Toying With His People

Paul Krugman observes

Notice that the caravan totally disappeared as an issue as soon as the votes were cast -- not just Fox News, but mainstream media too. Guys, you really need to take a hard look in the mirror and ask why you're so easily played 2/

— Paul Krugman (@paulkrugman) November 9, 2018

The midterms election feels like a mix-and-match combination of two ugly episodes from history. For weeks it felt like 2016: Rs created a fake issue -- the caravan playing the role of emails -- and the news media happily went along with it. 1/

Notice that the caravan totally disappeared as an issue as soon as the votes were cast -- not just Fox News, but mainstream media too. Guys, you really need to take a hard look in the mirror and ask why you're so easily played 2/

4:46 AM - 9 Nov 2018

The cynic would suggest that the guys (maybe a few gals, too) were played because they wanted to be played. However, it's more likely that producers or others in charge saw the picture of the caravan and had an absolute orgasm, with thousands of darkish people clearly marching together in the direction of the USA..

They could repeat endlessly that the individuals were refugees 1,000 miles or so from the Texas border, not financed by George Soros, did not include anyone of known Middle East origin, and are escaping poverty and oppression. But.... those pictures.

Nonetheless, there is a journalist- actually, a media personality- who is not being played.

At the President's campaign rally in Missouri the night before the election, Donald Trump called to the stage Fox News propagandist Sean Hannity. As the video below indicates, Hannity points beyond the crowd at the media and says into the microphone "by the way, all those people in the back are fake news."

The crowd was facing the media to which Hannity was pointing and goes wild, cheering, applauding, and smiling, a few apparently laughing at the media. They do so as Hannity turns 45 degrees so that he can see a portion of the crowd, and he smiles broadly.

He was not looking at the fake news, which he condemns for questioning and slamming his hero. He was not angry, but instead laughing while facing Trump's supporters. These individuals were laughing at the people (media) they were facing- as was Hannity. He was laughing at them.

Hannity is a partisan Republican doing what he can to help the party, and probably a genuine conservative and true believer. However, he didn't get where he was by being stupid. He knows, as Trump has proven, that many of these folks can be patronized, lied to, and even derided ("I lovethe poorly educated"; avoiding STD's "is my personal Vietnam. I feel like a great and very brave soldier"; "drink my little wine... have my little cracker")- and they will respond with fervent support.

Entertainers know how to entertain and how to play their audience. No one can do this better than the boss who on camera liked to tell potential apprentices "you're fired" but cannot be critical of anyone face-to-face. Legitimate, mainstream journalists are being "played," as Paul Krugman charges. However, not a legitimate journalist, Sean Hannity is not being played, instead himself playing his audience.

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Stay Out Of That Car

As the US Senate debated restricting the right of President Trump to impose tariffs on the basis of "national security," one of the Democratic Party's best senators, running for re-election in a major steel-producing state, argued "Why would any colleagues vote to let China off the hook?"

If only China were the sole target of the President's actions, the President's trade policies might be beneficial. But as David Frum tweeted prior to the Trump-Kim summit, "even if he's offering to take you to church, you don't get in a car with a drunken driver."

While conceding "of course, it could all change quickly with a Trump tweet or remark," the Washington Post's Heather Long on May 31 noted

The president has threatened tariffs on an additional $50 billion in Chinese goods later this month, but he has often changed his mind, putting tariffs on hold or scaling them back before they go into effect. Right now, Canada and the E.U. are taking a bigger blow. (The E.U. and other allies would also bear the brunt of Trump's proposed tariffs on autos).

One suspects- as Trump himself would put it- "people are saying that the President is imposing tariffs specifically because it would harm other countries."  Everything to him is a zero-sum game; to the extent another nation is harmed, the USA will be helped. However, Paul Krugman explains

Trump’s tariffs are badly designed even from the point of view of someone who shares his crude mercantilist view of trade. In fact, the structure of his tariffs so far is designed to inflict maximum damage on the U.S. economy, for minimal gain. Foreign retaliation, by contrast, is far more sophisticated: unlike Trump, the Chinese and other targets of his trade wrath seem to have a clear idea of what they’re trying to accomplish.

The key point is that the Navarro/Trump view, aside from its fixation on trade balances, also seems to imagine that the world still looks the way it did in the 1960s, when trade was overwhelmingly in final goods like wheat and cars. In that world, putting a tariff on imported cars would cause consumers to switch to domestic cars, adding auto industry jobs, end of story (except for the foreign retaliation.)

Noting "almost none of the Trump tariffs are on intermediate goods," Krugman adds

In the modern world economy, however, a large part of trade is in intermediate goods – not cars but car parts. Put a tariff on car parts, and even the first-round effect on jobs is uncertain: maybe domestic parts producers will add workers, but you’ve raised costs and reduced competitiveness for downstream producers, who will shrink their operations.

So in today’s world, smart trade warriors – if such people exist – would focus their tariffs on final goods, so as to avoid raising costs for downstream producers of domestic goods.

"As a lifelong salesman, he (Trump) has a huckster's knack for selling a feeling," in this case the notion that America the Great is being taken advantage of.   Dean Baker suggests a more practical and pecuniary motive:

When countries impose tariffs or other import restrictions they usually allow for some exemptions in special cases. One of the reasons that economists generally are opposed to tariffs is that these exemptions create enormous opportunities for corruption.

Imagine that someone importing $50 million in steel faced a 25 percent tariff. She would save $12.5 million if she could get an exemption. Many business people would be happy to share a portion, perhaps a very substantial proportion, of this $12.5 million in savings with the politician(s) who made it possible. This could mean campaign contributions, sweetheart contracts with their businesses, or even outright cash payments.

It is very plausible that the Trump family and/or others in his administration, who have shown an open contempt for ethics norms, plan to profit personally from granting these tariff exemptions. It would have been worth mentioning this possibility in this piece.

Personal or family business is often at the bottom of Trump's decisions.  And so the tariffs are not being placed across-the-board on imports from mainland China. Excluded are toys and..... apparel, including Ivanka Trump's clothing line.

The nation's economy might have benefited had the USA collaborated with the European Union and Canada and thereby isolated the Chinese. However, that was unlikely as long as Trump was denouncing NATO and Canada in his quest to break up the trans-Atlantic alliance.  If you believe (as I do) that fair trade is a more worthy goal than fair trade, recall the second part of Frum's admonition,to exercise caution "when President Trump appears to act in ways you believe you approve."

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Obama Thinks It's Real. Kilgore Called It The "Phony War."

If one is running for a Democratic nomination for governor, it is wise not to offend a large swath of potential primary voters by blasting the President of the United States of your own party.

And so Zephyr Teachout, running a righteous campaign against the legally endangered but politically powerful and popular governor, Andrew Cuomo, avoids picking a fight with President Barack Obama.

Of course, picking a fight with President Obama is not the danger; Obama is loathe to strike back at his enemies. But there are still many Democratic primary voters who believe he really, really is a Democrat, just as they believe in Bill Clinton and the tooth fairy.

Teachout aims to stop the anti-consumer, anti-worker acquisition by Comcast Cable of Time Warner, "at least in New York," and notes her opponent "takes a lot of money from large powerful interests and then hands out tax credits to them. It's a Reagonomics model of financial monopoly capitalism." But then she excludes Obama, probably wisely, from her list of co-conspirators when she remarks

But the problem here isn't just Cuomo, it's that people like Cuomo dominate the Democratic establishment. Rahm Emanuel, Tim Geithner, Larry Summers, Robert Rubin, and so on and so forth, these people believe in a world where powerful economic interests control our lives and fate through monopoly power,and their partners in government help structure those monopolies. Political corruption and economic monopoly are two sides of the same coin- too much concentrated power in too few hands.

The phrase "political corruption and economic monopoly" defines the Cuomo Administration about as well as does anything, and the Cuomo Administration as well as any other.  So, too, as Zephyr obviously understands, have Emanuel, Geithner, Summers, and Rubin damaged the lower and middle classes. And they all have connections to both Barack Obama and Bill Clinton, though more so to the latter. Nonetheless, President Obama is capable of recognizing, as he did in an interview early this month with the Economist, that when

corporate CEO's come and they have lunch with me—which they do more often than they probably care to admit (laughter)—and they’ll say, you know what, we really care about the environment, and we really care about education, and we really care about getting immigration reform done—then my challenge to them consistently is, is your lobbyist working as hard on those issues as he or she is on preserving that tax break that you’ve got? And if the answer is no, then you don’t care about it as much as you say.

But then he adds

Now, to their credit, I think on an issue like immigration reform, for example, companies did step up. And what they’re discovering is the problem is not the regulatory zealotry of the Obama administration; what they’re discovering is the dysfunction of a Republican Party that knows we need immigration reform, knows that it would actually be good for its long-term prospects, but is captive to the nativist elements in its party.

Undoubtedly, Barack Obama knows why corporate heads "step up" on immigration reform, and it's not because they have an Emma Lazarus-like vision of a multicultural nation. As Sam Ro of Business Insider (in a different context) notes

Ever since the financial crisis, corporations have managed to deliver robust profit growth by offsetting the drag of weak sales growth with widening profit margins. These fatter profit margins come from cutting costs, which usually means getting more productivity out of a fewer number of workers.

Income growth of these dwindling number of workers has stagnated as the labor pool has grown. It's really quite simple, for workers in a wide array of industries know there are others behind them waiting to pounce on any available job. The motive of (many corporations) in supporting immigration reform, is not merely academic because as Congress seeks compromise, business leaders, unlike the left, may urge legislation that provides legalization without citizenship.

The agenda of those corporations Obama enjoys doing lunch with is laid bare when the supportive President adds

And the same I think goes for a whole range of other issues like climate change, for example. There aren’t any corporate CEOs that you talk to at least outside of maybe—no, I will include CEOs of the fossil-fuel industries—who are still denying that climate change is a factor. What they want is some certainty around the regulations so that they can start planning.

Back in April, 2011 Paul Krugman took on the "economic uncertainty" myth when he explained

The reasons that business are not investing is that they have tons and tons of excess capacity. There is a very clear relationship historically between the amount of unemployment and the amount of business investment. When unemployment is high capacity is low, investment is low. There’s nothing. All of this stuff about uncertainty is just myth being made up to blame this on Obama. There’s nothing in there. It is exactly what you would expect.

It may seem a paradox that the charge of economic uncertainty is used to blame President Obama, who now de facto endorses the notion of regulatory uncertainty. But then the President also has promoted the myth that a lack of skills contributes more to the unemployment problem than does a lack of jobs.   And that a large federal workforce, and deficits in an economic downturn, are harmful.

Nevertheless, the larger message from Obama, who touts the acceptance of immigration reform and climate science among corporate chieftains, is that the latter are really a whole lot different than the populist base of the Republican Party, those pitchfork-wielding, uneducated masses. They don't even call him a Kenyan or a Muslim!   But Ed Kilgore (nearly two years ago) saw through this conceit, pointing out

Yes, years from now conservatives will sit around campfires and sing songs about the legendary internecine battles of late 2012, when father fought son and brother fought brother across a chasm of controversy as to whether 98% or 99% of abortions should be banned; whether undocumented workers should be branded and utilized as “guest workers,” loaded onto cattle cars and shipped home, or simply immiserated; whether the New Deal/Great Society programs should be abolished in order to cut upper-income taxes or abolished in order to boost Pentagon spending. There’s also a vicious, take-no-prisons fight over how quickly to return the role of the federal government in the economy to its pre-1930s role as handmaiden to industry. Blood will flow in the streets as Republicans battle over how to deal with health care after Obamacare is repealed and 50 million or people lose health insurance. Tax credits and risk pools or just “personal responsibility?”

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A Tale Of Two Pauls, With A Rick Thrown In

Many essays have been written commenting on Paul Ryan's recent remarks about inner-city culture. Perhaps the best is that of Paul Krugman in The New York Times. With my perspective following, here is Krugman's full column:

There are many negative things you can say about Paul Ryan, chairman of the House Budget Committee and the G.O.P.’s de facto intellectual leader. But you have to admit that he’s a very articulate guy, an expert at sounding as if he knows what he’s talking about.

So it’s comical, in a way, to see Mr. Ryan trying to explain away some recent remarks in which he attributed persistent poverty to a “culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working.” He was, he says, simply being “inarticulate.” How could anyone suggest that it was a racial dog-whistle? Why, he even cited the work of serious scholars — people like Charles Murray, most famous for arguing that blacks are genetically inferior to whites. Oh, wait.

Just to be clear, there’s no evidence that Mr. Ryan is personally a racist, and his dog-whistle may not even have been deliberate. But it doesn’t matter. He said what he said because that’s the kind of thing conservatives say to each other all the time. And why do they say such things? Because American conservatism is still, after all these years, largely driven by claims that liberals are taking away your hard-earned money and giving it to Those People.

Indeed, race is the Rosetta Stone that makes sense of many otherwise incomprehensible aspects of U.S. politics.

We are told, for example, that conservatives are against big government and high spending. Yet even as Republican governors and state legislatures block the expansion of Medicaid, the G.O.P. angrily denounces modest cost-saving measures for Medicare. How can this contradiction be explained? Well, what do many Medicaid recipients look like — and I’m talking about the color of their skin, not the content of their character — and how does that compare with the typical Medicare beneficiary? Mystery solved.

Or we’re told that conservatives, the Tea Party in particular, oppose handouts because they believe in personal responsibility, in a society in which people must bear the consequences of their actions. Yet it’s hard to find angry Tea Party denunciations of huge Wall Street bailouts, of huge bonuses paid to executives who were saved from disaster by government backing and guarantees. Instead, all the movement’s passion, starting with Rick Santelli’s famous rant on CNBC, has been directed against any hint of financial relief for low-income borrowers. And what is it about these borrowers that makes them such targets of ire? You know the answer.

One odd consequence of our still-racialized politics is that conservatives are still, in effect, mobilizing against the bums on welfare even though both the bums and the welfare are long gone or never existed. Mr. Santelli’s fury was directed against mortgage relief that never actually happened. Right-wingers rage against tales of food stamp abuse that almost always turn out to be false or at least greatly exaggerated. And Mr. Ryan’s black-men-don’t-want-to-work theory of poverty is decades out of date.

In the 1970s it was still possible to claim in good faith that there was plenty of opportunity in America, and that poverty persisted only because of cultural breakdown among African-Americans. Back then, after all, blue-collar jobs still paid well, and unemployment was low. The reality was that opportunity was much more limited than affluent Americans imagined; as the sociologist William Julius Wilson has documented, the flight of industry from urban centers meant that minority workers literally couldn’t get to those good jobs, and the supposed cultural causes of poverty were actually effects of that lack of opportunity. Still, you could understand why many observers failed to see this.

But over the past 40 years good jobs for ordinary workers have disappeared, not just from inner cities but everywhere: adjusted for inflation, wages have fallen for 60 percent of working American men. And as economic opportunity has shriveled for half the population, many behaviors that used to be held up as demonstrations of black cultural breakdown — the breakdown of marriage, drug abuse, and so on — have spread among working-class whites too.

These awkward facts have not, however, penetrated the world of conservative ideology. Earlier this month the House Budget Committee, under Mr. Ryan’s direction, released a 205-page report on the alleged failure of the War on Poverty. What does the report have to say about the impact of falling real wages? It never mentions the subject at all.

And since conservatives can’t bring themselves to acknowledge the reality of what’s happening to opportunity in America, they’re left with nothing but that old-time dog whistle. Mr. Ryan wasn’t being inarticulate — he said what he said because it’s all that he’s got.

Krugman is correct:  articulate Paul Ryan has the knowledge class convinced he knows what he's talking about; Ryan's citation of Charles Murray, known best for contending that black I.Q. is inheritable, belies any claim he wasn't thinking about race; tea party "populists' have taken a pass on calling out specific misdeeds of the corporate sector; the "welfare cheat" meme, when popular decades ago, was exaggerated and is even less accurate now; the degree of economic opportunity was exaggerated in the 1970s and has fallen since; Ryan couldn't find space in a 205-page report about poverty to mention falling wages; and this is a dreadful run-on sentence.

More questionable, however, is Krugman's contention

Instead, all the movement's passion, starting with Rick Santelli's famous ran on CNBC, has been directed against any hint of financial relief for low-income borrowers. And what is it about these borrowers that make them such targets of ire? You know the answer.

Well, no I don't, because I think Krugman evidently believes the subjects of the venom (video, below) are minorities, especially blacks (or blacks exclusively). I don't think that's at all clear, however.





Certainly Santelli, a guy who like Paul Ryan is expert at sounding as if he knows what he's talking about, attacked the "other."  But the other, in the mind of most (white) Americans need not be minorities.  Individuals in this nation don't consider themselves lower-class, but middle-class. And if they are forced to admit they are of lower-income, they don't identify with that status.  They are middle-class (or so they believe).  When Santelli rails against low-income borrowers, he strikes a chord in people who resent others.  And others could be white- they could in fact be their neighbor or, even more likely, the faceless people down the street or in the next town over.  What they could not be is their close friends, immediate relatives, pastor, or especially, themselves. It's always somebody else, especially if he or she doesn't have a face or a name.

At approximately 1:10 of the video below, Santelli turns to his audience of traders and rhetorically asks "how many of you people want to pay for their neighbor's mortgage that has an extra bathroom and can't pay their bills?"  He's not referring specifically to minorities or even to poor people, but rather to individuals who can afford a house with a bathroom, maybe two. Further, in the minds of many (white) Americans, minorities don't even have to pay bills- the government pays for them.

Similarly, when Santelli claims "you can go down to minus-2% (mortgage)- they can't afford the house," he's referring to consumers in general, not solely ones of low income.   Conveniently, both statements feed into the "entitlement" ruse. Conservatives and neo-liberals refer to Social Security and Medicare as "entitlements" not only because they (rightly) fear they will incur voters' wrath by saying they want to cut "Social Security" and "Medicare." They know also there is a vague sense (though largely inaccurate) that "others"- everyone not in the voter's inner circle- are getting away with something to which they arrogantly believe they're entitled. (They also technically are "entitlements" according to congressional nomenclature, but nobody knows what constitutes "entitlements," anyway. Or what the heck "nomenclature" is.)

In the following graph from Business Insider (culled from a few misleading graphs), we get an idea of what the cumulative income of the people for whom Santelli posed as defenders earn- compared to the income of the individuals he really was speaking for.

And this refers merely to income- not to wealth, in which the disparity is even greater- which renders Krugman's argument even more relevant and piercing.  Paul Krugman is about 97% on target, which even Peyton Manning would be proud of.




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It's The 1%

On Thursday, David Brooks was exorcised about emphasis on socio-economic inequality rather than "mobility (and) individual and family aspiration."  He hasn't noticed that it's primarily those who address the issue of inequality who propose policies and programs pertaining to mobility and individual and family aspiration.  He claims

Fourth, the income inequality frame needlessly polarizes the debate. There is a growing consensus that government should be doing more to help increase social mobility for the less affluent. Even conservative Republicans are signing on to this. The income inequality language introduces a class conflict element to this discussion...

Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness.

Paul Krugman responded by noting that Brooks was misleading readers by focusing on the top 5%, rather than the top 1%, of the income distribution and offered the table below from economists Piketty and Saez:

The Nobel Prize-winning economist explains

If you look at the bottom 4 percent of the top 5, you see good but not spectacular income gains. These are the kinds of gains that you might be able to explain in terms of skills, assortative mating, and so on. But the top 1 percent is in a different universe altogether. And in fact the gains within the top 1 percent are concentrated in an even smaller group: this is a Pareto distribution thing, in which the higher the income the greater the percentage gains. 

Without directly pointing his finger at his New York Times' colleague, Krugman recognized that Brooks was fronting for the Masters of the Universe in the commercial and business capital of the world.   He remarks "using wider definitions than the one percent is, in effect, diluting the wolves of Wall Street by lumping them in with the upper middle class. Not the same story at all."  Ironically, Brooks himself was waging class warfare.

Brooks also engages in a sort of class warfare when he accurately cites "no jobs for young men" as a serious problem while neglecting low wages.   As of August (according to the Social Security Administration), fully 40% of all U.S. workers were earning less than $10.74, what the 1968 minimum wage of $1.60 per hour would be in today's dollars.  If the federal minimum wage had kept up with inflation since the late 1960s, it would have been $10.52 per hour in 2012; if it had kept pace with productivity since 1960, it would have been $21.72 in 2012.

But Brooks' most entertaining, if completely subjective, claim is that the U.S.A. and liberals always have done better when eschewing class-based politics.  This was put to the test, however, several decades ago, when a fellow maintained "These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power."   He stated additionally

For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor — other people's lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

The previous year he had noted

Great accumulations of wealth cannot be justified on the basis of personal and family security.  In the last analysis such accumulations amount to the perpetuation of great and undesirable concentration of control in a relatively few individuals over the employment and welfare of many, many others.

Franklin Delano Roosevelt won four terms aided by such rhetoric of "class consciousness," which exceeds what even socialist/Independent Bernie Sanders could say today.  And America did fine, too.





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Word To Action Unlikely

Paul Krugman is a great economist.  He's also a great optimist.

In his regular New York Times column, on December 5 Krugman commented "Mr. Obama laid out a disturbing- and, unfortunately, all too accurate vision of an America losing touch with its own ideals, an erstwhile land of opportunity becoming a class-ridden society." He maintained "this isn't entirely new terrain for Mr. Obama" but "what struck me about this speech, however, was what he had to say about the sources of rising inequality."  The President, he noted addressed such critical factors as the minimum wage, labor's bargaining power, the safety net, and fixation on the fiscal deficit.

Citing improving health care implementation, Obama's second-term focus on his legacy (including shoring up the social safety net), and the President's apparent break with the "fiscal scolds" obsessed with debt and entitlements, Krugman argues Obama is

finally sounding like the progressive many of his supporters thought they were backing in 2008. This is going to change the discourse — and, eventually, I believe, actual policy.

So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.

Can, but won't.   In his softball interview for his Hardball tour, on Thursday Chris Matthews asked the President to comment on "a moral responsibility to look out for people who haven`t made it in this country."   Obama responded in part

And, you know, I -- I think Pope Francis is showing himself to be just an extraordinarily thoughtful and soulful messenger of peace and justice. I haven`t had a chance to meet him yet, but everything that I have read, everything that I have seen from him indicates the degree to which he is trying to remind us of those core obligations.

It's far from bold to compliment a pope, particularly for being a "thoughtful and soulful messenger of peace and justice.  (Soulful? Perhaps like the video below.)  But it was only fair and generous; in what was hardly a coincidence of timing, the President gave his speech on December 4.  Pope Francis had issued his Apostolic Exhortation a mere eight days earlier on November 26, declaring "We can no longer trust in the unseen forces and the invisible hand of the market," observing "trickle-down... has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

But while there is every reason to assume the sincerity of Pope Francis, there is little reason to assume the sincerity of Barack Obama. Buzzfeed's McKay Coppins has observed (at approximately 5:50 of the 6:16 video way below) "it's fascinating that five years into Obama's presidency we're still arguing about what he really believes."  The Administration currently is deep into secret negotiations (citation from the Electronic Frontier Foundation via The Economic Populist) for the

Trans-Pacific Partnership (TPP) that could include more than a dozen nations in the Asia-Pacific region including Malaysia, Vietnam, Japan, and South Korea.  Recently, China said that it was studying the possibility of joining the TPP talks.  Many members of the proposed agreement have long histories of currency manipulation, dumping, and other unfair trade practices that have dramatically increased U.S. trade deficits and job losses, and the agreement could sharply curtail the ability of the United States to challenge these practices.  The TPP would significantly increase the threat that rapidly growing trade deficits and job losses in the United States would be locked in if the TPP is completed.

Completion and implementation of the treaty would continue a policy of the last several presidents in destroying good jobs.  The Economic Policy Institute found

U.S. trade with Mexico after the North American Free Trade Agreement (NAFTA) has cost the United States nearly 700,000 jobs through 2010. U.S. trade with China has certainly failed to deliver on the promised benefits of growing exports. Since that country entered the World Trade Organization (WTO) in 2001, the U.S. has lost 2.7 million jobs through 2011 due to growing trade deficits with China. And the Korea-U.S. Free Trade Agreement (KORUS) has also resulted in growing trade deficits with that country and the loss of more than 40,000 U.S. jobs. Most of the trade-related job losses are concentrated in manufacturing, and growing trade deficits are responsible for a large share of the decline in U.S. manufacturing employment over the past fifteen years.

It is fascinating and understandable that insightful, thoughtful individuals still are arguing over what Obama believes.  Probably, though, Obama's speech on economics this past week does reflect a major portion of the thinking of the first black president, community organizer, and law professor.  But as with real Wall Street reform- which has been elusive in this Administration- the President's policies generally reflect his reluctance to step on some very wealthy toes.  After Coppins' remark, host Steve Kornacki added, "that means he's a great politician."

Barack Obama is a great politician, but no Pope Francis.  Paul Krugman's optimism, while inspiring for this Chanukah/Christmas/New Year's ("holiday") season, likely will prove somewhat misplaced.

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Across The Pond, They Call It Monarchy

Another week, another opportunity for the House GOP to vote to repeal the Affordable Care Act, this time with the Keep the IRS Off Your Health Care Act of 2013.  Supported by every Repub and four "Democrats," it would prevent the IRS from enforcing or implementing any portion of the ACA.

The seemingly pointless effort of the GOP to strangle health care reform in the crib enabled Representative Lloyd Dogget of Texas to charge legitimately that party leaders "have one alternative to ObamaCare. It's called NothingCare" and Paul Krugman to note they

haven’t had the courage to tell the base that Obamacare is here to stay, that the sequester is in fact intolerable, and that in general they have at least for now lost the war over the shape of American society. As a result, we’re looking at many drama-filled months, with a high probability of government shutdowns and even debt defaults.

Over the longer run the point is that one of America’s two major political parties has basically gone off the deep end; policy content aside, a sane party doesn’t hold dozens of votes declaring its intention to repeal a law that everyone knows will stay on the books regardless. 

Krugman is right on policy but the Repub strategy is far from insane, inasmuch as they seem to be following the same playbook they have for decades, only substituting health reform for abortion, or perhaps adding to it.  By trying to end the signature legislative achievement of their mortal enemy, they assure the popular base they're with them all the way, while they pursue the corporate agenda laid out for them by ALEC. Symbolism works; sometimes there is no better strategy than to appear to repeal a law which they know will stay on the books.

If Krugman is searching for insanity, however, he need look no further than what may be happening in the party of reason..  Blogging for Up with Steve Kornacki, Anne L. Thompson has found a few Democrats longing for a Clinton presidential nomination.  Iowa State Senator Tony Bisignano, a member of Joe Biden's 2008 Iowa steering committee, says "I think it's Hillary Clinton's time."   And Jim Demers, the co-chairperson of Senator Obama's 2008 New Hampshire presidential primary campaign, said on Up on Sunday morning

I'm one who's ready for Hillary as well. In '08, when I made my decision, it wasn't that I didn't like Hillary Clinton, but I really was caught up with how impressive Barack Obama was, and I thought he was the right guy for the time. And I think myself and a lot of people, particularly in New Hampshire,think that now's the time for Hillary Clinton.

No, really- a guy who thought Barack Obama "was the right guy for the right time" is applying the same logic in now endorsing Hillary Clinton.  Let's review: a fellow who virtually promised the most transparent administration in history who now runs arguably the most opaque administration in recent history; who promised to put on a pair of walking shoes and march with strikers, then (as Andrew Levine put it) "remained serenely detached" in the face of the "brazen, corporate-driven assault on public sector unions" in Wisconsin;  who campaigned as a peace candidate but whose national security policy, including drone strikes, has made Dick Cheney proud.  But then it was "time" for Barack Obama and it's now "time" for Hillary Clinton.

Not surprisingly, only a woman feels sufficiently secure to put it honestly.  Terri Goodman, described by Thompson as a "longtime Biden friend and Iowa supporter" who "would back a Biden run," explained "As far as Joe's concerned, I think he's acutely aware of the challenges ahead and he's a student of history. There are challenges inherent in running against someone who could be the first woman president."

Here we go again.   It appears it really wasn't State Senator Obama's speech in 2002 assailing the Iraq war, nor his opposition to a health care mandate during the campaign.  It was because it was his time, and now it's Hillary Clinton's time.  It's a simple theory- one's qualifications are determined not by experience, views, or values, but by the accident of the individual's birth.

There is no shame in making a mistake.  But it is now year five of an administration in which more whistleblowers have been prosecuted than in all others combined, and one in which there has been no prosecution of Wall Street figures after the financial industry nearly destroyed the global economy.  And now there not only are Democrats beginning to line up in support of H. Clinton before anyone has announced a candidacy or made concrete steps toward running.  There are Democrats who have aligned in the past with Joe Biden who have signaled their support for Clinton.  And they appear to be doing so for the same reason they supported a different candidate over her four years ago.

These guys, who presumably five years ago wanted a progressive president, made a mistake then.    It's too late to erase that error, but there is no reason to compound it by applying the same logic by again supporting an individual- and prematurely, at that- because of the circumstances surrounding his or her birth.



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If Perception Were Reality, It Wouldn't Be Perception

On  Real Time Friday night, Bill Maher carried the torch (video, below) for the right to vote.   He began by arguing that individuals such as Donald Trump, Sarah Palin, and Newt Gingrich are "worst racists" than Paula Deen and practice "real racism." He went on to refer to a piece by 7th Circuit Court of Appeals Judge Eric Posner in which the Judge noted that Chief Justice Roberts in his majority opinion struck down Section IV of the Voting Rights Act on the basis of "the principle of equal sovereignty." Posner described that as "a principle of constitutional law of which I had never heard (because) there is no such principle."

Noting that Posner stated "the opinion rests on air," Maher remaarked "In other words, Justice Roberts just pulled [it] out of his ass."    Conservative commentator Horace Cooper responded in part

There is no just Voting Rights Act enforcement law that doesn’t single out places like Chicago and Philadelphia for voter fraud.   By the way, the people that are losing their rights in Philadelphia and Chicago tend to be overwhelmingly Black, and Democrat. It’s not about race, it’s about it not serving the political needs of the administration to go after those ‘Blue state’ jurisdictions. It’s much better to go after the ‘Red states.

The Chief Justice has nothing on Horace Cooper for pulling things out of his ass.   Whether extensive voting fraud exists is arguable, and a complicated proposition.  But Cooper- as with most Republicans- refers to voter fraud, typically in big cities with large minority populations. That simply does not exist.   In 2007 The New York Times reported

Five years after the Bush administration began a crackdown on voter fraud, the Justice Department has turned up virtually no evidence of any organized effort to skew federal elections, according to court records and interviews.

Although Republican activists have repeatedly said fraud is so widespread that it has corrupted the political process and, possibly, cost the party election victories, about 120 people have been charged and 86 convicted as of last year.

Most of those charged have been Democrats, voting records show. Many of those charged by the Justice Department appear to have mistakenly filled out registration forms or misunderstood eligibility rules, a review of court records and interviews with prosecutors and defense lawyers show.

In Miami, an assistant United States attorney said many cases there involved what were apparently mistakes by immigrants, not fraud.

In Wisconsin, where prosecutors have lost almost twice as many cases as they won, charges were brought against voters who filled out more than one registration form and felons seemingly unaware that they were barred from voting.

But Republicans are less interested in whether significant voter fraud exists than in maintaining the fiction among the voting public that it does.  It is a central tenet of free market, conservative thought:  if it sells, it's legitimate.  This was illustrated last week by a quarrel between Red State proprietor Eric Erickson and Nobel Prize-winning economist Paul Krugman about the Acela Express.  Digby summarizes the exchange:


The rest of America is nervous about where their next meal and paycheck are coming from, how they are going to afford to bail their kids out of crumbling schools, and the price of a gallon of milk and loaf of bread that keep going up though Ben Bernanke tells them there is no inflation. 
Paul Krugman drops some Bureau of Labor Statistics data to show that the price of milk and bread haven't actually gone up at all. And asks:

So, how does Erickson know that the prices of bread and milk are soaring? Has he been carefully keeping track? Or is it just fake populism, an attempt to sound like Everyman while actually just whining? 
UPDATE (9:43 a.m.): Erickson emails POLITICO:

Paul uses a chart to try to disprove the reality that Americans with small kids actually experience at the grocery store. His problem is he thinks I'm attacking the Democrats and wants to defend them, when the criticism is broader and bipartisan. And if he hung around moms and dads with kids more often he'd hear a lot more real world complaining about bread, milk, and other grocery item prices going up while paychecks are staying the same. Not everything is academic or chartable and sometimes the accuracy of the chart isn't as real to people as the perception they have that their grocery store bills are getting more expensive though their shopping habits haven't changed. 

And later adds... 

Seriously, Paul's point is correct, but it is an issue of perception of people versus the reality of his chart.  He can certainly go tell people milk prices haven't gone up, but good luck getting them to believe him. 
UPDATE (12:59 p.m.): Krugman responds on his blog: "Ok, this is awesome":... 

Erickson’s response is, hey, it isn’t true, but people feel that it’s true... Notice, by the way, the implication that I don’t appreciate the problems real people (who don’t eat quiche or ride the Acela) are facing; actually, I do, but those problems are lack of jobs and stagnant wages, not rising prices. And if you want to solve problems, getting the nature of those problems right matters. 

But then, only elitists want to solve problems; true men of the people just vent, and what matters is perception, not truth.


In the world of the right's communication machine, perception trumps truth and there is no penalty for a blogger who makes up things about inflation, a pundit who misleads people about voter fraud, or a Supreme Court Justice who creates a constitutional principle out of thin air.

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More Slick Than Slick


When Marco Rubio gave the Gas and Oil Party's official rebuttal (transcript here) to the President's State of the Union message on Tuesday, he paused midway through for a swig of Poland Spring (owned by Nestle, a member of ALEC) and drew widespread derision.  The conservative Allahpundit on the conservative website Hot Air contended "If you exclude the 101 replays on Maddow’s show, you’re still at 100 replays for the day. On Fox, the clip ran an average of once every 90 minutes over 18 hours; on CNN a bit more than every 30 minutes, with Wolf Blitzer accounting for most of that; and on MSNBC, naturally, every 20 minutes."

The obsession with the water break threatened to obscure the brazen dishonesty of Rubio's message.   Recognizing the Floridian as "a slick one," the not-so-nice but insightful Steve M. finds

The difference between Rubio this year and the other legendary SotU response gaffer, Bobby Jindal in 2009, was that Jindal passed up a golden opportunity to make the round of talk shows poking fun at his much-mocked rebuttal. As I said at the time, Jindal had the chance to do what Bill Clinton did when his speech at the 1988 Democratic convention was criticized for long-windedness -- Clinton went on The Tonight Show,where Johnny Carson good-naturedly mocked the speech. We like our politicians human and affable. Clinton's political career turned out OK, wouldn't you say?

Marco Rubio is nothing if not affable. (That's why he's dangerous.) He's already shown up on Fox & Friends with a water bottle in hand. But not just Fox -- he went on Good Morning America (outreach!) and joked about the incident as well. Oh, and since he's a Republican, he tossed in a light, not-too-pious-by-heartland-swing-voter-standards reference to the Almighty, saying, "God has a funny way of reminding us we're human."

Rubio, whose political action committe now has an official Marco Rubio Water Bottle for sale, is determined to ignore the present and erase the past.  Referring to the "free enterprise system," he contended

But President Obama? He believes it's the cause of our problems. That the economic downturn happened because our government didn't tax enough, spend enough and control enough. And, therefore, as you heard tonight, his solution to virtually every problem we face is for Washington to tax more, borrow more and spend more.

This idea – that our problems were caused by a government that was too small – it's just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.

Only a few minutes earlier, the President whom Rubio claimed believes the"solution to virtually every problem we face is for Washington to tax more, borrow more and spend more" had stated

It is our unfinished task to make sure that this government works on behalf of the many, and not just the few, that it encourages free enterprise, rewards individual initiative, and opens the doors of opportunity to every child across this great nation.

The American people don't expect government to solve every problem. They don't expect those of us in this chamber to agree on every issue. But they do expect us to put the nation's interests before party....

Let me repeat: Nothing I'm proposing tonight should increase our deficit by a single dime. It is not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth.

Perhaps the Florida Senator, having expected to hear an address by a Democrat, became confused when he heard principles of small government, deficit reduction, and federalism popular among Republicans before Rubio's time.  Or maybe he just made it up.  More serious, though, was Rubio's repetition of the Republican shibboleth that "a major cause of our recent downturn was a housing crisis created by reckless government policies."

Paul Krugman notes

Every piece of this revisionist history has been refuted in detail. No, the government didn’t force banks to lend to Those People; no, Fannie Mae and Freddie Mac didn’t cause the housing bubble (they were doing relatively little lending during the peak bubble years); no, government-sponsored lenders weren’t responsible for the surge in risky mortgages (private mortgage issuers accounted for the vast majority of the riskiest loans).

The idea that government, not Wall Street or anyone or anything in the private sector, precipitated the economic crash is a dangerous article of faith among Republicans, a sizeable number of Independents, and even a few Democrats and accounts for much of the conservative hysteria surrounding Dodd-Frank (itself weak tea). Further, it endangers prospects of any financial reform.   Some cite the Community Reinvestment Act by name, while others know that it just must have been government forcing banks to lend to unworthy people (which somehow never include them, their relatives, or their friends).   Recently, Mike Konczal of Wonkblog thoroughly debunked Rubio's charge that government created the housing crisis central to the economic crisis.  Even before the right-wing fantasy took hold, Robert Gordon of The American Prospect dispelled it when in 2008 he explained

CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity "largely came to an end by 2001." In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA, Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."

 Marco Rubio starts off with a nod to his party's theocons, stating "I'm blessed to represent Florida in the United States Senate," then plays the poor boy card with "I still live in the same working-class neighborhood where I grew up." And he couldn't possibly want to hurt the elderly because "My neighbors are retirees who depend on Social Security and Medicare."  He neglected to mention that he'll be getting away from his neighbors if he gets close to the $675,000 asking price for his house.

But Rubio's ideas can cause more damage than his hypocrisy.  Krugman recognizes

For here we are, more than five years into the worst economic slump since the Great Depression, and one of our two great political parties has seen its economic doctrine crash and burn twice: first in the run-up to crisis, then again in the aftermath. Yet that party has learned nothing; it apparently believes that all will be well if it just keeps repeating the old slogans, but louder.

The party has learned nothing about policy.  But it is still learning about politics, hoping to put old wine into new bottles.  As Steve M. notes of Florida's junior senator "laugh him off at your peril"




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Only Benign Sounding



David Atkins labels Ted Nugent "a buffoon" and "to a certain degree" Representative Steve Stockman, the Texas Republican who invited the pro-gun, anti-Obama, one-hit wonder of long ago to tonight's State of the Union address.

Not so, Atkins argues, are Alan Simpson, Erskine Bowles, John Boehner, and President Obama, who are desperate to cut Medicare Social Security, Medicaid and the WIC program, and who ignore climate change and promote militarization of our police force.

Dictionary.com defines "buffoon" as "a clown; a jester" as well as "a person given to clowing and joking" and "a ludicrous or bumbling person; a fool."   So, yes, Nugent and possibly Stockman fit the bill while, as Atkins notes, "The Washington Consensus types love to clutch their pearls over the Sarah Palins, Ted Nugents, and Todd Akins" while lauding far more dangerous individuals such as the aforementioned SimpsonBowlesBoehnerObama.

Fittingly, two-and-a-half hours earlier Atkins had written about another "Serious Person" enjoying a honeymoon with the Washington Consensus folks, for he is no fool, no bumbler, or jokester, but a leading candidate for his party's presidential nomination.  He also sounds reasonable and is Hispanic, for which he gets extra points from a media which is exorcised about the anti-science, anti-middle class, anti-gun safety party because it doesn't like ethnic minorities.

He is Marco Rubio, who will be delivering the official official (the other, by Rand Paul) Repub response to the State of the Union message.  Atkins slams Rubio's remarks, as projected in the preview by the Weekly Standard's Chris Hayes, who comments in his love letter

Rubio also wants to take arguments about debt from the theoretical and the long-term to the immediate and the short-term. “I think we have to link the debt to their lives. People understand that we have this debt and that their kids are going to get saddled with this in the future. And I think that’s a compelling argument. But I think an even more compelling argument, in conjunction with that one, is to explain to people how the debt is hurting them right now.”

“The debt has a direct impact on unemployment. Ever dollar that is being lent to the government is a dollar that is not being invested in our economy,” he says. “The immediate danger of the debt, and the one that speaks to people in the real world, is the fact that the debt is contributing to the fact that they don’t have a good job.”

As George W. Bush ran up the deficit and the debt with two wars not paid for, a prescription drug benefit cherished by the pharmaceutical industry but not paid for, and cuts in the income tax rate, Rubio said... nothing.  Now, as Jeff Graham of Investor's Business Daily puts it, "Here's a pretty important fact that virtually everyone in Washington seems oblivious to: The federal deficit has never fallen as fast as it's falling now without a coincident recession" (chart, from Ezra Klein from CBO and OMB figures, immediately below).

Now the fact-starved Rubio is concerned about the deficit; now, he wants to cut spending, even though, as the graph (from the St. Louis Fed via Krugman's blog) below indicates, government spending has risen at a far lower rate in the Obama Administration than it did in the Bush 43 Administration.

Slashing spending won't bring the nation out of its economic slump.  Rubio claims "every dollar that is being lent to the government is a dollar that is not being invested in our economy." But heads of corporations are practically going on strike, hoarding $1.9 trillion rather than investing them in the U.S.A. because they hope Congress allows them to repatriate profits without paying taxes.  Paul Krugman explains

Which means that we're awash in excess savings. And if you decide to save more, it's not actually going to help society. I mean, things add up. If there's a crucial, one crucial thing to understand about all this it is that the global economy, money moves around in a circle. And my spending is your income, and your spending is my income. And if all of us try to spend less because we want to save more, we don't succeed. All we end up doing is creating a global depression...

There are some other things you can do. Debt relief, where you can do it, will help because it will make people able to spend more. There're some things that the, maybe the Federal Reserve can do, even though interest rates are zero. But the core thing, the thing that we know works, the thing that all the evidence of history says works in a situation like this is the private sector won't spend, government can step in and provide the spending that we need in order to keep this economy afloat.

Rubio apparently will demonstrate impressive economic ignorance and equally impressive sleight-of-hand.   The dollars lent to the government are those not invested in our economy, maintains the Florida Senator, suggesting that these are revenues from the American people.  But tax revenue is not returned to taxpayers on a dollar-for-dollar basis and are not meant to be, but instead are spent on defense, Medicare, etc.  Rather, those "lent" to the Federal government come from foreign banks and governments and therefore are not dollars "not being invested in our economy."  They are, in fact, dollars which are being invested in our economy.  Pretty slick, Senator.

Ultimately, however, facts matter little to Marco Rubio and only slightly more to the likes of Alan Simpson and Erskine Bowles, included among those about whom Krugman observes:

The deficit scolds dominating policy debate will, of course, fiercely resist any attempt to downgrade their favorite issue. They love living in an atmosphere of fiscal crisis: It lets them stroke their chins and sound serious, and it also provides an excuse for slashing social programs, which often seems to be their real objective.

But neither the current deficit nor projected future spending deserve to be anywhere near the top of our political agenda. It’s time to focus on other stuff — like the still-depressed state of the economy and the still-terrible problem of long-term unemployment.





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Quality Mythmaking



If ever you wonder how to separate the honest and the dishonest claims about earned benefits, here is one way:  if the speaker implies that the same factors apply to all of them, he or she is trying to play you for a fool.  Monday, Joe Scarborough, whose column in Politico should be entitled "The Wisdom of Conventional Wisdom," noted that Paul Krugman had appeared on Morning Joe with the temerity to claim that failure to slash the deficit immediately would not lead to the downfall of the nation.   The former GOP congressman wrote

But maintaining calm was not as easy for Council on Foreign Relations president Richard Haass, who agrees with former Joint Chief chairman Michael Mullen, that long-term debt poses the greatest threat to America 's national security. Richard took exception to the suggestion that deficits don't matter and that longterm debt can be pushed to the side for years to come . Mr. Haass, Admiral Mullen and former Clinton chief of staff Erskine Bowles all believe that entitlements and debt are the most pressing challenges we face as a country over the next few decades.

You can add my liberal co-host, Mika Brzezinski, to that group. Mika let out a gasp when Mr. Krugman suggested Medicare and Medicaid shortfalls should be ignored. She compared Krugman's "head-in-the-sand" approach to the one taken by climate change deniers. Krugman took exception, saying that no one could predict the future of entitlements so there was no need to worry until the programs became insolvent.

That response drew a spirited email from former Treasury official and “Morning Joe” regular Steve Rattner in defense of Mika's analogy, who wrote the following:

"We are putting millions of tons of carbon in the air every day; we are also adding billions of dollars to our future entitlement obligations every day. We are borrowing (stealing?) from our children to pay far more in benefits to seniors than we are paying into the system.
We have something like $60 trillion in unfunded liabilities to Medicare and Social Security. Paul Krugman would like us to just wait until those programs run out of money, at which point those unfunded liabilities would be just that much larger."

I know it will cause Steve, Mika and Richard much duress but I couldn't agree with them more.

And I know it will cause Steve, Mika, Richard, and Joe much duress but the Social Security, Medicare, and Medicaid programs differ from one another, including in target audience, funding, and solvency.  Still, the idea that "future entitlement obligations" (i.e., assistance for the ill, the elderly, and the poor) are the same as climate change is intriguing, if ludicrous.   Eleven days before his appearance on MSNBC's morning drive-time program, Krugman explained the difference, which begins

with climate change. Serious people are and should be deeply worried, indeed horrified, by the lack of action on greenhouse gases. But why? Why not just assume that when climate change becomes undeniable, we’ll do whatever is necessary?

The answer, first and foremost, is that each year we fail to act has more or less irreversible physical consequences. We’re pumping around 35 billion tons of carbon dioxide into the atmosphere annually; this stuff will stick around for a very long time, and its consequences for warming and sea level rise will last even longer. So each year that we fail to act has a direct physical impact on the future.

There’s also an investment aspect: each year that we fail to get the incentives right, people commit limited resources to the wrong technologies, especially coal-fired power plants instead of wind, solar, conservation, whatever. Again, these choices have a physical impact on the world of the future.

Now ask, what in the debate about “entitlements” corresponds at all to this kind of impact? Nothing physical, clearly. You could argue that it would have helped to prepay some of our future costs by paying down debt and indeed having the government acquire assets while the demography was favorable – not because this would have directly increased future resources (debt is money we owe to ourselves) but because it would have reduced the need for higher taxes, and hence the distortionary effect of those taxes. And this argument was, indeed, the reason people like me wanted to protect the Social Security lockbox way back when.

But we didn’t; Bush squandered the surplus on tax cuts and unfunded wars (and was, with notably rare exceptions, cheered on by the very people now lecturing us solemnly on the need to cut entitlements). Now the baby boomers are retiring fast, and as far as I can tell none of the deficit scolds are pushing for a big effort to pay debt down over the course of the next few years.

Instead, they’re pushing for things like a gradual rise in the retirement age and a change in the formulas used to compute benefits – things that will cut future rather than present outlays. Or to put it differently, they aren’t really trying to cut debt; they’re simply trying to lock us in now to the spending cuts they think we’ll eventually have to make anyway. And they never, as far as I can tell, really ask why it’s important to do this now.

But think about it; use Social Security as the example, although much the same argument applies to other programs. It seems probable if not certain that we will eventually either have to cut SS benefits (relative to current law) or raise additional revenue. So the threat, if you like, is that future benefits will fall short of what people now expect. To avert this threat, the usual suspects insist that we must gradually reduce the program’s generosity. That is, in order to guard against cuts in future benefits we must … cut future benefits. Huh?

Social Security is an easy call, given that it is projected to be solvent until 2033, would remain solvent forever if income caps on the payroll tax are eliminated, and does not contribute at all to the national deficit.  (Arguably, it did so briefly, while the payroll tax cut was in effect because the trust fund was reimbursed by money from the general treasury for revenues lost.  That ended with the fiscal slope deal.)    However, although Medicare- more efficient than the private market- does not itself add to the deficit, rising health care costs most emphatically do.

Nonetheless, critics of Medicare (as with Social Security) imply that its founders, and legislators thereafter, were ignorant of the demographic changes which would imperil the program. Not so, noted Sarah Kliff of Ezra Klein's Wonkblog, who found there is no reason to panic over Medicare when she noted last April

In 1970, when the Medicare Trustees projected the fund would be exhausted in 1972, Congress reduced payments to providers, primarily physicians and hospitals. The same thing happened in 1997, when the trustees projected the funds would run out in 2001. Then, Congress quickly passed the Balanced Budget Amendment, which again cut into doctors’ reimbursements.

“The appeal to ‘insolvency’ as a danger,” Marmor, Spencer and Oberlander write, “needs to be recognized for its symbolic and strategic value in framing the debate over Medicare.”

Their bottom line is that there’s a big difference between the Trust Fund running out of money and the death of the Medicare program. In fact, no one quite knows what would happen if the Trust Fund actually ran out of money. “There are no provisions in the Social Security Act governing what would happen in such an event,” the Congressional Research Service report concluded.

What it would not mean, however, is that Medicare would screech to a halt. Programs covering doctors’ visits and prescription drugs could continue on pretty much unfazed. As for hospital coverage, Congress could look for other revenue sources, or it could borrow, or it could move money over from other parts of the budget. Given Medicare’s political popularity, it’s difficult to imagine legislators letting the program go underwater.

Medicare and Social Security were put "on the table" by a President anxious to be the most responsible adult in the room.  But reductions as part of a grand bargain sold as a means to curb the deficit would be nearly impossible to undo.  And when at some point there is a GOP president, taxes will be slashed, defense spending will remain exorbitant, and the party in power will speak little of the deficits which so dominate their rhetoric today.



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Unless We're Lucky And The Premise Is Faulty


It's not his preference, but Ezra Klein speculates

Talk to smart folks in Washington, and here’s what they think will happen: The final tax deal will raise rates a bit, giving Democrats a win, but not all the way back to 39.6 percent, giving Republicans a win. That won’t raise enough revenue on its own, so it will be combined with some policy to cap tax deductions, perhaps at $25,000 or $50,000, with a substantial phase-in and an exemption for charitable contributions.

The harder question is what Republicans will get on the spending side of the deal. But even that’s not such a mystery. There will be a variety of nips and tucks to Medicare, including more cost-sharing and decreases in provider payments, and the headline Democratic concession is likely to be that the Medicare eligibility age rises from 65 to 67.

The media is on board with a reduction in Medicare benefits (and the Democratic Party with a cut in the program), as demonstrated by Andrea Mitchell's exchange (video, below) with Democratic National Committee chairperson Debbie Wasserman Schultz:

Digby notes

Mitchell, like so many other wealthy, celebrity pundits sees these "popular" programs as something frivolous that Democratic voters are hanging on to out of immature petulance and they just need a stern Daddy to come along and take away their toys for their own good. The fact that these "toys" are equivalent to Andrea Mitchell's yearly dry cleaning bill doesn't change the fact that they represent the entire hand to mouth existence of millions and millions of elderly people who are too sick and too old to go out and become wealthy TV stars.

Sarah Kliff, when this idea of raising the eligibility age (her chart, from Center and Budget Policy Priorities, way below) in return for a slight raise in upper income tax rates had only begun to materialize, explained

The idea has, however, gained a bit more traction since the Affordable Care Act passed. If the Medicare age were raised, the thinking has gone, the 3.3 million 65- and 66-year-olds  would still be guaranteed access to health coverage through the tax subsidies. The lowest-income seniors — those earning less than 133 percent of the federal poverty line – would qualify for Medicaid.

That’s the upside. Health care economists see a number of downsides, too. For one thing, Medicare tends to be a pretty efficient program. Its costs have grown slower than private health insurance plans. The Center for Budget Priorities and Policy estimates that, while the federal government would save $5.7 billion, the rest of the health care system would end up spending $11.4 billion more to provide those same benefits.

Seniors themselves would end up spending $3.7 billion more as the benefits on the exchange would be less robust than those currently covered through Medicare. Employers would end up footing part of the bill, too, continuing to sponsor an additional two years of coverage.

That $2.5 billion in orange on the chart above comes from increasing the premiums that a lot of other people pay for their health insurance coverage. The Kaiser Family Foundation estimates that moving these seniors into the health insurance exchanges would increase premiums there by 3 percent, as the larger insurance pool absorbs a patient population that tends to be older and sicker than its younger counterparts.

Medicare premiums likely would go up too. These seniors would be the more expensive enrollees on the exchange. But when it comes to Medicare, they’re the least expensive patients, the younger population with fewer health care needs than, say, the 90-year-old cohort.

There’s also concern that these seniors might not even have an option should the eligibility age get raised as some states do not plan to expand their Medicaid programs. That could leave any senior who earns less than 133 percent of the federal poverty line — about $15,000 for an individual — without any coverage option at all.

Krugman recognizes the harm in what would (inaccurately) be termed a "compromise," maintaining

First, raising the Medicare age is terrible policy. It would be terrible policy even if the Affordable Care Act were going to be there in full force for 65 and 66 year olds, because it would cost the public $2 for every dollar in federal funds saved. And in case you haven’t noticed, Republican governors are still fighting the ACA tooth and nail; if they block the Medicaid expansion, as some will, lower-income seniors will just be pitched into the abyss.

He asks, rhetorically or otherwise

Second, why on earth would Obama be selling Medicare away to raise top tax rates when he gets a big rate rise on January 1 just by doing nothing? And no, vague promises about closing loopholes won’t do it: a rate rise is the real deal, no questions, and should not be traded away for who knows what.

There are plenty of reasons Obama would be selling Medicare away.  He might be doing so in order to curry favor with, as Jonathan Chait terms them (in an otherwise odd column), the "establishment fiscal scolds," because possessing the approval of the mainstream media is generally important to neo-liberals.  Additionally, the President may believe such a deal would buy him credibility with the Establishment for other initiatives it otherwise might not look kindly upon.

Alternatively, President Obama may be attempting to enhance his reputation as the 'transformative President' characterizing one of his heroes, Ronald(6) Wilson(6) Reagan(6).    Meanwhile, Democratic seekers of congressional seats, themselves unable to gather to themselves the political advantages of transformative, will have to explain to voters why they (and their party) weakened one of America's enormously popular social insurance programs.

Whatever his motive(s), however, Barack Obama must be, in his quiet moments of reflection, contemplating his life after the presidency.   While no one knows for sure where he will land doing whatever he will be doing, one thing is sure:  he won't be hanging out with those too old to write history or too sick to put up much of a fight over the legacy he will have left the old, the sick, and the poor.

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