“The Fiscal Fizzle”: An Imaginary Budget And Debt Crisis
For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.
That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.
I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.
About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.
Things are expected to deteriorate after that, mainly because of the impact of an aging population on Medicare and Social Security. But there has been a dramatic slowdown in the growth of health care costs, which used to play a big role in frightening budget scenarios. As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century. Oh, and the budget office now expects interest rates to remain fairly low, not much higher than the economy’s rate of growth. This in turn weakens, indeed almost eliminates, the risk of a debt spiral, in which the cost of servicing debt drives debt even higher.
Still, rising debt isn’t good. So what would it take to avoid any rise in the debt ratio? Surprisingly little. The budget office estimates that stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. if we started now, or 1.5 percent of G.D.P. if we waited until 2020. Politically, that would be hard given total Republican opposition to anything a Democratic president might propose, but in economic terms it would be no big deal, and wouldn’t require any fundamental change in our major social programs.
In short, the debt apocalypse has been called off.
Wait — what about the risk of a crisis of confidence? There have been many warnings that such a crisis was imminent, some of them coupled with surprisingly frank admissions of disappointment that it hadn’t happened yet. For example, Alan Greenspan warned of the “Greece analogy,” and declared that it was “regrettable” that U.S. interest rates and inflation hadn’t yet soared.
But that was more than four years ago, and both inflation and interest rates remain low. Maybe the United States, which among other things borrows in its own currency and therefore can’t run out of cash, isn’t much like Greece after all.
In fact, even within Europe the severity of the debt crisis diminished rapidly once the European Central Bank began doing its job, making it clear that it would do “whatever it takes” to avoid cash crises in nations that have given up their own currencies and adopted the euro. Did you know that Italy, which remains deep in debt and suffers much more from the burden of an aging population than we do, can now borrow long term at an interest rate of only 2.78 percent? Did you know that France, which is the subject of constant negative reporting, pays only 1.57 percent?
So we don’t have a debt crisis, and never did. Why did everyone important seem to think otherwise?
To be fair, there has been some real good news about the long-run fiscal prospect, mainly from health care. But it’s hard to escape the sense that debt panic was promoted because it served a political purpose — that many people were pushing the notion of a debt crisis as a way to attack Social Security and Medicare. And they did immense damage along the way, diverting the nation’s attention from its real problems — crippling unemployment, deteriorating infrastructure and more — for years on end.
By: Paul Krugman, Op-Ed Columnist, The New York Times, Julo 20, 2014
“Fighting Bad Science In The Senate”: The Days Of Making A Sport Of Trampling On Women’s Health And Rights Are Numbered
The Senate hearing for the Women’s Health Protection Act shows just how important it is for women’s health advocates to push for the facts.
The propensity of anti-choice advocates to eulogize false science was on full display on Tuesday’s Senate hearing on the Women’s Health Protection Act (WHPA). That bill is a bold measure that would counter the relentless barrage of anti-choice legislation that has made abortion — a constitutionally protected medical procedure — altogether inaccessible for many U.S. women.
The bill was introduced last year by Senators Richard Blumenthal and Tammy Baldwin and Representatives Judy Chu, Lois Frankel and Marcia Fudge. It prohibits states from applying regulations to reproductive health care centers and providers that do not also apply to other low-risk medical procedures. It would, essentially, remove politicians from decisions that — for every other medical issue — remain between individuals and their providers.
The WHPA is long overdue. For the past three years, conservative lawmakers have used the guise of protecting women’s health to pass more than 200 state laws that have closed clinics, eliminated abortion services, and left women across the country without access to critical reproductive health care. The WHPA would reverse many of those policies and prevent others from being passed.
Tuesday’s hearing was representative of the broader debate over abortion rights. Those in favor of the bill argued that securing unfettered access to reproductive health care, including abortion, is critical to the health and lives of U.S. women and their families.
Those in opposition used familiar canards about abortion to argue that the law would be calamitous for U.S. women. Representative Diane Black of Tennessee had the gall to make the abortion-leads-to-breast cancer claim, one that has been disproven many times over. Others repeatedly cited the horrific cases of Kermit Gosnell, insinuating that all abortion providers (abortionists, in their lingo) are predatory and that late-term abortions are a common occurrence. In fact, if women had access to safe, comprehensive and intimidation-free care, Kermit Gosnell would have never been in business. Given the opposition’s testimony, you’d never know that late-term abortion is actually a rarity. According to the Centers for Disease Control, more than 90 percent of all abortions occur before 13 weeks gestation, with just over 1 percent taking place past 21 weeks.
At one point Representative Black argued that abortion is actually not health care. The one in three U.S. women who have undergone the procedure would surely argue otherwise.
Perhaps the most ironic testimony against the WHPA — and in favor of abortion restrictions – came from Senator Ted Cruz, who hails from Texas, a state with so many abortion restrictions that women are now risking their health and lives by self-inducing abortions or crossing the border to get care in Mexico. Senator Cruz attempted to validate U.S. abortion restrictions by referencing a handful of European countries with gestational restrictions on abortions. This was a popular argument during the hearing for Texas’ HB2 — the bill responsible for shuttering the majority of clinics in that state.
Cruz wins the prize for cherry picking facts to best support his argument. When citing our European counterparts, he conveniently ignored that such abortion restrictions are entrenched in progressive public health systems that enable all individuals to access quality, affordable (often free) health care, including comprehensive reproductive healthcare. Senator Cruz and his colleagues have adamantly opposed similar policies in the U.S., particularly the Affordable Care Act’s provisions for contraceptive coverage and Medicaid expansion. On the one hand conservatives lean on European policies to argue for stricter abortion restrictions at home, and on the other they claim those policies are antithetical to the moral fabric of the United States.
Would Cruz support France’s policies that enable women to be fully reimbursed for the cost of their abortion and that guarantees girls ages 15 to 18 free birth control? Or Belgium’s policy that enables young people to be reimbursed for the cost of emergency contraception? Or the broad exceptions that both countries make for cases of rape, incest, and fetal impairment, to preserve woman’s physical or mental health, and for social or economic reasons? He absolutely would not.
As the House of Representatives seems to be more motivated by suing the president than by voting on – let alone passing — laws that will actually improve the health and lives of their constituents, it’s highly unlikely that the WHPA will become law. But Tuesday’s debate – and the bill itself — is significant and shows a willingness among pro-choice advocates to go on offense after too many years of playing defense.
Bills such as the WHPA — even if they face a slim chance of being passed by a gridlocked Congress — provide an opportunity to call out conservatives’ use of bad science in their attempts to convince women that lawmakers know best when it comes to their personal medical decisions. And they allow us to remind lawmakers and citizens that despite all of the rhetoric to the contrary, abortion is a common, safe and constitutionally protected medical procedure, and that regulating it into extinction will only force women into back-alley practices like those run by Gosnell, costing them their health and their lives.
Those in support of the WHPA showed anti-choice lawmakers that the days of making a sport of trampling on women’s health and rights are numbered.
By: Andrea Flynn, Fellow at the Roosevelt Institute; The National Memo, July 18, 2014
“The End Of The Russian Fairy Tale”: A Nihilistic Disregard For Human Life
Before there is any further discussion of Malaysia Airlines Flight 17, it’s important that one point be made absolutely clear: This plane crash is a result of the Russian invasion of eastern Ukraine, an operation deliberately designed to create legal, political, and military chaos. Without this chaos, a surface-to-air missile would not have been fired at a passenger plane.
From the beginning, the Russian government did not send regular soldiers to Ukraine. Instead, it sent Russian mercenaries and security service operatives such as Igor Strelkov—the commander in chief in Donetsk and a Russian secret police colonel who fought in both Chechen wars—or Vladimir Antyufeyev, the Donetsk “deputy prime minister” who led the Latvian KGB’s attempt to overthrow the independent Latvian government back in 1991.
With the help of local thugs, these Russian security men besieged police stations, government offices, and other symbols of political authority, in order to delegitimize the Ukrainian state. In this task, they were assisted by the Russian government and by Russia’s state-controlled mass media, both of which still constantly denigrate Ukraine and its “Nazi” government. Just in the past week, Russian reporting on Ukraine reached a new pitch of hysteria, with fake stories about the supposed crucifixion of a child and an extraordinary documentary comparing the Ukrainian army’s defense of its own country with the Rwandan genocide.
Into this ambiguous and unstable situation, the Russians cynically funneled a stream of heavy weapons: machine guns and artillery, and eventually tanks, armed personnel carriers, and anti-aircraft missiles. In recent days, the separatist forces were openly using MANPADS, and were also boasting of having taken down large Ukrainian transport planes, clearly with Russian specialist assistance. Indeed, Strelkov on Thursday afternoon boasted online of having taken down another military plane, before realizing that the plane in question was MH17. He removed the post. In late June, several different Russian media sources published photographs of BUK anti-aircraft missiles, which they said had been captured by the separatists—though they were probably outright gifts from Russia. These posts have also been removed.
This is the context within which a surface-to-air missile was aimed at a passenger plane: A lawless environment; irregular soldiers who might not be so good at reading radar; a nihilistic disregard for human life; scorn for international norms, rules, or standards. Just for the record: There weren’t any Ukrainian government-controlled anti-aircraft missiles in eastern Ukraine, because the separatists were not flying airplanes.
Until now, these unorthodox methods have worked well for the Russians. They unnerved and distracted the Ukrainian government while at the same time allowing foreign governments, and European governments in particular, to turn a blind eye. Because the war was not a “real” war, it could be described as “local,” as “containable,” it could remain a low priority for European foreign policy or indeed for anybody’s foreign policy.
If it has done nothing else, the crash of Flight MH17 has just put an end to the “it’s not a real war” fairy tale, both for the Russians and for the West. Tragically, this unconventional nonwar war has just killed 298 people, mostly Europeans. We can’t pretend it isn’t happening any longer, or that it doesn’t affect anyone outside of Donetsk. The Russians can’t pretend either.
Without the fairy-tale pretense, some things are about to become clear. For one, we are about to learn whether the West in 2014 is as united, and as determined to stop terrorism as it was 26 years ago. When the Libyan government brought down Pan Am 103 over Lockerbie, Scotland, in 1988, the West closed ranks and isolated the Libyan regime. Can we do the same now—or will too many be tempted to describe this as a “tragic accident,” and to dismiss what will inevitably be a controversial investigation as “inconclusive?” It is insufficient to state, as President Obama has now done, that there must be a “cease-fire” in Ukraine. What is needed is a withdrawal of Russian mercenaries, weapons, and support. The West—and the world—must push for Ukrainian state sovereignty to be reestablished in eastern Ukraine, not for the perpetuation of another frozen conflict.
We will also learn something interesting about the Russian president. So far there is no sign of shock or shame in Russia. But in truth, this tragedy offers Vladimir Putin an opportunity to get out of the messy disaster he has created in eastern Ukraine. He now has the perfect excuse to denounce the separatist movement and to cut its supplies. If he refuses, then we know that he remains profoundly dedicated to the chaos and nihilism he created in Donetsk. We can assume he intends to perpetuate it elsewhere. And if we are not prepared to fight it, we should be braced for it to spread.
By: Anne Applebaum, Slate, July 18, 2014
“Obama’s Leadership Is Right For Today”: Persuasion, Conciliation, Education And Patience
“Because of his unsure and indecisive leadership in the field of foreign policy, questions are being raised on all sides,” the writer declared, adding that the administration was “plagued by a Hamlet-like psychosis which seems to paralyze it every time decisive action is required.” Is the writer one of the many recent critics of Barack Obama’s foreign policy? Actually, it’s Richard Nixon, writing in 1961 about President John F. Kennedy. Criticizing presidents for weakness is a standard practice in Washington because the world is a messy place and, when bad things happen, Washington can be blamed for them. But to determine what the United States — and Obama — should be doing, we have to first understand the nature of the world and the dangers within it.
From 1947 until 1990, the United States faced a mortal threat, an enemy that was strategic, political, military and ideological. Washington had to keep together an alliance that faced up to the foe and persuaded countries in the middle not to give in. This meant that concerns about resolve and credibility were paramount. In this context, presidents had to continually reassure allies. This is why Dean Acheson is said to have remarked in exasperation about Europe’s persistent doubts about America’s resolve, “NATO is an alliance, not a psychiatrist’s couch!”
But the world today looks very different — far more peaceful and stable than at any point in decades and, by some measures, centuries. The United States faces no enemy anywhere on the scale of Soviet Russia. Its military spending is about that of the next 14 countries combined, most of which are treaty allies of Washington. The number of democracies around the world has grown by more than 50 percent in the past quarter-century. The countries that recently have been aggressive or acted as Washington’s adversaries are getting significant pushback. Russia has alienated Ukraine, Eastern Europe and Western Europe with its recent aggression, for which the short-term costs have grown and the long-term costs — energy diversification in Europe — have only begun to build. China has scared and angered almost all of its maritime neighbors, with each clamoring for greater U.S. involvement in Asia. Even a regional foe such as Iran has found that the costs of its aggressive foreign policy have mounted. In 2006, Iran’s favorability rating in Egypt, Jordan and Saudi Arabia was in the 75 percent to 85 percent range, according to Zogby Research. By 2012, it had fallen to about 30 percent.
In this context, what is needed from Washington is not a heroic exertion of American military power but rather a sustained effort to engage with allies, isolate enemies, support free markets and democratic values and push these positive trends forward. The Obama administration is, in fact, deeply internationalist — building on alliances in Europe and Asia, working with institutions such as the International Monetary Fund and the United Nations, isolating adversaries and strengthening the global order that has proved so beneficial to the United States and the world since 1945.
The administration has fought al-Qaeda and its allies ferociously. But it has been disciplined about the use of force, and understandably so. An America that exaggerates threats, overreacts to problems and intervenes unilaterally would produce the very damage to its credibility that people are worried about. After all, just six years ago, the United States’ closest allies were distancing themselves from Washington because it was seen as aggressive, expansionist and militaristic. Iran was popular in the Middle East in 2006 because it was seen as standing up to an imperialist America that had invaded and occupied an Arab country. And nothing damaged U.S. credibility in the Cold War more than Vietnam.
Obama is battling a knee-jerk sentiment in Washington in which the only kind of international leadership that means anything is the use of military force. “Just because we have the best hammer does not mean that every problem is a nail,” he said in his speech Wednesday at West Point. A similar sentiment was expressed in the farewell address of President Dwight D. Eisenhower, a strong leader who refused to intervene in the Suez crisis, the French collapse in Vietnam, two Taiwan Strait confrontations and the Hungarian uprising of 1956. At the time, many critics blasted the president for his passivity and wished that he would be more interventionist. A Democratic Advisory Council committee headed by Acheson called Eisenhower’s foreign policy “weak, vacillating, and tardy.” But Eisenhower kept his powder dry, confident that force was not the only way to show strength. “I’ll tell you what leadership is,” he told his speechwriter. “It’s persuasion — and conciliation — and education — and patience . It’s long, slow, tough work. That’s the only kind of leadership I know — or believe in — or will practice.”
Maybe that’s the Obama Doctrine.
By: Fareed Zakaria, Opinion Writer, The Washington Post, May 29, 2014
“It’s Now The Canadian Dream”: It’s Time To Bring The American Dream Home From Exile
It was in 1931 that the historian James Truslow Adams coined the phrase “the American dream.”
The American dream is not just a yearning for affluence, Adams said, but also for the chance to overcome barriers and social class, to become the best that we can be. Adams acknowledged that the United States didn’t fully live up to that ideal, but he argued that America came closer than anywhere else.
Adams was right at the time, and for decades. When my father, an eastern European refugee, reached France after World War II, he was determined to continue to the United States because it was less class bound, more meritocratic and offered more opportunity.
Yet today the American dream has derailed, partly because of growing inequality. Or maybe the American dream has just swapped citizenship, for now it is more likely to be found in Canada or Europe — and a central issue in this year’s political campaigns should be how to repatriate it.
A report last month in The Times by David Leonhardt and Kevin Quealy noted that the American middle class is no longer the richest in the world, with Canada apparently pulling ahead in median after-tax income. Other countries in Europe are poised to overtake us as well.
In fact, the discrepancy is arguably even greater. Canadians receive essentially free health care, while Americans pay for part of their health care costs with after-tax dollars. Meanwhile, the American worker toils, on average, 4.6 percent more hours than a Canadian worker, 21 percent more hours than a French worker and an astonishing 28 percent more hours than a German worker, according to data from the Organization for Economic Cooperation and Development.
Canadians and Europeans also live longer, on average, than Americans do. Their children are less likely to die than ours. American women are twice as likely to die as a result of pregnancy or childbirth as Canadian women. And, while our universities are still the best in the world, children in other industrialized countries, on average, get a better education than ours. Most sobering of all: A recent O.E.C.D. report found that for people aged 16 to 24, Americans ranked last among rich countries in numeracy and technological proficiency.
Economic mobility is tricky to measure, but several studies show that a child born in the bottom 20 percent economically is less likely to rise to the top in America than in Europe. A Danish child is twice as likely to rise as an American child.
When our futures are determined to a significant extent at birth, we’ve reverted to the feudalism that our ancestors fled.
“Equality of opportunity — the ‘American dream’ — has always been a cherished American ideal,” Joseph Stiglitz, the Nobel-winning economist at Columbia University, noted in a recent speech. “But data now show that this is a myth: America has become the advanced country not only with the highest level of inequality, but one of those with the least equality of opportunity.”
Consider that the American economy has, over all, grown more quickly than France’s. But so much of the growth has gone to the top 1 percent that the bottom 99 percent of French people have done better than the bottom 99 percent of Americans.
Three data points:
• The top 1 percent in America now own assets worth more than those held by the entire bottom 90 percent.
• The six Walmart heirs are worth as much as the bottom 41 percent of American households put together.
• The top six hedge fund managers and traders averaged more than $2 billion each in earnings last year, partly because of the egregious “carried interest” tax break. President Obama has been unable to get financing for universal prekindergarten; this year’s proposed federal budget for pre-K for all, so important to our nation’s future, would be a bit more than a single month’s earnings for those six tycoons.
Inequality has become a hot topic, propelling Bill de Blasio to become mayor of New York City, turning Senator Elizabeth Warren into a star, and elevating the economist Thomas Piketty into such a demigod that my teenage daughter asked me the other day for his 696-page tome. All this growing awareness is a hopeful sign, because there are policy steps that we could take that would create opportunity and dampen inequality.
We could stop subsidizing private jets and too-big-to-fail banks, and direct those funds to early education programs that help break the cycle of poverty. We can invest less in prisons and more in schools.
We can impose a financial transactions tax and use the proceeds to broaden jobs programs like the earned-income tax credit and career academies. And, as Alan S. Blinder of Princeton University has outlined, we can give companies tax credits for creating new jobs.
It’s time to bring the American dream home from exile.
By: Nicholas Kristof, Op-Ed Columnist, The New York Times, May 14, 2014
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