Monthly Archives: December 2012

Shifting fortunes on the fight to prevent cuts in Social Security, Medicare and Medicaid benefits

David Dayen, who will be missed when he takes a blogging break from his FDL News gig after December 21, writes about a hopeful development on the “fiscal cliff”/Grand Bargain front in 450,000 Seniors Would Lose Coverage Under Medicare Eligibility Age I…

Posted in Liberal Thoughts

Supporters of Medicare are calling Obama on his trial balloon to cut proposal benefits in the program

Lately I’ve gotten into one of those phases where I’m wondering if I should just post two or three times a day, “read Digby” or “read Charlie Pierce.” Both are following the “fiscal cliff” drama, which is a farce that could have literally deadly implications for people who will be hurt by the human sacrifice in terms of cuts to benefits in Social Security, Medicare and Medicaid that elite political and media consensus have decided are necessary and unavoidable.

But for whatever value I’m adding, if only a tiny bit more noise on the issue in the blogosphere, I’m adding my own transmission of their information here. Pierce in The Actual Cost Of Washington’s Clever Debt Deal Esquire Politics Blog 12/10/2012, he takes up the issue of Alzheimer’s, which Peter Coy mentioned in his Bloomberg Businessweek article (The Fiscal Cliff Isn’t the Problem 12/06/2012) that I discussed yesterday. Pierce’s take:

We are on the brink of an epidemic of AD in this country. There are 5.4 million people with the disease right now, and there are estimated to be another 15 million people — mostly, aging spouses and economically stressed children — providing what amounts to $210 billion in unpaid care. (There are estimated to be 800,000 people with the disease who are living alone.) The disease already costs $140 billion to Medicare and Medicaid. By 2050, it is estimated, and assuming a cure is not found, the total cost of caring for Alzheimer’s patients could soar past $1 trillion.

The current plan being bruited about in Washington would raise the Medicare eligibility age from 65 to 67 years of age. This is the low end of the Alzheimer’s spectrum, but the increase in diagnosed cases is still significant, rising three percent per thousand people nationally just between 2000 and 2008. In John Boehner’s Ohio, there are 13,000 people roughly within that window with the disease. There are 7,100 in Eric Cantor’s Virginia, and 5700 in Paul Ryan’s Wisconsin. All of these people represent not only the ravages of the disease, but the severe emotional and economic strain that it puts on their families. All of these people represent a considerable amount of pain that is not being factored into the shrewd political calculations that get you on the Sunday shows.

Pierce also looks at what’s left of “welfare” proper (the Supplemental Security Income Program) in The Voices Missing From The Safety Net Debate Esquire Politics Blog 12/10/2012 and explains one of the common scams used to denigrate poor people and smear federal assistance to them, in this case brought to us by alleged liberal Nicholas Kristoff. Pierce:

Oh, dear god, have I seen this movie before. You have the heartbroken local bureaucrat without any specific examples, just “many people.” You have the statistics-free analysis of programs, and you have the pet “scholar” from the American Enterprise Institute who, in a stunning coincidence, writes a book concluding pretty much the same thing about social-welfare programs that everyone else at AEI believes. Indeed, his work reinforces the ideas that the AEI was set up in the first place to promote. (Burkhauser, you will note, has made a career out of suggesting an increased work ethic on people who are not him.) And, of course, there is the anguished liberal conscience of the Times columnist. What’s missing, of course, are any of the actual people who allegedly are getting fat on disability payments.

Liberals like Kristoff in this mode are indispensable for the Republican reactionary project of gutting social services in the US. From Herman Melville’s The Confidence Man:

“You are an abolitionist, ain’t you?” [the rough Missourian asked the herb-doctor]

“As to that, I cannot so readily answer. If by abolitionist you mean a zealot, I am none; but if you mean a man, who, being a man, feels for all men, slaves included, and by any lawful act, opposed to nobody’s interest, and therefore, rousing nobody’s enmity, would willingly abolish suffering (supposing it, in its degree, to exist) from among mankind, irrespective of color, then am I what you say.”

“Picked and prudent sentiments. You are the moderate man, the invaluable understrapper of the wicked man. You, the moderate man, may be used for wrong, but are useless for right.”

Digby not only has excellent political analysis. She also has the right attitude. In Day of Action Hullabaloo 12/10/2012, she writes about the “fiscal cliff” drama: “Going over the cliff is entirely in the president’s hands. He just handily won re-election and he can dictate the terms. There is no reason for any ‘concession’, certainly not now.”

Digby also points to and recommends Joan Walsh’s article, “Fiscal cliff” cruelty Salon 12/10/2012 in which she explains that the Medicare benefit cuts proposed by the White House in trial balloon form is a terrible idea. She reminds us not to be naive about trial balloons and how they work. They are a long-established political tool: “The worst sellouts of liberal principles allegedly under consideration by the White House, particularly a hike in the Medicare eligibility age from 65 to 67, may be trial balloons by staffers, or outrages floated in order to make other compromises more palatable to progressives later.”

She also says, and very rightly so, “Raising the Medicare eligibility age is so bad that I literally can’t believe the president would consider it. Even though there’s evidence he might.”

And as long as I’m fiscal cliffing here, this from Joan’s article reminds me of something:

Meanwhile, a compromise on the top tax rates is likewise a bad idea, because 39.6 percent is already a compromise. Everyone who talks about rebuilding the middle class needs to acknowledge how we did it last time around: with a top marginal tax rate above 90 percent through both Eisenhower administrations. John F. Kennedy cut it to 70 percent, and that’s where it stayed until Reagan slashed it – and we know how good the Reagan revolution was for the middle class. I’m not saying that’s where it should return, but if we keep sacrificing progressivity, we’ll never have the money we need to do what we need to do. Tax rate hikes shouldn’t stop at $250,000. There should be more, and higher, tax rates on the super rich.

Listening to some of the chatter on the “fiscal cliff” hoo-hah, I’ve started to wonder how many people actually know what marginal tax rates are. Because I rarely if ever see it explained in news articles. I’m guessing there is some large portion of the public who thinks that a 90% marginal tax rate on the highest portion of income means 90% tax on all income.

This is an important part from Joan’s article on current politicking to cut benefits on Social Security, Medicare and Medicaid around the “fiscal cliff”:

The White House seems to be playing both sides of the street on the question of whether it’s thinkable to go over the cliff. On Wednesday, Treasury Secretary Timothy Geithner told reporters the administration is “absolutely” prepared to do so if the GOP won’t budge on top tax rates. But that same day, the White House was meeting with Latino groups to build support for a theoretical fiscal cliff deal, by outlining the ways Latinos would be hurt by the tax hikes and program cuts that would (eventually) be triggered. Thursday they did the same thing with African-American groups. As long as we’re getting racial, it’s worth pointing out that keeping the top tax rates low, or compromising at 37 percent, is an absolute Christmas gift for wealthy white people, who make up a wildly disproportionate share of the top earners. And the lower life expectancy of African-Americans makes raising the Medicare eligibility age particularly cruel.

And it’s very true that cutting benefits on Social Security, Medicare and Medicaid will hit minorities disproportionately hard. Journalists should be jamming Obama and other Administration officials on that point. David Dayen discusses this point in Medicare Eligibility Age Increases Particularly Levies Pain on Seniors of Color FDL News 12/10/2012: “coverage disparities between the rich and poor melt away at 65 right now, and particularly between whites and minorities. Delaying that two years just means two more years where poor people of color will defer medical care and live without health insurance.”

And, yes, cutting benefits on Social Security, Medicare and Medicaid would be a terrible betrayal of the solid majority that just re-elected Obama. Joan Walsh:

So yeah, I think these are appalling ideas. We just had an election in which the president promised to protect Medicare, and never once publicly supported raising the eligibility age to 67, while Romney’s advisers said his plan included hiking the age. (Romney himself avoided details about any of his plans.) Post-election polls find that two thirds of voters oppose increasing the Medicare eligibility age. Should this deal become reality, it would reinforce the cynicism Americans harbor about government – and about Democrats. Deservedly.

The truth is, Obama should be pushing to lower the Medicare eligibility age, to let those 55 and over opt to buy into the program with their own money. The premiums paid by a younger, healthier cohort would help stabilize the program, while the benefits of getting that population insured earlier would keep costs down later. That’ll never happen, you say? Well, we can make sure it’ll never happen if progressives never ask for it.

Honestly, the only real reason to throw seniors into the Obamacare pool is to put more people at the mercy of private insurance, and weaken both the economic and political basis for Medicare. [my emphasis]

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Neoliberalism and the left: Democrats, the “social” version and the American version

I’ve written here a lot lately about the role of the left-center parties in advanced countries in the neoliberal scheme of things. Yanis Varoufakis takes a look at what happened to Europe’s social-democratic parties in that scheme.

This Klaus Stuttmann cartoon of 12/06/2012 illustrates the situation of the German Social Democratic Party (SPD). Though the SPD is the main opposition party, they have faithfully supported Chancellor Angela “Frau Fritz” Merkel’s disastrous policies on the euro and the EU and failing to offer any alternative framework for the issues Europe and Germany face. It shows the SPD and its corporate-toady Chancellor candidate for the 2013 elections, Peer Steinbrück, being overshadowed by Frau Fritz:

(On the SPD of Peer Steinbrück, see also my post of 10/02/2012, Neoliberalism and center-left politics: Germany.)

Varoufakis uses the symbol of the Global Minotaur to describe the current world financial system, which first emerged in the 1970s focused around how the world economy would sustain what are known as the “twin deficits” of the US, our public budget deficit and our trade deficit:

My tentative answer is that Europe’s Left fell for the Global Minotaur’s old trick. They saw the rivers of privately minted money that the financial sector was printing (while labour was squeezed and real estate prices soared) and thought they could harness some of it in order to pursue social democratic policies! Rather than (as the social democrats of the previous, Kreisky era had to do) target the profits of industry, as a source of funding social programs, social democrats thought they could tap the rivers of cash produced in the context of financialisation. Let finance free to do as it pleased and then tap into some of its proceeds to fund the welfare state. That was their game and, at the time, it seemed to them a better idea, more fathomable, than having to be constantly in conflict with industrialists, seeking to tax them in order to redistribute. In contrast, bankers were quite easy going. As long as the ‘leftist’ politicians let them do as they pleased, they were happy to give them some crumbs off their gargantuan dinner table.

Indeed, some of these social democrats, for some time, were funded by the financial sector quite generously so as to run their welfare programs (e.g. the Blair government’s considerable boost in public spending, similar programs in Spain by the PSOE government, etc.). Alas, to be allowed that small portion of the financialisation torrent, for the purposes of social programs, social democrats had to swallow financialisation’s logic hook, line and sinker. They had to shed their distrust for unfettered financial, labour and real estate markets. They had to suspend their critical faculties. And so, when in 2008 the tsunamis of capital produced by Wall Street, the City and Frankfurt crashed and burnt, Europe’s Social Democratic side of politics did not have the mental tools, or moral values, with which to subject the collapsing system to critical scrutiny. They were, thus, ripe for acquiescence, for total capitulation, to the toxic remedies (e.g. the bailouts) whose purpose was to sacrifice working people, the unemployed and the weak for the benefit of the financiers. The rest is a very sad, never ending, history.[my emphasis]

A similar process also seems to have occurred with the Democratic Party in the United States. I’ve also discussed this problem in Neoliberalism and the left (1) 05/12/2012 and Neoliberalism and the left (2) 05/12/2012. In the first of those, I quoted Michael Lind on the US Democratic and British Labour Parties:

The decision in the last generation of the Third Way “progressives” to be more pro-banker and pro-business than the right is one reason that the center-left in the U.S. and Europe is incapable of rising to the challenge of the economic crisis. Having mortgaged their parties to donors in Wall Street and the City of London, the Democratic and Labour Parties cannot engage in more than token reform of the bloated and dangerous financial sector without biting the hands that feed them.

This is how we get to a situation where a Democratic President just re-elected by a solid margin that rejected the reactionary economics advocated by plutocrat Mitt Romney and his running mate Paul Ryan, just a few weeks later floating a plan to cut Medicare benefits and instead of mobilizing the public to defend Medicare instead insists on only nominal tax increases for the wealthiest (“a little more from those who can most afford it”), and instead of insisting that the LOSER party go along with his plans, instead asks them to please let him compromise with them to cut Medicare benefits. At least that’s how I read his feeble appeal in his weekly Saturday address of 12/08/2012, “It’s not about which political party comes out on top, or who wins or loses in Washington. … And if both sides are willing to compromise, I believe we can give businesses and families a sense of security going into the New Year.”

In Italy, we now have the crooked rightwinger Silvio Berlusconi declaring his intent to return to power. And Frau Fritz’ faithful “technocrat” head of government in Italy, Mario Monti, has already declared his intention to step down in a month. We’ll see what kind of changes the new round of turmoil in Italian politics will produce, and whether Italian left parties can use Frau Fritz’ destructive austerity policies to successfully articulate a clear democratic alternative.

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Some real-world features of current federal budget needs

Bloomberg Businessweek‘s Peter Coy steps outside the “fiscal cliff” conventional wisdom and actually explains several practical real-world issues around them well in The Fiscal Cliff Isn’t the Problem 12/06/2012. Though not without some flotsam and jetsam of the CW. Particularly at the end, where he devotes a long paragraph to letting a Blue Dog Democrat hyping a version of the “inter-generational accounting” scam without pointing out that’s what he’s describing.

But on the realistic side, he explains on Social Security, “Social Security’s imbalance could be fixed by raising the ceiling for wages subject to the payroll tax.” He doesn’t even mention the proposal to cut benefits for existing and future retirees by tying inflation adjustments to the “chained CPI” measure.

The piece in both print and online is accompanied by an illustration by Ana Benaroya that works well in spoofing the excessive hype around the “fiscal cliff” and the potential harm that could come from addressing it in bad ways:

But I also have to wonder about the “Don’t Feed the Animals” sign it features. Among the more enthusiastically segregationist-minded, a meme became popular this past year comparing ordinary people receiving some sort of government assistance to wild animals who shouldn’t be fed by people. Although I’m more inclined to read this use of it as a spoof of segregtationist and conservative attitudes.

Coy also gives us a non-crazy description of the real issue around projected Medicare and Medicaid cost issues (although he doesn’t mention more recent projections that suggest the problem may be less severe than often thought):

The knottier problems are Medicare and Medicaid, whose costs have been driven up by extraordinarily inefficient health-care spending. The U.S. spends 53 percent more on health care per capita than No. 2 Norway while getting worse results. (Norwegians’ life expectancy at birth is a year and a half longer.)

The per capita cost and value-per-amount-spent are two areas in which the United States really does have an argument that we’re “exceptional.”

And he connects the costs of health care to federally-funded research, or lack thereof:

Making benefits less generous is the no-brainer way to close the gap [on Medicare and Medicaid]. The forward-thinking way is to conquer diseases that sap America’s human and economic potential, as Jonas Salk’s vaccine did for polio in the 1950s. Medicare and Medicaid alone spend $140 billion a year on dementia care, the Alzheimer’s Association estimates, yet the U.S. spends only about half a billion dollars a year researching cures. George Vradenburg, chairman of USAgainstAlzheimer’s, argues that the disease could be mostly eliminated by 2020 with Manhattan Project-size funding; cuts to research could make the problem worse. “This disease could very well become the financial and social sinkhole of the 21st century,” says gerontologist Ken Dychtwald, chief executive officer of the consulting firm Age Wave.

Coy might have added that cutting benefits on Medicare and Medicaid, as President Obama proposed in 2011 in the debt-ceiling negotiations, is not only a “no-brainer” but a no-heart-er approach. But in the context, “no-brainer” would not only mean an approach that requires no thought but one that doesn’t make good sense.

He makes an obvious and accurate Keynesian point that contradicts Republican economic dogma, “What’s limiting business investment and hiring today isn’t the prospect of slightly higher tax rates but the fear that there won’t be enough customers.”

And he explains how protracted depression can produce major long-term damage to the economy:

Weak, uncertain demand is the lasting legacy of the Great Recession and the slow rebound since. In manufacturing, mining, and utilities, depreciation has outpaced fresh investment since the start of the recession in December 2007, leaving the sector with a decline in productive capacity, according to Federal Reserve data. Recessions have lasting consequences: Eroding capacity, they limit the economy’s ability to grow—and generate tax revenue—in the future.

Coy also talks about the importance of engaging in public research for “education, scientific research, and infrastructure.” But I’m getting more and more indifferent to those vague formulations that are often found in close company with neoliberal assurances that the Great God Free Market will take care of everything as long as we have fewer unions and less protection for workers (“labor market flexibility” in the jargon) and also fewer government services, lower or nonexistent pensions, and restricted access to health care for all but the One Percent (“enhancing national competitive” in the neoliberal mantra). Coy does point out an important aspect of infrastructure investment, though:

Physical capital is underfunded as well. In 2009 the American Society of Civil Engineers gave the U.S. a grade of D for infrastructure. It’s doubtful that things are much better now; only about $100 billion of the Obama administration’s nearly $800 billion stimulus program went toward roads, bridges, and other needs. Infrastructure investment would make the U.S. more competitive in the long run while creating jobs in the short run, and since the U.S. can borrow for next to nothing, the financing would be cheap. But Boehner is opposing Obama’s debt proposal—which includes $50 billion in infrastructure spending—because it doesn’t cut spending enough. That’s unfortunate.

And he even says that holding back necessary spending right now “by spending cap or sequester would be as dumb as discarding coffee filters to lighten one’s backpack.” He also notes, perhaps with an ironic twist, “The U.S. spends more on its military than the next 13 countries combined; that would suggest potential for some nips and tucks.” Yeah, “nips and tucks.”

Coy’s article is nevertheless framed in the context of making responses to the “fiscal cliff” pseudo-crisis less damaging than they might be.

And that’s part of the more general problem. Both Democratic and Republican leaders are focusing their emphasis on reducing the deficit in the middle of a depression, not on the immediate need for strong stimulus spending. Vague magic formulas about the need to spend more on “education, scientific research, and infrastructure” don’t count.

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Fiscal cliffing ourselves into austerity economics in the middle of a depression

Digby has a good roundup on austerity-economics news in Europe and Australia in Let’s do it anyway, shall we? Hullabaloo 12/07/2012. Guess what? It’s making their economies shrink!

The most important immediate issue in the Fiscal Cliff farce is maintaining the benefits on Social Security, Medicare and Medicaid. Wall Street, the Republicans, and – sadly, President Obama – are using this ginned-up pseudo-crisis to try to cut benefits on those programs as a way for Wall Street to tap into the Mississippi River of cash flows that privatized versions of those programs could provide for banks, brokers and insurance copies to suck gigantic fees from at the expense of the majority of the country.

But those cuts wouldn’t provide immediate pro-cyclical effects. i.e., making the recession worse. The whole debate in which the President, leading Democrats and the whole Republican Party are calling for deficit reduction in the middle of a depression just shows the ghost of Herbert Hoover running wild.

Mike Koncza in gives some examples of the toxic economy analysis that One Percenter think tanks have been cranking out, in particular over the issue of the debt ceiling, and concludes, “There’s no good reason for the debt ceiling, and now there are really bad consequences for its existence. Time to end it.” (Another Reason to Kill the Debt Ceiling: Conservative Think Tanks’ Responses to Default Rortybomb 12/05/2012)

Jared Bernstein takes a look at some current real-world figures and points out something relevant to the deficit:

In fact, if any column in the table is flashing red (other than unemployment), it’s the revenue column. Since 2009, revenues are up only 0.7% of GDP while spending is down 2.4%. That’s the largest three-year spending contraction since the mid-1950s. The 3.1% of GDP decline in the budget deficit since 2009 is the largest three-year drop since the 1940s. To be fair, it’s also the case that the increase in the deficits up to 2009 were historically very large as well. But they needed to be. (emphasis in original)

And Yves Smith at Naked Capitalism asks us to be alert for “shameless cases of fearmongering and distortions” during the budget/fiscal cliff/deficit/Grand Bargain debates. And gives us an example: Fiscal Cliff Propaganda Watch: Business Owner Says the Fiscal Cliff Made Him Fire His Son 12/07/2012. Several examples, actually:

The lies told to sell the chump public on the necessity of enduring cuts to the social safety net are already at a breathtaking level. Where would you like to begin? The idea that big reductions in spending (going over the edge of the world off the fiscal cliff would be horrific, while only somewhat big cuts would be salutary? That Social Security “reforms” are necessary to fix the budget? Even former budget chief Peter Orszag ‘fessed up that one was not true. Or the favorite refuge of the Republicans, that raising taxes on the wealthy will hurt job creation. Ahem, we’ve pushed the low taxes model further than any other advanced economy, and the result is crumbling infrastructure, an overpriced and mediocre health care system, and record corporate profits combined with extreme measures to pay more to workers and a lack of new investment (the corporate sector has been a net saver since the early 2000s).

I’ve gotten as tired of hearing the phrase “crumbling infrastructure” as that cute little girl in the pre-election YouTube video crying about how tired she was of hearing about Bronco Bamma and Mitt Romney. But his point is right.

We would have a better chance of have some really constructive solutions to the depression if we had a President who didn’t have to be constantly pressured to act like a Democrat at all on economic issues. But at least he’s not Mitt Romney, and that’s good.

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The fight to save benefits on Social Security, Medicare and Medicaid from Obama’s “Grand Bargain”

I’m to the point on the Grand Bargain/Fiscal Cliff show that I’m reluctant to take seriously anything anyone says on Social Security, Medicare and Medicaid unless I know that same person is saying that the benefits on those programs are good things and…

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Obama at the Business Roundtable talks about “entitlement reform,” does not defend benefits on Social Security, Medicare and Medicaid

The speech has the two basic flaws most of his speech on the “fiscal cliff” nonsense have: he doesn’t defend benefits on Social Security, Medicare and Medicaid (“entitlements” in the jargon of the opponents of those programs) and he uses Republicans framing about the importance of reducing deficits rather than using federal stimulus to grow the economy out of the depression. Here is the video:

Now, any President speaking to the Business Roundtable would be expected to flatter them a bit, something to which Obama is more than receptive to doing. But there’s fluff flattery. And there’s stuff like this:

And I’ve said this to some of the small groups, let me repeat it to the large group — I am passionately rooting for your success, because if the companies in this room are doing well, then small businesses and medium-sized businesses up and down the chain are doing well. If companies in this room are doing well, then folks get jobs, consumers get confidence, and we’re going to be able to compete around the world.

He goes on to say, “Many of you, over the last two, three years, have experienced record profits or near record profits, and have a lot of money where you’re prepared to invest in plants and equipment and hire folks.”

He uses his Republican friendly framing in talking about the “fiscal cliff” farce:

During the entire campaign, I talked about the importance of short-term measures to boost growth but also a long-term plan to make sure that we’ve got our fiscal house in order, and I called for a balanced and responsible plan. My budget reflects a balanced, responsible plan, and I’ve shown myself willing to make some tough decisions when it comes to government spending — because, despite, I think, my reputation or the reputation of Democrats, I don’t think every government program works exactly the way it should. I think there are efficiencies that can be gained; there are some programs that used to work and just don’t work now the way they were intended. And as a consequence, working with Democrats and Republicans last year, we were able to cut over a trillion dollars of spending — the largest cut, by the way, in discretionary spending in history. So we’re prepared to make some tough decisions when it comes to spending cuts. [my emphasis]

And he uses the buzzword “entitlements” to refer to Social Security, Medicare and Medicaid, which invariably suggests that the speakers favors cuts in benefits to those programs:

And what I’ve proposed, what I put forward in the campaign and what I think a majority of the American people agreed with — in fact, there’s some folks who didn’t vote for me that focus groups and polls show nevertheless they agreed with my concept when it comes to deficit reduction — is that an approach that says we’re going to raise additional revenue particularly from those who have done best in the economy over the last decade, combined with some smart cuts and with entitlement reform that can strengthen our social safety net over the long term but do so in a responsible way — that’s the way to go forward. And that’s what we’ve put forward. [my emphasis]

And he refers to his current official proposal this way, again using the hostile term “entitlement” for Social Security, Medicare and Medicaid:

So what we’ve said instead is let’s allow higher rates to go up for the top 2 percent — that includes all of you, yes, but not in any way that’s going to affect your spending, your lifestyles, or the economy in any significant way; let’s make sure that 98 percent of Americans don’t see a single dime in tax increases next year, 97 percent of small businesses don’t see a single dime in tax increases next year — and by doing that alone we raise almost a trillion dollars without any adverse effects on the economy.

Let’s combine that, then, with some additional spending cuts and some long-term entitlement reform that can get us to a number close to $4 trillion, which stabilizes our debt and our deficits relative to GDP for at least a decade, perhaps more. [my emphasis]

He returns to the theme again: “I think there’s a recognition that maybe they can accept some rate increases as long as it’s combined with serious entitlement reform and additional spending cuts.” (my emphasis)

And again: “So, with that, let me just say we’ve got one path where we resolve this fairly quickly — we’ve got some tough spending cuts, we reform our entitlements, we have modest revenue increases.” (my emphasis)

Nowhere in his speech did he defend benefits on Social Security, Medicare and Medicaid in any way.

This is not a good thing. The only encouraging part of this speech are the parts where he seems, maybe, we can hope, to realize that the Republicans jacked him around pitifully on the debt ceiling fight in 2011 and he doesn’t want to do that again:

Let me make one last point and then I’ll start taking questions. There had been reports — and these are not necessarily confirmed, and maybe some of you have more insight than I do on this — that perhaps the Republicans go ahead and let the middle-class tax cuts get extended, the upper-income tax cuts go up, otherwise we don’t get a deal, and next year we come back and the thinking is Republicans will have more leverage because there will be another vote on the debt ceiling and we will try to extract more concessions with a stronger hand on the debt ceiling.

I have to just tell you that is a bad strategy for America. It is a bad strategy for our businesses. And it is not a game that I will play.

Most of you were involved in discussions and watched the catastrophe that happened in August of 2011. Everybody here is concerned about uncertainty; there’s no uncertainty like the prospect that the United States of America, the largest economy that holds the world’s reserve currency potentially defaults on its debts; that we give up the basic notion that the United States stands behind its obligations.

And we can’t afford to go there again. And this isn’t just my opinion; it’s the opinion of most of the folks in this room. So when I hear some on the other side suggesting that to resolve the possibility of a perpetual or a quarterly debt ceiling crisis that there is a price to pay — well, the price is paid by the American people and your businesses and the economic environment worldwide. And we should not accept going through that.

John Engler, who is, I think — he and I philosophically don’t agree on much — (laughter) — no, I’m just being honest about John, and he’s a great politician but he — he originally comes from the other party — but John is exactly right when he says the only thing that the debt ceiling is good for as a weapon is just to destroy your credit rating.

So I want to send a very clear message to people here: We are not going to play that game next year. If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation — which, by the way, we had never done in our history until we did it last year — I will not play that game. Because we’ve got to break that habit before it starts. [my emphasis]

The only “catastrophe” that happened over the debt ceiling was that it made Obama look really bad. Maybe that’s what he’s referring to. And, if so, that’s a good thing!

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Tony Blair annoys me even more than Bernard-Henri Lévy

Listening to Tony Blair about anything is kind of like watching FOX News to get informed about current events, or consulting Mitt and Ann Romney on how to show the common touch.

But here is Lord Blair, holding forth about Britain and the European Union, The UK should Shape the Future of Europe, not Withdraw from it 12/04/2012 (speech of 11/28/2012). We should remember he that the main thing the pro-Europe Tony Blair did for the EU during his long stint as Prime Minister was to divide its members in a major way by acting as “Bush’s poodle” on the Iraq War, joining the conservative governments of Spain and Portugal to be Europe’s leading cheerleaders for the invasion to get the non-existent “weapons of mass destruction.”

A devout devotee of the neoliberal gospel, Lord Blair illustrates that really bad ideas can and sometimes do spread across the Atlantic, in this case the “Grand Bargain”:

So the flagship policy of Europe is listing dangerously. As I have said before, to save it, I believe, requires a kind of ‘Grand Bargain’ approach rather than incremental steps, in which Germany agrees, effectively, to some form of mutualisation of debt; the debtor countries carry out profound structural reform; and the ECB stands fully behind the bargain. There are some signs this may happen. But even if it does, Europe will suffer for some time to come. …

So the real issue for us should be: what type of EU? And here there is no doubt that Europe needs fundamental, far reaching reform. Many of those reforms are precisely what the UK has been arguing for, like reform of the social model. It should be pointed out that these reforms are partially being made. Spain’s labour costs have declined substantially since the crisis began. Italy has grasped crucially important reforms in areas like pensions. Greece has cut spending by a bigger amount proportionally than any country in Europe since the War.

Like the American version of the much-discussed Grand Bargain to cut benefits on Social Security, Medicare and Medicaid, this one is aimed at impoverishing the people of countries like Greece, Italy, Ireland, Spain and Portugal for the benefit of (primarily) Germany. This is what “profound structural reform” actually means.

Like the tax side of the American “Grand Bargain” scheme, the revenue side of Lord Blair’s is pretty weak. I assume that what he means by “some form of mutualisation of debt” means that the eurzone has to recognize that Greece is never going to be able to pay back the debt load they current have and still have any kind of half-decent economy, so Germany is going to have to eat a bunch of losses. But that’s going to happen anyway. His endorsement of Germany Chancellor Angela “Frau Fritz” Merkel’s brutal austerity demands is the only real substance to that suggestion.

Lord Blair can earn healthy speaking fees at One Percenter gatherings with blather like the following: “Changes to the labour market, pensions, welfare and the way the State operates are necessary in all Western countries for reasons of demography, technology and external competition. The European social model has to change radically for Europe to prosper.” All of which means weaken unions, cut wages, increase unemployment, remove worker protections, cut government services, and let Grandma eat catfood.

Lord Blair realizes that Britain outside the EU is likely to suffer a relative loss in power. But he really offers nothing in terms of the kinds of changes, like creating a full political, budget and transfer union, that would be necessary for a truly vital, well-functioning EU. Britain’s foreign policy subservience to the US, of which Blair was fully supportive as Prime Minister, prevents it from being a true EU partner. The US has a foreign policy of global dominance or global hegemony, and part of what flows from that is preventing the rise of a “peer competitor” to the US, which the EU at least once had the potential to be. As long as Britain is nothing but a servant of the US in foreign policy, if a sometimes annoying one, they will continually push to keep the EU a weaker union, one that can’t deal with the kind of problems the currency union is now facing.

The Labour Party that Tony Blair headed is officially Britain’s social-democratic party. Blair’s One Percenter outlook as the former Labour Prime Minister and party head illustrates some of the severe problems its much smaller sister party in Greece, PASOK, is currently having. Already badly battered in the last national election, PASOK now is polling down around the five percent level. John Psaropoulos describes in Socialist Schism Could Weaken Government The New Athenian 12/04/2012 how PASOK is steadily shrinking even before any new elections:

Pasok suffered the loss of six MPs on November 7, who were expelled for voting against a package of painful austerity measures amounting to 13.5bn euros. One more departed later. It is now down to 25 MPs from 33 after the June election. …

The socialists’ fortunes have gone from bad to worse since they ceded power to a technocrat interim prime minister last November. In back-to-back elections last May and June they took 13 percent and 12 percent of the popular vote, respectively, in a steep tumble from 44 percent in 2009.

The European social democrats have proved themselves very ill-prepared to take political advantage of the political conditions of a depression. Even in France, where François Hollande’s Socialist government took power campaigning against austerity and demanding to renegotiate Frau Fritz’ fiscal suicide pact, then promptly once in office proposed a nasty austerity budget and approved the fiscal suicide pact with any attempt to renegotiate it.

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Deadlock on the “fiscal cliff” negotiations? That would be good news for Social Security, Medicare and Medicaid benefits

Paul Krugman is impressed at the determination of the Republican opposition to block action on budget issues proposed by President Obama. In Operation Rolling Tantrum 12/02/2012,he writes:

Oh, boy. This isn’t going to end, even when or if a deal is reached on defusing the austerity bomb; John Boehner has just declared that he’s going to hold the full faith and credit of the United States hostage every time we hit the debt limit. Nor will it be a case of holding the nation at gunpoint until it meets GOP demands; Republicans are signaling that they don’t intend to make any specific proposals, they’re just going to yell and stamp their feet until Obama soothes them somehow.

This is good news as far as it goes for benefits on Social Security, Medicare and Medicaid. As much as Obama may hope for a Grand Bargain to cut benefits on those programs, the only way he can hope to make that the start of his utopian postpartisan future is if the Republicans agree on a deal that includes it. But, in the scenario Krugman describes – “if the next two years are, as they seem likely to be, one long Republican tantrum” – they may not even be able to agree on anything they can pass off as a comprehensive package to solve the problem of the Gentle Fiscal Slope scheduled to begin January 1.

And if the Republicans continue with a strategy of fundamental opposition to try to keep the economy ailing and make Obama look bad, not only does he not get the Grand Bargain and postpartisan harmony. He may also have to act like a Democratic President who won re-election by a strong margin and fight the Republicans.

Politico, which Charlie Pierce calls Tiger Beat On The Potomac because of its often flighty, gossipy reporting seems to be working off some alternative script about what’s really being proposed and at least tacitly agreed to in the “fiscal cliff” negotiations. But this piece by Jennifer Haberkorn and Paige Winfield Cunningham spells out ways cutting Medicare benefits would hurt large numbers of people, The cold, hard realities behind Medicare cuts 12/02/2012. On raising the eligibility age from 65 to 67:

Most Democrats on Capitol Hill have lined up against the idea, arguing that doing so would leave 66- and 67-year-olds without access to affordable coverage. Plus, the 66- and 67-year-olds aren’t the ones sinking the Medicare trust fund; they’re typically the cheapest beneficiaries.

But they likely would become the costliest in the private insurance market, which could make coverage hard to find if they don’t already have it through the workplace — and they’d probably have to pay more out of pocket than they would under Medicare. …

An ABC News/Washington Post poll released Wednesday shows that 67 percent of people surveyed oppose the idea, too.

And they remind us, “Obama tentatively agreed to raise the eligibility age during his summer 2011 debt ceiling negotiations with House Speaker John Boehner.”

On increasing the Medicare Part B premium to cover 35% of its costs: “This is by far the biggest saver — but it’s also one that would clearly violate the Democrats’ pledge not to shift costs to seniors.”

There is a drug rebate requirement that falls on drug companies that was reduced under the Bush Administration in Medicare Part D, i.e., drug companies have had to pay less in rebates since 2006. Restoring that rebate, which Politico calls “dual-eligible rebates,” would save money without reducing benefits. Politico notes, “Drug companies will fight to make sure the idea never sees the light of day.”

Another benefit-reducing idea is to increase the amount recipients have to pay for Medicare and Medigap cost-sharing. Increasing the required payments from recipients is itself a benefit reduction and means that it puts more pressure on recipients to forego or postpone treatment to to cost considerations.

Means testing for Medicare would also be a reduction in benefits. Haberkorn and Winfield don’t explain Democratic opposition to this well. Medicare supporters are leery of means-testing for Medicare because that makes it easier for enemies of the program to stigmatize it as “welfare.” Like Social Security, Medicare is a defined-benefit plan to which future beneficiaries contribute during their working careers.

The last option they discuss is cuts in reimbursements to Medicare providers. That is not a cut in benefits unless the reductions were so poorly designed and/or so drastic that it actually interfered with delivery of services. There’s not magic measuring stick here; it requires people who know what they are doing on the Medicare side to negotiate, implement and monitor the changes, and decent performance and financial audits to evaluate such reductions when they are implemented.

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Obama’s “fiscal cliff” road show, Dec. 1

President Obama used his regular Saturday message to hype the phony “fiscal cliff” and to promote Republican Party framing of the deficit as an urgent priority and of tax cuts as the most important priority in the current “fiscal cliff” drama, Weekly A…

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