The Political Right's Grand Hypocrisy

I get a chuckle out of the fact that the big intellectual leaders of the fanatical right in the US fought tooth-and-nail to remove social programs for the disadvantaged, but secretly availed themselves of the goodies despite the conflict of their acts with their professions of faith.

Here is an excellent post by Yves Smith in her Naked Capitalist blog that outs the two big shots Friedrich von Hayek and Ayn Rand:

• Hayek was hired by Charles Koch, an infamous right wing ideologue billionaire, who funded the Cato Institute and brought Hayek to the US to be a scholar at one of his right wing think tanks. Hayek was reluctant because he had medical problems and insurance in the US would have been prohibitive. Koch uncovered the fact that during a previous stay in the US Hayek qualified for Social Security. With the promise of US taxpayer supported medical care, Hayek came to the US and took up the role that Koch gave him: to propound arguments why social entitlement programs in the US must be destroyed to bring back "liberty" to the American people.


• Ayn Rand took taxpayer paid for Social Security and Medicare payments while espousing her anti-government, destroy the entitlements to bring back real "liberty" to Americans theme.

It is stunningly hypocritical that these "big thinkers" both pushed a message for others which they refused to follow for themselves. Disgusting.

Robert Reich Calls Out Six Lies

Reich is speaking at the "Summit For A Fair Economy" in Minneapolis, Minnesota on September 10, 2011. He attacks are the foundational lies that have allowed Republicans to distort the economy for the last 30 years to the benefit for the ultra-rich:



The lies Reich debunks:

1) Tax cuts to the rich and corporations trickle down to the rest of us. (No it doesn't and it never has.)

2) If you shrink government you create jobs. (No, you get rid of jobs that way.)

3) High taxes on the rich hurts the economy. (No, the economy grew when the US did this under Eisenhower.)

4) Debt is to be avoided and it is mostly caused by Medicare. (No, if debt is properly used to grow the economy, it becomes a smaller part of the budget because of increased revenue and Medicare has the lowest overhead of any health insurance plan out there.)

5) Social Security is a Ponzi scheme (No, its solid for 26 years. Social Security is solid beyond that if the rich pay the same percentage in social security taxes as the rest of us do.)

6) We need to tax the poor. (This is what Republicans have been proposing when they say any "tax reform" needs to involve all Americans because poor people pay no income tax. The poor have no money and taxing them will not solve our budget problems.)

I'm impressed by the strong approval of this youthful audience for the message that Reich presents. This gives me hope for the future.

Dean Baker Takes Down Thomas Friedman

The NY Times columnist Thomas Friedman has a way with words and seems very impressive. But if you read him carefully over the years, you realize that he isn't much of a thinker. He is a wordsmith with limited ideas but a way of coming up with catchy phrases. Here is a bit from a post by Dean Baker in his Beat the Press blog that whittles Friedman down to size:

Thomas Friedman is once again orthogonal to reality. In his column today he urges a "grand bargain" where the Republicans abandon extremists of the right and agree to tax increases and Democrats abandon extremists of the left and agree to cut Medicare and Social Security (euphemistically referred to as "entitlements"). There is one little problem with Friedman's story.

Support for Social Security and Medicare is not confined to extremists of the left. Overwhelming majorities of every group, including Republicans and self-identified supporters of the Tea Party, are opposed to cuts to Social Security and Medicare. The only people who seem to support such cuts are wealthy people like Mr. Friedman.

The reality is that Social Security is easily affordable as everyone familiar with the projections knows. According to the latest projections from the Congressional Budget Office the program can pay every penny of benefits for more than a quarter century with no changes whatsoever. To make the program fully solvent throughout its 75-year planning horizon would require a tax increase is equal to 5 percent of the wage growth projected over the next 30 years. This is why people familiar with the program's finances are generally unwilling to support cuts in Social Security benefits, unlike Mr. Friedman.

...

The large deficits the country currently faces are due to an economic collapse caused by Wall Street greed and the incompetence of people with names like Alan Greenspan, Ben Bernanke, and Hank Paulson. Mr Friedman doesn't call for sacrifices from these people, for example with a financial speculation tax like the one recently proposed German Chancellor Angela Merkel and French President Nicolas Sarkozy.

There you have it. Friedman rants about stuff he doesn't bother to investigate, things he can't be bothered to find the truth about. Friedman is a well paid and very influential writer. As a "professional", you would think he has an obligation to get his facts right before he writes about them. But the above is not a one shot, one time, one-off mistake. He has ranted about this before. He has just recently written a book on this theme. He is quite happy to push this right wing talking point. He knows it is factually wrong. But he pushes it. I wonder why...

Calling on Americans to Sacrifice for their Country

Here is a post by Dean Baker in his Beat the Press blog which points up the hypocrisy of a writer like Thomas Friedman writing for the NY Times. He wants "the little people" to sacrifice but can't think of a thing which the ultra-rich need to do. This is what Friedman called "shared" sacrifice:

That's right, he said it in his column today. He approvingly quoted Kishore Mahbubani, a retired diplomat who is now the dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore:

“No U.S. leaders dare to tell the truth to the people. All their pronouncements rest on a mythical assumption that ‘recovery’ is around the corner. Implicitly, they say this is a normal recession. But this is no normal recession. There will be no painless solution. ‘Sacrifice’ will be needed, and the American people know this. But no American politician dares utter the word ‘sacrifice.’ Painful truths cannot be told.”

Sacrifice is wonderful if it serves a purpose, but there are two big unanswered questions. First how would sacrifice help the recovery right now and second, exactly who do Mr. Friedman and Mahbubani think should be doing the sacrificing?

On the first question, I suppose that Friedman and Mahbubani want to see taxes increased or benefits like Social Security and Medicare cut. Both of these steps would mean real sacrifices for low and middle class people, but how exactly do they help the recovery?

Remember our problem is too little demand. So we make people sacrifice by paying higher taxes. How does this increase demand? Or we cut their Social Security benefits or make them pay more for their Medicare. Again, this would imply real sacrifice, but how does this spur the economy?

Are there businesses out there who are saying that they will not hire or invest today because Social Security and Medicare are too generous? Will these businesses decide to hire more workers and expand their business if the government cut these benefits?

In more normal times, there was at least a plausible argument that this could be the case. The story would go that reducing the deficit would lower interest rates, thereby encouraging businesses to invest. (Actually most research shows that investment is not very responsive to interest rates.) However, with interest rates already at post-Depression lows, it is difficult to envision them going much lower, nor that there would be much additional investment even if they did. In other words, Friedman and Mahbubani seem to be calling for pointless sacrifice.

The second part of the story is who they want to sacrifice. The top 10 percent of income distribution received the vast majority of the gains from economic growth over the last three decades. A grossly disproportionate share went to the top 1.0 pecent and the top 0.1 percent. It might be reasonable to expect that the big gainers over this period would be the ones who should be doing the sacrificing.

But not in Thomas Friedman's world. In his world, sacrifice must be shared equally. Those who are incredibly rich and those who are barely getting are both called upon to make sacrifices for the greater good. That's Thomas Friedman justice.

Friedman reminds me of the old men who exhort the young to "do their duty" and go to war. The old are safe in knowing they won't be called up. So it is awfully easy for them to rant about the need to "go to war" with this or that.

How the Political Right Attacks Workers

Here is another post by Dean Baker in his Beat the Press blog that demonstrates how the political right uses "facts" to attack workers by giving the false impression that their pensions are an immense burden:

The Washington Post used a front page story to scare readers about public sector pensions, implying that they faced an enormous unfunded liability. It refers to "states facing, by one estimate, a combined $3 trillion in unfunded pension liabilities."

It is unlikely that readers are able to assess the meaning of this $3 trillion figure in any meaningful way. It is worth noting first that it assumes that the stock market will provide a return that is approximately half of its historic average over the next three decades. If the economy and profits grow as projected, it would be necessary for stock prices to fall so much that they would have to be negative before the end of the 30-year period over which pensions are typically evaluated.

If we take the more typical figure of $1 trillion and compare it to future GDP, it is equal to approximately 0.2 percent of projected GDP over the 30 year planning period. By comparison, the wars in Iraq and Afghanistan have added approximately 1.6 percentage points of GDP to the military budget. This means that the unfunded liability of state and local pensions is approximately one eighth as large as the costs of these wars. This sort of context might have been helpful to readers.

In reporting the size of Rhode Island's pensions it would have been helpful to remind readers that many of these workers do not collect Social Security. That means their pensions are often their entire retirement income.

The top 1% owns the media, so they can get their propaganda out and repeat it and repeat it using the "big lie" technique that works very effectively to convince people of a falsehood. Meanwhile, the bottom 90% has no mechanism to get out a message to defend their interests.

Selfish Redefinition of a Problem

Here is a bit from a post by Paul Krugman in his NY Times blog that catches the bad faith "solution" that the elite in the US is proposing as a way of fixing the Social Security entitlement "problem":

Whatever the reasons, however, in recent years some of us have watched in horror as obviously bad ideas somehow sweep elite opinion. Top of the list right now is the idea of raising the Medicare eligibility age.

It’s a terrible idea on multiple grounds. First, the underlying notion — Americans are living longer, so retirement programs should start later — is true only of the upper half of the income distribution. Life expectancy for the other half has not risen much:

Click to Enlarge
It is astonishing that the top half of the population has extended its life by 5 years over the last 30 years. That is dramatic. But I really empathize with those with the tough demanding physical jobs who aren't seeing their lifetimes extended, but are now subject to the demands of the elite that they work longer and delay getting any pension benefits until much later in life. It is grotesquely unfair.

I remember trying to explain to my mother, a retired teacher, that one reason why her teaching pension could be as rich as it was came from the fact that some teachers paid into the fund and either died before retirement or shortly after, so their dollars were making a much more comfortable retirement for her. She simply was not open to this argument. Her viewpoint was always "I paid for my retirement through my pension deductions". She never understood the impact of pension investment (good for her as the economy grew 1950-1990, bad for people retiring over the next couple of decades because of the economic bubbles and the stock market collapse 2000-2011+) and the effect of early death among the pension pool. She made it very clear to me the power of Upton Sinclair's famous quote:

It is difficult to get a man to understand something, when his salary depends upon his not understanding it!

My mother wasn't greedy and she wasn't hard hearted. She simply wanted to believe that she had fully funded her own pension through her individual pension contributions. She didn't want to hear that she was inadvertently benefiting from the misfortune of others.

Analysis of the Political Opportunism Using the S&P Downgrade of US Federal Debt

Here is a bit from an article published in Politco by Matt Stoller, who worked on the Dodd-Frank financial reform law and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (D-Fla.) and is now a fellow at the Roosevelt Institute:

Let’s note, at the start, that this downgrade was absurd. The credit rating of the United States is not in jeopardy. The U.S. government prints dollars — it can no more run out of dollars than a bowling alley can run out of strikes.

What’s really happening is an attempt by both parties to justify slashing Social Security and Medicare. Republicans have long wanted to roll back the New Deal. What is relatively new is that a Democratic president is now dead set on cutting these programs as well.

President Barack Obama, in his speech Monday about the downgrade, used the market turmoil as an excuse to do just that. After a debt ceiling deal in which the Democrats argued that defense spending cuts — not entitlement cuts — could close the long-term deficit, Obama said Monday that there’s “not much further” he can trim defense. Despite the fact that defense spending has gone up on his watch. Instead, Obama said, we need cuts in social spending, or, as he phrased it, “modest adjustments to health care programs like Medicare.”

...

In the early 1990s, according to Canadian investigative journalist Linda McQuaig, Canadian corporate executives encouraged ratings agencies to threaten a downgrade of their nation’s credit as an inducement for cutting social spending and lowering high-end tax rates. It worked.

And today we are seeing that Republicans use ratings agencies to support their conservative agenda: that the government can’t spend so much on entitlements such as Medicare and Social Security. Benefits of public employee unions must also be slashed, public assets privatized and the disruptive power of unions countered.

The government, this argument insists, needs to be run like a business — and rated like one.

...

S&P’s downgrade may ultimately provide cover for the Democrats leadership, as well. They now have the excuse that can justify to supporters why they have no choice but to break promises made to senior citizens, unions and the public. For example, House Democratic Whip Steny Hoyer has been giving speeches for years advocating entitlement cuts.

So S&P is offering these politicians an excuse for a remarkably unpopular action. By treating this downgrade as meaningful, Democrats and Republicans could join in a bipartisan effort to slash entitlements — government social programs that are popular, work well and have relatively strong funding streams.

The reasoning is Orwellian. Medicare is cheaper and better than private health insurance — which is why we cannot afford it. Social Security may run out of money in 27 years— why it’s important to cut the payroll tax that funds it. The Bush tax cuts for the wealthy should be extended indefinitely — but the prospect of Social Security and Medicare for everyone else creates a fiscal emergency.

The rush is on to carve up what’s left of social spending — and everyone’s represented but the public.

...

There’s a big problem in destroying these entitlement programs, however. It’s not just the increase in poverty and suffering. These programs, which people have paid for with payroll taxes for their entire lives, give Americans a sense of why it’s useful to support the government as legitimate. To see what happens when a social contract falls apart, look at the massive rioting in London.

Middle-class incomes are down radically in the U.S. since 2007, as much as 15 percent according to new Internal Revenue Service data. Home equity is still falling. If cherished entitlement programs are also savaged by the politicians who destroyed our life savings, citizens might begin to question whether this whole constitutional democracy thing is worth it.

Strange and ominous political eddies are already emerging. Congressional disapproval is higher than 80 percent. This could turn ugly — as it has before in U.S. history. While we’ve airbrushed the legacy of political violence out of U.S. history, it’s there. Labor conducted gun battles with Pinkerton private military forces in the late 19th century. Strikes often turned deadly in the 1930s. If there are serious defense cuts, the prospect of hundreds of thousands of war-weary former soldiers thrown into a terrible economy is not, shall we say, a recipe for social stability.

With proposals on the table to cut defense and social spending in a deflationary economy, maybe U.S. political leaders are just throwing one final, blow-out empire-ending party.

I don’t mean to push the panic button. After all, America has a stable political order that can handle a great deal of stress. This system, though, is rooted in a middle class that believes its interests are aligned with those running the country.

As the wealth, opportunity, social status and economic security of the middle class evaporate, so, too, could this belief.

The riots in the UK should put some fear into US political leaders, but it is clear that it won't. Obama is oblivious. The Iowa straw poll proves that the Republicans live in an alternate reality. Sadly all things come to an end. Maybe the glory days of the US are over and it is now on a steep decline to banana republic status.

An Accounting of Obama's "Achievement"

From a post by Glenn Greenwald writing for Salon magazine:

Democratic politics in a nutshell

by Glenn Greenwald

Let's begin by taking note of three facts:

(1) Three days ago, Democratic Rep. John Conyers, appearing at a meeting of the Out of Poverty caucus, said: "The Republicans -- Speaker Boehner or Majority Leader Cantor -- did not call for Social Security cuts in the budget deal. The President of the United States called for that" (video here, at 1:30);

(2) The reported deal on the debt ceiling is so completely one-sided -- brutal domestic cuts with no tax increases on the rich and the likelihood of serious entitlement cuts in six months with a "Super Congressional" deficit commission -- that even Howard Kurtz was able to observe: "If there are $3 trillion in cuts and no tax hikes, Obama will have to explain how it is that the Republicans got 98 pct. of what they wanted," while Grover Norquist, the Right of the Right on such matters, happily proclaimed: "Sounds like a budget deal with real savings and no tax hikes is a go."

(3) The same White House behavior shaping the debt deal -- full embrace of GOP policies and (in the case of Social Security cuts) going beyond that -- has been evident in most policy realms from the start. It first manifested in the context of Obama's adoption of the Bush/Cheney approach to the war on civil liberties and Terrorism, which is why civil libertarians were the first to object so vocally and continuously to the Obama presidency, culminating in this amazing event from mid-2010: "Speaking at a conference of liberal activists Wednesday morning, ACLU Executive Director Anthony Romero didn't mince his words about the administration's handling of civil liberties issues. 'I'm going to start provocatively . . . I'm disgusted with this president,' Romero told the America's Future Now breakout session."

In other words, a slew of millionaire politicians who spent the last decade exploding the national debt with Endless War, a sprawling Surveillance State, and tax cuts for the rich are now imposing extreme suffering on the already-suffering ordinary citizenry, all at the direction of their plutocratic overlords, who are prospering more than ever and will sacrifice virtually nothing under this deal (despite their responsibility for the 2008 financial collapse that continues to spawn economic misery). And all of this will be justified by these politicians and their millionaire media mouthpieces with the obscenely deceitful slogans of "shared sacrifice" and "balanced debt reduction" -- two of the most odiously Orwellian phrases since "Look Forward, not Backward" and "2009 Nobel Peace Prize laureate" (and anyone claiming that Obama was involuntarily forced by the "crazy" Tea Party into massive budget cuts at a time of almost 10% unemployment: see the actual facts here).

There is much more. Go read the original post to get the embedded links and the additional material.

It is clear that either the Democrats must push Obama out of the party or the party needs to split to allow the liberals to continue the historic mission of the Democratic party to look after the bottom 90% instead of selling out to the top 1%.

America, Meet Your President

Here is the opening paragraphs of an excellent article by Bruce Bartlett explaining the wolf in sheep's clothing that got sold to America in 2008:

There is no question that Barack Obama is one of our most enigmatic presidents. Despite having published two volumes of memoirs before being elected president, we really don’t know that much about what makes him tick. The ongoing debate over the deficit and the debt limit is clarifying what I think he is: a Democratic Richard Nixon.

To explain what I mean, I first have to tell some history.

Barlett has done American's a great service by going on to provide an honest history of their politics in this article. It reveals how politicians on left and right sold themselves under the party banner, but proceeded to do the opposite of what their party sold them as doing. He explains how FDR's social innovations got entrenched and how the radical right for decades has determinedly worked to reverse these advances for the bottom 90% of society in favour of the agenda of the ultra-rich.

Here is the key bit of the story about Obama:

Thus Obama took office under roughly the same political and economic circumstances that Nixon did in 1968 except in a mirror opposite way. Instead of being forced to manage a slew of new liberal spending programs, as Nixon did, Obama had to cope with a revenue structure that had been decimated by Republicans.

Liberals hoped that Obama would overturn conservative policies and launch a new era of government activism. Although Republicans routinely accuse him of being a socialist, an honest examination of his presidency must conclude that he has in fact been moderately conservative to exactly the same degree that Nixon was moderately liberal.

Here are a few examples of Obama's effective conservatism:

• His stimulus bill was half the size that his advisers thought necessary;


• He continued Bush’s war and national security policies without change and even retained Bush’s defense secretary;


• He put forward a health plan almost identical to those that had been supported by Republicans such as Mitt Romney in the recent past, pointedly rejecting the single-payer option favored by liberals;
  
• He caved to conservative demands that the Bush tax cuts be extended without getting any quid pro quo whatsoever;


• And in the past few weeks he has supported deficit reductions that go far beyond those offered by Republicans.

Further evidence can be found in the writings of outspoken liberals such as New York Times columnist Paul Krugman, who has condemned Obama’s conservatism ever since he took office.

How has this trick of selling Obama as the great liberal "hope", the promised one, the one with "change you can believe in" that ends up being a conservative agenda? How has this trick been pulled on the electorate? The same way John Edwards could run for President and hide the fact that he was a sex fiend busily having an extra-marrital affair and paying hush money to his love interest while his wife was dying of cancer.

Dean Baker Straightens Out the NY Times

Here is a post by Dean Baker on his Beat the Press blog that corrects the misrepresentation of facts by the NY Times and the false impressions planted by Barack Obama. I have bolded the key bits:

The NYT Gets It Wrong on the Deficit Commission, Again

The prospect of cutting Social Security benefits for seniors and giving more money to the very wealthy seems to have excited reporters so much that they just can't get anything straight. The NYT again told readers that President Obama's fiscal commission produced a deficit reduction plan. This is not true. The deficit commission did not have the votes necessary to produce a plan. The plan referred to in this article was the plan of the co-directors, former Senator Alan Simpson and Morgan Stanley director Erskine Bowles.

The article also assists President Obama in misrepresenting public opinion about the cuts proposed by the Senate Gang of Six plan. It comments:

"Seeking to sum up the current state of affairs, Mr. Obama said, 'We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts and modifications to Social Security, Medicaid and Medicare that would strengthen those systems' and provide for new tax revenues. And, he added, 'we now have a bipartisan group of senators' and a majority of the American people who agree."

President Obama was not in any obvious way "seeking to sum up the current state of affairs." He was misrepresenting the state of affairs, presumably to advance his agenda. There are no public opinion polls that show the majority of the American people support the cuts to Social Security and Medicare in the Gang of Six plan. In fact, there are no polls that show even a majority of Republicans support such cuts. Presumably President Obama is aware of polling data on these issues.

It also would have been helpful to remind readers that President Obama means "cuts" when he refers to "modifications" to Social Security. Some readers may not have read the Gang of Six plan closely enough to realize that it proposes to cut Social Security benefits by an average of close to 6 percent.

You can only have a democracy if you have an informed public. You can only have an informed public if the press is free and critical and gives insight into when politicians are lying or are manipulating public opinion. Dean Baker meets the criteria of "the press" but almost all of the rest of the media in the US falls far below what is necessary to sustain the Republic.

Revolt from the Left Against Obama

The progressives within the Democratic party are throwing in the towel. They are tired of a supposed "Democratic" president who is more Republican in his policies than a fair portion of the Republican caucus.

Here is a bit from an article by Glenn Greenwald in Salon magazine:

Meanwhile, the latest Gallup poll shows that the President's approval rating among self-identified "liberals" has dropped to 70% -- the lowest it has been in many months (which means, of course, that 30% of liberals refuse to express approval for the Democratic President). Other polls have found similarly large quantities of dissatisfaction: "Nearly half of [Obama's] own base -- 45 percent of Democrats and Democratic-leaning independents -- want someone to challenge him for the Democratic nomination . . . Among pro-Democratic voters who want him challenged: pluralities of women, voters younger than 45, and those without a college degree."

... it's hard to imagine those numbers going anywhere but down as the realization sets in that it is the President who, now by his own admission, has been working hard to cut Social Security and Medicare benefits, and as the President increasingly pursues what is clearly his 2012 strategy: casting himself as a trans-partisan centrist ...

...

That level of progressive commitment to Obama's candidacy was vital to his victory in 2008, and its absence could be crippling in 2012 (a dependency on Wall Street cash even greater than 2008 can only take one so far). Wasn't that one obvious lesson of 2010: the central role base enthusiasm plays in election outcomes?

Democratic Party supporters can try to put a happy face on this problem by citing approval ratings, but it only masks the serious problem of intense dissatisfaction and lack of enthusiasm (Matt Yglesias and others, for instance, touted a poll from Netroots Nation finding 80% approval for Obama as evidence that the base loves the President, studiously ignoring the much more significant fact that only 27% "strongly approved" of Obama in that poll, while 53% approved only "somewhat," and 20% expressed some form of disapproval [strong or somewhat]: a poll of hard-core Democratic activists that finds that only 27% "strongly approve" of their own Party's president is hardly some sign of a healthy relationship with the base: quite the opposite).

...

Columbia University's Jeffrey Sachs has an excellent assessment of the role both parties are playing in America's decline, along with their competition as to who can be more subservient to Wall Street; he concludes: "America needs a third-party movement to break the hammerlock of the financial elites. Until that happens, the political class and the media conglomerates will continue to spew lies, American militarism will continue to destabilize a growing swath of the world, and the country will continue its economic decline." I highly recommend Sachs' entire article.

It is pretty clear to me that the Democratic party should split into left and centre/right. With that choice, perhaps the crazy right that is the Republican party will disappear since it is clearly a party of fanatics not willing to take the responsibility of governing seriously.

Dean Baker Shows How Perspective Leads You to Interpret Facts Differently

It is naive to believe that you merely have to look to see. We don't just open our eyes and understand the world. Reality is developed through experience, learning, and culture. You learn from personal experiences that hot things hurt. But your culture can teach you that you must "learn" to handle hot things to show that you are brave and "adult". So the child goes from naively getting burned, to learning to fear hot objects, to learning an "obligation" to become adept at handling hot things.

Here's Dean Baker explaining how America's elite -- the top 1% -- "know" that now is a great time to cut entitlements to put the bottom 99% "in their place". Yes, the top 1% who blew up the economy and destroyed the wealth & jobs of the bottom 99% have decided that "now" is the time to capitalize on the disaster by creating yet another disaster for the bottom 99%...

The New York Times Bemoans the Lost Opportunity to Cut Social Security and Raise the Age of Medicare Eligibility to 67

That's right, you can read about the "unique opportunity" that was lost right here. The complains that the likely deficit deals to be produced in the days ahead will not feature:

"significant future savings from Medicare, Medicaid and Social Security — the entitlement programs whose growth as the population ages is driving long-term projections of unsustainable debt."

As every budget analyst knows, Social Security is not a major driver of the deficit. Under the law, it cannot contribute to the deficit. It can only spend money that was raised from its designated tax or from interest earned on the Treasury bonds bought with this revenue. If the trust fund lacks the money to pay benefits then full benefits will not be paid. Furthermore, the projected increase in Social Security benefits over the decades ahead is relatively modest.

The projected increase in the cost of the Medicare and Medicaid is much larger but this is attributable to the projected explosion in private sector health care costs. If the United States faced the same per person health care costs as any other wealth country we would be facing long-term budget surpluses, not deficits.

This fact is important, since it suggests that the more obvious way to reduce the costs of these programs is to fix the U.S. health care system. This would imply lower payments to drug companies, hospitals, doctors and other providers. Alternatively, Medicare beneficiaries could be given the option to buy into the more efficient health care systems in other countries. If these options were presented to the public it is likely that most would find it preferable to denying care to patients as the NYT advocates in this piece.

It is also worth noting how this "unique opportunity" came about. The deficits exploded due to the incredible incompetence of the Federal Reserve Board which allowed the $8 trillion housing bubble grow unchecked. The collapse of this bubble gave the economy its worst downturn since the Great Depression. High levels of unemployment are projected to persist for a decade.

This economic collapse led to the large deficits that the government is currently running. While tens of millions of people are suffering from the effects of high unemployment and the wealth lost with the collapse of the housing bubble, the NYT views this crisis brought on by Wall Street greed and economic mismanagement as a unique opportunity to cut Social Security and Medicare. Of course, the vast majority of people from all demographic groups (including Tea Party Republicans) strongly oppose cuts to these programs.

Go read the original article to get the embedded links.

It is pathetic that those who caused the financial diaster are now "piling on" and adding yet another disaster -- the removal of government programs -- all in the name of "liberty" and "freedom". Yeah, if you have billions in the bank you can celebrate your freedoms. But if you are working two jobs at minimum wage, you need help to make sure your life doesn't fall apart. But the cruel indifference of the ultra-rich has now translated itself into yet another "opportunity" to offload responsibilities to those already down and out while the ultra-rich continue to demand "tax cuts" and special exemptions and "socialism for the rich" to fatten their wallets. Shame.

Means Testing Entitlements

Here is Paul Krugman in his NY Times blog talking about the issue of means testing Medicare:

I’ve been thinking about this issue more since Friday’s duel to the death discussion with David Brooks, and have come to the conclusion that this is an even worse idea, on pure policy grounds, than even most liberals realize.

The usual argument against means-testing — which is entirely valid — is that it (a) doesn’t save much money and (b) messes up a relatively simple program. The reason it can’t save much money is that there are relatively few people rich enough to be able to afford major cost-sharing. Meanwhile, the good thing about Medicare, as with Social Security, is precisely that it doesn’t depend on your personal financial status — you just get it. Means-testing would turn it into something much more intrusive, like Medicaid.

But there’s a further point I haven’t seen emphasized: if you want the well-off to pay more, it’s just better to raise their taxes.

Wait, you say: won’t raising taxes reduce incentives to work and create wealth? Yes, it will (although such effects are greatly exaggerated in our political discourse.) But means-testing benefits does the same thing. Conservative economists love to point out that means-tested programs like food stamps in effect create high marginal tax rates for low-income families, since they lose benefits if they work and earn more. Well, means-testing Medicare would do the same thing: your reward for a life of hard work and accumulation will be higher copays and deductibles.

So what’s the difference between means-testing and just collecting a bit more taxes? The answer is, class warfare — not between the rich and poor, but between the filthy rich and the merely affluent. For a tax rise would get a significant amount of revenue from the very, very rich (because they have so much money), while means-testing would end up imposing the same burden on $400,000 a year working Wall Street stiffs that it imposes on billion-a-year hedge fund managers.

What we need is actual control of health costs. Means-testing of Medicare is just a badly designed, unfair form of taxation.

Krugman has overlooked on key argument against means testing. This came up in the late 1980s/early 1990s when the right wing Conservatives took power in Canada. They wanted to means test our pension plan. But this argument helped stop this rightward slide:

If you means test a social program, then the rich who will have to pay for the program will see the program as a burden and agitate to end the program. Only a universal program ensures no social group has a motive to cut back or shut down the program as "too expensive".

Also, Krugman doesn't address the administrative expenses of policing a system where some get the service for free and others have to pay. Those that have to pay have an incentive to try to trick the system into giving them free service and you now have a policing headache to find the cheats.

Universal benefits are simple to understand, simple to police, and tend to keep the society cohesive.

The Grand Illusion

Robert Reich has a post that tries to understand why the rabid right in the US hates government and have become even more convinced that "government is the problem" following the 2008 financial crisis. Here is the key bit:

...most of what government does that helps average people is now so deeply woven into the thread of daily life that it’s no longer recognizable as government. Think of the indignant voters who showed up at congressional town meetings to protest Obama’s health care bill shouting “don’t take away my Medicare!”

A recent paper by Cornell political scientist Suzanne Mettler surveyed how many recipients of government benefits don’t really believe they have received any benefits. She found that over 44 percent of Social Security recipients say they “have not used a government social program.” More than half of families receiving government-backed student loans said the same thing, as did 60 percent of those who get the home mortgage interest deduction, 43 percent of unemployment insurance beneficiaries, and almost 30 percent of recipients of Social Security Disability.

Add in the relentlessly snide government-hating and baiting of Fox News and Rush Limbaugh and his imitators on rage radio; include more than thirty years of Ronald Reagan’s repeated refrain that government is the problem; pile on hundreds of millions of dollars from the likes of oil tycoons Charles and David Koch intent on convincing the public that government is evil, and you have all the ingredients for the emergence of a wrecking-ball right that’s intent on destroying government as we know it.

The final critical ingredient has been the abject failure of the Democratic Party – from the President on down – to make the case for why government is necessary.

One would have thought the last few years of mine disasters, exploding oil rigs, nuclear meltdowns, malfeasance on Wall Street, wildly-escalating costs of health insurance, rip-roaring CEO pay, and mass layoffs would have offered a singular opportunity to explain why the nation’s collective well-being requires a strong and effective government representing the interests of average people.

Yet the case has not been made. Perhaps that’s because, even under the Democrats, the interests of average people have not been sufficiently attended to.

It is tragic that so many people in the US are completely deluded about events and actors. The propaganda of the political right has been inordinately effective because most Americans can't be bothered to think things through. They are happy to have simplistic propaganda spoon-fed to them. The fact is that things continue to get worse despite the fact that Republicans have been the dominant political party in the US for the last 30 years. You would think they would begin to wonder why this same government they elected under the banner "government is the enemy" has been unable to disassemble the "onerous state" and deliver the right wing paradise promised. Just like the religious right should wonder why they've delivered majorities for most of the last 30 years but their "social agenda" mysteriously never gets passed into law. As Deep Throat said in the Watergate case "follow the money". The money for the last 30 years has been in tax cut after tax cut. Who benefits? The ultra rich.

Ignorance is Bliss

Here are some bits from an interesting paper entitled "Reconstituting the Submerged State: The Challenges of Social Policy Reform in the Obama Era" by Suzanne Mettler. What I find amazing is the profound ignorance of so many Americans about government entitlements. So many are convinced that they are paying taxes and getting "no benefits" because they are ignorant of the very programs that provide them benefits:


Here is the introduction to her paper:

President Barack Obama came into office with a social welfare policy agenda that aimed to reconstitute what can be understood as the “submerged state”: a conglomeration of existing federal policies that incentivize and subsidize activities engaged in by private actors and individuals. By attempting to restructure the political economy involved in taxation, higher education policy, and health care, Obama ventured into a policy terrain that presents immense obstacles to reform itself and to the public’s perception of its success. Over time the submerged state has fostered the profitability of particular industries and induced them to increase their political capacity, which they have exercised in efforts to maintain the status quo. Yet the submerged state simultaneously eludes most ordinary citizens: they have little awareness of its policies or their upwardly redistributive effects, and few are cognizant of what is at stake in reform efforts. This article shows how, in each of the three policy areas, the contours and dynamics of the submerged state have shaped the possibilities for reform and the form it has taken, the politics surrounding it, and its prospects for success. While the Obama Administration won hard-fought legislative accomplishments in each area, political success will continue to depend on how well policy design, policy delivery and political communication reveal policy reforms to citizens, so that they better understand how reforms function and what has been achieved.

And from the conclusion of the paper:

When Obama first declared his candidacy and then as he assumed the highest office in the land, he promised that his presidency would help Americans to “reclaim the meaning of citizenship,” “restore our sense of common purpose,” and “restore the vital trust between people and their government.” While efforts to reconstitute the submerged state may have appeared distant from or antithetical to such goals, it is crucial to their achievement because to the extent it has succeeded, it diffuses the power of special interests relative to that of the public. Now, if the Obama administration can successfully reveal the remaining aspects of the submerged state to citizens through new features of policy delivery, it may help enable them to participate in a more meaningful way.

Sadly, I don't see any real success by Obama in making the "submerged state" visible. I must confess that I'm not even aware of any concerted effort by the Obama administration to make it visible. For example, if Obama wanted to make the role of government policy in people's lives he would have pushed harder for the "public option" instead of allowed control of health care to be captured by the insurance industry. In Canada it is absolutely clear that health policies and health spending is fully in the control of the government and directed through the electorate's choices in political representation. There is nothing like that in the US.

Mettler claims that Obama is strenuously making the submerged state visible:

In the realm of social welfare issues, Barack Obama set out to transform existing policies within the submerged state. He sought to harness this vast set of arrangements and to make it more inclusive and responsive to the needs of ordinary citizens, and to curtail the extent to which it channels public funds toward powerful sectors of the economy and affluent citizens. This has been an ambitious reform agenda. Such change requires the reconstitution of long-established relationships between government and economic actors.

I just don't see it.

I applaud the idea of making the role of government more visible in order to weaken special interest groups and give citizens a greater sense of the role of government in their lives, but I just don't see that he has made much real progress. I wish he had. But I just don't see it.

How to Legally Lie Cheat and Steal

The political right is using its muscle in the media to sell a message that is stampeding people to policies that make no sense. Here is a bit from a post by Dean Baker on his Beat the Press blog:

The business-backed group Third Way has been making a big point of going after Social Security lately. Today it had a column telling us that Social Security is in crisis, even though the most recent projections from the Social Security trustees show that the program can pay full scheduled benefits with no changes whatsoever for a quarter century. Even after that point, the program would always be able to pay a higher benefit than what current retirees receive.

Third Way's crisis argument hinges on the fact that the program is paying out more in benefits than it collects in taxes. In other words, it is relying on interest from the $2.6 trillion trust fund that it has built up over the last quarter century. To term this a crisis would be like saying that Bill Gates had a crisis because he dipped into his $50 billion in assets to build some new play houses for his kids. The trust fund was built up for the explicit purpose of supporting the program. It makes no sense to say that using it is a crisis.

It is also worth noting that even if we waited until 2036 and the program actually faced a shortfall, the amount of additional revenue needed to sustain the program's full benefits past this shortfall would be trivial compared to costs like the increase in military spending associated with the wars in Afghanistan and Iraq.

The occasional mistatement of fact could be accepted as sloppiness, but this constant harping on the US Social Security program as being "bankrupt" and the "need" to cut benefits and raise SS taxes is criminal. It has created the impression in the thirtysomethings that they will not be able to count on SS and it has put fear into older Americans that SS won't be there for them. This is all part of a concerted plot by the political right to destroy "socialism" in America. They want to get back to the good old day when workers were impoverished and you could offer peanuts and have people fighting each other for the chance to get that job. It is cruel and vicious what the rich and the political right are doing to destroy America.

Debating What's Needed to Fix the US Economy

Charlie Rose has a good round table discussion with Paul Krugman of The New York Times, Jared Bernstein of The Center on Budget and Policy Priorities, David Walker of Comeback America Initiative, and Ken Rogoff of Harvard University. These four broadly agree on what is needed. Watch the video.

What is utterly obvious to me from watching these guys kick ideas around: Barack Obama has failed utterly in providing the necessary leadership to reboot the economy.

Revealing the True Soul of US Television "News" Commentary

I've been bothered by how obviously right of centre the supposedly "liberal media" truly is in the US. There are many TV shows where they invite Republicans to bash Obama but no Democrats to defend him. Of they will have a panel of 3 right wing nuts to 1 "liberal" who gets shouted down by the stacked deck of "commentators".

Here's an article from the Washington Monthly that notes this same thing at Meet the Press this week:

It was quite a roundtable on “Meet the Press” yesterday. Viewers got to see a Republican strategist, a conservative pundit, a conservative Democrat, and an ostensibly center-left columnist who thinks that Democrats are big meanies when it comes to Medicare.

It was “Must See TV” for viewers eager to see a soul-crushing discussion.

...

It’s exasperating, but it’s worth reemphasizing what too many establishment types simply refuse to understand: Democrats are telling the truth. Indeed, Dems are doing what the media is reluctant to do: offering an accurate assessment of the Republican plan for Medicare. If voters find the GOP proposal frightening, the problem is with the plan, not with Democrats’ rhetoric.

I’m at a loss to understand what, exactly, Ruth Marcus, David Brooks, and their cohorts would have Dems do. Congressional Republicans have a plan to end Medicare and replace it with a privatized voucher scheme. The proposal would not only help rewrite the social contract, it would also shift crushing costs onto the backs of seniors, freeing up money for tax breaks for the wealthy. The plan is needlessly cruel, and any serious evaluation of the GOP’s arithmetic shows that the policy is a fraud.

Which part of this description is false? None of it, but apparently, Democrats just aren’t supposed to mention any of this. One party is allowed to present this agenda, but the other party is expected to sit quietly on their hands.

With a constant barrage of right wing media telling people that entitlements are sinking the ship of state under a flood of debt. But not a mention of big Bush tax cuts for the rich or the uncosted wars in Iraq and Afghanistan.

The message that Medicare can't be afforded is this year's flavour-of-the-day. Remember how in 2006 Bush tried hard to sell the message that Social Security is "broke", that is is "just IOUs", that the big budget deficits mean that the "only choice" is to cut entitlements like Social Security, it isn't hard to believe that most people think there is no hope and are willing to sign up for raising retirement to 78 and cutting benefits in half so that the government can go back to handing out more tax cuts to billionaires and millionaires who, this time, will cross their hearts and hope to die pledge that when they get these cuts they will churn out a lot of "trickle down" wealth so the bottom 90% can finally see a light at the end of the tunnel. Ridiculous.

Robert Reich served on the board of Social Security and constantly blogs to point out that the program is solvant with only a minor shortfall some 20 years out which is absolutely meaningless because nobody can predict with certainty if the economy will leap ahead by 5% next year or sink by 2%. But Republicans beat the drums of doom and sell the new religion of "gotta cut entitlements".

No wonder US politics is skewed so hard right. The media spouts right wing nonsense 24/7. They present a centre-right panel as "balanced". Tragic.