"Things are getting worse in San Bernardino. The city filed for bankruptcy earlier this year, but its financial situation has continued to deteriorate. And now with what promises to be a heated court battle over payments to the state pension fund in the offing, further cuts are likely.
"Things are getting so bad that at a recent city council meeting, the city attorney advised residents to 'lock their doors and load their guns' because the city could no longer afford to keep up a strong enough police force."
Consider also this Reuters story from Greece:
"For hours the leader of the Greek journalists' social security fund had been chairing a meeting about disastrous losses on retirement savings caused by the country's economic collapse. 'She tried to present herself as the fund's savior and asked (members) to double contributions to 6 percent of salaries,' said one of those present that night at the Titania hotel. Spanopoulou, 58, did not succeed.
"When she rose to leave around midnight, enraged fund members first swore, then waded in punching, kicking and tearing at her clothes, according to witnesses. A bodyguard managed to bustle her out of the room, but another group caught her just outside the hotel and gave her a second beating. She spent the night in hospital.
"It was a brutal sign of the fury many Greeks feel at the way the country's debt crisis has dashed hopes of a comfortable old age. Greece's pension funds - patchily run in the first place, say unionists and some politicians - have been savaged by austerity and the terms of the international bailout keeping the country afloat."
When governments cannot pay their current employees because they've gone broke paying pensions to previous employees (among other obligations), you don't get a "fiscal cliff," or even a bad recession. You get the unraveling of civilization.
That is how Republicans should present the stakes in the budget impasse when speaking to the press. So far, John Boehner has described the president's proposals as "unserious" and Mitch McConnell has let it be known that he laughed in Tim Geithner's face. Does either of those responses convince the average voter that something is at stake here beyond Republicans protecting their wealthy friends?
In point of fact, the Republicans have already bowed to the election results and agreed to raise taxes on the top 2 percent of earners. But the president is pushing for much more. Far from proposing spending cuts, Obama touts new stimulus spending and "investment" in infrastructure. He wants to limit deductions and have sole discretion to raise the federal debt limit. He may be hoping to provoke angry Republicans into permitting sequestration, calculating that he could withstand a recession at the start of his second term and still emerge with his legacy intact, but that Republicans would be devastated in the 2014 midterms if they were made to take the blame for a downturn.
It's a triple irony that Obama is successfully painting Republicans into the "party of the rich" corner. First because they've already agreed to tax increases, and second, the much-maligned Bush "tax cuts for the rich" actually made the code more, not less, progressive. And third, because the Republicans are holding out for what? For spending reductions. What is the nature of those spending cuts? There are a number of possibilities, but one that Republicans have endorsed includes means-testing entitlements.
Means-testing translates into another tax on wealthier Americans. They will receive fewer benefits from programs like Social Security and Medicare than they've been led to expect. So Republicans are holding out -- and being scorned as the party of the rich -- for demanding fewer benefits for, yes, the rich.
The Republicans are attempting to divert the nation -- not from the "fiscal cliff" but from something much worse. If government debt is not controlled by spending cuts (tax increases on the rich make scarcely a dent), the U.S. is headed for drastic economic decline. Interest rates will rise to attract wary international investors. Rising interest rates will in turn increase our debt service burden, while a diminished private sector will provide less and less tax revenue. The combination of spiraling debt service and entitlement spending will quickly leave no funds for any other purpose.
That's when it becomes Mad Max. That's what the negotiations are about.
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