ataxingmatter

The 'ignorance is bliss'/'ride'em cowboy' mentality of today's GOP

Today's GOP is dominated by the Tea Party types that are a cross between an ostrich with its head stuck in the sand-- the "ignorance is bliss" philosophy-- and a 1860s cowboy as depicted in the 1960s western-mania TV shows-- the "hell bent on raising a ruckus"/"my way or the highway" mentality.  The combination is deadly dangerous for democratic egalitarianism.

On the ignorance is bliss side, see, for one example out of many possible, the "two pending Republican bills that seek to curtail or end vital surveys by the Census Bureau."  Editorial, Stragegic Ignorance, New York Times (May 25, 2013).  

As described in GOP Census Bill Would Eliminate Key Economic Indicators, Huff. Post (May 26, 2013), the only purpose of H.R. 1639,  the bill introduced by Jeff Duncan (R-SC), appears to be to ensure that the government does not have reliable data on the many important indicators of the health of the economy, from housing and health to crime, employment and the environment. 

 A spokesman for Duncan declined to explain why the congressman wants to eliminate such data or even whether he understands that the data would be compromised by his bill, which has 10 co-sponsors.

But the proposed Census Reform Act is explicit in its intent to end nearly every survey the Census conducts, mandating the "repeal" of the nation's agricultural census, economic census, government census and mid-decade census. It would also bar the bureau from carrying out the American Community Survey (ACS), which the House voted last year to end, although the Senate let that measure die.

There is very little done by the government or big businesses that does not at some level depend on the reams of information provided by the Census surveys, from writing regulations and distributing federal services to rolling out new products and finding customers. The ACS is an ongoing survey that collects data every month, instead of every 10 years, so that governments and businesses have current information. Id.

Because it bars the Secretary of Commerce and the Census Bureau from carrying out "any survey, sampling, or questionnaire", the bill would effectively hamstring the government's ability to gather any kind of information other than a numerical count of population.  Note that this would also include all of the information collected by the Department of Labor's Bureau of Labor Statistics, since those statistics are generally gathered through the U.S. Census Bureau.  See, e.g., Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey.  To get a further sense of the importance of the information provided through the Department of Labor with Census Bureau support, see this page showing the subject categories of Labor statistics collected.  Some information collected by the Census Bureau is also used by the Department of Health and Human Services, although DHHS surveys are so specialized that the department has an extensive set of specialized surveys that various of its agencies conduct.  (Let's hope Duncan doesn't notice them, or he will set out to gut that agency, too.)

A similar bill was introduced in the Senate by Rand Paul (R-KY) which specifically targets the American Community Survey--the frequently updated survey that gathers information anonymously and provides a wealth of data about economic trends across the country. See Poe press release; see also Huff Post, Rand Paul, Ted Poe Sponsor Bill that Seeks Religion Law that Already Exists (May 25, 2013) (noting that a 1976 law already ensures that answers about religion on the Census are voluntary, but the Paul/Poe bill gratuitiously includes the same provision again). 

Paul claims the mandatory survey is too intrusive--he wants it to be "voluntary".  Voluntary surveys get low participation rates, particularly in some geographic areas.  The data needs are universal--having gaping holes where there were too many dropouts to give the survey statistical validity would be a huge problem.  But Paul doesn't care--he's too busy scoring Tea Party points with anarcho-libertarians who've been brought up (since Reagan) to think that "government is the enemy", while at the same time benefitting from billions in government aid because of these very surveys.   And too busy using terms like "protect Americans" (from the Poe Press Release) in hypocritical ways that have nothing to do with protecting anybody but the elite--since the result of not having the ACS survey will be to allow more misleading pronouncements to go unchecked by data.  Like Sarah Palin's ignorant assertions about Alaskan self-sufficiency (when more federal tax dollars go to Alaska than come from it), these anti-tax/anti-government claims are mere posturing that misleads ill-informed people to support policies that favor the elite.   As the HuffPost article notes,

[T]he 14 largest counties in Poe's state of Texas received more than $14 billion in federal funding in 2008 based on ACS data, according to a recent Brookings Institution study. Id.

Without such data, it would be harder to show the failure of the laughable tax-cuts-for-the-rich/austerity-for-everybody-else policies of the rightwing in Congress and in state legislatures.  Take, for example, the recent reporting about the way the GOP legislatures that have decided NOT to expand Medicaid will leave the most vulnerable poor in the lurch (yet again) as far as receiving health care that all of us need and most of us take for granted.  The better off will receive the benefit intended by Obamacare, but the worst off will remain vulnerable in those recalcitrant states where the GOP runs the show with the "ignorance-is-bliss" mentality.  Without the kind of regular information collected by the Census Bureau and in particular the American Community Survey, the government won't be able to track results of these Red State "experiments" in austerity to show how much like Third World countries their states become regarding poverty, unemployment, and all the other economic indicators provided by the census.

This ostrich-with-tits-head-in-the-sand mentality makes sense only if the ideas you support are purely ideological ones, for which data is irrelevant.  As Maurine Haver, head of Haver Analytics, noted to a reporter:

[T]here is a fundamental divide between people who are interested in solid, reality-based data and those who are not. "If you know what you think, you don't need information to help you assess what's going on," she said. "The people that need information are the people who use it because they really want the truth, not people who think that because they believe it, it becomes the truth." Id.(paragraphing changed and italics added).

Of late, that seems to be the position of the Tea Party reps in Congress, like Rand Paul, Ted Cruz and too many others.   And they don't care about the ensuing harm to ordinary folk from their efforts. 

Need more proof of the ostrich-plus-cowboy mentality?  Just look at the fight breaking out in Congress between Ted Cruz and the rest of the Tea Party cohort with the somewhat more sensible GOP members like John McCain over the debt ceiling. Kusskin-Shoptaw, McCain, Tea Party Senators Squabble over Debt Ceiling Procedures, Bloomberg.com (May 22, 2013).

 Once again, the Tea Party is willing to run the United States off a cliff over an artificial fiscal limit that is, in the actual economic scheme of things, meaningless except as a stage for such masquerades about fiscal responsibility concerns.  The Party of No wants to Know Nothing to disguise its "bankrupt the US to get at the liberals" ideology in the sheep's clothing of a fake "we care about economic responsibility" policy initiative.

Freedom does NOT reside in allowing brute force economic might to set the rules.  Freedom is having government institutions that work and are subject to the will of the people.  So that when 81% of the American public want gun check legislation, Congress listens to the people instead of to the well-funded NRA.  So that when a majority of the American people don't want corporate funding to be siphoned to campaigns behind the closed doors of erroneous 501(c)(4) status, IRS employees are allowed to do their work to find "parties" that are circumventing politicking disclosure requirements rather than being hung out to twist in the wind under a fake "scandal" created by the ideological anti-tax right.  So that when agencies allocate resources or describe results of economic legislation, they have accurate data to do so.  Freedom does not rest in willful ignorance.

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McConnell Tossing the Gauntlet on Debt, Taxes and the GOP's dream of dismantling Social Security and Medicare

Pretty much as I predicted, Obama's failure to go over the fiscal cliff--instead "negotiating" and settling for a half-assed deal that hardly got rid of any of the stupidities of the Bush tax cuts--convinced the Republicans that they can play their brinkmanship game on the debt ceiling debate yet again and perhaps finally get the Democrats to undo their own most significant programs of the last 100 years--Social Security and Medicare.

What we ought to be doing is cutting the military/defense and corporate welfare budgets.  And then increasing taxes--with (1) new layers of tax brackets and tax rates corresponding to our new levels of income inequality, so that multimillionaires are taxed at a higher rate than mere millionaires and billionaires are taxed higher than multimillionaires and (2), at the least, legislation to eliminate the farce of the so-called "carried interest: privileged compensation taxation for LBO managers, who get mostly preferential capital gains for their "services" in buying companies and loading them with debt that makes the managers but not the workers wealthy.

But the Democrats somehow still thought they would get some kind of credit, even from the staunchest of the right-wingers, for being "bipartisan" and working out a "deal" to avoid the "fiscal cliff."  So they made the ridiculous Bush tax cuts permanent, except for those in the upper-upper crust making three times as much as anybody in the middle class.  And they made the estate tax cut even larger than it was--with a $5.2 million exemption (double for a couple) and only a 40% rate.  Inequality will continue to grow at accelerated rates.  And they extended the litany of truly egregiously stupid corporate tax breaks, like the bonus depreciation/expensing provisions that ultimately permit corporate multinational giants a NEGATIVE effective tax rate (read Cary Brown on the way noneconomic frontloading of expensing amounts to nontaxation under time value of money principles).

The GOP however is currently running deranged.  The party that purports to care about fiscal conservatism only wants to fund more military and make sure that vulnerable elderly don't get as much in their Social Security checks and have to pay even more for their health care.  McConnell--the MINORITY leader in the Senate--has pronounced his party's views on the matter:  "The tax issue is finished."  Brian Knowlton, McConnell Takes Taxes Off the Table in New Talks, New York Times (Jan 6, 2013).

Folks, the stuff about the debt ceiling and the need to cut benefits under Social Security and Medicare is baloney.  The US government isn't a family--it's a sovereign regime .  We should learn from the Euro nations that are embroiled in a self-defeating austering regime that leaving citizens suffering while trying to toady to big business is a recipe for disaster.

President Obama had damn well better take Social Security and Medicare off the table as well as any corporate tax reductions.  Get rid of corporate loopholes and let corporate tax revenues INCREASE.  It is the only way left to try to re-balance an economy that is skewed in favor of the uber-rich and the multinational corporations and against ordinary Americans.  Oh, it would also help to move to single-payer single-provider health care and get profit-making out of what should be an important human right.

And are we "spending way too much" anyway, as McConnell declares?  Surely not, since we are only spending on things that the Congress has voted to spend on.  If McConnell wants to spend less, let him propose a spending cut and put it to the vote.  If it fails, then he should vote the taxes or borrowing needing to pay for the spending Congress has legislated.

So, just as my advice in the "fiscal cliff" debate was to go over the cliff, let the Bush tax cuts expire, and then put in place some decent cuts for the REAL middle class (those making less than $100,000 a year), my advice here is to go over the "sequester cliff" and let the across-the-board cuts, with the first real cuts to the military in decades, take place.  We should damp down our military zeal and start to put our money where it will build good schools, good colleges, good public transportation, and ultimately good jobs.

As for the debt ceiling, the best thing would be for the Senate to eliminate the filibuster rule (or at least make the right-wingers do a physical filibuster) and eliminate the debt ceiling.  It is an artifact of a different age, and is meaningless.  Think about this.

1) we have spending bills that require us to spend X dollars

2) we have tax bills that only raise X-Y dollars.

3) we have a governmental obligation to pay the X dollars that we spend to those who provide the goods and services amounting to X dollars.

4) Therefore we have a governmental obligation to borrow the Y dollars that we don't raise with taxes.

 

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the GOP version of negotiation: you won, but we get to cut Medicare anyway

Some in the GOP have realized what progressives have been saying all along--that by winning the election, President Obama is in a much better negotiating position on taxes and spending than before, and the GOP really doesn't have many hands to play.

The trouble is, the GOP thinks if it "gives" on any tax increases on the wealthiest Americans that it should have the "right" to a "balanced deal" and get the Dems to go along with the decimation of Medicare, Medicaid and Social Security.  This is the main battle of the radical right's class warfare against ordinary Americans--their goal is to eliminate, reduce, or privatize Social Security, Medicare, and Medicaid benefits.  They created the fiscal cliff with brinkmanship temper-tantrum threats to throw the United States into default unless they got their way, and they are trying to use the December 31 deadline that they themselves set in place to push the Democrats into being the ones to destroy the most effective social welfare programs that the Democrats have created.

See, e.g., Hiedi Przybyla, Republican Defectors Ready to Back U.S. Tax-Rate Compromise, Bloomberg.com (Dec. 5, 2012).  Some members of the GOP have "signed a letter calling for exploration of 'all options' on taxes and entitlement programs"; Petition signers like Mike Sampson (R-ID) say this means he would be willing to "accept higher rates for married couples earning more than $500,000 a year, in exchange for an overhaul of spending on entitlements such as Medicare."  "We've [the GOP,that is, has] got to have entitlement reform," he says.  Id.

Steny Hoyer--the center-right Democratic whip in the House--said that "proposals to raise the eligibility age from 65 to 67 and other entitlement changes 'clearly are on the table'."

Hoyer is writing a suicide note for the Democratic party with that statement, for two reasons.

1) Tax increases cannot be significant enough if they are limited to married couples with $500,000 or $1 million of income, as Simpson suggested, nor if they do not raise the top rate to at least the Clinton era rate of 39.6 percent. 

In reality, they should introduce additional brackets above that rate level for the top earners (e.g., 4o% for 750,000 or more, 45% for 2 million or more , 50% for 10 million or more, up to perhaps 65% for those who make hundreds of millions of income per year). 

And the capital gains preference should be eliminated.  But the GOP is also digging its "line in the sand" against any increases in taxes on investment income--even though this is an income category that creates tax arbitrage opportunities for the wealthiest Americans and high-income Americans (like Mitt Romney) end up paying tax at rates substantially less than ordinary Americans because of the preferential treatment of their capital gains income.  See, e.g., James Politi, Republicans in capital gains tax fight, Financial Times.com (Dec. 4, 2012) (noting that Republicans in the House are "fighting tax increases on capital gains and dividends, ruling out investment income as an acceptable source of additional revenues in increasingly urgent talks to avert the fiscal cliff") [hat tip--Yves Smith at Naked Capitalism].

2) Democrats were elected as the party most likely to protect earned benefit programs, not destroy them.  There is no way that Democrats should accept ANY "overhaul" of Medicare or the other social program eligibility requirements as a way to cut spending.  They are vitally essential to Americans, and the GOP suggestions take the brunt of cuts out on the most vulnerable populations.  The GOP's cuts include lowering the COLA for the elderly for Social Security, when the elderly actually have a HIGHERr cost-of-living than ordinary Americans, or raising the eligibility age for Medicare, when those who labor all of their lives often need EARLIER eligibility because they need to retire earlier and have no health care outside of work and can't afford to pay what private insurers will charge. 

The savings from these stingy GOP proposals are de minimis, but the impact will be to create a momentum for reducing benefits as a way to save.  That is treating a symptom and not the problem. 

The problem of increasing health care costs comes from the inordinate profit-taking by parties at every link of the health care chain--consultants who bid out to insurers, insurers, hospitals, doctors, Big Pharm, Big Nursing Home, and shareholders.  The only way to address the problem is to do what every other advanced civilization in our era has already done--move to a single payer system that treats health care as a citizen's right and treats the provision of health care as in some sense a public good that the government must provide.  Single payer allows the government to bargain on behalf of its citizens, reducing the monopolistic rights of pharaceutical, hospital and other health care intermediaries.

The article notes that about 120 Dems would need to "buy in" to entitlement cuts in the House for the GOP to agree to tax increases.  The Dems should say no.  The tax increases will come into law on January 1, and then the Dems can propose a bill that will cut taxes for those for whom it makes sense, without decimating the star programs that have supported the middle class since FDR.  (Note to Dems--progressives will not vote for anyone who goes along with such entitlement changes.)

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GOP proposes Medicare eligibility age increase

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Republican "fiscal cliff" proposal

House republican leaders have sent a letter to President Obama with their "fiscal cliff" proposal, which the Republicans cast as a "fair middle ground" and a "balanced framework for averting the fiscal cliff."  Id.  Republicans object that the administrative proposal has is unbalanced, because it has "four times as much tax revenue as spending cuts" (under a Republican claim that the Administration shouldn't count already enacted spending cuts that were part of the Administration's original proposal as part of the bargain).  And of course the Republicans don't like the idea of any stimulus measures being included in the deal or the proposal to finally do away with our arcane and unnecessary debt ceiling mess, which invites games of chicken that have no point.  They claim that they are merely supporting the Bowles-Simpson plan, which of course they are not since they are refusing all tax rate increases.

The letter is written rather confusedly and is therefore somewhat ambiguous on exactly what it is offering as a concrete proposal.  One has to conclude that it isn't a concrete proposal but actually merely puffery that restates the position that the GOP wants lots of entitlement cuts, no military cuts, and no tax rate increases (but might go along, maybe, with some unspecified "loophole eilmination" for the nonce).  It appears to propose the following:

• $900 billion in cuts to mandatory spending including Medicare and Medicaid spending over the next decade 
  • The Republican letter, of course, tries to assume the mantle of "preserving and protecting" social welfare programs even while they reach out to reduce, eliminate or privatize them, when it suggests that perhaps the Republicans will return to the Budget Resolution that offered a voucher plan for limiting Medicare benefits (and hoped to buy off current seniors and those nearing retirement by promising them benefits under the current program). The Republican proposal referred to claims to "reform" Medicaid by offering "flexibility" that cuts $800 billion from the program over 10 years!  Although admitting that the election makes pursuing those kinds of harsh reforms "counterproductive", the Republican leaders promise to "continue to support and advance them." 
• $300 billion in cuts to other discretionary spending over the next decade
• $200 billion in cuts to Social Security benefits (by revising the method of calculating cost of living increases, which would also apply to keep the tax brackets from rising as fast and for adjustments to government pensions)
• $800 billion in new revenue--achieved through "pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates" (but of course without mentioning just what loopholes and deductions would be removed).  The letter goes on to declare that the Republican leaders will not agree to higher tax rates, asserting that their position is to "protect small businesses and our economy".

Let's assess this so-called "proposal." 

Lowering rates is absurdity at this point:  no reasonable person should vote for a proposal to lower US tax rates even more than they already are.  Lowering rates while eliminating deductions or loopholes doesn't work any better:  immediately after such a bill is passed, the lobbyists will be back on the floor.  First they'll demand a temporary extension while markets "adjust" (mostly bulls..t).  Then they'll demand that the temporary provision be made permanent to provide "certainty" to markets and businesses.  Then they'll demand enhancement of the loophole to broaden it, since they say such provisions will incentivize job creation. Etc.  This is an old story that never plays out the way the lobbyists promise.  Congress shouldn't fall for it again.  Because the next ploy will be--oh, let's broaden the base by removing these new old loopholes and then we can lower rates even more.  The only thing that is likely to happen in this ploy is that the top rates go down for the wealthiest taxpayers, who pay less and less.

Cutting the various safety net programs is equally absurd.  Especially in a time of continuing difficulty, especially for vulnerable populations like the elderly, poor, laborers with inadequate pension and health care possibilities after retirement and other large groups in our population.  There is no reason to cave to the GOP's forty-year campaign to reduce, privatize or eliminate social welfare programs:  let the gradual onset of taxes and sequesters take place in January, and then ask them to pass a tax cut to benefit those in the middle and lower-income groups.

The letter ends with an oxymoronic statement that essentially states that if the Obama administration will cave to these GOP demands, they are "ready and eager to begin discussions about how to stucture these reforms."  They go on to suggest that President Obama has taken actions to "undermine good-fith effrorts to reach a reasonable and equitable agreement."

That's bunk, boys.  If the GOP is going to play this game this way, the administration should not attempt any kind of short-term resolution.  After the Bush tax cuts are repealed once and for all by operation of existing law as of January 1, it will be much easier to discuss what reasonable tax cuts should be enacted to protect the middle class rather than the wealth of corporate managers and owners.  And once there is a first start on the reduction of the military budget, we can move on to reduce it even more.  Action can be taken to stave off problems that would be caused by any of the provisions in early 2013.

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Reich video on the austerity bomb/fiscal cliff

Robert Reich is at it again--producing a quick (2 1/2 minute) video with sketches to illustrate his suggested rules for Democrats in the "fiscal cliff" negotiations with the GOP.  The video is available various places, including on Salon at the following link:  Robert Reich, Understanding the fiscal cliff in 150 sections, Salon.com (Dec. 3, 2012).

"Reich's Rules" sound an awful lot like the stuff I've been writing on my blog, so readers may see some building of a consensus here.  (I hope.)

Rule 1.  "Hold your ground."  Dems won the election.

Rule 2. "No deal is better than a bad deal."  Bush tax cuts end.  (I'd add--the military sequester is the first real cut in the military and a start on reducing that huge 60% stake of our budget.)

Rule 3. "Make Republicans vote on extending the tax cuts just for the middle class."  How can they really refuse?

Rule 4. "Demand higher tax rates on wealthy, not just limits or deductions."

Rule 5. "Don't cut safety nets" (Medicare, Social Security, Medicaid, programs for the poor).

Rule 6.  "Don't cut investments in our future productivity" (education, basic research, infrastructure).

Rule 7. "Cut spending on military and corporate welfare (agribusiness, oil and gas, Big Pharma, big insurance, Wall Street)."

Rule 8. "Put jobs before deficit reduction" (and avoid the austerity trap).

 Watch the video on youtube here

 

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11/30/12 Links Worth Noting: Stealth (Class) Warfare

Paul Krugman, Class Wars of 2012, New York Times (Nov. 30, 2012).

When Mitt Romney disparaged ordinary Americans, it was visible, obvious, and clearly an indication of the lack of esteem he held for ordinary Americans.  The same arrogance is at work in the class warfare that the radical right is waging against the social programs that have been partof the great stabilization of the middle class and a singular pathway to a more sustainable lifestyle for those who are underprivileged in America--Social Security, Medicare, and Medicaid.

The drumbeat for "fiscal cliff" worries continues to build in the media.  The right wants us to think that they are worried about future generations facing mountains of debt.  They aren't.  The right wants us to think that they are worried that the only way to combat skyrocketing health care costs is by cutting back on benefits for ordinary Americans.  They aren't, and it isn't.  The right wants us to think that the wealthy have sacrificed already and are truly noble if they bear even minimal tax increases from the expiration of the Bush tax cuts.  They haven't and they aren't.  The right wants the progressives to roll over and play dead, so they can insist that they have the good of the country at heart when they demand cuts to infrastructure spending and cuts to "entitlements" as a condition for petty little increases in the taxes of the ultra rich who have greedily sucked up all the juice in the economy for forty years.  We won't.

Readers may think this blog has become a broken record of arguments for higher taxes--at least on the wealthy, at least through the removal of the preferential capital gains rate--and holding firm on protecting Social Security, Medicare, Medicaid.  Maybe so.  But we must continue to speak out until those we elected to lead the country act like they heard the prevailing sentiment of the election:  we want more taxes on the upper class; we want an economy that is stimulated by government spending when private spending won't do it; we want a sustainable economy that distributes resources more equitably and not a winner-take-all economy that allows those with monetary power to dictate the lifestyles of the rest of us.

Krugman is, as usual, correct.  What they can't get by buying an election the rich will try to get by lobbying and pretending to worry about the fiscal cliff.  Let them try.  Progressives in Congress should start talking, on any available outlet, about "going over the cliff" because it really isn't so bad.  It will free us once and for all of the ridiculous Bush tax cuts and allow us to undertake thinking about the tax code without that "status quo" hanging over our head like the sword of Damocles.  And we can pass some really decent tax cuts for the lower income quintiles at the first of the year, without having to deal yet again with the "extenders" on the table.  We can reform corporate tax--getting rid of loopholes; getting rid of the transfer pricing games--without lowering rates.  And we can deal with the sequester in reasonable ways.  What should we spend on and why.  Let the rest go.  We would finally begin the process of lowering the expectations of the military-industrial complex.

The following are excerpts from Krugman's piece.

The important thing to understand now is that while the election is over, the class war isn’t. The same people who bet big on Mr. Romney, and lost, are now trying to win by stealth — in the name of fiscal responsibility — the ground they failed to gain in an open election.

***

Consider, as a prime example, the push to raise the retirement age, the age of eligibility for Medicare, or both. This is only reasonable, we’re told — after all, life expectancy has risen, so shouldn’t we all retire later? In reality, however, it would be a hugely regressive policy change, imposing severe burdens on lower- and middle-income Americans while barely affecting the wealthy. Why? First of all, the increase in life expectancy is concentrated among the affluent; why should janitors have to retire later because lawyers are living longer? Second, both Social Security and Medicare are much more important, relative to income, to less-affluent Americans, so delaying their availability would be a far more severe hit to ordinary families than to the top 1 percent.

***

[A]ny proposal to avoid a rate increase is, whatever its proponents may say, a proposal that we let the 1 percent off the hook and shift the burden, one way or another, to the middle class or the poor.

***

The point is that the class war is still on, this time with an added dose of deception. And this, in turn, means that you need to look very closely at any proposals coming from the usual suspects, even — or rather especially — if the proposal is being represented as a bipartisan, common-sense solution. In particular, whenever some deficit-scold group talks about “shared sacrifice,” you need to ask, sacrifice relative to what?

***

America’s top-down class warriors lost big in the election, but now they’re trying to use the pretense of concern about the deficit to snatch victory from the jaws of defeat. Let’s not let them pull it off.

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There are no "per se" tax or spending caps: lame duck negotiations no place for Medicare/Medicaid cuts

When George W. Bush got reelected with a minority of the popular vote and contested state counts, the GOP claimed a mandate to keep going with the fiscally irresponsible program of high military spending combined with tax cuts particularly advantageous for their wealthy and corporate-owning supporters.

When Barack Obama got reelected with a clear majority of the popular vote and a resounding majority in the electoral college, the GOP says Obama has no mandate because the GOP managed to retain the House though Democrats in the House got more votes than Republicans in the House.

Anybody notice the partisan inconsistency there?

What we do know is that a majority of Americans--even lots of those Republicans who voted for Romney--want this Congress to preserve Medicaid and Medicare.  There is a huge effort by some--like the Peterson Institute, the Simpson-Bowles comedy tour, and right-wing propaganda tanks--to cast Medicare as impossible to sustain because of the current trend in health care costs.  The argument goes this way:

• health care costs in the US are rising
• the population that is eligible for Medicare in the using is rising as baby boomers age
• Medicare costs will therefore inevitably increase
• even though Medicare costs are rising less rapidly than non-Medicare health care costs (because of the ability of the government to mandate certain cost controls), those increases will eventually require significantly higher government outlays
• the US has unprecedented levels of debt and annual budget deficits
• the US spends too much compared to its tax revenues (the tax take is several percentage points less of the GDP than the spending percentage)
• therefore the US can't afford to pay those increasing amounts for Medicare health care costs
• therefore we should cut back on eligibilty for, and benefits from, Medicare.

But this argument has several fatal flaws that include the following:

• debt is extraordinarily cheap right now
  • if you can borrow at very low rates, it is better to borrow now than later
  • if you can borrow at very low rates and there are important projects on which to spend the money, the borrowed money acts as a stimulant to the economy
  • if the economy is stimulated by the borrowed money, the GDP growth will likely support continued low interest rates and faster revenue growth that will repay the debt faster
• deficit spending by the government is vital when there isn't private spending
  • and if the economy grows, private spending will grow and deficit spending can pull back
• spending priorities have to be determined: 
  • there is no per se rule that higher spending is necessarily bad (though the right-wing in this country presupposes that there is and based almost all policy prescriptions on that presupposition, because the right-wing ideologically wants to divert public spending to its private pocketbooks)
  • there is no arbitrary and fixed percentage of GDP that is the "right" amount to be spent by the government on government programs
  • we spend too little now on public infrastructure ( public transporation, national roadways, electrical grids, and sewage systems are badly deteriorated), basic research (we have cut back on funding for NIH and NSF, major drivers of advancements in scientific and medical knowledge), and major priorities like combatting global warming/ supporting renewable energy
  • we spend too much now on the military (the military-industrial complex constitutes about 60% of the federal government)
  • we should support continued spending on Medicaid and Medicare, because those programs fill a vital need and serve the population well--we should not reduce benefits but rather increase them, at least for those who rely on Medicare/Medicaid as their primary or only health care plan

• We've already built in various cuts to the spending for Medicare and Medicaid (possibly too much) and the question of what the costs will be ten years down the road depend in part on what else we do along those lines and how those things work out. See Editorial, Health Care Entitlements, New York Times (Nov. 29, 2012); Yves Smith, Naked Capitalism.

• tax policy should be based on fairness in the way we raise revenues and spending priroities in the amount of revenues we raise

• An equation that says "X (health care costs) is increasing and Y (Medicare coverage of health care costs) is increasing (because the number of people needing the program that pays for health care costs is increasing) and Z (taxes for coverage of health care costs) is increasing" and then concludes "therefore we must reduce Y" is using false logic: 
  •  to maintain a relative constant, there are more options than "reduce Y" since the country could:
    • reduce X (move to single payer, as every other advanced nation has done, and halve the cost of health care)
    • increase Z (increase the tax support for Medicare, because it is a high priority that a majority of the citizens of our democracy support)

What we have to do is get away from the kind of thinking that seems to permeate so much of the discussion in Congress and in the media--that there are pre-set limits to how much we should borrow, how much we should spend, or how much we should raise in tax revenues. 

The deficit hawks want us to think that the coutnry will be just another Greece if we don't rein in spending and debt and keep taxes low.  Traditionally our spending has ranged around 21% of GDP, but there is nothing magical about that number--it could rise to 24% or 26% without harm.  And we are not Greece, because we remain a powerful economy, one that can print our own money and one that commands interest from the global economy, so our debt (mostly caused by the Bush tax cuts combined with the Bush wars, and the Reaganomics deregulatory mania) is not an unbearable yoke around our necks.  We should be discussing the real needs of the country for infrastructure and provision of public goods and then figuring out how to pay for them with a combination of taxes and debt.

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Once again the fiscal cliff, Simpson-Bowles, the magical "21% of GDP"

The media tends to run in packs.  And on this whole matter of the long-awaited sunset of the Bush tax cuts combined with the earlier-negotiated package of budget cuts (including a much needed start to cutting back on that bloated soaker of 60% of all federal expenditures, the military), the media really can't seem to think for itself.

So we keep hearing about how we should worry about the "fiscal cliff".  Even though for some reason bond traders aren't.  Even though people are still flocking to US Treasuries rather than the debt of other sovereign nations.  Even though the economy seems to be looking the other way and consumer confidence is up. 

People like Peter Peterson (private equity vulture capitalist) want us to think the deficit is the worst crisis imaginable and therefore that we need to adopt austerity (cut "entitlement" programs).  People like Alan Simpson (curmudgeonly former senator and never one whit a progressive) and Erskine Bowles (upright Chicago School-thinker on economics issues and not a progressive either) want us to think we need to focus on debt and that we should have a pick (austerity) package with 2/3 spending cuts and 1/3 tax hikes and, oh yeah, "entitlement" "reforms." 

These are people who are peddling the same old cure for the GOP-invented problem of "beastly" government that needs to be "starved."  When what we have in reality is a problem of an unequal economy that needs to be jumpstarted, in order to get government monies rolling to support infrastructure and human capital development, which will get the middle class growing, which will be good for everybody.

Why would anybody listen to Peter Peterson, Erskine Bowles, Alan Simpson or any of that crowd?  They are not much different from the Mitt Romney of the 47% remarks fame--they're nowhere near middle class themselves, they haven't the foggiest notion of what it might be like not to be able to afford decent medical care or a decent retirement, and they think of themselves and the white men like themselves, as the leaders of the free world who merit all the wondrous things they have.  Bull Shit.

Jeff Madrick is a mildly progressive (he'd probably say "centrist") member of the "next new deal" project at the Roosevelt Institute.  He writes in Salon.com about the arbitrary nature of most of the foundation of the austerity "gotta pay down the deficit and pay the debt" movement.  In particular, he writes aobut the idea that there is something fundamentally wrong about federal spending that exceeds the historical trendline of 21% of GDP.  See Jeff Madrick, The Simpson-Bowles consensus makes no sense, Salon.com (Nov. 28, 2012). As he notes, the idea that we should never exceed that historic trendline comse from the Heritage Foundation--a propaganda tank that puts forth all kinds of material that wants us to stay with the status quo.   It would mean "deep cuts to Social Security, Medicare, and Medicaid over time, as well as virtually all other federal programs."   Centrists in discussions at the Brookings INstitution suggested spending in the range of 23 to 25% of GDP would be more reasonable, given our context (decades of underspending on infrastructure and overspending on military).  And Madrick thinks we need to keep these ideas in mind:

Centrists had better get together and remind America, with analysis, pragmatism, and a keen sense of justice and America’s future, how deeply wrongheaded most of the basic principles of Simpson-Bowles are. This thinking has led to today’s fiscal cliff, and as a blueprint for the future it is both damaging to the economy and cruel for most Americans. Id.

Folks.  There is no merit, per se, in any status quo.  There is no there there.  As Jeff says, "American cannot be run by men like these" (speaking of Simpson, Bowles, and Peterson, elites all three who want the economy to be brought under control by cutting entitlements a lot  and not raising taxes much). Id.

 

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The Media's Role in Driving the "Fiscal Cliff" Imagery

[edited 11/23/12 4:33 EST]

The mainstream media has been fed a steady diet of releases from interested parties (like right-leaning propaganda tanks) about the need to adopt austerity measures, often cast as needing to save the country from out-of-control spending and unprecedented deficits and debt. 

At the same time, the mainstream media has generally given up investigative journalism to engage in sports-like "he said-she said" journalism:  it treats most fiscal issues as a contest between left-leaning and right-leaning groups to be described by each side's post position--i.e., as a merit-based race between equally valid positions.  Without the investigative wherewithall for in-depth research, there's much less information about wehther and how the facts may support one side and not the other. 

We see it on climate change, where a scientific consensus is treated as just another opinion contrasted with the wishful opinions of anti-environmental corporatists.  We see it on evolution, where belief-based creationism is taught in schools alongside fact-supported scientific theory, with the two sides reported in the news as though they represent equally valid educational positions.     

It shouldn't be surprising, therefore, that this approach surfaces in spades when it comes to the so-called "fiscal cliff". 

One is hard pressed to find articles that give credence to the position of progressives on Social Security (it is not bankrupt), Medicare (we can solve the long-term problem of financing of reasonable universal health care without cutting benefits by learning from the facts and experiences about controlling medical care costs through single-payer systems like those adopted in every other advanced nation), or even taxes.  The possibility of using the end-of-year changes as a fresh-start, "sweep the house clean" foundation for immediate action early in the new term is often ignored and, if mentioned, is generally given short shrift and inadequate explanation. 

It's easy, though, to find forecasts of return to recession outcomes if the sequester and end of the Bush tax cuts are allowed to take place as currently enacted.    

Take, for example, the rhetoric of Mark Johnson in a KTVB.com report, A Fiscal Cliff primer (Nov. 18, 2012, updated Nov. 19).

If Congress cannot come up with an agreement on the Simpson-Bowles ratification, and then cannot come up [with] enough compromises to pass a plan of their own, and the President refuses to extend the current January 1st deadline, it's over the cliff for Uncle Sam.

And, straight into the tax increases, unemployment jump, deep federal cuts and probable recession; A rough landing for the country and a scenario neither side wants.

The article adds to the crisis drumroll by quoting political scientist David Adler.

"And all the progress that Idaho families made in getting out of the recession will have gone by the wayside if in fact America's politicians in Washington are not able to put our fiscal house in order." Id.

In a similar vein, Jonathan Weisman in the New York Times reports today that "negotiators" have agreed on the parameters for a deal in which they will agree on fixed amounts of revenue to be raised (without tax rates increasing) and fixed amounts of cuts to social programs (and other federal programs like farm subsidies).  Jonathan Weisman, Seeking Ways to Raise Taxes but Leave Tax Rate as is: Negotiators Float Ideas to Appease Both Parties, New York Times (Nov. 23, 2012), at A12. 

The article contains a good bit of information (or speculation, it isn't completely clear) about what "negotiators" are considering in order to "pacify" the Republicans without permitting tax rate increases.  There's no specific source attribution other than to ""aides involved in the negotiations" and a "Republican aide involved in the current talks."  Id.  Predictably, it also includes a description of the slated legislative changes as a "crisis" when the "'fiscal cliff' would squeeze hundreds of billions of dollars out of the fragile economy next year and, many economists say, send the country back into recession".  Id. 

There's not a single hint that it may not really be a "cliff".  That it merely cuts back INCREASES in military spending.  That the sequester, with its cuts to the military, leaves the government with more options for funding NEEDED stimulus spending.  That Congress has all the power it needs to undo any truly harmful components of the sequester.  That Congress can instead consider targeted cuts to lower-income taxpayers to prevent a renewal downward recession trend.  That Congress can instead target spending cuts (and spending) on stimulation of the economy.  That Congress, in other words, has it in its power to help lower-income taxpayers pay for needed consumption and thus to create tax cuts and controlled spending cuts to benefit the lower and lower-middle income classes whose consumption is most needed to drive economic growth.

A little better is Evan Soltas, A Gentler Slope for the 'Fiscal Cliff', Bloomberg.com (Nov. 19, 2012), in which he admits the siren-call of the term to journalists.

The vivid imagery and false urgency of the [fiscal cliff] term transformed budget arcana into a national Wile E. Coyote moment. The words lent themselves to media overexposure and political opportunism. Despite efforts by Chris Hayes, Ezra Klein and Suzy Khimm to rebrand it the “fiscal curb” or “austerity crisis” -- either of which would be more consistent with reality -- Bernanke's original phrasing has held fast.  Id.

Soltas at least explores the benefit of avoiding drastic austerity measures and even considering an "alternate" path of increasing the tax take beyond the "historic" measures of 18-19% of GDP.  Remember, we are currently at all-time lows in the perecentage of GDP taken in federal taxes, due especially to the enormously preferential rates to the super-elite through taxation of capital gains, dividends and private equity compensation (that is, "carried interest") at less than half the top rate on ordinary compensation.

A reasonable solution might be a combination of spending cuts and revenue increases which stabilizes both at 18 or 19 percent of gross domestic product. That would be in line with their 50-year historical average. Increases or decreases beyond this level demand larger arguments about the proper size and role of government.

Alternatively, one could contend that demographic shifts -- namely, the growing elderly fraction of the population -- or rising health care costs justify greater public resources without any moral claims about government’s proper size. There is merit to this argument, but it neglects the revenue side of the historical consensus on the taxes paid to the federal government.

The relevance of any "historical consensus" on the percent of GDP that should be paid to the federal government, however, is questionable.  The times are extraordinarily different, with the years of low tax intake from the Reagan tax cuts through the Bush tax cuts, coupled with the unprecedented problem of the Bush preemptive wars being fought without the historical use of wartime increases in tax cuts (especially on the rich) to pay for them.

Maybe one of the better articles is a pre-election discussion at Fidelity.com on the "Fiscal Cliffhanger", Sept. 26, 2012.  Here at least there is a good graphic demonstrating just how significant the Bush-era tax cuts are in our deficit problem ($221 billion) and how little the cut to support for Medicare payments to providers is ($11 billion).  Perhaps this kind of graphic can get the upper-middle class Americans to consider their fair-share obligation. (That means couples, like most professionals such as myself, who make more than $100,000 a year but less than the $250,000 or more a year that Obama has taken as his targeted income level for reintroducting pre-Bush era taxes.)  Further, the article acknowledges that gridlock in the lame duck is quite possible, but goes on to note that there will likely be a resolution--with compromise on both sides--early in 2013.

 Many progressives--in which group I include myself-- do think that a clean sweep start to the new session could allow Congress to act more reasonably on our long-term fiscal needs without compromising measures needed to continue moving us out of the Bush recession.  

Once the Bush tax cuts are gone and the sequester starting to take effect, Congress could  enact piecemeal legislation.  It could pass new, better targeted tax cuts for the lower-middle and lower income distribution.  Hopefully Obama, now in office and not needing to protect his electoral future, will recognize the reasonableness of allowing some tax increases to take place in four-or five- years for those couples in the $100,000 to $250,000 taxable income set.  

Once the sequester is starting to roll in, Congress could move to reinstate public pension support.  It could consider long-term support for Medicare through gradual adoption of a single-payer, Medicare-for-all system that meets the real needs of the future rather than using an artificially created fiscal crisis to destroy the New Deal programs.  It could accept the sequester's limited spending increases for the military.  It could even finally act to reduce the tax-and-spending subsidies for Big Banks (get rid of the active financing exception to Subpart F), Big Pharmacy and Big IT (legislate new international tax rules that undo the tax evasion that current  "affiliated sales" of intellectual property permits while reining in the ability of MNEs to locate their profits in offshore tax havens with sophisticated tax planning like the "Dutch sandwich" techniques), and Big Oil and Big Agribusiness (outright subsidies built into well-lobbied tax and spending provisions).   

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More on the Threat to Social Security and Medicare from the so-called "Fiscal Cliff"

In several posts recently I have discussed the harmful demands the right is engaging in related to the so-called "fiscal cliff" created by the original Bush tax cuts (set to sunset en masse), the artificial debt ceiling (used by the GOP to exact promises of spending cuts during a recession along with extension of unneeded tax cuts for the rich), and the ill-conceived notion that the U.S. military should continue to be funded at dangerously high levels that (i) ensure that the military-industrial complex will find a war or quasi-war in which to engage their newest toys while (ii) sucking resources from public infrastructure projects and education that are vitally needed to sustain our economy.  See, e.g., The GOP's extortion demands: cut Social Security or we'll shoot; If the Dems got backbone; Is it a fiscal cliff or merely a bump in the road; We face an 'austerity crisis' not a 'fiscal cliff. 

A. The Explanation.

At least the national media and a slew of bloggers are beginning to provide some background information to ordinary Americans on just what is driving the national discussion of "fiscal cliffs" and "austerity" demands.  See, e.g., Richard Rubin & Heidi Przybyla, Tax Pledges Confound Math as Obama Seeks Deal with Republicans, Bloomberg.com (Nov. 16, 2012) (noting that "The $607 billion fiscal cliff is the combination of tax increases and spending cuts that will take effect in January if Congress doesn’t act" and characterizing the positions of the parties as follows: "Republicans want to extend expiring tax cuts for all income levels and are demanding an overhaul in 2013 of entitlement programs and the tax code" while "Obama wants $1.6 trillion in higher taxes for top earners over the next decade, achieved through a combination of limits on breaks and higher tax rates on ordinary income, capital gains, dividends and estates"); Jackie Calmes, Demystifying the Fiscal Impasse that is Vexing Washington, New York Times (Nov. 16, 2012), at A19 (the online article is dated Nov. 15). 

[A] slew of tax cuts — $400 billion for 2013 — expire on Dec. 31: All of the Bush-era rate reductions; smaller tax cuts that periodically expire for businesses and individuals; and the 2-percentage-point cut in payroll taxes that Mr. Obama pushed in 2010....  Also, 28 million taxpayers — about one in five, all middle- to upper-income — would have to pay the alternative minimum tax in 2012.... That is because Congress has failed to pass an inflation adjustment....

***

An emergency unemployment-compensation program is expiring, which would save $26 billion but end payments to millions of Americans who remain jobless and have exhausted state tax benefits.

Medicare payments to doctors would be reduced 27 percent, or $11 billion, because this year Congress has not passed the usual so-called 'doc fix' to block the cuts....

The biggest cut would be $65 billion, enacted across the board for most federal programs over the last nine months of fiscal year 2013, from January through September.  This cut, known as the sequester, was mandated by an August 2011 budget deal between [President] Obama and Congress that ended [the GOP] standoff over raising the nation's debt limit.   Demystifying the Fiscal Impasse that is Vexing Washington

It is surely accurate that our still-weak economy would do better if we do not hit it too hard with decreases in government spending--especially decreases to government spending that supports the most vulnerable amongst us who need unemployment support in order to provide the basic necessities.  Similarly, it is surely true that some of the Bush tax cuts and the Obama payroll tax reduction are still vitally important to those in the lower 60% or so of the income distribution because of the slow growth in the economy.  We will want to find some resolution to the situation that accommodates the need to avoid a harmful austerity approach.

So the Times' explanation of the components of the so-called "fiscal cliff" is okay.  And it is reasonable in noting that the situation is currently "vexing" to Washington.  Similarly, the Bloomberg article succinctly characterizes the clear poles of the Democratic and Republican positions--a Democratic insistence on higher taxes paid by the rich, and a Republican insistence on so-called "tax reform" and spending cuts, aimed in particular at the earned benefit and safety net programs of Social Security, Medicare, and Medicaid. 

B. A Grand Bargain or a Devil's Bargain--How the Heck Did Social Security Even Get In the Picture?

Where the Times article fails is in its discussion of the "reasons"  for excessive worry about the "fiscal cliff" (if one can really call the GOP recalcitrance to immediately pass an extension of at least a good portion of the Bush tax cuts for individual taxpayers in the true middle class any form of reason).  

The Times article asserts that the "main disagreement" between Dems and Republicans is merely the question of extending the Bush tax rates for the top 2 percent of taxpayers.  That is a considerable understatement, one that results in part from the way the media reduces complex issues to easily retained soundbites, in that it ignores the considerable disagreement about whether and to what extent there should be any changes at all to the various earned benefit programs. 

The  article author appears to operate on an unstated assumption that because President Obama seemed ready to trade off changes in Social Security, Medicare and Medicaid benefits for higher taxes on the very richest of the rich in August of 2011, he will still enter into such a "Grand Bargain" to avoid the so-called "fiscal cliff."  Progressives hope, at least, that Obama will not fall prey to those same conclusions: Obama is now in a position of considerable leverage, and he must recognize that he cannot allow the Democrats to be extorted into a Devil's Bargain to reduce Social Security, Medicaid, and Medicare benefits in exchange for the pittance of slightly higher taxes on the upper crust.

The article goes even further astray at the end with its label of a "two-part deal" as the "best-case outcome".  It claims that "[m]any budget experts and economists are hoping for a two-part deal.  The first part would extend many of the tax cuts and repeal the automatic spending cuts to avert the changes scheduled after Jan. 1.  But it would be contingent on the second part: a framework for reducing projected long-term deficits by overhauling both the tax code--to raise revenues--and entitlement programs--chiefly Medicare and Medicaid, whose rising costs in an aging population are unsustainable."  Id.

Of course, here the "many" is simply put out there without any context, so one can't challenge the statement as accurate or inaccurate.  The right-wing has a stable of market fundamentalist economists who want to see earned benefit programs reduced, and there are certainly the Blue-Dog Dems and a number of others (like the Bowles Simpson group) who go along with that with little questioning of the ultimate negative impact on quality of life and decency of those determinations.  Overall, there is considerable parroting of the right-wing rhetoric that suggests that these vitally important programs have to be overhauled, rather than recognizing that it is the factors that lead to ever-increasing costs for medical care in the United States that must be addressed.  And it mistakenly suggests that there is a consensus in that regard. This is a perfect example of the way today's journalists buy into the rhetoric that is promoted (at great expense) without questioning the fundamental presuppositions underlying it.  In fact, the sequester deal did not touch Social Security, Medicare and Medicaid because there was no consensus that these programs should be reduced.  And the election results demonstrate that there is no consensus now that these program benefits must be reduced, though there is likely a consensus that health care costs in this country are increasing well beyond what is reasonable.  It is absolutely critical that the distinction be made.

So let's take these issues into consideration here.

C. Thinking about the two key components of the so-called "fiscal cliff"--tax cuts and spending cuts.

1. The Bush tax cuts, job creators, and uncertainty

The right has, not unexpectedly, argued that not extending all of the tax cuts--including those that amount to significant dollars for the wealthiest upper crust--will create a dire situation since, the right argues, the wealthy are the "job creators".  There is no empirical evidence supporting the idea that tax cuts for the upper crust do anything to create jobs: most jobs are created by small businesses, and those with incomes above $250,000 make up only about 3% of small businesses. 

Others argue that the uncertainty of letting the Bush tax cuts expire on December 31 is itself a dire blow to the economy.  But in the same breath, the media and most members of the Democratic and Republican parties acknowledge that they do not disagree on the need to extend the tax cuts for the middle income group at this time--the Democrats because they recognize that the tax cuts are still needed at a time of continuing slow growth out of the Great Recession caused by the profligate regulatory and tax policies of the Bush years, and the GOP because they recognize that they have no opportunity for an electoral majority if they continue to ignore the middle class. 

Thus,  savvy political advisers note that allowing the Bush tax cuts to expire and then enacting judiciously selected tax cuts targeted at the middle class (perhaps similar to the Bush tax cuts for the lower income groups or perhaps more carefully selected and without the many corporate tax giveaways) are fairly sure things, so that the arguments from uncertainty reduce to the same-old right-wing scare tactics.

2. The sequester, military spending, health care costs, and the importance of Social Security, Medicare, and Medicaid

Some conclude that neither side wants the sequester, with its domestic spending cuts and military cost-cutting, to go into place.  This, too, may be incorrect and overly simplistic. 

Many progressives recognized that we have a substantial imbalance in spending, in which we neglect public infrastructure (roads, bridges, public transportation especially rail and inter-and intra-city rail) and human capital development (funding for public education and for basic research) while pushing money at the military-industrial complex.  The latter step merely encourages the military to find ways to use the military investment it makes--i.e., more money essentially fosters war-mongering simply by providing plenty of the tools to carry it out through exorbitant expenditures on the military.  Letting the sequester take place is probably the only way that our dysfunctional Congress--with far-right-wing/Tea Party dominance in the House and the minority-control rule through the filibuster in the Senate--will be able to undo the disastrous emphasis on military spending above everything else that began with Reaganomics.  

Accordingly, a better course might be to let the sequester take hold, too, and then selectively undo cuts that jeopardize sound government--such as cuts to research, centers for disease control, public transportation, public infrastructure, education, and funding of public pension obligations.  Surely the right recognizes that Americans are not happy when lax regulation results in deaths from medical care because Congress was lobbied out of regulating compounding pharmacies or deaths from bridge collapse because Congress refused to spend sufficiently on upgrading our antique transportation infrastructure or continually falling behind in research on Alzheimers and cancer and the many other modern afflictions because Congress has been so stingy with federal funds supporting basic research at our research universities.

OF course, we know from the election that today's GOP sees no problem with cuts to various domestic programs that the Dems (and many ordinary Americans) hold dear--the right's admitted goal since Reagan has been to reduce the size of government, on the ill-founded belief in market fundamentalism that private markets can do everything better.  

But we have years of evidence that disproves that belief, and progressives must start publicizing the absurdity of the right's claims about market fundamentalism and the right's denials about basic scientific theory.  Climate change is real, and investments will be required to protect our great cities.  Social Security is not bankrupt, and there is no reason that it cannot continue for years (even indefinitely) without reducing benefits.  Markets like medical care simply don't work without governmental intervention because Big Pharma, Big Insurance, and Big Med (especially for-profit hospitals, nursing homes but also too highly compensated doctors combined with too lowly compensated aides and other assistants) exercise near-monolithic control of access and pricing, rendering the health care "market" dysfunctional, and government intervention will be required to create health-care delivery systems that serve the people. 

(Even those who ascribe to Milt Friedman's views of how markets work--views which in my view are based on unrealistic and overly simplistic assumptions that leave out most of the truth of human behavior in order to arrive at neatly mathematical formulas--recognize problems with the health care market where physicians operate in a structure of monopolistic competition.  In Capitalism and Freedom, Friedman noted that state licensing acts as a barrier to entry that gives physicians considerable market control, thus resulting in rent profits.  Friedman's market fundamentalism solution would be to allow anyone to practice medicine without a license, thus creating consumer "choice."  Query whether anyone without considerable wealth would actually prefer a return to those "quack" days of frontier medicine where such a market existed or would rather have a version of today's regulated system of health care professionals with both affordability and competence. I argue that the latter is both preferable and attainable.  See below.)

The following provides some of the factual evidence for the importance of government intervention in the medical care market--European and Canadian health care, which are generally forms of government single-payer or single-payer/single-provider care, and Medicare, which is a form of government single-payer care, are both considerably less costly and substantially more universal in coverage than the standard, private market U.S. medical care model.   See, e.g., the OECD's comparative statistics on medical care provision in the US compared to OECD countries and Canada, available here (see statistical spreadsheet here).

Total Healh Care Spending Per Person, 2010: US (8233); OECD avg (3268); CA (4445)

Total Health Care Spending* as Share of GDP, 2010: US (17.6); OECD avg (9.5); CA (11.4)

Pharmaceutical Expenditure* Per Person, 2010: US (983); OECD avg (496); CA (741)

Practicing Physicians Per 1000 Population, 2010: US (2.4); OECD avg (3.1); CA (2.4)

Practicing Nurses Per 1000 Population, 2010: US (11.0); OECD avg (8.7); CA (9.3)

Physician Consultations Per Person, 2010: US (3.9); OECD (6.4); CA (5.5)

Medical Graduates Per 100000 Population, 2010: US (6.6); OECD (10.3); CA (7.2)

*expressed in dollars adjusted for purchasing power parities (rates of currency conversion that equalise the cost of a given 'basket' of goods and services in different countries)

The U.S. medical care market's high costs are attributable to a variety of factors, but perhaps the most significant is the potential for "rent" profits to Big Med, Big Pharm, and Big Insurance. 

Note that the right's "reaganomics" rhetoric has been that we have to reduce the size of government by cutting government costs specifically for the social justice programs that serve a majority of our citizens, particularly in their old age.  The right's most important priority for reductions in government services, that is, are reductions to the earned benefit programs that it calls "entitlements" (a term that it does not extend to the various tax expenditures that provide all kinds of gravy for the upper crust and multinational corporations like Big Oil, Big Pharma, Big Banks, etc.).  The right wants to reduce the deficit on the hides of the poor, the elderly and those who have little besides Social Security and Medicare for retirement (because of their reasonable reliance on their availability to buffer the viscisitudes of private markets in their old age).  So the right proposes either privatizing ("voucherizing" Medicare; "optionalizing" Social Security) or shifting programs to the States (where reductions in Medicaid funding for the poor can be hidden more easily) and/or reducing benefits by increasing the age for eligibility and decreasing potential payments.  In other words, the right treats a problem caused by the unduly high costs of a wacky, quasi-monopolistic, market-based medical care system as best solved not by bringing the costs down the way every other civilized peer nation has done, but instead by preventing the majority of Americans from having access to decent medical care if they are poor or old and dying or physically handicapped or otherwise unable to afford private insurance.

 *****

After all, as Robert Reich argues, the "fiscal cliff" and "looming budget deficits" aren't the worst of our problems. 

The central problem of our economy is widening inequality. It's reducing the purchasing power of the vast middle class on which job growth depends, and turning the economy into a speculative casino for multimillionaires and billionaires.  It's also undermining our ability to turn the economy around, as those millionaires and billionaires subsidize politicians who refuse to raise taxes on the wealthy and seek to cut spending critical to the middle class and the poor.  Robert Reich, Stop income inequality!, Salon.com (Nov. 15, 2012) (formatting changed).

The more I think about this, the more I am convinced that, as Kenneth Thomas says, Democrats Should Just Sit Back and Ride Over the Fiscal Cliff (in a post at Middle Class Political Economist, republished on BusinessInsider.com, here). 

[The fiscal cliff] is the combination of spending cuts and tax increases set to take place on January 1 based on several different laws.  Estimates of the consequences run as high as $800 billion next year, or 5.2% of the country's $15.29 trillion gross domestic product in 2011.  Yes, that would mean a recession, with obvious consequences for the middle class.  But this is only true if we did nothing after January 1, and that's not going to happen.  Id.