Tea Party: The Welfare State Is Out Of Control But Leave “My” Medicare Alone
About a month ago, Politico ran a much-discussed piece, insisting that the Republican Party and its base have become “fanatically anti-spending.” Tea Partiers, the article added, are obsessed with “cut, cut, cut,” and “taking a cleaver to government spending.”
I’ve pushed back against this, but a new Marist poll out today makes this much easier. The poll asked respondents:
“Do you support or oppose doing each of the following to deal with the federal budget deficit: cut Medicare and Medicaid?”
Among all registered voters, 80% opposed these cuts. Among self-identified Tea Party supporters, 70% opposed these cuts. Among self-identified Republicans, 73% opposed these cuts.
We’re talking about taxpayer-financed, socialized medicine, which Tea Partiers should oppose reflexively if they’re desperate to “cut, cut, cut.”
Except, they’re not.
When pressed on the radical nature of their agenda, congressional Republicans consistently claim the “American people” are on their side, even suggesting they have a popular mandate to pursue drastic policy measures that voters didn’t know about last year. But the data is hard to ignore — not only does the American mainstream oppose GOP cuts to Medicare and Medicaid, but even the Republicans’ own base isn’t on board.
I often think of this piece from Matt Taibbi, who attended a Tea Party rally last summer.
After Palin wraps up, I race to the parking lot in search of departing Medicare-motor-scooter conservatives. I come upon an elderly couple, Janice and David Wheelock, who are fairly itching to share their views.
“I’m anti-spending and anti-government,” crows David, as scooter-bound Janice looks on. “The welfare state is out of control.”
“OK,” I say. “And what do you do for a living?”
“Me?” he says proudly. “Oh, I’m a property appraiser. Have been my whole life.”
I frown. “Are either of you on Medicare?”
Silence: Then Janice, a nice enough woman, it seems, slowly raises her hand, offering a faint smile, as if to say, You got me!
“Let me get this straight,” I say to David. “You’ve been picking up a check from the government for decades, as a tax assessor, and your wife is on Medicare. How can you complain about the welfare state?”
“Well,” he says, “there’s a lot of people on welfare who don’t deserve it. Too many people are living off the government.”
“But,” I protest, “you live off the government. And have been your whole life!”
“Yeah,” he says, “but I don’t make very much.”
The point is that congressional Republicans are desperate to make devastating cuts, and think they’re on safe political ground. GOP officials might be surprised to learn just how many Americans rely on government spending, and want to keep the benefits that apply to them.
By: Steve Benen, Washington Monthly, Political Animal, April 19, 2011
Our Irresponsible American Ruling Class Is Failing
The American ruling class is failing us — and itself.
At other moments in our history, the informal networks of the wealthy and powerful who often wield at least as much influence as our elected politicians accepted that their good fortune imposed an obligation: to reform and thus preserve the system that allowed them to do so well. They advocated social decency out of self-interest (reasonably fair societies are more stable) but also from an old-fashioned sense of civic duty. “Noblesse oblige” sounds bad until it doesn’t exist anymore.
An enlightened ruling class understands that it can get richer and its riches will be more secure if prosperity is broadly shared, if government is investing in productive projects that lift the whole society and if social mobility allows some circulation of the elites. A ruling class closed to new talent doesn’t remain a ruling class for long.
But a funny thing happened to the American ruling class: It stopped being concerned with the health of society as a whole and became almost entirely obsessed with money.
Oh yes, there are bighearted rich people when it comes to private charity. Heck, David Koch, the now famous libertarian-conservative donor, has been extremely generous to the arts, notably to New York’s Lincoln Center.
Yet when it comes to governing, the ruling class now devotes itself in large part to utterly self-involved lobbying. Its main passion has been to slash taxation on the wealthy, particularly on the financial class that has gained the most over the past 20 years. By winning much lower tax rates on capital gains and dividends, it’s done a heck of a job.
Listen to David Cay Johnston, the author of “Free Lunch” and a columnist for Tax Notes. “The effective rate for the top 400 taxpayers has gone from 30 cents on the dollar in 1993 to 22 cents at the end of the Clinton years to 16.6 cents under Bush,” he said in a telephone interview. “So their effective rate has gone down more than 40 percent.”
He added: “The overarching drive right now is to push the burden of government, of taxes, down the income ladder.”
And you wonder where the deficit came from.
If the ruling class were as worried about the deficit as it claims to be, it would accept that the wealthiest people in society have a duty to pony up more for the very government whose police power and military protect them, their property and their wealth.
The influence of the ruling class comes from its position in the economy and its ability to pay for the politicians’ campaigns. There are not a lot of working-class people at those fundraisers President Obama has been attending lately. And I’d underscore that I am not using the term to argue for a Marxist economy. We need the market. We need incentives. We don’t need our current levels of inequality.
Those at the top of the heap are falling far short of the standards set by American ruling classes of the past. As John Judis, a senior editor at the New Republic, put it in his indispensable 2000 book, “The Paradox of American Democracy,” the American establishment has at crucial moments had “an understanding that individual happiness is inextricably linked to social well-being.” What’s most striking now, by contrast, is “the irresponsibility of the nation’s elites.”
Those elites will have no moral standing to argue for higher taxes on middle-income people or cuts in government programs until they acknowledge how much wealthier they have become than the rest of us and how much pressure they have brought over the years to cut their own taxes. Resolving the deficit problem requires the very rich to recognize their obligation to contribute more to a government that, measured against other wealthy nations, is neither investing enough in the future nor doing a very good job of improving the lives and opportunities of the less affluent.
“A blind and ignorant resistance to every effort for the reform of abuses and for the readjustment of society to modern industrial conditions represents not true conservatism, but an incitement to the wildest radicalism.” With those words in 1908, President Theodore Roosevelt showed he understood what a responsible ruling class needed to do. Where are those who would now take up his banner?
By: E. J. Dionne, Opinion Writer, The Washington Post, April 17, 2011
“I’m Not A Politician So Let Me Be Perfectly Clear”: Raise America’s Taxes!
President Obama in his speech on Wednesday confronted a topic that is harder to address seriously in public than sex or flatulence: America needs higher taxes.
That ugly truth looms over today’s budget battles, but politicians have mostly preferred to run from reality. Mr. Obama’s speech was excellent not only for its content but also because he didn’t insult our intelligence.
There is no single reason for today’s budget mess, but it’s worth remembering that the last time our budget was in the black was in the Clinton administration. That’s a broad hint that one sensible way to overcome our difficulties would be to revert to tax rates more or less as they were under President Clinton. That single step would solve three-quarters of the deficit for the next five years or so.
Paradoxically, nothing makes the need for a tax increase more clear than the Republican budget proposal crafted by Representative Paul Ryan. The Republicans propose slashing spending far more than the public would probably accept — even dismantling Medicare — and rely on economic assumptions that are not merely rosy, but preposterous.
Yet even so, the Republican plan shows continuing budget deficits until the 2030s. In short, we can’t plausibly slash our way back to solid fiscal ground. We need more revenue.
Kudos to Mr. Obama for boldly stating that truth in his speech — even if he did focus only on taxes for the very wealthiest. I also thought he was right to say that we need spending cuts — including in our defense budget. Mr. Obama didn’t say so, but the United States accounts for almost as much military spending as the entire rest of the world put together.
As I see it, there are three fallacies common in today’s budget discussions:
• Republicans are the party of responsible financial stewardship, struggling to put America on a sound footing.
In truth, both parties have been wildly irresponsible, but in cycles. Democrats were more irresponsible in the 1960s, the two parties both seemed care-free in the ’70s and ’80s, and since then the Republicans have been staggeringly reckless.
After the Clinton administration began paying down America’s debt, Republicans passed the Bush tax cuts, waded into a trillion-dollar war in Iraq, and approved an unfunded prescription medicine benefit — all by borrowing from China. Then-Vice President Dick Cheney scoffed that “deficits don’t matter.”
This borrow-and-spend Republican history makes it galling when Republicans now assert that deficits are the only thing that matter — and call for drastic spending cuts, two-thirds of which would harm low-income and moderate-income Americans, according to the Center on Budget and Policy Priorities. To pay for tax cuts heaped largely on the wealthiest Americans, Republicans in effect would gut Medicare and slash jobs programs, family planning and college scholarships. Instead of spreading opportunity, federal policy would cap it.
• Low tax rates are essential to create incentives for economic growth: a tax increase would stifle the economy.
It’s true that, in general, higher taxes tend to reduce incentives. But this seems a weak effect, often overwhelmed by other factors.
Were Americans really lazier in the 1950s, when marginal tax rates peaked at more than 90 percent? Are people in high-tax states like Massachusetts more lackadaisical than folks in a state like Florida that has no personal income tax at all?
Tax increases can also send a message of prudence that stimulates economic growth. The Clinton tax increase of 1993 was followed by a golden period of high growth, while the Bush tax cuts were followed by an anemic economy.
• We can’t afford Medicare.
It’s true that America faces a basic problem with rapidly rising health care costs. But the Republican plan does nothing serious to address health care spending, other than stop paying bills. Indeed, Medicare is cheaper to administer than private health insurance (2 percent to 6 percent administrative costs, depending on who does the math, compared with about 12 percent for private plans). So the Republican plan might add to health care spending rather than curb it.
The real challenge is to control health care inflation. Nobody is certain how to do that, but the Obama health care law is testing some plausible ideas. These include rigorous research on which procedures work and which don’t. Why pay for surgery on enlarged prostates if certain kinds of patients turn out to be better with no treatment at all?
Ever since Walter Mondale publicly committed hara-kiri in 1984 by telling voters that he would raise their taxes, politicians have run from fiscal reality. As baby boomers age and require Social Security and Medicare, escapism will no longer suffice. We need to have a frank national discussion of painful steps ahead, and since I’m not a politician, let me be perfectly clear: raise my taxes!
By: Nicholas Kristof, The New York Times, April 13, 2011
Pragmatic Policy vs Ideological Philosophy
For some time now, Democrats and Republicans alike have been yearning for a great philosophical clash between the two parties. No more of this five percent of 12 percent of the federal budget stuff. We wanted entitlements, the role of government, the obligations that the old have to the young, that the rich have to the poor, that the powerful have to the powerless.
Paul Ryan’s budget offer exactly that sort of reconstruction of the social compact. America is a very different place before his budget than it would be after his budget. But though Obama’s speech was closer to that sort of clash of visions than anything he’s offered before — he used the word “vision” 15 times, for instance — what he offered was not philosophy. It was policy. But you have to read it closely — and know where it came from — to see that.
This is difficult advice when it comes to deficit reduction, but don’t look at the number. This plan cuts $4 trillion, that plan cuts $2 trillion, that one cuts $10 trillion. Those numbers reflect little but the internal hopes and dreams of the plan. If I say that my plan means Medicare will never spend another penny and economic growth will shoot to 8 percent — and that’s only a shade less optimistic than the assumptions and models included in the Ryan budget (pdf) — I can save an almost unlimited amount of money. My number can be anything I want it to be. The problem is I actually can’t save that much money because my math is based on fantasy. So my number is meaningless.
President Obama says his plan cuts $4 trillion over 12 years. Rep. Paul Ryan says his plan cuts $4 trillion over 10 years. If you look at the numbers, the two plans appear quite similar. But if you look at how they’d get to the number, they couldn’t be more different. And it’s how you get to the number that matters, because that’s what decides whether you’ll get to the number. It’s also, incidentally, what decides the shape of our government going forward.
Ryan’s number is the product of holding the growth of Medicare and Medicaid to the rate of inflation, which is far lower than has ever been shown to be possible. How he gets there is, on Medicaid, he tells the states to figure it out, and on Medicare, he tells seniors to figure it out. Both strategies have been tried: Various states have gotten waivers to radically remake their Medicaid program, and the consumer-driven model that Ryan is proposing for Medicare has been attempted in the Federal Employee Health Benefits Program and Medicare Advantage. None of these programs have worked, which is why we’re in our current predicament.
Obama’s number is the product of holding Medicare growth to GDP+0.5 percent — which is, in practice, a few percentage points beyond inflation, and a few percentage points behind the health-care system’s normal rate of growth. He mostly gets there through the cost controls passed as part of the Affordable Care Act, which hope to hold Medicare to GDP+1 percent. He then proposes to shave a further half-percentage point off the growth rate by introducing value-based insurance — where we pay more for treatments that are proven to work than for treatments that are not proven to work — into Medicare and giving generic drugs quicker entry into the marketplace. These programs have worked at smaller scales and in more limited pilots. We don’t know if they’ll work across the entire Medicare system, but we have reason to think they will.
Then there are taxes. Ryan’s plan pledges to make the Bush tax cuts permanent, at a cost of at least $4 trillion over 10 years, and more after that. He’d then clean out the tax code, but he’d pump the money he made from closing expenditures back into tax cuts. Obama proposes to return to the Clinton-era tax rates on income over $250,000 and then raise a further trillion through closing tax expenditures. Altogether, that’s about $2 trillion less than letting all the Bush tax cuts expire, but at least $2 trillion more than Ryan’s plan. Notably, Obama hasn’t said which expenditures he’d close to get to $1 trillion. The difference between the two tax plans — particularly when added to Obama’s decision to cut $400 billion from security-related spending, while Ryan largely exempts that category — explains why Obama doesn’t have to make such deep cuts in programs for seniors and low-income Americans.
So are we finally getting the grand philosophical debate we wanted? Not quite. Obama spoke extensively of vision — the GOP’s, which “claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires … {while} asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill,” and his, “where we live within our means while still investing in our future; where everyone makes sacrifices but no one bears all the burden; where we provide a basic measure of security for our citizens and rising opportunity for our children,” but he’s overselling it.
Obama’s budget is not philosophy. It is very similar to the Simpson-Bowles report, which attracted the votes of Republicans as far to the right as Tom Coburn. Few Democrats would say their vision of balancing the budget is one in which there was only one dollar of new taxes for every three dollars of spending cuts, but that’s what Obama’s proposal envisions. Obama’s budget, somewhat curiously, is what you’d expect at the end of a negotiation process, not the beginning. In fact, as it’s modeled off of Simpson-Bowles, it is the product of a negotiation process, as opposed to an opening bid. It is, in other words, policy. You could argue that this is a philosophy, and that philosophy is pragmatism, but I think that’s getting too cute. This is the sort of policy that might pass and might work.
Ryan’s budget is purer, but it is also more fantastical. It posits the government it wishes were possible, and the policies it wishes would work. It is an opening bid so ideological that it leaves little room for a process of negotiation. Every dollar it purports to raise comes from cutting spending. Not one comes from taxes. It privatizes Medicare and unwinds the federal government’s role in Medicaid. For all the philosophy in his budget — and his budget does have a very different philosophy about the proper role of government than we see in federal pllicy today — there’s neither policy that could pass nor policy that could work. And, curiously for a conservative who distrusts both government and congress, it has no answer to the question of “what if this fails?”
The policy that clarifies this difference is the “trigger.” Obama’s budget, aware that it might not pass and, if it does pass, it might not work, proposes to make automatic cuts to discretionary spending and tax expenditures if the promised savings don’t materialize. If Ryan’s budget falls shorts, there’s no comparable failsafe. That is to say, Obama’s budget has two plausible ways to get to its number, while Ryan’s budget has none. You don’t need a PhD in philosophy to understand why that’s a problem.
By: Ezra Klein, The Washington Post, April 13, 2011
A Vision Of Optimism And Equal Opportunity: What It Means To Be A Democrat
I’m glad I waited for President Obama’s heralded budget speech Wednesday before criticizing it (such a novel idea); there was much to praise in it and little to challenge. The best news: Obama laid out the kind of sweeping “story” of American democracy, and the bold vision of how we grow together, that I thought was too much to ask for even yesterday. He even talked about the scariest fact of American inequality: The dangerous hold the top 1 percent of Americans has on wealth, income and (he didn’t say this) politics. He pushed back on the cruel GOP deficit plan, made his toughest case yet for tax hikes on the richest, and stayed away from the worst ideas floated by his own deficit commission. The devil will be in the deficit-cutting details, and frankly, there weren’t a whole lot of them in the speech. But the president came out fighting with firmness, and with a rhetoric of social justice and equality, that I haven’t seen enough of these last two years.
Obama acknowledged our American history as “rugged individualists, a self-reliant people with a healthy skepticism of too much government.” But he quickly identified “another thread running throughout our history”:
A belief that we are all connected; and that there are some things we can only do together, as a nation. We believe, in the words of our first Republican president, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves. And so we’ve built a strong military to keep us secure, and public schools and universities to educate our citizens. We’ve laid down railroads and highways to facilitate travel and commerce. We’ve supported the work of scientists and researchers whose discoveries have saved lives, unleashed repeated technological revolutions, and led to countless new jobs and entire industries. Each of us has benefited from these investments, and we are a more prosperous country as a result.
Part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us. “There but for the grace of God go I,” we say to ourselves, and so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, and those with disabilities. We are a better country because of these commitments. I’ll go further – we would not be a great country without those commitments.
So far, so good. It got even better when Obama took direct aim at Paul Ryan’s cruel and ludicrous budget plan. He laid out its many cuts, and concluded:
These are the kind of cuts that tell us we can’t afford the America we believe in. And they paint a vision of our future that’s deeply pessimistic. It’s a vision that says if our roads crumble and our bridges collapse, we can’t afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we can’t afford to send them. Go to China and you’ll see businesses opening research labs and solar facilities. South Korean children are outpacing our kids in math and science. Brazil is investing billions in new infrastructure and can run half their cars not on high-priced gasoline, but biofuels. And yet, we are presented with a vision that says the United States of America – the greatest nation on Earth – can’t afford any of this.
Then he attacked the Gilded Age social inequality and tax cuts that have helped create our troubles:
Think about it. In the last decade, the average income of the bottom 90% of all working Americans actually declined. The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes? They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty three seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.
Indulge me here, because this is how Democrats should be talking, and rarely do:
The America I know is generous and compassionate; a land of opportunity and optimism. We take responsibility for ourselves and each other; for the country we want and the future we share. We are the nation that built a railroad across a continent and brought light to communities shrouded in darkness. We sent a generation to college on the GI bill and saved millions of seniors from poverty with Social Security and Medicare. We have led the world in scientific research and technological breakthroughs that have transformed millions of lives.
This is who we are. This is the America I know. We don’t have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country. To meet our fiscal challenge, we will need to make reforms. We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m President, we won’t.
That’s the president I voted for.
On the meat of the president’s plan to cut the deficit: He deserves credit for rejecting Medicare vouchers, for turning aside specific talk about Social Security (even though it has nothing to do with the federal deficit, the privatizers and Obama’s friends on his deficit commission wanted it thrown on the table in a grand bargain that can only be bad news for Democrats and working people; Obama seemed not to be willing to do that); for promising that reforms and innovations already part of the Affordable Care Act will bring down the costs of Medicare and Medicaid; and for saying we need bigger defense cuts than so far proposed.
(Small point: I liked the way Obama trashed Ryan without mentioning him — you don’t fight down — but I wish he’d been a tiny bit more confrontational on exactly what Ryan’s “Medicare vouchers” would do; if seniors could afford insurance at all, which is debatable, they’d certainly be at the mercy of privatized “death panels” refusing care over its costs. I say that because I’m sure some GOP prevaricator will bring back the “death panel” lie now that Obama has committed to curbing costs in Medicare. I hope I’m wrong.)
My quibbles? I’m still concerned that Obama has agreed to freeze the 12 percent of the budget that goes to “discretionary spending.” And I’m assuming that freeze includes the cuts made this week. I don’t like his promise of $3 in spending cuts for every dollar raised in revenue via tax hikes. In a statement, AFL-CIO president Richard Trumka praised the speech but added: “President Obama does not yet have the balance right between spending cuts and new revenue.” I also never like it when Obama undermines himself by saying things like:
I don’t expect the details in any final agreement to look exactly like the approach I laid out today. I’m eager to hear other ideas from all ends of the political spectrum.
I know, I know, he thinks it makes him sound reasonable to independents; I worry he sounds weak to Republicans. If Obama thinks the plan he laid out is as far to the left as Ryan’s plan is to the right, and that the answer is to meet in the glorious middle, we’re all in trouble.
But for today, I’ll take him at his word. After the speech, pundits called it the opening salvo of the Obama 2012 reelection campaign, as though there was something wrong with that. If these are the founding principles of the president’s 2012 campaign, Democrats and the country will be better off than we’ve been in a while.
By: Joan Walsh, Editor at Large, Salon, April 13, 2011
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