2012 GOP presidential hopeful Newt Gingrich today released his latest big idea: a return to Bush-style Social Security privatization. Gingrich has been quite vocal in his support for privatized Social Security accounts, but today marked the first time that he laid out specifics as to how he would gut one of the most successful programs in American history.

First, Gingrich explains that he would let workers opt into private accounts, just like Bush’s suggested system. Gingrich points to two models that inspired him to suggest this approach: privatized retirement accounts in both Chile and Galveston, Texas. He added the caveat that, should private accounts fail to deliver the same return as minimum Social Security benefits, the government would step in and make investors whole again:

The government guarantees that all workers with personal accounts will receive at least as much in retirement as they would under the current Social Security system. If someone with a personal account retires with benefits lower than those offered by the current system, the Treasury will send them a check to make up the difference. Thus, there is a legal government obligation that in a worst case scenario a retiree will be able to enjoy benefits at least as good as they would under th e traditional Social Security system.

Watch him explain the idea at a campaign event today:

As we pointed out when Sen. Rob Portman (R-OH) suggested a similar idea, promising to make investors whole again sets up a huge moral hazard problem. If investors know full well that the government is going to provide them with a minimum benefit, no matter what they do, then the incentive is to make risky investments and hope for a big payoff. After all, why not take the risk if the government has guaranteed that you can’t lose money? Investors have every incentive to bet big in the hopes of a large payout, because if they go bust, the government will bail them out.

Add to this the fact that the privatized systems in Chile and Galveston aren’t as wonderful as Gingrich makes out. In fact, while they work quite well for the wealthy, middle- and lower-income participants wind up worse off. Regarding the Galveston system, Eric Kingson, a professor of social work at Syracuse University, explained that “for most people, it’s somewhere between ‘very bad’ and ‘not very good.’ ” Chile’s system, meanwhile, has “left millions without savings for their retirement.” According to estimates by Chile’s undersecretary for pensions, “in 2007, only 60 percent of Chilean workers had some kind of pension coverage, down from 86 percent in the 1970s.”

Gingrich’s plan would also cause the deficit to explode, as money meant for Social Security would have to be diverted into the creation and administration of private accounts. Social Security kept 14 million seniors out of poverty last year, but Gingrich would enact a scheme to privatize the system, while hoisting the costs of failure onto the federal government.

Across the country, groups pushing for living wage legislation are finding powerful allies in religious leaders and faith groups that are flocking to join the fight. Case in point, a rally in New York City urging the City Council to raise wages at city-subsidized projects got a big boost today from the support of the Roman Catholic Archdiocese of New York:

Msgr. Kevin Sullivan, executive director of Catholic Charities, is scheduled to speak at a rally on Monday organized by a coalition of religious, labor and community leaders to urge the passage of the bill, originally introduced last year by two City Council members from the Bronx.[...]

[H]e added that the rally on Monday, at Riverside Church, would provide an appropriate setting for the archdiocese to address economic hardship and unemployment, matters of utmost concern to the church.[...]

“We’re going to speak about how this economic crisis continues to hurt everybody in society, particularly the poor,” the monsignor said. “We need to make sure there are decent jobs with decent wages.”

The City Council will hold a hearing tomorrow on the bill, which would would mandate a wage of $10 per hour with benefits, or $11.50 without benefits, for employees of projects that receive at least $1 million in government subsidies. Small businesses and manufacturers are exempt, but the bill has still faced strong opposition from business leaders and Mayor Michael Bloomberg.

Archbishop Timothy Dolan of the New York archdiocese has recently been pushing the church to focus more on the economic hardship millions are facing and the importance of living wages. He wrote in a letter to all bishops in the U.S. that “the best way out of poverty is to work at a living wage.” According to a 2009 report, more than one million workers in low-wage industries in Chicago, Los Angeles and New York City lose more than $56.4 million each week as a result of employment and labor law violations.

The Florida Independent reports that faith groups are planning a series of actions to protest wage theft. This week also marks the first anniversary of the Day Against Wage Theft in Miami-Dade County. Florida Republicans are pushing a bill that would bar municipalities from “adopting or maintaining” local ordinances like Miami-Dade’s that crack down on wage theft.

Our guest blogger is Sarah Ayres, a research associate at the Center for American Progress Action Fund.

By now we have all heard the latest in the months-long debate over reducing the nation’s deficit — barring a last-minute miracle, the congressional super committee tasked with finding at least $1.5 trillion in deficit reduction will fail to come to an agreement. Cue handwringing by pundits lamenting the inability of both Democrats and Republicans to compromise.

The notion that both sides share in the blame is an easy line for commentators to repeat, but it isn’t true. Time and time again, the only thing preventing an agreement on long-term deficit reduction has been the Republicans’ absolute refusal to consider any tax increases on high-income households as part of the solution. Michael Linden and I created a timeline of major events in the past six months of deficit talks:

February 14, 2011: President Barack Obama submits budget for 2012 with about $2 trillion in deficit reduction, half of which come from spending cuts.

April 15, 2011: House passes Rep. Paul Ryan’s (R-WI) budget, which includes $5.8 trillion in spending cuts along with tax cuts for the richest Americans.

May 5, 2011: Vice President Joe Biden begins debt talks.

May 11, 2011: Speaker John Boehner (R-OH) says he will not raise debt limit without spending cuts that match how much the limit is raised.

June 23, 2011: Majority Leader Eric Cantor (R-VA) walks away from debt ceiling talks with Biden after refusing to consider any tax increases. The administration had offered $2.4 trillion in spending cuts for $400 billion in taxes, an 83:17 split.

July 7, 2011: Obama and Boehner begin debt-ceiling negotiations.

July 9, 2011: Boehner walks away from Obama’s “grand bargain”: $4 trillion in debt reduction comprised of $1 trillion in revenue and $3 trillion in spending cuts, including entitlement reforms.

July 19, 2011: The Gang of Six proposes a $4 trillion deficit reduction plan, including $2 trillion in revenue.

July 22, 2011: Again, Boehner walks away from negotiations after Obama offers $1.2 trillion in revenues and $1.6 trillion in spending cuts, including entitlements.

July 31, 2011: Debt ceiling agreement is reached, cutting $1 trillion in spending immediately and establishing the super committee to reduce deficits by at least an additional $1.2 trillion.

October 26, 2011: Democrats first super committee offer is $3 trillion in deficit reduction comprised of about $1.3 trillion in revenues and $1.7 trillion in spending cuts, including cuts to Medicare and Medicaid. Republicans immediately reject it. Republicans’ first super committee offer is $2.2 trillion in deficit reduction, which includes no new tax revenues.

November 8, 2011: Republicans’ second super committee offer is $1.5 trillion in deficit reduction. It does include $300 billion in new tax revenue, but in exchange for extending the Bush tax cuts and lowering the top tax rate. The plan would ultimately cut taxes for the wealthy and raise them for everyone else.

November 10, 2011: Democrats’ second offer is $2.3 trillion in deficit reduction, consisting of $1.3 trillion in spending cuts and $1 trillion in revenue. The revenue would be split between $350 billion in concrete measures and $650 billion in future tax reform. Republicans reject it.

November 11, 2011: Democrats agree to Republicans’ top lines including just $400 billion in revenues and $875 billion in spending cuts, but refuse to accept the GOP’s tax cut for the rich. Republicans reject it and make their final offer: $640 billion in spending cuts and $3 billion in revenues.

What this timeline shows is just how much Democrats have been willing to bend, only to have Republicans reject very generous offers. Back in June, Democrats reportedly offered a mere $400 billion in tax increases as part of a $2.4 trillion deficit reduction package — a 83:17 ratio of spending cuts to tax increases. Republicans said no.

And they haven’t budged an inch since then, stubbornly insisting that any deficit reduction package consist entirely of spending cuts. Even after Democrats on the super committee agreed to the Republican top line of $400 billion in revenues, Republicans refused to make a deal.

Looking at all the offers rejected by Republicans, it comes as no surprise that the super committee will not reach a deal. By rejecting any mix of spending cuts and tax increases, Republicans ensured that there would be no agreement a deficit reduction package.

Unless unemployment benefits are extended in the next few months, six million Americans will lose their benefits in 2012, including one million in January alone. This will suck $57 billion out of the economy in the first quarter of next year.

Republicans have turned several extensions of unemployment benefits into political theater, refusing to extend them without offsetting cuts elsewhere in the budget. On CNN’s State of the Union yesterday, Sen. Rand Paul (R-KY) started this song-and-dance again, telling Candy Crowley that he would not support any plan that extended unemployment benefits without a way to pay for it, because to do otherwise is “to borrow money from China to pay people not to work”:

“If you want to extend unemployment benefits, they have to be paid for,” Paul said. “We have an unemployment program. We have a tax for it. It’s paid for for 26 weeks. So the question is, do we want to borrow money from China to pay people not to work?”

Watch Paul’s comments:

But Paul’s assessment of unemployment benefits vastly underestimates their value. Research has proven that benefits for the long-term unemployed are not weakening job search efforts. And the extended benefits provide necessary support to those who are unemployed and help boost the economy. In fact, unemployment benefits provide some of the highest bang-for-the-buck of any government program.

Already, most jobless Americans are no longer eligible for unemployment benefits. At a time when there are still four job seekers for every opening and many Americans continue to struggle with unemployment, it belittles their struggle for Paul to say that the vital support from unemployment benefits is only paying them “not to work.”

A record number of Americans have fallen into poverty since the financial crisis sparked a deep recession in 2008, but that hasn’t stopped House and Senate Republicans from targeting the poor on their crusade to slash federal spending. In September, Kentucky Sen. Rand Paul (R) declared that “the poor are getting richer even faster” than the rich while relying on government programs, even as the number of children and senior citizens living in poverty has increased to record levels.

One of Paul’s fellow Republicans, Louisiana Sen. David Vitter (R), is now joining that fight, invoking the failed welfare reform policies of the 1990s in calling for a federal cap on food stamps and other forms of welfare, vital programs for millions of impoverished families that grew even more necessary during the recession. Under Vitter and three other senators’ plan, the New Orleans Times-Picayune reports, food stamps would be capped at pre-2007 levels:

Sen. David Vitter, R-La., joined last week with three other conservative GOP senators to propose caps on means-tested federal social welfare programs. It would require that funding for food stamps and 76 other federal welfare programs be capped at pre-2007 levels by 2015 or when unemployment falls below 7.5 percent, whichever comes sooner. [...]

“One of the most significant substantive accomplishments coming out of the 1994 Republican takeover of Congress was welfare reform,” Vitter said. “But as significant as this reform was, we are overdue to renew welfare reform efforts and make additional gains because the welfare state has grown enormously since then — even factoring our recession.”

What Vitter doesn’t note, however, is that welfare reform was a massive failure, reducing America’s ability to aid its poorest and neediest citizens. In 1995, the old welfare system reached 75 percent of those living in poverty, but during the depths of the recession, the “reformed” welfare program reached less than a third. Food stamps, which were not included in those reforms, increased by 57 percent in 2009 as more Americans were plunged into poverty.

This isn’t the first time the GOP has targeted food stamps this year, nor are food stamps the only social welfare program to face the Republican axe. The House Republican budget cut funding for nutrition assistance programs and other programs that help women, infants, and children. The GOP has made extending unemployment benefits a chore, even as it endlessly protects massive tax breaks for corporations and the wealthy.

There are nearly 50 million people living in poverty, 15.7 million of whom are children, and without social welfare programs like food stamps, American poverty would be even worse. In 2010, 28.6 percent of Americans would have lived in poverty without social welfare programs, according to the Center on Budget and Policy Priorities. Unfortunately, the Republican answer to that problem has been to propose raising taxes on the poorest Americans while simultaneously cutting the programs that are most vital to them.

The preferable treatment that investment income receives in the tax code is one of the factors driving the income inequality and galvanizing the Occupy Wall Street movement. Because the capital gains tax is capped at 15 percent, “anyone making more than $34,500 a year in wages and salary is taxed at a higher rate than a billionaire is taxed on untold millions in capital gains.”

The reason this low rate helps create an income divide is that capital gains are made almost exclusively by the wealthy. In fact, “over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people.” And the concentration is actually far greater than that, as half of all capital gains are made by the richest 0.1 percent of Americans:

Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation’s earners– rather than the more common 1%. The top 0.1%– about 315,000 individuals out of 315 million– are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.

It’s crystal clear that the Bush tax reduction on capital gains and dividend income in 2003 was the cutting edge policy that has created the immense increase in net worth of corporate executives, Wall St. professionals and other entrepreneurs.

This is why the various Republican plans floated to reduce or eliminate the capital gains tax are folly. Doing so only benefits the very wealthy, who have already been the main beneficiaries of the tax cuts package enacted by the Bush administration. Remember, it was President Reagan — the patron saint of today’s conservatives — who completely equalized the tax treatment of capital gains and wages, taxing them at the same exact rate. Since then, the capital gains tax has been steadily eroded, as the richest Americans have steadily increased the gap between themselves and the rest of the country.

Both Reagan & Clinton signed "grand bargains" with tax increases

The congressional super committee tasked with cutting $1.5 trillion from the federal deficit over the next 10 years is likely to announce its failure today, and the main reason is that the committee’s six Republicans refused to budge on their support for massive tax cuts for the rich. Democrats would have even accepted the GOP’s paltry concession on revenues — $350 billion from ending deductions — had Republicans not included a permanent extension of the Bush tax cuts for the wealthy, Sen. John Kerry (D-MA) said this morning.

Twenty-four cents out of every dollar saved in Sen. Pat Toomey’s (R-PA) plan that became the primary Republican offer came from tax increases, an even smaller number than proposed in bipartisan plans from other commissions. But while taxes have become the major sticking point between the two parties in their attempts to reach multiple bargains this year, that hasn’t always been the case. Tax increases, in fact, made up large parts of the five “fiscal grand bargains” made during the Reagan, H.W. Bush, and Clinton administrations, the New York Times reports:

In the five fiscal grand bargains of the 1980s and early 1990s, tax increases accounted for an average of 61 cents of every dollar saved. In fact, in President Reagan’s 1982 and 1984 budget-trimming deals, more than 80 percent of deficit reductions came from tax increases. What’s more, the deals passed with majority support from both parties. Mr. Reagan may be remembered as an antitax hero, but he actually raised taxes 11 times over the course of his presidency, all in the name of fiscal responsibility.

Republicans used to rank deficit reduction ahead of curbing taxes, but now the reverse is true.

While Republicans claim to be focused on deficit reduction, their attachment to tax cuts continues to tell a different story. The Bush tax cuts for the wealthy, originally passed in 2003, blew a hole in the federal budget when the GOP offered no plan to pay for them, even though the party predicted at the time that it would pay off the nation’s debt in 10 years. And instead of asking the wealthiest Americans to sacrifice, the GOP has sought to take the knife to an array of programs that help the elderly, the poor, and women, infants, and children in the name of deficit reduction.

The super committee’s lack of a deal isn’t necessarily a “failure,” as economists have warned that forced austerity would only imperil the American economy. But the GOP’s intransigence, tied together by anti-tax activist Grover Norquist, has already led to the first credit downgrade in American history. Now, even as Republicans attempt to lay blame at the feet of Democrats, that anti-tax dogma has prevented the super committee from reaching a deal that Democrats were apparently itching to sign onto.

Today, the 12-member congressional super committee is expected to announce failure to reach an agreement to cut $1.5 trillion from the federal budget. One of major “sticking divides,” as Democratic co-chair Sen. Patty Murray (WA) noted, has been Republicans refusal to consider a widely supported tax increase on America’s wealthy.

This intransigence is largely motivated by the shadowy influence of lobbyist Grover Norquist, the head of Americans for Tax Reform, who threatens to serve any Republican who breaks his anti-tax pledge with electoral defeat. Today on CNN, super committee member Sen. John Kerry (D-MA) noted that Norquist’s handcuffs on his GOP colleagues essentially makes him the “13th member of this committee without being there“:

KERRY: We Democrats put a $4 trillion dollar plan on the table. We had $1.3 trillion of cuts, and we had $1.3 trillion in revenue. Now, some of that revenue, we’re not asking that to happen tomorrow or the next day, it could happen in a year. This is a ten-year plan and longer. So we have the ability here to do something that’s fair for all Americans. But unfortunately, this thing about the Bush tax cuts and the pledge to Grover Norquist keeps coming up. Grover Norquist has been the 13th member of this committee without being there. I can’t tell you how many times we hear about ‘the pledge, the pledge.’ Well all of us took a pledge to uphold the Constitution and to full and faithfully and well-execute our duties and I think that requires us to try and reach an agreement. So we have to compromise.

Watch it:

Despite Norquist’s desire to “crush the other team,” it seems that more and more members of his own team are starting to agree with Kerry. GOP Rep. Mike Simpson (ID) said regarding Norquist’s anti-tax pledge, “I didn’t know I was signing a marriage agreement.” Rep. Frank Wolf (R-VA) blasted Norquist for “paralyzing Congress.” Freshman Rep. Reid Ribble (R-WI) vowed to never sign another pledge, noting the last straw came when Norquist wouldn’t let Republicans close tax loopholes that subsidize ethanol production. Former GOP Sen. Alan Simpson simply said, “If Grover Norquist is the most powerful person in America, he should run for president” rather than peddle his influence backstage.