“It’s Galling Season Again”: The GOP’s Phony New Compassion
When someone in any social cohort decides to act like Ebenezer Scrooge, it’s easy and quite natural for everyone else to fall into the role of Bob Cratchit. This is what several Republicans are now doing in reaction to Mitt Romney’s remarks about Barack Obama and his “gifts” to his core constituencies. But Republicans allegedly competing for the loyalties of the 100 percent is a movie we’ve seen. It doesn’t work, and it doesn’t work for a straightforward reason: free-market solutions to many of the problems faced by the 47 percent simply don’t exist. The GOP has no answer to these problems, and it really doesn’t want to have any. But, boy oh boy, are we about to enter a galling period of hearing them pretend otherwise.
In fact, it’s already started. Bobby Jindal kicked this off by saying in response to Romney, “We need to continue to show how our policies help every voter out there achieve the American dream.” Marco Rubio weighed in with the reassuring news flash that, in fact, he does not think there are “millions and millions of people in this country that don’t want to work.” Fellow Floridian Rick Scott—bless him, the Rick Scott who ripped off Medicare before he became governor and has tried to block Democrats from voting since occupying the office—says Republicans have to say that “we want to take care of every citizen of our state.” Scott Walker, Haley Barbour, Michael Steele, Susanna Martinez, and others have made similar remarks. All well and good. So now, let’s match this lovely rhetoric to the Republican record of the past decade or so.
Let’s start with health care, a big problem in the lives of many 47 percenters. True, the GOP, when George W. Bush was president, passed the Medicare prescription drug-coverage bill. That was mostly a good thing, although the bill didn’t pay for the program and it created the famous doughnut hole problem that is finally being solved by Obamacare. What else beyond that? Most obviously, they opposed the subsidized coverage for millions of working poor that is at the heart of Obamacare, defenestrating their own proposal (the individual mandate) while doing so.
And how about S-CHIP, the health plan for poor children? Children! They fought it tooth and nail. It was supposedly an imposition on private insurers who were positioned to offer similar coverage. Yet of course, they did not do so. If they had, there’d have been no need for S-CHIP in the first place.
The one health care idea they’ve come up with, health savings accounts, are widely known to be riddled with problems. They work fine until people really need ongoing care, kind of like a car that gets you where you’re going on normal days but won’t start during emergencies. Yet they tend to have very high deductibles, and people can still be thrown off if they get really sick. This is the GOP’s great contribution to addressing the health needs of the working class.
What other problems do the 47 percent face? Hardship in old age surely ranks up there. It’s they, after all, who depend wholly or mostly on their Social Security checks (which average about $1,400 a month) to get by. And what did they see Republicans try to do on this front? Privatize it—a proposal so unpopular that it died with almost no support in Congress from even the GOP, and this after Bush spent weeks barnstorming for it. People clearly don’t want Social Security privatized—just as they don’t want Medicare voucherized.
What else? Paying for college? Oh, the GOP record here is particularly stellar. Republicans in Congress spent loads of political capital fighting the Democrats’ effort in 2010 to lower student-loan interest rates. The Obama student-loan reform has been widely hailed—in addition to helping students by offering lower interest rates, it actually saves taxpayers money by eliminating the middleman (private lenders). This year’s GOP platform called for undoing the reform and going back to the old system, which, wouldn’t you know it, is the position of the big banks.
Believe me, I could go on and on and on for pages. The bottom line is this. These private-sector “solutions” Jindal and others invoke to the problems faced by people of limited means already exist. They have either been implemented and been seen to fail (or at least create big new problems), or they’ve not been implemented because a wary public knows better and has risen up to say no.
Government programs were created for a reason: needs arose that the private sector wasn’t responding to. There was no profit to be made, or not enough, or too much risk to be assumed, in providing health coverage to working-class people and their children, who were more likely to have health issues and be expensive to care for; in offering student loans to people who might not be able to pay them back; et cetera. There just were not and are not practical free-market solutions to these problems. That’s why government stepped in.
If the entire Republican Party were made up of nothing but David Frums and David Brookses, maybe well-designed and good-faith market-based attempts to address some of these problems could have a chance. But the actually existing Republican Party is more accurately represented by another David—Vitter, the Louisiana senator—who dismissed S-CHIP as “Hillarycare.”
And it’s Vitter rather than the other Davids who typifies the party because that is how the party’s voting base wants it. The darkly amusing thing about all this distancing from Romney is that in truth, all he was doing was expressing the views of the overwhelming majority of the party’s conservative base, which rose up in a mighty rage in 2009 against these “moochers” and their “gifts.”
I wish Jindal and the rest of them luck, in spite of it all. If they’re sincere and serious, we’ll have a very different Republican Party five years from now from the one we’ve known. In the meantime, permit me my skepticism. They don’t have good solutions to working people’s problems because the record shows that at bottom, they don’t really want to solve them.
By: Michael Tomasky, The Daily Beast, November 18, 2012
“Blown Out Of The Water Like Naval Scrap”: Petraeus Benghazi Testimony Shreds GOP Attack On Rice
On Friday the Republican politicians who had so angrily demanded the testimony of David Petraeus about Benghazi got what they wanted—and what they deserved—when the former CIA director set forth the facts proving that their conspiracy theories and witch-hunts are dead wrong.
Appearing behind closed doors on Capitol Hill, Gen. Petraeus, recently resigned from the spy agency over his illicit affair with biographer Paula Broadwell, answered questions from legislators concerning the tragic Sept. 11 assault that left Ambassador Chris Stevens and three other diplomatic personnel dead.
When the session concluded, Petraeus was spirited away. And Senator John McCain (R-AZ), whose criticism of the Obama administration over Benghazi has verged on hysterical, emerged from the hearing room with very little to say to the reporters waiting outside.
“General Petraeus’ briefing was comprehensive. I think it was important; it added to our ability to make judgments about what was clearly a failure of intelligence, and described his actions and that of his agency and their interactions with other agencies,” said McCain, adding, “I appreciate his service and his candor” before abruptly fleeing as reporters tried to question him.
McCain’s curt statement was in sharp contrast to his voluble remarks on Thursday, when he denounced UN Ambassador Susan Rice for what he and Senator Lindsey Graham (R-SC) described as her misleading description of the attack on Sunday television shows a few days after it occurred. (It later emerged, embarrassingly, that his posturing before the cameras on Benghazi had prevented him from attending a scheduled hearing on that subject. He didn’t want to to discuss that either.)
Essentially, McCain and Graham, joined by Senator Kelly Ayotte (R-NH), accused Rice on Thursday of lying and covering up the fact that the Benghazi consulate had been attacked by terrorists affiliated with al Qaeda. They vowed to prevent her confirmation as Secretary of State, should the president nominate her to replace Hillary Rodham Clinton.
But with McCain departing so abruptly after the Petraeus hearing, it was left to others, including House Intelligence Committee chair Peter King (R-NY), Rep. Adam Schiff (D-CA), Sen. Dianne Feinstein (D-CA), and Sen. Kent Conrad (D-ND) to reveal what their Arizona colleague didn’t care to discuss. In his testimony, Petraeus blew apart the half-baked theories offered by McCain and Graham—and left them looking foolish.
On earlier occasions, King had echoed the same complaints made by McCain and Graham, but after Friday’s hearing he reluctantly admitted the truth: Petraeus had confirmed that the CIA had approved the talking points used by Rice, tentatively blaming the incident on a notorious anti-Muslim video sparking demonstrations in Cairo and elsewhere at the time. Although Petraeus said he had believed that terrorists were responsible, that suggestion was removed from the talking points in order to protect the ongoing FBI investigation into Benghazi, which Rice also mentioned.
As King explained in response to reporters’ questions, Petraeus not only confirmed that any allusion to al Qaeda had been removed from the talking points given to Rice, but that his agency had consented to that decision:
Q: Did he say why it was taken out of the talking points that [the attack] was al Qaeda affiliated?
KING: He didn’t know.
Q: He didn’t know? What do you mean he didn’t know?
KING: They were not involved—it was done, the process was completed and they said, “OK, go with those talking points.” Again, it’s interagency—I got the impression that 7, 8, 9 different agencies.
Q: Did he give you the impression that he was upset it was taken out?
KING: No.
Q: You said the CIA said “OK” to the revised report –
KING: No, well, they said in that, after it goes through the process, they OK’d it to go. Yeah, they said “Okay for it to go.”
In short, Rice was using declassified talking points, developed and approved by the intelligence community, when she discussed the Benghazi attack. So McCain’s nasty personal denunciation of her , along with most of his claims about how the White House handled Benghazi, has been blown out of the water like so much naval scrap. The Arizona senator, his colleagues, and their loud enablers on Fox News and elsewhere in the wingnut media will never apologize to Rice. But that is what they owe her.
By: Joe Conason, The National Memo, November 17, 2012
“Fueled, Serviced, And Collected”: How Wall Street Profits From The College Loan Mess
Five years after Wall Street crashed the economy by irresponsibly securitizing and peddling mortgage debt, the financial industry is coming under growing scrutiny for its shady involvement in student loan debt.
For a host of reasons, including a major decline in public dollars for higher education, going to college today means borrowing—and all that borrowing has resulted in a growing and heavy hand for Wall Street in the lending, packaging, buying, servicing, and collection of student loans. Now, with $1 trillion of student loans currently outstanding, it’s becoming increasingly clear that many of the same problems found in the subprime mortgage market—rapacious and predatory lending practices, sloppy and inefficient customer service and aggressive debt collection practices—are also cropping up in the student loan industrial complex.
This similarity is especially striking in the market for private student loans—which currently make up $150 billion of the $1 trillion of existing student loans.
As detailed in a July 2012 report by the Consumer Financial Protection Bureau and Department of Education, private student loans mushroomed over the last decade, fueled by the very same forces that drove subprime mortgages through the roof: Wall Street’s seemingly endless appetite for new ways to make profit. In this case, investor demand for student loan asset backed securities (SLABS) resulted in private student lenders—primarily Sallie Mae, Citi, Wells Fargo, and the other big banks—to relax lending standards and aggressively begin marketing these loans directly to students.
Unlike federal student loans, private loans have higher and fluctuating interest rates and come without any flexibility for tailoring payments based on income. Before the SLABS binge, most private student loans were actually made in connection with the college financial aid office, which helped ensure students weren’t taken for a ride, or weren’t borrowing more than they needed to. Between 2005 and 2007, the percentage of loans to students made without any school involvement grew from 40 percent to over 70 percent. And the volume of private student loans mushroomed from less than $5 billion in 2001 to over $20 billion in 2008. The market shrunk back to $6 billion after the financial crisis as lenders tightened standards.
And just like the subprime mortgage market, not all students were aggressively targeted by these rapacious lenders. The largest percentage of private loans taken out in 2008 were by students at for-profit colleges. In 2008, just 14 percent of all undergrads took out a private loan while 42 percent of students at for-profit colleges took them out. And as we now know, these loans are sinking borrowers—with absolutely no ability to discharge these loans by filing bankruptcy.
The latest student loan default rates issued by the Department of Education show that the three-year default rates for those who started repayment between October 2008 and September 2009 was 13 percent nationally—an average masking sharp differences depending on the type of school the borrower attended. For-profit institutions had the highest average with nearly 1 out of 4 borrowers in default, compared with 11 percent from public institutions and 7.5 percent at private, non-profit institutions.
All these statistics mean that close to 6 million borrowers are in default (almost 1 in 6 borrowers) to the tune of a combined $76 billion, more than the combined annual tuition for all students attending public two- and four-year colleges.
And for the borrower who can’t make payments, the student loan industrial complex is not a good place to be. And it’s costly for taxpayers: the Department of Education paid $1.4 billion last year to debt collectors and guaranty agencies to chase down borrowers who weren’t paying their loans. And here’s where Wall Street grabs another slice of the debt-for-diploma system pie. As reported in The New York Times, of the $1.4 billion paid out last year, about $355 million went to 23 private debt collectors. The remaining $1.06 billion was paid to the guarantee agencies to collect on defaulted loans made under the old federal loan system, which they in turn often outsource to private collectors.
But wait, there’s more! It turns out that two of the nation’s biggest banks own debt collection agencies that have contracts with the Department of Education to collect on federal student debt that’s gone bad: NCO Group, owned by One Equity Partners, the private equity arm of JP Morgan Chase and Allied Interstate, owned by Citi Venture Capital International, the private equity arm of Citigroup. Both of these debt collection agencies are distinctive in that according to a comprehensive report by the National Consumer Law Center, they have received the most complaints filed with the Better Business Bureau in a three-year period. At the same time, NCOs performance in recovering past-due loans has made it one of the top performers for the DOE.
The new cop on the beat—the Consumer Financial Protection Bureau—is now going to be providing federal oversight of the nation’s largest debt collectors, which is welcome news. The Department of Education could also play an important role in rewarding good behavior by their debt collectors. As NCLC recommends in its report, they could incentivize humane treatment of debtors by penalizing agencies for large numbers of complaints filed against them and reward agencies with few complaints.
Over the last two decades, our nation—in a major shift from its historical roots—slowly privatized and financialized the responsibility of paying for college. The result is a system in which the entire pipeline of student loans—now the largest source of “aid” for most students—is fueled, serviced, and collected by Wall Street.
The student loan industrial complex invites a more profound question: given the billions in profit generated by federal and private student loans, along with the billions in administrative costs absorbed by tax payers, is debt the most efficient and equitable way to provide access to higher education?
By: Tamara Draut, The American Prospect, November 16, 2012
“Life, Death And Deficits”: There Is No Good Case For Denying Older Americans Access To Medicare And Social Security
America’s political landscape is infested with many zombie ideas — beliefs about policy that have been repeatedly refuted with evidence and analysis but refuse to die. The most prominent zombie is the insistence that low taxes on rich people are the key to prosperity. But there are others.
And right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare. Even some Democrats — including, according to reports, the president — have seemed susceptible to this argument. But it’s a cruel, foolish idea — cruel in the case of Social Security, foolish in the case of Medicare — and we shouldn’t let it eat our brains.
First of all, you need to understand that while life expectancy at birth has gone up a lot, that’s not relevant to this issue; what matters is life expectancy for those at or near retirement age. When, to take one example, Alan Simpson — the co-chairman of President Obama’s deficit commission — declared that Social Security was “never intended as a retirement program” because life expectancy when it was founded was only 63, he was displaying his ignorance. Even in 1940, Americans who made it to age 65 generally had many years left.
Now, life expectancy at age 65 has risen, too. But the rise has been very uneven since the 1970s, with only the relatively affluent and well-educated seeing large gains. Bear in mind, too, that the full retirement age has already gone up to 66 and is scheduled to rise to 67 under current law.
This means that any further rise in the retirement age would be a harsh blow to Americans in the bottom half of the income distribution, who aren’t living much longer, and who, in many cases, have jobs requiring physical effort that’s difficult even for healthy seniors. And these are precisely the people who depend most on Social Security.
So any rise in the Social Security retirement age would, as I said, be cruel, hurting the most vulnerable Americans. And this cruelty would be gratuitous: While the United States does have a long-run budget problem, Social Security is not a major factor in that problem.
Medicare, on the other hand, is a big budget problem. But raising the eligibility age, which means forcing seniors to seek private insurance, is no way to deal with that problem.
It’s true that thanks to Obamacare, seniors should actually be able to get insurance even without Medicare. (Although, what happens if a number of states block the expansion of Medicaid that’s a crucial piece of the program?) But let’s be clear: Government insurance via Medicare is better and more cost-effective than private insurance.
You might ask why, in that case, health reform didn’t just extend Medicare to everyone, as opposed to setting up a system that continues to rely on private insurers. The answer, of course, is political realism. Given the power of the insurance industry, the Obama administration had to keep that industry in the loop. But the fact that Medicare for all may have been politically out of reach is no reason to push millions of Americans out of a good system into a worse one.
What would happen if we raised the Medicare eligibility age? The federal government would save only a small amount of money, because younger seniors are relatively healthy and hence low-cost. Meanwhile, however, those seniors would face sharply higher out-of-pocket costs. How could this trade-off be considered good policy?
The bottom line is that raising the age of eligibility for either Social Security benefits or Medicare would be destructive, making Americans’ lives worse without contributing in any significant way to deficit reduction. Democrats, in particular, who even consider either alternative need to ask themselves what on earth they think they’re doing.
But what, ask the deficit scolds, do people like me propose doing about rising spending? The answer is to do what every other advanced country does, and make a serious effort to rein in health care costs. Give Medicare the ability to bargain over drug prices. Let the Independent Payment Advisory Board, created as part of Obamacare to help Medicare control costs, do its job instead of crying “death panels.” (And isn’t it odd that the same people who demagogue attempts to help Medicare save money are eager to throw millions of people out of the program altogether?) We know that we have a health care system with skewed incentives and bloated costs, so why don’t we try to fix it?
What we know for sure is that there is no good case for denying older Americans access to the programs they count on. This should be a red line in any budget negotiations, and we can only hope that Mr. Obama doesn’t betray his supporters by crossing it.
By: Paul Krugman, Op-Ed Columnist, The New York Times, November 15, 2012
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