Jac VerSteegIn passing the $1.1 trillion budget bill to avoid a government shutdown, Congress has shown that the word “guarantee” means different things for different interest groups. The spending measure so blatantly played fast-and-loose with “guarantee” that South Florida Democrats including Reps. Lois Frankel, Alcee Hastings and Ted Deutch voted against the bill.
In a statement, Rep. Frankel lambasted a provision in the spending measure that rolls back reforms enacted to prevent Wall Street abuses that caused the economic meltdown that emerged in 2008.
“This spending bill puts hard working taxpayers on the hook for Wall Street’s riskiest behavior,” Frankel’s statement said. “Big bank gambling caused Americans to lose their homes, their jobs, and retirement funds.”
Frankel was objecting to repeal of the Dodd-Frank reform that required financial institutions to conduct risky derivatives trades using entities not covered by federal insurance. Because of the repeal, those risky accounts once again can enjoy a taxpayer guarantee.
Meanwhile, Congress used the funding bill to remove a longstanding guarantee that benefit cuts would not be inflicted on current retirees protected by the Pension Benefit Guaranty Corp. Under the new provision, benefits could be cut by up to two-thirds. About 10 million Americans are covered by the potentially affected multiemployer pension plans, some of which are close to financial collapse.
Rep. Hastings, quoted in The Palm Beach Post, said Congress “just in time for the holiday season, insisted on putting language in the bill that will cripple retirement security for millions of Americans by undermining 40 years of federal law prohibiting cuts to pension benefits.”
The well-founded fear is that, having taken this step, Congress will approve cuts to other pension benefits and perhaps even Social Security.
It’s true that if those multiemployer pension funds failed, taxpayers would be on the hook for billions. But what a juxtaposition. Congress doesn’t want taxpayers on the hook for pensioners, but it’s OK for taxpayers to be on the hook for Wall Street giants – who already benefitted from a multibillion dollar taxpayer bailout.
Congress of course wants to avoid a possible pension crisis. Members can see that coming for sure. But members of Congress can’t foresee a new financial crisis from risky Wall Street behavior. I mean, who could imagine such a crisis – aside from anybody who happened to be alive in 2008?
Heaven forbid Congress should shore up pension funds and pay for other shortfalls by increasing taxes on the wealthiest Americans. But the massive spending bill did include a provision that will affect the rich.
As the Washington Post reports, the bill contained an increase in campaign contribution limits that “means that a donor who gave the maximum $32,400 this year to the Democratic National Committee or Republican National Committee would be able to donate another $291,600 on top of that to the party’s additional arms – a total of $324,000, ten times the current limit.
“In a two-year election cycle, a couple could give $1,296,000 to a party’s various accounts.”
In a news release, Rep, Deutch said, “It is downright appalling that congressional negotiators, without public debate or even fair warning, tucked language into the Omnibus Appropriations bill that gives more influence to wealthy donors and special interests who have more than plenty already.”
Well, the wealthy have to do something with all that money they aren’t paying in taxes. And who will benefit from those increased donations? Members of Congress.
And increased contributions mean increased influence that means federal policies will continue to favor the wealthiest Americans while drubbing regular taxpayers and penalizing pensioners. It’s guaranteed.
Jac Wilder VerSteeg is editor of Context Florida. Column courtesy of Context Florida.
