Transcript: Thom Hartmann riffs on the US debt problem, 10 Nov '10
Thom Hartmann: 20 minutes past the hour. Okay, as I said, we’ve got two choices. Now maybe there’s others that I’m missing. But I think that at the most, at the biggest most macro level, in order to pay off our debt, or in order to reduce our debt, which is brought to us courtesy of three republican presidents over nine trillion dollars of the US federal debt. Over nine trillion dollars of that debt was incurred during the Reagan, Bush Sr. and Bush Jr. administrations. A little, right around the neighborhood of three trillion dollars of it was run up during the Clinton and Obama administrations. And Carter. Take those three. Actually you go back to ’78, ’78 is your starting point because that’s when it actually started going up.
So nine trillion for the republicans, three trillion for the democrats. You know, you know my, you’ve heard my rant a million times on Jude Wanniski, back in the 1970s, I think it was ’74, he came up with his two Santa Clauses theory. He said why are the democrats always get to be the Santa Clauses of passing out things, let the republicans be the Santa Clauses of tax cuts. So what if it runs up the debt. If it runs up a debt, eventually the debt will get so great that these socialist programs like social security will have to be done away with.
Well, according to the republicans, we’re there now. Now I would argue, maybe, maybe not. But let’s assume for a moment that they’ve got something. I mean I’ve been, throughout the Bush years I was screaming about the fact that we were spending 300 billion dollars a years of our tax dollars simply paying interest on the bonds that we were issuing to support George W. Bush’s insane spending on wars, on military hardware, on thousand dollar a gallon gasoline for Afghanistan. On hundreds of billions of dollars to his good buddies at Halliburton and Bechtel and Boeing and McDonnell Douglas and on and on. You know, George W. never met a war contractor he didn’t love. I mean his daddy, the Carlyle Group, they’re, it’s an investment group that invests in war contractors. What a surprise, his son has given us a couple more calls.
So we’ve got two ways out of this now. This massive debt. We can either do what Germany did in the 1920s, and not just Germany, I mean Zimbabwe did it in the last decade. We can either reduce that debt by inflating the currency. By saying okay we owe 14 trillion dollars, no problem. We’ll turn 14 trillion dollars into one year of GDP by cutting the value of the dollar in half over the next couple years or cutting it to a quarter of what it was. Or which by the way wipes out retired people, wipes out working people, and can be very, very, very profitable to the investor class who sees it coming. So we can either do that, or we can raise taxes on the rich.
If George W. Bush’s tax cuts, and I don’t know why everybody calls them tax cuts. Tax giveaways. Because they were entirely funded by debt. That’s why they had to be passed by reconciliation. There was no funding mechanism attached to them. He said oh magically these tax cuts are going to pay for themselves. They didn’t. Not only did they not pay for themselves they drove the country into debt to the tune of close to five trillion dollars. If George W. Bush had never cut taxes the way he did, we would right now have about the same debt that we had when Bill Clinton left office. Which was around 8 or 9 trillion dollars. No I think it was around 7 trillion, in fact.
And in fact if we went back to the tax rates that we had before Reagan, we’d have a one trillion dollar debt right now, if that. Because when Reagan came into office, the debt in today’s inflation adjusted dollars, was only a trillion bucks. And the interest we were paying on the debt was a small part of the federal budget. Now it’s almost as big as the entire defense budget. The defense budget is 500 billion, the interest we’re going to pay this year is 400 billion. And the republicans want to say well we can’t afford, we can’t afford to extend unemployment benefits, we’ve got to pay the interest on the debt.
I noticed a lot of people are calling, I’m hearing Julie talking to people on the phone. Where can they find my new book, “Rebooting the American Dream,” printed for free on the internet. And it’s at TruthOut.org, just so you know. You go over to TruthOut.org, there’s a banner. The first chapter, the introductory chapter, is there. Every week for the next 12 weeks we’re going to put up another chapter. It’s going to be on the web forever, it’s going to become the lending library. And it addresses 11 ways to solve this problem. And I keep saying over and over and over.
I was astounded with Christopher Whalen saying you know he hopes that the republican party will do what I hope the democratic party does. Because both parties, both parties, historically supported a 91% top tax rate for billionaires. Because it discourages wild speculation that makes the economy unstable. And it encourages wealthy people to keep their money in their businesses rather than suck the money out and stick it in Swiss banks which is what we’ve been seeing for the last 30 years. It encourages domestic productivity. Dwight Eisenhower liked this idea, Richard Nixon liked this idea. I mean this, this Teddy Roosevelt was a fan of a progressive income tax. Herbert Hoover raised taxes up above 50%. I realize Herbert Hoover is not the very best example to give of how to respond to anything but you get the point.
So anyhow, we got two ways out of the debt problem. We can either pay it off, which means paying taxes on millionaires and billionaires so that hedge fund managers like John Paulson who made 4.6 billion dollars and paid 15% income tax on it and not one penny of social security tax. This is the other reason they’re all screaming about social security. Because they’re terrified that you are going to figure out that these fat cats, these guys, the Dick Armey’s of the world, the John Boehner buddies of the world, that they’re not paying any social security tax. Or the majority of them.
Thom Hartmann: Okay, we’re getting the early word now on what the debt commission, President Obama, you know the way he likes to do things is to have experts look at things and evaluate them and analyze them, experts from all points of view. If only George Bush had done that before he went into the Iraq war, right? There’s something to be said for doing things that way. On the other hand, sometimes there’s something to be said for simply saying no, this is the right thing that’s the wrong thing, we’re going to do the right thing.
In any case, he had these, he’s, and the other problem is who are your experts. Arguably that’s what George W. Bush did. W turned it over to Cheney, Cheney went down to the CIA. He said okay give me your right wing hacks, give me your guys who want war with Iraq and let’s cherry pick some intelligence and when people in the CIA pushed back on it, they got threatened. You want to see the story, go see the movie Fair Game. Movie will blow your mind. You will be joining me in calling for Karl Rove, Dick Cheney and Scooter Libby to be tried for treason.
But in any case, what Obama has done with the debt is he put together this debt commission, he says what are we going to do, you know, we’re broke. Well social security has nothing to do with the debt. And social security is solvent for at least 25 more years. And then it will be able to pay 70 % of benefits forever. There is no social security crisis. Well actually there is. Let me tell you what the social security crisis is. And this is the story that you’re not going to hear on Sean Hannity’s show. You’re not going to hear Limbaugh talking about this. You’re not going to hear even NPR talking about this. You’re not going to hear anybody who is, anybody who is the dog being wagged by the tail of billionaires talking about this. You probably won’t even hear about this on the television networks that purport to be progressive.
Here’s the real crisis in social security. That crisis is that there are a couple hundred thousand people in this country who make so much money, who make tens of millions of dollars, hundreds of millions of dollars, billions of dollars a year. Literally make so much money that if they paid social security tax on it the same as a fireman or a policeman or a teacher or you or me pay on it. If you’re making less than, I think it’s 106 thousand dollars a year right now. If you’re making less than 106 grand a year, every single you earn, you pay social security tax on and your employer matches. You’re paying about 6 and change as I recall and your employer is paying about 6 and change. It’s a total of about 13% of every single penny up to 106 odd thousand dollars. 106, 107, it changes every year and I can never keep track of them all but it’s in that neighborhood.
After that, if you’re making enough money that you’re making more than 106 thousand dollars a year, you know how much money you pay in social security tax? Nothing. Not a penny. You make 200 thousand dollars a year, you got 97 thousand, 90 thousand and change that you pay no social security tax on at all. You get a gift of an extra 13%. You make 500 thousand dollars a year, you got 400 and, or you got 390 thousand dollars on which you’re paying no social security tax. You get an extra 13%. You make a million dollars a year, you’ve got about 900 thousand dollars a year on which you’re paying no social security tax. If you’re like John Paulson and you make 4.6 billion dollars a year, 4,600 million dollars a year, a million dollars four thousand, six hundred times, in one year. You pay social security tax on that 4 billion, 600 million dollars, you pay absolutely no social security on 4 billion, 599 million, 900 thousand dollars of it. You get a 13% bonus. John Paulson got a 13% bonus.
You have to pay it, I have to pay it, the guy working on the street out there filling the pothole has to pay it, but John Paulson, he doesn’t pay it. Stephen Helmsley, he doesn’t pay it. Jamie Diamond, he doesn’t pay it. The heads of Citibank, the heads of Goldman, they don’t pay it. That’s the crisis in social security. The talking heads on TV, who are making a million, two million, five million dollars a year, ten million dollars a year, 20 million dollars a year. They’re not social security tax on anything except the first hundred thousand. They’re getting a 13% bonus on the rest. That’s the crisis in social security that they don’t want you to know about.
What they don’t want you to know is that if social security tax worked the way income tax works, which is everybody pays it, then not only would social security be solvent forever, but you could literally and two different think tanks have done the math on this, a conservative one and a progressive one and they agree on it although the conservative one thinks it would be terrible policy and it would destroy America. But if the billionaires paid the same social security tax on every penny of their billions that they make, as the guy out in front of my building right now who is digging up the road pays on every penny that he earns, you could double social security payments tomorrow. Americans could actually retire on social security, and have enough money to maybe even take a vacation once a year. It would stimulate the economy massively and there would be no problem with social security ever. Ever.
And that’s the conversation they don’t want us to have. So they’ll talk about everything else. We got 40 trillion dollars in debt going on 100 years! Well that 40 trillion dollar hole? That would be fixed if you simply did away with the cap. It’s called lift the cap. But I’ll bet you, and I don’t know how to make a bet with three million people all at once, my listening and viewing audience, I don’t know how to do it. But I’ll bet you that when this commission comes out with their recommendations, number one, that is not one of the things that they will recommend. It’s not even one of the things that they will submit as a consideration. Because my guess is that the vast majority of the people on this commission are not paying social security taxes on much of their income, if not most of their income. Bet number one.
And bet number two, I’ll bet you, that President Obama, who knows that if he’s going to get re-elected in 2012, he’s going to have to get a lot of money from a lot of people who are not paying social security taxes right now and very much would not like to pay that 13%. I mean look at the blow back that he’s getting right now on talking about letting a 3% tax break on millionaires and billionaires expire. 3%, that’s what, that was Bush’s tax cut. He dropped the top marginal tax rate from 39 down to 36%. 3%. And these guys are willing to go to the mat over this. To the point that Obama is already backing up and going okay maybe, maybe for a year or two we can extend the Bush tax cuts, that 3%.
Do you really think that those people, that the lobbyists down here on K Street that start out at 300 thousand dollars a year, or if they’re a former member of congress, they start out at 900 thousand dollars a year to one and a half, if they were formerly a senator. You know, Chris Dodd will probably start out at two million bucks a year next year. If he starts at two million dollars a year, then 1 million, 900 thousand dollars of his income, he’s not paying 13% social security on. Do you really think that those people are going to say to the president and to elected members of congress, yeah sure, go ahead, raise our taxes by 13%.
Look at the stuck pig squealing coming out of people like Rush Limbaugh. He’s got a 400 million dollar contract. On 400 million dollar income, he pays social security taxes on 3, he pays no social security taxes, he gets a 13% subsidy from you and me on 399 million, 900 thousand dollars of his income. And he’s squealing like a stuck pig about having his income tax raised by 3% on that 400 million dollars. Can you imagine the noises he’ll make if somebody comes along, like the president of the United States, and says let’s raise Limbaugh’s taxes by 13% on the 399 million, 900 thousand dollars a year on which he pays no social security tax. Assuming that it’s actually true that he makes 400 million a year. I think that, I’m guessing that number is wildly inflated for PR purposes. Hannidy’s 200 million a year, Beck’s 30 million dollars a year. These guys are probably all making a fraction of that. But nonetheless, they’re making millions. And they’re not paying social security taxes on it. That’s the social security crisis in this country.
And because our, we have right now the finest government that money can buy, and the money is in the hands of people who are not paying social security taxes, the social security crisis that is going to be talked about by the talking heads on TV, mark my words, is not going to be the fact that most of those talking heads on TV are not paying social security tax on most of their income.
Thom Hartmann: So here, the debt chairman wants to cut social security and Medicare, this is the early word that’s coming out. These guys are saying you know we’re not even going to wait for the final report. We’re going to preempt it, we’re going to push for this, after all you know America is broke. Three republican presidents ran up a nine trillion dollar debt, we can’t afford anything. Now not a penny of that debt is in social security. Social security is a separate program from the federal budget.
I told you I was going to give you the republican riposte, the republican response to my point about billionaires not paying social security taxes, and here it is. It’s very simple. The republican response is well you know billionaires don’t pay social security taxes, because billionaires when they retire and get social security, don’t get billions from social security. I mean if you want them to pay 13% of their income on a billion dollars that’s you know 130 million dollars they’re going to pay in. If they make a billion dollars a year, they’re paying 130 million dolars a year into social security but when they retire they’re going to get $2000 a month or $1000 a month or $800 a month or whatever. Frankly I don’t, I’m sorry, I’m not on social security, I have no idea how much the monthly payments are. I know they’re not a lot. I have relatives on social security and I know that it’s, they’re pinching pennies. But anyhow, that’s the response.
Because the payments, the benefits are fixed, therefore, the payment into the program should be fixed. If social security was just a retirement program, that would be a pretty hard one to rebut with anything other than you know kind of the standard liberal response which I actually believe, which is we’re all in this together and do you really want people having to eat dog food and not take their drugs, their pharmaceuticals because they can’t afford it? They might be living next door to you? I mean aren’t we all in this together, at a certain level?
But the reality is that only 2/3 of social security is retirement benefits. Fully 1/3 of what social security pays out every year goes to people like my friend in Santa Fe, New Mexico, Michael Hutchison, the author, brilliant, wonderful guy, who was out running about ten years ago, in the winter, slipped on some ice on a bridge going over a river in Santa Fe, flipped over the bridge, it had a low, what do you call it, railing on the side. Flipped over that thing and fell 10, 20 feet down into the water, into the icy water, and broke his neck. And he’s a quadriplegic. And he lives on social security. And that’s, I mean, he’s not alone.
There are a lot of people in that kind of a situation in the United States. People who were born with birth defects that were so overwhelming that there’s no way their family could pay for it. People who have lost their spouses and lost all their income and been thrown into destitution. People who have been injured or wounded, people who are born without the ability to work, either because of physical or mental disability. They’re on social security. 1/3 of social security payments are caring for the most vulnerable among us. And the republicans want to say screw them. I don’t want my taxes going up. I earned a billion dollars, I want my billion dollars, damn it. And if you make your money the way Mitt Romney did, buying and selling companies, I don’t want to pay more than 15% income tax, and I don’t want to pay social security. And they got all that from George Bush. Actually they got a lot of that from Ronald Reagan.
So there is a moral issue here, and there is an issue of accountability and responsibility. And the dimension of it that you’re not going to hear discussed by the talking heads on TV, I guarantee you, this commission, I mean they’re coming out, they’re putting their pitch out there today. This is going to be all over the talk shows tonight, it’s going to be the topic on Sunday. It’s going to be on the front pages of the newspapers tomorrow. And nobody, I mean there may be a few, maybe Katrina Vanden Heuvel will, you know, maybe they’ll get generous and say oh let’s have a real liberal on. Can’t get Amy Goodman, she’s too much. Michael Moore, you know, back when Phil Donahue had his TV show on MSNBC, the rule, Jeff Cohen was his producer, Jeff is a friend of mine. He’s teaching now in Ithaca. And the rule, and he started FAIR, you know the Fairness & Accuracy in Reporting, FAIR.org. The rule that MSNBC had was any time you have a liberal on you have to have two conservatives to balance them and if you have Michael Moore on you have to have three conservatives to balance him. I’m not making this up. You can Google it.
So you know I don’t think you’re going to see any genuine progressives, real liberals on TV talking about oh what about raising taxes on the rich. What about not even you know like raising taxes on them, how about simply applying the tax to them that everybody else pays. What’s wrong with that? Why should a person who makes their living working as a Wal-Mart greeter part time to supplement their social security and they’re making 13, 15 thousand dollars a year, and every single penny of that, they’re paying social security tax on. Yeah I know, they’re below the poverty level, they don’t have to pay federal income tax, but they’re still paying every penny of that income, they’re paying social security tax on.
Why should that person be taxed at a 13% rate and Steven Helmsley of United Healthcare, John Paulson on Wall Street, guys who are making hundreds of millions or billions of dollars, after the first 100 thousand dollars have been made, and for these two guys it’s like in the first day of the year, right. By January 3rd that’s been covered. Every penny they make after that, they pay not one penny in taxes for social security. Why? It’s a game that’s been rigged for the rich. And you know, you’ll hear some democrats talk about this, you’ll hear Bernie Sanders talk about this every single week on this program. You’ll hear, there’s a number of democrats who are quite outspoken on this. The progressive caucus there’s nearly a hundred of them. Not one republican will touch this. Not one. Because they know which side their bread is buttered on. It’s just really that simple.
Transcribed by Suzanne Roberts, Portland Psychology Clinic.