My previous post "Killing Us Softly With Austerity, Part I," came before the deal

   Now  the deal has been struck.  The mythological “fiscal cliff” and its threat of  a bipartisan political economic disaster, something like Sherlock Holmes and Professor Moriarty fighting to a mutual death as they fell from the Victoria Falls, has been avoided.  Conan Doyle in fiction  eventually brought Holmes back and explained we he didn’t die.  We though know that we still have the Democrats and the Republicans, CNN and Fox News, the non cable networks and newspaper syndicates to keep on  inventing  all of the fictions they desire to maintain the wealth and power of the owners and investors in the capitalist system. 

                First, the practical effects of the deal are to push working people a little deeper into the quicksand, which is what the working class in the U.S. has faced for  the last three decades

 The regressive payroll tax deductions that the Obama administration established, the first really positive government action concerning taxation in decades, is gone as of now.

  I found that out in my first paycheck of the new year, as did tens of millions who live on wages and salaries.  Less net pay of course means less purchasing power.  The fact that direct cuts in social security and medicare were avoided is a huge positive, and one that the administration should  take well earned credit for, given the Republicans relentless campaign to force those policies down the throat of the people. 

The elimination of the Bush tax giveway to families with  for than $400,000 in annual income, while significantly above the $250,000 limit that Obama was demanding(and which in itself would still make the U.S. developed capitalist country with the lowest rate of taxation on high incomes in developed world ) is a smaller albeit not unimportant gain. 

 Of course,  “new Russia,” which has a 13 percent “flat tax” on income. would probably be considered by Euro-American capitalists as a "capitalist paradise. So far, there, though,  is no evidence that the Republican national leadership has contacted Vladimir Putin to offer him the 2016 Republican presidential nomination to run on a flat tax platform with the slogan, “better dead than taxed.”  Or that Gerard Depardieu, citizen of New Russia, plains to return to France and run for president on a 13% flat tax platform, boasting he was a much better actor than Ronald Reagan(which he was)

               But what can be done, beyond pointing out both the contradictions and the irrationality of present policies?  First, we, in the tradition of the Communist movement through the world, must have a list of demands---not demands that we can  gain in the short run, but demands that we can use to organize and educate the working class.  These demands must be understandable and rooted in real events, past and present.

                The first, since so much of the hidden maneuvering concerns the social security/ medicare funds and funding, would be to demand progressive social security reform, which has nothing to do with lowering benefits, increasing the age at which citizens receive full benefits. 

When the system was established in the mid 1930s, there was division over how it would be funded.  Some left New Dealers called for funding the program through progressive taxes on incomes, corporate profits, and other forms of wealth.  The majority supported regressive payroll taxes on workers and businesses. 

 Roosevelt supported that position for two reasons.  First, workers would see social security as their individual account, like a bank account, which would make it much more difficult for conservative governments to repeal the legislation in the future.  Second  Roosevelt understood, that big business, which both the real power in U.S. politics and society and the New Deal’s main enemy, could afford a payroll tax system much more easily than a system based on progressive general taxation.  Small business might rant and rave against the system and cheat as many workers as they could  cheat out of benefits.

My mother for example was told by her shopkeeper employer that an account was opened up for her and for six years he “took out” a small amount from her meager salary.  When she died thirty years after she quit working we found that there was no account for her.

But Roosevelt did say  when Social Security was pased  that in the future he expected that social security would be funded partially by general revenues to take some of the burden off working people.  And, the administration did seek to advance a “wealth tax act” at the same time that it enacted Social Security legislation in 1935.

                Serious progressive taxation of the rich was implemented during WWII and then decimated in two waves under Reagan and George W. Bush  over the last thirty years.  Those who  today for example see Ronald Reagan “raising taxes” and try to use him against the present Republican ultra-right miss the forest from the trees

  Detaxation along with the deregulation of finance capital, of  the interconnected banking and stock market businesses, has put us where we are and there is no way to pull ourselves out of the quicksand of contemporary U.S. capitalist crisis  until we systematically repeal these policies and update both taxation and regulation to regain what the working class has lost in income, benefits and security over these last three decades  and  put the working class, which is the foundation of the economy, on  better  footing.

                President Obama’s reduction in regressive payroll taxes has a positive step but that is now gone thanks to the “fiscal cliff compromise.”  And it wasn’t connected to any real social security reform.

If we revive Roosevelt’s belief that social security would eventually be partially funded by general revenues/wealth taxes, working people will understand that these reductions will give them more income security/purchasing power without reducing or endangering their social security accounts. 

If we also define progressive taxation as wealth taxes, the working class, who know that they have no wealth, are less likely to be conned by reactionary propaganda into believing that progressive  taxation threatens them and begin to understand that it is regressive taxation, payroll taxes, homeowner property taxes, tolls for public roads, licensing fees(all of which have increased substantially over the last three decades to “compensate” for the tax giveways of the Reagan Bush era) which  have saddled them with a mountain of consumer debt  without doing anything to hold back the flood of local, state and federal  government debt.

                We can also begin to educate the working class about the “debt ceiling” which was established by conservative coalition in Congress in 1939(after their large gains in the recession fueled 1938 elections) to restrict funding for  existing New Deal programs and prevent the establishment of new ones. 

 The debt ceiling, which conveniently disappeared in the Reagan and George W Bush years, has  been since WWII a weapon  used by conservative politicians to restrict progressive legislation of all kinds.  It has been raised over and over again to pay for WWII, forty years of a world  cold war, a dozen years of an world “war against terrorism.” 

The only time that conservative politicians tried to envoke it against military spending was the time when military spending was most necessary—in 1943, when they threatened to use the debt ceiling to block appropriations as leverage against Roosevelt’s directive to establish a 25,000 dollar a year cap on executive salaries(comparable to around 400,000 today).  If anything this was evidence that protecting the high incomes of the corporate leadership from the Roosevelt and the New Deal was far more important to them than winning the war against Hitler and  the fascist Axis.

                Reforming social security from the bottom up through partial funding by general revenues; restoring and updating pre Reagan tax schedules from the bottom up to restore hundreds of billions that was taken from low and moderate income people through the Reagan-Bush policies.  These policies would help make  the well-being of upper income groups dependant on the income, mass purchasing power, and security of low and moderate income groups instead of continuing in one form or another the absurd trickle down theory, which is in its various forms the rationale for detaxation and deregulation and has led to economic disaster over and over again.

                These policies are all realizable under the capitalism we  currently have.  They, along with complementary policies  like a version of the Works Progress Administration to provide millions of public jobs for the unemployed and  new national and regional public power programs on the model of the TVA, are based on programs which were established in this country in the  past and had significant success. 

They are also programs which deals rationally with both the consumer and public debt crises in that the increase mass purchasing power from the bottom up which reduces consumer  debt and stimulates furthers higher incomes and further increases in mass purchasing  power and restores a system of progressive taxation, in which the higher incomes and the new tax schedules can rationally deal with the federal deficit crisis. 

Capital loses twice with these demands, both  in higher taxes and in lower profits from interest payments garnered from debt.  But the working class wins, pulling itself up from the quicksand of the Reagan-
Bush policies and fewer capitalists will find themselves falling off or being pushed off the “fiscal cliff” only to rely on the “safety net” of federal bailouts.