Wednesday, July 13, 2011

Repealing the Great Society

Republicans propose changes in Medicare and Social Security. The claim is that federal spending is “out of control.” Members of Congress repeat that claim often, hoping that by repetition their claim will become true. GOP members publicly advocate that the federal budget must be cut to their terms or else the United States can default on its obligations. The party opposes the “Great Society” as it did the “New Deal.” It just doesn't know that.

President Lyndon Baines Johnson (LBJ) signed the Social Security Act of 1965 into law. It established Medicare. Johnson enrolled former President Harry Truman as the first Medicare beneficiary at the bill-signing ceremony and presented him with the first Medicare card. Truman’s boss, President Franklin Delano Roosevelt (FDR), signed the first Social Security Act into law in 1935. Thirty years later, that part of FDR’s New Deal had become part of LBJ’s Great Society.

Republicans have opposed Social Security for more than 65-years-old. They also oppose facts. For instance, Social Security and Medicare entitlements are already paid for through an involuntary tax called FICA, collected at a rate of 7.65% of gross [before deduction] earnings. 6.2% goes for Social Security called OASDI [Old-Age, Survivors, and Disability Insurance]. 1.45% goes for Medicare. The federal system of old age, survivors, disability and hospital insurance is paid by the FICA tax. The Social Security system then funds the first three, while hospital insurance is funded by Medicare.

Those are the facts. Here are more. For the last 20 years Congressional Republicans have tried to limit Medicare spending on doctors’ services. However, the proposed limits have always proved to be so unrealistic, like their current demands, that each time new limits have been proposed, Congress has had to intervene to increase them. Republicans inaccurately call it uncontrolled spending when they lose.

Only half of American's 65 and older had any health insurance at the time LBJ signed the bill that created Medicare. Medicaid, established by Title XIX of the Social Security Act of 1965, is administered by the states. The public health insurance program covers over 60 million people, including one in three children, eight million people with disabilities and nearly six million low-income seniors. Each state administers its own Medicaid program. In addition to Medicare, LBJ’s “Great Society” legislation included laws to uphold Civil Rights, to create Public Broadcasting and the National Endowment for the Arts and Humanities, and to establish a host other social legislation programs to improve the American way of life. It seems as if Republicans are determined to repeal the Great Society.

Thirty-five million Americans lived below the poverty level in 1965. In a nation with such abundance, LBJ argued that helping the poor was in the best interest of business by providing stability to society. Republican disdain for Johnson’s War on Poverty continues. Originally headed by the late R. Sargent Shriver, the first Director of the Peace Corps, its legislation created Medicaid in addition to environmental protection, aid to education, Head Start, and the Job Corps. Republicans appear to label any program that helps poor people as “reckless spending.”

President Johnson also handled spending differently than the way Republicans and President Obama are considering. Instead of deficit spending to finance the Vietnam War, LBJ pushed Congress to enact a surtax. The imposition of a surtax added another 10% to one's ordinary federal income tax liability. LBJ left office in 1969 with a balanced budget plus a small surplus. It took 30-years for the United States to see another balanced budget.

Bear in mind that there is no Constitutional requirement for a balanced budget. The United States federal government has pretty much always been in debt since its inception. Article I, Section 8, Clause 2 of the Constitution grants to the United States Congress the power “To borrow money on the credit of the United States.” As you may also know from recent accounts, Section 4 of the Fourteenth Amendment states, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Republicans are questioning it.

Their latest debt ceiling demands include an oldie-goldie cover renamed the Cut, Cap and Balance Pledge. It is a classic hit that comes up from time to time -- to oppose raising the borrowing limit unless it is accompanied by spending cuts and caps, and to pass a Balanced Budget Amendment to the Constitution. So far the Pledge has been signed by just 12 senators (6 of them freshmen Republicans) and 28 House members (17 of them Republican rookies). Republicans seem to like the idea of amending the Constitution despite the fact that the founders made that so difficult to accomplish it has only happened seventeen times. As I say, it’s a GOP blast from the past like the Fair Tax.

During the Carter administration, Republicans proposed the Balanced Budget Amendment as a fiscal cure-all. It didn’t cost them anything politically since they were out of power, controlling neither house of Congress nor the Presidency. They knew it would not be enacted. Between April 29, 1975 and January 29, 1980, 34 petitions for a Balanced Budget Amendment have been submitted to Congress from 30 different state legislatures. Even though deficit spending soared during the Reagan administration, a program agreed to by Congressional leaders and the administration that entailed two dollars of spending cuts for every dollar of tax increases failed miserably. Deficits mounted further. But Congress had no intention of passing the Balanced Budget Amendment.

The Gramm-Rudman-Hollings Act of 1985 acted as political cover to raise the debt limit. It called for automatic cuts in discretionary spending when certain deficit-reduction targets were not met. Aimed at cutting the budget deficit, the largest in history at the time, the House passed the bill 271-154, the Senate by 61-31, and President Ronald Reagan signed the bill on December 12, 1985. However, when it began to affect popular programs, Congress amended it to postpone its effects until later years. The Act was partially overturned in the courts and eventually repealed in its entirety.

Republicans should know that default is not an option. A failure to increase the debt limit by the deadline coupled with a breakdown of Treasury’s machines for printing checks caused a two-week default in 1979. That was enough to raise interest rates by six-tenths of a percentage point for years afterward and increased the Reagan era deficit even more. Yet, the GOP threatens default as a negotiating tactic.

As to tax revenue increases, Ronald Reagan requested the largest peacetime tax increase in American history in 1982. Bill Clinton also asked for a large tax boost for deficit reduction again in 1993. Strong economic growth followed each time, even though conservative economists predicted economic disaster.

Congressional Republicans seem to be thinking about something other than fiscal responsibility, business, or the social fabric of the country. Advocacy of its position to negotiate the budget with default puts its representatives in the position of breaching their oath of office which could subject them to recall if not impeachment. The GOP position seeks to repeal the Great Society. They are doing a good job of that, so far.

Article first published as Repealing the Great Society on Technorati.

1 comment:

Humilty said...

I cringe to think about it, but sometimes it feels like they are moving towards trying to institute some kind of a caste society and aren't even really trying to hide it any more. (they being the elected officials that consistently vote to reduce "hand up" assistance programs.