Our Common Good

Economist James K. Galbraith of the University of Texas made the argument in early 2011 that if anything, we should be talking about lowering the retirement age.

We talked to Galbraith on the phone today to discuss this idea, as well as his assessment of the Fiscal Cliff talks and entitlement (a word he hates) situation in general.

He still likes this idea. With unemployment near 8%, he still thinks that it makes sense, at least temporarily, to reduce the retirement age, to let people get benefits earlier, and to clear up the job market.

He explains:

My argument is that you have a phenomenon which is very well known called the Baby Boom which is out there and the Baby Boom is a portion of older workers who are approaching, but in many cases are not at, the retirement age. They are, particularly those who have been working in real jobs, I’m not talking about professors or journalists, but people who actually - you know, move boxes, inventory, or stand at checkout counters for a living. When unemployed, they have a very difficult time getting a new job and early retirement is intrinsically attractive.

Why aren’t they taking it? Possibly because it’s not attractive enough, possibly because they’re a little too young. So the solution is to make the early retirement available for a limited period, let’s say three years…and let the people who take it at 62 get a better deal than they get now so that a higher fraction of the working population will take it at 62.

But what about the general entitlement problem, and all the debt we’re drowning in?

Galbraith calls this “propaganda” that’s been pushed for decades by the same people, who have made predictions that have never come true. He specifically called out old writings (from the ’80s and ’90s) of anti-debt activist Pete Peterson.

The whole notion that there’s this great deficit crisis which can only be dealt with by cutting SS, Medicare, and Medicaid, that’s just - it’s a relative recent front in a very old propaganda war. People who have been, for decades, blathering on about the disaster in SS, Medicare, and Medicaid. I highly recommend the back issues of the New York Review Of Books, which lists Peter G. Peterson, who prowled on about this.

If there is a problem, he says, it’s not the government’s expenses per se, but that costs for covering the elderly’s healthcare are expensive regardless of who’s paying for them:

If you’re asking whether there are problems with Medicare and Medicaid, the standard answer on that is health care costs are the problem, and that is not dependent upon whether or not you are on a private or public insurance scheme. In fact, Medicare pays less to providers than private insurance does. The reason doctors accept Medicare patients is that unlike private insurers, Medicare actually writes the checks and pays people, which doctors like. I suppose you’ve encountered doctors who have had problems getting cash out of insurance companies, if you haven’t, I’ll say you haven’t encountered a doctor.

The key point which he emphasized over and over again is that changing who pays for people doesn’t change the burden. And if anything, if you’re worried about generational dependency, you should be in favor of the current structure of Social Security, which makes workers set aside money for their retirement, so that they’re not dependent on their children.

Galbraith also has a great rebuttal to those scary CBO charts showing entitlement costs surging, and swamping GDP, putting the US on a Greece-like debt-to-GDP ratio. Bunk says Galbraith. Those aren’t macroeconomic forecasts, but just “CBO baselines” that are used for scoring laws. The reality, he says, is that there’s no way for healthcare costs to surge and get so big while not also boosting nominal GDP significantly, meaning that the ratios can’t actually get that bad.

Read the full interview. 

Republican aides are circulating their summary of the White House’s opening bid on the fiscal cliff. They’re circulating it because they believe it fleshes out Speaker John Boehner’s complaint that “the White House has to get serious.” Above all, they’re circulating it because the president isn’t offering them anything in his opening bid.

[…]

“How did it take them three weeks (and two days) to offer nothing but President Obama’s budget?” A GOP leadership aide asked me rhetorically. 

We’re seeing two things here. One is that the negotiations aren’t going well. When one side begins leaking the other side’s proposals, that’s typically a bad sign. The other is that Republicans are frustrated at the new Obama they’re facing: The Obama who refuses to negotiate with himself.

The Pentagon is facing its worst cash crunch in more than a decade, with potential cuts of up to a half-trillion dollars over the next decade if Congress doesn’t act soon. Yet the U.S. military still somehow found the money on Tuesday to put a down payment on a $10 billion upgrade of its nuclear weapons in Europe — y’know, just in case there’s another Cold War.

winningprogressive:

The “six studies” that Romney claims supports his mathematically impossible budget proposals are actually blog posts and papers by Republicans.

dendroica:

The Economic Policy Institute has run the numbers and finds that President Obama’s budget would boost economic growth far more than Republican challenger Mitt Romney’s. Obama’s plan would create 1.1 million jobs in 2013 and 280,000 jobs in 2014, while Romney’s budget would create 87,000 jobs in 2013 and lose 641,000 jobs in 2014, provided that his plans are deficit-financed, according to a new EPI study (pdf). (via Study: Obama’s plan would create more 1.1 million jobs in 2013. Romney’s plan would create 87,000.)

dendroica:

The Economic Policy Institute has run the numbers and finds that President Obama’s budget would boost economic growth far more than Republican challenger Mitt Romney’s. Obama’s plan would create 1.1 million jobs in 2013 and 280,000 jobs in 2014, while Romney’s budget would create 87,000 jobs in 2013 and lose 641,000 jobs in 2014, provided that his plans are deficit-financed, according to a new EPI study (pdf). (via Study: Obama’s plan would create more 1.1 million jobs in 2013. Romney’s plan would create 87,000.)

generalbriefing:

“Least We Can Do” Marco Rubio

This video pisses me off!  It’s not the lie that they are telling about the medicare cuts that are suggested by the Ryan/ Romeny plan (it would lead to the elimination of Medicare by 2016, which would effect my parents and my grandparents).  No, it’s the fact that they keep talking about how deep this recession is and how my generation can’t find jobs, but they can’t seem to get that this means that our generation will need some kind of guaranteed safety net in our retirement too. What? Are we supposed to trust the stock market after the Crash of ‘08?  On what planet does that make sense?  The stock market scares me now more than ever, especially since Boomers are still screwing around in it.  

I don’t see why I have to accept that I won’t have guaranteed healthcare or retirement even though I pay into a system that provides it.  What’s their alternative?  Do they have one?  Nope, I’m on my own.  Which means I’m left to work until I die for a paycheck that hasn’t increased in 35 years.  In fact, in the wake of the recession, the paycheck has been reduced.  What the hell is that?

There are folks looking out for the elderly and folks looking out for the Boomers, but who is looking out for me?

huffpostpolitics:

George W. Bush Legacy Hovers Over Republican National Convention

TAMPA, Florida — Where is George W. Bush?

The last Republican president was a no-show at the Republican convention this week. And the party that he led for eight years barely mentioned him - or his record.

Nevertheless, Bush’s fiscal legacy - including hundreds of billions spent on two wars that helped balloon the federal deficit - loomed large over the gathering, as Republicans tried to make the case that the Republican Party was the party of smaller government and restrained spending.

Paul Ryan, for one, even lumped Bush in with President Barack Obama, blaming both for the nation’s tenuous fiscal condition.

“In a clean break from the Obama years and, frankly, from the years before this president, we will keep federal spending at 20 percent of GDP or less,” Ryan, R-Wis., the House Budget Committee chairman, said as he accepted the vice presidential nomination Wednesday.

The legacy of the Bush years complicates Republican presidential nominee Mitt Romney’s case against Obama as both fight to win over an electorate frustrated by the nation’s enormous debt and budget-busting deficits.

[HUFFPOST POLITICS]


Maryland’s Chris Van Hollen is the top Democrat on the House Budget Committee. That makes him Paul Ryan’s counterpart in the House. And so Van Hollen, more so perhaps than any other House Democrat, has experience with both Ryan and his budget. We spoke on Friday about his working relationship the vice presidential candidate, the disagreements Democrats and Republicans have over Medicare, and why Democrats can’t seem to come together around one budget.

[…]

CVH: Well, first of all, we’ve had an experiment with the private insurance plans within Medicare. Those were the Medicare Advantage plans. The original idea with those plans was that they’d save money for the very reasons you’re talking about. In fact, they’ve ended up costing more money.

Second, if you fragment the Medicare market, you lose the ability of the Medicare program to negotiate good prices for seniors. After all, we all know that a large HMO or insurance company has more bargaining leverage over price than smaller ones. I would point you to the analysis done by the Congressional Budget Office of the Republicans’ fiscal year 2012 budget that indicated the Ryan-Republican approach did not reduce costs in the overall system. They estimated under that plan that by the year 2022, seniors would be paying an additional $6,000 plus per year. That model has clearly failed.

But it’s also clear we need to move away from the strict fee-for-service program and towards a model that rewards quality of care. And as you know, there’s some preliminary evidence we’re bending that curve down. Per-beneficiary costs are slowing. It’s too early to pop champagne bottles, but clearly that’s the direction we need to move in.

EK: Another point Ryan makes is that his plan will make the Medicare system more like the health insurance that members of Congress get. You’re a member of Congress. You seem pretty healthy. So why isn’t that a good idea?

CVH: That plan gives seniors on Medicare a much worse deal than members of Congress have. The Federal Employee Health Benefit Plan, like the current Medicare plan, covers a fixed percentage of the overall costs of your health care. In the federal plan, it’s called the guaranteed share, and it’s 72 percent of the cost of your premiums, and as costs rise, they continue to pay that guaranteed share.

The entire premise of the Romney-Ryan plan is to have the voucher value fall relative to rising health-care costs, and so the percentage of health-care costs covered by Medicare will decline over time under the Romney-Ryan plan. That exposes seniors to rising health-care costs when members of Congress are protected from them. We’ve even got a graph on this that I can send you.

[…]

CVH: I do believe it’s been missed. But I do want to emphasize that the Romney-Ryan Medicare plan would have immediate cost increases for seniors. I know they like to talk about the fact that their plan doesn’t really begin till 10 years from now, but for seniors with high prescription drug costs, the Ryan-Romney plan would increase their costs immediately. And if you decide not to take the savings in Obamacare, you pass that onto seniors in the form of higher co-pays. So it’s not true their plan doesn’t have an impact for 10 years.

That said, I certainly agree that the Romney-Ryan budget has a dramatic, negative effect on Medicaid. According to the Congressional Budget Office it will cut Medicaid by one-third over 10 years. That’s a huge hit, and a lot of people don’t realize that two-thirds of Medicaid spending goes to support seniors in nursing homes and individuals with disabilities. That would dramatically hurt seniors who rely on Medicaid and low-income families and kids.

abaldwin360:

House Budget Committee Chairman Paul Ryan (R-WI) told Christian Broadcast Network earlier this week that the House GOP’s budget, which he wrote, was driven by his Catholic faith. “A person’s faith is central to how they conduct themselves in public and in private,” Ryan said, and Catholic principles are what led him to cut programs for the poor so as to keep people from becoming “dependent on government.”

As ThinkProgress noted Tuesday, Ryan’s budget seems toignore Catholic social teaching that calls for protecting the poor and improving access to food, jobs, health care, housing, and the social safety net. And now religious leaders are making the same case. The founder of the PICO National Network, the largest national coalition of religious congregations, slammed Ryan’s claim of adherence to Catholic teaching as “the height of hypocrisy” in a release circulated Wednesday:

It’s the height of hypocrisy for Rep. Ryan to claim that his approach to the budget is shaped by Catholic teaching and values,” said Fr. John Baumann, S.J., founder of PICO National Network. […] “A central moral measure of any budget proposal is how it affects “the least of these” (Matthew 25). The needs of those who are hungry and homeless, without work or in poverty should come first.”

“By these measures,” the release says, “the Ryan budget is a severe failure,” noting that it cutsMedicare, Medicaid, Pell Grants, food stamps, and “other programs that help vulnerable working families make it through tough times and live better lives,” while giving massive tax breaks to the wealthiest Americans and corporations. Overall, 62 percent of Ryan’s budget cuts come from programs that benefit the poor. “The mission of the Church is to ‘bring good news to the poor’ and to protect the vulnerable, not to justify the impoverishment of the very young, the very old and the sick in order to enrich the wealthy,” the release says.

read more

Republicans in six House of Representatives committees next week will dust off their past proposals for reducing the deficit as they try to replace some of the automatic spending cuts set to take place in January.

Under a directive in the House-passed budget plan from Congressman Paul Ryan, the panels have just two weeks to come up with $18.45 billion in savings for fiscal 2013 and a net $261 billion over 10 years.

Expected targets for cuts include food stamps, farm subsidies and crop insurance, federal employee pensions and health care. A repeal of President Barack Obama’s health reform law would prevent new coverage expenses from occurring from 2014.

The proposed cuts, like the Ryan budget that prescribes them, have little chance of passage in the Democratic-controlled Senate. But they will live on as campaign talking-points for both parties as November elections approach.

They also could complicate the annual passage of spending bills needed to keep the government running - raising the risk of a shutdown just weeks before the election.

shihtzuman:

Earlier this week, the Congressional Progressive Caucus released its budget for fiscal year 2013, titled the Budget for All, which offers a stark contrast and credible alternative to the misguided budget proposed by House Budget Committee Chairman Paul Ryan (R-Wis.).

House Republicans have passed the Paul Ryan budget resolution, a sweeping plan that slashes long-term mandatory spending, goes under the discretionary spending targets set by the debt limit deal, cuts taxes for the rich and corporations, changes Medicare to a voucher program, eliminates Pell grants for hundreds of thousands of students, and generally authorizes just about every conservative wet dream you can name. And after all that, Ryan’s budget doesn’t even balance until 2040, because it’s nearly impossible to do so without anything on the revenue side.

The vote was relatively close, with the budget passing 228-191. Ten Republicans voted against the budget resolution, up from four last year. Here they are:

Walter Jones (NC), Jimmy Duncan (TN), Tim Huelskamp (KS), Chris Gibson (NY), Justin Amash (MI), Todd Platts (PA), Ed Whitfield (KY), David McKinley (WV), Denny Rehberg (MT), Joe Barton (TX).

Not too many of those votes are because the budget wasn’t conservative enough: that explains Huelskamp, Amash and maybe Barton. The others face tough re-election battles, or in the case of Rehberg are running for Senate in Montana. Walter Jones is just idiosyncratic. But I agree with Dave Weigel, 10 Republicans out of 238 isn’t that many, considering they’ve opened themselves up yet again to charges of ending Medicare as we know it (regardless of what Politifact says).

abaldwin360:

Paul Ryan, outlining his latest budget proposal in the House TV studio Tuesday morning, said the policies of the Republican presidential nominees “perfectly jibe” with his plan, which slashes the safety net to pay for tax cuts mostly for wealthy Americans.

“Do you wholeheartedly believe they will accept your budget?” NBC’s Luke Russert called from the audience.

“Absolutely,” the House Budget Committee chairman replied without hesitation. “I’m confident.”

Makes perfect sense, in a way. Mitt Romney, the likely Republican nominee, is on record as saying, “I’m not concerned about the very poor.” And Ryan has just written a budget that supports Romney’s boast.

Ryan would cut $770 billion over 10 years from Medicaid and other health programs for the poor, compared with President Obama’s budget. He takes an additional $205 billion from Medicare, $1.6 trillion from the Obama health-care legislation and $1.9 trillion from a category simply labeled “other mandatory.” Pressed to explain this magic asterisk, Ryan allowed that the bulk of those “other mandatory” cuts come from food stamps, welfare, federal employee pensions and support for farmers.

Taken together, Ryan would cut spending on such programs by $5.3 trillion, much of which currently goes to the have-nots. He would then give that money to America’s haves: some $4.3 trillion in tax cuts, compared with current policies, according toCitizens for Tax Justice.

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Read the rest of this article, this rhetoric amazes me. It’s like he thinks (or wants his supporters to think) that he is doing some kind of “moral duty” by taking safety nets away from poor Americans.

What is to be done? To find an answer, listen to the markets. They are saying: borrow and spend, please. Yet those who profess faith in the magic of the markets are most determined to ignore the cry …

Contrary to conventional wisdom, fiscal policy is not exhausted. This is what Christine Lagarde, new managing director of the International Monetary Fund, argued at the Jackson Hole monetary conference last month. The need is to combine borrowing of  cheap funds now with credible curbs on spending in the longer term. The need is no less for surplus countries with the ability to expand demand to do so.

It is becoming ever clearer that the developed world is making Japan’s mistake of premature retrenchment during a balance-sheet depression, but on a more dangerous – far more global – scale. Conventional wisdom is that fiscal retrenchment will lead to resurgent investment and growth. An alternative wisdom is that suffering is good. The former is foolish. The latter is immoral.