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“The Story Of Our Time”: The Most Crucial Thing To Understand Is The Economy Is Not Like An Individual Family.

Those of us who have spent years arguing against premature fiscal austerity have just had a good two weeks. Academic studies that supposedly justified austerity have lost credibility; hard-liners in the European Commission and elsewhere have softened their rhetoric. The tone of the conversation has definitely changed.

My sense, however, is that many people still don’t understand what this is all about. So this seems like a good time to offer a sort of refresher on the nature of our economic woes, and why this remains a very bad time for spending cuts.

Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family.

Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too.

And that’s what happened after the financial crisis of 2008. Many people suddenly cut spending, either because they chose to or because their creditors forced them to; meanwhile, not many people were able or willing to spend more. The result was a plunge in incomes that also caused a plunge in employment, creating the depression that persists to this day.

Why did spending plunge? Mainly because of a burst housing bubble and an overhang of private-sector debt — but if you ask me, people talk too much about what went wrong during the boom years and not enough about what we should be doing now. For no matter how lurid the excesses of the past, there’s no good reason that we should pay for them with year after year of mass unemployment.

So what could we do to reduce unemployment? The answer is, this is a time for above-normal government spending, to sustain the economy until the private sector is willing to spend again. The crucial point is that under current conditions, the government is not, repeat not, in competition with the private sector. Government spending doesn’t divert resources away from private uses; it puts unemployed resources to work. Government borrowing doesn’t crowd out private investment; it mobilizes funds that would otherwise go unused.

Now, just to be clear, this is not a case for more government spending and larger budget deficits under all circumstances — and the claim that people like me always want bigger deficits is just false. For the economy isn’t always like this — in fact, situations like the one we’re in are fairly rare. By all means let’s try to reduce deficits and bring down government indebtedness once normal conditions return and the economy is no longer depressed. But right now we’re still dealing with the aftermath of a once-in-three-generations financial crisis. This is no time for austerity.

O.K., I’ve just given you a story, but why should you believe it? There are, after all, people who insist that the real problem is on the economy’s supply side: that workers lack the skills they need, or that unemployment insurance has destroyed the incentive to work, or that the looming menace of universal health care is preventing hiring, or whatever. How do we know that they’re wrong?

Well, I could go on at length on this topic, but just look at the predictions the two sides in this debate have made. People like me predicted right from the start that large budget deficits would have little effect on interest rates, that large-scale “money printing” by the Fed (not a good description of actual Fed policy, but never mind) wouldn’t be inflationary, that austerity policies would lead to terrible economic downturns. The other side jeered, insisting that interest rates would skyrocket and that austerity would actually lead to economic expansion. Ask bond traders, or the suffering populations of Spain, Portugal and so on, how it actually turned out.

Is the story really that simple, and would it really be that easy to end the scourge of unemployment? Yes — but powerful people don’t want to believe it. Some of them have a visceral sense that suffering is good, that we must pay a price for past sins (even if the sinners then and the sufferers now are very different groups of people). Some of them see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain.

What has happened now, however, is that the drive for austerity has lost its intellectual fig leaf, and stands exposed as the expression of prejudice, opportunism and class interest it always was. And maybe, just maybe, that sudden exposure will give us a chance to start doing something about the depression we’re in.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, April 28, 2013

April 29, 2013 Posted by | Economy | , , , , , , , , | Leave a comment

“Predisposed To Believing Nonsense”: From The Far-Right Fringe To The Halls Of Congress

Rachel led the show the other night with a look at conspiracy theories, once relegated to the fringes of American politics, now being embraced by growing numbers of conservatives, including elected lawmakers. The segment specifically noted ridiculous theories about the Boston Marathon bombing, spewed by activist Alex Jones, and touted by a GOP lawmaker in New Hampshire.

As best as I can tell, no member of the U.S. Congress has embraced Jones’ Boston-related nonsense, but it’s clear that many federal lawmakers are taking some of his other ideas seriously.

The right wing media’s promotion of a widely-debunked Alex Jones conspiracy theory about the Department of Homeland Security’s (DHS) ammunition acquisitions prompted House Republicans to hold a hearing to investigate. The theory, which assigns some sinister motivation behind the recent ammo purchases, first gained traction on the websites of conspiracy theorist Alex Jones before finding its way to Fox News and Fox Business and finally to the halls of Congress.

On April 25, Republican Reps. Jim Jordan (OH) and Jason Chaffetz (UT) held a joint hearing “to examine the procurement of ammunition by the Department of Homeland Security and Social Security Administration Office of Inspector General.”

At a distance, if we set aside the bizarre ideology that leads elected officials to believe nonsense, it’s fascinating to watch the trajectory — a fringe activist comes up with an idea, which is then picked up by a more prominent far-right outlet, which is then echoed by Fox News and Fox Business, which is then embraced by some of Congress’ sillier members who are predisposed to believe nonsense, which then leads to a congressional hearing.

This just doesn’t happen on the left. This is not to say there aren’t wacky left-wing conspiracy theorists — there are, and some of them send me strange emails — but we just don’t see prominent, center-left media professionals trumpet such silliness or Democratic members of Congress racing to take the nonsense seriously.

As for the underlying ammunition claim itself, it’s been shown to be baseless. Someone might want to let Jordan and Chaffetz know.

 

By: Steve Benen, The Maddow Blog, April 26, 2013

April 29, 2013 Posted by | Politics | , , , , , , , , | Leave a comment

“Nonsensical Overweening Power”: Virginia’s Assault On Abortion Claims Its First Victim

At abortion clinics, the presence of awnings, the width of doorways and the dimensions of janitorial closets have little to do with the health of patients. But by requiring that Virginia’s 20 abortion clinics conform to strict licensing standards designed for new hospitals, the state has ensured that many or most of them will be driven out of business in the coming months.

Just days after the state Board of Health approved the regulations this month, under pressure from Attorney General Ken Cuccinelli II (R), they claimed their first victim. Hillcrest Clinic in Norfolk, which for 40 years had provided reproductive health services, including abortions, closed last weekend.

Hillcrest was partly a victim of its own success in providing women with ready access to birth control. Like most other clinics around the state, it saw demand for abortions dwindle as more women took advantage of options to prevent unwanted pregnancies.

Still, even after years of protests, arson, a pipe bombing and an attack by a man wielding a semiautomatic weapon, Hillcrest performed more than 1,600 abortions last year, about 7 percent of the state total. The principal reason it closed its doors was that complying with the regulations would have saddled it with $500,000 in renovations — an unaffordable expense.

That’s precisely what Mr. Cuccinelli and other advocates of the policy intended. According to a survey by the state Health Department, just one of the 19 surviving clinics meets the requirements. Fifteen of the remaining facilities estimated their combined costs of compliance at $14.5 million.

Some of the clinics, including those operated by Planned Parenthood, which has a national fundraising network, will survive. Many others, which are run as small businesses, probably will not. Most have no means to raise hundreds of thousands of dollars to widen corridors, install state-of-the-art surgical sinks and expand parking lots.

What’s more, the upgrades they face are arbitrary manifestations of the state’s overweening power. Other types of walk-in clinics, including those that perform oral and cosmetic surgery, are unaffected by the regulations.

As Dr. David Peters, owner of the Tidewater Women’s Health Center in Norfolk, told the Virginian-Pilot newspaper: “I can do plastic surgery. I can stick needles in babies’ lungs. I can put tubes up penises and into bladders and do all sorts of crazy stuff in my office with no regulations whatsoever. No government supervision. But for an abortion . . .it just becomes nonsensical.”

The Board of Health had sought to exempt existing abortion clinics from the regulations, which were never intended for ambulatory clinics. But board members caved when Mr. Cuccinelli, the most political attorney general in Virginia’s history, threatened to withhold the state’s legal help if they were sued.

Regulation is essential for all health services. But there is no evidence that unsanitary conditions or slapdash procedures are common at abortion clinics in Virginia nor that women who seek services from them are at risk. The state’s assault on women’s reproductive rights is an ideological crusade masquerading as concern for public health.

 

By: The Editorial Board, The Washington Post, April 26, 2013

April 29, 2013 Posted by | Abortion, War On Women | , , , , , , , | Leave a comment

“The Party Of Nothing”: Republicans, An Immovable Wall of Nays

So far, it doesn’t look like the story of the Tsarnaev brothers is killing Republican support for immigration reform. John McCain and Lindsey Graham insisted that their identity makes reform all the more important. But Boston aside, if you pay a little attention you see signs that the right is getting a bit restive about all this reasonableness. There’s a long and winding road from here to there, but if the GOP does drop immigration, then it will essentially be a party of nothing, the Seinfeld Party, a party that has stopped even pretending that policy is something that political parties exist to make.

Yesterday in Salon, political scientist Jonathan Bernstein wrote up the following little discovery, which has to do with the numbering of bills. Historically, the party that controls the House of Representatives reserves for itself the first 10 slots—HR 1, HR 2, and so on. Usually, the majority party has filled at least most of those slots with the pieces of legislation that it wants to announce to the world as its top priorities. When the Democrats ran the House, for example, HR 1 was always John Dingell’s health-care bill, in homage to his father, a congressman who pushed for national health care back in the day.

Today, nine of the 10 slots are empty. Nine of the 10. The one that is occupied, HR 3, is taken up by a bill calling on President Obama to approve the Keystone XL pipeline. Even this, insiders will tell you in an honest moment, is completely symbolic and empty: the general expectation among Democrats and Republicans is that Obama will approve the pipeline sometime in this term, but that eleventy-jillion lawsuits will immediately be filed, and the thing won’t be built for years if at all, and nothing about this short and general bill can or is designed to change that. One other slot, HR 1, is provisionally reserved for a tax-reform bill, so at least they have settled on a subject matter, but if you click on HR 1, you will learn that “the text of HR 1 has not yet been received.”

This wasn’t true of even the GOP in earlier vintages. Newt Gingrich had an aggressive agenda, as we remember all too well, and even Denny Hastert filled most of the slots. (The Democrats of 2009 didn’t, for some reason, but obviously the Democratic Congress of 2009 was the most agenda-heavy Congress since 1981 or arguably 1965.) Today’s GOP can’t be bothered to pretend.

I became a grown-up, to the extent that I am one, right around the time Ronald Reagan took office. Lots of people say things like, “Gee, the Republican Party was really a party of ideas then.” I argue that that assertion is vastly overaccepted today. The central conservative “idea,” after all—supply-side economics—was and remains a flimsy and evidence-free lie that has destroyed the country’s economic vitality and turned our upper classes into the most selfish and penurious group of people history has seen since the Romanovs. Other conservative ideas of the time were largely critiques of extant liberalism or gifts to the 1 percent dressed up in the tuxedoes of “liberty” and “freedom.” I’ll give them credit for workfare and a few other items. But the actual record is thinner than most people believe.

Still, there was some intellectual spadework going on. And still (and this is more important), there were people in the Republican Party who tried to bring those ideas into law. The Orrin Hatch of the 1980s and 1990s was a titan compared with the Orrin Hatch of today. When I look at Senate roll-call votes and see that immovable wall of nays on virtually everything of consequence that comes before them, I wonder what someone like Hatch really thinks deep down, but of course we’ll never know. He is doing what the party’s base demands of him, and those demands include that he clam up and denounce Obama and not utter one sentence that could be misinterpreted as signaling compromise.

This brings me back to immigration. The Tsarnaevs may not have derailed things, but other cracks are starting to show. Last Thursday—before we knew who the Boston bombers were—Rush Limbaugh speculated that immigration reform would constitute Republican “suicide.” A Politico article yesterday made the same point—an analysis showed that if 11 million “undocumented residents” had been able to vote in 2012, Obama might have won Arizona and would even have made a race of it in Texas. This did not go unremarked in right-wing circles yesterday. The Big Bloviator himself weighed in: “Senator Schumer can taste this. He’s so excited. All the Democrats. Why would we agree to something that they are so eager to have?”

Immigration is the one area today on which a small number of Republicans are actually trying. Limbaugh’s position last week is a change from a couple of months ago, when Marco Rubio had him admitting that maybe the GOP needed to embrace reform. It’s not hard to imagine him and Laura Ingraham and others turning surlier as the hour of truth on the bill approaches.

I will be impressed and more than a little surprised if the day comes and a majority of Republicans back an immigration bill. Passing such a bill is undoubtedly in their self-interest, as everyone has observed. What fewer have observed is that doing so is just not in their DNA. And life teaches us that genes usually get the better of reason.

 

By: Michael Tomasky, The Daily Beast, April 24, 2013

April 29, 2013 Posted by | Immigration Reform, Republicans | , , , , , , , | 1 Comment

“A Very Sweet Deal”: Prescription Drug Price-Gouging Enabled By Congress

Republicans and Democrats don’t agree on much. But one thing they would agree on if they knew the facts is that because of the cozy relationship big drug companies have with our lawmakers in Washington, Americans pay far more for their medications than people anywhere else on the planet.

As a consequence, our health insurance premiums are much higher than they should be. And our Medicare program is costing both taxpayers and beneficiaries billions of dollars more than necessary.

Americans who are uninsured are at an even greater disadvantage: many of them have no choice but to put their health at risk because they can’t afford the medications their doctors prescribe for them.

Drug makers have so much influence in Washington that they’ve been able to kill numerous proposals over the years that would enable the U.S. government to regulate drug prices like most other countries do. Between 1988 and 2012, the pharmaceutical industry spent more on lobbying than any other special interest, forking over a total of $2.6 billion on lobbying activities, according to OpenSecrets.org. That’s far more than even banks and oil and gas companies spent.

That money helped them get a very sweet deal when members of Congress were drafting legislation that would eventually be the Medicare Part D prescription drug program. Drug makers were able to get their friends in Congress to insert language in the Part D legislation that prohibits the federal government from seeking the best prices from pharmaceutical companies.

According to a recent analysis by Health Care for America Now (HCAN), an advocacy group, the 11 largest drug companies reported $711.4 billion in profits over the 10 years ending in 2012, much of it coming from the Medicare program. They reaped $76.3 billion in profits in 2006 alone, 34 percent more than in 2005, the year before the Part D program went into effect.

“Americans pay significantly more than any other country for the exact same drugs,” said HCAN Executive Director Ethan Rome.

How much more do we pay than residents of other countries? Here are a few examples of what we pay on average for six brand name drugs compared to what residents of other countries pay, according to the International Federation of Health Plans:

— Celebrex (for pain) – U.S.: $162; Canada: $53

— Cymbalta (for depression and anxiety) – U.S: $176; France: $47

— Lipitor (for high cholesterol) – U.S.: $124; New Zealand: $6

— Nasonex (for nasal allergies) – U.S: $108; U.K.: $12

— Vytorin (for high cholesterol) – U.S: $123; Argentina: $31

— Nexium (for acid reflux) – U.S.: $123; Spain: $18

The Congressional Budget Office says that if Medicare could get the same bulk purchasing discounts on prescription drugs as state Medicaid programs already get, the federal government would save at least $137 billion over 10 years.

In his proposed budget for 2014, President Obama is asking Congress to require drug companies to sell their medications to Medicare at the best price they offer private insurance companies, which is what they are required to do for Medicaid.

On April 16, several members of Congress, led by Sen. Jay Rockefeller (D-W.Va.) and Rep. Henry Waxman (D-Calif.), introduced legislation to require drug companies to provide rebates to the federal government on drugs used by people who are eligible for both Medicare and Medicaid. One of the cosponsors was Independent Sen. Angus King, the former governor of Maine. The lawmakers noted that with the exception of Medicare Part D, all large purchasers of prescription drugs negotiate better prices. Their bill, they say, would correct excessive payments to drug companies, while saving taxpayers and the federal government billions of dollars.

As you can imagine, the drug companies don’t like what President Obama and the lawmakers are proposing. You can expect them to mount a multi-million dollar PR and lobbying campaign over the coming months to protect both their sweet deal with Medicare and their Wall Street-pleasing profits.

 

By: Wendell Potter, Guest Contributor, Politix, April 23, 2013

April 29, 2013 Posted by | Big Pharma, Medicare | , , , , , , | 1 Comment

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