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“Mooching Off Medicaid”: Conservatives Like Big Government Just Fine When It Lines Their Pockets

Conservatives like to say that their position is all about economic freedom, and hence making government’s role in general, and government spending in particular, as small as possible. And no doubt there are individual conservatives who really have such idealistic motives.

When it comes to conservatives with actual power, however, there’s an alternative, more cynical view of their motivations — namely, that it’s all about comforting the comfortable and afflicting the afflicted, about giving more to those who already have a lot. And if you want a strong piece of evidence in favor of that cynical view, look at the current state of play over Medicaid.

Some background: Medicaid, which provides health insurance to lower-income Americans, is a highly successful program that’s about to get bigger, because an expansion of Medicaid is one key piece of the Affordable Care Act, a k a Obamacare.

There is, however, a catch. Last year’s Supreme Court decision upholding Obamacare also opened a loophole that lets states turn down the Medicaid expansion if they choose. And there has been a lot of tough talk from Republican governors about standing firm against the terrible, tyrannical notion of helping the uninsured.

Now, in the end most states will probably go along with the expansion because of the huge financial incentives: the federal government will pay the full cost of the expansion for the first three years, and the additional spending will benefit hospitals and doctors as well as patients. Still, some of the states grudgingly allowing the federal government to help their neediest citizens are placing a condition on this aid, insisting that it must be run through private insurance companies. And that tells you a lot about what conservative politicians really want.

Consider the case of Florida, whose governor, Rick Scott, made his personal fortune in the health industry. At one point, by the way, the company he built pleaded guilty to criminal charges, and paid $1.7 billion in fines related to Medicare fraud. Anyway, Mr. Scott got elected as a fierce opponent of Obamacare, and Florida participated in the suit asking the Supreme Court to declare the whole plan unconstitutional. Nonetheless, Mr. Scott recently shocked Tea Party activists by announcing his support for the Medicaid expansion.

But his support came with a condition: he was willing to cover more of the uninsured only after receiving a waiver that would let him run Medicaid through private insurance companies. Now, why would he want to do that?

Don’t tell me about free markets. This is all about spending taxpayer money, and the question is whether that money should be spent directly to help people or run through a set of private middlemen.

And despite some feeble claims to the contrary, privatizing Medicaid will end up requiring more, not less, government spending, because there’s overwhelming evidence that Medicaid is much cheaper than private insurance. Partly this reflects lower administrative costs, because Medicaid neither advertises nor spends money trying to avoid covering people. But a lot of it reflects the government’s bargaining power, its ability to prevent price gouging by hospitals, drug companies and other parts of the medical-industrial complex.

For there is a lot of price-gouging in health care — a fact long known to health care economists but documented especially graphically in a recent article in Time magazine. As Steven Brill, the article’s author, points out, individuals seeking health care can face incredible costs, and even large private insurance companies have limited ability to control profiteering by providers. Medicare does much better, and although Mr. Brill doesn’t point this out, Medicaid — which has greater ability to say no — seems to do better still.

You might ask why, in that case, much of Obamacare will run through private insurers. The answer is, raw political power. Letting the medical-industrial complex continue to get away with a lot of overcharging was, in effect, a price President Obama had to pay to get health reform passed. And since the reward was that tens of millions more Americans would gain insurance, it was a price worth paying.

But why would you insist on privatizing a health program that is already public, and that does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.

So ignore all the talk about too much government spending and too much aid to moochers who don’t deserve it. As long as the spending ends up lining the right pockets, and the undeserving beneficiaries of public largess are politically connected corporations, conservatives with actual power seem to like Big Government just fine.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, March 3, 2013

March 5, 2013 Posted by | Affordable Care Act, Medicaid | , , , , , , , | Leave a comment

“Low Information Republicans”: What We Have Here Is More Than A Failure To Communicate

One of the more common areas of discussion among political professionals is the phenomenon of low-information voters. These are folks who care about the country and its future, but choose not to keep up on current events, due to some combination of feeling busy, apathetic, and frustrated. Political pros find these Americans difficult to reach — and at times, easy to manipulate — precisely because they’re disengaged and far behind the curve.

The point isn’t that low-information voters are dumb, but rather, that they’re ignorant. In focus groups, you’ll hear these same folks express poorly thought out opinions based on vague “something I heard on the news” observations.

But what happens when we move past low-information voters and start looking at low-information politicians? Ezra Klein relayed an incredible exchange from last week about the ongoing fiscal debate in Washington.

Would it matter, one reporter asked the veteran legislator, if the president were to put chained-CPI — a policy that reconfigures the way the government measures inflation and thus slows the growth of Social Security benefits — on the table?

“Absolutely,” the legislator said. “That’s serious.”

Another reporter jumped in. “But it is on the table! They tell us three times a day that they want to do chained-CPI.”

“Who wants to do it?” said the legislator.

“The president,” replied the reporter.

“I’d love to see it,” laughed the legislator.

In other words, an elected member of Congress — a “veteran legislator,” not some freshman who’s only been in office a couple of months — wants to see President Obama endorse a “serious” policy like chained-CPI as part of a larger debt-reduction package, but the lawmaker has absolutely no idea that Obama has already endorsed chained-CPI as part of a larger debt-reduction package. Indeed, in this case, the Republican lawmaker was so incredulous, he or she laughed at reality, as if it couldn’t possibly be true.

So, is it fair to say Washington debates would be less ridiculous if low-information Republican lawmakers were simply brought up to speed on the basics? Would compromise be easier if GOP officials had some clue as to what President Obama is, in reality, offering?

Well, no, probably not.

Jon Chait reminds us of the classic Upton Sinclair line: “It is impossible to make a man understand something if his livelihood depends on not understanding it.”

As this is applied to the ongoing political debates in DC, Republicans seem ignorant to a jaw-dropping degree about some of the basics, but even if they suddenly became more informed, it’s likely they’d come up with new reasons not to govern constructively with the White House.

Indeed, we don’t have to speculate to know this is true. Over the weekend, Ezra highlighted concerns raised by Mike Murphy, one of the top political consultants in the Republican Party, who said President Obama could reach a bipartisan deal with Republicans if only he endorsed chained CPI, apparently unaware that Obama has already done this.

Reminded of the facts, Murphy dug in, saying Obama endorsed means testing, but “refused” chained CPI. This is factually incorrect, too — indeed, it’s the exact opposite of reality — and when this was brought to his attention, Murphy switched gears, saying chained CPI is a “small beans gimmick” and Republicans just aren’t able to “trust” the White House.

Keep in mind, Murphy’s no dummy, but his line of argument is literally incoherent. He wants Obama to endorse a policy. Told that Obama already endorsed that policy, Murphy denies it. Presented with proof, Murphy decides the policy he supports isn’t so great after all.

So what does Murphy recommend? That Obama “earn trust” with Republicans by “first” agreeing to spending cuts. But in our reality, Obama already embraced about $1.5 trillion in spending cuts in 2011, with no accompanying revenue. In other words, Murphy believes the way out of the current mess is for the president to give Republicans 100% of what they want, accepting another cuts-only package.

Ezra’s bottom line rings true: Republicans have effectively eliminated the possibility of compromise, since they “just want to get the White House to implement their agenda in return for nothing.”

 

By: Steve Benen, The Maddow Blog, March 4, 2013

March 5, 2013 Posted by | Deficits, Sequester | , , , , , , | 2 Comments

“Morning Joe’s Accuracy Deficit”: If It’s Way Too Early, It’s Just Flat Out Wrong

We’ve all played the game “telephone,” where a message gets distorted in the retelling, often so much so that the original sender has a hard time recognizing it when it comes back. Nowadays, “telephone” is played in the blogosphere, and that’s how I felt when I first learned that my views on reducing the federal budget deficit were portrayed as in sharp contrast to those of my famous Princeton colleague, Paul Krugman.

The story began when Krugman appeared as a guest on “Morning Joe” on January 28th. He locked horns with host Joe Scarborough and others over how urgent it is to reduce the deficit, with Krugman arguing that we have lots of time and Scarborough (and others) arguing that we need to act post haste. Krugman did not dispute the notion that we must eventually get ourselves off the explosive debt path on which we now find ourselves. But he insisted that, with the economy so weak and the markets so welcoming of U.S. Treasury debt, we can and should go slowly.

Scarborough, though cordial to his guest, was incredulous and even amused. He subsequently argued in POLITICO that Krugman’s view is extreme, dangerous, and — most germane to this note — shared by almost no one else. It certainly wasn’t the consensus view on “Morning Joe” that day.

When Scarborough speaks, people listen. So controversy quickly erupted in the blogosphere. In POLITICO on February 15th, Scarborough invoked me as being on his side of the debate — which was news to me. While there are nuances of difference between my views on the budget issue and Krugman’s, and notable differences in rhetorical style, our positions are broadly similar. I’m probably a tad more hawkish than my colleague, but there’s not much distance showing between us.

So why had Scarborough declared me a deficit hawk?, I wondered when someone informed me of the alleged schism within the Princeton economics department. Here’s the answer.

In my new book, “After the Music Stopped” (Penguin Press, 2013), which was published a few days before the Scarborough-Krugman debate, I argued that there is not just one, but actually three distinct deficit problems, each with its own solution.

PROBLEM 1: In the very short run, meaning right now, we probably have too much deficit reduction. The U.S. economy could actually use some fiscal stimulus (to wit, larger deficits) today, rather than more fiscal contraction, because unemployment is still so high. Doesn’t that sound like Krugman?

PROBLEM 2: Over the coming decade, however — which is the focus of Simpson-Bowles, the so-called grand bargain, and most other plans — we do need to bring the deficit down, I argued. And, indeed, Problems 1 and 2 should be linked: by joining together some modest stimulus now with perhaps ten times as much deficit reduction over the ten-year budget window. In Washington-speak, we would thus “pay for” the stimulus ten times over. Furthermore, I argued, we could accomplish that without undue pain and suffering.

PROBLEM 3: The real budget crunch comes well down the line — a decade or two or three from now. The problem is simple to diagnose — healthcare costs are projected to soar — and it looks massive. By the way, that doesn’t mean we shouldn’t start addressing the healthcare cost problem now.

An excerpt from my book, making these points, was published in The Atlantic on January 25th — three days before the “Morning Joe” show. Interestingly, The Atlantic entitled the excerpt: “How to Worry About the Deficit: (1) Don’t; (2) Wait a Few Years; (3) Then Worry About Healthcare Costs.” A bit long as headlines go, and maybe a bit misleading, but it did capture the three separate deficit issues.

Apparently the article caught Scarborough’s eye. In that POLITICO article, he cited me as among the anti-Krugmans, claiming I was “particularly supportive of the “Morning Joe” panel’s view.” Why? Because I had warned of “truly horrific problems” ahead and “even shared [the] conclusion that the coming Medicare crisis will be so great that Democrats won’t be able to tax their way out of it.”

Well, I did say those things, but they referred to Problem 3, the long-run explosion of healthcare costs, not to Problem 2, the ten-year budget. Here’s the actual quotation about taxing our way out of the exploding healthcare costs (from “After the Music Stopped,” p. 404):

“The government can cover no more than a small fraction of the projected deficits by raising taxes. Sorry, Democrats, but the Republicans are right on this one. Americans are used to federal taxes running about 18.5 percent of GDP; they will not allow them to rise to 32 percent of GDP. Never mind that a number of European countries do so; we won’t.”

Krugman subsequently noted in his blog (on February 16) that his position is “not so different” from mine.

I don’t blog, so the purpose of this missive is simple: Can we please end the mini-debate right here? While there may be some small differences between Krugman’s position on reducing the deficit and my own, they are pretty small. Had I been on “Morning Joe” that day, the debate surely would have been two against four, not one against four. Furthermore, Krugman and I are not occupying some obscure corner of the policy debate, where only weirdos live. A large number of economists are on our side. Others, of course, are closer to the Scarborough camp.

The more important question is the substantive issue of the day: Should we be going for more fiscal austerity right now, or not? Those of us who say “not” urge you to consider some pertinent facts: the unemployment rate remains sky high; fiscal austerity has failed in Europe, where it is harming growth; the U.S. Treasury can still borrow at super-low interest rates; and we have already made serious progress on the ten-year budget problem. Now make up your own minds.

 

By: Alan S. Blinder, Opinion Contributor; Professor of Economics and Public Affairs, Princeton; Former Vice Chairman of the Federal Reserve, Politico, March 4, 2013

March 5, 2013 Posted by | Deficits, Sequester | , , , , , , , | 1 Comment

“Congress Lacks Courage And Vision”: FDR Put Humanity First, The Sequester Puts It Last

FDR placed the needs of the American people above petty budgetary concerns, but today’s leaders lack his courage and vision.

In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.

This cost money. We knew, and you knew, in March, 1933, that it would cost money. We knew, and you knew, that it would cost money for several years to come. The people understood that in 1933. They understood it in 1934, when they gave the Administration a full endorsement of its policy. They knew in 1935, and they know in 1936, that the plan is working.—FDR, 1936

Eighty years ago this month, at the height of the worst economic crisis in our nation’s history, Franklin D. Roosevelt delivered on his promise to launch a New Deal for the American people. Not wedded to any one program, idea, or ideology, the New Deal was founded on the very simple premise that when the free market failed to provide basic economic security for the average American, government had a responsibility to provide that security. In Roosevelt’s day, this meant imposing the first-ever meaningful regulation of the stock market, shoring up the nation’s financial system by guaranteeing private deposits and separating commercial from investment banking, and providing jobs to the millions of unemployed through government expenditures on infrastructure. The Roosevelt administration also launched the country’s first nationwide program of unemployment insurance to help the unemployed bridge the gap between jobs as well as Social Security to ensure that the elderly, after years of work and toil, would not suddenly find themselves utterly destitute.

Conservative critics of FDR’s polices say that these programs did not work—that unemployment remained high throughout the 1930s and that it was only World War II that brought us out of the Great Depression. As such, these same critics continually argue that the deficit spending that fueled the New Deal was the root cause of its inability to bring the unemployment rate down to acceptable levels. In short, they argue that government spending and government programs do not work, and that only the free market can provide the economic stimulus necessary to get the economy back on its feet again.

But as is the case today with the naysayers on climate change, the empirical evidence suggests that nothing could be further from the truth. During FDR’s first term, for example, the average annual growth rate for the U.S. economy was 11 percent. Compare that to the paltry 0.8 percent we witnessed in the first term of the Obama administration. The nationwide unemployment rate also fell, from its all-time high of 25 percent in 1933 to 14 percent by 1935, which at the time represented the largest and fastest drop in unemployment in our nation’s history.

But far more damning to the conservative critique is the argument that tries to invalidate the New Deal by positing that it was World War II and not the relief programs of the 1930s that brought us out of the Great Depression. Conservatives love to trumpet this fact and often use it as part of their argument against deficit spending, never stopping for a moment to consider that government expenditures—and deficits—in World War II made the New Deal look like small potatoes. In fact, deficit spending in the New Deal never topped 6 percent of GNP, while in World War II it ran as high as 28 percent. In other words, World War II was the New Deal on steroids. Viewed from this perspective, it is FDR’s critics on the left—not the right—who possess the stronger argument. The problem with the New Deal was that it did not go far enough. In other words, the government should have spent more money, not less, if it was going to be successful in bringing the economic crisis to an end.

All this is not to say that free enterprise is incapable of producing economic growth—it most certainly is. But there are times when capitalism, left to its own devices, can fail. Franklin Roosevelt was willing to acknowledge this, and he spent the better part of his tenure in office trying to put in place programs that would make capitalism work for the average American, not just those at the top. Hence, his agenda was not to subvert or destroy the free market system, but rather to save it.

It took vision and courage to launch the New Deal—the vision to understand that when the free market systems falls short or fails, government has a responsibility to take direct measures to get the economy moving again, and the courage to engage in deficit spending at a time when orthodox economic theory argued that the only proper response to an economic recession or depression was to slash government spending and balance the budget.

Unfortunately, the leadership we possess in Washington today lacks the vision and the courage to follow FDR’s example and put in place the sort of common-sense programs that would stimulate the economy and put people back to work. Instead of providing jobs for millions by spending money on our failing infrastructure—now ranked 24th in the world—or investing in programs that would reverse the falling education rates of our children, or providing greater federal support for the basic scientific research that may unlock untold benefits for future generations, we instead speak of nothing but the deficit and the sequester, as if cutting spending in the midst of recession is the magic bullet that will lead us out of our economic malaise.

Franklin Roosevelt faced similar critics, who, much like today’s deficit hawks, insisted that he must cut spending and balance the budget no matter what the consequences for the average American. But FDR would have none of this. “To balance our budget in 1933 or 1934 or 1935,” he said,

would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.

As it turns out, FDR’s decision to put “humanity first” was not only the right moral decision, it was also the right economic decision. For the deficit spending that he finally unleashed in World War II, coupled with the social and economic reforms put in place during the New Deal, led to one of the longest periods of economic prosperity in America’s history and the birth of the modern American middle class.

Sadly, all of the evidence to date suggests that our leaders in Washington are quite happy “to pass by on the other side” and let the sequester proceed without so much as a fight. With roughly 16 million people across the country still unemployed, this is surely “a crime against the American people.”

 

By: David Woolner, The National Memo, March 3, 2013

March 5, 2013 Posted by | Deficits, Economic Recovery | , , , , , , , | Leave a comment

“The Dunce Vs Deceiver Debate”: Either John Boehner Is Confused Or He Thinks You’re Confused

Watching House Speaker John Boehner (R-Ohio) on “Meet the Press” yesterday, it was hard not to wonder about the Republican leader’s frame of mind. Given the distance between reality and his rhetoric, one question hung over the interview: does Boehner actually believe his own talking points?

For example, the Speaker insisted, “[T]here’s no plan from Senate Democrats or the White House to replace the sequester.” Host David Gregory explained that the claim is “just not true,” leading Boehner to respond:

“Well, David that’s just nonsense. If [President Obama] had a plan, why wouldn’t Senate Democrats go ahead and pass it?”

Now, I suppose it’s possible that the Speaker of the House doesn’t know what a Senate filibuster is, but Boehner has been in Congress for two decades, and I find it implausible that he could be this ignorant. The facts are not in dispute: Democrats unveiled a compromise measure that required concessions from both sides; the plan enjoyed majority support in the Senate; and Republicans filibustered the proposal. That’s not opinion; that’s just what happened.

“If he had a plan, why wouldn’t Senate Democrats go ahead and pass it?” One of two things are true: either the House Speaker has forgotten how a bill becomes a law in 2013 or he’s using deliberately deceptive rhetoric in the hopes that Americans won’t know the difference. It’s one or the other.

What’s worse, the “dunce vs. deceiver” debate intensified as the interview progressed.

Consider this gem:

“Listen, there’s no one in this town who’s tried harder to come to an agreement with the president and to deal with our long-term spending problem, no one.”

If by “tried,” Boehner means “blew off every overly generous offer extended by the White House,” then sure, he tried. In reality, Boehner walked away from the Grand Bargain in 2011, walked away from another Grand Bargain to pursue “Plan B” (remember that fiasco?); and walked away from balanced compromise on sequestration.

Or how about this one about the sequester:

“Listen. I don’t know whether it’s going to hurt the economy or not.”

Boehner, just two weeks ago, wrote a Wall Street Journal op-ed arguing that the sequester is going to hurt the economy. Does the Speaker not remember this?

And finally, let’s not forget this one:

“I’m going to say it one more time. The president got his tax hikes on January the first. The issue here is spending. Spending is out of control.”

First, no sane person could look at stagnant government spending rates during the Obama era and think it’s “out of control.” Second, using Boehner’s own logic, the Speaker got his spending cuts in 2011 — to the tune of nearly $1.5 trillion — so if we’re following his line of reasoning, the issue isn’t spending.

Honestly, Boehner came across as a man who’s just terribly confused about the basics of the ongoing debate. Putting aside ideology and preferred policy agendas, the Speaker just doesn’t seem to keep up on current events especially well — he doesn’t remember the 2011 spending cuts; he doesn’t remember last week’s Senate filibuster; he doesn’t remember President Obama’s offers to cut more spending; he doesn’t remember his own op-eds; and he doesn’t remember the economic growth that followed tax increases in the 1980s and 1990s.

I’m tempted to take up a collection to help buy Boehner some remedial materials, but I’m not sure what he’d need first: an Economic 101 textbook or a subscription to a daily newspaper.

 

By: Steve Benen, The Maddow Blog, March 4, 2013

March 5, 2013 Posted by | Sequester | , , , , , , , , | Leave a comment

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