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“Where Government Excels”: Recognizing The Reality That There Are Some Things The Government Does Better Than The Private Sector

As Republican presidential hopefuls trot out their policy agendas — which always involve cutting taxes on the rich while slashing benefits for the poor and middle class — some real new thinking is happening on the other side of the aisle. Suddenly, it seems, many Democrats have decided to break with Beltway orthodoxy, which always calls for cuts in “entitlements.” Instead, they’re proposing that Social Security benefits actually be expanded.

This is a welcome development in two ways. First, the specific case for expanding Social Security is quite good. Second, and more fundamentally, Democrats finally seem to be standing up to antigovernment propaganda and recognizing the reality that there are some things the government does better than the private sector.

Like all advanced nations, America mainly relies on private markets and private initiatives to provide its citizens with the things they want and need, and hardly anyone in our political discourse would propose changing that. The days when it sounded like a good idea to have the government directly run large parts of the economy are long past.

Yet we also know that some things more or less must be done by government. Every economics textbooks talks about “public goods” like national defense and air traffic control that can’t be made available to anyone without being made available to everyone, and which profit-seeking firms, therefore, have no incentive to provide. But are public goods the only area where the government outperforms the private sector? By no means.

One classic example of government doing it better is health insurance. Yes, conservatives constantly agitate for more privatization — in particular, they want to convert Medicare into nothing more than vouchers for the purchase of private insurance — but all the evidence says this would move us in precisely the wrong direction. Medicare and Medicaid are substantially cheaper and more efficient than private insurance; they even involve less bureaucracy. Internationally, the American health system is unique in the extent to which it relies on the private sector, and it’s also unique in its incredible inefficiency and high costs.

And there’s another major example of government superiority: providing retirement security.

Maybe we wouldn’t need Social Security if ordinary people really were the perfectly rational, farsighted agents economists like to assume in their models (and right-wingers like to assume in their propaganda). In an idealized world, 25-year-old workers would base their decisions about how much to save on a realistic assessment of what they will need to live comfortably when they’re in their 70s. They’d also be smart and sophisticated in how they invested those savings, carefully seeking the best trade-offs between risk and return.

In the real world, however, many and arguably most working Americans are saving much too little for their retirement. They’re also investing these savings badly. For example, a recent White House report found that Americans are losing billions each year thanks to investment advisers trying to maximize their own fees rather than their clients’ welfare.

You might be tempted to say that if workers save too little and invest badly, it’s their own fault. But people have jobs and children, and they must cope with all the crises of life. It’s unfair to expect them to be expert investors, too. In any case, the economy is supposed to work for real people leading real lives; it shouldn’t be an obstacle course only a few can navigate.

And in the real world of retirement, Social Security is a shining example of a system that works. It’s simple and clean, with low operating costs and minimal bureaucracy. It provides older Americans who worked hard all their lives with a chance of living decently in retirement, without requiring that they show an inhuman ability to think decades ahead and be investment whizzes as well. The only problem is that the decline of private pensions, and their replacement with inadequate 401(k)-type plans, has left a gap that Social Security isn’t currently big enough to fill. So why not make it bigger?

Needless to say, suggestions along these lines are already provoking near-hysterical reactions, not just from the right, but from self-proclaimed centrists. As I wrote some years ago, calling for cuts to Social Security has long been seen inside the Beltway as a “badge of seriousness, a way of showing how statesmanlike and tough-minded you are.” And it’s only a decade since former President George W. Bush tried to privatize the program, with a lot of centrist support.

But true seriousness means looking at what works and what doesn’t. Privatized retirement schemes work very badly; Social Security works very well. And we should build on that success.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, April 10, 2015

April 13, 2015 Posted by | Federal Government, Medicare, Social Security | , , , , , , , | Leave a comment

“Can America Stand Rand?”: Cranking Up His ‘Libertarian’ Campaign

Platitudes typically litter the announcement speech of every aspiring president, and Rand Paul’s address in Louisville today was no exception. “We have come to take our country back,” he thundered—or tried to thunder—“from the special interests that use Washington at their personal piggy bank.”

Exactly what those special interests might be, he neglected to say — although they probably don’t include the oil or coal lobbies he tends to favor. He went on to rant against “both parties” and “the political system,” not to mention “big government,” deficit spending, and the federal debt. Naturally he prefers “small government” because “the love of liberty pulses in my veins.”

Yet Paul delivered these encrusted clichés with impressive energy, to an enthusiastic crowd featuring enough youthful and minority faces sprinkled among the Tea Party types to lend a touch of credibility to claims that he is a “different kind of Republican.” Speaking about urban poverty and education, the Kentucky Republican even name-checked Dr. Martin Luther King, Jr. — a gesture that too many elected officials in his party, especially from the South, still find difficult. (His father Ron Paul, watching from the audience, may have stifled a chuckle, recalling how his racist newsletters regularly excoriated the late civil rights leader as a “pro-communist philanderer” and worse, while blasting Ronald Reagan for signing the bill that made King’s birthday a national holiday.)

Appealing to younger and minority voters, Paul wisely emphasized his ideas about cutting back the machinery of surveillance and incarceration. Likewise, he kept the required paeans to economic “freedom” sufficiently vague to avoid alienating potential supporters, like students who might not appreciate his hostility to federal loans and grants, and families whose survival depends on food stamps and unemployment benefits that he would slash.The upside of a Paul campaign may be that his dissenting perspective on issues such as Iran, Cuba, and the surveillance state brings a small degree of sanity to the Republican primary debate. Although he parroted much nonsense about the Obama administration’s foreign policy, he dared to say that the goal of diplomacy “should be and always is peace, not war.”

Equally beneficial would be a frank discussion of the libertarian delusions that underlie his economic platform – and the real effects that such policies would have on American communities, families, and workers.Paul still hates the auto bailout, although killing it would have cost another million jobs. While he rails against deficit spending and Obama’s economic stimulus, the clear consensus is that unemployment would have soared without those measures. No doubt he agreed with his father’s repeated warnings that government spending would lead to “hyperinflation” and depression, but we have seen precisely the opposite: a revived economy, recovering employment, and inflation that remains too low to worry any sane person.

Among Paul’s easiest targets today was the IRS, which he promises to diminish or even abolish with his favorite “new idea,” a flat tax. That was a fresh proposal, perhaps, back when right-wing academics Robert Hall and Alvin Rabushka unveiled it in a 1983 book titled Low Tax, Simple Tax, Flat Tax. There is no reason to believe that Rand Paul’s flat tax would differ significantly from theirs in design or impact; namely, to worsen inequality, raising the burden on the poor and middle class while benefiting the very rich.

Mocking the federal proclivity to spend more than the IRS collects, Paul chortled today, “Isn’t $3 trillion enough?” But while he promises to “balance” the budget, his 17 percent flat tax wouldn’t collect even that amount — which means enormous cuts in every budget sector, from education and infrastructure to defense.

Authors Hall and Rabushka described their flat tax as “a tremendous boon to the economic elite” and noted, candidly, “it is an obvious mathematical law that lower taxes on the successful will have to be made up by higher taxes on average people.” We shall see whether Paul is as honest as the authors of his tax plan.

 

By: Joe Conason, Editor in Chief, The National Memo, April 7, 2015

April 10, 2015 Posted by | GOP Presidential Candidates, Libertarians, Rand Paul | , , , , , , , , , | Leave a comment

“Americans Are A Bunch Of Slackers”: Carly Fiorina, As Ridiculous As Every Other Businessperson Politician

Yesterday, former HP CEO Carly Fiorina told Chris Wallace on Fox News Sunday that the chances that she’ll run for president are “higher than 90 percent.” And what will Fiorina be offering? Why, hard-nosed business sense, of course! Her political experience may begin and end with one failed run for Senate, but that doesn’t mean she isn’t ready for the job. Let’s see her answer to the inevitable question of why she’s qualified to be president:

Because I have a deep understanding of how the economy actually works, having started as a secretary and become the chief executive of the largest technology company in the world, because I understand how the world works and know many of the world leaders on the stage today, because I understand technology, a transformational tool, because I understand bureaucracies—how they work and how you need to change them and our government is a huge bureaucracy, and because I understand executive decision-making, which is making tough calls in tough times with high stakes for which you’re prepared to be held accountable.

So she knows that decision-making is about making tough calls! And does the substance of those calls matter? Nah. If someone who had success in a field unrelated to business—let’s say a great trial lawyer—said to a corporate board, “Hire me to be your CEO, even though I’ve never worked in business, because I know how to make tough decisions, and that’s what business is about, right?” they’d be laughed out of the room. That’s not even to address Fiorina’s stormy tenure at HP, which wouldn’t put her on anyone’s list of highly successful chief executives.

But there are a couple of other things about this interview I want to point out:

Well, I think we have two fundamental structural problems in our economy. One is that we have tangled people up in a web of dependence from which they can’t escape. We’re leaving lots of talent on the field. Secondly, we’re crushing small businesses now. Elizabeth Warren is right, crony capitalism is alive and well. Big business and big government go hand in hand. But for the first time in U.S. history now, we are destroying more businesses than we are creating.

So the biggest problem with the economy is the “web of dependence” we’ve trapped people in. Americans are a bunch of slackers cashing their government benefits, and if we could just cut those benefits and get them off their lazy duffs, then the economy would be supercharged. OK.

And what is this about “For the first time in U.S. history now, we are destroying more businesses than we are creating”? I have no idea what she’s talking about, but the economy constantly creates and then destroys businesses. You may have heard that idea that 90 percent of businesses fail in their first year; turns out that isn’t actually true, but the majority of businesses don’t last more than five years. Create, destroy, create, destroy—that’s how capitalism works.

And I love her attempt at Republican populism: “Crony capitalism is alive and well. Big business and big government go hand in hand.” And if you think that’s a problem, the person to solve it is the one whose sole quasi-qualification is having been CEO of a huge corporation.

But the best part of the interview is this, where Fiorina drills down to the problem that’s really holding our economy back:

So, if we want mainstream and the middle class going and growing again, we’ve got to get small and family-owned businesses going and growing again. Washington, D.C., has become a vast unaccountable bureaucracy. It’s been growing for 40 years. We have no idea how our money is spent.

I think there are two things that would help tremendously. One, zero base budgeting, so we know where the money is spent. We’re talking about the whole budget and not just the rate of increase.

And two, pay for performance in our civil service. We have—how many inspector general reports do we need to read that say, you know, you can watch porn all day and get paid exactly the same way as somebody who is trying to do their job?

There you have it. If we could only get federal employees to stop watching porn, we could really get this economy going.

I’ve got some shocking news for Ms. Fiorina. You know those tens of thousands of people who worked for you at HP? Plenty of them were watching porn, too. It isn’t just something that federal employees do.

 

By: Paul Waldman, Senior Writer, The American Prospect, March 30, 2015

March 31, 2015 Posted by | Carly Fiorina, CEO'S, GOP Presidential Candidates | , , , , , | 2 Comments

“Cruz Tells Small Child, ‘Your World Is On Fire'”: Scare Them While They’re Young And You’ll Have Them For Life

For politicians like Sen. Ted Cruz (R-Texas), fear is an important motivating tool. Listen to the far-right Texan deliver a typical stump speech and you’ll hear quite a few dire assessments from Cruz about nearly everything.

But as a rule, when politicians address small children, they dial it down a notch. It made a Cruz event in New Hampshire the other day that much more noteworthy.

[Cruz said,] “The Obama economy is a disaster. Obamacare is a train wreck. And the Obama-Clinton foreign policy of leading from behind – the whole world’s on fire!”

Julie Trant, a child in the audience, took this literally. “The world’s on fire?” she asked.

“The world is on fire, yes,” said Cruz, not missing a beat as the crowd chuckled. “Your world is on fire.”

Let’s note that the child in this story is just three years old. During the event, she was sitting on her mother’s lap.

Cruz quickly added, however, “But you know what? Your mommy’s here, and everyone’s here to make sure that the world you grow up in is even better.”

Let’s unpack this one:

  1. The “Obama economy,” in reality, is not a disaster. On the contrary, the president’s economic agenda ended the Great Recession, turned the economy around, and created the strongest job growth since the 1990s.
  2. The Affordable Care Act is not “a train wreck.” On the contrary, the ACA is actually succeeding beautifully, exceeding the expectations of many optimists.
  3. The whole world is not “on fire,” at least not any more than usual.
  4. Telling a three-year-old child, “Your world is on fire” is probably inappropriate at any time, but it’s especially unsettling when it’s wrong.
  5. Telling that same child that Republicans are going to “make sure that the world you grow up in is even better” is odd phrasing. “Even better” usually follows “things are good,” not “things are horrible.”

The child’s mother, for what it’s worth, describes herself as “a huge Ted Cruz supporter” and said during a radio interview this morning that she describes the senator as “Uncle Cruz” to her daughter.

 

By: Steve Benen, The Madow Blog, March 16, 2015

March 21, 2015 Posted by | Conservatives, Fearmongering, Ted Cruz | , , , , , , , | Leave a comment

“GOP Critics In An Unenviable Position”: Conservatives Scramble To Downplay ACA News

Americans learned yesterday that the Affordable Care Act has extended health care coverage to 16.4 million people, slashing the nation’s uninsured rate by over a third, against the backdrop of related system-wide good news. This puts “Obamacare” critics in an unenviable position: trying to characterize a law that’s working as a horrible failure, all evidence to the contrary notwithstanding.

Sen. John Barrasso (R-Wyo.), who’s struggled in this area before despite being the Senate GOP’s point person on health care, gave it his best shot. “Millions of people have lost coverage they liked,” the far-right senator told the New York Times, repeating a dubious claim unsupported by the evidence. He added that extending coverage to millions through Medicaid expansion is “hardly worth celebrating.”

He didn’t say why, exactly, he finds it discouraging when low-income families receive coverage through Medicaid.

But the funnier reaction came by way of a Wall Street Journal piece.

Edmund Haislmaier, senior fellow at the Heritage Foundation, a conservative research group, said the report also doesn’t include essential information on how many people who signed up on exchanges were previously uninsured.

“It’s premature to say it’s ACA-related,” Mr. Haislmaier said.

The number of uninsured historically also has been closely aligned with the economy, with numbers rising during recessions and falling as conditions improve.

Oh my.

The economic argument is itself politically tricky for ACA detractors, because it leaves Republicans in a position of arguing, “Let’s not credit Obama’s health care policies for the good news; let’s instead credit Obama’s economic policies.”

But it’s the Heritage Foundation’s other argument that’s truly amazing. The Affordable Care Act was created in large part to expand Americans’ access to affordable medical care. Once the law was implemented, its provisions worked like a charm and uninsured rate dropped. If the Wall Street Journal quoted Edmund Haislmaier fairly, the Heritage argument seems to be that the success might just be a coincidence – the ACA set out to reduce the uninsured rate, the law was implemented, and the uninsured rate fell at its fastest rate in four decades, but it’s “premature” to say the progress and the law are related.

Jon Chait joked:

Right, I mean, who can really say? Yes, there has been a sudden and extremely sharp plunge in the uninsured rates among the populations eligible for coverage under Obamacare that begins at the exact time Obamacare took effect:

But that could be anything. Survey error. People being excited about Republicans winning the midterm. Sunspots. You never know. Probably not the sudden availability of a major new federal health-care law enrolling millions of people.

Perish the thought.

For context, it’s worth noting that the Heritage Foundation used to be one of the leading conservative think tanks in the nation, even sketching out a health-care-reform blueprint several years ago that resembles the “Obamacare” model now. In recent years, however, Heritage’s focus has shifted away from scholarship and towards political activism.

 

By: Steve Benen, The Maddow Blog, March 17, 2015

March 18, 2015 Posted by | Affordable Care Act, Conservatives, Uninsured | , , , , , , | Leave a comment

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