If This Is The Beginning, God Help Us At The End

Once again, President Obama has taken a rather strange path on the way to negotiating with Tea Party-drunk Republicans.

His latest budget proposal—which includes marrying Social Security to so-called “Chained CPI,” a way to measure inflation that pleases folks at the reactionary Heritage Foundation—may or may not make an acceptable compromise at the end of the budget process and the back-and-forth with the opposition party, but including Chained CPI as part of his initial proposal is no place to start.

And no one summed it up better than the incomparable Robert Reich:

Democrats invented Social Security and have been protecting it for almost 80 years. They shouldn’t be leading the charge against it.

That is exactly—exactly—right. As the former Secretary of Labor notes, Chained CPI is a “stingier” formula for calculating inflation adjustments to Social Security payments than even the current stingy formula. Reich also points out:

Social Security benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Yet, at the start of budget negotiations with never-give-an-inch Republicans in Congress, a Democrat in the White House is proposing a formula for calculating adjustments to future Social Security payments that, again as Reich reminds us, Paul Ryan didn’t even include in his rayless and Randian budget. That is a weird and seemingly defeatist posture to take at the beginning of what will obviously be some difficult, if not nasty, budget negotiations.

Now, all that having been said, there may be a way to make Chained CPI work as a method to reduce future costs to the Social Security program, but that way must—must—include protection for those folks who, as Reich put it, get relatively “meager” benefits under the program.

Time will tell whether Obama’s relatively solid legacy will be tarnished by his rush to compromise with uncompromising Republicans, but he’s not exactly off to a good second-term start by offering Chained CPI at this point in the budget process.

But the press, always anxious to push the Republican Party’s false but widely believed the-debt-is-killing-us meme, will give the President much credit for pissing off liberals, and perhaps pissing off liberals is exactly why Obama’s budget has that stingier cost-of-living adjustment in it. He can now tell Republicans: “See, look how serious I am about entitlement reform and look at how much anger among my base I have created. Now, let’s dance.”

And Republicans, smelling blood, will say: “Dance? Why, sure, we’ll dance. Especially now that you’re dancing to our music.”

Oh, by the way. One of those Republicans who gets mostly undeserved credit for being “sensible” on budget issues, Senator Bob Corker of Tennessee, called President Obama’s budget plan,

A beginning point.

Yep, a “beginning” point. As this White House has done almost from the start, it begins in the middle and the rest, like the public option-less ObamaCare, is history.

Meanwhile, the economy continues not to produce enough jobs for Americans, wages are stagnant or declining, and wealth inequality is increasing. And just about the only talk about public policies that would help create jobs, increase wages, and narrow the gap between the rich and the poor, is coming from the left, those whom the President has, purposely or not, just pissed off with his Chained CPI proposal.

If You Don’t Learn Anything Else About Social Security “Reform” Learn This

A frequent contributor to this blog (HL Gaskins) sent in a fantastic and informative clip from MSNBC’s The Last Word that aired last November. I am posting it here because the five-minute essay by Ezra Klein needs to be seen by anyone who gives a damn about Social Security and what it means to so many working people. And after you watch it, pass it on to others.

My parents, both gone, are the kinds of folks Klein is referencing in his piece. When I hear knuckleheads on TV and radio, fretting over the national debt or pretending they want to “save” Social Security and Medicare, saying that we ought to raise the retirement age or the Medicare eligibility age or otherwise penalize working folks for the sins of Wall Street gamblers, I think of my parents. And then I get pissed.

Fortunately, Ezra Klein expresses my outrage in a much more civilized manor:

Fiscal Cliff Frustration

Watching cable news during this fiscal cliff flop can be frustrating.

I actually heard a talking head say on MSNBC this morning that he, a man who held political office as a Democrat but who now works for a Wall Street bank, that there is no way he should get Medicare when he is 65. He should have to wait until he is 67, he proudly said.

That is just part of the talk I have heard everywhere on TV about how Democrats need to cave on “entitlements,” finding some way to get Republicans to make a “deal” before The End of the World comes.

But, again, let’s quickly review what is going on here. From January 2001 until January of 2009, Republicans held the White House, and for a substantial part of that time had effective control of Congress. Thanks in part to Democrats responsibly raising taxes in 1993, Republicans inherited budget surpluses in 2001.

Then, Republicans cut taxes, initiated two wars, cut taxes some more, created a new entitlement program that was a sweet deal for their pharmaceutical industry campaign contributors, and then looked the other way while the economy was looted by reckless, greedy bankers who brought on the worst economic crisis since the Great Depression. While all that was going on, the federal debt soared, and, thanks mostly to those past Republican policies, keeps soaring.

As if that wasn’t enough, when the public, sensibly, put Democrats in control of Congress and the White House, Republicans suddenly found Jesus on the issue of government spending, just when we needed the government to keep spending to save the economy and to keep Americans working.

After finding Austerity Jesus, Republicans decided that the best way to save the country from “big-spending” Democrats (!) was to sabotage the economic recovery and hold the country hostage over the debt ceiling (!) until Democrats gave them what they wanted.

Then, because Democrats wouldn’t give them everything they wanted, they decided to create a situation that eventually led to this fiscal cliff fiasco, which amounts to a job-killing sword of Damocles hanging over the economic recovery.

But before we had to face the fiscal cliff, the parties had to face an election. Republicans didn’t do very well. In fact, Democrats gained seats in Congress and the hated Barack Obama was reelected, substantially, it turns out, because he ran on restoring those 1993 tax rates on the wealthy, those to whom Republicans had handed a rather large gift when they were in charge, a gift about to run out at the end of this year.

So, here we are. The fiscal cliff, which we have because Republican hostage takers needed assurance that Democrats would cut our social insurance commitments and not take away that tax gift from wealthy folks, is getting closer. And after that, yet another debt ceiling fight awaits, as Republicans have threatened to hold the country hostage again.

And some chattering schlemiel on television, a former Democratic congressman who now works for a big bank, says Democrats should be willing to raise the eligibility age for old folks, essentially to pay for the profligacy that Republicans inflicted on the country, old folks and all, during their years of governance. The right-wing drowned us in debt via tax cuts and war spending and a new entitlement program, and they want Democrats to tell old people they will have to pay for it.

It is psychotropically frustrating is what it is.

Chuck Todd, host of MSNBC’s The Daily Rundown, said this morning that “the pubic is craving a compromise.” He said that because of a new NBC/Wall Street Journal poll that found the following:

nbc poll

That poll supposedly indicates that people are beginning to blame “both sides” for the current impasse, which, if true, is a reflection of news coverage and not of reality.

But the poll did confirm a reality that journalists, and pundits on television, ought to pay attention to:

positive negative poll

As you can see, Democrats enjoy relatively strong public support. And look at the bottom of that list. Republicans are 15 points—15 points!—underwater. And looking deeper at those numbers, only 9% of respondents said they had a “Very Positive” view of Republicans, compared to 21% who viewed Democrats very positively.

The bottom line is that the public trusts Democrats to do the right thing during these fiscal cliff deliberations and any deal making that might come from them. And the right thing is not giving political cover to Republicans in Congress—who after recklessly running and ruining the economy, now feverishly want to cut social insurance benefits to rectify their malfeasance.

Word To Democrats: Be Careful On Entitlement Reform

A few Republicans are publicly divorcing themselves from Grover Norquist, which is a good sign. But not enough Republicans are yet ready to absorb fully the meaning of the GOP’s defeat on November 6.

As President Obama has said several times now, if the last election had one clear message, it was that the wealthiest Americans, those who have been doing pretty well despite a sluggish economic recovery, need to “pay a little more” in taxes and thus get things started in terms of fixing our long-term fiscal problems.

On Sunday, John McCain’s lap dog, Sen. Lindsey Graham, clearly abandoned Grover Norquist and his infernal tax pledge. I have heard replayed numerous times the following excerpt from Graham’s appearance on ABC’s This Week With George Stephanopoulos:

I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform.

In context, though, Graham was not endorsing an increase in marginal tax rates (“I agree with Grover, we shouldn’t raise rates,” he said), but only an increase in revenues by other means, like capping deductions for wealthy families (“If you cap deductions around the $30,000, $40,000 range, you can raise $1 trillion in revenue,” he claimed). But, so be it. In whatever form, it is clear that some Republicans, feeling the heat of November 6, are starting to warm up to an increase in federal revenues and it seems likely that more, perhaps enough to get a deal done, will follow.

Now comes the “if Democrats will do entitlement reform” part.

Appearing with Lindsey Graham on ABC’s This Week was Sen. Dick Durbin, a Democrat who signed onto the Simpson-Bowles deficit reduction plan.

He said a couple of things that illustrate the problems for President Obama and the Democrats, in terms of getting a deal that Democrats like me can support. First, Durbin suggested that Social Security shouldn’t be part of a larger budget deal since it is funded separately and “does not add one penny to our debt.” It’s pretty clear that most Democrats feel the same way. They believe that the relatively simple fixes for Social Security don’t belong in the discussion going on now. So, leave that program out of it.

Then we have this:

DURBIN: Medicare is another story. Only 12 years of solvency lie ahead if we do nothing. So those who say, “Don’t touch it, don’t change it,” are ignoring the obvious. We want Medicare to be there for today’s seniors and tomorrow’s, as well. We don’t want to go the Paul Ryan route of voucherizing it, privatizing it, but we can make meaningful reforms in Medicare and Medicaid without compromising the integrity of the program, making sure that the beneficiaries are not paying the price for it, except perhaps the high-income beneficiaries. That to me is a reasonable approach…

STEPHANOPOULOS: Does that include raising the age for Medicare eligibility?

DURBIN: Here’s my concern about that, George. What happens to the early retiree who needs health insurance before that person’s eligible for Medicare? I had it happen in my family, and I’ll bet a lot of your viewers did, as well. We’ve got to make sure that there is seamless coverage of affordable health insurance for every American. My concern about raising that Medicare retirement age is there will be gaps in coverage or coverage that’s way too expensive for seniors to purchase.

STEPHANOPOULOS: Is that a fair point, Senator Graham?

GRAHAM: Not really. I don’t think you can look at entitlement reform without adjusting the age for retirement, like Tip O’Neill and Ronald Reagan did. It goes to 66, 67 here pretty soon for Social Security. Let it float up another year or so over the next 30 years, adjust Medicare from 65 to 67 over the next 30 years, means test benefits for people in our income level. I don’t expect the Democrats to go for premium support or a voucher plan, but I do expect them to adjust these entitlement programs before they bankrupt the country and run out of money themselves. So age adjustment and means testing for both Social Security, Medicare I think is eminently reasonable. And all those who’ve looked at this problem have done that over time.

Democrats would, of course, agree to means-testing entitlements. No doubt about that. But raising the eligibility age for retirement and old-age health care? Not so fast.

Paul Krugman, a leftish economist, is definitely opposed to the idea, as he indicates in this short post, his generalized objection based primarily on the differences in life expectancy between economic classes (folks with lower earnings don’t tend to live as long as those with higher earnings, thus raising the eligibility age would have a disproportionately harmful effect on lower wage earners).

There have been more specific objections to raising the age, including these:

  • folks with physically demanding jobs would likely be forced to hang on another few years to keep their insurance;
  • cost-shifting to retirees who won’t have adequate income to absorb the increase;
  • an increase in the number of uninsured Americans (especially among low-income groups, including African-Americans and Hispanics);
  • the obvious increase in the cost to those employers who offer health care benefits to retirees (the employer plan would become the primary payer), which would, among other things, discourage employers from offering such retirement plans.

Now, an astute reader might suggest that some of these objections could be answered by provisions already in place in the Affordable Care Act. In fact, I heard a commentator this weekend suggest that raising the eligibility age for Medicare was no big deal since ObamaCare will provide coverage for those seniors who can’t afford it.

Well, that turns out to be partially true, at least according to a study done by the Kaiser Family Foundation, which looked at raising the age in the context of the Affordable Care Act (it assumed an increase in the Medicare eligibility age to 67 that would go into effect in 2014, just for simplicity). I suggest all those interested in this topic read that study, but its conclusion was as follows (highlights mine):

Previous studies conducted prior to the enactment of the 2010 health reform law concluded that raising the age of Medicare eligibility would produce significant federal savings, but would also increase the number of uninsured older adults and shift risk and additional cost onto retirees who lack health insurance and onto employers that offer retiree health plans. Our analysis, which takes into account the coverage expansions and subsidies in the ACA, finds that net federal savings to the federal government would be considerably lower than previously estimated because the federal government would incur new costs associated with expanded coverage for 65- and 66-year olds under Medicaid and premium tax credits and cost-sharing assistance for lower-income individuals in the new health insurance Exchange.

We estimate that nearly one-third of the 65- and 66-year-old adult population who would be affected by an increase in the age of Medicare eligibility [about 5 million people]—those with low incomes who would qualify for Medicaid or generous premium tax credits and cost-sharing assistance through the Exchange—would face lower out-of-pocket costs than they would have paid under Medicare in 2014 as a result of this policy change –generally those with incomes below 300 percent of the FPL [federal poverty level]. However, two-thirds would face higher out of-pocket costs, on average, due to higher premium contributions for employer-sponsored coverage and for coverage in the Exchange. The shift of adults ages 65 and 66 from Medicare to the Exchange is also projected to increase premiums that would be paid by adults younger than age 65 in the Exchange, as older adults enter the Exchange risk pool. In addition, Part B premiums paid by the elderly (ages 67 and over) and by disabled Medicare beneficiaries would be expected to increase, as the healthiest and lowest-cost segment of the Medicare population is removed from the Part B risk pool and shifted to the Exchange or to employer-sponsored plans. States and employers are also expected to see increased costs.

The study warns:

Given the magnitude of the changes that we estimate would occur by raising the Medicare eligibility age, this analysis underscores the importance of carefully assessing the distributional effects of various Medicare reforms and savings proposals to understand the likely impact on beneficiaries and other stakeholders.

It’s just not as simple as Republicans, like Lindsey Graham above, make it. And Democrats need to be careful about getting giddy over a possible Republican retreat on raising revenues and under the influence of such giddiness make a bad agreement on entitlements.

In short, Democrats need to remember who their constituents are.

How Conservatives Subvert Self-Government

The entire modern conservative movement consists of an ongoing attempt to sever the relationship of a self-governing people to their government, to break down the concept of a political commonwealth.”

—Charles Pierce

n Sunday’s Joplin Globe appeared a column from a local college professor (of finance) named Richard La Near. Suffice it to say that, although I have lately ignored him, I have previously taken on this union-hating, learned man—God, how I wish I could put “learned” in quotation marks.

But this shouldn’t be ignored: Arguing for “partially and slowly” privatizing Social Security, the “Honorary Chairholder of Free Enterprise at Missouri Southern State University” butted in a long line of melodramatic conservatives by falsely calling the wildly popular social insurance program a “legalized Ponzi scheme.”

And while that should have been dreadfully ditsy enough, he wrote the following, presumably in reference to “Obamacare”:

The passage of one more entitlement program will prove that too much democracy can be devastating to a great nation. Again, the takers will outnumber—and outvote—the makers, and more people will vote for a living rather than work for a living.

Ah, how clever. And how cynical.

Now, I’m not one to extol the virtues of ignorance and bigotry that sometime (okay, often) accompany the exercise of our democratic heritage, but we are what we are. Abraham Lincoln called the American people his “rightful masters.” If La Near’s “too much democracy” brings about our national extinction, if we find that self-government by America’s rightful masters will one day lead to our ruin, then so be it.

As a bona fide member of the rightful masters class, I’d rather go down as the victim of people in welfare hammocks than of conservative capitalist carnivores like Mitt Romney, a man who has successfully preyed upon the working class such that he can bulldoze a $12 million, 3,000-square-foot beachfront house only to replace it with an 11,000-square-foot beachfront house.

Charles Pierce wrote recently:

In modern conservative thought…and in the mindset it seeks to ingrain on the people of the country, the government is the ultimate Other.

In doing so, the corporate masters of the conservative movement are good with all of this because they seek a wary, frightened and insecure people.

Yes, Amen! Yes! Conservatives seek a “wary, frightened and insecure people.” People suspicious and afraid of too much democracy, afraid, for God’s sake, of their own government! That’s the message Dr. La Near is trying to send.

Thomas Frank, in his book, The Wrecking Crew: How Conservatives Ruined Government, Enriched Themselves, and Beggared The Nation, essentially documents the attempts by right-wingers to take over government only to undermine it, to subvert it, to, as Charles Pierce so aptly described it, break down the concept of a political commonwealth.”

You see, conservatives talk of a “commonwealth“—”a group of persons united by some common interest“—mainly in terms of war, of fighting terrorism or some other common enemy. There isn’t much of a sense of political commonwealth worth preserving here at home, beyond the small commonwealth of the wealthy.

Conservatives these days, for instance, see no pressing domestic need to provide an affordable college education to our kids or to keep sick folks from going bankrupt, but they do see a pressing need to keep taxes low on the rich.

John Dean, whose book, Broken Government: How Republican Rule Destroyed the Legislative, Executive, and Judicial Branches, is a must read, said of contemporary conservatives:

they are radicals more interested in power for themselves and other Republicans instead of serving the general public interest.

There simply is no “general public interest“—no national commonwealth—that a conservative can love, so long as it is tied up with an effective, domestically-interested government. But we have to ask ourselves just what the Constitution means by its splendidly pithy preamble:

We the People  of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Clearly this government—our government—was established as an instrument of the People that would go about the sometimes messy business of forming a “more perfect Union” and creating fairness and peace at home, protecting ourselves from external enemies, promoting “the general Welfare,” and fortifying our Liberty.

It’s not possible to neatly separate the domestic duties of our constitutional government from its duty to defend us, as so many on the right are wont to do. The two are tightly bound together and Americans should also be tightly bound together around the idea that we are all-in on a we-the-people government.

And by using language like “legalized Ponzi scheme,” in reference to the old age fear-killer we call Social Security, or saying that too much democracy can be devastating” to, uh, a democratic nation, Richard La Near, and others like him, are sadly pulling apart the bonds that hold us—we the people—together.

In La Near’s final paragraph, he wrote:

In conclusion, I would note that every great nation must periodically deflate to remain competitive. Those with flexible economic and political systems can do so…

America must “deflate to remain competitive”? I wonder just what segment of our society he has in mind that will have to do all the deflating? The deflated poor? The deflated sick? The deflating middle class? You will search La Near’s “financial Armageddon is coming” writings in vain for any kind of sign that he believes the wealthiest Americans should get in on the deflating, at least by paying a little more in taxes.

But you will find much wariness, much fear, and much insecurity about our democracy, about self-government, about America’s rightful masters. In short, you will find the philosophy of contemporary conservatism.

More Falsehoods About Social Security And Medicare

By now everyone has heard the news:

WASHINGTON – The Medicare and Social Security trust funds are both on “unsustainable paths” — as they have been for years — and will be exhausted by 2024 and 2033, respectively, a trustee report released Monday said.

And by now maybe you have heard the misinformation.

Joe Scarborough said this morning that Social Security will be “bankrupt” three years earlier than projected last year and it will just keep ratcheting up until it will be no time until it is gone. “It’s going down,” he said. In fact, here was the graphic on the screen as the panel discussed the issue:

Social Security benefits to be depleted by 2033.” What tommyrot that is. Benefits, far from being depleted, will continue long after 2033, even if nothing is done.

But first, let’s look at Medicare. As the USA Today story noted:

The trustees have predicted the depletion of the Medicare Trust Fund every year since they first began issuing reports in 1970, and they ultimately extend the deadlines out a few more years.

Yes, look at this from the Congressional Research Service:

As you can see, since such reports have been created, the projections of insolvency have been fairly imminent. Consider this from Sarah Kliff at Wonkblog:

…the trust fund doesn’t really decide Medicare’s fate. Instead, it’s an accounting term. When we talk about the Medicare Trust Fund, we’re pretty much referring to where our payroll taxes to finance the insurance program get stored. If the Trust Fund runs out, that means it can no longer cover everything it’s supposed to pay for. But Congress could — and, many think, would — make up the difference by borrowing, cutting spending elsewhere and using the savings to plug the hole, or finding new sources of revenue.

“The fund is a fiscally neutral element in the goods and services of Medicare finances,” Theodore Marmor, Spencer Martin and Jonathan Oberlander wrote in one article on the topic. “Congress can change the taxes that finance Medicare if it has the will. Likewise, it can change the benefits and reimbursements of the program.”

So, you can easily see that Medicare won’t be “bankrupt” in 2024, even though there is a definite problem with its financing that has to be soon addressed (apart from just shifting the cost on to future seniors, as the Romney-Ryan budget plan does*).

Likewise, Social Security is not now bankrupt and won’t be in 2033. Why? It is simple, as John Harvey at Forbes pointed out:

It is a logical impossibility for Social Security to go bankrupt.

Here’s how the Social Security Administration explains it:

The current Social Security system works like this: when you work, you pay taxes into Social Security. The tax money is used to pay benefits to:

  • People who already have retired;
  • People who are disabled;
  • Survivors of workers who have died; and
  • Dependents of beneficiaries.

The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.

Because wage growth has been slow, and because the economy hasn’t exactly been great, money going into the trust funds has slowed down, but Social Security is not—not—paying out more in benefits than it is bringing in. Payroll taxes, along with interest from the special issue Treasury bonds the program holds, plus taxes on Social Security benefits paid by high-income taxpayers, all add up to an increase in the Social Security surplus.

Get that? The program’s surplus is still growing.

But even though Joe Scarborough got it wrong about Social Security and bankruptcy, he did get something right. He said the program’s future finances could be fixed in about twenty minutes.

One way of doing that—without cutting benefits—would be to eliminate the Social Security tax cap, which is currently set at $110,100. Eliminating the cap would mean that those who make more than that (about 6% of wage-earners) would then have to pay Social Security taxes on all their wages. Just this simple move would guarantee payment of full benefits for at least 75 years.

So, although we will hear a lot of Republicans talking about the demise of the two most important social stabilizers we have, using trust fund projections as tools to severely weaken, if not destroy, our safety net, the truth is that the future of both programs can be fixed without dramatically altering their nature, if there is the political will to do so.

And it is up to voters to impregnate the Republican Party with that will.

_________________________________

* Sadly, Willie Geist, a fixture on “liberal” MSNBC from 4:30am until 8:00am, defended the GOP budget plan and Paul Ryan, saying,

He doesn’t do this because he likes throwing old people out on the street; he’s trying to make it solvent. He’s trying to save it in the long term…he’s trying to do something big…

Willie, of course, will never have to worry about surviving his old age on reduced Social Security benefits or worry about how he is supposed to come up with the thousands upon thousands of dollars to get health care when he is too old for television.

Social Security And Journalism’s Failure To Inform

Journalists are supposed to inform us.

What one means by “inform” is, I suppose, in the news consumer’s mind, but the point is that anyone who regularly partakes of American journalism should at least understand the basics of any given issue in the news.

Alas, that is not the case. Journalism, and journalists, are letting us down.

As just one example, Trudy Lieberman of Columbia Journalism Review points out the gross deficiencies in media coverage of “the Social Security debate”:

For nearly three years CJR has observed that much of the press has reported only one side of this story using “facts” that are misleading or flat-out wrong while ignoring others. Whatever the reason—ideology, poor understanding of how the program works, gullibility, or plain old reportorial laziness—news outlets have given the public a skewed picture of the financial health of this hugely important program, which is the sole source of retirement funds for millions of Americans and will continue to be for decades to come.

Lieberman points out that Social Security, while “not in perfect financial health,” is nevertheless a tweak or two away from extended solvency, a fact which has not “been discussed much in the press.” The reason it hasn’t, Lieberman suggests, is “because it doesn’t fit into the doom-and-gloom narrative that has proved politically expedient to tell.”

The result of this misreporting or underreporting or non-reporting is that people—many of them young people—are losing their faith in Social Security, which plays right into the hands of right-wingers, who have always hated it:

“The elite press repeatedly quotes the commentary of the devoted opponents of social insurance retirement programs,” says Yale professor emeritus Theodore Marmor. “But they appear unaware of how they are supporting a strategic attack on social insurance that has been going on for years.”

Singled out for bad reporting and bad journalism is The Washington Post’s Lori Montgomery, the once-respectable paper’s budget correspondent. Montgomery pushes a narrative that fits nicely in with the narrative pushed by conservatives in the Republican Party: in order to come to grips with our financial problems, federal social programs—including Social Security—have to be sliced. There is a “surprisingly broad consensus” for that view, Montgomery’s reporting insists.

The Post’s Robert Samuelson is also specifically cited as pushing the “popular message” that Social Security is a welfare program that “is slowly and inexorably crowding out the rest of government.”  Other journalist at other outlets have done the same thing, which leads Lieberman to surmise:

With that kind of news reporting, young people…can be forgiven for misunderstanding the concept of social insurance and believing Social Security is almost dead. Over the decades since the passage of Social Security in 1935, the media have used the term “social insurance” less and less, which of course keeps people in the dark about what it really is. In 1930, The Washington PostThe New York Times, and the Chicago Tribune together published nearly eighty articles with the words “social insurance” in the headline. In 1990, there were at most two—one in the Times and one in the Post. By then the Cato Institute and other conservative think tanks were well on their way to changing the media’s narrative and description of Social Security. The program was no long to be described as social insurance, but as an investment that fell short of what people could achieve on their own by saving and managing their payroll tax contributions. It was not a good deal for younger workers.

Lieberman tells us how the right-wing Heritage Foundation has “systematically” attacked “the country’s most popular social program” by deliberately using a “Leninist” strategy, including “guerrilla warfare against both the current Social Security system and the coalition that supports it.” Part of that guerilla warfare involves gaining “the support of key individuals in the media as well as to win over vital constituencies for political reform.”

Sadly and disturbingly, not only have individuals in the media been won over, many Democrats have been compromised, too:

The media haven’t reported much about how the nuts and bolts of proposals to fix Social Security would affect ordinary people, but they’ve done a super job of showing how Social Security’s opponents have brought one of the biggest segments around to their way of thinking—Congressional Democrats, including the second ranking member of the Senate, Dick Durbin, who is often the media’s go-to guy for the progressive perspective. It’s kind of a validation of Cato’s manifesto…

“We used to have Democrats speaking out (in support of the program) which we don’t have today, “ says Eric Kingson, co-director of the advocacy group Social Security Works.

Well, I still hear some Democrats speaking out, but I admit their voices are not as loud and aren’t heard as often as they used to be. And part of the reason for that is because journalists have largely bought into the Social-Security-is-dying propaganda and are failing to inform the public as to what is really going on.

Thankfully, one outstanding journalist, Trudy Lieberman, is trying to do something about it.

Debt Hysteria Housecall

A conservative Globe blogger is in serious need of some timely counsel, and, being a conscientious public servant, I am here to provide it. He commented on my recent post, Let’s Agree:

We, all of us, in America, today are facing a $65 Trillion HOLE (Ok, plus or minus a “little bit”). Said another way…each and every American is “in hock” for about $550,000 due and payable some day.

And the crazy thing is NO ONE talks about that number nor does ANYONE propose how to fix it, “on bite at a time”.

And:

Well it is possible for a man to eat an elephant. But he must do so one bite at a time. But while we all argue, the NUMBER just keeps on going up and up. THERE, Duane, is the curve that MUST be bent, NOW. Just how deep is a $65 Trillion “cliff” I wonder?

Richest nation in the world my hind foot. Not with that kind of balance sheet!!!

Anson 

Dear Anson,

Because I hate to see you in such a state, as your Doctor of Tranquility, I am offering my limited help (I’m not a Doctor of Finance, remember) in treating the unfortunate hysteria you are suffering over the issue of the alleged “65 trillion” dollar financial “HOLE” you claim the country is about to disappear into. (Or are we going off a cliff? Or eating elephants? I forget.)

You should know that people who make that frantic $65 trillion charge (or any of the other various amounts) in the way they do are using what I consider to be the accounting equivalent of junk science:

First of all, the term “unfunded liabilities” has normally been used in right-wing, fear-generating blogs and articles and Fox “reports” on this very long-term wild speculation you mention, but that term has been lately discredited (because a “liability” is more of a legal term and promises made by the government are not actually legally binding on it). I notice now many folks are using the proper term, “unfunded obligations,” which is more accurate, but still junk, when used in the kind of analysis you referenced.

To put it as simply as possible, what you are referring to with your scary high number is the difference between projected federal financial commitments under current law and the projected revenues available to cover those commitments—over a completely arbitrary time horizon of 75 years.

These obligations are not technically “debt,” since Congress is free to pass legislation that would eliminate them altogether (don’t try doing that with your debt, by the way). And it is beyond silly to say “each and every American is ‘in hock’ for about $550,000 due and payable some day.”

Second, that time horizon (did you even know what it was?) could just as well have been 750 years and that big and fat and scary number would have been even bigger and fatter and scarier. (Let me see, what comes after “trillion”?)

The truth is that no one—or almost no one—actually believes these numbers are accurate for a lot of reasons, most notably that policies and situations change quite frequently over even short periods of time (just look at budget surpluses under Clinton and deficits under Little Bush), and 75 bleeping years is sort of a long time, don’t you think?  Go back 75 years (1936?) and imagine a bureaucrat in the government, perhaps Newt Nostradamus, estimating “unfunded obligations” in 2011. It is absurd on its face.

And while we’re at it, the Social Security and Medicare Boards of Trustees have said that

Projected Medicare costs over 75 years are about 25 percent lower because of provisions in the Patient Protection and Affordable Care Act…

Do you believe that? Of course you don’t.

The reason some conservatives promote hysterical talk about such things as unfunded liabilities and use such frightening language is because they seek to dismantle or sharply reduce our social commitments and scaring the public is one way, they believe, they can do it. 

While it is true that Medicare funding is a big problem in the out years, it is not, as I demonstrated recently, an insurmountable one, if policies to control health care costs are implemented and other things are done, like, say, raising revenues.  And they will get implemented and revenues will get raised, in some way at some time. So, get some sleep and stop worrying about it, for God’s sake. (Or, if you can’t sleep, use the up time to write your favorite Republicans and urge them to get real about taxes.)

Third, there is a comparative fallacy involved in these numbers. The gap, instead of being put in the form of aggregate unfunded dollar commitments, should be put in the form of percentage of projected GDP, which would attempt to account for economic growth over the time period. That way future gaps could be more fairly compared with today’s gap.  But then those numbers wouldn’t look or sound so damn scary, would they?

Fourth, let’s look at those “unfunded obligations” in a way that conservatives won’t like.  Let’s discuss Pentagon spending in those terms.  Is defense spending an obligation? Yeah, sort of (see the Constitution). And, like Social Security and Medicare, is there a Pentagon tax dedicated to our national defense? Huh? Nope, there’s not.  So, using the analysis you are advancing, every single dollar of necessary future military spending is an unfunded obligation, right?  That means, projected over 75 years, the gap between revenues specifically dedicated to the Defense Department and the projected military spending is, well, it is more money than God, or even Mitt Romney, has!

This stuff the right-wind peddles is analytical junk, Anson.  There really are no such things as “unfunded” obligations because the government has the power to tax to meet them. And using such language in the context you and others use it unnecessarily scares people who don’t know any better, and it doesn’t help arrive at rational solutions to our very real problems with long-term debt. 

The fact is you don’t need those misleading large numbers to make the point—which nearly everyone understands by now—that some important changes in Medicare (and a tweak or two in Social Security) are necessary to keep us fiscally sound.  Indeed, distorting the picture so grossly tends to lead away from careful, reasonable solutions in favor of distinctly reactionary and irrational ones. (Of course, as I said, some folks on the right wouldn’t mind that one bit, as long as the New Deal fell victim to such panic.)

But I am under no illusion that you, in your zeal to save the country, will stop worrying and stop trying to scare the bejesus out of people because you are fixated on our debt problem and therefore welcome uncritically any analysis that generates fear over it.  And I am certain you will not now listen to,

Your  Doctor of Tranquility,

Duane

Let’s Agree

Let’s stop subsidizing the wealthy. Stop crony capitalism. Stop corporate welfare. Means-test our entitlement programs.”

The above quote was not said by some wild- or starry-eyed liberal. It was said by the Buddha of budgetary knowledge on the right, Paul Ryan, on ABC’s This Week last Sunday. 

In the spirit of the New Year and New Beginnings, let us end this year with a note of agreement. I agree with Mr. Ryan that we should stop crony capitalism—the only kind there will ever be without adequate public attention—and stop corporate welfare—corporations are doing just fine, thank you—and we should means-test our entitlement programs—especially Medicare, which is, as Paul Ryan knows very well, the biggest driver of our long-term debt problem. 

And Paul Ryan also knows very well that the plan he advanced earlier this year—which nearly every Republican this side of the Asteroid Belt voted for—would end the system created in 1965, even if the name would live on. (No matter what Politifact says.) Let’s all at least agree on that. 

And let us agree that the current Medicare system, which took more than 50 years to bring into reality, should be preserved. After all, it was signed into law by a Texan, Lyndon Johnson, and was supported by almost half of the Republicans in Congress at the time. 

So sensitive are Americans to perceived government interference, that even the sainted FDR dared not force the issue of public health insurance—which he supported—before the enactment of his social security bill was assured in 1935. And despite Missourian Harry Truman’s efforts to get the job done—President Johnson would eventually credit “the man from Independence” for those efforts and make the 81-year-old fighter the program’s first enrollee— it took another generation before folks without means could rest a little easier knowing they had at least basic health insurance they could afford, when they were on the unprofitable side of life. 

And among those who could rest a little easier were my parents. My dad, who was 56 years old when Medicare was passed, worked all of his pre-heart attack life. My mom worked full-time at home and part-time at what she called the “dime store.” Were it not for Medicare, well, the alternative for them would have been and, for me, remains, unthinkable.  Let’s agree that, for them and millions of  people like them, access to affordable government health insurance made—and for now, still makes—America a better place in which to live.

Truman, in a special message to Congress in November of 1945—1945!—said there were “certain rights which ought to be assured to every American citizen.” One of them, he said, was “the right to adequate medical care and the opportunity to achieve and enjoy good health.” What a shame, more than 65 years later, we are fighting over The Affordable Care Act, which guarantees Americans, sick or well, rich or poor, the right to health insurance, or rather the right to purchase health insurance from profit-minded private insurers. It is, by no means, a fulfillment of the vision of liberals, old or new. But it ain’t nothing. 

And yet we fight. Let’s agree to stop fighting about something so necessary. 

Truman said: 

In the past, the benefits of modern medical science have not been enjoyed by our citizens with any degree of equality. Nor are they today. Nor will they be in the future—unless government is bold enough to do something about it. 

People with low or moderate incomes do not get the same medical attention as those with high incomes. The poor have more sickness, but they get less medical care. 

He didn’t must make that statement in 1945 without evidence to back it up. And he had plenty: 

The people of the United States received a shock when the medical examinations conducted by the Selective Service System revealed the widespread physical and mental incapacity among the young people of our nation… 

As of April of 1945, nearly 5,000,000 male registrants between the ages of 18 and 37 had been examined and classified as unfit for military service. The number of those rejected for military service was about 30 percent of all those examined. The percentage of rejection was lower in the younger age groups, and higher in the higher age groups, reaching as high as 49 percent for registrants between the ages of 34 and 37. 

Think about that. And think about the health of those back then who were in their forties and fifties and sixties and beyond. Truman, understanding that the child is father of the adult, said that it is “important to resolve now that no American child shall come to adult life with diseases or defects which can be prevented or corrected at an early age.” 

Let’s agree that health care involves inter-generational agreements. Old folks, let’s make sure the young are cared for, even if their parents are not rich. Young folks, let’s make sure the old are cared for, even if they lack wealth. All of us are either young or getting old. The Affordable Care Act is simply a part of these inter-generational agreements—without which any modern and civilized society cannot continue to be modern and civilized. It ought to be without controversy, or at least without animus. 

But it’s not. We have folks around the country, and folks in Congress, who are fighting for the repeal of the Affordable Care Act with a kind of religious zeal, as if to lose the battle would mean the end of a God-blessed America. There are even some radicals who would move us back to not only 1964, before Medicare, but to 1934, before Social Security. They would leave the non-rich at the mercy of charities or family and friends, of whatever means. 

But if we can’t finally agree, as Paul Ryan seemed to suggest last Sunday, that entitlements—Social Security, Medicare and Medicaid—are a permanent part of our social fabric and that in order to afford them we may need to, among other things, means-test them, then I’m not sure there is anything we can agree on as a civilized nation.

As Harry Truman said so long ago, our government needs to be “bold enough” to do something about inadequate health care in our country.  All he was really saying was we-the-people need to be bold enough.

Bold enough to agree.

It’s Only Called Class War If We Fight Back

More than a week ago, economist and former Secretary of Labor Robert Reich gave a speech at the “Summit for a Fair Economy” in Minneapolis and addressed several “downright bald-faced lies” told by conservatives and Republicans about the economy.  He ended his speech with this:

The greatest enemy we have is mass cynicism. When people really get to the point where they think nothing can be done, then the other side wins. That’s what they want by the way. That’s what they want…[The other side] wants government at all levels to function so badly that people say government can’t work…they also want politics to be so bad and so paralyzed that most Americans say nothing can be done…

It’s easy, when they are scared and disorganized, for people to be subject and vulnerable to demagogues who come along and say to them, “You know…the reason you’re in trouble is because of government, or it’s because of immigrants or it’s because of the poor or it’s because of blacks,” or it’s because of a number of scapegoats that are always offered up, the same scapegoats.

But in reality, we are all struggling over a smaller and smaller share of a bigger and bigger pie. And they are deflecting and diverting attention from the story which is that more and more of the income and wealth is going to big corporations and to the very, very super rich in this country and that is what has to be reversed and that is why we have to take back America.

Class warfare?  Yes, that’s what it is called if someone on our side fights back.  Pay attention today to the criticism of President Obama today as he announces his debt-cutting plan that includes taxes on the rich.  His plan has already been called class warfare by Republicans this past weekend.  Ask yourself why it is called class warfare if a champion of the middle class and poor decides to fight back?

Finally, as ammunition in the effort to fight back, here are some of Reich’s compact responses to the “downright bald-faced lies” told by the Right:

“DOWNRIGHT BALD-FACED LIE” #1: Giving tax cuts to the rich and corporations will trickle down to everyone else

A lie! it has not happened; it has never happened. They don’t need more tax cuts. Big corporations are now sitting on more than 2 trillion dollars of cash. There are higher corporate profits now than we have seen in 35 years. ‘s not happened and The ratio of corporate profits to wages is now higher than it’s been since before the Great Depression of the 1930s.

“DOWNRIGHT BALD-FACED LIE” #2: Shrinking government creates more jobs

I debate a lot of…conservative economists and others on television who keep on saying this and I keep on saying, “Tell me your theory. How is it that if you lay off teachers and social workers and firefighters and police officers, that you have fewer people building the roads, building the highways, building the infrastructure, fewer people rebuilding our schools, fewer people doing all of the public’s work, how can that create more jobs?”

And the answer I get is, “Government always gets in the way.”  I say, “But tell me exactly how is it that if you shrink government you’re going to get more jobs, particularly when consumers are holding back because they can’t do it?”

And the answer I get is, “Government always gets in the way.”  In other words, there is no intellectual basis for the ideology…If you shrink government you get fewer jobs…

“DOWNRIGHT BALD-FACED LIE” #3: Taxing the rich hurts the economy

Under Dwight David Eisenhower—who nobody would call a socialist, I don’t believe—[“Some would now,” said someone in the audience]—some would now? Yes—the top marginal income tax rate on the top earners was 91%.  And even with deductions and tax credits, that still meant that they were paying an effective tax rate of hugely higher than they are today.  And yet the economy grew faster.

That lie about trickle down, the lie that we must not tax the rich because that would deter them from working hard and investing and creating jobs is nothing but a bald-faced lie, based on ideology rather than facts.

“DOWNRIGHT BALD-FACED LIE” #4: Medicare and Social Security and other spending is the cause of the long-term debt problem

It’s not! The long term debt out there is because of rising health care costs. Medicare is the most efficient system we have…the administrative costs of Medicare are so tiny relative to private insurance, that what we really need, if we want to get Medicare and medical costs down in the future, is Medicare for all.  And then we can move from a fee-for-service system to a fee-for-healthy-outcome system…

“DOWNRIGHT BALD-FACED LIE” #5: Social Security is a Ponzi scheme

Can you imagine the irresponsibility—putting partisanship to one side—I’ve never heard a public official running for national office who lies through his teeth by saying that the Social Security system is a Ponzi [scheme]—I was a trustee of the Social Security trust fund, I know exactly what the actuaries project.  For the next 26 years Social Security is purely solvent, completely solvent; there’s no problem. 

Beyond 26 years the only reason there is a problem with potentially being to pay out everything Social Security owes beyond 26 years… is because of rising inequality, because so much money has gone to the top that the portion of income subjected to Social Security taxes is not going to be enough.  And that’s why the easiest most direct response to the post-26 years from now is to raise the cap on incomes subject to Social Security.

“DOWNRIGHT BALD-FACED LIE” #6: Tax reform should include raising taxes on even the poor

Real tax reform is that we’ve got to expand the earned income tax credit…we’ve got to reduce taxes on the middle and lower middle, and we’ve got to increase taxes on the top—and more tax brackets…go back to where we were before.

Admittedly, this was Reich’s weakest response, as I don’t believe tax rates on the middle income need to come down any further, but otherwise his speech was flawless.

Here is the video:

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