social and economic justice

Ryan's Follies: Health Care Reform, Bankruptcy, and Tipping Points

Joseph M. Firestone — Tue, 14 Aug 2012 19:24:42 -0400

Still more Ryan's follies from his answer to the President's 2011 SOTU.

On the Affordable Care Act (ACA)

”Then the President and his party made matters even worse, by creating a new open-ended health care entitlement.

“What we already know about the President’s health care law is this: Costs are going up, premiums are rising, and millions of people will lose the coverage they currently have. Job creation is being stifled by all of its taxes, penalties, mandates and fees.”

Well, Congressman Ryan's right about most of this. The ACA doesn't contain direct measures to prevent insurance companies from raising premiums, but relies on exchanges that won't be fully operative until 2014, by which time insurance companies will have raised rates far higher than they were when the ACA was passed in 2010. On the other hand, Paul Ryan and the Republicans wouldn't support any cost-cutting measure that would be effective anyway, such as, for example, prohibiting increases in premium costs greater than the rate of inflation in the rest of the economy, because the Republicans and Ryan himself, along with many Democrats are bought and paid for by the health insurance companies and big Pharma.

Ryan's claim that job creation is being stifled by the ACA bill, is currently unsupported by evidence. And his claim about job creation is pure theory, especially since most of the bill isn't operational yet and its impact can't be assessed. One thing's certain, however, and that is that there's no way that either the ACA, or alternatives based on the free competition and confidence fairy theories Ryan favors will produce the 2.5 million new jobs predicted by the California Nurses Association study if the Democrats had rid themselves of the filibuster in January of 2009 and passed Medicare for All, rather than collaborate with the Republicans and the Blue Dogs to cut the heart out of health care reform.

On the ACA and bankruptcy:

”Businesses and unions from around the country are asking the Obama Administration for waivers from the mandates. Washington should not be in the business of picking winners and losers. The President mentioned the need for regulatory reform to ease the burden on American businesses. We agree – and we think his health care law would be a great place to start.

“Health care spending is driving the explosive growth of our debt. And the President’s law is accelerating our country toward bankruptcy.”

Health care spending is driving the explosive growth of debt, both public and private, but as we saw in my first Ryan's Follies post, the public debt accompanying health care deficit spending is reducing debt in the private sector and also increasing demand. Unfortunately, the explosive growth of private debt from health care costs visited upon individuals is causing great suffering in the form of bankruptcies and foreclosures. In addition, these costs result in deaths when people can no longer afford co-pays and decide to forgo treatment they need before illnesses or injuries cause serious damage.

I don't believe that Ryan is right that “the President's Law” is accelerating the Government towards bankruptcy, because it has no risk of “bankruptcy,” unless Congressman Ryan and his colleagues decide to force insolvency by not using their constitutional authority to appropriate Government spending or to raise the debt limit. The “explosive growth” of the public debt is, for reasons stated in my first Ryan's Follies post, of little or no concern. However, I do believe that the growth of private sector debt due to health care costs is a major issue, as is the portion of the US GDP spent on the health care sector, which is way out of line with other industrial nations, and which at the same time produces much worse outcomes for too many Americans whether they have insurance “coverage,” or not.

Of course, the Congressman is not concerned about these real problems, but only about his imagined “problem” of the Government becoming insolvent due to excessive spending. That is, one of the reasons, why, I suppose, he opposes Medicare for All. If he and his Republicans were to join with Democrats to pass that, it would relieve both the increasing private sector debt problem, and also reduce the GDP proportion of health care spending by perhaps one-third. But, I guess we should just expect this kind of public service out of someone who proposes to return the United States to 19th century economic rules and behavior.

Congressman Ryan, criticizes the waiver process, by saying that Washington should not be in the business of picking winners and losers. But, this is one of the most hypocritical remarks in the history of politics coming from Congressman Ryan, since he has gone out of his way to see to it that lack of regulation would ensure that the health insurance companies, big Pharma, the FIRE sector, and businesses in his and other Congressional Districts that wanted to move jobs to other nations would be big winners while American workers and people needing Medical insurance would be big losers. The Congressman has always picked winners and losers.

Unfortunately, for America, however, he has never picked them in the public interest; but only to benefit his own political career. And this has meant, when it comes to jobs, that he has picked foreign winners and American losers while always wrapping himself in the flag.

And back to public debt:

”Our debt is out of control. What was a fiscal challenge is now a fiscal crisis.

"We cannot deny it; instead we must, as Americans, confront it responsibly.

“If we act soon, and if we act responsibly, people in and near retirement will be protected.”

As shown in my first Follies post, the national debt isn't out of control at all. But Ryan is right to think that we have a fiscal crisis that we have to confront responsibly. That crisis is that the Government including Congress, the Federal Reserve, and the Executive Branch isn't using activist fiscal policy to achieve the public purpose, even though there is no solvency risk and little inflation risk in the United States doing so. The United States has so many problems right now that letting these problems go unsolved, by kicking them down the road is the real meaning of fiscal irresponsibility.

When it comes to fiscal irresponsibility no one is better described by that term than Paul Ryan. Of course, he has a lot of company in Peter G. Peterson, the Koch brothers, and all the advocates of balanced budget amendments, Republicans and Democrats who think it's responsible to manage the US Government's spending as though it were a household or still on the gold standard. These people, who have, apparently been joined by Barack Obama, will destroy the economic foundations of the United States, and create a nation where everyday life is “nasty, brutish, and short,” and the sick “die quickly.”

And, of course, “tipping points” into dependency:

”Our nation is approaching a tipping point.

“We are at a moment, where if government’s growth is left unchecked and unchallenged, America’s best century will be considered our past century. This is a future in which we will transform our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency.”

Anyone who has experienced unemployment, or living on Social Security alone, or Medicare, not supplemented by other medical insurance, knows that the social safety net is no hammock, and that it is not nearly as generous as social safety nets in other modern industrial nations. Our social safety net is the most stingy and mean of all these, and also the one most immersed in false economies that undercut demand and prevent the social safety net from doing its job of making recessions less punishing for poor people, people out of work, the sick, and most of the 99%.

Congressman Ryan makes Mr. Potter, the banker in “It's a Wonderful Life,” look like a generous man, for he means to drain America of real wealth so he can serve the job exporters he loves so well better. If he has his way, the social safety net will become a bed of nails. If we simply leave it where it is, there's no danger of hammocks anytime soon. And even if we were to extend it by passing enhanced Medicare for All, and say, doubling Social Security payments in recognition of the fact that the financial sector of the economy has, by now, nearly destroyed both the savings, and the pension legs of the proverbial three-legged retirement stool for a very large percentage of the middle class, there is no way that even that would tip us all over into “hammocks.”

A strong, generous, social safety net is not a social invention that will make people dependent. Instead, it is an invention to make them more free. FDR wisely said that “necessitous men are not free men.” What angers me so much about Romney, Ryan, the Koch Brothers, Peter G. Peterson, and all who follow him, is that they want to make most of us “necessitous” while they lack for nothing!

(Cross-posted from Correntewire.com.)

Ryan's Follies: Oy! Taxes, Decline, and Austerity

Joseph M. Firestone — Sun, 12 Aug 2012 21:36:18 -0400

More on Ryan's follies and the overall quality of thinking we find in this young “guru”! Here's more from his answer to the President's 2011 SOTU.

”On this current path, when my three children – who are now 6, 7, and 8 years old – are raising their own children, the Federal government will double in size, and so will the taxes they pay.”

It will be roughly 19 years until Ryan's children are raising their own children, and guess what? GDP will be between two and three times what it is now, and, as we've already seen there's no reason why taxes should be any higher as a percentage of income for most people, unless of course, people like Ryan keep lowering taxes for the rich and raising them for everyone else in order to achieve a damaging budgetary surplus.

Hopefully, the tax rates for the top 2% of the population will be far higher than they are now, and estate taxes will return to their levels in the 1950s, so that gentlemen like Congressman Ryan can begin to pay their fair share again, and the United States can once again have a wealth distribution that is more equal than the likes of Russia, China, Turkey, and Jordan.

I recently blogged on some Credit Suisse data related to the inequality problem. My analysis showed that the US was 24th in the world on Median wealth per Adult. Our Median Wealth per Adult was about $53,000. The nation that ranked first, Australia, had a Median Wealth per Adult of about $223,000 or 4.2 times ours. Also the ratio of the Mean to the Median Wealth per Adult, an even better measure of inequality, was 4.71 for us, and 1.79 for the Australians. One thing's for sure it won't be very good for most of our grandchildren if Romney/Ryan tax policies, which will make this situation even worse, are inflicted on us in 2013. Four years of that and we could very well see that Median Wealth number go down to $46,000 or so and that ratio up to 6 to 1. The political and social unrest that will cause here is anybody's guess. Here's another folly:

”The next generation will inherit a stagnant economy and a diminished country.”

That depends on Congressman Ryan, the Republicans, President Obama, and other Democrats who think we have a deficit/debt problem, which must be treated with Government austerity and tax cuts for the rich. That's a sure recipe for condemning the United States to a stagnant economy and a diminished country. We're seeing the results of such policies now in Europe and in the UK, which is fast becoming the laboratory case illustrating why austerity isn't the thing to do to a down economy.

How do these exponents of Hooverian crackpot economics expect the economy to grow when they are going to drastically lower the aggregate demand provided by Government deficits? By blowing more private sector debt bubbles leading to a new collapse produced by lack of regulation and corporate account control fraud, he further impoverishment of the American Middle Class, and then more lemon socialist bailout?

That's sarcasm, of course. But that kind of pattern is probably a feature, rather than a bug of the Romney/Ryan plan. Their grand design isn't morning in America. It's the New Serfdom with themselves and others like them as our new feudal lords.

”Unfortunately, instead of restoring the fundamentals of economic growth, he engaged in a stimulus spending spree that not only failed to deliver on its promise to create jobs, but also plunged us even deeper into debt.”

The Democrats have failed to end the recession, at least for most Americans; but Paul Ryan's austerity policies, if followed in 2009, would never have restored “the fundamentals of economic growth.” Balanced budgets at the Federal level would only have depressed demand to such a degree that we'd be in a second Great Hooverian Depression right now. Really, Ryan's version of economic science is at the very least 115 years old. Some whiz kid! Between he and Eric Cantor, they'd have the economy flat on its back for the next 100 years.

”The facts are clear: Since taking office, President Obama has signed into law spending increases of nearly 25% for domestic government agencies – an 84% increase when you include the failed stimulus.”

Much of this “spending” is a result of the operation of the automatic stabilizers in the safety net helping people get through the recession, created by the FIRE sector and its control frauds -- spending over which the Obama Administration had no control that was also necessary. And much of it was due to Homeland Security and its expenditures, “domestic spending,” which I'm quite sure Ryan would be opposed to cutting? In any case, numbers like the ones just above don't mean anything, unless one thinks these expenses increase the solvency risk of the Government. Since we've already seen that they don't, these "facts" of Ryan's are of little or no importance.

”All of this new government spending was sold as “investment.” Yet after two years, the unemployment rate remains above 9% and government has added over $3 trillion to our debt.”

Of course it's now 3.5 years, 8.3%, and more like $5 Trillion in additional debt, otherwise known as world savings of USD in the form of Treasuries. As I said in my last post, the addition to debt doesn't matter. And, again, much of the new Government spending was due to the response of the automatic stabilizers to the crash of 2008, and wasn't “sold as 'investment'” at all.

As for the stimulus package, only a relatively small part of it was justified as “investment,” as Paul Ryan very well knows. By the time the Republicans, the Blue Dogs, and the President got through with the ARRA, the tax cuts in the package and spending geared toward maintaining the States, ate up more than half the stimulus over a two year period, and were in no way "investment."

The stimulus itself was also only one-half as large as it needed to be in volume of spending to end the recession (as many asserted, including myself, at the time), and was less stimulative than it should have been, due to the fact that low-multiplier tax cuts were such an important component of it. So, it wasn't any surprise to many of us that it failed to lower unemployment below 8.3%, or that the deficit remained high, since the primary cause of big deficits was the combination of high unemployment and the operation of the social safety net.

Congressman Ryan is a rising star in the Republican Party, and is often characterized as their foremost policy wonk and budgetary guru. But his performance over the past two years, indicates that if he's their guru, and if the Republicans remain in charge of the House, then we'll all be in trouble; because while Paul Ryan may be better at adding and subtracting than most of his colleagues, there are very important things that he apparently fails to understand, or at least to heed, about Macroeconomics and its relation to fiscal policy.

In particular, Congressman Ryan, seems to have no clue about the sectoral balance model of macroeconomics. One of the things that model implies is that if the US is running a negative trade balance (imports exceed exports), and the private sector needs to save to pay back debt, the Government budget deficit must be equal to the value of the trade deficit plus the value of private sector savings. If the Government tries to work against the dynamic implied by this model, by taking active steps to reduce that deficit, as Paul Ryan and the Republicans so vigorously advocate, then the private sector is going to have to reduce its imports, its savings, or, most likely, both, because a reduced Government deficit will lessen demand in the private sector.

So, Government austerity is not going to create private sector prosperity as Ryan, and sometimes, President Obama and many Democrats, suggest, but private sector privation, instead. Less private sector savings, less real wealth, and a stagnating economy. Paul Ryan may actually want that, and the President may too, so he can say that he left a legacy of hard and courageous decision making, but most of the rest of us don't.

We wish that our political parties and their leaders would leave that legacy of courage and sacrifice that they, their families, their friends, and the wealthy people and corporations they deal with daily, are calling for, to themselves and their families; while leaving us with things like enhancements of the social safety net including Medicare for All, and greatly increased Social Security payments, as well as with a Job Guarantee program. After 30 some-odd years of policies promoting extreme wealth for them, and stagnation for the rest of us; it's time for them to make the sacrifices, and for us to get our share of the productivity gains in the form of a Green New Deal.

So, let's have some really hard decisions from them. Decisions that involve their giving up some of the extreme wealth they've accumulated, very often through political influence and manipulation, and sometimes control frauds, rather than from honest work. Decisions that recognize that an America that is unusually unequal among the world's wealthy nations cannot long stand without civil strife for everyone. Let those who have benefited disproportionately from the past 35 years not continue tempting fate. There must be a peaceful return to social and economic justice and fairness in America now, before we go any further down the road to plutocracy and the new serfdom. The alternative is too terrible to contemplate.

(Cross-posted from Correntewire.com.)

Stopping Obama from Doing the GOP's Dirty Work on Social Security

Daniel Marans — Fri, 14 Jan 2011 17:54:04 -0500

As usual, the Democrats are on track to do the Republicans’ dirty work—only to suffer the political fallout later on. What else could one conclude from the rampant rumors that President Obama will signal his willingness to “compromise” (read: cut) on Social Security in the State of the Union address? Anyone who doubts that this would amount to political suicide, hasn’t read National Review editor, Ramesh Ponnurru’s column in the New York Times last Friday, instructing Republican politicians that they should wait for President Obama to act first on Social Security “reform” (read: benefit cuts). Here’s the kicker: Ponnurru specifically suggests that Republicans should champion “entitlement reform,” if, and only if, Obama dangles Social Security as an area of compromise in the State of the Union address. As friends of the President, we progressives must stop him from granting Ponnurru’s wish—and the wishes of so many conservatives eager to have the President do their bidding. Click here to read Ponnurru's column.

Embracing Social Security cuts is a lose-lose strategy for President Obama and the Democrats. In the event that the President pursues this strategy, against the loudest objections of his base, there are essentially two possible outcomes, neither of them good for Democrats. If the President’s drive to cut Social Security encounters limited public uproar and, with the help of Republican cooperation, he gets good press for being “bipartisan,” Democrats will have given Republicans political cover for achieving one of their coveted policy goals, and screwed the country in the process. If the President “goes first” on Social Security cuts, and the public reacts in horror—a likelier scenario— not only will the Republicans jump ship, they will also waste no time using it against the President. They will paint themselves as Social Security’s defenders, standing between the public and the big, bad Social Security-hating President.

If this strikes you as unfeasible, just remember how disingenuously the Republicans hung Medicare cuts on Obama’s neck during the healthcare debate. The Republican party that once denounced Medicare's creation as "Socialized medicine," and perennially advocates voucherizing it, had no problems claiming the Medicare Advantage cuts in the healthcare reform bill amounted to “pulling the plug on Granny,” and calling end-of-life counseling, “death panels.” Should Democrats yield the high ground on Social Security, it would be “death panels” all over again.

Ponnurru and other conservatives have been salivating over huge cuts to Social Security for years. But unlike Democrats, they are far more attuned to the political costs of actually pushing for benefit cuts. Bush’s privatization effort went down in flames, and Reagan’s cuts before that. Social Security is still the “third rail” in American politics, and Republicans have already learned that the hard way.

Until recently, the Democrats knew it too and skillfully exploited public suspicion of Republicans on Social Security. As a result, for decades, the public trusted Democrats to deal with Social Security more than Republicans by huge margins. Along with Medicare, Social Security was the Democrats’ bread and butter, an issue they could turn to for electoral victories in the very worst of political climates.

But now, on the heels of a GOP smear campaign accusing President Obama and the Democratic Congress of “raiding” the Social Security trust fund, the public actually trusts Republicans more. Worse still, Democrats have lost the support of seniors, at one time one of their most reliable constituencies. In the 2010 elections alone, Democrats lost seniors by 21 points. To put this in perspective, President Obama only lost seniors by 8 points in 2008, amid an unprecedented surge in participation from young and minority voters. The President cannot afford to lose seniors by 21 points in 2012.

It doesn’t take a genius to figure out that the drop-off in support from seniors in 2010 was the result of the Republicans’ Medicare lies. At least with Medicare, though, it was not the President’s fault. But if the President does the Republicans’ dirty work on Social Security, it will be. He will be bargaining away the Democrats' last, best poker chip. And when the 2012 elections roll around, we will all be sorry we didn’t do more to stop him.

Harry Reid: Social Security's Last Line of Defense

Daniel Marans — Mon, 10 Jan 2011 16:53:33 -0500

Senate Majority Leader Harry Reid’s appearance on Meet the Press this Sunday was a rare positive moment in a very bad couple of months for Social Security advocates. Reid, who is not known for his gifted oratory, gave the most cogent rebuttal of calls to cut Social Security of any elected official in recent memory. With Democrats out of power in the House, and Obama poised to make Social Security cuts part of a “bipartisan deficit reduction package” ahead of the debt-ceiling debate, Harry Reid may be the only man standing in the way of disaster for America’s favorite government program. Take a look at the full transcript of his remarks below, or click here for a clip of the exchange.

[BEGIN EXTRACT]
DAVID GREGORY: Social Security-- how does it have to change? What they put on the agenda is raising the retirement age, maybe means testing benefits. Is it time for Social Security to fundamentally change if you're gonna deal with the debt problem?
HARRY REID: One of the things that always troubles me is when we start talking about the debt, the first thing people do is run to Social Security. Social Security is a program that works. And it's going to be-- it's fully funded for the next forty years. Stop picking on Social Security. There're a lotta places--
DAVID GREGORY: Senator are you really saying --
HARRY REID: --where you can go to save money.
DAVID GREGORY:-- the arithmetic on Social Security works?
HARRY REID: I'm saying the arithmetic in Social Security works. I have no doubt it does.
DAVID GREGORY: It's not in crisis?
HARRY REID: No, it's not in crisis. This is-- this is-- this is something that's perpetuated by people who don't like government. Social Security is fine. Are there things we can do to improve Social Security? Of course.
DAVID GREGORY: Means testing. Raising the retirement age--do you agree with either of those?
HARRY REID: --I'm not going to go to with any of those backdoor methods- you know, to whack Social Security recipients. I'm not going to do that. We have a lot of things we can do with-- this debt. It's a problem. But one of the places where I'm not going to be part of picking on is Social Security.
[END EXTRACT]

One thing you won’t get from the transcript is the condescending smirk on Gregory’s face when he asks Reid if “the arithmetic on Social Security works.” Could there be any better metaphor for the elitism of the Washington press corps? Reid sticks to his guns though and leaves Gregory looking like the naïve one. For those looking for tips on how to effectively argue against cuts, Reid’s remarks are an excellent template. Here is the breakdown of his talking points:

There is no Social Security crisis. Social Security works and it is fully funded for the next 40 years
Social Security did not contribute to the deficit, so it shouldn’t be cut in order to reduce the deficit. “Stop picking on Social Security!”
Those who claim Social Security is in crisis just don’t like government programs.
Raising the retirement age and means-testing are backdoor methods to whack Social Security recipients.

Unfortunately, Reid may be the only Democrat that gets it. Contrast Reid’s response to Washington’s revered conventional wisdom with those of scores of more “respectable,” establishment political figures—most of them Democrats. For weeks now, we have seen a non-stop drumbeat for Social Security cuts from prominent politicians, with little pushback from the mainstream media.

First it was the presidentially-appointed Deficit Commission Co-Chairs, Alan Simpson and Erskine Bowles, and their proposed cuts of up to 41.5% of scheduled Social Security benefits. (Bowles and Simpson’s reluctant admission that cutting Social Security would do nothing to reduce the deficit made the massive cuts they were recommending all the more disingenuous.)
Then, Senator Dick Durbin, a long-time liberal and Reid’s deputy in the Senate, surprised his progressive supporters by publicly supporting the Co-Chairs’ proposal (there was no official vote)—and parroting many of their talking points about the need to make “tough choices.” Apparently he missed the rest of the cuts in the Social Security part of the Commission report, because he only even bothered to defend his support for the retirement age increases.
Careful not to be outdone by Durbin, no less than 14 Democratic senators wrote the President a letter commending the Commission’s report and insisting that Congress act on it right away, despite the fact that it never enjoyed enough support for the Commission to formally vote on it.
Members of a bipartisan deficit reduction group of 20 senators in the Senate, led by Senators Warner (D-VA) and Chambliss (R-GA), and which includes most of the letter’s signers, have said they are using the Commission recommendations as the basis of their report.
A 15th Democratic Senator, Mark Pryor from Arkansas, flaunted his deficit hawk bona fides by publicly announcing that Social Security needed to be “on the table” in the discussion of deficit reduction, and specifically suggested that increasing the retirement ages was a likely option.
Finally, there is the refusal of top White House aides to deny that they would agree to Social Security cuts. Bob Kuttner caught Austan Goolsbee refusing to comment on it as recently as Friday.

So there you have it. The only powerful Democrat on the record against cuts to Social Security is Harry Reid—and he may be the only man who can stop it. In some ways this comes as no surprise. As an uncharismatic social conservative, Reid has never been a progressive darling. But a New Yorker profile of him this autumn revealed that Reid is a New Deal Democrat through and through. Raised in a poor mining family, Reid has made fighting for economic security and adequacy the driving force of his political career. His commitment to the Democratic Party is rooted in a deeply Christian belief that core Democratic programs like Social Security and Medicare are just the right thing to do. In the New Yorker article, Reid, a devout Mormon, called Social Security “the most successful antipoverty program since the fishes and the loaves.”

Neal Pritchard

Neal Pritchard — Sat, 12 Jun 2010 16:27:05 -0400

Big Ag’s Power Couple Are Banking on Brown, Feinstein

Philip Palij — Tue, 16 Feb 2010 21:24:04 -0500

Bill Jennings, executive director of the California Sportfishing Protection Alliance (CSPA), quipped about Resnicks’ contributions to Brown and others. “Resnick is an equal opportunity contributor to candidates seekers. He gives money to everybody – it doesn’t matter if they’re Republican, Democrat or the Anti-Christ, he’ll try to buy their votes

Glen Pritchard

Glen Pritchard — Fri, 09 May 2008 17:23:27 -0400

The Old Lady, the Goose, and the Golden Eggs

Dennis Chin — Wed, 12 Mar 2008 17:12:33 -0400

How can Aesop's tale of the goose that laid the golden eggs guide us towards economic justice?