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I wouldn’t celebrate yet

We need the passengers of United 93

Today Paul Krugman wrote in Medicare and Mediscares about the Republicans hoisting themselves on their own petard by embracing Paul Ryan’s plan to gut Medicare.  The triumph of the Democrat in a special election in NY-25 was supposed to be evidence that the Republicans had gone too far.  Now, if Democrats can only capitalize on the mistakes Republicans have made, maybe they can win in 2012!

Not so fast.

Have you seen gas prices lately?  I wanted to buy some cherries yesterday at Wegman’s.  LOVE those things.  But at $3.99/lb the prepacked bag was going to set me back $8.00.  My kid loves fresh fruit but the cherries went back for a more sensible quart of strawberries.  On an unemployment budget, cherries are out of the question.

A lot more little luxuries like that will become increasingly out of the question this year.  Most employers in my industry are laying off and the R&D professionals are scrambling for anything they can get, even working for peanuts, in order to make the mortgage and fill the gas tank.  Health insurance?  Such a distant memory.  We have a nation of pre-retired professionals who are having a lot of trouble making ends meet.  It’s been this way for three years and counting and from what I can see, it’s only going to get worse.

And that’s just what the Republicans have planned.  They’re taking a page from the playbooks of big companies like United Airlines and GM, which declared bankruptcy and renegotiated all of their union contracts.  If you want to know how this works, check out the PBS special “Can You Afford to Retire?” that was broadcast in May 2006.  Here’s how the companies wear you down until you finally give in and scream, “take my pension! PLEASE!!”  From the transcript:

ELIZABETH WARREN: The question up front about who will have what priorities if this business collapses is where the whole game is won or lost. Ironically, it is the bankruptcy laws that are responsible for much of what has happened here because bankruptcy laws currently say, “Banks, you can take it all,” because bankruptcy laws don’t leave something on the table for the employees and the retirees.

HEDRICK SMITH: [voice-over] So if bankruptcy doomed United’s pensions from day one, why did United take two-and-a-half years to kill its pensions? I asked Jamie Sprayregen.

JAMES H.M. SPRAYREGEN: It may have been, you know, intellectually obvious, but coming up with a process by which to handle adjusting expectations so people would buy into the need to address the pension issue, without it becoming a situation where we would lose what we call the hearts and minds of the employees, was a real challenge and an art.

GREG DAVIDOWITCH, Pres., Flight Attendants Union, United:Ultimately, what we concluded was that management had a very deliberate course of action set out from the beginning of the bankruptcy, which was to roll out demands for concessions over a period of time in an escalating way, in order to bring the employees along without creating a spark that would have led to real labor unrest.

HEDRICK SMITH: [on camera] A strike.


ELIZABETH WARREN: What it really comes down to is, How much can we take away from the employees before they finally say, “Fine, you take it, but I’m not working here anymore.” And no one else will come to work for them, either. That’s what corporate reorganization in America has become, “How much less can I give you and still keep you here?

The Republicans loathe Elizabeth Warren with a white hot intensity.  She’s got their number.  It’s very important to get her to STFU, to waste her time, to humiliate her and make sure she never gets an appointment to the CFPC.  She’s got powerful mojo.  By the way, I think the R&D industry has crossed the line with their workers.  Experienced researchers are getting out and new ones are getting scarce.  The field is too demanding and difficult to find that you’ve wasted 10 years of your life in school only to land a job making $37,000/year and no health benefits.  And no, I don’t expect India or China to be able to make up the slack for a long time.

So, the company starts putting a lot of pressure on the employee.  Pay is cut, benefits are cut, hours are increased.  Before you know it, you’re doing a lot more work for a lot less pay.  The changes are slow and gradual.  The company doesn’t want the employees striking or jumping ship.  But the give backs start to wear on the employee to the point where there is really not much more that can be cut in the short term without inflicting real pain and inciting sans culouttes type resentment.  To avoid that, the company goes in for the kill and tells the employee that the only thing that will save the company and their jobs is if they give up their pension benefits.  Before they know it, the employee ends up with a pension 1/3 the size of the originally promised benefit.  The CEO rides off into the sunset with a huge bonus having done the job he was hired to do.

(Hmmm, is this the roadmap that Pfizer is following right now?  I wonder…)

This is what the Republicans (and some accommodating Democrats) are trying to do with the country as a whole.  They want to eliminate Social Security and Medicare.  But provoking us outright is dangerous.  There may be rioting and strikes.  So, they put pressure on us gradually.  They keep the fiscal stimulus package small,  it runs out years before it can engage the country’s economic gears, they pursue a deficit reduction policy while allowing unemployment to rise, they make it difficult for the unemployed to get benefit extensions, they allow houses to foreclose without an effective program to help strapped, unemployed homeowners and they raise gas and commodity prices to inflate the costs of food.

All this puts a lot of stress on the average American.  Spending starts to grind to a halt, putting even more pressure on small businesses, who in turn lay off more people.  And let’s not forget the Republican governors who want to suspend collective bargaining rights.  It is all designed to make the average American feel so much pressure that they will scream “Uncle!” and be a lot more willing to talk about what Medicare and Social Security means to them.

Republicans may be mindless borgs but they are really good at assimilating the rest of us.  There is still an entire 17 months between us and the 2012 election.  I anticipate a lot more pain as the Republicans crank the rack on which we are stretched.  We will be screaming and begging for relief before they are done.  And that’s when they’ll hand us the papers for us to sign away our deferred wages for Medicare benefits and all of the extra taxes that we late boomers put away for the surplus.  Timing is everything and they’ve got time to get the job done.  There won’t be a significant number of special elections before Nov. 2012 and what do they care if they lose a lot of seats in Congress in 2012?  They will have accomplished what they have been trying so hard to do since the New Deal was enacted 70 years ago- kill it dead.  Once the social safety net is gone, it will be very hard to revive.  To their backers, they will be heros and ride of into the sunset with mighty fists full of dollars.

Democrats aren’t stupid.  They know what’s going on.  We have to assume that some of them are OK with this plan.  Well, until you realize you may need social security, it’s not that big a deal.  Maybe they’re hoping that voters will be so frightened of the prospect of Republican rule in 2012 that they won’t vote the bastards in again.  But as I said before, timing is everything and by this time next year, the damage may already be done.

If the Democrats have any intention of saving the system, they’d better get a lot more aggressive and innovative about how they do it.  That would mean that Obama would have to make use of the bully pulpit and convince people that Republicans are about to steal their lunch money.  It’s too bad he’s not very good at this.  Or he could use the mechanisms of government to apply pressure on Republicans but that’s not why he was hired, right?  He was hired to make Democrats feel good.  Well, the orgasm is over now.  It’s time for him to pull his weight or sit the next term out.  If he can’t stop the Republicans from continuing the beatings to the point where we agree to the Medicare plan, it will be too late to replace him as a candidate next year.  Democrats better think that over carefully.

Taking a victory lap now is not going to stop Ryan and his cohort.  They’ll just increase the pain in the interim.  Be prepared.  This year is going to get really rough for us.