Reject "chained CPI" Social Security cuts as part of any budget deal

 Richard Eskow at Campaign for America's Future:

News reports say the President’s proposed deal includes the “chained CPI,” which would impose drastic Social Security cuts and tax hikes for everybody but the wealthy.  And House Minority Leader Nancy Pelosi says that “Democrats will stick with the President.”

They should both think again.

The “chained CPI” is being offered as part of a “deficit reduction” deal, even though Social Security is forbidden from contributing to the deficit.  Even if you accepted this unreasoned act, it remains morally unacceptable to reduce spending on the backs of the elderly, women, the poor, veterans, disabled Americans, and the poor.

It’s even more unethical to do it when other options available could save much more money, And it’s even worse when we see who isn’t “sharing in the sacrifice” – a list that includes hedge fund managers, Wall Street gamblers, billionaires, drug companies, defense contractors, and tax-dodging corporations.

Independent estimates say that the “chained CPI” will slash Social Security benefits by $122 billion over the next ten years. Here are eight solutions that will save more money  - and really will reduce the deficit – without compromising either our ethics or our sense of fairness:

1. Close multiple loopholes in the capital gains law: $174.2 billion. (1.42x)
Lawmakers could save nearly one and a half times as much money as they’ll get from stripping seniors, the disabled, veterans, and children of their benefits - 1.42 times as much, to be precise – by closing capital gains loopholes.

The Public Opines

Washington Post poll on "Fiscal Cliff" negotiations:

Q: In order to strike a budget deal, would you accept Cutting spending on Medicaid, which is the government health insurance program for the poor or is this something you would find unacceptable?

Accept    28%

Unacceptable    68%

Q: In order to strike a budget deal that avoids the so-called 'fiscal cliff', would you accept Cutting military spending or is this something you would find unacceptable?

Accept    42%

Unacceptable    55%

Q: In order to strike a budget deal that avoids the so-called 'fiscal cliff', would you accept Raising taxes on Americans with incomes over 250-thousand dollars a year or is this something you would find unacceptable?

Accept   74%

Unacceptable    24%

Q: In order to strike a budget deal that avoids the so-called 'fiscal cliff', would you accept Raising the age for Medicare coverage from 65 to 67 or is this something you would find unacceptable?

Accept   36%

Unacceptable  60%

Q: In order to strike a budget deal, would you accept Changing the way Social Security benefits are calculated so that benefits increase at a slower rate than they do now or is this something you would find unacceptable?

Accept  34%

Unacceptable  60%

The only way that Social Security and Medicare can go “bankrupt” is if we let them.

James Surowiecki at The New Yorker:

One of the most influential ideas in Washington these days is that Social Security and Medicare are on the verge of going bust. Earlier this month, Senator Lindsey Graham warned of the “imminent bankruptcy” of these insurance programs for the elderly, and Republican leaders are citing the threat of insolvency as a reason that entitlement reform must be part of any fiscal-cliff deal. The argument sounds reasonable enough, but it’s really a bid to turn the great political strength of these programs—the fact that they were designed to be self-supporting—into a weakness.

Unlike most government programs, Social Security and, in part, Medicare are funded by payroll taxes dedicated specifically to them. Some of the tax revenue pays for current benefits; anything that’s left over goes into trust funds for the future. The programs were designed this way for political reasons. When F.D.R. introduced Social Security, he calculated that funding it through a payroll tax rather than out of general tax revenue would make people think of the program not as welfare but as an entitlement—as something that they had paid for and had a right to. Many liberals initially opposed the idea, because payroll tax rates aren’t progressive (everyone pays the same rate) and because they tax only labor income. But the system proved as resilient as F.D.R. had predicted, and when Lyndon Johnson introduced Medicare, in the nineteen-sixties, he adopted it, too. Over the years, Social Security and Medicare taxes have risen sharply, to the point where payroll taxes account for thirty-six per cent of all federal revenue. Today, most American households pay more in payroll taxes than in income tax. Yet there’s little public hostility to these taxes, and the programs they fund remain enormously popular.

But the trust-fund strategy has an Achilles’ heel: funds can run out of money. Projections show that, owing to an aging population and rising health-care costs, the Medicare Trust Fund will become insolvent in 2024 and Social Security in 2033. The image of empty coffers is a powerful one: half of all Americans aged between eighteen and twenty-nine don’t think that Social Security will exist when they retire. That’s a bizarre thing to believe about an important government program. No one ever says, “I don’t think the U.S. Army will be there when I get old” or talks about the Defense Department “going broke.” We assume that there will always be a need for the military, and that we’ll end up paying the taxes that are necessary to fund it. But, because Social Security and Medicare have always been self-supporting, it’s easy to believe that they’ll just vanish if the trust funds dry up. This isn’t the case. Relatively minor tweaks to Social Security will allow it to keep paying full benefits for many decades. And, if we wanted, we could supplement funding for both programs with general government revenue. That’s what most European countries do, and, indeed, parts of Medicare are already paid for out of general revenue. The only way that Social Security and Medicare can go “bankrupt” is if we let them.

"Preserving Medicare Benefits by Controlling Health Care Costs"

From Campaign for America's Future:

The Challenge:

To "fix the debt," we should focus on fixing the economy. Investment in jobs and growth will a) reduce the costs of high unemployment, b) raise more revenue, and b) reduce the debt burden. Instead, a small but well-funded and loud group of "deficit hawks" is demanding to "cut entitlements," including Medicare. Now, as President Obama seems to be on the verge of forcing Republicans to accept tax increases on the wealthy, conservatives are demanding a large payoff in return: cuts to Medicare benefits that would raise costs for seniors now and undermine the program for future retirees.

The trade-off is morally offensive: Why should fairer taxes from the rich be allowed only if accompanied by less health care for the old or vulnerable?

Their cuts are aimed at the wrong target. We don't have an "entitlements" problem; we have a broken health care system. The rising costs of publicly funded health care programs like Medicare will consume a larger portion of the budget in the future if nothing is done. But the real problem is runaway health care costs generally, driven by the entrenched corporate interests – the drug and insurance companies and the private hospital complexes – that have made our health care the most expensive in the world.

Make the Case:

Voters overwhelmingly rejected the right's plan to turn Medicare into a "voucher" in the 2012 elections. Now conservatives have another strategy to weaken Medicare: raise the age of eligibility; that is, eliminate benefits for 65- and 66-year-olds. (Republican leaders in Congress don't want to admit that publicly, so they propose $600 billion in Medicare and Medicaid cuts without any explanation of how they arrived at that number or which specific policies they have in mind to reach that number.)

Denying Medicare to 65- and 66-year-olds will actually cost more money than it saves. The best estimate is that $5.7 billion in projected federal savings in Medicare will end up forcing individuals, states and employers to pay an additional $11.4 billion for health care...

There are also reports that House Republicans want to increase Medicare costs for people with higher incomes. But three out of four people with Medicare have incomes under $40,000, and the very small number of seniors with incomes over $80,000 already pay considerably more for Medicare.

If the overall U.S. health care system controlled costs as well as most European countries, both Medicare and overall health care costs would be fully affordable. To do that, you have to take on the drug companies, insurance companies and hospital complexes that drive up costs. Cutting benefits - or eliminating them for 65- and 66-year-olds - doesn't control costs. It simply shifts the costs from the public budget to individual seniors or their families.  (Economist Dean Baker of the Center for Economic and Policy Research documents this.)

Cliff notes...

Laura D'Andrea Tyson @ New York Times:

...The economy continues to operate far below its capacity. The unemployment rate is at least two percentage points higher than what most economists consider consistent with a full recovery. Other measures, such as the high rate of long-term unemployment and the low labor-force participation rate, reflect an impaired labor market.

According to the Congressional Budget Office, gross domestic product is still about 6 percent, or about $973 billion, below the potential level the economy is capable of producing at full capacity. This is the largest gap between actual and potential output following a recession in modern American history.

The weakness of government spending at the state and local level and more recently at the federal level has been a significant factor behind the slow recovery. The phasing out of earlier federal stimulus measures, the expiration of temporary payroll-tax relief and extended unemployment benefits scheduled at the end of the year, and the tight caps on discretionary federal spending already in force mean more federal fiscal drag on the economy’s growth next year even if the fiscal cliff is averted...

"The pirates behind the campaign to fix the debt"

The wonderfully ascerbic Mr. Charles Pierce @ Esquire:

There are many more important topics out there than The Deficit, the scary, hairy monster that haunts the dreams of David Gregory and only the blood of the poor and elderly can appease its wrath. Climate change comes immediately to mind, as do income inequality, the vast inequities of our tax code, the ongoing upward translation of the nation's wealth, why more bankers aren't in federal prison, and whatever did I do to the baby Jeebus that he allowed Notre Dame to play for a national championship. But the biggest reason why we should shut the national piehole on the topic is not that we have more serious problems, or even that any discussion violates the blog's first rule of economics — Fk The Deficit. People Got No Jobs. People Got No Money.

The real reason we should stop talking about it for a while is that the people who are insisting that it will eat us and our posterity on toast are lying swine who would sell your white-haired granny to the Somali pirates for another three points on the Dow. Until we all acknowledge the fact that organized wealth in this country has become downright sociopathic in the heedless damage it does, any discussion of The Deficit can and will be hijacked by that quarter in order to gain absolution for its grievous sins and the right to go on committing them against the rest of us, over and over again.

Listening to these people talk about the national economy is like listening to a burglar tell you that you should really polish the silver more often.

Mea Culpa!

Conservative Bruce Bartlett @ American Conservative writes a fascinating "I told you so" & "Mea Culpa" combo:

I know that it’s unattractive and bad form to say “I told you so” when one’s advice was ignored yet ultimately proved correct. But in the wake of the Republican election debacle, it’s essential that conservatives undertake a clear-eyed assessment of who on their side was right and who was wrong. Those who were wrong should be purged and ignored; those who were right, especially those who inflicted maximum discomfort on movement conservatives in being right, ought to get credit for it and become regular reading for them once again.

I’m not going to beat around the bush and pretend I don’t have a vested interest here. Frankly, I think I’m at ground zero in the saga of Republicans closing their eyes to any facts or evidence that conflict with their dogma. Rather than listen to me, they threw me under a bus. To this day, I don’t think they understand that my motives were to help them avoid the permanent decline that now seems inevitable.

For more than 30 years, I was very comfortable within the conservative wing of the Republican Party. I still recall supporting Richard Nixon and Barry Goldwater as a schoolchild. As a student, I was a member of Young Republicans and Young Americans for Freedom at the height of the Vietnam War, when conservatives on college campuses mostly kept their heads down.

In graduate school, I wrote a master’s thesis on how Franklin Roosevelt covered up his responsibility for the Pearl Harbor attack—long a right-wing obsession. My first real job out of graduate school was working for Ron Paul the first time he was elected to Congress in a special election in 1976. (He lost that same year and came back two years later.) In those days, he was the only Tea Party-type Republican in Congress.

After Paul’s defeat, I went to work for Congressman Jack Kemp and helped draft the famous Kemp-Roth tax bill, which Ronald Reagan signed into law in 1981. I made important contributions to the development of supply-side economics and detailed my research in a 1981 book, Reaganomics: Supply-Side Economics in Action.

After Reagan’s victory, I chose to stay on Capitol Hill, where I was staff director for the Joint Economic Committee and thought I would have more impact. I left to work for Jude Wanniski’s consulting company in 1984, but missed Washington and came back the following year. Jude was, of course, the founding father of supply-side economics, the man who discovered the economists Robert Mundell and Arthur Laffer and made them famous.

I went to work for the Heritage Foundation, but left in 1987 to join the White House staff. I was recruited by Gary Bauer, who was Reagan’s principal domestic policy adviser. Gary remains well known among religious conservatives. Late in the administration I moved over to the Treasury Department, where I remained throughout the George H.W. Bush administration.

Afterwards I worked for the Cato Institute and the National Center for Policy Analysis, a conservative think tank based in Dallas. I wrote regularly for the Wall Street Journal editorial page, National Review, and other conservative publications. For 12 years I wrote a syndicated column that ran in the Washington Times, Investor’s Business Daily, the New York Sun, and other conservative newspapers.

I supported George W. Bush in 2000, and many close friends served in high-level administration positions. I was especially close to the Council of Economic Advisers and often wrote columns based on input and suggestions from its chairmen, all of whom were friends of mine. Once I even briefed Vice President Dick Cheney on the economy.

But as the Bush 43 administration progressed, I developed an increasingly uneasy feeling about its direction. Its tax policy was incoherent, and it had an extremely lackadaisical attitude toward spending. In November 2003, I had an intellectual crisis.

"The Right's Latest Tax Lie"

 Michael Lind @ Salon:

The Heritage Foundation in Washington, D.C., has always had a special place in my heart. In the late 1980s, during the presidency of George Herbert Walker Bush, the right-wing think tank provided me with my first job as a young conservative intellectual. My first assignment was to write a policy brief about presidential war powers. I was removed from the project after I wrote a draft that began with the observation that the U.S. Constitution divides war powers between Congress and the president, and gives the most important war powers — the power to declare war and to fund it — to Congress. The higher-ups at Heritage reassigned the paper to a Wall Street Journal staffer, who provided them with what they wanted: a brief arguing that the president has absolute, uncontrollable power in foreign affairs.

One of my next assignments was to write a policy paper justifying a forthcoming bill from the late Sen. Jesse Helms, a belligerent reactionary from North Carolina. When I met with the senator’s staff, I was told to wait because Helms wasn’t sure what he was going to put in the bill. After I failed to turn in the policy brief on time, I received an official reprimand from my supervisor, which I treasured until I lost it during a move. The reprimand said, in effect, that at Heritage we write policy papers first and add the facts later.

Things went downhill. I soon left Heritage and, a few years later, the conservative movement altogether. When several colleagues and I founded the New America Foundation in the late 1990s, I held up Heritage as a model of what a genuine think tank ought not to be.

I am amused to report that my former colleagues at the Heritage Foundation have lost none of their willingness to sacrifice truth to propaganda. The Heritage Foundation has published an “Index of Dependence on Government” by William W. Beach and Patrick Tyrrell that seeks to bolster Mitt Romney’s theme that at least 47 percent of Americans are parasitic, government-dependent “takers” rather than “makers” (hat tip to Thomas B. Edsall):

The Debate over mortgage debt

It seems the administration's economic team - most notably Tim Geithner and Larry Summers - just never got the centrality of "underwater" housing debt in putting brakes on a recovery.  This is an interesting piece in The Washington Post on how the "debate" unraveled on the inside, how it continues with what appears to be total denial on Geithner's part - and the lingering impact of the mortgage crisis:

One year and one month before President Obama won reelection, he invited seven of the world’s top economists to a private meeting in the Oval Office to hear their advice on what do to fix the ailing economy. “I’m not asking you to consider the political feasibility of things,” he told them in the previously unreported meeting.

There was a former Federal Reserve vice chairman, a Nobel laureate, one of the world’s foremost experts on financial crises and the chief economist of the International Monetary Fund , among others. Nearly all said Obama should introduce a much bigger plan to forgive part of the mortgage debt owed by millions of homeowners who are underwater on their properties.

Obama was reserved in response, but Treasury Secretary Timothy F. Geithner interjected that he didn’t think anything of such ambition was possible. “How do we get this done through Congress?” he asked. “What could we actually do that we haven’t done?”

The meeting highlighted what today is the biggest disagreement between some of the world’s top economists and the Obama administration. The economists say the president could have significantly accelerated the slow economic recovery if he had better addressed the overhang of mortgage debt left when housing prices collapsed. Obama’s advisers say that they did all they could on the housing front and that other factors better explain why the recovery has been sluggish.

Krugman: "Paul Ryan is a con man"

Word is that Honest John Boehner has tapped former Vice Presidential aspirant Paul Ryan as the House GOP's lead man in "fiscal cliff" negotiations with Democrats. This, of course, is an indication of Boehner's perpetual weakness in dealing with the cranks in his (Tea) Party. I'll defer to The Professor at NYT as a reminder of just how tenuous Rep. Ryan's cred as a "serious person" is:

So now that the Unperson/Ryan ticket has lost, Republicans are clearly expecting Paul Ryan to move right back into his previous role as Washington’s favorite Serious, Honest Conservative.

Via "Sky Dancing"

He might get away with it; but I hope not.

The fact is that Ryan is and always was a fraud. His plan never added up; it was never, contrary to what people who should know better asserted, “scored” by the CBO. What he actually offered was a plan to hurt the poor and reward the rich, actually increasing the deficit along the way, plus magic asterisks that supposedly reduced the debt by means unspecified.

His genius, if you can all it that, was in realizing that there was a role — as I said, that of Honest, Serious Conservative — that self-proclaimed centrists desperately wanted to see filled, so that they could demonstrate their bipartisanship by lavishing praise on the holder of that position. So Ryan did his best to impersonate a budget wonk. It wasn’t a very good impersonation — in fact, he’s pretty bad at budget math. But the “centrists” saw what they wanted to see.

Ryan can’t be ignored, since his party does retain blocking power, and he chairs an important committee. But if he must be dealt with, it should be with no illusions. Fool me once …

"The US doesn't have a spending problem..." - It's the distribution, stupid!

 James Kwak at The Atlantic:

In this season of fiscal silliness, many people are saying that we cannot afford our current entitlement programs. They shake their heads solemnly and say that Social Security and Medicare were well-intentioned ideas, but we simply do not have the money to pay for them and there is no escaping the need for "structural changes."

Hogwash.

Crazy People...

Mike Thompson, via Balloon Juice

You'd also likely find a pretty close correspondence with "the same people who firmly believed in 'WMDs' in Iraq."  Apparently there's no penalty or skepticism toward our "opinion elites" no matter how wrong they are, nor how many times.  But it's not just hard-core conservatives. A daily sampling of this willfully ignorant, morally crass nonsense that's tilted toward "the center" and packaged as "entitlement reform" can be sampled at "Morning Joe," that cable roundtable of perennial mediocrity steeped in terminal self-satisfaction.

We know, we know...but credit that someone in the crazy-talk terrain of Cato & Forbes is pushing back against the nutcases

Glimmers of sanity where one least expects it, via Noahpinion:

Cato scholar and Forbes writer Timothy B. Lee is hardly what you'd call a liberal. Nevertheless, he's written a scathing column on conservatives' "Reality Problem". He mentions Nate Silver denialism, climate change denialism, and evolution denialism, but this part especially caught my eye:

On macroeconomics, a broad spectrum of economists, ranging from John Maynard Keynes to Milton Friedman, supports the basic premise that recessions are caused by shortfalls in aggregate demand. Economists across the political spectrum agree that the government ought to take action counteract major aggregate demand shortfalls. There is, of course, a lot of disagreement about the details. Friedman argued that the Fed should be responsible for macroeconomic stabilization, while Keynes emphasized deficit spending. 

But rather than engaging this debate, a growing number of conservatives have rejected the mainstream economic framework altogether, arguing—against the views of libertarian economists like Friedman and F.A. Hayek—that neither Congress nor the Fed has a responsibility to counteract sharp falls in nominal incomes.

This jerk Romney is exactly who we thought he was...

Ezra Klein on Romney's "ugly vision of politics":

Goodbye and good riddance

During the campaign, Mitt Romney repeatedly promised seniors that he’d restore President Obama’s $716 billion in Medicare cuts. He promised them that, unlike Obama, he wouldn’t permit a single change to Medicare or Social Security for 10 years. He promised them, in other words, political immunity. While the rest of the country was trying to pay down the deficit and prioritize spending, they’d be safe.

He also promised the rich that they’d see a lower overall tax rate, and while he did say he would try to pay for some of those tax cuts by closing loopholes and deductions, he also said he expected faster growth would pay for those cuts — which means he really was promising tax cuts to the rich at a time when he said deficit reduction should be a top priority. Oh, and let’s not forget his oft-stated intention to roll back the Dodd-Frank financial reforms and replace them with…something.

Keep all that in mind when you hear Romney blaming his loss on “the gifts” that Obama reportedly handed out to “the African-American community, the Hispanic community and young people.” Romney was free with the gifts, too, and his promises to seniors and to the rich carried a far higher price tag than any policies Obama promised minorities or the young...

Zombies "at the table"

Lots of talk about what's "on the table" in "fiscal cliff" negotiations. Krugman, again, clarifies what's at stake and what "zombie ideas" are just stupid. Let's keep the zombies away from "the table":

America’s political landscape is infested with many zombie ideas — beliefs about policy that have been repeatedly refuted with evidence and analysis but refuse to die. The most prominent zombie is the insistence that low taxes on rich people are the key to prosperity. But there are others. 

Undead?

And right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare. Even some Democrats — including, according to reports, the president — have seemed susceptible to this argument. But it’s a cruel, foolish idea — cruel in the case of Social Security, foolish in the case of Medicare — and we shouldn’t let it eat our brains. 

First of all, you need to understand that while life expectancy at birth has gone up a lot, that’s not relevant to this issue; what matters is life expectancy for those at or near retirement age. When, to take one example, Alan Simpson — the co-chairman of President Obama’s deficit commission — declared that Social Security was “never intended as a retirement program” because life expectancy when it was founded was only 63, he was displaying his ignorance. Even in 1940, Americans who made it to age 65 generally had many years left. 

Grand Bargain? "Aim High" Mr President

Robert Reich:

I hope the President starts negotiations over a “grand bargain” for deficit reduction by aiming high. After all, he won the election. And if the past four years has proven anything it’s that the White House should not begin with a compromise.

Assuming the goal is $4 trillion of deficit reduction over the next decade (that’s the consensus of the Simpson-Bowles commission, the Congressional Budget Office, and most independent analysts), here’s what the President should propose:

First, raise taxes on the rich – and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in over 80 years.

"The Sham of Simpson Bowles"

Illinois Congressional Representative Jan Shakowsky:

Erskine Bowles and former Senator Alan Simpson deserve some kind of medal for creating the widely held perception that their plan for reducing the deficit and debt is anything other than a bad proposal.

It has been nearly two years since the commission they chaired, which I served on, finished its work. The duo’s proposal has attained almost mythical status in Washington as the epitome of what a “grand bargain” should look like.

But everyone look again. They will discover that it is far less than meets the eye.

Have Simpson-Bowles’ champions read it? Given any real scrutiny, this plan falls far short of being a serious, workable or reasonable proposal – from either an economic or political analysis.

In one of its few specific points, for example, Simpson-Bowles mandates a top individual tax rate of 29 percent “or less.” Much like the vague Romney proposals, the Simpson-Bowles plan would make up the shortfall by eliminating tax loopholes, suggesting options such as having employees pay taxes on their health benefits. Not only is this likely to increase costs to middle-income families, it could threaten coverage altogether. The proposal for corporate tax reform would eliminate taxes on profits earned overseas, rewarding companies that move jobs offshore.

Don't blow it!

Krugman:

(T)he Democrats now look like the natural party of government. Bush had already established a reputation for being unable to get anything right in the actual business of governing; all that was supposedly left was political prowess, and now that’s gone too. And even the news media have, I think, begun to notice that we aren’t the “center-right” country of fantasy, we’re a diverse nation, ethnically and otherwise, in which a lot of liberal ideas have become perfectly mainstream.

Still, hubris and all that: this newly effective coalition could be shattered if taken for granted. And you know what could really produce the kind of dispirited base that was supposed to doom Obama in 2012? A sellout on key Democratic values as part of a Grand Bargain. If, say, Obama raises the retirement age in return for vague promises on revenue (promises that would be betrayed at the first opportunity); if he appoints a deficit scold to a major economic post; it could all fall apart.

"What Romney Lost"

Garry Wills at NYRB:

What happens to those who lose a presidential campaign? Some can do it with heads rightly held high, and go on to give valuable service to the nation. We were reminded of this just two weeks before the recent election, when George McGovern died. Though he underwent a humiliating defeat by Richard Nixon forty years before, he was a man of integrity, some of whose ideas were continued by people who worked in his 1972 campaign, like Bill and Hillary Clinton, veterans of his Texas office that year. McGovern was re-elected to the Senate after his presidential loss, where he performed important services...

What public service do we expect from Mitt Romney? He will no doubt return to augmenting his vast and hidden wealth, with no more pesky questions about where around the world it is stashed, or what taxes (if any) he paid, carefully sheltered from the rules his fellow citizens follow...

What vestige of a backbone is Romney left with? Things he was once proud of —health-care guarantees, opposition to noxious emissions, support of gay rights and women’s rights, he had the shamelessness to treat as matters of shame all through his years-long crawl to the Republican nomination.

Deficits - Don't believe the "Mediscare" hype. The issue is systemic healthcare costs, which are driven by private markets.

Ezra Klein:

From the Congressional Budget Office’s hot new white paper, “Options for Deficit Reduction“:

That’s all of the federal government’s spending in three graphs. The top graph is health care, including Medicare, Medicaid and the Affordable Care Act. The middle graph is Social Security. And then there’s literally everything else: Defense, education, infrastructure, food safety, R&D, farm subsidies, the FBI, etc.

What these three charts tell you is simple: It’s all about health care. Spending on Social Security is expected to rise, but not particularly quickly. Spending on everything else is actually falling. It’s health care that contains most all of our future deficit problems. And the situation is even worse than it looks on this graph: Private health spending is racing upwards even faster than public health spending, so the problem the federal government is showing in its budget projections is mirrored on the budgets of every family and business that purchases health insurance...

Got that?  Private health care costs are inflating faster than government health care spending.  Which means it's not a "Medicare" problem.  The issue we need to attack is getting systemic health care costs under control. When you hear anyone blame Medicare as the root of our budget problems or their target in "getting health care costs under control", they are either selling you their ideology or their ignorance.  The prevalence of this nonsense is a key to understanding why as a nation our health care spending per capita is about twice as much as the high-quality universal systems such as France and Canada, with no better outcomes to show for it.

The failure of the "war on religion" demagogy

Ed Kilgore at Washington Monthly on the Catholic vote and the failure of the Church hierarchy's hysterics and demagogy:

A dog that definitely did not bark on November 7th was the once-very-intense Republican effort to “wedge” Catholic voters with claims the Obama administration was waging a “war on religion,” notably via the allegedly insufficient exemptions it offered to a contraception coverage mandate created by Obamacare. Obama won Catholics by a 50-48 vote, almost exactly his margin among voters generally, and continuing Catholic voters’ very close similarity to the electorate as a whole. The failure of the “war on religion” effort is all the more remarkable since it received tactic (and in some cases overt) support from the Catholic hierarchy, particularly via the U.S. Conference of Catholic Bishops’ “Fortnight for Freedom” campaign during the spring, aimed at mobilizing the faithful against the contraception mandate.
In a thoughtful piece for the National Catholic Reporter on Election Eve, Maryland parish priest Fr. Peter Daly examined the failure of the “Fortnight for Freedom,” and basically schooled the bishops:

Our Catholic bishops started out leading a political parade in the spring. But when they looked behind them in the fall, they discovered that almost nobody was following. What happened?

A few groups got in line. The Knights of Columbus were very active. EWTN had several programs devoted to Fortnight. There were some rallies around the country. A lot of money was spent on pamphlets and videos. There was an opening Mass in Baltimore and a closing Mass in Washington, D.C. But there was hardly any talk about it in the pews. The average Catholic hardly even noticed a Fortnight for Freedom was happening.

Why didn’t this movement catch fire? Four reasons, I think.

The GOPers have gone mad

A year old quote via the politically orphaned old-school conservative Bruce Bartlett, but so off-the-wall and obviously concocted it serves as a worthwhile reminder of just how crazy - literally crazy and/or profoundly cynical to the point of caring not one whit for this country, not to mention "the truth" - that the GOP has become.  This garbage, from one of actually-existing conservatism's alleged "intellectuals," is analytically sociopathic at best, coming from a former leader of Congress who obviously knows better:

On Nov. 21, Newt Gingrich, who is leading the race for the Republican presidential nomination in some polls, attacked the Congressional Budget Office. In a speech in New Hampshire, Mr. Gingrich said the C.B.O. "is a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that it has not internally generated."

If the GOP gains even greater power, this country is headed for a cliff. Not the much-touted fiscal cliff, but a "cliff" off of which intellectual integrity and common decency are in freefall and simply no longer part of our political equation. My contempt for grifters like Gingrich - who populate the GOP in large numbers - is boundless. 

“I’ve never—old as I am—seen a politician lie as much"

American Prospect's "Ringside Seat":

Looked at from a certain angle, Mitt Romney’s presidential campaign has been a grand experiment in whether it's possible to lie your way to the White House. Sure, all politicians stretch the truth like Play-Doh. They dissemble. They exaggerate. They tell the occasional out-and-out whopper. Traditionally, though, politicians tend to stick with truthiness, in the Colbert sense. Until now, there’s never been a presidential campaign built almost solely on a foundation of lies. Romney’s people have made no bones about it; his pollster, Neil Newhouse, told media at the Republican National Convention, "We're not going to let our campaign be dictated by fact-checkers." Strangely, that might have been the single most honest statement to come out of the campaign.

Romney has lied about Obama raising taxes on the middle class. He’s invented an overseas “apology tour." He’s sworn up and down that the president cut $500 billion from Medicare. He's claims that under Obama, the federal government will control half of all American industry. He's falsely asserted, over and over again, that the president has dismantled Clinton’s welfare work reforms. He’s tried to turn the auto bailout into a case of Obama “bankrupting” the car companies. The list goes on—so long that blogger Steve Benen has assembled no fewer than 917 examples of “Mitt’s mendacity.” And when he's called out, he doubles down. The great mystery, of course, is why—why, running against a fairly unpopular president with a fairly lousy economy in a politically divided country, would the challenger choose to abandon truth in such wholesale fashion? Only Mitt's God, or his shrink, can probably answer that question. 

The Long Con: Mail-Order Conservatism - "Mitt Romney is a liar..."

Great piece by Rick Perlstein @The Baffler:

Mitt Romney is a liar. Of course, in some sense, all politicians, even all human beings, are liars. Romney’s lying went so over-the-top extravagant by this summer, though, that the New York Times editorial board did something probably unprecedented in their polite gray precincts: they used the L-word itself. “Mr. Romney’s entire campaign rests on a foundation of short, utterly false sound bites,” they editorialized. He repeats them “so often that millions of Americans believe them to be the truth.” “It is hard to challenge these lies with a well-reasoned-but- overlong speech,” they concluded; and how. Romney’s lying, in fact, was so richly variegated that it can serve as a sort of grammar of mendacity.

Some Romney lies posit absences where there are obviously presences: his claim, for instance, that “President Obama doesn’t have a plan” to create jobs. Other Romney fabrications assert presences where there are absences. A clever bit of video editing can make it seem like Romney was enthusiastically received before the NAACP, when, in fact, he had been booed. There are lies, damned lies, statistics—like his assertion that his tax cut proposal won’t have any effect on the federal budget, which the Tax Policy Center called “not mathematically possible.” That frank dismissal vaulted the candidate into another category of lie, an attempt to bend time itself: Romney responded by calling that group “biased”; last year, he called them “objective.”

There are outsourced lies, like this one from deep in my files: in 2007, Ann Romney told the right-wing site Newsmax.com that her husband had “always personally been prolife,” though Mitt had said in his 1994 Senate race, “I believe that abortion should be safe and legal in this country.” And then Ann admitted a few sentence later, “They say he flip-flopped on abortion. Well, you know what? He did change his mind.”

And then there’s the most delicious kind of lie of them all, the kind that hoists the teller on his own petard as soon as a faintly curious auditor consults the record for occasions on which he’s said the opposite. Here the dossier of Mittdacity overfloweth. In 2012, for example, he said he took no more federal money for the Salt Lake City Olympic Games than previous games had taken; a decade earlier, however, he called the $410 million in federal money he bagged “a huge increase over anything ever done before.”

"They can't handle the truth!"

Andrew Rosenthal at NYT:

In a brazen example of putting ideology ahead of reality, Senate Republicans seem to have pressured the Congressional Research Service to withdraw a report debunking conservative economic orthodoxy. Cutting tax rates at the top appears “to have little or no relation to the size of the economic pie,” the report said. “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.” So charging the rich lower tax rates doesn’t promote economic growth; it merely increases economic inequality.

The CRS is a highly respected, independent agency that prepares reports for members of Congress and routinely issues findings that disappoint or even irritate their clients, who usually just grin and bear it, or at least bear it. But Congressional Republicans seem to think that the CRS should function like Pravda.

Remember, when "Morning Joe" et. al. blame Medicare for out-of-control costs, you are listening to people spreading ignorance

CBPP:

Cutting Medicare and Medicaid is a sure path to INCREASING the percentage of GDP the county spends on health care.  Most of the discussion about "entitlements" burdening our economy are based on utter disinformation or near-total ignorance.  Replacing Medicare with vouchers - or even raising the eligibility age - will explode health care costs.  Not just out-of-pocket for seniors, but in aggregate.

The "cure" of cutting Medicare and Medicaid can only mean one of two things - exploding health care costs as private insurers pick up market share and hospitals are burdened with the uninsured flooding emergency rooms, or people simply going without essential health care. 

There is definitely a need to control health care inflation in relation to our overall economy, but privatization via vouchers or raising the Medicare age take us in exactly the wrong direction, as the chart shows. Medicare and Medicaid do the best job of cost-control, compared to private insurance.

The Professor takes on "The Blackmail Caucus" (& the idiocy of the De Moines Register)

Krugman @ NYT:

If President Obama is re-elected, health care coverage will expand dramatically, taxes on the wealthy will go up and Wall Street will face tougher regulation. If Mitt Romney wins instead, health coverage will shrink substantially, taxes on the wealthy will fall to levels not seen in 80 years and financial regulation will be rolled back.

Given the starkness of this difference, you might have expected to see people from both sides of the political divide urging voters to cast their ballots based on the issues. Lately, however, I’ve seen a growing number of Romney supporters making a quite different argument. Vote for Mr. Romney, they say, because if he loses, Republicans will destroy the economy. 

O.K., they don’t quite put it that way. The argument is phrased in terms of “partisan gridlock,” as if both parties were equally extreme. But they aren’t. This is, in reality, all about appeasing the hard men of the Republican Party. 

Taxing the top

Robert Reich on taxing "job creators":

The rich are far richer than they used to be, while most of the rest of us are poorer. The latest data show the top 1 percent garnering 93 percent of all the gains from the recovery so far. But median family income is 8 percent lower than it was in 2000, adjusted for inflation.

The gap has been widening for three decades. Since 1980 the top 1 percent has doubled its share of the nation’s total income—from 10 percent to 20 percent. The share of the top one-tenth of 1 percent has tripled. The share of the top-most one-one hundredth of 1 percent—16,000 families—has quadrupled. The richest 400 Americans now have more wealth than the bottom 150 million of us put together.

Meanwhile, the tax rates paid by the wealthy have dropped precipitously. Before 1981 the top marginal tax rate was never lower than 70 percent. Under President Dwight Eisenhower it was 93 percent. Even after taking all the deductions and tax credits available to them, the rich paid around 54 percent.

Income Inequality - the Second Gilded Age

Brad DeLong at SFGate:

A third of a century ago, all of us economists confidently predicted that America would remain and even become more of a middle-class society. The wealth inequality of the 1870-1929 Gilded Age, we would have said, was a peculiar result of the first age of industrialization. Transformations in technology, public investments in education, a progressive tax system, a safety net and the continued decline in discrimination on the basis of race and sex had made late-20th century America a much more equal place than early-20th century America and would make early-21st century America even more equal - even more of a middle-class society - still.

We were wrong.

America is at least as unequal as, and might be more unequal than, it was back at the beginning of the 20th century when Republicans, such as President Theodore Roosevelt of New York condemned the power wielded by "malefactors of great wealth," and Democrats such as perennial losing presidential candidate William Jennings Bryan of Nebraska denounced shadowy conspiracies that had somehow manipulated the financial system to rob the typical family of its proper share in America's prosperity.

Four major factors have driven rising inequality over the past 35 years:
Waning progressivity of our tax system: We no longer tax the rich a significantly greater share of their income than we tax the middle class. The idea behind the cut in relative tax rates on the rich was that it would release blocked entrepreneurial energy and trigger a burst of more rapid economic growth.

It did not: Economic growth overall has been slower since President Ronald Reagan began waves of tax cuts for the rich.

Hope vs. "Nope"

Professor Krugman:

Mr. Obama may not be as bold as we’d like, but he isn’t actively misleading voters the way Mr. Romney is. Furthermore, if we ask what Mr. Romney would probably do in practice, including sharp cuts in programs that aid the less well-off and the imposition of hard-money orthodoxy on the Federal Reserve, it looks like a program that might well derail the recovery and send us back into recession.

And you should never forget the broader policy context. Mr. Obama may not have an exciting economic plan, but, if he is re-elected, he will get to implement a health reform that is the biggest improvement in America’s safety net since Medicare. Mr. Romney doesn’t have an economic plan at all, but he is determined not just to repeal Obamacare but to impose savage cuts in Medicaid. So never mind all those bullet points. Think instead about the 45 million Americans who either will or won’t receive essential health care, depending on who wins on Nov. 6.

Romney's Debate BS Meter - 24 Myths in 41 Minutes

Igor Volsky @ Think Progress:

1) “Syria is Iran’s only ally in the Arab world. It’s their route to the sea.” Romney has his geography wrong. Syria doesn’t share a border with Iran and Iran has 1,500 miles of coastline leading to the Arabian Sea. It is also able to reach the Mediterranean via the Suez Canal.

2) “And what I’m afraid of is we’ve watched over the past year or so [in Syria], first the president saying, well we’ll let the U.N. deal with it…. Then it went to the Russians and said, let’s see if you can do something.” While Russia and China have vetoed multiple resolutions at the U.N. Security Council on Syria, the United States has also been working through the Friends of Syria group and other allies in the region. Obama’s approach “would essentially give U.S. nods of approval to arms transfers from Arab nations to some Syrian opposition fighters.”

3) “Former chief of the — Joint Chiefs of Staff said that — Admiral Mullen said that our debt is the biggest national security threat we face. This — we have weakened our economy. We need a strong economy. We need to have as well a strong military.” If Romney is worried about the national debt, why does he want to increase military spending from 3.5 percent of GDP to 4 percent? This amounts to a $2.1 trillion increase over a ten year period that the military says it does not need and Romney has no plan to pay for it.

4) “[W]hen — when the students took to the streets in Tehran and the people there protested, the Green Revolution occurred, for the president to be silent I thought was an enormous mistake.” Obama spoke out about the Revolution on June 15, 2009, just two days after post-election demonstrations began in Iran, condemning the Iranian government’s hard-handed crackdown on Iranian activists. He then reiterated his comments a day later in another press conference. Iranian activists have agreed with Obama’s approach.

5) “And when it comes to our economy here at home, I know what it takes to create 12 million new jobs and rising take-home pay.” The Washington Post’s in-house fact checker tore Romney’s claim that he will create 12 million jobs to shreds. The Post wrote that the “‘new math’” in Romney’s plan “doesn’t add up.” In awarding the claim four Pinocchios — the most untrue possible rating, the Post expressed incredulity at the fact Romney would personally stand behind such a flawed, baseless claim.

6) “[W]e are going to have North American energy independence. We’re going to do it by taking full advantage of oil, coal, gas, nuclear and our renewables.” Romney would actually eliminate the fuel efficiency standards that are moving the United States towards energy independence, even though his campaign plan relies on these rules to meet his goals.

Although Mitt Romney is as credible as a used-car salesman, there's at least one thing that we know is at stake Nov. 6

Mitt Romney has proven himself the "Etch-a-Sketch" candidate on any and every issue, but James Suroweicki @ The New Yorker explains at least one thing we can count on if this slippery character manages to hedge and edge his way into the White House:

Mitt Romney can be a hard man to pin down. But there is one thing that he’s been clear about: if he becomes President, he will repeal Obamacare. That simple promise, more than any other that Romney has made, illuminates what is most at stake in this year’s election. The campaigns may spend most of their time talking about taxes and jobs. But health care is where the election’s outcome will have the most immediate and powerful impact on how Americans live. 

Is Chinese currency manipulation still a major problem?

Professor Krugman, a former "renminbi hawk":

In 2010 an undervalued renminbi was a significant drag on advanced economies, including the United States. Since then, however, two big things have happened: relatively high inflation in China, and some appreciation of the renminbi against the dollar. As a result, the real exchange rate of China against the United States (based on consumer prices), has appreciated significantly:

At the same time. China’s surplus has come way down:

So this is an odd time to be making confrontation over China’s currency a centerpiece of your economic policy — unless, of course, it’s just bluster aimed at making voters think you’re tough.

Romney's only problem isn't math

Geography fail at final debate - Glen Kessler, WaPo "Factchecker":

Mitt Romney repeated his contention that Syria is Iran’s route to the sea. This is a puzzling claim, considering that Syria shares no border with Iran — Iraq and Turkey are in the way — and that Iran has about 1,500 miles of coastline along the Persian Gulf and Gulf of Oman, leading to the Arabian Sea.

Do tax cuts for the rich turn them into "job creators"?

Economists Laura D'Andrea Tyson & Owen Zidar, @ New York Times, have done the research:

The centerpiece of Mitt Romney’s tax plan is an across-the-board 20 percent cut in marginal tax rates. This cut, along with a few other tax changes Mr. Romney has endorsed – such as repeal of the estate tax and the alternative minimum tax – would reduce federal tax revenue from personal income and payroll taxes by an estimated $3.6 trillion to $3.8 trillion over 10 years.

The total is closer to $5 trillion when Mr. Romney’s proposed cut in the corporate income tax rate to 25 percent is included. About two-thirds of this amount would go to taxpayers making $200,000 a year or more – about 5 percent of all taxpayers.

Extending the Bush tax cuts for high-income earners, as Mr. Romney proposes, adds another trillion in lost revenue and increases the share of the benefits going to the top 5 percent. Even if the cost of the Romney tax cuts for the top 5 percent is covered by base-broadening measures, as Mr. Romney promises – but as President Obama and many others assert is mathematically impossible – does it make sense to devote trillions of dollars to lowering income taxes for the top 5 percent? Is this an effective way to create jobs?

Mr. Romney appears to think so. His plan rests on the assertion that lower taxes for high-income taxpayers will increase economic activity and employment – that lower taxes for job creators create jobs and will do so quickly. This assertion, while superficially convincing and ideologically compelling, is not supported by the evidence.

Romney campaign doesn't pass the test on jobs plan

The Professor @ NYT:

(The Romney) campaign is claiming that Romney’s assertion that his plan would create 12 million jobs is backed by three economic studies — and none of the studies actually says what the campaign says it does. The (implausible) claim that tax cuts would add 7 million jobs was a 10-year estimate, not a 4-year estimate; the 3 million jobs figure for energy was a prediction of what would happen under current policy, not what Romney would add; the 2 million “get tough with China” estimate had nothing to do with what Romney is proposing.

So they’re just faking it — the same way they have with the “six studies” supposedly validating the tax plan, four of which aren’t studies and one of which actually validates the critics.

What’s amazing here is the contempt the campaign is showing for the voters and the media. 

Sorry, but Professor Krugman has given you guys a well-deserved "F" for "faking it."

Democracy in America

Kevin Drum @ MJ:

From Mitt Romney, in a June conference call with some fellow plutocrats:

I hope you make it very clear to your employees what you believe is in the best interest of your enterprise and therefore their job and their future in the upcoming elections.

Subtle! Vote for Obama and your job is toast. Stuff like this explains why America's business elites are so beloved these days.

More from Romney @ In These Times:

"Nothing illegal about you talking to your employees about what you believe is best for the business, because I think that will figure into their election decision ..."

Conservative against Romney

Ed Kilgore @ Political Animal:

Back in August, the famous Reagan Budget Director David Stockman tore Paul Ryan a new one in an op-ed accusing his presumed doppelganger of great feats of mendacity and cowardice.

Now Stockman’s back with an enraged J’accuse! aimed at the very heart of Mitt Romney’s biography: the idea that he was a champion creator of “jobs” or “wealth” at Bain Capital. Stockman makes earlier critics of Bain look like Starbucks-addicted yuppie pikers. Here’s a sample:

Bain Capital is a product of the Great Deformation. It has garnered fabulous winnings through leveraged speculation in financial markets that have been perverted and deformed by decades of money printing and Wall Street coddling by the Fed. So Bain’s billions of profits were not rewards for capitalist creation; they were mainly windfalls collected from gambling in markets that were rigged to rise.

If you find Stockman’s rhetoric discredited by his hard-money biases, check out this:

Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.

Word on The Street

Mike Thompson via Balloon Juice

Income Inequality Stifles Economic Growth

  Annie Lowery @ New York Times:

Income inequality has soared to the highest levels since the Great Depression and the recession has done little to reverse the trend, with the top 1 percent of earners taking 93 percent of the income gains in the first full year of the recovery.

The yawning gap between the haves and the have-nots — and the political questions that gap has raised about the plight of the middle class — has given rise to anti-Wall Street sentiment and animated the presidential campaign. Now, a growing body of economic research suggests that it might mean lower levels of economic growth and slower job creation in the years ahead, as well. 

“Growth becomes more fragile” in countries with high levels of inequality like the United States, said Jonathan D. Ostry of the International Monetary Fund, whose research suggests that the widening disparity since the 1980s might shorten the nation’s economic expansions by as much as a third. 

Reducing inequality and bolstering growth, in the long run, might be “two sides of the same coin,” research published last year by the I.M.F. concluded. 

In the United States, since the 1980s, rich households have earned a larger and larger share of overall income. The 1 percent earns about one-sixth of all income and the top 10 percent about half, according to statistics compiled by the respected economists Emmanuel Saez of the University of California, Berkeley, and Thomas Piketty of the Paris School of Economics. 

Colbert reveals the real Mitt

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