The state of health care reform

As everyone knows, the rollout of the Affordable Care Act has been pretty bumpy what with website problems, Congress not providing funding for getting the word out, and states refusing expanded Medicaid even if it is free money.  There have been surprises also.  The red state of Kentucky with a Democratic Governor, Steve Beshear, is running a successful program.  Connecticut has an online program that it is thinking of selling to other states.  Massachusetts with the original universal health care program hired the same folks that messed up the federal website resulting in problem after problem resulting in a backlog in processing paper applications.

In the meanwhile, the Congressional Republicans would still like to either eliminate or defund the ACA, but as Greg Sargent wrote recently in the Washington Post people are beginning to move away from supporting those actions.

Obamacare is a disaster for Democrats, and a certain winner for Republicans. That’s what we keep hearing, anyway.

So why does it look as if the percentage of Americans who favor repeal may have actually shrunk since its rollout problems began?

That’s what the February tracking poll for the Kaiser Family Foundation suggests. To be sure, the new poll finds that opinion of the law is more negative than positive: 47 percent of Americans view the law unfavorably, while 35 percent view it favorably (though opinions have improved a bit since October).

But unfavorable views have not translated into support for the GOP position of repeal; indeed the repeal position may have lost ground since the October rollout problems, while a clear majority favors keeping and improving the law.

Some Kaiser survey results

Some Kaiser survey results

I think most people, including President Obama, would say that the ACA could be improved.  Any piece of legislation of that scope is going to have parts that don’t work well or have unintended consequences which need fixing.  And they need fixing in a systematic way and not just on the fly through delays and exceptions as the administration has been trying to do.  The poll results show support for making fixes.

The poll shows that 48 percent want to keep and improve the law, and another eight percent want to keep it as is — for a total of 56 percent who want to keep it. (50 percent of independents want to keep and fix.)

Meanwhile, 19 percent want to repeal the law and not replace it, while 12 percent want to repeal and replace with a GOP alternative — totaling 31 percent.

Back in October Kaiser found that 37 percent want repeal/replace or just repeal, versus 47 percent who want to keep/expand it. There was a temporary spike for repeal in December, at the height of the problems; now it appears to be back down to below where it was.

In fairness, the wording is not directly parallel. The new poll offers respondents the option of keep and improve, while the October poll offered folks keep or expand. But this underscores the point: When people are offered keep and improve — the Dem stance — support for keeping the law grows.

Paul Krugman pointed out in his last New York Times column that Republican attempts to find horror stories have so far not really succeeded.

Remember the “death tax”? The estate tax is quite literally a millionaire’s tax — a tax that affects only a tiny minority of the population, and is mostly paid by a handful of very wealthy heirs. Nonetheless, right-wingers have successfully convinced many voters that the tax is a cruel burden on ordinary Americans — that all across the nation small businesses and family farms are being broken up to pay crushing estate tax liabilities.

You might think that such heart-wrenching cases are actually quite rare, but you’d be wrong: they aren’t rare; they’re nonexistent. In particular, nobody has ever come up with a real modern example of a family farm sold to meet estate taxes. The whole “death tax” campaign has rested on eliciting human sympathy for purely imaginary victims.

And now they’re trying a similar campaign against health reform.

Krugman cites the Response to the State of the Union Address.

 In the official G.O.P. response to the State of the Union address, Representative Cathy McMorris Rodgers alluded to the case of “Bette in Spokane,” who supposedly lost her good health insurance coverage and was forced to pay nearly $700 more a month in premiums. Local reporters located the real Bette, and found that the story was completely misleading: her original policy provided very little protection, and she could get a much better plan for much less than the claimed cost.

Louisiana is running ads about people losing health care insurance with actors.

In Michigan, Americans for Prosperity is running an ad that does feature a real person. But is she telling a real story? In the ad, Julia Boonstra, who is suffering from leukemia, declares that her insurance has been canceled, that the new policy will have unaffordable out-of-pocket costs, and that “If I do not receive my medication, I will die.” But Glenn Kessler of The Washington Post tried to check the facts, and learned that thanks to lower premiums she will almost surely save nearly as much if not more than she will be paying in higher out-of-pocket costs. A spokesman for Americans for Prosperity responded to questions about the numbers with bluster and double-talk — this is about “a real person suffering from blood cancer, not some neat and tidy White House PowerPoint.”

Even supporters of health reform are somewhat surprised by the right’s apparent inability to come up with real cases of hardship. Surely there must be some people somewhere actually being hurt by a reform that affects millions of Americans. Why can’t the right find these people and exploit them?

The most likely answer is that the true losers from Obamacare generally aren’t very sympathetic. For the most part, they’re either very affluent people affected by the special taxes that help finance reform, or at least moderately well-off young men in very good health who can no longer buy cheap, minimalist plans. Neither group would play well in tear-jerker ads.

There is about a month left to sign-up before one has to pay a tax penalty for not having coverage for 2014.  The last number reported was 4 million sign-ups.  A priority:  Get the young and healthy to sign-up.

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Chart from Kaiser via the Washington Post

Picture of buttons from sites.tufts.edu

Trying to made sense of it all

I think I may be ready to retreat to my cocoon to read trashy books and watch baseball and reruns of NCIS before my head explodes from trying to make sense of what is going on out there.

Yesterday, Boston Globe columnist Adrian Walker had a little anecdote from my Congressperson, Mike Capuano.

…Capuano said he was in an airport last weekend flying home from Washington when a TSA screener stopped him and said, “You really need to cut our taxes!” Capuano was incredulous to hear that from a federal employee, though he probably shouldn’t have been.

“I asked him, ‘Do you know taxes pay your salary?’ ” Capuano said with a laugh.

I wish I knew what the silly TSA screener said then.  It is an example of how divorced from reality so many people are.  Maybe we should expand the shut down to include furloughs for half of the screeners.  This would cut flights so many of the members of Congress would have trouble getting home.  I don’t think this would be a bad thing.  Maybe if they stayed in Washington more, they would figure out how to talk to each other informally over a beer.  That could only help.  Maybe some of them would get a grip on reality.

As I was getting ready to write this, I Googled  both “Republican Alternate Reality” and “Republican Alternate Universe”.  Turns out people have been writing about the topic for a number of years now.  It is one thing to talk sans facts, but another to act.  And what is happening now is the action that they have all wanted:  a government shutdown.  I think they are hoping that a few weeks without government will show people they can live without it.  Maybe a good plan except that there are already Republicans complaining that monuments in Washington are closed so veterans can’t visit them.  Duh!

Back in August 2012 (2012 not 2013), Michael Cohen wrote a piece in the Guardian about the Presidential campaign.  If you recall, they had a slogan “You didn’t build that”.

On 17 July, President Barack Obama spoke at a campaign rally in Roanoke, Virginia. It was a typical event for an incumbent president who is seeking a second term. In his remarks, he offered his vision of government’s role in spurring entrepreneurship and creating jobs in the United States:

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business – you didn’t build that. Somebody else made that happen. The internet didn’t get invented on its own. Government research created the internet so that all the companies could make money off the internet.”

This is all fairly boilerplate rhetoric – a basic recitation of how Democrats view the role of government and its interplay with the private sector. But in this statement, there was one phrase that Republicans have grabbed on to like a famished dog with a new bone:

“You didn’t build that.”

That single phrase, taken out of context by Republicans, has become the GOP’s symbol of Obama’s supposed contempt for the free market and entrepreneurship, and for his socialist assault on America.

The Affordable Care Act is a prime example of government overreach and socialism even though it is built on private insurance companies.

“You didn’t build that” became “We built that”

And so, the Republicans made “We built that” the theme of Tuesday’s convention proceedings. Speaker after speaker hammered on this theme, accusing Obama of disrespecting small business. But they did so with almost a wilful sense of hypocrisy. For example, Delaware lieutenant governor candidate Sher Valenzuela attacked Obama for the line despite the fact that, just a few months ago, she gave a detailed speech to a business group about how they could do a better job getting government contracts.

Cohen goes on to detail a number of instances where the speakers at the Republican Convention ignored facts and concludes

But all of this is at pace with a conservative worldview that considers government to be nothing more than malevolent interference with the smooth operation of the private sector – except when it’s not. “Jobs don’t come from government,” said Texas Senate candidate Ted Cruz last night, a view that basically sums up GOP economic thinking. But if you listened to Republican governors on Tuesday, you might have found yourself surprised to discover that, in their states, the government has played an oddly integral role in spurring job creation. If you listened to Mary Fallin, governor of Oklahoma, extol the virtues of the energy industry in her state and bemoan “more government, bigger spending and more regulation”, you might never know that the oil and gas industry is deeply reliant on – and spends millions lobbying for – tax breaks from the federal government.

One can believe that government should play a less direct role in the workings of the private economy – clearly, this is a defensible notion. But to listen to Republicans harping on Obama’s “you didn’t build that” line is to hear a party that views “government” in the most simplistic imaginable terms. This isn’t a governing philosophy; it’s a caricature of how the economy actually works.

To be sure, it’s hardly unusual for political rhetoric to take liberties with the truth, or to stretch an argument to breaking-point, but with Republicans today, the issues runs much deeper. Very simply, the way they talk about what the federal government does or should do, and about the role of spending, taxation and regulation, is more than just a compendium of lies: it describes an alternate reality.

In the GOP’s defense: at least they can argue they built that.

So now they have shutdown the federal government which was a goal all along.  They built it.  And in their alternate universe, President Obama and the Democratic congressional leadership should negotiate with them.  Nancy Pelosi has tried to explain what she calls “regular order”:  The Senate passes a bill.  Then the House passes one.  Then there is a conference committee.  Budget bills were passed back in March, but the House declined to appoint members to a conference committee.  Contrary to what some members of Congress seem to believe there are rules and conventions as to how to proceed.

Gail Collins has a response in the New York Times.

On Wednesday, House Republicans pushed to refund bits and pieces of the government that the members particularly like, such as veterans and the National Guard. Also anything that lends itself to a dramatic press conference, such as national parks and cancer treatment for children. Since the House proposals are never going anywhere in the Senate, there’s a limit to what you want to know about what went on during the debate. Let’s summarize:

Democrats: “Meaningless political theater!”

Republicans: “Come to the table!”

Coming to the table has now replaced strangling Obamacare as the most popular G.O.P. war cry. There is a longstanding political rule that when all else fails, you demand more talking. If you’re running for office against a guy who’s got 70 percent in the polls, it’s time to call for a debate. If you’re already having four debates, it’s time to call for six.

“Why don’t we sit down and have a conference committee about how we’re going to fund the federal government?” demanded Representative Ander Crenshaw of Florida. Republicans have posed this question a lot, and it would be an excellent one if they were not the same folks who have spent the last half-year refusing to sit down and have a conference committee about the federal budget.

Representative John A. Boehner, the House speaker, arrived at the Capitol on Thursday with his security personnel on the third day of the government shutdown.

Representative John A. Boehner, the House speaker, arrived at the Capitol on Thursday with his security personnel on the third day of the government shutdown.

I’ll give the final word on reality to Elizabeth Kolbert in her New Yorker posted this morning.

…Shuttering the government is a dumb idea under pretty much any circumstances. Still, the objections that Republicans in Congress raise to the health-care law might be worth considering if they bore any relationship to the law in question. Rarely do they.

Some lawmakers’ comments have been so off the wall that they defy parody. A few months ago, for example, Representative Michele Bachmann announced on the House floor that Obamacare needed to be repealed “before it literally kills women, kills children, kills senior citizens.”

“Let’s not do that,” she added helpfully. “Let’s love people.”

“All of this would be funny,” President Obama noted the other day, after bringing up the Bachmann line, “if it weren’t so crazy.”

The crazy list goes on and on. As the economist Paul Krugman has repeatedly pointed out in his Times column, congressional Republicans these days seem to think that they can override not just the laws of physics but also the rules of arithmetic. They insist that the federal budget is so bloated it could easily be cut by hundreds of billions of dollars. But when a transportation bill was drafted this summer that would have actually reduced spending, they refused to vote for it. (The bill had to be pulled from the floor.) It’s hard to cut the federal budget if you’re not willing to reduce the amount of money the government spends. “What Republicans really want to do,” Krugman wrote recently, is “repeal reality.”

It’s been so long since reality has made much of a difference on Capitol Hill that it sometimes seems it genuinely has been repealed. But the thing you can always count on with reality is that it has staying power.

I hope I can hold out until reality and fact make a comeback.

Photograph: Doug Mills/The New York Times

Urban sprawl, transportation, and poverty

I’ve been thinking since I read Paul Krugman’s column “Stranded by Sprawl” about successful urban areas and public transportation.  I lived for a number of years in Richmond, VA and for part of that time I didn’t drive or have a car.  After I acquired a car, I realized how limited my world was without one.  There were many places I couldn’t get to without driving and even if there was a bus, service was often erratic and infrequent.  I don’t know if thing have changed since I left twenty years ago, but I know that the counties surrounding the City of Richmond were where the new office parks and shopping malls were springing up.  I was lucky because I did live within easy walking distance of a nice shopping area with restaurants and some stores so I could leave the car behind when I met friends for breakfast or dinner.  But I didn’t live near any of the “projects” or poor areas which were pretty segregated back then.

One of my first memories of my Boston move was one of my new neighbors lamenting that the view from the back of the houses on our street was marred by looking down at the roofs of a large public housing project.  In fact, there are actually four projects within easy walking distance.  After I went to work for the Housing Authority I learned that public housing developments were scattered through the city neighborhoods.  The BHA takes pains in trying to maintain the grounds of each (with limited resources) so they don’t become a blight on the neighborhoods and several have been totally redesigned and no longer have the dead end streets which only serve to isolate residents.  Contrast this with the Atlanta described by Krugman

When the researchers looked for factors that correlate with low or high social mobility, they found, perhaps surprisingly, little direct role for race, one obvious candidate. They did find a significant correlation with the existing level of inequality: “areas with a smaller middle class had lower rates of upward mobility.” This matches what we find in international comparisons, where relatively equal societies like Sweden have much higher mobility than highly unequal America. But they also found a significant negative correlation between residential segregation — different social classes living far apart — and the ability of the poor to rise.

And in Atlanta poor and rich neighborhoods are far apart because, basically, everything is far apart; Atlanta is the Sultan of Sprawl, even more spread out than other major Sun Belt cities. This would make an effective public transportation system nearly impossible to operate even if politicians were willing to pay for it, which they aren’t. As a result, disadvantaged workers often find themselves stranded; there may be jobs available somewhere, but they literally can’t get there.

Is Detroit in trouble because its land area is too big?  I don’t know.  Detroit is 138 square miles with a population today of around 700,000 people.  Boston is 48 square miles with a population about 50,000 people smaller. In Boston, we gripe about the public transportation all the time and worry that some neighborhoods that are more affluent have better service, but we are always working on it.  I haven’t read anything about public transportation in Detroit:  It is the Motor City.

Boton T

Back to Krugman

The apparent inverse relationship between sprawl and social mobility obviously reinforces the case for “smart growth” urban strategies, which try to promote compact centers with access to public transit. But it also bears on a larger debate about what is happening to American society. I know I’m not the only person who read the Times article on the new study and immediately thought, “William Julius Wilson.”

A quarter-century ago Mr. Wilson, a distinguished sociologist, famously argued that the postwar movement of employment out of city centers to the suburbs dealt African-American families, concentrated in those city centers, a heavy blow, removing economic opportunity just as the civil rights movement was finally ending explicit discrimination. And he further argued that social phenomena such as the prevalence of single mothers, often cited as causes of lagging black performance, were actually effects — that is, the family was being undermined by the absence of good jobs.

My worry about Boston is that it will become more and more like Manhattan where only the well-off and the very poor can afford to live.  Jobs, particularly tech jobs, are moving back into the city and near suburbs from further out along the outer ring highways.  Will we end up with a shrinking middle?

These days, you hear less than you used to about alleged African-American social dysfunction, because traditional families have become much weaker among working-class whites, too. Why? Well, rising inequality and the general hollowing out of the job market are probably the main culprits. But the new research on social mobility suggests that sprawl — not just the movement of jobs out of the city, but their movement out of reach of many less-affluent residents of the suburbs, too — is also playing a role.

What’s to be done?  More investment in infrastructure in places like Atlanta and Los Angeles.  More investment in light rail systems.  More investment in maintenance of what we have for cities like Boston, Chicago and New York.  Unfortunately this is another thing in which the House Republicans are not interested.

The trillion dollar coin explained – sort of

When I started hearing about the possibility of the treasury minting a trillion dollar coin which could end all the endless debates about the debt ceiling, I thought it was a joke.  Turns out, that is only partly true.  Here are two views of the platinum coin.

The first is Neil Irwin’s as posted on the Wonkblog.

I’ll lay out this econo-pundit’s conclusion upfront: I hate the platinum coin idea. But if there is no resolution of the debt ceiling through the legislative process, I hate some of the alternatives more.

The issue, for those who need a refresher: To avoid running into the debt ceiling in the next couple of months, the Treasury secretary could exploit a legal loophole, create a platinum coin, assign it a value of $1 trillion or some other very high number, and deposit it at the Fed, thus enabling the government to carry out its previously promised tax and spending policies without broaching the legal cap on debt issuance.

To back up a minute, it is important to understand what the debt ceiling does, and why it is problematic. Congress passes laws to spend money: This many dollars for fighter aircraft, Social Security benefits paid according to such and such formula, and so on. It passes laws to enact a tax code. And the difference between that spending and the money raised in taxes the government funds by issuing debt. But Congress also has a third constraint: An overall ceiling on how much debt the Treasury can issue. In the past, Congress has raised that ceiling to whatever it needed to be to match the previously approved taxes and spending as a matter of course.

Now, House Republicans are viewing the debt ceiling differently. They are treating the debt ceiling–and the need to raise it–as a lever through which to try to win battles over spending that they lost in previous negotiations. They want to not pass an increase to the debt ceiling unless they get some major concessions from Democrats on cutting spending—concessions that Democratic senators and the White House say are non-starters.

So the idea of the trillion dollar coin would be to put this whole impasse to rest.  Irwin goes on to explain what the coin would not do.

A couple of the widespread objections don’t hold water. So long as the Federal Reserve does its job, the platinum coin would not be inflationary. In the current ultra-low interest rate environment, the Treasury depositing a $1 trillion coin at the Fed would not affect the supply of money in the broader economy any differently from it issuing $1 trillion in Treasury bills. Nothing about the platinum coin would prevent the Fed from hiking interest rates when it sees an inflationary threat on the horizon.

That’s not to say a platinum coin gambit would be much fun for the Fed. Chairman Ben Bernanke and New York Fed president Bill Dudley would face a moment of truth, and scores of Fed lawyers would be working overtime, as the central bank had to decide whether to treat the $1 trillion coin as a legal deposit. The Fed in general hates to end up in the middle of political disputes, and this would be a highly uncomfortable spot.

On the other side is Paul Krugman who begins by explaining the whole debt ceiling business.

Where does the debt ceiling fit into all this? Actually, it doesn’t. Since Congress already determines revenue and spending, and hence the amount the Treasury needs to borrow, we shouldn’t need another vote empowering that borrowing. But for historical reasons any increase in federal debt must be approved by yet another vote. And now Republicans in the House are threatening to deny that approval unless President Obama makes major policy concessions.

It’s crucial to understand three things about this situation. First, raising the debt ceiling wouldn’t grant the president any new powers; every dollar he spent would still have to be approved by Congress. Second, if the debt ceiling isn’t raised, the president will be forced to break the law, one way or another; either he borrows funds in defiance of Congress, or he fails to spend money Congress has told him to spend.

So in reality, Congress would just have to authorize borrowing money that they have already said could be spent.  And part of the issue is that not enough people are working and paying enough taxes to create enough revenue.  In some ways you can understand the Republicans who want to set a fixed amount for a budget and then make everything fit.  No borrowing.  But then you have things like Hurricane Sandy and extra spending for the Bush wars for which no revenue was ever raised, and etc., etc. and we end up either cutting things no one wants to cut or borrowing.  Back to Krugman.

Finally, just consider the vileness of that G.O.P. threat. If we were to hit the debt ceiling, the U.S. government would end up defaulting on many of its obligations. This would have disastrous effects on financial markets, the economy, and our standing in the world. Yet Republicans are threatening to trigger this disaster unless they get spending cuts that they weren’t able to enact through normal, Constitutional means.

Republicans go wild at this analogy, but it’s unavoidable. This is exactly like someone walking into a crowded room, announcing that he has a bomb strapped to his chest, and threatening to set that bomb off unless his demands are met.

Which brings us to the coin.

Here’s how it would work: The Treasury would mint a platinum coin with a face value of $1 trillion (or many coins with smaller values; it doesn’t really matter). This coin would immediately be deposited at the Federal Reserve, which would credit the sum to the government’s account. And the government could then write checks against that account, continuing normal operations without issuing new debt.

But wouldn’t the coin trick be undignified? Yes, it would — but better to look slightly silly than to let a financial and Constitutional crisis explode.

A downgrade of the United States credit rating again will end up costing us in interest which seems to me to defeat the purpose since we will probably have to borrow more to pay extra to borrow.  Maybe enough Republicans will join with enough Democrats to raise the ceiling to a trillion dollars and we won’t need the magic coin.  This is what Irwin is hoping for.

The platinum coin gambit could be terrible for the U.S. government’s long-term standing as a premier destination for global capital. This is a moment for Republicans to take responsibility for governing and to accept the fact that their leverage is limited with control of only one house of Congress. But if the alternative truly is default, a crazy coin option may indeed be less bad than the alternatives.

What would be on the other side?  Some suggestions include the Cat in the Hat, Alfred E. Newman (both sent in to the Takeaway) and my favorite idea, Mark Twain who once said, “Suppose you were an idiot. And suppose you were a member of Congress. But I  repeat myself.”

Boomers and the job numbers

What does the retirement of the baby boom generation have to do with the job numbers you might ask.  I never thought of my retirement impacting the unemployment rate but reading Paul Krugman in the New York Times this morning, I realize that in a strange way I am helping the economy.  Yes, I’ve read all  the stories about how we didn’t save enough, how our homes (the big retirement plan for many) have lost value, how interest rates are hurting retirees, how the numbers are going to make Medicare and Social Security go broke and on and on.  But it never occurred to me that maybe the estimated 10.000 people a day who retire might actually be good for the economy.  Think about it.  Each person who retires has the potential to open up a job for someone else.  The bottom line is there is still work that needs to be done and at some point someone will be hired to do it.

 

AARP Social Security for Dummies Book Jacket

 

Krugman writes

 …the methods the bureau uses are public — and anyone familiar with the data understands that they are “noisy,” that especially good (or bad) months will be reported now and then as a simple consequence of statistical randomness. And that in turn means that you shouldn’t put much weight on any one month’s report.

In that case, however, what is the somewhat longer-term trend? Is the U.S. employment picture getting better? Yes, it is.

Some background: the monthly employment report is based on two surveys. One asks a random sample of employers how many people are on their payroll. The other asks a random sample of households whether their members are working or looking for work. And if you look at the trend over the past year or so, both surveys suggest a labor market that is gradually on the mend, with job creation consistently exceeding growth in the working-age population.

On the employer side, the current numbers say that over the past year the economy added 150,000 jobs a month, and revisions will probably push that number up significantly. That’s well above the 90,000 or so added jobs per month that we need to keep up with population. (This number used to be higher, but underlying work force growth has dropped off sharply now that many baby boomers are reaching retirement age.)

Meanwhile, the household survey produces estimates of both the number of Americans employed and the number unemployed, defined as people who are seeking work but don’t currently have a job. The eye-popping number from Friday’s report was a sudden drop in the unemployment rate to 7.8 percent from 8.1 percent, but as I said, you shouldn’t put too much emphasis on one month’s number. The more important point is that unemployment has been on a sustained downward trend.

But isn’t that just because people have given up looking for work, and hence no longer count as unemployed? Actually, no. It’s true that the employment-population ratio — the percentage of adults with jobs — has been more or less flat for the past year. But remember those aging baby boomers: the fraction of American adults who are in their prime working years is falling fast. Once you take the effects of an aging population into account, the numbers show a substantial improvement in the employment picture since the summer of 2011.

unemployment

unemployment (Photo credit: Sean MacEntee)

 

So the job growth and unemployment figures are slowly improving.  The overall trend is up for growth and down for unemployment.  I think one of the most shocking reactions to the numbers was the notion that they were somehow being manipulated and the things were actually much worse.  Do some like Jack Welsh actually want things to either get worse or at least to stay bad?  They just can’t bring themselves to admit that President Obama may be succeeding – despite Congress and the Republicans and turning things around.  Do they really need to win that badly?

Krugman says it better

…The U.S. economy is still far short of where it should be, and the job market has a long way to go before it makes up the ground lost in the Great Recession. But the employment data do suggest an economy that is slowly healing, an economy in which declining consumer debt burdens and a housing revival have finally put us on the road back to full employment.

And that’s the truth that the right can’t handle. The furor over Friday’s report revealed a political movement that is rooting for American failure, so obsessed with taking down Mr. Obama that good news for the nation’s long-suffering workers drives its members into a blind rage. It also revealed a movement that lives in an intellectual bubble, dealing with uncomfortable reality — whether that reality involves polls or economic data — not just by denying the facts, but by spinning wild conspiracy theories.

It is, quite simply, frightening to think that a movement this deranged wields so much political power.

Ryan’s Budget and the 2012 Election

 Dan Wasserman sums up the Ryan Budget.

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President Obama called the Ryan Budget “Social Darwinism” quoting that wise Republican, Newt Gingrich.  Mitt Romney called it “marvelous”.  Paul Krugman calls it “Pink Slime Economics”

Here is Krugman

And when I say fraudulent, I mean just that. The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities, the way it slashes taxes for corporations and the rich while drastically cutting food and medical aid to the needy. Even aside from all that, the Ryan budget purports to reduce the deficit — but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes.

And we’re talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That’s a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close?

None. Not one. He has, however, categorically ruled out any move to close the major loophole that benefits the rich, namely the ultra-low tax rates on income from capital. (That’s the loophole that lets Mitt Romney pay only 14 percent of his income in taxes, a lower tax rate than that faced by many middle-class families.)

This budget fight and the election to come are about what we want the country to be.  The Republicans have that much right.  Will we become a country with the rich hiding in gated communities and getting richer or will we a a country where everyone has a chance to succeed, where the less fortunate get help, and where there is a robust middle class?  Democracies thrive in countries with an educated middle class.  Look at the driving forces behind the Arab Spring.  The choices this election will be clear. 

The budget fight is also about whether or not a deficit is important right now.  Yes, we can’t continue to grow the deficit indefinitely, but it seems to this non-economist, that the way to deal with the deficit is not through draconian cuts to the domestic budget, but spend on things that result in jobs.  When people work they pay taxes and the deficit can begin to come down.  But cutting food stamps, unemployment insurance, job retaining programs, aid to education, are all key to growing jobs or helping those who can’t find them.

Andrew Rosenthal put it better in today’s New York Times.

He ticked off some of the budget’s most near-sighted assaults: financial aid cuts to nearly 10 million college students; 1,600 fewer medical grants; 4,000 fewer scientific research grants. Starting in 2014, it would cut around 200,000 children from the Head Start program and 2 million mothers and their young children from a food assistance program. “We wouldn’t have the capacity to enforce the laws that protect the air we breathe, the water we drink or the food that we eat,” he said.

Medicaid would be gutted, Medicare would be turned into a voucher program – but the Republicans would still cut taxes by $4.6 trillion over the next decade. The cuts, as usual, would mostly benefit the wealthy.

Mr. Obama noted that the stated purpose of the Republican budget is to reduce the federal budget deficit, but he called it a Trojan horse and “thinly veiled social Darwinism.” The real purpose is to cripple government. And he said, because it guts “the very things we need to grow an economy that’s built to last – education and training, research and development, our infrastructure – it is a prescription for decline.”

The Republican response to Mr. Obama – that the nation is in a debt crisis and the president doesn’t get it – just made his point for him. We don’t have a debt crisis. We have a medium- to long-term budget problem, driven largely by rising health costs combined with an aging population. Health care reform is an honest attempt to deal with that. Letting the Bush tax cuts expire, starting with the high-end ones, would be an honest attempt to deal with that. Then there’s our lack of jobs, lack of income growth, diminishing prospects and dwindling opportunities.

And we shouldn’t forget that George W. Bush told us we didn’t need to raise taxes to pay for the war in Iraq because it would pay for itself through oil revenue.  He cut taxes for the 1% instead and created a deficit.  This probably wouldn’t have been so catastrophic except that the economy collapsed in 2008.  Here is a link to a nice chart.

So the Ryan Budget will be at the heart of the election this fall – especially if Paul Ryan is Romney’s VP.  It will be interesting.

 

Who is really European?

I was reading Paul Krugman’s column in the New York Times this morning and I started thinking.  The Republicans accuse President Obama of trying to make us more like European Socialists, but in reality it is they who want to make us European.  Think about it a minute.

Krugman writes

Last week the European Commission confirmed what everyone suspected: the economies it surveys are shrinking, not growing. It’s not an official recession yet, but the only real question is how deep the downturn will be.

And this downturn is hitting nations that have never recovered from the last recession. For all America’s troubles, its gross domestic product has finally surpassed its pre-crisis peak; Europe’s has not. And some nations are suffering Great Depression-level pain: Greece and Ireland have had double-digit declines in output, Spain has 23 percent unemployment, Britain’s slump has now gone on longer than its slump in the 1930s.

Worse yet, European leaders — and quite a few influential players here — are still wedded to the economic doctrine responsible for this disaster.

What is that doctrine?  Basically you gut the retirement system, layoff workers, cut wages, and increase taxes.  Krugman puts it this way

Specifically, in early 2010 austerity economics — the insistence that governments should slash spending even in the face of high unemployment — became all the rage in European capitals. The doctrine asserted that the direct negative effects of spending cuts on employment would be offset by changes in “confidence,” that savage spending cuts would lead to a surge in consumer and business spending, while nations failing to make such cuts would see capital flight and soaring interest rates. If this sounds to you like something Herbert Hoover might have said, you’re right: It does and he did.

President Herbert Hoover.

Image via Wikipedia

 

Thomas Wright in a column published in the Financial Times brings in the Republicans.  He points out the while Mitt Romney and Newt Gingrich want to deal immediately with the debt crisis – like the Europeans – Democrats and, in particular the President, believe that the debt is a long term issue and not a near term crisis. 

I’m certainly not an expert, but it does appear that the European Hooverism is being largely driven by Germany.  It will be interesting to see how that works out for them in the long run.  What happens when the Greek economy continues to sink and they decide to pull out of the Euro? 

Back to Krugman again.

Meanwhile, countries that didn’t jump on the austerity train — most notably, Japan and the United States — continue to have very low borrowing costs, defying the dire predictions of fiscal hawks.

So what will it take to convince the Pain Caucus, the people on both sides of the Atlantic who insist that we can cut our way to prosperity, that they are wrong?

After all, the usual suspects were quick to pronounce the idea of fiscal stimulus dead for all time after President Obama’s efforts failed to produce a quick fall in unemployment — even though many economists warned in advance that the stimulus was too small. Yet as far as I can tell, austerity is still considered responsible and necessary despite its catastrophic failure in practice.

The big question:  Will the Congress pass the President’s new jobs bill?  Or will it stick to slash, slash, slash?  Increasing aid to local governments for police, fire, schools and programs like the Community Development Block Grant (CDBG) will prevent layoffs and enable hiring.  Take CDBG  for example.  The City of Boston uses the funds to assist human services programs like afterschool and youth recreation, to assist small businesses and nonprofits make repairs and improvements, and help low income homeowners make repairs.  There are rules about who can get assistance.  Jobs are ceated when the business or nonprofit hires staff or a contractor to make repairs and improvements.  Assistance to homeowners also creates jobs.  Many other localities use CDBG to improve roads and sidewalks.  I think everyone understand how keeping teachers, police, and firefighters employed helps local governments.  It also increases the tax base for all levels of government and will eventually help lower the debt.  Or am I being too simplistic?

Krugman ends this way

Look, I understand why influential people are reluctant to admit that policy ideas they thought reflected deep wisdom actually amounted to utter, destructive folly. But it’s time to put delusional beliefs about the virtues of austerity in a depressed economy behind us.

So it seems that it is really the Republicans who are more European with their belief in continued austerity.  They need to look around and see what is happening in Europe and decide if they – and us – really want to be like them or continue to pursue the President’s American exceptionalism.