Tom Ferguson

Roosevelt Institute Senior Fellow

Recent Posts by Tom Ferguson

  • Who Buys the Spies? The Hidden Corporate Cash Behind America’s Out-of-Control National Surveillance State

    Oct 23, 2013Tom FergusonPaul JorgensenJie Chen

    This piece was cross-posted from AlterNetThis is the first in a new series from AlterNet's New Economic Dialogue Project, edited by Lynn Parramore. 

    This piece was cross-posted from AlterNetThis is the first in a new series from AlterNet's New Economic Dialogue Project, edited by Lynn Parramore. 

    Long before President Obama kicked off his 2008 campaign, many Americans took it for granted that George W. Bush’s vast, sprawling national security apparatus needed to be reined in. For Democrats, many independents, and constitutional experts of various persuasions, Vice President Dick Cheney’s notorious doctrine of the "unitary executive" (which holds that the President controls the entire executive branch), was the ultimate statement of the imperial presidency. It was the royal road to easy (or no) warrants for wiretaps, sweeping assertions of the government’s right to classify information secret, and arbitrary presidential power. When Mitt Romney embraced the neoconservatives in the 2012 primaries, supporters of the President often cited the need to avoid a return to the bad old days of the Bush-Cheney-Rumsfeld National Security State as a compelling reason for favoring his reelection. Reelect President Obama, they argued, or Big Brother might be back.

    But that’s not how this movie turned out: The 2012 election proved to be a post-modern thriller, in which the main characters everyone thought they knew abruptly turned into their opposites and the plot thickened just when you thought it was over.

    In early June 2013, Glen Greenwald, then of the Guardian, with an assist from journalists at The Washington Post, electrified the world with stories drawn from documents and testimony from Edward Snowden, an employee of Booz Allen Hamilton working under contract with the National Security Agency, who had fled the country. They broke the news that the U.S. government had been collecting vast amounts of information on not only foreigners, but also American citizens. And the U.S. had been doing this for years with the cooperation of virtually all the leading firms in telecommunications, software, and high tech electronics, including Google, Apple, Microsoft, Verizon, and Facebook. Sometimes the government even defrays their costs.

    For most election analysts, the revelations came like a bolt from the blue, despite a whole series of warning signs. These included Obama’s rapid fire decision to step up the war in Afghanistan right after he took office, the alacrity and severity with which his administration prosecuted national security whistleblowers after promising greater transparency and the administration’s sweeping claims about the government’s right to hold citizens without trial for indefinite periods. Not to mention the Justice Department’s insistence that killing American citizens without any kind of court hearing is lawful, the efforts to prosecute journalists for simply posting links to leaked documents, the overkill that attended official responses to the Occupy movement and protests at the national party conventions, or the White House claims that press freedoms enshrined in the Bill of Rights do not cover bloggers in an era in which everyone, including the New York Times, uses blogs.

    Even now, the suggestion that the Obama administration embodies a distinctively new form of extensively privatized National Security State organically linked with the famously contentious Bush-Cheney structures takes some getting used to. In particular, many readers are likely to wonder what a bitter, partisan stalemate such as the U.S. just witnessed over raising the debt ceiling can possibly mean in a situation where Big Brother and Big Money are working hand in hand through it all.

    As the storm over surveillance broke, we were completing a statistical analysis of campaign contributions in 2012, using an entirely new dataset that we constructed from the raw material provided by the Federal Election Commission and the Internal Revenues Service (which compiles contributions from so-called “527”s).  In light of what has transpired, our quantitative analysis of presidential election funding invites closer scrutiny, particularly of the finding that we had already settled upon as perhaps most important:  In sharp contrast to endlessly repeated claims that big business was deeply suspicious of the President, our statistical results show that a large and powerful bloc of  “industries of the future” – telecommunications, high tech, computers, and software – showed essentially equal or higher percentages of support for the President in 2012 than they did for Romney.

    Though documenting the claim would take us far beyond this post, we believe that the emergence of these new industries is a key factor in transforming the old National Security State into its new, even more sinister twenty-first century model. They are not the only important influence in that transformation, of course. These would include not only 9/11, but the rapid growth of the rest of the homeland security “industry,” including private prison companies and many other non-obvious players focused on data collection in particular domains, such as the vast infrastructure built out to service and support U.S. interventions in Iraq and Afghanistan. The policy of macroeconomic austerity, which made privatization of the old National Security State so seductively attractive to policymakers under pressure to cut government expenditures, has also played a significant role.

    But the point that our findings document is perhaps most instructive of all. Many of the firms and industries at the heart of this Orwellian creation have strong ties to the Democrats. Bush and Cheney may have invented it, but national Democratic leaders are full-fledged players in this 21st century National Surveillance State and the interest group pressures that now help to sustain its defenders in Washington work just as powerfully on Democrats as on Republicans.

    Over the next few weeks on AlterNet, we will explore what our data show about the 2012 election. But for now, we want to focus on the telecommunications, high tech, computers, and software industries, which contain many firms deeply involved in the surveillance programs.

    We built two datasets for our research. One covers big business, meaning firms big enough to rank among the 350 largest on Fortune's lists plus members of the Forbes 400 richest Americans. The second is a much larger sample containing every firm of every size, from the smallest to the largest.

    We assess support by firms and their executives (our dataset is the first to integrate contributions from both, including “independent” expenditures and, of course, Super Pacs) in two ways: We count the percentage of firms that make any contribution at all to each candidates’ campaigns (and their party’s national committee) and we track the legit cash money split between the two candidates. For more details, see the preliminary version of our full length study, available here.

    In our big sample, which pretty well approximates “business as a whole,” Obama trailed far behind Romney. 41 percent of all the firms (or, thanks to the Supreme Court, their executives) contributed to Romney; only 24 percent donated to Obama. But rates of contributions from big businesses were much higher for both candidates: Just over half (56 percent) contributed to Obama, while fully 76 percent donated to Romney. Our conclusion is straightforward: the traditional view that the Republicans are the party of business finds some support, but our results suggest much stronger backing for the President within big business than any account of the election suggests.

    But the really significant findings emerge when you look at particular industries. Six industries where the President ran especially strongly attracted our attention: telecoms, software, web manufacturing, electronics, and computers, plus the defense industry. His support in these industries ran far above his average levels of support either for business as a whole or the rest of big business. In fact, it equaled or exceeded the backing these firms afforded Romney.

    In subsequent posts we will look at other industries in which Romney showed particularly strongly and consider the now red hot question of support by business groups for Tea Party and “main line” Republican congressional candidates. But we think this finding is the most significant of all: Firms in many of the industries directly involved in the surveillance programs were relative bastions of support for the President.

    It is a sobering conclusion. At the time President Obama took office, many of his supporters expected a radical change in course on national security policy. This did not happen. For sure, limitations on some of the worst excesses were put in place, but there was no broad reversal. The secret programs of surveillance expanded and the other policies discussed above, on indefinite detention, treatment of whistleblowers, and executive prerogatives relative to Congress stayed in place or broke even more radically with tradition.

    Our analysis of political money in the 2012 election shines a powerful new light on the sources of this policy continuity. We do not believe that it would be impossible to strike a reasonable balance between the demands of security and freedom that accords with traditional Fourth Amendment principles and checks abuses of government surveillance rapidly and effectively. But a system dominated by firms that want to sell all your data working with a government that seems to want to collect nearly all of it through them is unlikely to produce that.

    The authors gratefully acknowledge support from the Working Group on the Political Economy of Redistribution of the Institute for New Economic Thinking for preparation of the database, but the paper represents the views of the authors, not the institutions with which they are affiliated. The entire Political Money Project database for this essay is to be freely available to the public when work on it is completed.

    Thomas Ferguson is a Roosevelt Institute Senior Fellow, professor of political science at the University of Massachusetts, Boston, and contributing editor of AlterNet. His books include "Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems" and "Right Turn: The Decline of Democrats and the Future of American Politics."

    Paul Jorgensen is assistant professor of political science at University of Texas, Pan American and non-resident fellow at the Edmond J. Safra Center at Harvard.

    Jie Chen is university statistician at the University of Massachusetts, Boston.


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  • The English Riots: Just Meaningless Sound and Fury?

    Aug 23, 2011Tom Ferguson

    Zizek misses the point: Austerity politics is a social and economic disaster.

    Zizek misses the point: Austerity politics is a social and economic disaster.

    In a recent essay, Slovenian theorist and literary provocateur Slavoj Zizek attempts to unpack the political meaning of the riots in England. These broke out in response to the shooting of Mark Duggan by the Metropolitan Police and then spread rapidly from London to other cities. Zizek argues that the riots amounted to an exercise in sound and fury signifying nothing -- symptoms of an "ideological-political predicament" in which opposition can only be expressed through meaningless bursts of violence. This is the essence, he suggests, of global capitalism. He takes issue with both conservative and liberal responses, calling out the former for promoting an authoritarian crack down and the latter for trying to find "deeper meaning" in the social and economic conditions faced by the rioters.

    The essay strikes me as similar to a lot of Zizek's other work: too clever by a half, with strained echoes of fashionable appeals across ideological divides reminiscent of, for example, Barack Obama. The difference is that Zizek is a theorist. Thus the discussion is framed in terms of High Theory: an abstract nod first to the left, then another equally ethereal gesture to the right, followed by the claim that both are plainly inadequate.

    Alas, the thinner the ice, the faster Zizek skates. He is impatient to get a theory of resistance going, but the fact is that we are only three years into the Great Recession, so his efforts are a bit premature. If you look back at the Great Depression, you will see that distinctively new patterns of resistance usually took three to four years to form. Until then, there was discontent aplenty, but electorates in advanced countries mostly sullenly voted out the conventional politicians in office and replaced them with one or another of the existing moderate "out" parties. Occasionally, there were riots, and in peripheral countries, much worse. But only after the 1931 European financial crisis (sense a pattern?) dragged the whole world down another notch did real swamp creatures swarm out, as unbearable budget cuts and falling national incomes forced progressive social groups to organize more seriously. So I suspect it will be this time.

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    In contrast to what Zizek proposes, I doubt that what we see now reveals the inner essence of global capitalism or anything else. It's probably not accidental that he finds political movements in Greece and Spain more constructive -- they are further into the crisis than the Brits, whose turn to the right is brand new. The British riots probably reflect the despair and anger of marginalized populations staggering under early shocks of austerity while local authorities themselves reel from cuts in their own budgets. The world has a lot more experience with macroeconomic austerity than most of the media or social science cares to talk about. The social disasters that sweeping budget cutbacks bring in their wake are plain to anyone who wants to see.

    Zizek is right about one important fact: Repetition is a basic feature of social history. Unfortunately, it's not, as St. Augustine thought, the mother of learning. Its deadly spiral now mostly reflects the indifference of elites, the realities of political power, and wretched theories of free market fundamentalism. Zizek probably knows as well as anyone what Hegel's students reported he said in his famous lectures on Reason in History: "What experience and history teach is this: peoples and governments have never learned anything from history and acted according to what one might have learned from it." The euro crisis and the disastrous G20 Toronto Consensus in favor of austerity will churn world politics for a long time.

    Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and Senior Fellow at the Roosevelt Institute. The International Journal of Political Economy has just published a revised version of his paper with Robert Johnson on "A World Upside Down: Deficit Fantasies in the Great Recession."

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  • Memo to New York Times: Data Shows That 'We' Are Not Responsible for D.C. Deadlock

    Aug 15, 2011Tom Ferguson

    Pundits should look at data, rather than mirrors, to find the real culprit behind the mess in Washington.

    Pundits should look at data, rather than mirrors, to find the real culprit behind the mess in Washington.

    After this summer's exhausting budget and debt ceiling follies, everyone who can turn on a TV knows that Congress is sharply polarized along party lines. But most pundits are way off on what causes it.  As I've pointed out repeatedly, too many of them miss political money's pivotal role in creating disastrous deadlock. The evidence for this isn't conjectural. It's in the data for any who care to look.

    Virtually all polls, including those of organizations like CBS that poll with the New York Times, acknowledge that public support for cutting Social Security and Medicare is minuscule and that the "no new taxes" posture assumed by Republicans and some Democrats is repudiated even by most members of the Tea Party (for more polls, see here, here, and here). The public is not sharply divided on these issues. Quite the contrary.

    But on Sunday, a Times analyst once again tried to lay the blame for D.C. gridlock on the public. Brushing aside the importance of political money, Sheryl Stolberg instead recycled familiar arguments from various analysts who argue that you and I are responsible: "If Americans want to know why their elected officials can't compromise...perhaps they ought to look in the mirror."

    Analysts and reporters need to stop looking in mirrors and start scrutinizing data. There is little evidence that Congressional polarization is rooted in sharp differences in public sentiment.

    The most popular theory about the origins of polarization is the "cultural wars" approach. In this view, American society has fractured into warring segments over a set of "hot button" issues. Our highly polarized politics, runs the argument, just reflects deep differences over policy and ideology that now separate Americans from one another-- differences that some television commentators profess to believe run deeper than at any time since the Civil War. But this just doesn't hold up. Quite like false 1980s claims that American public opinion had shifted markedly to the right and that Ronald Reagan's magic powers as a "Great Communicator" had established his position as the most popular American president of all time (see Ferguson and Rogers, "Right Turn" and Page and Shapiro, "The Rational Public"), this line is easily refuted by simply aligning data on public opinion over time.

    As Morris Fiorina shows in his 2009 book "Disconnect", whether you rely on Gallup, General Social Survey, or National Election Survey data, sharp ideological shifts in American opinion are not to be found. Between 1972 and 2004, for example, even the much-touted shift in the percentage of the population styling themselves "liberal," "conservative," and "moderate" bounced very little. Between the 1970s and the 2000s, the "liberal" label declined slightly in popularity, but only by about 5 points. All through the period the largest category of people who expressed a preference self-identified as "moderates," while the percentage of people thinking of themselves as extreme conservatives actually fell. As Fiorina and Abrams comment in a 2008 study: "The percentage of exact middle-of-the scale placements was 27% in 1972 and 26% in 2004" (see "Political Polarization in the American Public" in American Political Science Review, 11, 563-589).

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    Time graphs of the levels of these and similar measurements typically look like near-straight lines. If Americans were really becoming more extreme in their politics, the graphs would look quite different. To the extent any ideological change at all shows, Americans actually appear to be leaning slightly leftward. On some issues, such as same sex marriage, public opinion has moved sharply in that direction.

    Given the mass of contrary data, analysts intent on finding electoral explanations for polarization typically appeal to some version of political "sorting" notions. The idea is that even if there is no basic change in the trend of opinion, perhaps the population is somehow shoehorning itself into more homogeneous political units that then battle out their differences. The most obvious suggestion, again much touted in the media, involves the gerrymandering of legislative districts. This is a testable hypothesis. Many have tested it. The upshot is that while some stunning examples of gerrymandering for partisan advantage certainly exist, such as the lurid Texas case that led to former House Majority Leader Tom DeLay's conviction, many counter-cases can also be found. In general, redistricting cannot possibly account for the observed degree of polarization. This actually should have been obvious all along: U.S. Senate districts have not changed at all, but the Senate exhibits about as much polarization as the House over the same period.

    Many other "sort" theories have been advanced. Everyone knows that Republican strength in the South has surged. But a substantial part of the population was more conservative there to begin with; they didn't change much. It also turns out that the sharpest increases in polarization occurred in the north and east. Most studies of geographic polarization thus end up concluding that geography has been at best a marginal factor.

    Complicating the story by adding references to migration -- of African-Americans from South to North and whites to the South -- does not help much, either. The changes in each party's regional strongholds undoubtedly bolster dominant viewpoints in each party by, for example, increasing the ranks of relative liberals in the Northeast and conservatives in the south and west. So differences between the parties should grow more distinct, right?

    Wrong. Fiorina's points about the lack of change in Southern opinion on policy and polarization above the Mason-Dixon line remain stumbling blocks. Pointing to all the intensely partisan Republican representatives who come from the Sunbelt is not an answer, but just reframes the question.

    The one form of "sort" theory with traction actually undermines the logic of explaining political change over time through it. Studies by Fiorina and Levendusky are persuasive that individuals who hold specific "hot button" attitudes that political parties choose to highlight, such as abortion, gay rights, or stem cell research, tend to migrate toward the party championing those issues. But this research also shows that the phenomenon is miniscule -- usually only a few percentage points. In reality, huge numbers of people holding hot button attitudes continue to affiliate with the "wrong" political party. Most also do not change their broader ideological label when they drift. So the overall ability of labels like "liberal" or "moderate" or "conservative" to predict positions even in most sensitive issue areas is still usually limited.

    The conclusion has to be that "sorting" was a minor part of all the sound and the fury that came with polarization; it cannot be the Archimedean lever that moved the American political world. That was political money.

    As I recently pointed out in the Financial Times, a tidal wave of political cash that emerged in the 1970s has washed away the remnants of the old seniority system in Congress, drastically changing the way that body operates. In its place, Congress now uses a system of "posted prices" for selecting who serves on committees and assumes leadership positions. Individual members of Congress compete for key slots by raising enormous amounts of money not only for themselves, but for the national congressional and senatorial campaign committees. These are controlled by Congressional party leaders. The leaders' control of these committees, along with the vast fixed investments in research, polling, and media capabilities these committees maintain, gives them more leverage over individual Congressmen and women. It makes crossing party lines far more costly than, for example, in the nineteen fifties.

    In dividing so sharply and refusing compromises, Congress is listening primarily to those who contribute political money, not the public. As a political slogan "No new taxes" was around long before the Tea Party. It is the mantra not of the public, but of a huge swath of super-rich Americans. In an op-ed in today's New York Times, Warren Buffett readily acknowledges this simple truth. So should reporters who purport to analyze the roots of America's current political stalemate.

    Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and Senior Fellow at the Roosevelt Institute. This essay borrows from his recent paper, "Legislators Never Bowl Alone: Big Money, Mass Media, and the Polarization of Congress."

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  • Dodd-Frank: Whose Law Is It, Anyway?

    Jul 21, 2011Tom Ferguson

    One year later, the big banks are more dangerous and reckless than ever. And they are crafting the very legislation meant to keep them in check.

    Who would have guessed that the World Spirit has such a sense of humor?

    One year later, the big banks are more dangerous and reckless than ever. And they are crafting the very legislation meant to keep them in check.

    Who would have guessed that the World Spirit has such a sense of humor?

    A year to the day after Dodd-Frank allegedly gave regulators the powers they need to save us from reckless banks that are too big to fail, government officials, bankers, and regulators are meeting in Europe. They are trying to cobble together yet another rescue plan for Greece, while Portugal and Ireland wait desperately in the wings and Spain and Italy hold their breath. If the Eurocrats fail, any number of banks could knock over, bringing the world a "Lehman in reverse." Only slightly less sensationally, there is a real chance that the European pow wow could lead to a "credit event" that would force financial houses that sold credit default swap protection (aka: insurance) against loan defaults to pay up.

    Now here's the really fun part: Remember AIG? American financial houses are widely believed to have written billions of dollars worth of those credit default swaps. Alas, the Fed and the Treasury do not know who is on the hook for how much. They hope, but cannot say for sure, that another AIG is not out there somewhere, capable of triggering chain bankruptcy again or starting big runs on money market funds.

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    That's the Dodd-Frank "reform" in action. Sure, you can respond that this is only to be expected since, as Michael Hirsh reported in Newsweek, Congressman Barney Frank's committee allowed Goldman Sachs to proffer nine pages of amendments to drafts of the bill covering derivatives.  But I think this is too tepid. What's happening with financial reform is not just business as usual. The money-driven American political system has now spun completely out of control. It imperils us all. We may escape this time, but the incentives are still there for the monsters to keep taking risks until they have to be bailed out by us again.

    Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and Senior Fellow at the Roosevelt Institute

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  • From New Deal to Raw Deal: The Real Economics of Cutting Social Security

    Jul 7, 2011Tom FergusonRobert Johnson

    social-security-200Contrary to the mainstream media and D.C. drumbeat, Social Security has little to do with the federal deficit. So why is there talk of cutting it?

    social-security-200Contrary to the mainstream media and D.C. drumbeat, Social Security has little to do with the federal deficit. So why is there talk of cutting it?

    This morning the Washington Post reported that the White House is offering to cut Social Security as part of a broader budget deal with the Republicans. At last we have the answer to the question everyone has been asking about the Democrats: How far can they go?

    The financial collapse of 2008 has taught us to be skeptical of economic forecasts that simply spin trends out into an indefinite future. Most central bankers, economists, and business leaders failed not only to foresee, but even to imagine, the colossal dimensions of that catastrophe.

    Now, however, the very people who said that there was no way for regulators to recognize financial bubbles in advance predict budget gloom and doom. Scary charts of the time path of U.S. debt to GDP ratios -- many originating from the Peterson Foundation -- fill the media, along with specious arguments about how budgets affect national income.

    The strangest of these debates involve Social Security. The "arguments" here sort mostly into two groups: One rails on about how "runaway entitlements" are leading to a deficit explosion. The other advises that Social Security can be "saved" in the long run by timely changes, typically involving a mix of taxes and benefit cuts, including, notably, yet another rise in the age of eligibility for the program.

    Neither point of view makes much sense. The simple fact is that the deficit did not swell tidally until the financial crisis hit. While George W. Bush's tax cuts destroyed the Clinton budget surpluses, enough tax revenues trickled in to keep the deficit from blowing out until the economic equivalent of Hurricane Katrina hit in the fall of 2008. It was the one-two punch of the bank bailouts and the Great Recession that led to today's giant gap between general revenues and expenditures.

    But even now there is no near term threat to Social Security's solvency. In 1983, Congress enacted into law recommendations of the Greenspan Commission to raise Social Security taxes to cover the retirement bulge coming from baby boomers. Since then, the program has piled up enormous surpluses. These have been invested in government bonds, thus helping to finance the rest of the government.

    The 2011 Report of the Trustees of the Social Security Trust Fund projects that the Trust Fund and interest earnings from it will suffice to cover all benefit payments until 2036. Even then, the Fund would not be empty -- the Report projects that tax revenues will still cover approximately 75% of promised benefits until 2085. Talk of the bankruptcy of Social Security is hot air.

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    2036 is a long way off. The argument in 2011 is about whether there is any reason to do anything at all right now. The case pressed by self-proclaimed "rescuers" of Social Security such as Peter Orszag, the former head of the Obama administration's Office of Management and Budget who has since accepted a position at Citigroup, is unpersuasive.

    The first yellow flag is Orszag's frank acknowledgment that Social Security features barely at all in any putative budget short fall: "Social Security is not the key fiscal problem facing the nation. Payments to its beneficiaries amount to 5 percent of the economy now; by 2050, they're projected to rise to about 6 percent."  A rise of 1% in four decades! Former Senator Alan K. Simpson, co-chair of the President's deficit commission, claimed that his group's deficit report "harpooned all the whales in the ocean, and some of the minnows." Lost in the blaze of publicity about the Commission is the crucial fact that Social Security is plainly one of the minnows.

    But the whole discussion is even fishier. If any shortfall ever materializes, it could easily be made up by transfers from general tax revenues, though that would breach the long maintained fiction that Social Security is a contributory system on the model of most private insurance. (It is actually a pay as you go system, where current taxes pay benefits to current beneficiaries, with the final guarantee of the whole system's soundness being, in the last analysis, the success of the economy as a whole.) But if fears about 2036 are unbearable, plenty of ways exist that would fix the program without threatening anyone's life support system.

    Between 2002 and 2007, for example, the richest 1% of Americans garnered 62% of all income gains, while the bottom 90% of the population saw their incomes grow by 4%. At the same time, thanks to the Bush tax cuts, the rich were also paying proportionately fewer taxes. Considering that ordinary Americans fronted most of the money for the bank bailouts and have endured most of the recession's "collateral damage," it seems only simple justice that if the program needs fixing, the best way to do it would be to raise the ceilings on earnings subject to the Social Security tax, which is currently only $106,800. That would put the burden on people who cannot plausibly claim to be suffering.

    But if, for example, productivity runs even slightly higher than in the forecasts, there may be no shortfall of any kind. Considering that the projected shortfall is still a quarter century away, there is no good reason to tinker with a program that, as the Washington Post editorialized in 2005, provides the majority of income "for nearly two-thirds of the elderly...[and] the only source of income for one-fifth of all elderly people, for 25 percent of non-married elderly women, and for 38 percent of elderly African Americans and Hispanics."

    But Orszag and others who agree that the program makes at most a minor dent in the budget, nevertheless argue for "fixing" it now. Their reason is remarkable: As Orszag frankly confesses, "even though Social Security is not a major contributor to our long-term deficits, reforming it could help the federal government establish much-needed credibility on solving out-year fiscal problems." Cut benefits, in other words, simply to prove to financial markets that the government can do it. As Paul Krugman observes, this position is tantamount to claiming that we should cut Social Security now, because we might have to do it in the future. Polls show strong public opposition to cuts in Social Security. Considering the havoc that the financial crisis wreaked on the home values and pensions of ordinary Americans, proposals that Democrats should roll over and join Republicans and the Peterson Foundation in cutting Social Security is outlandish. As profits for the banks the American people rescued soar, it marks a new low in the Democratic Party's long retreat from the New Deal's glittering promise that ordinary Americans, too, deserved to share in prosperity.

    This essay is adapted from Thomas Ferguson and Robert Johnson's "A World Upside Down: Deficit Fantasies in the Great Recession," just appearing in the new issue of the International Journal of Political Economy (Vol. 40, No. 1, pp. 3-47). That essay is a revised and expanded version of their Working Paper for the Roosevelt Institute.

    Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and Senior Fellow at the Roosevelt Institute.

    Rob Johnson is a Senior Fellow and the Director of the Project on Global Finance at the Roosevelt Institute.

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