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David Peterson's Blog

Web Address: http://www.zcommunications.org/zspace/davidpeterson
Bio: I am an independent writer and researcher based in Chicago. (More)

All Peterson Blogs

Social Contracts, American Style II

By David Peterson at Mar 12, 2005


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Man. Is the class-warfare dragon in the States fanning its wings these days. Or what? Not only does it feed off the Bunko Artist-in-Chief's proposal to “reform” the Social Security system---potentially the single greatest financial scam in American history. (Though I must admit: The Pentagon has got such a huge headstart over it, it'd take the Social Security scam quite a few years to catch up.) Or the proposal---vetted most recently and celebratedly by the chairman of the U.S. Federal Reserve---for a national sales tax to replace the income tax, two basic re-draftings of the social contract to be accompanied by the reinstitution of the thumb-screws, public floggings, and debtors' prison, should push come to shove.
(Real fast aside. To repeat a question that Paul Krugman asked the very next morning: "Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously?" Though to one-up Krugman: Why on earth would anyone ever have taken this pose seriously in the first place?)
But also, at the other end of the American food chain, the new bankruptcy law passed by a margin of 74-to-25 in the U.S. Senate yesterday (with 18 of the Senate's 44 Democrats voting with the Republican block) to “keep debtors in bankruptcy for longer periods than in the past while allowing high-income earners to continue to shield such assets as trust funds and expensive homes in states with large homestead exemptions, such as Texas and Florida,” as the Chicago Tribune reported this morning. By all appearances, this one looks like beauty. A "victory for President Bush and credit card companies," the Trib called it. "If the measure becomes law as expected, many Americans who file for bankruptcy protection against their creditors will be unable to wipe out medical bills, credit card debt, automobile loans and other debt as they can do now....Critics said the bill would remove a safety net for many Americans who do not have significant savings and find themselves in bankruptcy court because they have lost their jobs or suddenly face a large medical bill." Sounds like a plan to me. (See Social Contracts, American-Style I.) Yet another "[r]apid-fire [victory] by Republicans on business-friendly legislation," the New York Times reported. "The banking, credit card and retail industries, which have pushed for the legislation for more than seven years, argue that changes to current law are needed to end abuse of the system by people who shirk their financial obligations when they could repay some of what they owe," the Washington Post explained. "The three industries gave more than $56 million to political parties and candidates in the 2004 elections, most of it going to Republicans, according to the Center for Responsive Politics...." The Times also reported that an effort by the senior Senator from Massachusetts to "rally members of his party around a series of amendments that would offer special protection for those whose bankruptcy was attributed to health care costs or other unexpected expenses" went kerplunk. The whole disgraceful event prompted the Senator to quip: "This legislation makes the bankruptcy courts of the United States the collection agency for the credit-card industry." Debtors will now find it harder to protect themselves from astronomical medical bills---the U.S. alone in being without a national health care program, let us not forget, medical-related debt being a major component behind the bankruptcy phenomenon in the States. (See “Illness And Injury As Contributors To Bankruptcy,” David U. Himmelstein et al., Health Affairs, posted February 2, 2005.---For the PDF version of the same article.) Best of all, though, was this quote from Illinois Senator Richard Durbin: "The worst element of the bill is that it is going to force a lot of people deeper into debt. Many won't be discharged from debt under these payback plans because many of them have debts beyond their control. They will be burdened with these debts for years to come." Debt peonage, the most heavily incarcerated population of any in the entire world, wars of foreign aggression, and spreading freedom and democracy around the globe: It all makes for a very nice version of the social contract indeed.--- Once again: Sounds like a plan to me. Maybe the regime in Washington can solve its all-volunteer military-personnel shortage by slipping legislation through Congress that offers a state-buyout of a person's medical debts in return for some form of “national service,” the size of the buyout being directly proportional to the risks of the service involved? Thus, for example, at the low-end, dental work can be exchanged for replacing the divots on golf courses with brand new sod after insurance and credit card company executives finish a round of golf. At the mid-level, elective surgeries for driving American oil company executives around Baghdad. (Or Caracas, in case it's ever liberated.) More serious and invasive procedures in return for helping the Americans manage their vast “rendition” gulag around the world. While at the extreme high-end, any life-saving procedure for serving as a human land-mine sniffer ahead of the troops before they invade the next outpost of tyranny. "To what do the billionaires owe their good fortunes?" Thus ponders an essay introducing the 671 names to have made it onto Forbes's All-Billionaires list 2005, a total of 215 more billionaires than made the 2003 list (a record 131 new billionaires this past year alone), accounting for some $800 billion more net worth this year than just two years ago. The co-authors then canvass a number of possible explanations. But they settle upon one above all: "old-fashioned entrepreneurialim." "The U.S. is now home to an astonishing 341 billionaires," Forbes reminds us, "just shy of half the world's billionaire population."
"Strengthening Social Security for Future Generations," White House Office of the Press Secretary (Homepage) "The Tax System: Testimony of Chairman Alan Greenspan Before the President's Advisory Panel on Federal Tax Reform," March 3, 2005 "The World's Billionaires," Luisa Kroll and Lea Goldman, Forbes, posted March 10, 2005 "Why So Many New Billionaires?" Luisa Kroll and Lea Goldman, Forbes, posted March 10, 2005 American Bankruptcy Institute (Homepage---for all of you "busy insolvency professionals" out there) "Deficits and Deceit," Paul Krugman, New York Times, March 4, 2005 "Bankruptcy bill passes Senate," Nicolas Brulliard, Atlanta Journal-Constitution, March 11, 2005 "Going broke may prove costlier than ever," M. William Salganik, Baltimore Sun, March 11, 2005 "Senate OKs tougher bankruptcy rules," William Neikirk, Chicago Tribune, March 11, 2005 "Democrats Are Divided, As Some Back G.O.P. Bills," Carl Hulse, New York Times, March 11, 2005 "Bracing for a Bankruptcy Rush," Riva D. Atlas and Eric Dash, New York Times, March 11, 2005 "Bankruptcy Overhaul Gets Senate OK," Ann McFeatters, Pittsburgh Post-Gazette, March 11, 2005 "Florida Door May Shut on Debtors," Helen Huntley, St. Petersburg Times, March 11, 2005 "30% interest rates: Sound business or loan sharking?" Editorial, USA Today, March 11, 2005 "Senate Passes Bill To Restrict Bankruptcy," Kathleen Day, Washington Post, March 11, 2005 "Health Economics 101," Paul Krugman, New York Times, November 14, 2005 (as posted to Truthout) "Bad for the Country," Paul Krugman, New York Times, November 25, 2005 (as posted to Truthout) Social Contracts, American-Style I
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Re: Social Contracts, American Style II

By Shannon, James at Mar 13, 2005 03:49 AM

The fact of the matter is - Rich people are rich because they know that taxes are to only be paid by stupid employeed fools. All government is in the hands of the wealthy and will not make the rich pay their fair share. Since they make way more than they need and don't have to spend it to live, they get to keep their money and buy politicians who pass laws to make the poor slob consumer pay for everything. That is history The rich are rich because they are better people than the rest of us and deserve more. They are landed gentry - thay do not have to work. God shines wealth upon them because of their goodness.

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Re: Social Contracts, American Style II

By Yurallnuts, Realpc at Mar 13, 2005 01:42 AM

Credit companies are like crack dealers, and people have to learn to say no. If there are no consequences, if you can live it up and have your debt evaporate, nothing will be learned. Americans buy too much stuff and if you don't everyone thinks you're poor or eccentric. Yes the economy depends on consumer spending but does it have to be this extreme? I am not against capitalism, because the right to private ownership is essential for individual freedom. However, I am against greed and irresponsibility.

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Re: Social Contracts, American Style II

By Jautter, Mind at Mar 12, 2005 23:33 PM

Realpc& bwong;After the Michael Jackson trial concludes,WTGN will be back to moderate your discussions. As for indebtedness,barring catastrophic medical encumberances,differentiating what we need versus what we want, and choosing the former, will keep us solvent,maybe.My guess is that before too long,we'll be seeing ads like "one gallon milk,no money down,50 cents a week for 6 weeks."

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Re: Social Contracts, American Style II

By Protocol4, Nemo at Mar 12, 2005 23:11 PM

To add to what bwong just said, realpc, you should really read up on 19th century U.S. economic history to understand how credit functioned in the early days of the republic (acutally you will find that exactly what are considered today as irresponsible borrowing practices fuelled economic development).

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Re: Social Contracts, American Style II

By Gammon101, Bwong at Mar 12, 2005 22:42 PM

"If I am careful to stay out of debt and only buy what I can afford" If everyone acts like you the Capitalist economy would collapse.Consumption and waste fuel the economy. Borrow and spent is what keep the engine humming.The huge financial sector is mostly about maganing all aspects of debts. You have no clue how real capitlism works, do you? This explains your response to me in the other blog. You have some folksy ideas of what capitalism is and think that it is reality. PS This has nothing to do with the topic proper in this blog.

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Re: Social Contracts, American Style II

By Yurallnuts, Realpc at Mar 12, 2005 17:54 PM

The former law was well-meaning but actually allowed people to steal from their creditors. It allowed people to make lousy business decisions and get away with it. Of course, there are still many unfair laws that allow the ultra-rich to get away with massive theft, and of course those laws need to be changed also.

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Re: Social Contracts, American Style II

By Yurallnuts, Realpc at Mar 12, 2005 17:51 PM

The former law was not only unfair to the nasty credit companies. It was also unfair to the small companies the debtors owed. If a small business owner claims bankruptcy, all the other small businesses they owed get screwed. What is fair about that?

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By Yurallnuts, Realpc at Mar 12, 2005 17:50 PM

There are cases where debts should be forgiven. But the former law made it too easy for people to be irresponsible and take advantage. If I am careful to stay out of debt and only buy what I can afford, I should be better off than someone who has spent all their money on things Americans consider necessities but are really luxuries, so that they are not ready for emergencies. I know people who have tremendous debt but still have extra large TVs and cell phones, the latest computer, etc.

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