No Glory For Governors Trying To Do The Right Fiscal Thing
If you want to get national attention as a governor these days, don’t try to be innovative about solving the problems you were elected to deal with – in education, transportation and health care. No, if you want ink and television time, just cut and cut and cut some more.
Almost no one in the national media is noticing governors who say the reasonable thing: that state budget deficits, caused largely by drops in revenue in the economic downturn, can’t be solved by cuts or tax increases alone.
There is nothing courageous about an ideological governor hacking away at programs that partisans of his philosophy, including campaign contributors, want eliminated. That’s staying in your comfort zone.
The brave ones are governors such as Jerry Brown in California, Dan Malloy in Connecticut, Pat Quinn in Illinois, Mark Dayton in Minnesota and Neil Abercrombie in Hawaii. They are declaring that you have to cut programs, even when your own side likes them, and raise taxes, which nobody likes much at all. Rhode Island’s Lincoln Chafee has warned of possible tax increases too.
Indeed, to the extent that Quinn received any national press coverage, he got pilloried in conservative outlets in January when he signed tax hikes that included a temporary increase in Illinois’ individual income tax rate from 3 percent to 5 percent.
Despite all the commotion around whether the federal government will shut down, the clamor in the states may be even more important than what’s happening in Washington, which is missing in action on the moment’s most vital fiscal question.
What states are doing to ease their fiscal agonies will only slow down our fragile economic recovery, and may stop it altogether. The last thing we need right now are state and local governments draining jobs and money from the economy, yet that is what they are being forced to do.
As the last three monthly reports from the Bureau of Labor Statistics showed, an economy that created a net 317,000 private-sector jobs lost 70,000 state and local government jobs. Cutbacks are dead weight on the recovery.
In a more rational political climate, President Obama would have resurrected the lovely old Republican idea of federal revenue sharing. Washington should have continued replenishing state budgets for two more years, until we were certain the economic storms had passed. Instead, anything that might be called “stimulus” – “S” is now a scarlet letter in politics – was rejected out of hand.
The federal government could also help the states by picking up more of their Medicaid costs. In the long run, health-care spending should be a responsibility of the national government – as it is in almost every other wealthy democracy. A national commitment would end the specter of states forcing already financially beleaguered citizens off the health insurance rolls.
Such ideas are off the table because the current rage is not for figuring out how to make government work better – a cause that once united governors of both parties – but for cutting back even its most basic and popular functions.
Consider the new budget Gov. Scott Walker announced in Wisconsin on Tuesday. Among other things, he proposed cutting state aid to schools by $834 million over the next two years, a 7.9 percent reduction.
On top of that, Walker would make it harder for localities and school districts to make up for the shortfall by limiting their ability to raise property taxes. This isn’t about education reform. It’s about forcing larger class sizes, layoffs, reductions in extracurricular activities or cuts in teacher pay and benefits. But, hey, if it’s labeled “government,” let’s slash it.
What’s truly amazing, as Stateline.org reported recently, is the number of governors who are cutting taxes at the same time they are eviscerating programs. A particularly dramatic case is Florida’s Republican Gov. Rick Scott. He faces a $3.5 billion budget gap – and is pushing for $2 billion in corporate and property tax cuts.
Historically, times of fiscal stress forced states to make useful economies in programs that didn’t work or were not essential. But what’s happening in so many places now is a reckless rush to gut the parts of government that all but the most extreme libertarians support – and that truly deserve to be seen (one thinks of education and programs for poor children) as investments in the future.
And those governors doing the hard work trying to balance cutbacks and tax increases get ignored, because there’s nothing sexy about being responsible.
By: E. J Dionne, Op-Ed Columnist, The Washington Post, March 3, 2011
Social Security and The Deficit: Associated Press Passes Off Dishonest Editorial About Social Security Finances
The insidious ways that conservative narratives bleed into our mainstream economic discourse as objective truths is a dominant theme in my book, and this story by the Associated Press’s Stephen Ohlemacher — ostensibly a piece of reporting rather than opinion — is one of the most egregious examples I’ve encountered. Check out the lede:
“Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.”
Is it “sick”? Social Security has $2.5 trillion in T-Bills sitting in a trust fund, is financed through 2037 and if nothing were to change it would still be able to pay out higher benefits than it does today, indefinitely.
Is it getting sicker? Well, the 2000 Social Security Trustees’s report (PDF) projected that the trust fund would run out in … 2037. But the 1997 report (PDF) expected the trust fund to be depleted by 2029 — 8 years earlier than currently projected. So in that sense, it’s “healthier” today than it was 13 years ago. More from the AP’s thinly veiled editorial:
“The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016.”
“This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors’ benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said.”
OK, this is just incredibly dishonest. Let me explain why:
When he says the program is “in the red” what he’s talking about is that current tax revenues being paid into the system have fallen below current benefit payments. Which should be unsurprising with wages stagnating and an unemployment rate of 9.4 percent.
But what’s unsaid is that the Social Security’s revenues aren’t limited to current tax receipts, thanks to the interest earned on those T-Bills in the trust fund. They earned 5.1 percent in 2008, and 4.8 percent in 2009. When you include that earned interest, as any honest reporter must do, the program has not “gone into the red,” and — if we define “going into the red” as total annual outlays exceeding total income, including interest income — it won’t until at least 2018, according to the Trustees’ latest report (PDF).
Yes, the Trust Fund grew last year, is growing this year, and will continue to grow for several more years, until it reaches a projected $4.2 trillion dollars. Back to the AP misinforming the public:
“That figure nearly triples – to $130 billion – when the new one-year cut in payroll taxes is included.”
“Congress has promised to replenish any lost revenue from the tax cut, but that’s hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.”
Could any ordinary citizen reading that possibly know that, by law, Social Security’s financing is separate from the rest of the federal budget, and that the program has not added a single penny to the deficit?
These are two wholly separate issues — there’s Social Security’s financing, which has been in surplus since 1983, and then there’s the federal budget, which is in deficit because of the downturn, tax breaks showered on the wealthy and trillions in war spending. (Note: unlike the Social Security program, we don’t have a War Trust Fund with its own dedicated revenue stream.)
The AP then turns the program’s greatest strength into a weakness. Behold the sleight-of-hand:
“Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 – unless Congress acts in the meantime.”
No, Congress could raise taxes to cover the shortfall anytime — nothing need be done in “the meantime.”
But more to the point, this narrative ignores the fact that the Trust Fund had a specific purpose: to ease the glut of baby-boomers entering the system. As I wrote in September, it “was a far-sighted act of governance.”
At the time, the oldest boomers were 37 years old, and the youngest were just 19. In 2037, when the fund is projected to be tapped out, the oldest baby boomers still kicking will be 91 and the youngest will be 73 years old. Not to be morbid, but given that the life expectancy of Americans is 78.1 years today, that means that the “glut” of baby-boomers receiving benefits will be receding in the nation’s rearview mirror. In other words, the trust fund will have done exactly what it was intended to do.
This point never seems to wind up in the conversation.
But it gets even worse, as Ohlemacher advances perhaps the most dishonest spin in the entire debate — that the trust fund is not a huge pile of T-Bills, but just “IOUs” — that the funds have been “borrowed” by the government.
“The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.”
Again, this conflates two wholly separate issues. Let’s run it down:
The national debt is (approximately) $14 trillion. None of that debt is a result of Social Security, which is fully funded and has run surpluses for years.
The federal government issued $14 trillion in T-bills to cover its budget shortfalls — that’s the national debt. It exchanged those $14 trillion in T-bills for cash (which it spent on programs other than Social Security). It must pay back that cash, with interest, as those T-bills are redeemed.
So, yes, it borrowed money — it borrows money by issuing Treasury Bills, which are held by individuals, institutions and governments. One of those institutions happens to be the Social Security Administration — $2.5 trillion of those T-Bills were exchanged for cash paid into Social Security by workers (and the interest is earned). Which is good, as it’s a safe investment for the surpluses that have been generated. They couldn’t just stick those trillions under a mattress.
But those T-Bills could just as easily have been exchanged for cash from China, or from private pension funds — there would be no difference at all. That would have happened if there had never been a Social Security program in the United States. The $14 trillion in debt would be exactly the same — it doesn’t matter who holds the T-Bills.
All of the above is why the deficit has nothing to do with SS — they are two completely separate issues being conflated by the “entitlement crisis” crowd. And no “neutral” reporter should ever write a story that simply carries their water for them.
By: Joshua Holland | Sourced from AlterNet, January 27, 2011
PolitiFact’s Lie of the Year: ‘A government takeover of health care’
In the spring of 2009, a Republican strategist settled on a brilliant and powerful attack line for President Barack Obama’s ambitious plan to overhaul America’s health insurance system. Frank Luntz, a consultant famous for his phraseology, urged GOP leaders to call it a “government takeover.”
“Takeovers are like coups,” Luntz wrote in a 28-page memo. “They both lead to dictators and a loss of freedom.”
The line stuck. By the time the health care bill was headed toward passage in early 2010, Obama and congressional Democrats had sanded down their program, dropping the “public option” concept that was derided as too much government intrusion. The law passed in March, with new regulations, but no government-run plan.
But as Republicans smelled serious opportunity in the midterm elections, they didn’t let facts get in the way of a great punchline. And few in the press challenged their frequent assertion that under Obama, the government was going to take over the health care industry.
PolitiFact editors and reporters have chosen “government takeover of health care” as the 2010 Lie of the Year. Uttered by dozens of politicians and pundits, it played an important role in shaping public opinion about the health care plan and was a significant factor in the Democrats’ shellacking in the November elections.
Readers of PolitiFact, the St. Petersburg Times‘ independent fact-checking website, also chose it as the year’s most significant falsehood by an overwhelming margin. (Their second-place choice was Rep. Michele Bachmann’s claim that Obama was going to spend $200 million a day on a trip to India, a falsity that still sprouts.)
By selecting “government takeover’ as Lie of the Year, PolitiFact is not making a judgment on whether the health care law is good policy.
The phrase is simply not true.
Said Jonathan Oberlander, a professor of health policy at the University of North Carolina-Chapel Hill: “The label ‘government takeover” has no basis in reality, but instead reflects a political dynamic where conservatives label any increase in government authority in health care as a ‘takeover.’ ”
An inaccurate claim
“Government takeover” conjures a European approach where the government owns the hospitals and the doctors are public employees. But the law Congress passed, parts of which have already gone into effect, relies largely on the free market:
• Employers will continue to provide health insurance to the majority of Americans through private insurance companies.
• Contrary to the claim, more people will get private health coverage. The law sets up “exchanges” where private insurers will compete to provide coverage to people who don’t have it.
• The government will not seize control of hospitals or nationalize doctors.
• The law does not include the public option, a government-run insurance plan that would have competed with private insurers.
• The law gives tax credits to people who have difficulty affording insurance, so they can buy their coverage from private providers on the exchange. But here too, the approach relies on a free market with regulations, not socialized medicine.
PolitiFact reporters have studied the 906-page bill and interviewed independent health care experts. We have concluded it is inaccurate to call the plan a government takeover because it relies largely on the existing system of health coverage provided by employers.
It’s true that the law does significantly increase government regulation of health insurers. But it is, at its heart, a system that relies on private companies and the free market.
Republicans who maintain the Democratic plan is a government takeover say that characterization is justified because the plan increases federal regulation and will require Americans to buy health insurance.
But while those provisions are real, the majority of Americans will continue to get coverage from private insurers. And it will bring new business for the insurance industry: People who don”t currently have coverage will get it, for the most part, from private insurance companies.
Consider some analogies about strict government regulation. The Federal Aviation Administration imposes detailed rules on airlines. State laws require drivers to have car insurance. Regulators tell electric utilities what they can charge. Yet that heavy regulation is not described as a government takeover.
This year, PolitiFact analyzed five claims of a “government takeover of health care.” Three were rated Pants on Fire, two were rated False.
‘Can’t do it in four words’
Other news organizations have also said the claim is false.
Slate said “the proposed health care reform does not take over the system in any sense.’ In a New York Times economics blog, Princeton University professor Uwe Reinhardt, an expert in health care economics, said, “Yes, there would be a substantial government-mandated reorganization of this relatively small corner of the private health insurance market (that serves people who have been buying individual policies). But that hardly constitutes a government takeover of American health care.”
FactCheck.org, an independent fact-checking group run by the University of Pennsylvania, has debunked it several times, calling it one of the “whoppers” about health care and saying the reform plan is neither “government-run” nor a “government takeover.”
We asked incoming House Speaker John Boehner’s office why Republican leaders repeat the phrase when it has repeatedly been shown to be incorrect. Michael Steel, Boehner’s spokesman, replied, “We believe that the job-killing ObamaCare law will result in a government takeover of health care. That’s why we have pledged to repeal it, and replace it with common-sense reforms that actually lower costs.”
Analysts say health care reform is such a complicated topic that it often cannot be summarized in snappy talking points.
“If you’re going to tell the truth about something as complicated as health care and health care reform, you probably need at least four sentences,” said Maggie Mahar, author of Money-Driven Medicine: The Real Reason Health Care Costs So Much. “You can”t do it in four words.”
Mahar said the GOP simplification distorted the truth about the plan. “Doctors will not be working for the government. Hospitals will not be owned by the government,” she said. “That’s what a government takeover of health care would mean, and that’s not at all what we”re doing.”
How the line was used
If you followed the health care debate or the midterm election – even casually – it’s likely you heard “government takeover” many times.
PolitiFact sought to count how often the phrase was used in 2010 but found an accurate tally was unfeasible because it had been repeated so frequently in so many places. It was used hundreds of times during the debate over the bill and then revived during the fall campaign. A few numbers:
• The phrase appears more than 90 times on Boehner’s website, GOPLeader.gov.
• It was mentioned eight times in the 48-page Republican campaign platform “A Pledge to America” as part of their plan to “repeal and replace the government takeover of health care.”
• The Republican National Committee’s website mentions a government takeover of health care more than 200 times.
Conservative groups and tea party organizations joined the chorus. It was used by FreedomWorks, the Heritage Foundation and the Cato Institute.
The phrase proliferated in the media even after Democrats dropped the public option. In 2010 alone, “government takeover” was mentioned 28 times in the Washington Post, 77 times in Politico and 79 times on CNN. A review of TV transcripts showed “government takeover” was primarily used as a catchy sound bite, not for discussions of policy details.
In most transcripts we examined, Republican leaders used the phrase without being challenged by interviewers. For example, during Boehner’s Jan. 31 appearance on Meet the Press, Boehner said it five times. But not once was he challenged about it.
In rare cases when the point was questioned, the GOP leader would recite various regulations found in the bill and insist that they constituted a takeover. But such followups were rare.
An effective phrase
Politicians and officials in the health care industry have been warning about a “government takeover” for decades.
The phrase became widely used in the early 1990s when President Bill Clinton was trying to pass health care legislation. Then, as today, Democrats tried to debunk the popular Republican refrain.
When Obama proposed his health plan in the spring of 2009, Luntz, a Republican strategist famous for his research on effective phrases, met with focus groups to determine which messages would work best for the Republicans. He did not respond to calls and e-mails from PolitiFact asking him to discuss the phrase.
The 28-page memo he wrote after those sessions, “The Language of Healthcare 2009,” provides a rare glimpse into the art of finding words and phrases that strike a responsive chord with voters.
The memo begins with “The 10 Rules for Stopping the ‘Washington Takeover’ of Healthcare.” Rule No. 4 says people “are deathly afraid that a government takeover will lower their quality of care – so they are extremely receptive to the anti-Washington approach. It’s not an economic issue. It’s a bureaucratic issue.”
The memo is about salesmanship, not substance. It doesn’t address whether the lines are accurate. It just says they are effective and that Republicans should use them. Indeed, facing a Democratic plan that actually relied on the free market to try to bring down costs, Luntz recommended sidestepping that inconvenient fact:
“The arguments against the Democrats’ healthcare plan must center around politicians, bureaucrats and Washington … not the free market, tax incentives or competition.”
Democrats tried to combat the barrage of charges about a government takeover. The White House and House Speaker Nancy Pelosi repeatedly put out statements, but they were drowned out by a disciplined GOP that used the phrase over and over.
Democrats could never agree on their own phrases and were all over the map in their responses, said Howard Dean, former head of the Democratic National Committee.
“It was uncoordinated. Everyone had their own idea,” Dean said in an interview with PolitiFact.
“The Democrats are atrocious at messaging,” he said. “They’ve gotten worse since I left, not better. It’s just appalling. First of all, you don”t play defense when you”re doing messaging, you play offense. The Republicans have learned this well.”
Dean grudgingly admires the Republican wordsmith. “Frank Luntz has it right, he just works for the wrong side. You give very simple catch phrases that encapsulate the philosophy of the bill.”
A responsive chord
By March of this year, when Obama signed the bill into law, 53 percent of respondents in a Bloomberg poll said they agreed that “the current proposal to overhaul health care amounts to a government takeover.”
Exit polls showed the economy was the top issue for voters in the November election, but analysts said the drumbeat about the “government takeover” during the campaign helped cement the advantage for the Republicans.
Rep. Earl Blumenauer, an Oregon Democrat whose provision for Medicare end-of-life care was distorted into the charge of “death panels” (last year’s Lie of the Year), said the Republicans’ success with the phrase was a matter of repetition.
“There was a uniformity of Republican messaging that was disconnected from facts,” Blumenauer said. “The sheer discipline . . . was breathtaking.”
By: Bill Adair, Angie Drobnic Holan, PolitiFact-December 16th, 2010
Fear and Favor-A note to Tea Party activists: This is not the movie you think it is.
A note to Tea Party activists: This is not the movie you think it is. You probably imagine that you’re starring in “The Birth of a Nation,” but you’re actually just extras in a remake of “Citizen Kane.”True, there have been some changes in the plot. In the original, Kane tried to buy high political office for himself. In the new version, he just puts politicians on his payroll.
I mean that literally. As Politico recently pointed out, every major contender for the 2012 Republican presidential nomination who isn’t currently holding office and isn’t named Mitt Romney is now a paid contributor to Fox News. Now, media moguls have often promoted the careers and campaigns of politicians they believe will serve their interests. But directly cutting checks to political favorites takes it to a whole new level of blatancy.
Arguably, this shouldn’t be surprising. Modern American conservatism is, in large part, a movement shaped by billionaires and their bank accounts, and assured paychecks for the ideologically loyal are an important part of the system. Scientists willing to deny the existence of man-made climate change, economists willing to declare that tax cuts for the rich are essential to growth, strategic thinkers willing to provide rationales for wars of choice, lawyers willing to provide defenses of torture, all can count on support from a network of organizations that may seem independent on the surface but are largely financed by a handful of ultrawealthy families.
And these organizations have long provided havens for conservative political figures not currently in office. Thus when Senator Rick Santorum was defeated in 2006, he got a new job as head of the America’s Enemies program at the Ethics and Public Policy Center, a think tank that has received funding from the usual sources: the Koch brothers, the Coors family, and so on.
Now Mr. Santorum is one of those paid Fox contributors contemplating a presidential run. What’s the difference?
Well, for one thing, Fox News seems to have decided that it no longer needs to maintain even the pretense of being nonpartisan.
Nobody who was paying attention has ever doubted that Fox is, in reality, a part of the Republican political machine; but the network — with its Orwellian slogan, “fair and balanced” — has always denied the obvious. Officially, it still does. But by hiring those G.O.P. candidates, while at the same time making million-dollar contributions to the Republican Governors Association and the rabidly anti-Obama United States Chamber of Commerce, Rupert Murdoch’s News Corporation, which owns Fox, is signaling that it no longer feels the need to make any effort to keep up appearances.
Something else has changed, too: increasingly, Fox News has gone from merely supporting Republican candidates to anointing them. Christine O’Donnell, the upset winner of the G.O.P. Senate primary in Delaware, is often described as the Tea Party candidate, but given the publicity the network gave her, she could equally well be described as the Fox News candidate. Anyway, there’s not much difference: the Tea Party movement owes much of its rise to enthusiastic Fox coverage.
As the Republican political analyst David Frum put it, “Republicans originally thought that Fox worked for us, and now we are discovering we work for Fox” — literally, in the case of all those non-Mitt-Romney presidential hopefuls. It was days later, by the way, that Mr. Frum was fired by the American Enterprise Institute. Conservatives criticize Fox at their peril.
So the Ministry of Propaganda has, in effect, seized control of the Politburo. What are the implications?
Perhaps the most important thing to realize is that when billionaires put their might behind “grass roots” right-wing action, it’s not just about ideology: it’s also about business. What the Koch brothers have bought with their huge political outlays is, above all, freedom to pollute. What Mr. Murdoch is acquiring with his expanded political role is the kind of influence that lets his media empire make its own rules.
Thus in Britain, a reporter at one of Mr. Murdoch’s papers, News of the World, was caught hacking into the voice mail of prominent citizens, including members of the royal family. But Scotland Yard showed little interest in getting to the bottom of the story. Now the editor who ran the paper when the hacking was taking place is chief of communications for the Conservative government — and that government is talking about slashing the budget of the BBC, which competes with the News Corporation.
So think of those paychecks to Sarah Palin and others as smart investments. After all, if you’re a media mogul, it’s always good to have friends in high places. And the most reliable friends are the ones who know they owe it all to you.
By PAUL KRUGMAN: New York Times Op-Ed Columnist, Oct. 3, 2010
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