With the House Republican caucus still squabbling over what ransom they should demand for an increase in the debt limit, Speaker John Boehner issued his own threat yesterday. According to Roll Call, Boehner wants “another round of spending cuts beyond the sequester.” Cuts how big? In Boehner’s word, “greater than the increase in the debt limit.”

Well, the last increase in the debt limit was over $1 trillion. And the sequester cuts equal $1.2 trillion if kept in place for 10 years. So it would appear Boehner wants to literally double down on sequester (although he did suggest the cuts could be implemented over a longer time frame than 10 years.)

This is austerity madness. Our deficits are already plummeting. We’ve already adopted major cuts. We’re on the verge of fully implementing ObamaCare, which is designed to address the actual source of our long-term deficits, and the early signs are promising. So demand another trillion or more in cuts now is economic suicide.

Granted, as I’ve said before, I believe these threats are empty ones, in part because the math is so ridiculous. And Boehner has already delivered many empty threats this year, as it is an essential component of his kabuki dance that keeps his caucus from revolting without forcing a complete governmental breakdown.

Nevertheless, he is a major leader of his party, and his words matter. He is accountable for his math, and his math adds up to a brutal gutting of government that would shatter our shaky economy.

On a press call yesterday in advance of this week’s “summit” between President Obama and Chinese President and General Secretary of the Communist Party Xi Jinping, Alliance for American Manufacturing’s (AAM) Scott Paul called for consequences for China’s trade violations, computer hacking and theft of intellectual property. Meanwhile, trade deficit figures were released today, and the monthly U.S. goods deficit with China climbed to $24.1 billion in April, up from $17.9 billion in March. The 2012 trade deficit with China was a record $315 billion.

Need A Larger Approach To Trade Deficit

On the call Paul said that China has been picking up the pace of acquiring foreign currency reserves, to an amount matching the height of currency manipulation in 2007. China imposes impediments to importing, while subsidizing its exports in various ways. He said there has to be real consequences to China for their various trade violations, hacking and IP theft or they won’t stop. “Unless you hit China in the wallet it has no incentive to improve the environment,” he said. “Many in Congress are losing patience as well.”

Paul said that the Obama administration has been good on trade cases that have been brought to its attention, but when you look at the data on surging Chinese imports, you have to conclude that we need a more macro approach, with goals to reduce trade deficit, and potential consequences with China if the goals are not met. Paul said he is weary and tired of continued U.S./China summitry that result in new agreements that are just updated promises that China has made since 2001.

Paul said that legislation will be reintroduced in the Senate this month to do something about China’s continuing currency manipulation. He predicted it will again pass the Senate, and he urges House Speaker John Boehner to allow a vote this time. This morning Ohio Senator Sherrod Brown sent a press release promising to reintroduce this legislation. “As our trade deficit continues to widen, our need to level the playing field for American manufacturers and workers becomes more urgent,” Brown said in the release. “Yet instead of taking action, we’re pursuing trade deals with countries that manipulate currencies. Congress won’t let these agreements move without finally imposing penalties on foreign nations that cheat trade laws by manipulating currency.”

Paul also urged the President not to take the advice he is getting to set aside issues on which the U.S. and China do not agree.

Does China Hold All The Cards?

In response to a question on what happens if we confront China, Paul said it is myth that China holds all the cards and we can’t get more aggressive. It would inflict severe damage to China’s economy if they stopped financing U.S. debt because they depend on our market and get many benefits. If the administration took a stronger approach, backed by Congress, we would see results. We do export to China but some of those are irreplaceable, so we don’t need to fear China cutting off those products. “We actually hold the cards.”

Investment In U.S. Companies

Another questioner asked about China’s increasing purchases of U.S. companies. Paul responded that such investment, if done responsibly, is a good thing – if it is not subsidized.

There is a problem with state-owned enterprise investment in U.S. companies, bringing an investor to U.S. soil that has no cost of capital because it is provided by the state, but is competing for markets and capital here. That creates a different metric, where they have a huge advantage. There has to be an exceptional amount of reciprocity for Chinese investment – where we have equal possibilities for investment in China.

But we have legitimate national security concerns about some proposed acquisitions. For example, does the recent $4.7 billion purchase of pork-producer Smithfield have an impact on U.S. food security? What are the priorities of this new pork conglomerate: will it be servicing China or the U.S., and will it drive up U.S. costs?

National Security Concerns

There was a question on AAM’s report of U.S. defense relying on China. AAM recently released a study, <a href=”http://americanmanufacturing.org/press-releases/report-says-us-military-dangerously-dependent-foreign-suppliers”>Remaking American Security: Supply Chain Vulnerabilities & National Security Risks Across the U.S. Defense Industrial Base, authored by Guardian Six Consulting President Brigadier General John Adams. The report showed how our national security is in jeopardy because of an overreliance on foreign suppliers for critical defense materials. “Foreign sourcing puts America’s military readiness in the hands of potentially unreliable supplier nations and undermines the ability to develop capabilities needed to win on future battlefields.”

The report called for an increase in domestic production of the natural resources and manufactured goods for our military.

AAM has also released this chart illustrating how our trade deficit finances China’s military expansion:

“Time For Talk Is Over”

Accompanying the call, AAM released a letter sent from Scott Paul to President Obama in advance of this week’s meetings saying, “The time for talk is over; the time for action is here.”

The letter lists a number of national security concerns, from “dangerous dependence on foreign suppliers for the raw materials, parts, and finished products needed for our national defense” to reports of Chinese computer hacking to obtain “critical U.S. weapons system designs.” These reports “identify a clear and present danger posed by Chinese activities.” Chinese hacking has also infltrated our commercial enterprises to steal key technology and industrial secrets, and our critical infrastructure computer systems. It is worth reading the entire letter.

24th Anniversary Of Tianamen Square Massacre

Note: Today is the 24th anniversary of the Tianamen Square Massacre of students protesting for democracy, killing an unknown number of people, with varying estimates of up to 2,600 dead and as many as 7,000 wounded. Following the massacre in Beijing, the government launched a widespread crackdown on democracy advocates.

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Today President Obama is joining college students at a White House event launching a new push to keep student loan rates from doubling in July. Among the various plans offered, Sen. Elizabeth Warren’s plan is the most affordable for students, while the Republican plan tries to “make money” off of students using fluctuating “market rates.”

Student Loan Rates Set To Double

Student loan rates for more than 7.4 million students with federal “Stafford loans” are scheduled to double July 1 from 3.4 percent to 6.8 percent if nothing is done. The amount of student loan debt is massive. U.S. students currently owe almost $1.1 trillion in student loan debt, and this amount is increasing at a rate of about $2,853.88 per second. This amount is greater than total credit card debt currently owed. Thirty-five percent of people under 30 are near default on their student loans, and approximately 32 percent of those between the ages of 30 and 49.

In 2005 average student loan debt was just over $17,000. By 2012 it was above $27,250. This was a 58 percent increase in just seven years. This debt creates a drag on the U.S. economy – home ownership and car ownership have declined for young households.

This infographic shows the extent of the problem: (click for larger)

There are various plans before the Congress to avoid the July 1 rate-doubling. But Republicans are holding this hostage with their bill that makes a college education much more expensive. It is going right down to the July 1 wire, and students don’t know what their rates will be.

Republican Plan And Obama Plan

House Republicans passed the “Smarter Solutions for Students Act,” that lets loan rates fluctuate yearly, pegged to the 10-year rate plus 2.5 percent, but capping the rate at 8.5 percent (loans for parents and graduate students would have a 10.5 percent cap). This means that rates even on existing loans will go up as rates climb, likely all the way to the 8.5 percent cap as the economy recovers. This is more than if the Congress does nothing and just lets rates double July 1. The Congressional Budget Office (CBO) projects rates would rise to 7.7 percent in 2023, which is more than double the current rate. Many are calling the Republican plan the “Bill to Make College More Expensive.”

Republicans say students should pay “market rates,” regardless of what people need or how much it does for the country and economy to have a better-educated population. Republicans want rates high because the government makes a profit off of the student loans, reducing the need to ask the wealthy and corporations to pay higher tax rates. Shahien Nasiripour points out at The Huffington Post that the Education Department is forecast to generate a $51 billion profit this year from lending to college students and their families – more than Exxon Mobil’s 2012 profits. So cutting these payments will “grow the deficit.”

President Obama has offered a similar plan that sets a fixed (once a student has the loan, the rate doesn’t change) rate to the 10-year Treasury note plus 0.9 percent, with no interest rate cap. However, repayment obligations are restricted to 10 percent of income. The President’s plan is focused on being “budget neutral.”

The Warren Plan

Sen. Elizabeth Warren, D-Mass., has introduced The Bank on Students Loan Fairness Act that lets students borrow money at a rate of 0.75 percent – matching the rate that the Federal Reserve lets banks borrow at. The Warren plan is backed by a number of organizations and members of Congress. (See a fact sheet of the bill and the bill text.)

Watch as Sen. Warren introduces and explains the Bank on Students Loan Fairness Act:

Click here to view the video on YouTube.

Economist Joseph Stiglitz endorsed the Warren bill:

College graduation has become a big factor in whether students succeed later in life, Stiglitz says. “The life chances of a young American are more dependent on the income and education of their parents than in other industrial countries.”

Most other industrialized nations make paying for college easier, Stiglitz says. For example, Australia’s loan program caps payments as a percentage of income, essentially enabling most people to pay for college without going bankrupt. Many European countries directly subsidize college, although those subsidies have fallen due to the financial crisis.

Other Plans

Senators Jack Reed, D-R.I., and Tom Harkin, D-Iowa, have introduced the Reed-Harkin Student Loan Affordability Act of 2013 (S. 953) which keeps the current 3.4 percent rate in place for two more years. The bill “pays for” this by closing corporate tax loopholes.

Sen. Kirsten Gillibrand, D-N.Y., has a bill, the Federal Student Loan Refinancing Act, to allow students to renegotiate into fixed, 4-percent loans. Approximately 90 percent of federal (not private) student loans – 37 million borrowers – would be affected by the Gillibrand bill.

In “Proposals to Bring Student-Loan Interest Rates Under Control,” the Center for American Progress compares different plans to address the student loan rate problem.

Support The Warren Plan To Give Students The Same Break Banks Get

Click here to Give Students The Same Break Banks Get:

Sen. Elizabeth Warren has a great, simple idea, and she’s made it her first bill. Give students the same loan rates that the big banks get:

“Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%. But this summer a student who is trying to get a loan to go to college will pay almost 7%. In other words, the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks–the same banks that destroyed millions of jobs and nearly broke this economy. That isn’t right.”

What’s Wrong With Free?

We are stuck arguing about how much of a crushing debt burden students take on to get educated because ideology dictates what we provide “market solutions” (aka “make bankers richer(er)”) instead of just being able to go to college if that’s the right path for them. We the People should just provide an education that makes people’s lives better and helps both the country and our larger economy at the same time. Is our government supposed to be about making our lives better, or making bankers richer?

P.S.: Here Is What Speaker Boehner’s Spokesperson Said

House Speaker Boehner’s spokesperson responded to the new student loan initiative saying that Obama’s efforts to continue governing the country is a “cynical event” and a “PR stunt” that is intended “to change the subject from its growing list of scandals.”

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Last August and September, I did a series of eight posts about how, contrary to Tea Party and John Boehner assertions, federal spending was actually very popular. As I said at the time, Americans don’t want less government; they just want government that costs less.

The latest installment — episode 9 — happened last week when the air traffic control problems caused by the sequester were fixed in what by congressional standards was warp speed.

A continuing series
Read the full series

Faced with an immediate backlash from flyers, Congress and the White House enacted legislation that fixed the problems less than a week after the furloughs caused long delays in the skies and long security lines at the airports.

Yes…Flyers are a relatively elite group relative to the population at large. Yes…this is a group that has more influence and a larger megaphone than the average voter. And yes…the delays were easier for the media to cover and so were more visible than sequester-related reductions in other programs.

But my main point from last year’s series of posts is just a relevant now. Faced with the choice of a reduced federal service or a reduction in spending, the decision was immediate and unmistakable: a federal service was the winner.

I looked at the coverage of the FAA furloughs closely for any sign of anyone declaring that this is the price we have to pay for reducing the deficit. As far as I can tell either no one said it, or no one said it loud enough for it to be recorded. Convenience rather than belt tightening was the clear preference. (Please let me know if you saw the opposite.)

This says a great deal about the budget debate that’s ahead.

1. Federal programs that have the potential to inconvenience large groups — like air traffic control– are going to be very difficult to cut no matter what.

2. As happened with the sequester, spending reductions for these programs put in place with great fanfare and lots of political chestbumping are very likely to be reversed within a relatively short period. It might take longer than a week, but the reversals should be expected and built in to projections.

3. If the FAA was hard to cut, think about Medicare and Medicaid, which are far more important to many more people than air traffic control. Indeed, the biggest lesson of the FAA sequester reversal is that changes in Medicare and Medicaid will be far more difficult that anyone is imagining.

4. Federal employees should be worried. The administrative and operating expenses of most departments and agencies will not be a great concern to voters because it’s hard to see how most of that affects them directly.

5. The National Park Service may well be the next reversal if furloughs cause the parks to close one day a week or month as has been rumored.

6. The IRS may also be a candidate for a reversal if it becomes obvious that refunds are seriously delayed.

Originally posted at Capital Gains and Games.

Politico reports that Congressional leaders from both parties are trying to find a way to exempt themselves and their staff members from using the “Obamacare” health exchanges, as mandated in the health reform law.  The Politico story says that Hill leaders are afraid that their lower-paid staffers would leave their Congressional jobs in large numbers if they were hit with significant out-of-pocket Obamacare costs.

The story also says that Representatives and Senators are concerned that “older, more senior staffers could also retire or jump to the private sector rather than face a big financial penalty,” and were “also concerned about the hit to their own wallets.”

If the story is true – and so far there have been no denials from Democrats – then this highlights a potential landmine for the Democrats.  It suggests that Obamacare’s requirement for premium costs will be too onerous for lower-income and middle-class working Americans to bear.  Those out-of-pocket costs rise to 9.5 percent, after subsidies, which end once income exceeds four times the Federal poverty level, which comes to roughly $43,000. Payment provisions below that level will also have a significant impact on household budgets.

(UPDATE: Ezra Klein has a clarification from Dems which says they’re objecting because, for technical reasons, staffers would have to pay 100 percent of their premium share. Unfortunately that doesn’t contradict the argument that out-of-pocket premium requirements are burdensome, and may in fact reinforce it.)

The “individual mandate” provision takes effect next year, and it appears to be the source of Congressional fear.  It now appears as if Democratic leaders in the House and Senate are afraid that these provisions will be so onerous that they’ll lose many of their top staffers.

But weren’t we told that Obamacare provides “universal coverage,” and that it will be an enormously popular bill? Didn’t a series of Democratic luminaries, including Hillary Clinton, tell us that the individual mandate was a wonderful idea? Weren’t we told that Massachusetts residents love their version of Obamacare (aka “Romneycare”)? Weren’t we told that similar plans worked very well in nations like Switzerland?  Didn’t Nate Silver tell progressives that they would be “batsh*t crazy” not to enthusiastically support a bill that could drain a household income by nearly ten percent – for mediocre private-sector health insurance coverage?

Now, it seems, the second thoughts have begun. But, to be fair, who could have seen this coming?

Ahem.

We were among the first (possibly the first) to argue against John Edwards’ and Hillary Clinton’s individual-mandate proposals in the 2008 primaries.  (In 2007 we called them “a bug, not a feature,” in health reform.) We pointed out that Massachusetts residents who were personally affected by the law liked it far less than other people did, with only a slim majority supporting it even in that liberal state. (Their lack of enthusiasm appears to be shared by Hill staffers.)

It’s also worth noting that a significant number of Massachusetts residents who disapproved of the law two years later felt that way because it didn’t go far enough in reforming the healthcare system.

We explained that Switzerland’s lower-cost, nonprofit-driven health system can’t be compared to our system of overpriced health insurance, where most people who become bankrupt for medical reasons did so despite actually having insurance coverage.  And we advised progressives that, pace Silver, they would be “batsh*t crazy” to embrace a health plan that forced people to buy a lousy private-sector product – or pay higher taxes if they couldn’t afford it.

It looks like the bats have come home to roost.

Rep. Henry Waxman may have been correct when he told Politico that Congressional fears were unfounded, and that Hill politicians and staffers would be exempted from the onerous out-of-pocket provisions of Obamacare.  But the point has still been made, however inadvertently, by Democrats in Washington: These mandates are too much for working Americans to bear.

They were, however, a great boon to the health insurance industry. That’s why we looked to see how well health insurance stocks did the day after Obamacare’s passage. They did quite well, thank you very much.  It was a red-letter day for health insurance executives, if not for working Americans.

There are plausible economic arguments for requiring all Americans to purchase health insurance (although they’re not as conclusive as their proponents usually claim).  But they certainly don’t outweigh the dire economic effect healthcare costs have on most Americans. (See “A Healthcare Bailout for the Middle Class.”)

I still feel the way I did in 2009 when I wrote that “progressive groupthink hindered health reform.” The reflexive instinct to support a Democratic-proposed policy led to the mindbending spectacle of liberals from Rachel Maddow to Paul Krugman cheering for an “individual mandate” policy which was designed in a conservative think tank as a boon to private corporations.

It’s also worth noting that, whatever you think of Obamacare’s merits, this story reinforces the perception that today’s Democratic leaders are pretty terrible at messaging. John Boehner’s spokesperson was understandably gleeful when he said “The speaker’s objective is to spare the entire country from the ravages of the president’s health care law. He is approached daily by American citizens, including members of Congress and staff, who want to be freed from its mandates. If the speaker has the opportunity to save anyone from Obamacare, he will.”

It should’ve been pretty easy to say that coming, too.

We argued then that it was ethically unacceptable and economically unwise to force people to buy a lousy private-sector insurance product. The only way to mitigate that would be by offering them membership in a publicly-managed Medicare plan.  But the combination of high-pressure lobbying and Presidential indifference made sure that didn’t happen.

This doesn’t mean that “Obamacare” should be repealed, although it now seems that nothing short of Medicare-For-All (or, at a minimum, all-payer) can save our broken healthcare system. But it does mean that the battle for decent health care in this country isn’t over. In fact, it’s only begun.

Mark this day. For the first time in history, a Democratic president has officially proposed to cut the Democratic Party’s signature New Deal program, Social Security:

President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say.

In a significant shift in fiscal strategy, Mr. Obama on Wednesday will send a budget plan to Capitol Hill that departs from the usual presidential wish list that Republicans typically declare dead on arrival. Instead it will embody the final compromise offer that he made to Speaker John A. Boehner late last year, before Mr. Boehner abandoned negotiations in opposition to the president’s demand for higher taxes from wealthy individuals and some corporations.

The way this was explained to me is that the liberal Democrats in the House put out a leftward proposal and the Democrats in the Senate put out a moderate proposal, which the president tacitly endorsed. The Crazy Republicans then came back with a rightward proposal so now the president has simply set forth a compromise between the Senate Dems and the Crazy Republicans. And it’s his final, final offer this time.

God help us if the Republicans wise up and take this deal. After all, it’s a more conservative budget than even their hero Ronald Reagan ever submitted.

This is what he proposes:

I’m going to quote Mike Lux here:

If Obama includes it in his budget, he is claiming this as a policy idea he supports before he even starts negotiations with the Republicans. This is terrible policy and terrible politics at the same time. In a budget document that has no actual policy impact but that symbolically represents what he stands for and who he wants to fight for, he will alienate senior citizens and the families who worried about taking care of them, he will split his political party down the middle, and– by being the first one to formally propose cuts to Social Security– he will hand Republicans a big political weapon to hurt Democrats in 2014.

I understand the president has political reasons he wants to do this. He wants to look like the most reasonable guy in the room, and he wants the Republicans to look like they are the extremists who won’t compromise. He doesn’t want the attacks that will come from the deficit hawk crowd if offers nothing on “entitlement reform,” and he feels like this is a modest cut compared with the budget ax the Republicans are threatening. He feels like he can lessen the impact of the Social Security cuts by adjusting the formula to protect the oldest and poorest recipients.

But, folks, this is rotten public policy, and all those political reasons pale in comparison to the damage he is doing here. With the demise or curtailment of most pensions, the drop in family wealth due to the collapse of the housing sector in 2008, the big unemployment numbers cutting into many families’ life savings, the flattening or decrease of wages for most workers, and the inflation in many essentials among those who are working driving down the ability to save for retirement, this is the absolute last time we should be looking at cutting incomes for retirees.

As to the idea that Obama will keep the most vulnerable low-income seniors from harm, I am very appreciative of that fact that he cares about them and is trying to preserve them from cuts. Obama’s compassion for the poorest of the poor is something to be lauded, one of his best values. But I used to do a lot of organizing with moderate income senior citizens, and I know a lot of middle-income seniors. I can tell you that even for those a little above the cut-off line but still living mostly on Social Security, they are not living in luxury, they are in fact just making it. When groceries or utilities or out-of-pocket health care expenses spike, it hurts and hurts bad. I have been in the apartments of seniors when utility prices were going on one of their periodic jumps, have seen what they can afford to eat, have felt the cold in their apartments in the winter because they can’t heat their place. I know in my heart, because I have seen the evidence up close and personal, that for a lot of seniors the $500 a year they will have lost from chained CPI a few years from now if this cut goes into effect will result in more seniors dying of hypothermia or malnutrition.

Most Americans, over 80 percent in polls I have seen, understand that cutting Social Security benefits is a terrible idea, and I believe that if that is what happens people will be angry. But even if the politics were not on our side, this is a moral issue pure and simple. The president should not propose cutting Social Security, and Democrats in Congress should raise hell and oppose him if he does. As Democrats, according to all that rhetoric I kept hearing during the campaign last year, we believe in fighting for the middle class, and this proposal punches the middle class– both older Americans and the families who care for them– in the gut.

Ok, so what do we do now?

First, we cannot simply sit back and expect the GOP to do our dirty work for us. After all, the way things are going, the Prsident or could start offering up new tax cuts for all we know. He’s either a terrible negotiator or he really, really wants these cuts. Either way, counting on him holding the line is probably not a good idea.

So, we have to buck up the Democrats. I know, I know. But they still have to face voters while the president has run his last election. They should be made very, very aware of what they are contemplating: attacks from both the left and the right in the next election. Any incumbent Democrat who could face a primary challenge will be facing withering criticism for voting to cut SS, veterans benefits and medicare. And if they are lucky to fight them off and win they will be attacked by the Republicans challenger on exactly the same issues. These are very, very popular programs which, by the way, don’t actually need to be cut. Anyone who votes for this will hear about it. If you have a Democratic congressional rep, give them a call and let them know that you will hold it against them. (Also too, if you have a Republican representative. They have to face voters too and it can’t hurt to remind them of that. And after all, they are just looking for reasons to oppose this …)

And call your Senators starting today. The pattern so far has been that Speaker Boehner will only suspend the Hastert Rule (allowing legislation to the floor without a Republican majority) if it is already passed with a bipartisan Senate vote. Best to try to stop it here first.

Meanwhile prepare for a barrage of savvy, world weary commentary from your fellow liberals telling you that this is no big thing and that Democrats will not suffer even a tiny bit if they vote for a common sense proposal like this one. You will be shushed and told to calm down and take a chill pill. In other words, you will be gaslighted by fellow liberals who are embarrassed that you aren’t being coolly accepting of something that is completely unacceptable. This is how this works. Tell them to STFU and move out of the way.

And recall this:

Responding to a flood of angry phone calls and letters from their elderly constituents, a growing number of Congressmen and Senators are seeking to repeal or revise the “Medicare Catastrophic Coverage Act of 1988″ enacted in June of that year. The amount and the tenacity of elderly opposition to the law, particularly to the new taxes that will fund it, took many Congressmen by surprise. It also has provoked an open and widespread grass-roots rebellion within the nation’s largest senior citizen lobby, the American Association of Retired Persons (AARP), whose national office pushed hard for the original legislation. Already, some 30 bills have been introduced to repeal the catastrophic act in whole or in part or to change the way it is financed. More bills are expected.

The cool kids should think twice before predicting a complacent acceptance of this proposal because sometimes the people do stand up and object. Especially when it comes to these programs. They don’t call it the third rail for nothing.

Two recent news reports indicate that the president is “strongly considering” cuts to Medicare and Social Security in his upcoming budget, which is to be released in less than ten days.

The question’s been asked for four years: Why would Obama want to cut these popular and successful programs, especially when there are better solutions out there (and Social Security doesn’t even contribute to the deficit)?

It’s time to ask a new question: Why wouldn’t he cut them?

That’s why we’ve launched a new petition today to the White House, telling President Obama not to include Social Security, Medicare and Medicaid cuts in his fiscal 2014 budget. To send the president a strong message, sign this petition now.

Bad News

Last Friday The Wall Street Journal reported that the president’s cuts would be “aimed in part at keeping alive bipartisan talks on a major budget deal.” No, you’re not experiencing déjà vu. We’ve heard this story before.

The Journal was vague on the president’s specific cuts, though it did cite the “chained CPI” cut to Social Security. (The administration described those cuts as a minor “technical change,” although they’re technically less accurate than the current and already inadequate formula. They’d come to 6.5 percent of a 75-year-old’s benefits and 9.2 percent of a 95-year-old’s.)

The New York Times reported that the president and House Republicans “have quietly raised the idea of broad systemic changes” to these programs as part of a broad “fiscal deal.” It also provided more detail on the president’s newest proposed Medicare cut, which would combine the deductibles for outpatient and hospital Medicare coverage. That would increase annual out-of-pocket costs for 80 percent of Medicare recipients (while typically lowering them for people who are hospitalized during the year.)

The rationale is that it will discourage the use of unnecessary medical care. That’s a misguided notion. But the president and his staff has shown a proclivity toward this kind of shallow wonkery in their support for misguided concepts like the excise tax on health insurance plans with higher than average costs.  The White House economic team may very well believe that this plan would “discourage people from seeking unneeded treatments” (as the Times puts it).

Bad Policy

Nevertheless, both cuts are bad ideas. The Medicare change is based on a model of health economics that fails to understand how health care decisions are made in the real world and relies on old (and challenged) studies, including one from the RAND Corporation, which claim such cuts reduce the use of unneeded services without reducing the use of necessary care.

As for the “chained CPI,” it’s already been dissected at length (we included a small compendium of critiques here).

Seniors and near-seniors today are facing a retirement crisis of tragic proportions, which a New York Times’ editorial outlines. That underscores the fact that these changes are both unwise and unkind.

Bad Politics

The politics are equally disastrous. The President’s early flirtations with these kinds of cuts contributed to a 25-point plunge in support for Democrats on the question of who has the better ability to handle Social Security. Polls in 2010 showed that President Obama was even less trusted than George W. Bush on the topic – even after Bush tried to privatize the program, which would have been disastrous after the 2008 financial crisis.

Polls continue to show that voters across the political spectrum oppose these kinds of cuts – “hate” isn’t too strong a word – and would even be willing to pay more in taxes to protect Social Security.  These cuts might become the most unpopular domestic policy decision in modern history.

How would that affect Democrats?  When Obama and House Speaker John Boehner agreed on the “chained CPI” last December, CNBC ran an article headlined “How You Could Be Affected by Obama’s Social Security Plan.”  Not “Obama and Boehner’s plan” – Obama’s.

Does anybody doubt how these cuts will be presented to the public – or how they’ll be remembered?

Broken Record

We were told last month that the president “focused a lot on entitlements” while offering “concessions” to Republicans which included another offer to cut Social Security benefits with the “chained CPI.” Senior White House official Gene Sperling told CNN that the president was “reaching out to Democrats who understand we need to make serious progress on long term entitlement reform.”

In other words, the people who needed persuading were fellow Democrats, not Republicans. House Democratic leader Nancy Pelosi tried to help him by reiterating her willingness to support the president’s cuts, but the Senate’s recent voice-vote rejection of the chained CPI shows that it’s still a tough sell. Good.

In December 2012 Obama and House Speaker Boehner agreed in principle to the “chained CPI” benefit cuts, during the same negotiations when Obama caved on his popular tax increase for income above $250,000. That particular cave-in, as we noted at the time, increased the deficit by $183 billion – much more than the estimated $122 billion the “chained CPI” cut would save (without even reducing the deficit). You could bring in more money by closing loopholes in the capital gains tax, too.

In 2011, The Washington Post reported, “As part of his (deficit-deal) pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security.”

In 2010, a “very senior White House official” told a group of us that the administration supports such cuts. Reports in 2010 also indicated that the president planned to announce Social Security cuts in his State of the Union message until he was pressured to back down.

And in 2009, the president appointed two adamant Social Security opponents to run his “deficit commission.”

Why?

It would appear that the president supports these ideas because he thinks they’re good policy, not just because he has to make a deal with the Republicans.

Some say he doesn’t like them but feels compelled to propose them – repeatedly, apparently – in order to get a deficit deal.  This theory essentially argues that the president and his team don’t understand the politics of the situation, and haven’t learned from experience. It’s a loyal, if not very flattering, argument.

Personally, I think the “147 people” principle is a big part of the problem. Everybody the president and his advisors know thinks this is the right thing to do. It’s a herd mentality. But whatever the reason, these don’t look like “concessions” to me. They look like attempts to implement the policy that “very senior official” said they supported back in 2010 – and make it look like a concession.

N=0

Then there’s something which is sometimes called the “N-dimensional chess” theory, which argues that the president is so brilliant that he’s playing on more dimensions than the ordinary mind can grasp. He proposes bad things knowing that they won’t be accepted, outfoxing the Republicans by showing the country how reasonable he is and how unreasonable they are.

Some people used “N-dimensional chess” to defend Obama’s benefit-cut chatter in 2009 and 2010.  The Republicans then ran to the Democrats’ left in 2010 – and took back the House.

How’s that working out for you?

This year’s “N-dimensional” theory says the president will predicate these benefit cuts on higher taxes for individuals and corporations, and the Republicans will refuse. Social Security and Medicare will be unharmed and the president will look like a winner.

It’s a silly theory. These repeated proposals reinforce the false conservative notion that we “can’t afford” these programs.  And the Republicans have already indicated they’re open to “revenue increases” – the only requirement for “compromise” cited by the Times – but that they’d do it through reductions in “tax expenditures.” That’s D.C.-ese for “reducing tax breaks that help the struggling middle class, while leaving millionaires and corporations alone.”

The President would then have to accept this package of cuts and tax hikes in toto, which would batter the middle class, or he’d look like the intransigent one.

Checkmate.

It doesn’t really matter which (if any) theory’s true. If these cuts are in the president’s budget he will have branded his administration and his party for generations to come – as Social Security and Medicare cutters.  People don’t follow the ins and outs of budget negotiations, but they’ll certainly remember who lowered their benefits.

Motive and Opportunity

Whatever their motives, we know what the president and his team intend to do. The important question now is, What do we intend to do?

Will voters raise an outcry in the next nine days? Will the Democratic rank and file shower the White House with calls and emails insisting that it back down from these proposals, or will it passively accept them – and then watch their party suffer the consequences for years to come? Will citizens across the political spectrum express their opposition to these cuts?

One day we may look back with regret on the Great Medicare and Social Security Cuts of 2013. And we won’t be asking ourselves why Obama did it. We’ll be asking ourselves why we didn’t stop it. It’s time to stop wondering about the president’s motives and take a good look at our own.

Sign this petition to President Obama: No cuts to Social Security, Medicare and Medicaid in the fiscal 2014 budget.

Everyone’s talking about marriage this week. So it’s hard to blame speaker of the Oklahoma House of Representatives T. W. Shannon for wanting to get in on the action with a bill to divert federal funds for the Temporary Assistance for Needy Families (TANF) to fund a series of public service announcements touting the benefits of marriage to single parents. 

House Bill 1908, authored by House Speaker T.W. Shannon, would take money designated to help needy families and divert it to a campaign promoting marriage.

The bill passed the House and was sent to the Senate this week. The Senate sent it to the Appropriations Committee for discussion.

The bill, if it becomes law, would create a public service campaign as part of the Oklahoma Marriage Initiative and utilize federal TANF funds, to promote marriage as a tool against poverty.

TANF — Temporary Assistance for Needy Families — was designed to help low-income families on a temporary basis.

The bill would take much-needed funds from families and put it into advertising telling single parents the benefits of marriage.

Legislators are incredibly arrogant to believe they know best how people should live their lives.

Where to begin? First of all, this is what happens when the federal government gives state governments more “flexibility” by turning programs in to block grants — as Paul Ryan and the Republicans want to do with food stamps and Medicaid. 

The problem is there’s even less resources are available to deliver actual help to those who actually need it.

This questionable use of taxpayer money ostensibly meant for the social safety net is not unprecedented or even unique. In fact, TANF already picks up the tab for a program known as the Oklahoma Marriage Initiative – a cost of $2.8 million per year. The program was launched in 1999 when policymakers decided the state’s high level of out-of-wedlock births and divorce were causes of its high poverty rate. Since single-parent families are more likely to live in poverty, they reasoned, pro-marriage workshops would raise incomes along with marriage rates.

Of course, if the chain reaction flows the other way – couples who have financial troubles are more likely to split up, after all – then it might very well be counterproductive to skimp on benefits that would otherwise help families make ends meet. And benefits are indeed falling: Even as Oklahoma ramps up its pro-marriage programs, TANF benefits have dropped by one-third since 1996 in real terms.

The Oklahoma Marriage Initiative also suffers from a perverse redistributive effect. The programs advertised on its website are free and open to all, and engaged couples even get a big discount on their marriage license in exchange for attending. In effect, the state is siphoning welfare dollars from poor families to support relationship counseling for the general population, many of whom are surely quite well off.

Of course, as I pointed out, that’s exactly how the 90′s style “welfare reform” Paul Ryan and conservatives admire so much is supposed to work: this brand of “reform” doesn’t reduce the need for help, it just ensures that fewer people receive help.

When conservatives start talking “welfare reform,” progressives usually respond one of two ways. We either: (a) start inching towards the exits; or (b) stand in open-mouthed wonder, asking one another “Wait, they’re not serious, right?”

Oh, they’re serious, alright. In fact, that’s why we start making for the exits — because they’re serious. And none is more serious than the current poster boy for “serious” conservatives, Rep. Paul Ryan, who took to the pages of the Wall Street Journal touting his “Path to Prosperity” as an effort to build upon the welfare reform of the late 90s.

Welfare reform: This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job — it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.

See, there’s the problem with this is that the welfare reform of the late 1990s was not a success. Not unless you’re a conservative. And even then it was at best a “catastrophic success” — defined here as “success” that’s actually catastrophic for those it’s purported to help. That’s also what makes it a success. That is, if you’re a conservative.

What makes it a success? Well, in a sense, failure. It works if it doesn’t work, in other words, especially if it doesn’t work for the right people — because the right people are the wrong people. Follow me? No?

Besides, marriage isn’t an economic cure all.

Not that it will matter to Gingrich, Santorum or many other conservatives, but a new Brookings Institute study shows that conservatives have it backwards on economic decline and declining marriage rates.

The Brookings Institute’s Hamilton Project is out with a new study showing a strong correlation between income and marriage. While marriage rates have dropped as a whole over the last few decades, there’s been much a steeper decline in marriage among low-income Americans. Michael Greenstone and Adam Looney suggest that one reason for that drop is that labor-market changes that have altered marriage prospects for those trying to make ends meet, countering conservative claims that social norms and values are responsible for the trend.

Marriage rates among lower-income men and women have declined, but Greenstone and Looney offer different explanations for each gender. Among men, they say, those “that experienced the most adverse economic changes also experienced the largest declines in marriage” between 1970s and the present day.

By contrast, women have made big gains in the labor market over the past few decades. But their greater participation in the workforce–combined with a low-income male population, increasing prison rates for men, high unemployment and diminished earning power–has also kept more women from marrying. As s result, there’s a similar, if less dramatic, correlation between income and marriage among women…

Perhaps Gwen Guthrie put it best in her 1986 single, “Ain’t Nothin’ Goin’ On But The Rent.”

Like Algernon Austin posted back in September, less income means less marriage.

The New York Times recently provided a perfect illustration of the dynamics behind the declining marriage rate in its story on Reading, Pa., the city with the highest poverty rate in the country in 2010. It featured the story of Ashley Kelleher, a waitress at an International House of Pancakes, who has been supporting her three children as well as the father of two of them.

“For the past five years, it has been me paying the bills,” she said. Kelleher said she wants to get married someday, but only to a partner who is financially stable. The man she is with now, however, is not.

Social conservatives have looked everywhere for explanations for the decline of heterosexual marriage, everywhere but the American economy. But the research on this issue clearly shows that financially insecure men are less likely to marry.

We can see the relationship between men’s earnings and marriage in the figure below. The figure shows “less money, less marriage,” to quote the authors of a recent report from Pew Social and Demographic Trends. Although the Pew research shows “no significant differences by education or income in the desire to get married,” the less money a male has, the less likely he will actually marry.

It bears out what I wrote after covering CPAC last year: A brother generally needs a paycheck before he can afford to “put a ring on it.”

At the same time, the Heritage Foundation just launched a website, FamilyFacts.Org, that touts marriage as an economic cure-all, while blaming single-parenting (single mothers in particular) and out-of-wedlock births for all manner of economic ills. I guess they live on the same planet as John Boehner.

I visited that planet last month, when I attended CPAC— a three-day conference that had nothing to say about job creation. It wasn’t on the agenda. I did sit through the “Traditional Marriage and Society” panel, which featured two African American speakers. I marveled that — given the unemployment crisis facing African American communities — this is what these two speakers came all the way to Washington to address. I wasn’t surprised, though. The right has been too successful at getting “Black People Who Should Know Better”™, to hop on that train to nowhere for too long.

Attacking my marriage won’t change the marriage rates or the employment rates — or lower poverty rates — in African American communities. None of that appears to be the point. I’d say the point is that they’re not interested in creating jobs in black communities. If they were, well… Here’s what I’d say.

A brother generally needs a paycheck before he can afford to “put a ring on it.” A 2006 poll conducted by the Washington Post, the Kaiser Family Foundation, and Harvard University found that “Black men report the same ambitions as most Americans — for career success, a loving marriage, children, respect.” But in this recession black male unemployment has reached depression era levels. Some 8% of us lost our jobs between 2007 and 2009.

You want to promote marriage in African American communities? Start with job creation.

Welfare reform isn’t going to “save” marriage, and marriage isn’t going to save anyone from poverty.

The International Federation of Health Plans has depicted our ridiculous health care system in 21 graphs.

We don’t get more health care; we just pay more — much more.

And this entirely accounts for the scary long-term deficit projections.  If we paid what every other advanced industrial country pays, we would project surpluses as far as the eye can see and be able to begin investing in areas vital to our future — like educating our kids.

It’s not “entitlements,” “greedy geezers,” the “takers,” public worker salaries and pensions, teachers’ unions, big government, out of control spending, or even cost of policing the world.  A corrupted congress allows entrenched corporate lobbies to protect their right to rip us off.  It isn’t more complicated than that.  Every other explanation is hogwash.  Take a look at the graphs.  Remember them the next time Speaker Boehner babbles about out of control spending.  Or the White House floats cutting Social Security with a chained CPI.  Or the various Pete Peterson fronts rail about deficits.

Want to rebuild America?  Want to provide pre-school for all or affordable college?  Want to get our books in order?  Get the damn hogs out of the trough.

Take a look.

I was chatting with my neighbor this weekend, as we watched our children playing together, she brought up the subject of the Supreme Court hearing oral arguments for and against marriage equality today. We discussed the odds that the court will ultimately overturn the Defense of Marriage Act and California’s Proposition 8 in the bargain. “If they do overturn DOMA,” she said, “I think we should hold a ‘filing jointly’ party next April.”

We both laughed, even though we both knew how serious her unspoken point was. If the Court overturns DOMA, it will effectively repeal one of the most expensive and least discussed taxes in America: The Gay Tax.

There’s no gay marriage on form 1040.

Same-sex couples can legally wed in nine states and the District of Columbia. This week, 80 prominent Republicans urged the Supreme Court to make it the law of the land. But come tax time, married gay couples have few rights and more headaches.

…. Much of the issues stem from the fact that gay couples cannot file jointly on their federal tax returns. This makes tax preparation more tedious for those living in states that recognize gay marriages. Same-sex couples may have to prepare as many as four tax returns in order to maximize their tax benefits, pros say. Each spouse needs to file his or her federal return as a single person. And couples who want to file married at the state level have to prepare a joint federal return — which never gets filed — in order to have all the information they need, experts say. “It’s a burden, and it takes extra costs,” says Alison Flores, an attorney and analyst with the Tax Institute at H&R Block.

 Not being able to file jointly also means that many same-sex couples face larger tax bills than straight couples, says Kenneth Weissenberg, a partner at accounting firm EisnerAmper who estimates he and his husband Brian Sheerin paid an additional $5,000 in taxes last year because they couldn’t file as a married couple. Many married couples owe less in taxes when they file their returns jointly than they would as individuals, especially when one spouse earns more than the other, says Weissenberg.

It’s a subject my husband and I have discussed many times, most recently after Maryland voters made marriage equality the law of the state. For more than ten years, we’ve filed our taxes separately. Maryland now allows gay couples to file joint state tax returns, but we’re waiting until next year because our tax preparation was already underway when we got the news.

We’ll file out state taxes jointly next year, and we’re holding out hope that we’ll be able to do the same with our federal taxes, because right now we pay a pretty high tax penalty for being married to each other. Sometimes that tax gets really expensive, for people like 83-year-old Edith Windsor.

There is, though, something distinct about Edith Windsor, the plaintiff in the case challenging the Defense of Marriage Act, and not simply in the almost mesmerizingly romantic aspects of her story—how the night she first danced with Thea Spyer, the woman she would marry, she kept twirling until there were holes in her stockings, and how, forty-four years later, she nursed her as she was dying. Windsor’s biography, but for the same-sex variation, isn’t so different from those of the Justices, or of those in their social and cultural circles. She is eighty-three, three years older than Ginsburg, six years older than Scalia and Kennedy; like Stephen Breyer, who is seventy-four, she was married to a psychologist. She was born in Philadelphia, went to Temple, and then got a graduate degree (in mathematics) from New York University. (In Ginsburg’s case, it was Cornell then Harvard and Columbia; reading Jeffrey Toobin’s profile of Ginsburg in The New Yorker, one can imagine them in the same circles.) Windsor did very well at I.B.M., as an early systems engineer. Her wife died in 2009, the same year as did John O’Connor, whose wife, Sandra Day O’Connor, had, like Windsor, quit a job in which she was a pioneer to care for a spouse with a devastating, chronic illness. (Multiple sclerosis in Spyer’s case, Alzheimer’s in O’Connor’s.)

As I wrote in an earlier post, Windsor had standing to bring the case because she was financially damaged by DOMA. Spyer had left Windsor her shares in the country house and Greenwich Village apartment they’d bought in 1968 and 1975 (each worth much more now), and, because the federal government, unlike the state of New York, doesn’t recognize her marriage, Windsor has to pay three hundred and sixty-three thousand dollars in estate taxes. How many times in their legal careers have the Justices, including the younger ones, told a friend they saw at a dinner party or an older relative who’d been widowed not to worry—that spouses don’t get a tax bill like that? And will it be striking to them that if the widow had been Edith Windsor, they wouldn’t have been able to say so?

There it is. A $363,000 tax bill for being married to another woman. The reason for this is something known as “The Gift Tax,” which in this case really should be renamed “The Gay Tax”.

Beware the Gift Tax

Heterosexual married couples are exempt from almost all federal taxes that are levied on transfers of property or money between them. Not so for gay and lesbian couples, since their marriage is not recognized by the federal government. This means that same-sex couples must be aware of federal gift tax rules.

What is the gift tax? Every person may give a lifetime total of up to $5.25 million (for 2013) without tax penalty. Once you surpass that limit, all further gifts, and anything you leave at death, are taxed. Annual gifts of $14,000 or less per recipient do not count towards this lifetime total. Heterosexual spouses are exempt from this tax — they can give any amount to each other and it doesn’t count as a gift. But gifts between same-sex couples do not qualify for this exemption. (To learn more about how the gift tax works, see Nolo’s article Estate and Gift Tax FAQ.)

Example: How the gift tax works

If Ann and Greg are married, Greg can give Ann $30,000 per year, and this will not count towards Ann’s lifetime gift/estate tax exemption. But if Marcia and Mary are married and Marcia gives Mary $30,000 one year, $16,000 of that amount will count against Marcia’s lifetime gift total.

How might this affect gay and lesbian couples? If you make taxable gifts of more than $5.25 million, you will have to pay taxes on any future gifts. This tax can be hefty — nearly 40% of the amount of the gift — and wealthy same-sex couples may be at risk of having to pay it. You can also rack up the dollar amounts if you put your partner on the title to your home without receiving payment. The federal government considers this to be a gift of half the value of your home, and this amount will count towards your lifetime gift total.

That’s not all. You don’t have to be wealthy to get hit with the Gay Tax. The biggest tax hit can come where you least expect it: health insurance.

And for some same-sex couples, the biggest tax hit happens in an area most married couples don’t yet associate with Uncle Sam: health benefits. While more employers are allowing same-sex spouses to be added to their employees’ health plans, the perk is often considered a taxable benefit under federal law, costing those couples an additional $1,069 a year in taxes, according to a 2007 report by the Center for American Progress, a progressive think tank based in Washington. Workers also normally can’t use pre-tax dollars to pay for a spouse’s coverage. Some companies try to offset those higher taxes by increasing pay for affected workers, but those employees are also subject to higher taxes on that compensation, says Moulton.

That’s our family’s reality. Right now my husband and I each have health insurance through our employers. The kids are carried on his health insurance, and as a result he pays a premium for family coverage. That means he is effectively paying for health insurance for me. But it’s health insurance that I can’t touch, because the minute I do it becomes a taxable gift. Thus, I get health insurance separately through my employer, and the premium is deducted from my salary. So, we’re basically paying for my health insurance twice, and if I used the health insurance provided through my husband’s employer we’d get hit with a higher tax bill.

But wait, there’s more. As Suse Orman pointed out earlier this year, gay couples pay more taxes for fewer rights.

There’s another penalty that’s even worse. Regardless of the size of their estates, every gay couple is discriminated against when it comes to Social Security benefits.

Married heterosexual couples can maximize their Social Security retirement benefits by taking advantage of the highest-earner’s benefit. When both spouses are alive, the lower earner can opt to collect a monthly benefit check that is equal to 50% of his or her spouse’s benefit. For many married couples, that 50% spousal benefit is often much higher than what the lower-wage-earning spouse could collect based on his or her own earnings record. Most important, when the high earner dies, the surviving spouse is allowed to collect 100% of the deceased’s higher benefit.

Because same-sex marriages aren’t recognized on the federal level, gay and lesbian couples are not eligible for Social Security spousal benefits. The lower earner cannot claim any benefits based on the higher earner’s benefit. A heterosexual couple married for just a few months is able to collect a federal benefit that same-sex couples who have been together for decades can’t. Are we really a nation that says that is fair?

According to that 2007 Center For American Progress study, gay couples pay a grand total of $178 million, and employers pay an additional $57 million in payroll taxes on that taxable income — a penalty, Orman notes, that neither same-sex couples.

It doesn’t stop there. As I wrote back in 2006, there’s a long list of “gay tax penalties.”

Most of the economic and financial issues are things that married heterosexuals don’t have to talk about, or even think about much, because it’s already given. But same-sex couples do have to talk about it, have to negotiate how to get just a few, can’t get most of those benefits, and have to pay more for the few we do get. And in many ways, same-sex couples assume many of the “burdens and obligations” of marriage referred to in the New Jersey decision are actually subsidizing for married heterosexuals the same benefits that are denied to us.

It almost makes marriage seem more like “welfare for heterosexuals” supported by the rest of us; a stipend, if you will, for being “straight.” That’s the part that doesn’t get talked about.

It’s one that either doesn’t get brought up, maybe because people don’t particularly like talking about money, or opponents of marriage equality dismiss support for marriage equality by saying “it’s all about money.”

… There are a host of financial issues that effect same-sex couples differently, and create the “economic and financial inequities” mentioned in the ruling. I listed them before when I asked what rights same-sex couples should have, and here they are again in a nutshell.

• Inheritance rights – Same-sex couples have no automatic rights to inheritance in the absence of a will.
• Family leave – Same-sex couples have no legally protected right to unpaid leave to care for an ill spouse.
• Pensions – Most pension plans only pay survivor benefits to a legal spouse. Same-sex partners get no pension support for surviving partners.
• Nursing homes – Same-sex couples have no legal right to live together in a nursing home and spend their final years together.
• Home protection – The laws that protect married couples from being forced to sell their homes to cover high nursing home bills don’t apply to same-sex couples. A same-sex partner can be forced to sell, and forced out of the home to satisfy nursing home bills if he/she lives in the home but does not own it.
• Retirement savings – Married people can roll over a deceased spouses 401(k) into an IRA without paying taxes. Same-sex partners must withdraw everything, pay income taxes on it, and lose the tax deferral benefits.
• Taxes – Marries spouses may inherit unlimited property from a deceased spouse, tax free. Same-sex partners pay taxes on any amount over set state and federal limits.
• Social Security benefits – Unless you’re married, you get no Social Security from a dead spouse. If you have kids, they will get it and you may be custodian of it until they’re adults.

Now, most of these are issues that no state court or legislature can address, or at least fully address, because they involve federal law. But the argument against many of these benefits for same-sex couples is that many of them can be obtained through the creation of legal documents (i.e. a will, though heterosexual spouses are guaranteed to inherit some percentage of a deceased spouses estate even in the absence of a will.) or through other processes that usually require same sex couples to shell out more money for what married heterosexuals get for free or at significantly less cost. For example, one same-sex partner can purchase health insurance for his/her spouse via an employer’s health plan or another, but the heterosexual in the next cubicle will probably get to add his spouse at little or no additional cost, and the cost of that benefit will be made up in part by the queer in the adjoining cubicle.

That’s only a partial list, but add them up — inheritance rights, family leave, pensions, nursing home costs, retirement savings, etc. — and it all adds up to a rather expensive “gay tax,” because our families must either pay more than legally married couples would for the same things; or we pay a higher price for inequality, by either suffering the consequences of not having those rights or paying for legal documents that may or may not be recognized, in hopes they might win us one or two of those rights. The legal costs alone would pay for thousands of marriage licenses.

The biggest irony about the “Gay Tax” thus far has been that it’s the one tax that Republicans like — so much, in fact, that even GOP deficit hawks like John Boehner will spend $3millon taxpayer dollars to defend.

There are signs that the GOP may be “evolving” on the issue. Conservative Republican Ted Olson is one half of the legal team arguing for marriage equality before the court today. As many as 75 prominent Republicans signed an amicus brief presented to the Court this week, arguing that marriage equality is a civil right. Sen. Rob Portman, recently announced his change of heart on marriage equality, after his son came out.

Those are reasons to hope. On the other hand, marriage equality remains a struggle for the GOP. Most of the prominent GOP supporters of marriage equality are “out-of-office.” For every Rob Portman, there’s a John Boehner who will “always oppose” marriage equality. For every Ted Olson there’s a Republican like CPAC straw poll winner Rand Paul, who’d solve the problem of the Gay Tax with a tax cut.

Rand Paul appeared on Fox News Sunday with Chris Wallace who asked him about the Defense of Marriage Act (DOMA) case that will be argued in the Supreme Court this week. Rand Paul said that marriage should be a state issue and that the federal government should not be promoting something he doesn’t believe in.

Paul believes that by issuing a flat tax, you get rid of the benefits that are available to heterosexual couples, thus making the tax system equal. Gay Americans rejoice! Now, everyone will pay the same tax and nobody needs to be declared equal in the eyes of the law or any of that other messy business.

Rand Paul says he wants the government to make laws more neutral towards the issue of gay marriage. He thinks that if you take the word “marriage” out of tax code, then the federal government never has to deal with the issue of redefining it. Wrong.

Marriage is not just a states issue, no matter how much Rand Paul wants it to be. The institution of marriage is deeply intertwined with the federal government. The federal government looks at marriage licenses for Social Security benefits, citizenship, and for Medicaid/Medicare benefits. Declaring that gay marriage is states rights issue also rejects the argument that is at the core of this debate.

Do we see gay Americans as equals or do we not?

I appreciate that Sen. Paul, like any Republican, wants to lower my taxes; albeit in his own delusional way. But honestly, there’s a much simpler way to do it:

Let me and my husband get married, and treat my our marriage the same as our neighbors’ marriage.

Repeal the Gay Tax, and not only will we throw a “Filing Jointly” party, but I might even consider in sending Paul an invite.