Tag: deficit

Medicare and the Overton Window

This Pelosi post got me thinking about just what a Democratic response to a Ryan-style plan on Medicare should even be. After all, if you work from Ryan’s far right starting point and counter with “well, let’s just privatize x% of Medicare for this set of individuals” or some other “sensible middle” type compromise, then you’ve already lost. You’ve advanced the GOP’s idea of the program (which is a bad one) significantly and at the expense of the better solution: Medicare as it stands or Medicare plus substantial improvements.

It is a fact that the real driver of deficits in this country are healthcare expenses. Don’t take it from me, here’s the CBO’s report (PDF link):

Medicare and Medicaid are responsible for 80 percent of the growth in spending on the three largest entitlements over the next 25 years and for 90 percent of that growth by 2080.

But if we could achieve the per patient healthcare cost of most of the other developed nations in the world, we’d be facing yawning surpluses in this country, not deficits, and we’d very likely have better individual health outcomes to boot.

Therefore: the Democratic response to Ryan’s “privatize Medicare” should in fact be: Medicare For All. Period. We don’t want to reduce this program. Like 87% of all Americans, we think it should at the bare minimum stay just as it is. Preferably, we’d like to massively expand it. This has the dual benefit of covering medical expenses for everyone in the country and relieving the number one deficit driver in the economy: everyone’s medical expenses. Plus this means we eliminate the dread ACA and its totalitarian horrors. Everyone wins!

Now, of course, I don’t really think Medicare For All has any particular chance of becoming law; what using this sort of proposal does do is set the limits of the debate more appropriately and in ways that tend to favor outcomes preferable to the Democrats.
On the right: Eliminate Medicare and let the wealthy fend for themselves.
On the left: not only keep Medicare, but make it the healthcare provider for all, with tremendous humanitarian benefit but also knock-on budget benefits.
Then you’d be down to arguing about whose plan actually saves more money long term and how that impacts health outcomes in America. Which is precisely where the debate needs to be.

A person, company or nation would be defined as ‘broke’ if it couldn’t pay its bills, and that is not the case with the U.S. Despite an annual budget deficit expected to reach $1.6 trillion this year, the government continues to meet its financial obligations, and investors say there is little concern that will change.

David J. Lynch repeating that which cannot be repeated enough. We have a ~$16 Trillion economy and the lowest tax burden in half a century. And, miracle of miracles, the beloved market realizes this because, as the linked article also notes, we can borrow at historically low interest rates, paying 0.68 percent on a two-year note, down almost 5% from what we were paying on that back in 2007.
Clearly, though: time to panic.
Source: bloomberg.com

[Tea Party activists and junior lawmakers] literally think you can just balance it, you know, [by cutting] waste, fraud and abuse, foreign aid, and NPR. And it doesn’t work like that.

Paul Ryan, letting a little truth slip out. Wonder how those people got crazy ideas like that into their heads?
Almost equally unbelievable is that Ryan also said: “Do I believe you can get slightly higher revenues without harming jobs, and get better economic growth? Yes, I do believe that.” Not the R-word! And from a Republican. Who knew?
Source: Washington Post

EXTRA: USA NOT BROKE, JUST RESTING

Bloomberg delivers some shocking, shocking stuff:

“The U.S. government is not broke,” said Marc Chandler, global head of currency strategy for Brown Brothers Harriman & Co. in New York. “There’s no evidence that the market is treating the U.S. government like it’s broke.”

The U.S. today is able to borrow at historically low interest rates, paying 0.68 percent on a two-year note that it had to offer at 5.1 percent before the financial crisis began in 2007. Financial products that pay off if Uncle Sam defaults aren’t attracting unusual investor demand. And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so.

Print out in the largest type possible and stick to the teleprompter of every Serious Person currently inhabiting the media. Likewise, Obama and his proxies need to be talking about this. A lot. So often that we can’t stand it anymore, and then a few million more times on top of that. Then you can start a serious discussion about revenue, which is the only truly serious way out of this mess. Sorry, but it is.

EXTRA: USA NOT BROKE, JUST RESTING

PAMtastic poll data

Apropos of this post:

The [NBC/WSJ] survey — which was conducted Feb. 24-28 of 1,000 adults (200 reached by cell phone), and which has an overall margin of error of plus-minus 3.1 percentage points — also listed 26 different ways to reduce the federal budget deficit.

The most popular: placing a surtax on federal income taxes for those who make more than $1 million per year (81 percent said that was acceptable), eliminating spending on earmarks (78 percent), eliminating funding for weapons systems the Defense Department says aren’t necessary (76 percent) and eliminating tax credits for the oil and gas industries (74 percent).

The least popular: cutting funding for Medicaid, the federal government health-care program for the poor (32 percent said that was acceptable); cutting funding for Medicare, the federal government health-care program for seniors (23 percent); cutting funding for K-12 education (22 percent); and cutting funding for Social Security (22 percent).

So, the approach I laid out for the Democrats is not only popular, it’s the most popular. Well, that and people just have no fucking idea about earmarks and their relative proportion of the federal budget. Add that to the striking unpopularity of the GOP’s putative positions and you have a multifaceted issue about which you can be sure that The Democrat will make not one peep, will grudgingly accept the whatever the GOP’s demands are, and will be roundly slaughtered by voter fury about come 2012 but interpret said slaughter as implicit approval of the GOP message and most definitely not anything to do with The Democrat’s utter fecklessness. Optimism!

Unified Field Theory

First principles:

  1. The recently House-passed continuing resolution only makes a government shutdown more likely by both caving to perceived GOP demands to “cut” while also exhausting the supply of low hanging fruit that Obama has already come out in favor of cutting.
  2. The GOP has the media high-ground, as always, because serious people know that cuts must be necessary, and since the GOP is at dollar value X, and the Democrats are, for all intents and purposes, at dollar value $0 (spending freeze as opposed to new cuts), the serious person answer must be $X/2. That’s the “grand bargain” that Democrats wisely point out will still submarine the economy and the GOP flatly refuses to even discuss. See: shutdown and default in 2011.
  3. Serious People furthermore agitate for deep cuts to Social Security, despite its dedicated funding source and minimal deficit impact in the near future, because, well, because that’s what serious people do. Acceding to the demands for cuts to Social Secuirty is 2012 suicide for the Democrats. It just is.

With all that in mind, what the Democrats need is a concentrated, coordinated effort that steals this idiotic media high ground surrounding the (perceived) absolute necessity of “cuts and a lot of them.” Karl Rove taught us nothing if not the fact that making your enemies’ strengths into their weaknesses is a potent political tool. Think Swiftboating. That The Democrat assiduously avoids the use of this tool is why they fail.

Therefore: the GOP is talking at least $100B in cuts, and immediately. Right or wrong, that’s going to have to be your number too. However, and critically, the GOP wants those cuts to come entirely from the non-military discretionary budget, somewhere around 14% of the whole government budget. This, then, is where and how you attack them. And you’re going to do it specifically and with dollar amounts.

You go down the list of GOP hobby horses: faith-based initiatives, the military, oil subsidies, agribusiness subsidies, general corporate welfare, abstinence-based education, all of it; but you don’t stop with spending, you also target revenue: capital gains taxes, estate taxes, social security taxes (as in: uncapped), and ultimately the tax code itself, which could use a few new brackets up top.

Secretary Gates can likely provide you with a long list of outdated or otherwise no-longer-needed military programs. Lots of them will seem ridiculous or hopelessly out of touch. Mock them and mock the GOP for continuing to support them.
Same goes for oil subsidies. These are the richest companies on Earth and the GOP wants to give them corporate welfare while asking for “shared sacrifice” from the poorest of the poor?

When you’ve run out of spending to cut from GOP programs, you go to work on revenue. That’s right, I said it. You need to too. First: revenue is revenue. Capital gains, management fees, bonuses, and everything else falls under regular pay. Next, you set about raising effective rates on corporations and the rich. The corporate side can be most effectively done by eliminating shelters and loopholes. Any country in which ExxonMobil pays $0 in taxes needs, needs corporate tax reform. Period. Still haven’t hit the number? New tax brackets. Still haven’t hit the number? Uncap Social Security. And so on.

You then pack the whole thing together and unveil it as the “alternative” plan and hoist the GOP upon it each and every day, all day. Because they are guaranteed to hate it. But will have to explain why they prefer to make these cuts on the backs of the poorest instead of the richest and furthermore call it “shared sacrifice.”

You’ve got less than two weeks to put this together. Recent history with the tax cut extension “fight” suggests you haven’t even considered something along these lines yet. But it’s how to win. That’s why it looks so strange to you. Yes, it’s simple minded. But simple minded is what works. You are the last few hundred people in America to come to this realization.

I’m not saying this bill would be what was passed, or that it would even reach the floor in a serious way…but it would drive the conversation in a way that benefits you, The Democrat, and not so coincidentally us the American people.
Currently you’re battling over the 14% that contains the most painful cuts possible. You shouldn’t be. You furthermore don’t even need to be. Change the conversation to terms that have the potential to benefit you. Right now revenue doesn’t even come up. It needs to. It needs to be the first question off the lips of the serious people. Until it is, you will fail.

Zero

That would be the number of Republicans that voted to end taxpayer subsidies for Big Oil. Companies that are enjoying record profits of ~$100 billion per year, often pay no taxes whatsoever, and receive taxpayer provided subsidies to the tune of tens of billions of dollars per decade.

But, by all means, let’s cut $100 over here that just gets wasted on food for starving children. Furthermore, let’s agree not to discuss any of this. Shrill.

Zero

Social Security Pays for Itself

OMB director Jacob Lew, from the turnstile:

Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.

[…]

For years, the surpluses in the Social Security trust fund have helped to mask our deficits elsewhere. Now that we are paying Social Security back, the problem is not with Social Security, but with the rest of the budget. In 2001 and 2003, Washington cut taxes for the wealthiest Americans and later expanded Medicare without paying for it. Blaming Social Security for our fiscal woes is like blaming you for not saving enough in your checking account because the bank lost all depositors’ money.

Replace “Washington” in the second-to-last sentence with “Republicans and the Bush Administration rammed through” and we are in full agreement. Now if we can just get serious people talking in these terms on the serious Sunday morning shows (and etc…) every week for the next 20 or so years, the logical argument can finally begin on equal footing.

Social Security Pays for Itself

Social Security

The size of that fix [required to keep Social Security fully funded] is significant, but not astonishing. Over the next 75 years, the shortfall will be equal to about 0.7 percent of gross domestic product. How much is 0.7 percent of GDP? To put that in perspective, the Center on Budget and Policy Priorities calculates that it’s about as much as George W. Bush’s tax cuts for the rich will cost over the same period. Saying we can afford those cuts – which is the consensus Republican position – but not Social Security’s outlay is nonsensical. Coming up with 0.7 percent of GDP isn’t a crisis. It’s a question of priorities.

And this is precisely how it should be talked about every single time a microphone is turned on. Clear, simple terms that highlight the basic stability of the program, the relative ease of fixing it (as opposed to, say, Medicare), and its critical position as the only thing between catfood and dying in the streets for millions of elderly individuals who have by and large paid into it, fair and square. Oh, but now your deal has to change and you have to keep working at your labors until you’re 70. Just makes perfect sense.

The parallels to Wisconsin are striking: A group and the government enter into a deal. Now the government wants to change the deal ex post facto, and uses a bludgeon of “dread Unions” to paper over the fact that they the government are the one dealing in underhanded fashion. And, of course, the media blissfully reports it from the government perspective. This is why we fail.

But, if a few million folks show up on the doorstep of said government, well, things can change.

Social Security