Why Do Deficit Hawks Hate Social Security?

by Zach Carter, Media Consortium blogger

Last week, Social Security advocates learned something they had long suspected. Arguments for cutting Social Security aren’t really about economics or the deficit. They’re all about waging war on social services.

In short, some very prominent policymakers are out to dismantle Social Security on ideological grounds. The most recent example of this view comes from Alan Simpson, a former Republican Senator from Wyoming who now serves as co-Chair of President Barack Obama’s Federal Debt Commission. Earlier this summer, Simpson was caught on video spreading absurd lies about Social Security, but his latest outburst explains why he’s been so willing to distort the facts. Simpson simply hates Social Security.

As Joshua Holland highlights for AlterNet, Simpson fired off a nasty email to Ashley Carson, who advocates for elderly women, in which he referred to the most successful social program in U.S. history as “a milk cow with 310 million tits.”

Social Security is doing just fine

But Simpson has a lot of power on the Debt Commission, which is expected to recommend that Congress reduce the deficit by cutting social programs in a report this year. But as Holland notes, Social Security isn’t in trouble:

Social Security is in fine shape. It’s got a surplus that will run out in 2037, but even if nothing were to change by then, it could still continue to pay out 75 percent of scheduled benefits seventy-five years from now, long after the surplus disappears, and those benefits would still be higher than what retirees receive today.

What’s more, as William Greider notes for The Nation, Social Security has never added one cent to the federal budget deficit. According to the law that created the program, Social Security never can. Targeting Social Security in order to fix the deficit is like invading Iraq to fight Al-Qaeda. The issues are not related.

Raising the retirement age robs workers

The Debt Commission is likely to recommend raising the retirement age—the age at which Social Security benefits begin to be paid out. But as Martha C. White notes for The Washington Independent, it’s a “solution” that simply robs low-income workers of their tax money. Everybody pay Social Security taxes when they work, and when they retire, they receive federal support. If you don’t live long enough to actually retire, you don’t get any benefit from Social Security.

“The hardship of raising the retirement age falls disproportionately on low-income workers who work in physically demanding professions, jobs they may not be able to continue through their seventh decade. … Moreover, though the average lifespan has increased since Social Security’s creation, those extra years aren’t enjoyed equally by all Americans. Overall, Americans are living about 7 years longer. But the poorest 20 percent of Americans are living just two years longer.”

Raising the retirement age, in other words, disproportionately hurts the poor—the very people Social Security is supposed to help most.

New Orleans charter school wonders? Don't believe it.

http://www.schoolsmatter.info/2010/08/nola-regular-public-schools-outgain.html

In case you hear otherwise from right-wingers or their Obama Department of Education confreres, here is another take (with data) on the much ballyhooed New Orleans post-Katrina schools experiment with charter schools. In fact, says the author, regular public schools, despite their traditional staffs, traditional union protections and requirement to take everyone (including those expelled from the charter schools), are kicking the butts of the charter schools in student improvement.

"Giipper" Reagan Evisceration of Carter's Energy Initiatives Throws U.S. for a Loss

About Reagan's attitude toward renewable energy...Reagan had no success in reducing government spending except in one area...eviscerating Carter's Energy initiatives...In a paper on patent generation by area, solar energy patenting plunged from 1983 to 1995. The author said the number one reason was Reagan's complete destruction of renewable energy initiatives...How much did we lose by wasting all that time?...How much ahead would we be now?...We will never know...

http://www.salon.com/news/env/energy/index.html?story=/tech/htww/2010/08/26/the_lies_of_james_watt

But when it comes to Sir Ronnie, reps never let the facts get in the way of printing a good legend....If you want to see government spending here is the chart..it peaked as a percentage of GDP under Reagan....and is just now slightly ahead of his best year, 1983. Of course, we had tax receipts of about 20 percent GDP....now, taxes are like 16 percent of GDP...although listening to teabaggers you'd think it was 80 percent...

American exceptionalism

Paraphrasing one of the commenters below, nothing says global superpower more than schools requiring kids to bring their own toilet paper. Or counties tearing up paved roads and turning them into gravel to reduce the upkeep.

http://www.nytimes.com/2010/08/15/business/economy/15supplies.html?_r=2


http://twitter.com/NatashaChart/status/21921756331

http://www.wwmt.com/articles/roads-1363526-mich-counties.html

Dems Outperform GOP on managing the economy

Supporting an early 2010 blog by Kissweb, dutchman comments on the Hufffington Post

that there is no proof that Republican presidents - in aggregate - have done better than Democratic ones in managing the economy.

Listed below is the post WWII Economic performance, by political party, summarized: (all results are annualized to reflect compounding, and go back to 1947, when the source data compiled at the Bureau of Economic Analysis - www.bea.gov - begins)

Real GDP Growth:

Democratic Presidencies: 3.59% per year
Republican Presidencies: 2.46%

Per Capita, Real GDP Growth:

Democratic Presidencies: 2.30% per year
Republican Presidencies: 1.25%

Deficit-adjusted, Per Capita, Real GDP Growth:

Democratic Presidencies: 0.98% per year
Republican Presidencies: -2.48%

Jobless Rate:

Democratic Presidencies: 5.45%
Republican Presidencies: 5.93%

Growth in the Federal Debt:

Democratic Presidencies: 4.18%
Republican Presidencies: 8.12%

Inflation-adjusted Growth in the S&P 500:

Democratic Presidencies: 9.31%
Republican Presidencies: 3.69%

In short, when Reagan asked if you are better off now than you were during the previous presidency, in most cases where Democrats were in office the answer was "yes", while for every Republican since Eisenhower, the answer has been "no".

Who loves the troops now?

Um, isn't this rampant public hostility to Muslims hurting the troops? They're trying to win hearts and minds in Iraq and Afghanistan. Can you imagine Fox News is helping Petraeus get the counter-insurgency job done -- or is hurting Taliban efforts to recruit more people to shoot at the Americans?

Why do these people hate America so much?

Stockman Extrapolated

Reagan insider: 'GOP destroyed U.S. economy'

Commentary: How: Gold. Tax cuts. Debts. Wars. Fat Cats. Class gap. No fiscal discipline

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) -- "How my G.O.P. destroyed the U.S. economy." Yes, that is exactly what David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, "Four Deformations of the Apocalypse."

Get it? Not "destroying." The GOP has already "destroyed" the U.S. economy, setting up an "American Apocalypse."

Jobs recovery could take years

In the wake of Friday's disappointing jobs report, Neal Lipschutz and Phil Izzo discuss new predictions that it could be many years before the nation's unemployment rate reaches pre-recession levels.

Yes, Stockman is equally damning of the Democrats' Keynesian policies. But what this indictment by a party insider -- someone so close to the development of the Reaganomics ideology -- says about America, helps all of us better understand how America's toxic partisan-politics "holy war" is destroying not just the economy and capitalism, but the America dream. And unless this war stops soon, both parties will succeed in their collective death wish.
But why focus on Stockman's message? It's already lost in the 24/7 news cycle. Why? We need some introspection. Ask yourself: How did the great nation of America lose its moral compass and drift so far off course, to where our very survival is threatened?
We've arrived at a historic turning point as a nation that no longer needs outside enemies to destroy us, we are committing suicide. Democracy. Capitalism. The American dream. All dying. Why? Because of the economic decisions of the GOP the past 40 years, says this leading Reagan Republican.
Please listen with an open mind, no matter your party affiliation: This makes for a powerful history lesson, because it exposes how both parties are responsible for destroying the U.S. economy. Listen closely:

Reagan Republican: the GOP should file for bankruptcy

Stockman rushes into the ring swinging like a boxer: "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation's public debt ... will soon reach $18 trillion." It screams "out for austerity and sacrifice." But instead, the GOP insists "that the nation's wealthiest taxpayers be spared even a three-percentage-point rate increase."
In the past 40 years Republican ideology has gone from solid principles to hype and slogans. Stockman says: "Republicans used to believe that prosperity depended upon the regular balancing of accounts -- in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses too."
No more. Today there's a "new catechism" that's "little more than money printing and deficit finance, vulgar Keynesianism robed in the ideological vestments of the prosperous classes" making a mockery of GOP ideals. Worse, it has resulted in "serial financial bubbles and Wall Street depredations that have crippled our economy." Yes, GOP ideals backfired, crippling our economy.
Stockman's indictment warns that the Republican party's "new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one:"

Stage 1. Nixon irresponsible, dumps gold, U.S starts spending binge

Richard Nixon's gold policies get Stockman's first assault, for defaulting "on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world." So for the past 40 years, America's been living "beyond our means as a nation" on "borrowed prosperity on an epic scale ... an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves."
Remember Friedman: "Just let the free market set currency exchange rates, he said, and trade deficits will self-correct." Friedman was wrong by trillions. And unfortunately "once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors."
And without discipline America was also encouraging "global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve." Yes, the road to the coming apocalypse began with a Republican president listening to a misguided Nobel economist's advice.

Stage 2. Crushing debts from domestic excesses, war mongering

Stockman says "the second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40% of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970." Who's to blame? Not big-spending Dems, says Stockman, but "from the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts."
Back "in 1981, traditional Republicans supported tax cuts," but Stockman makes clear, they had to be "matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration's hastily prepared fiscal blueprint, however, was no match for the primordial forces -- the welfare state and the warfare state -- that drive the federal spending machine."
OK, stop a minute. As you absorb Stockman's indictment of how his Republican party has "destroyed the U.S. economy," you're probably asking yourself why anyone should believe a traitor to the Reagan legacy. I believe party affiliation is irrelevant here. This is a crucial subject that must be explored because it further exposes a dangerous historical trend where politics is so partisan it's having huge negative consequences.
Yes, the GOP does have a welfare-warfare state: Stockman says "the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending, exempted from the knife most of the domestic budget -- entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans' fiscal religion."
When Fed chief Paul Volcker "crushed inflation" in the '80s we got a "solid economic rebound." But then "the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts." By 2009, they "reduced federal revenues to 15% of gross domestic product," lowest since the 1940s. Still today they're irrationally demanding an extension of those "unaffordable Bush tax cuts [that] would amount to a bankruptcy filing."
Recently Bush made matters far worse by "rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures." Bush also gave in "on domestic spending cuts, signing into law $420 billion in nondefense appropriations, a 65% percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy." Takes two to tango.

Stage 3. Wall Street's deadly 'vast, unproductive expansion'

Stockman continues pounding away: "The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector." He warns that "Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation." Wrong, not oblivious. Self-interested Republican loyalists like Paulson, Bernanke and Geithner knew exactly what they were doing.
They wanted the economy, markets and the government to be under the absolute control of Wall Street's too-greedy-to-fail banks. They conned Congress and the Fed into bailing out an estimated $23.7 trillion debt. Worse, they have since destroyed meaningful financial reforms. So Wall Street is now back to business as usual blowing another bigger bubble/bust cycle that will culminate in the coming "American Apocalypse."
Stockman refers to Wall Street's surviving banks as "wards of the state." Wrong, the opposite is true. Wall Street now controls Washington, and its "unproductive" trading is "extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives." Wall Street banks like Goldman were virtually bankrupt, would have never survived without government-guaranteed deposits and "virtually free money from the Fed's discount window to cover their bad bets."

Stage 4. New American Revolution class-warfare coming soon.... America's oligarchs

Finally, thanks to Republican policies that let us "live beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore," while at home "high-value jobs in goods production ... trade, transportation, information technology and the professions shrunk by 12% to 68 million from 77 million."
As the apocalypse draws near, Stockman sees a class-rebellion, a new revolution, a war against greed and the wealthy. Soon. The trigger will be the growing gap between economic classes: No wonder "that during the last bubble (from 2002 to 2006) the top 1% of Americans -- paid mainly from the Wall Street casino -- received two-thirds of the gain in national income, while the bottom 90% -- mainly dependent on Main Street's shrinking economy -- got only 12%. This growing wealth gap is not the market's fault. It's the decaying fruit of bad economic policy."
Get it? The decaying fruit of the GOP's bad economic policies is destroying our economy.

Warning: this black swan won't be pretty, will shock, soon

His bottom line: "The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing ... it's a pity that the modern Republican party offers the American people an irrelevant platform of recycled Keynesianism when the old approach -- balanced budgets, sound money and financial discipline -- is needed more than ever."
Wrong: There are far bigger things to "pity."
First, that most Americans, 300 million, are helpless, will do nothing, sit in the bleachers passively watching this deadly partisan game like it's just another TV reality show.
Second, that, unfortunately, politicians are so deep-in-the-pockets of the Wall Street conspiracy that controls Washington they are helpless and blind.
And third, there's a depressing sense that Stockman will be dismissed as a traitor, his message lost in the 24/7 news cycle ... until the final apocalyptic event, an unpredictable black swan triggers another, bigger global meltdown, followed by a long Great Depression II and a historic class war.

Best Strategy Qualified

In NYT (8/8/10), Frank Rich has some qualification to Democrat's best strategy.

The president is also wrong when he says that every single current G.O.P. idea is a Bush idea. Many are not. And those that are not are far more radical.

A political campaign built on Obama’s faulty premises cannot stand — or win. The polls remain as intractable as the 9.5 percent unemployment rate no matter how insistently the Democrats pummel Bush. To add to Democratic panic, there’s their “enthusiasm gap” with the Tea-Party-infused G.O.P., and the Rangel-Waters double bill coming this fall to a cable channel near you. Some Democrats took solace in one recent poll finding that if Republican economic ideas were branded as “Bush” ideas, the pendulum would swing a whopping 49 percentage points in their favor. But even in that feel-good survey, only a quarter of the respondents were worried that a G.O.P. Congress would actually bring back Bush policies.

Bleak as this picture looks for the Democrats, it is so only up to a point. No one knows what will happen on an Election Day almost three months away. One encouraging sign for the party in power is the over-the-top triumphalism of the right. Conservative pundits are churning out daily prognostications with headlines like “Ten More Reasons Dems Are Toast.” A recent Wall Street Journal front-page news story hyping a far-fetched Republican scenario for retaking the Senate was something of a nostalgic throwback to the kind of wishful thinking that inspired “Dewey Defeats Truman.”

But rather than wait for miracles or pray that Bushphobia will save the day, Democrats might instead start playing the hand they’ve been dealt. Elections, the cliché goes, are about the future, not the past. At the very least they’re about the present. It’s time voters were told just how far right the G.O.P. has lurched since Bush returned to Texas. And the White House might also at long last — at very long last — craft a compelling message, not to mention a plan, to offer real hope to the jobless. Repeated boasts of a resurgent auto industry (where the work force is 30 percent smaller than prerecession) won’t persuade anyone, and neither will repeated assurances that legislation passed months ago will kick in over the long haul. Some 16.5 percent of America’s workers are now either unemployed and trying to find a job, involuntarily working part time, or have stopped looking for work altogether. That figure doesn’t even include the many Americans who’ve had to settle for jobs for which they are overqualified.

For Obama even to stipulate that the G.O.P. has ideas about how to deal with this crisis is generous. Consultants are telling Republicans to advance no new programs at all, given how far a simple no to the president has taken them thus far, and they are following orders. But what we can discern of the Republican “ideas” lying in wait almost makes Bush’s conservatism actually seem compassionate.

The public is largely unaware of this because the conservative establishment in both Washington and the press has been relentless in its effort to separate the G.O.P. from the excesses of the Palin-Fox-Beck-Breitbart bomb throwers and from wacky Tea Party senatorial candidates like Sharron Angle of Nevada and Rand Paul of Kentucky. To hear most non-Fox conservative pundits tell it on Sunday talk shows or op-ed pages, these unruly radicals are just a passing craze. The new post-Bush G.O.P., we’re told, is exemplified by responsible, traditional small-government conservative governors like Mitch Daniels (of Indiana) or Chris Christie (of New Jersey).

But it’s Daniels and Christie who are the anomalies. The leaders who would actually take over should the Republicans regain Congress are far closer to the revolutionaries than most voters imagine. Take Representative Paul Ryan of Wisconsin, who has been relentlessly promoted by the right as the intellectual golden boy of the G.O.P. and who would be elevated to chairman of the powerful budget committee in a Republican House. His much publicized “Roadmap for America’s Future” — hailed by Fred Barnes of The Weekly Standard as “the most important proposal in domestic policy” since Reagan’s voodoo economics — not only revives the failed Bush proposal of partially privatizing Social Security but tops him by replacing Medicare with a voucher system that, like Ryan’s skewed tax cuts, would benefit the superrich while raising taxes and medical costs for everyone else.

In the theoretically more sober Senate, the G.O.P.’s rightward shift is arguably even more drastic. The pernicious Bush economic orthodoxy — tax cuts as a magic elixir to both create jobs and reduce deficits — remains gospel even as two veterans of Reaganomics, Alan Greenspan and David Stockman, have gone public over the past week to disavow it. But factor in the Senate’s rush to xenophobia, and Bush, who pushed hard for immigration reform, starts to look like Nelson Mandela.

Now we have a Republican Senate leader, Mitch McConnell, joined by such onetime “moderates” as John McCain and Charles Grassley, calling for hearings to “look into” the 14th Amendment. That Reconstruction landmark, guaranteeing citizenship to anyone born in America, was such a prideful accomplishment of the old Party of Lincoln that the official G.O.P. Web site has been showcasing it to counter the Republicans’ current identity as a whites-only country club. Even Lindsey Graham — who could rightfully be anointed “This Year’s Maverick” by The Times Magazine as recently as July 4 — has joined the 14th Amendment revisionists and is slurring immigrants as baby machines who come to America to “drop a child” for nefarious purposes. The Hispanic-bashing has gotten so ugly that Michael Gerson, the former Bush speechwriter, wrote last week that Graham and McCain “may never fully recover” their reputations.

Given this spectacle, Obama and the Democrats are, if anything, flattering the current G.O.P. by accusing it of being a carbon copy of Bush. (sic. mine: Because this GOP is further to the right than Genghis Kahn). But even if the Democrats sharpen their attack, they are doomed to fall short if they don’t address the cancer in the American heart — joblessness. This requires stunning emergency action right now, August recess be damned. Instead we get the Treasury secretary, Timothy Geithner, offering the thin statistical gruel that job growth has returned “at an earlier stage of this recovery than in the last two recoveries.”

Best Strategy for the Democrats in the mid Elections

Finally Obama is going on the offensive. Here is the pick up from this NYT editorial: “It’s not like they’ve (Republicans) engaged in some heavy reflection. They have not come up with a single solitary new idea to address the challenges of the American people. They don’t have a single idea that’s different from George Bush’s ideas — not one. Instead, they’re betting on amnesia.”

Democrats could start to banish that haze of memory by reminding voters what is actually in those giant packages of legislation: Protections for patients against insurance companies. Rules keeping adult children on health policies, and requiring coverage for pre-existing conditions. A new consumer financial protection bureau to fight lending abuses. The preservation or creation of nearly three million jobs, averting Depression-level unemployment. The local benefits of stimulus projects.

Republicans fought against each of those measures, and seem to be spoiling to hold hostage middle-class tax cuts in order to preserve tax cuts for the rich. Democrats have been far too timid in taking on those issues, to the point that they now will have to do more than simply remind voters of Republican opposition.

For most voters, the only real issue is high unemployment, and it is here that Democrats seem to have set aside bold thinking and fallen into the Republican trap of placing deficit fears ahead of job revival. Rather than spend time during the campaign stoking anxiety over Social Security, Democrats should aggressively counter the myth that the deficit is causing unemployment, and advocate using government in ways that might re- inspire voters.

A few suggestions: Using the revenue from reinstating taxes on the rich to put people back to work, rebuilding and repairing the country. Providing robust support for state and local governments, many of which have cut past the bone. Repairing the unemployment system so that it is a real safety net and not a political tool.

As the economy recovers, there will be money available for sane and careful deficit reduction, territory the Democrats know far better than their opponents. A House or Senate controlled by Republicans, leading to longer stalemates and years of political posturing, is not the way to get there. Instead of shrinking from their accomplishments, Democrats should use their remaining time to build on them.

In your ear, Republican lies regarding Obama's economic policy

The Recovery Act wasn't a silver bullet, but it's very good policy. It cut taxes for 95% of working families to give them a leg up as they fight to get by. It invested in our nation's infrastructure and clean energy. it gave tax breaks to small businesses to help hire workers, and it helped out state and local governments -- including local police departments like the one in Englewood, Colorado. As many as 2.4 million Americans are working now who would otherwise be unemployed, and we're breaking the back of the recession.

In the three months prior to the Act, the nation lost 2.2 million jobs. The financial system was collapsing, and the "Great Recession" was being recognized for what it was -- the worst economic downturn since the Great Depression.

The success of the Recovery Act is composed of millions of stories of folks getting to work who wouldn't otherwise be in their jobs, families able to buy their first home because of the homeowner's tax credit, and much more.

Balancing Consumption and Investment as Drivers of Economic Growth

With an eye toward balancing consumption and investment as drivers of economic growth, Prof. Phelps (NYT,8/6/10) calls for a national bank to fund innovation leading to new industries and employment. He argues as follows:

High business investment also depends on companies having confidence in the future. A company might be afraid to invest in research or product lines if it fears the rest of the economy is not doing the same — or if it fears the government might become hostile to its goals. During the Depression, John Maynard Keynes warned President Franklin D. Roosevelt not to damage business confidence with anti-profit rhetoric — to treat titans of business “not as wolves or tigers, but as domestic animals by nature.”

What, then, is to be done? One reform would be to create a First National Bank of Innovation — a state-sponsored network of merchant banks that invest in and lend to innovative projects. Another would be to improve corporate governance by tying executives’ compensation to long-term performance rather than one-year profits, and by linking fund managers’ pay to skill in picking stocks, not in marketing their funds. Exempting start-ups from corporate income tax for a time would also help.

We also need a program of tax credits for companies for employing low-wage workers. That may seem counterintuitive at a time when the Obama administration is pressing education and high-paying jobs, but we need to create jobs at all levels. Early last year, Singapore began giving such credits — worth several billion dollars — and staved off a recession. Unemployment there is around 3 percent.

A revamp of the economy for greater dynamism and inclusion is essential for prosperity and growth. Rather than continuing to argue over solutions to a problem we do not have — low demand — the country needs to focus on fixing the structural problems that, unresolved, will stymie the economy over the long haul.

Edmund S. Phelps, the director of the Center on Capitalism and Society at Columbia University and winner of the 2006 Nobel Prize in Economics, is the author of “Structural Slumps” and “Rewarding Work.”

SEC Accuses Sam And Charles Wyly, Billionaire Dallas Investors, Of Insider Trading Yielding $550 MILLION

TERRY WALLACE 07/29/10 11:02 PM

DALLAS — Sam and Charles Wyly, Dallas billionaire investors known for their support of conservative candidates and causes, made $550 million in undisclosed profits through 13 years of insider trading, according to a Securities and Exchange Commission lawsuit filed Thursday.

In a 78-page complaint filed in a Manhattan federal court in New York, the SEC said the Wylys held and traded tens of millions of shares in companies on whose boards they served and "defrauded the investing public" by misrepresenting their ownership and trading of those stocks.

"The apparatus of the fraud was an elaborate sham system of trusts and subsidiary companies located in the Isle of Man and the Cayman Islands ... created by and at the direction of the Wylys," the SEC complaint stated.

Using this offshore system, the Wylys were able to sell stock worth more than $750 million in four public companies where they served as corporate directors. They also committed an insider trading violation at one of the companies that resulted in an unlawful gain of over $31.7 million, according to the complaint.

The complaint lists the four companies as Michaels Stores Inc., Sterling Software Inc., Sterling Commerce Inc. and Scottish Annuity & Life Holdings Ltd., which is now known as Scottish Re Group Ltd.

"The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," Lorin L. Reisner, SEC deputy director of enforcement, said in a statement Thursday. "They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders."

The Wylys' defense attorney, William A. Brewer III of Dallas, called the charges "without merit" and said the Wylys "intend to vigorously defend themselves - and expect to be fully vindicated."

"At worst, the claims appear to represent an after-the-fact justification for a misguided six-year investigation," Brewer said in a statement issued by his law firm.

In March, Forbes magazine estimated Sam Wyly's net worth at $1 billion. He has given generously to Republican causes and candidates, including the Swift Boat campaign that helped re-elect President George W. Bush in 2004 by tarring his Democratic opponent, Sen. John Kerry.

The Wyly brothers, with their wives, have donated almost $2.5 million to more than 200 Republican candidates and committees at the federal level over the past two decades, according to the nonpartisan Center for Responsive Politics.

Both Presidents Bush received donations from the Wylys. Other recipients included current and former Republican senators: Kay Bailey Hutchison, John Cornyn and Phil Gramm of Texas; Sam Brownback and Bob Dole of Kansas; Elizabeth Dole of North Carolina; Mel Martinez of Florida; Judd Gregg of New Hampshire; John Thune of South Dakota; and Kit Bond of Missouri.

Also named as defendants in the lawsuit are the Wylys' investment attorney, Michael C. French of Dallas, who was accused of covering the operation "with a false cloak of legality that was essential both to its concealment and its execution. Another defendant was the Wylys' stockbroker, Louis J. Schaufele III of Dallas, who was accused of using his position to conceal and misrepresent the Wylys' control over the securities and making insider trades himself.

Attorneys for French and Schaufele had no comment Thursday.

The conservatives love rich greedy guys like these frellows who have billions and spend, actually invest, some of it in buying politicians and supporting conservative causes that ultimately are self serving, that is the people and causes help these greedy guys get more money and pay less taxes. The conservatives hate guys like Buffet, Soros and Gates who give away their wealth fighting desease and ignorance in the world, deseases such as malaria. Why is that?