“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
“Rand Paul’s Crazy Word Salad On Obamacare”: A Symbol Of GOP’s Larger Mess
Sen. Rand Paul made national news this weekend when he refused to say precisely whether he wanted to repeal Kentucky’s version of the Affordable Care Act, Kynect, along with the federal act itself. He bobbed and weaved like his boy Mitch McConnell, and most people have left it at that: another scared Republican afraid to tell the voters what he really thinks about a program that’s helped many of them. Reporters are used to that. Nobody except liberals even criticize it anymore, sadly.
But I want to look at Paul’s entire ludicrous soliloquy on Obamacare, Kynect and healthcare generally, because it shows how fundamentally unserious he is about domestic policy. Or if he is serious, he’s seriously delusional. It was every bit the nonsensical word salad we are used to being served by Sarah Palin, but maybe it’s sexism: Paul is never called out on it or mocked the way the former Alaska governor was. He ought to be.
I’ve written before that “Paul is what you get when traditional and corrosive American nepotism meets the 21st century GOP echo chamber: a pampered princeling whose dumb ideas have never been challenged by reality.” Ron Paul’s son has a tendency to look proud of himself whenever he shows a passing familiarity with facts and figures and ideas, even if he’s conflating or distorting them beyond any resemblance to reality. It’s on display in this interview with Kentucky reporters.
The junior senator from Kentucky starts out by acknowledging that Kynect gets a lot of praise, locally and nationally.
I think the real question that we have in Kentucky is people seem to be very much complimenting our exchange because of the functionality of it, but there are still the unknown questions or what’s going to happen with so many new people.
OK. Let’s take a look at “what’s going to happen with so many new people.” Here Paul rolls out some brand-new GOP anti-ACA scare tactics. First: The rapid expansion of Medicaid, he claims, is costing jobs.
I mean it’s basically about a 50 percent increase in Medicaid in one year. That’s a dramatic shot to a system. And my question is what will happen to local hospitals. If you look at [Glasgow, Kentucky, hospital] TJ Samson laid off 50 people and they’re saying they can’t afford the huge burden of Medicaid.
Oops, stop right there. While the hospital’s CEO did in fact link the layoff of 49 staffers to Obamacare in April, days later the Kentucky Cabinet for Health and Family Services disputed that account. It said the hospital would take in hundreds of thousands of dollars more in Medicaid funding annually, because it’s now being reimbursed for uninsured patients it used to treat without payment. Asked about the discrepancy, Paul just pointed to earlier reporting about the Samson CEO’s remarks and said: “All I know is what I read in the papers.”
So for President Rand Paul, the buck would presumably stop with the papers.
Then Paul raised the specter of folks getting their private health insurance subsidized under the Affordable Care Act, but with such high deductibles that they ultimately won’t be able to pay.
That’s gonna mean … you’re still just a non-payer, probably. And hospitals are going to have to figure out, we won’t know this for six months to a year, how many people who show up with subsidized insurance will actually be able to pay [their] deductible.
This could conceivably be a problem – actually, it was a big problem before the ACA – but Paul has no evidence the ACA made the problem worse. More likely it has helped some, because even with a high deductible plan, many preventive services are now provided without a co-pay. The point is, there’s no evidence of such a problem yet; Paul is just throwing trash at Obamacare to see what will stick. And there’s more:
How many of the new people on Medicaid, how many of those people may have actually had insurance before? Did they go from being a non-payer to being a government payer? Or did they maybe have insurance, but now they’re on Medicaid because it’s easier than having insurance?
Paul could probably find out the answers to these questions, with staff work and a little consultation with the Kentucky Cabinet for Health and Family Services, but he would never bother. After hearing all of this bad news, much of it invented, a local reporter asked the senator the obvious question:
With all those unknowns, do you think Kynect should be dismantled?
And here Paul joins McConnell and punts. Or lies, since it’s pretty sure from his answer he thinks Kynect should be dismantled.
You know I’m not sure — there’s going to be … how we unravel or how we change things. I would rather —I always tell people there’s a fork in the road.
Oh, that fork in the road. Paul turns to boilerplate conservative rhetoric:
We could have gone one of two directions. One was towards more competition and more marketplace and one was toward more government control. The people who think that the government can efficiently distribute medicine need to explain why the VA’s been struggling for decade after decade in a much smaller system.
Points for working in the VA, the Obama scandal du jour. Let’s leave that alone, it’s a story in itself. Continue, Sen. Paul:
And they also need to explain, even though I think we all want Medicare to work better, why Medicare is $35 trillion short.
Huh? First of all, Paul doesn’t “want Medicare to work better,” he wants to repeal it. That’s something you don’t hear much about, but he sponsored a bill with Utah Tea Party Sen. Mike Lee to replace Medicare with the Congressional Health Care Plan members of Congress buy in to, essentially privatizing it. The bill would also raise the age of eligibility from 65 to 70. That ought to go over well with the GOP’s rapidly aging white base. That’s why Paul is forced to lie about his own Medicare position.
And the allegation that Medicare is “$35 trillion short”? I could find no documentation for it besides a Heritage Foundation blog post, and a ton of YouTube videos where Rand Paul makes the claim on Fox News. It seems to refer to a 2011 estimate by Medicare trustees that the Part A Trust Fund would face a shortfall by 2026 unless payroll taxes were raised or program costs were trimmed – and the Affordable Care Act has been trimming them. It’s bunk.
Then Paul turns briefly to the question of Kynect:
There’s a lot of questions that are big questions that are beyond the exchange and the Kynect and things like that. It’s whether or not how we’re going to fund these things.
But then he detours again, to take us back to the already debunked example of TJ Samson hospital’s Medicaid-induced “layoffs.”
If they lose 50 good paying jobs in the hospital, is that good? Then we’ve got more people in the wagon, and less people pulling the wagon.
With that profound Kentucky take on Paul Ryan’s “makers vs. takers” narrative, he walks away. And we’re back to Mitt Romney’s deriding the “47 percent.” In Paul’s more colorful telling, the problem is that some of us pull the wagon, while freeloaders and layabouts just lounge in it. For 50 years, Republicans have tried to tell voters the folks “in the wagon” are minorities. But in Kentucky, which is 88 percent white, they’re mainly white. So Rand Paul, the great 2016 hope, is really a prisoner of the elitist 2012 narrative that cost the GOP the White House.
Even though there’s so much to explore in Paul’s Kynect two-step – delusion, ideology, outright lies – the media mostly ignored it. Those who’ve paid attention simply covered the admittedly newsworthy Obamacare evasion. But I think Paul’s entire stand-up act, his performance art — Being a Very Serious Senator, or at least playing one on TV — deserves more attention. It’s only the soft bigotry of the media’s low expectations for Republicans, and maybe a little of society’s sexism, that makes Rand Paul someone to contend with in 2016, when Sarah Palin is widely just a punch line.
By: Joan Walsh, Editor at Large, Salon, June 2, 2014
“Gimmicks Tend To Backfire”: What A Party Circling The Drain Looks Like
The same is true of TV shows, consumer products and politics: when you have to rely on gimmicks to make your sale, you’re on the path to failure.
Despite a consistent and unyieldingly belligerent posture, the GOP has been increasingly substituting flash-in-the-pan gimmicks for actual policy positions or even coherent ideological talking points. Meanwhile, they’ve been quietly but surely on a path of retreat on substantive grounds.
The Benghazi carnival continues to go nowhere, damaging neither the Democratic Party generally nor even Hillary Clinton in a significant way. Republicans who once thought they could ride an anti-Obamacare wave all the way to November are facing the annoying reality that even in red states the actual specifics of the program are pretty popular, and they’re going to look very bad trying to take away health insurance from millions of people. The seniors who bought into the lie that the ACA is stealing money from Medicare are still with the GOP, but they’re not a big enough voting block to sweep conservatives into a Senate majority, much less the sort of tidal wave they would need to overcome Democratic filibusters.
In the meantime, polls show voters moving away from the GOP on most issues. Fox News’ ratings are tanking. And early numbers are indicating that while liberal and centrist voters aren’t excited about voting in the June primary, conservative voter enthusiasm seems to be greatly diminished as well.
Some of these trends are new, but they were also predictable. Pundits left, right and center have been cautioning for years that the GOP would be placed in a political squeeze by its hardline stance on the ACA. Gay marriage used to be a wedge issue driving Karl Rove’s voters to the polls; now it’s a thorn in the elephant’s side and a major public image problem. The shrill cries of Benghazi barely even excite their own base anymore. And the national Republican party hasn’t even given its own voters a positive agenda it would enact if it held the White House. After all, cutting Social Security, Medicare, food stamps and unemployment benefits isn’t a terribly attractive policy platform for a party utterly dependent on older, less educated suburban and rural white voters. What else are Republicans actually offering the public as a credible policy platform? What are they even offering to their own base?
Without steak to sell, all the GOP has left is culture war sizzle. Enter Phil Robertson of Duck Dynasty fame, whose bright light of media controversy over his remarks on gay marriage attracted a swarm of Republican political moths desperate to cling to his popularity with the conservative base. Now they’re stuck with him as he goes to public events telling Republican leadership that they can solve their problems with the electorate by “getting right with God”. His prescriptions for divine governance, unsurprisingly, are non-starters with the majority of American voters.
Gimmicks tend to backfire. Unfortunately for them, the Republican Party doesn’t seem to have much else left in its arsenal.
By: David Atkins, Washington Monthly Political Animal, May 31, 2014
“Content-Free Carping”: From VA To Obamacare To Medicare
At the moment most Republicans are looking at the VA scandal that broke out in Phoenix as a sheer political bonanza without any long-term significance: a federal agency responsible for an especially valued constituency (veterans) has screwed up fatally on Barack Obama’s “watch.” That’s enough to powerfully reinforce a number of important conservative memes about Obama (and indirectly, Democrats): he and his people are incompetent, they don’t have the normal patriotic impulse to take care of veterans, and when held accountable they stonewall and lie.
But a few voices are beginning to figure out how to link the VA mess not only to the overriding issues of Obamacare, but to the “socialized medicine” treatment of Obamacare that would be applied to Medicare, too, if the political climate was right.
Here’s the Cleveland Plan Dealer‘s Kevin O’Brien spelling it all out:
Putting a government bureaucracy in charge of one’s health is a gamble likely to end badly.
And yet, if Obamacare stands, that is precisely the gamble each and every American eventually will take.
There is no better predictor of the course of a single-payer medical system in the United States than the VA system, because it is a single-payer system….
Americans who watch this story play out and fail to make the clear and obvious connection to Obamacare will be guilty of willful ignorance. The systemic flaw is identical. It’s just magnified on a massive scale. Rather than making a false promise to treat all of the ills of a relatively few sick and injured military veterans, Obamacare has put the federal government on the path to taking responsibility for the medical needs — and the attendant costs — of the entire U.S. population.
Like most conservative attacks on “bureaucracy,” O’Brien’s ignores the powerful bureaucracies that operate in the private sector with even less accountability. As TNR’s Jonathan Cohn puts it:
It’s worth remembering that some of the problems veterans are having right now have very little to do with the VA and a whole lot to do with American health care. As Phil Longman, author of Best Care Anywhere, noted in his own congressional testimony last week, long waits for services are actually pretty common in the U.S.—even for people with serious medical conditions—because the demand for services exceeds the supply of physicians. (“It took me two-and-a-half years to find a primary care physician in Northwest Washington who was still taking patients,” he noted.) The difference is that the VA actually set guidelines for waiting times and monitors compliance, however poorly. That doesn’t happen in the private sector. The victims of those waits suffer, too. They just don’t get the same attention.
But nonetheless, the longer the VA scandal stays in the public eye, the more we will hear arguments the VA should be broken up and its services privatized with federal regulations and subsidies replacing federal bureaucracies–creating a system much like the one contemplated by Obamacare, as it happens. But at the same time, we’ll be told Obamacare itself is a failure because it involves the government in guarteeing heath care. And where conservatives speak to each other quietly, it will be understood that Medicare is subject to the same complaints and deserves the same fate.
No wonder most GOP pols confine themselves to content-free carping about Obama being responsible for the VA scandal.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal. May 22, 2014
“What The VA Scandal Is Not About”: Conservative’s Desire To Privatize All Health Care
While the media furor over revelations of potentially death-dealing delays in eligibility determinations and care scheduling at the Veterans Administration is leading to all sorts of promiscuous talk by conservatives about the inherent incompetence of government and/or the need to privatize all government health-related services (presumably including the provision of insurance by Medicare), let’s be clear what the scandal is not about, as noted by CBS’ Rebecca Kaplan:
There…doesn’t appear to be a major quality problem among the agency’s doctors and nurses either, even though it appears that not enough veterans can get through the door to see them. Veterans’ advocates who appeared before Congress last week agreed that once veterans get access to care within the VA system, it is high-quality care. The problem is getting access to that care in the first place.
The American Customer Satisfaction Index (ACSI), the nation’s only cross-industry measure of customer satisfaction, ranks VA customer satisfaction among the best in the nation — equal to or better than ratings for private sector hospitals. When asked if they would use a VA medical center the next time they need inpatient or outpatient care, veterans in the 2013 ACSI survey overwhelmingly indicated that they would (96 and 95 percent, respectively).
Backlogs in eligibility determinations would exist whether veterans were being sent to VA hospitals for care, or to private hospitals with a voucher in their hands. And physician shortages and scheduling backlogs are hardly an unfamiliar phenomenon at private health care facilities.
Of course conservatives will try to use the issues at VA to undermine any and all public involvement in health care. But the only way to make absolutely sure veterans aren’t placed at risk by inefficient eligibility or scheduling systems is to deny them care altogether. Replacing public health care bureaucracies with private health care bureaucracies won’t fix the problems, and could make the care itself a lot worse and a lot more expensive.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 23, 2014
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