged from the process and products of their own labor, which they confront as strange, alien entities and forces with which they have little, and largely antagonistic, relation. This occurs because the process and product of their labor is not under their control. In this case, the political process of producing a government and the government produced by it, though nominally an expression of the people’s will expressed through elections, are not actually under the people’s control.

It's under the control of the same ruling class, which appropriates the political power that flows from people’s hands and uses it for the ruling class’s own antagonistic interests, in the same way that the ruling class takes the economic wealth the people’s labor created and turns it against them.

The ruling class wants the people alienated from the “government” and confused about what it is. The ruling class does not want the polity to have clear lines of political authority that derive from the people, that the people can understand and, heaven forfend, exercise.

Debt Ceiling Nonsense

Debt Ceiling Nonsense
Jim Kavanagh

“Could the Treasury skip the rigamarole and pay its bills without bonds? Economically, sure. Why doesn't it? Well, the Fed has regulations governing “overdrafts” -- but apart from these, the answer is plain: to do so would expose the ‘public debt’ as a fiction, and the debt ceiling as a sham.” - James K. Galbraith

It is infuriating to watch this “debt ceiling” charade play out again, and terribly depressing to see so many self-identified leftists accepting, and bargaining within, the ridiculous, fictional framework that guarantees their perpetual defeat within a never-ending cycle of such nonsense.

Just about everybody—certainly everybody with any “progressive” inclinations—recognizes what a tiresome farce this is. We all know the “debt ceiling” is the atavistic remnant of a 1917 gold-standard-era law that was ignored until Newt Gingrich dug it up in 1995 to start the now-perennial stunt cycle; that it exists in no other country besides Denmark, where it is set astronomically high precisely to avoid making it a political weapon; that it is used hypocritically by Republicans as a political weapon against Democratic presidents, to cut social spending and attack “entitlements” (Social Security and Medicare); that it enables a ludicrous, blatantly unconstitutional “do-over” by which right-wing legislators, who were unable to get the social program cuts they want through normal Congressional votes, try to force the Executive to stop spending that the Congress has already authorized, etc.  (For a nice critique of the constitutional pretzel-twisting the Republicans are engaged in, see Robert Hockett’s Stop the Charade: The Federal Budget Is Its Own ‘Debt-Ceiling’.)

Reconcile This: Lessons From The Latest Legislative Debacle

Reconcile This: Lessons From The Latest Legislative Debacle

Jim Kavanagh

newsakmi.com

So the Biden administration has achieved passage of, and signed into law, its Infrastructure Bill, and its Reconciliation/Social Spending Bill, dubbed Build Back Better (BBB), has passed the House and is awaiting decision by the Senate. Watching this process play out over the past months has demonstrated, in a way that could not be more definitive, a couple of core truths about the prospects for achieving social policies that could provide socio-economic security and justice for working-class—most—Americans, let alone any kind of transformative, lasting change in socio-economic structures.

 

The Outer Limits

The first of those truths, which left-socialists have long understood and many more sincerely concerned progressives are finding inescapable, is that the necessary social policies will never be achieved through the extant two-party system and the normal legislative process. This is so, it is becoming hard not to acknowledge, because that process and those two parties—the Democrats (including their “progressive” squaddies and their “socialist” auxiliary) at least as much as the Republicans—are institutionally designed to be obstacles to any such reform. They are representatives of the donor caste, not of their ostensible popular constituencies.

Second Wide-Ranging Interview with Kate Frey of We are Many, They are Few

 We Are Many, They Are Few

Interview with Jim Kavanagh of the Polemicist on the corruption of US politics, taxation, the upcoming election and the current political moment.

Payroll Taxes Are the Achilles Heel of Social Security

On August 8^th, Donald Trump took four executive actions on coronavirus relief. One was a memorandum deferring, to the end of the year, payment of the employee portion of the payroll tax for employees making less than $4000 biweekly. (Employer payments had already been deferred in the CARES act.)

He did this, according to the language of the memorandum, because “This modest, targeted action will put money directly in the pockets of American workers, and generate additional incentives for work and employment, right when the money is needed most.”

In an additional Trumpian flourish, he stated: “If victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax…I’m going to make them all permanent,” and: "If I win, I may extend and terminate… I'll extend it beyond the end of the year and terminate the tax."

To that effect, he included this language in the memorandum: “The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”

The “payroll tax” is, of course, the FICA tax—part paid by the employer and part by the employee—that is earmarked for the Social Security and Medicare Trust Funds. The understanding is that Social Security and Medicare (SS&M) benefits are paid out from these funds. For FDR, that understanding “justified” SS&M in fiscally stringent terms that would make SS&M impervious to challenge from conservative politicians: “We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”

Critical Hour Discussion of Trump's Call for Payroll Tax Cut (4/8/2020)

The Bernie Train Stops, but Will the Senator Continue to Fight From Outside?

US Senator Bernie Sanders (I-VT) announced Wednesday that he is dropping out of the Democratic race for the White House, following weeks of pursuing an increasingly unlikely path to defeating the moderate front-runner for the nomination, former US Vice President Joe Biden, in a race now overcome by the COVID-19 coronavirus pandemic. What will be the impact of this on the race going forward? Also, will what took place in Wisconsin this week be the start of the 2020 election wars?

"President Donald Trump on Tuesday once again voiced his support for slashing the payroll tax — the primary funding mechanism for Social Security and Medicare — and said he would be calling for such a cut even if the US were not currently in the midst of a nationwide public health and economic emergency," Common Dreams reported Wednesday. Is this "code for gutting Social Security's dedicated funding," as progressive organization Social Security Works called it?
[Related articles: “Taxpayer Money” Threatens Medicare-for-All (And Every Other Social Program), Behind the Money Curtain: A Left Take on Taxes, Spending, and Modern Monetary Theory]

“Taxpayer Money” Threatens Medicare-for-All (And Every Other Social Program)

-Apocryphal (often spuriously attributed to Mark Twain)

Three assertions:

• There is no such thing as “taxpayer money.”


• Taxes do not pay for government spending. (Nor does debt. No revenue is needed.)


• Leftists who continue to talk as if “taxpayer dollars” must be collected to “pay for” government programs are undermining Medicare-for-all and every other progressive policy initiative. 

I know these assertions run counter to an economic ideology that has been ingrained in us as obvious and irrefutable, known for sure. And I know how easy and seemingly effective it is to say things like: “Look at all the taxpayer dollars going to the military. We should spend some of those taxpayer dollars on healthcare instead.” But I want to show, with specific examples, why using this language is a bad idea—a really bad idea.

Maggie’s Farm

There are two reasons why it's important to stop talking like this: 1) Because it's not true, and 2) Because it perpetuates an ideology of how money and public financing work that is not only false, but profoundly reactionary and politically damaging—that is designed to, and will, impede achieving the most basic progressive goals.

Let's deal with the second point first, since I know a lot of leftists won’t overcome their resistance to understanding and promoting an economic proposition that runs counter to the common wisdom unless they can see the political point of it.

Consider the logic of this language: If government spending depends on tax revenue, if the government—the public authority—is an empty pocket that has to be filled with dollars that originate in the private pockets of “taxpayers,” that means public wealth depends on private wealth. That means private wealth is the source, the wellspring from which the public treasury draws; It means that, without large concentrations of private wealth (which are subject to the highest rates of taxation), the public authority cannot function.

Is that not precisely the theoretical grounding of capitalist socio-economic theory in its most regressive Thatcherite form?

If that's true, we are then in a polity where those who pay more dollars in taxes have a prima facie credible claim to demand more influence on the use of those dollars by the public authority—i.e., more political power. After all, the government depends on them; they are its donors, the breadwinners of this household, the source of its wealth. In a taxpayer/donor-financed polity, you can debate whether "taxation is theft" and to what extent “winners”—i.e., meritorious taxpayers—are paying for “losers” and “moochers”—i.e., “undeserving” non-taxpayers. It’s a polity where social programs of universal benefit exist at the sufferance—whether forced or voluntary—of the wealthy, subject to constant negotiation about how far that should go.

This is the paradigm of noblesse-oblige, welfare-state capitalism, whether more or less “generous,” where the public authority—the federal government—must go hat in hand to the wealthy to pay for public services.

Behind the Money Curtain: A Left Take on Taxes, Spending, and Modern Monetary Theory

Taxes do not fund government spending.

That’s a core insight of Modern Monetary Theory (MMT) whose radical implications have not been understood very well by the left. Indeed, it’s not well understood at all, and most people who have heard or read it somewhere breeze right past it, and fall back to the taxes-for-spending paradigm that is the sticky common wisdom of the left and right.¹

This, despite the fact that the truth of the proposition is obvious if you think through just a few steps about the process of money-creation. What makes it hard to see is the dense knot of conventional theory and discourse in which we are entangled, and which seems impossible to cut as cleanly as MMT suggests.

But the discussion around the newly-enacted Republican tax bill has brought the issue of tax policy to the forefront again, and it’s time for the left to realize how fundamentally wrong that common wisdom is, and how continuing to argue within the phony terms of the taxes-for-revenue paradigm occludes and reproduces a persistent reactionary fiction regarding what taxes are for.