“A Holiday Wish List For Congress”: Work In The Spirit Of The Season And Help Get The Country Back On Track
For many of us who give gifts at this time of year, the rituals put in perspective the differences between what we can afford, what we need, and what we want. Considering the nation is more than $16 trillion in debt and facing the so-called fiscal cliff of automatic across-the-board spending cuts and tax hikes, lawmakers need to concentrate on doing just what is needed.
With that in mind, here’s my suggested holiday wish list for Congress:
For many of us who give gifts at this time of year, the rituals put in perspective the differences between what we can afford, what we need, and what we want. Considering the nation is more than $16 trillion in debt and facing the so-called fiscal cliff of automatic across-the-board spending cuts and tax hikes, lawmakers need to concentrate on doing just what is needed.
With that in mind, here’s my suggested holiday wish list for Congress:
1. Peace and harmony. We can’t afford for the ideological differences between the political parties to paralyze us. Make a short term deal to prevent us from going over the fiscal cliff and set up the 113th Congress to succeed where the 112th Congress fell short. Here’s a suggestion on how to do that.
2. Fund only the defense we need. Every year, the defense budget is full of weapons and programs someone in Congress wants but that the Pentagon doesn’t need or want. Leaders as diverse as former Secretaries of State Henry Kissinger, Madeline Albright, and James Baker, along with former Defense Secretary Robert Gates say we can spend less on national security. And working with others, we at Taxpayers for Common Sense have provided a set of suggestions on where to cut defense spending.
3. Be good shepherd. The Farm Bill is one of the best examples of programs some people want, but we don’t need right now. It is hard to argue that with farm country seeing record profits the last few years we need to continue to provide massive crop insurance subsidies and other subsidy programs for farmers. What we absolutely don’t need is to have a trillion dollar farm bill shoe-horned into the last days of the 112th Congress.
4. Listen to the wise men—and women. In the last two years, wise men and women from former Sen. Alan Simpson and Erskine Bowles to former Sen. Pete Domenici and Alice Rivlin have laid out plans for long term restructuring of our budget and reduction of our debt. It’s time to listen to those ideas and set the stage for solving our fiscal problems.
5. Gold, frankincense, and myrrh. The tax code is riddled with loopholes and breaks that total more than $1 trillion in forgone revenue every year. It’s time for lawmakers to give taxpayers the gift of flatter, simpler, and fairer tax code that eliminates most of the breaks and generates the revenue to fund the government we need.
We know that Congress will be back at work even as many of us are enjoying time off with our families and we hope that each and every one of them can work in the spirit of the season and help get the country on track for a brighter fiscal future. That’s what America needs.
By: Ryan Alexander, Washington Whispers, U. S. News and World Report, December 24, 2012
“The Austerity Trap”: What Raising The Medicare Eligibility Age Really Means
After a campaign in which Republicans attempted to pillory Barack Obama for finding $716 billion in savings from Medicare (via cuts in payments to insurance companies and providers but not cuts to benefits), those same Republicans now seem to be demanding that Obama agree to cuts in Medicare benefits as the price of saving the country from the Austerity Trap, a.k.a. fiscal cliff. Oh, the irony! You’d almost think that they weren’t really the stalwart defenders of Medicare they pretended to be.
And there are some hints that the Obama administration is seriously considering agreeing to raise the Medicare eligibility age from 65 to 67 as part of this deal. It’s a dreadful idea, and as we discuss this possibility, there’s one really important thing to keep in mind: Medicare is the least expensive way to insure these people. Or anybody, for that matter. In all this talk of the bloated entitlement system, you’d be forgiven for thinking Medicare was some kind of inefficient, overpriced big government program. But the opposite is true, and that’s why raising the eligibility age is such a dreadful idea.
Raising the eligibility age saves very little money, on the order of a few billion dollars a year. That’s because the 65 and 66-year-olds will have to get insurance somewhere, and many of them are going to get it with the help of the federal government, either through Medicaid or through the insurance exchanges, where they’ll be eligible for subsidies. However, since many Republican-run states are refusing to expand Medicaid in accordance with the Affordable Care Act, lots of seniors who live in those states will just end up uninsured, which will end up leading to plenty of financial misery and more than a few premature deaths. Put this all together, and the Center on Budget and Policy Priorities estimates that while the federal government would save $5.7 billion a year from raising the eligibility age, costs would increase by more than twice in other parts of the system—for the seniors themselves, employers, other enrollees in exchanges who would pay higher premiums, and state governments.
What we’d be doing is taking people off Medicare, the most efficient and inexpensive option for them to have insurance, and putting them into the individual market, which works less well and costs more. When we start talking about this in more detail, that’s what Republicans should really be forced to address.
If you want more details on the implications of raising the eligibility age, you should be reading Jonathan Cohn and Sarah Kliff. But it’s important that we keep the big picture in view as the Austerity Trap deal takes shape. If anything, we should be putting more people on Medicare—that would save money and improve health in the system overall (you may recall that when the ACA was being debated one of the proposals was to allow people over 50 to buy in to Medicare, an idea we should bring back). There’s an argument being made that raising the eligibility age may not be a good idea, but the administration has to give Republicans something, and it’s not that big a deal. If that’s the case that wins the day, we should be clear about exactly what it means: a more expensive health care system, exactly the opposite of what everybody says they want.
By: Paul Waldman, Contributing Editor, The American Prospect, December 10, 2012
“The Big Budget Mumble”: Republicans Can’t Play Their Usual Con Game Of Just Saying No
In the ongoing battle of the budget, President Obama has done something very cruel. Declaring that this time he won’t negotiate with himself, he has refused to lay out a proposal reflecting what he thinks Republicans want. Instead, he has demanded that Republicans themselves say, explicitly, what they want. And guess what: They can’t or won’t do it.
No, really. While there has been a lot of bluster from the G.O.P. about how we should reduce the deficit with spending cuts, not tax increases, no leading figures on the Republican side have been able or willing to specify what, exactly, they want to cut.
And there’s a reason for this reticence. The fact is that Republican posturing on the deficit has always been a con game, a play on the innumeracy of voters and reporters. Now Mr. Obama has demanded that the G.O.P. put up or shut up — and the response is an aggrieved mumble.
Here’s where we are right now: As his opening bid in negotiations, Mr. Obama has proposed raising about $1.6 trillion in additional revenue over the next decade, with the majority coming from letting the high-end Bush tax cuts expire and the rest from measures to limit tax deductions. He would also cut spending by about $400 billion, through such measures as giving Medicare the ability to bargain for lower drug prices.
Republicans have howled in outrage. Senator Orrin Hatch, delivering the G.O.P. reply to the president’s weekly address, denounced the offer as a case of “bait and switch,” bearing no relationship to what Mr. Obama ran on in the election. In fact, however, the offer is more or less the same as Mr. Obama’s original 2013 budget proposal and also closely tracks his campaign literature.
So what are Republicans offering as an alternative? They say they want to rely mainly on spending cuts instead. Which spending cuts? Ah, that’s a mystery. In fact, until late last week, as far as I can tell, no leading Republican had been willing to say anything specific at all about how spending should be cut.
The veil lifted a bit when Senator Mitch McConnell, in an interview with The Wall Street Journal, finally mentioned a few things — raising the Medicare eligibility age, increasing Medicare premiums for high-income beneficiaries and changing the inflation adjustment for Social Security. But it’s not clear whether these represent an official negotiating position — and in any case, the arithmetic just doesn’t work.
Start with raising the Medicare age. This is, as I’ve argued in the past, a terrible policy idea. But even aside from that, it’s just not a big money saver, largely because 65- and 66-year-olds have much lower health costs than the average Medicare recipient. When the Congressional Budget Office analyzed the likely fiscal effects of a rise in the eligibility age, it found that it would save only $113 billion over the next decade and have little effect on the longer-run trajectory of Medicare costs.
Increasing premiums for the affluent would yield even less; a 2010 study by the budget office put the 10-year savings at only about $20 billion.
Changing the inflation adjustment for Social Security would save a bit more — by my estimate, about $185 billion over the next decade. But put it all together, and the things Mr. McConnell was talking about would amount to only a bit over $300 billion in budget savings — a fifth of what Mr. Obama proposes in revenue gains.
The point is that when you put Republicans on the spot and demand specifics about how they’re going to make good on their posturing about spending and deficits, they come up empty. There’s no there there.
And there never was. Republicans claim to be for much smaller government, but as a political matter they have always attacked government spending in the abstract, never coming clean with voters about the reality that big cuts in government spending can happen only if we sharply curtail very popular programs. In fact, less than a month ago the Romney/Ryan campaign was attacking Mr. Obama for, yes, cutting Medicare.
Now Republicans find themselves boxed in. With taxes scheduled to rise on Jan. 1 in the absence of an agreement, they can’t play their usual game of just saying no to tax increases and pretending that they have a deficit reduction plan. And the president, by refusing to help them out by proposing G.O.P.-friendly spending cuts, has deprived them of political cover. If Republicans really want to slash popular programs, they will have to propose those cuts themselves.
So while the fiscal cliff — still a bad name for the looming austerity bomb, but I guess we’re stuck with it — is a bad thing from an economic point of view, it has had at least one salutary political effect. For it has finally laid bare the con that has always been at the core of the G.O.P.’s political strategy.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 2, 2012
“We The People Are Watching”: It’s Time For The GOP To Stop Saying ‘No’ And Start Compromising
New polls have bad news for the GOP when it comes to the so-called “fiscal cliff.”
The public is more interested in the budget negotiations than any other news story—even the Petraeus sex scandal, according to a recent PEW survey.
Americans have also decided in advance who will be to blame if the budget negotiations fail and we enter 2013 without a deal to avoid across-the-board tax increases and spending cuts—the GOP.
According to a new CNN poll, 45 percent of Americans say they will blame the Republicans–compared to the 34 percent who would blame President Obama. That margin of 11 percent is nearly four times the edge that gave the president his re-election. And 53 percent have an unfavorable view of the Republican Party.
Why is the public so prone to blame Republican members of the House and Senate?
Maybe they’ve been paying attention.
Indeed, 7 out of 10 say the GOP has not done enough to compromise with the president. They made stonewalling their strategy in 2009 and have basically not any made exceptions since — except when they were tricked into doing so. A vast majority of Republicans in Congress have signed Grover Norquist’s pledge that basically means they’re unwilling to compromise—though some senators have started to back away from that once-firm commitment.
Voters also agree with Democrats on the issues — 56 percent say taxes on the wealthy should be kept high. And even Republicans agree by an 8-percent margin that any deal should include tax increases along with spending cuts.
“77% believe that their personal financial situation will be affected if the government goes off the fiscal cliff,” said CNN polling director Keating Holland.
Four years of Republicans hyping the fear that the deficit will personally hurt individual Americans has been effective. But, as The New York Times‘ Paul Krugman writes, “…the clear and present danger to the American economy isn’t that we’ll fail to reduce the deficit enough; it is, instead, that we’ll reduce the deficit too much.”
The president has the upper hand in the negotiation and the GOP’s weakness is demonstrated by the fact that they have a member of the losing Republican ticket on their negotiating team.
But will that be enough? Can this GOP say “yes” to a deal that doesn’t punish the middle class? If past is prologue, the odds aren’t good.
By: Jason Sattler, The National Memo, November 26, 2012
“Let Me Count The Ways”: Would A Republican Candidate Lie About Taxes?
The United States faces a gigantic economic choice next year, and last night’s debate centered largely around what Mitt Romney would do about it. Romney’s plan is to lock the Bush tax cuts into place, reduce the long-term deficit entirely through spending cuts, enact an additional 20 percent tax rate cut that would disproportionately benefit the rich and cover the cost through unspecified closings of tax deductions. But Romney labored tirelessly, and with evident success, to portray himself in a far more egalitarian light. Every time President Obama described the cost of his tax rate cost, Romney dismissed it as untrue, pledged that his plan would not reduce the current tax burden on the rich, and even implied that he would make the rich pay higher taxes by closing their loopholes.
It was a virtuoso performance. But what does it tell us about how Romney would govern if elected? Here he was making promises about how he would govern that flatly contrasted with his plans. Which promises should we believe? Ross Douthat argues that Romney’s soothing moderate rhetoric shows that he is likely to govern as the moderate he presented himself as.
It’s worth considering a similar — in many ways, identical — episode that took place a dozen years before. During the 2000 election, the growth of a budget surplus offered the country a major choice. Al Gore proposed to use most of the surplus to retire the national debt and the balance for public investment. George W. Bush proposed a large, regressive income tax that Gore warned would exacerbate inequality and jeopardize the soundness of the budget.
Then, as now, the Republican simply denied over and over that his plan would do what the Democrats said it would. Bush portrayed his plan as devoting just a small fraction of the surplus to tax cuts and described his tax cut itself as benefitting the poor far more than the rich. And you certainly could find circumstantial evidence to suggest that Bush might govern the way he portrayed himself, rather than the way his plan read. He had governed in a bipartisan way in Texas, he had explicitly denounced the conservative wing of the Congressional GOP, and he had surrounded himself with moderate advisers like Michael Gerson and Karen Hughes.
But Bush in fact followed through on what his plan actually did, which happened to be what Gore described it as, and not what Bush described it as. His promises to maintain the budget surplus and direct most of the tax cuts to lower-earners fell by the wayside. What mattered was the party, and the Republican Party was committed to a policy of regressive tax cuts.
The Bush-Gore debates centered primarily around Gore’s endless, frustrating attempts to pin down Bush’s priorities. I compiled pieces of Bush denying he would pursue what turned out to be the centerpiece of his administration’s economic agenda.
Here’s Bush in the first presidential debate:
I want to take one-half of the surplus and dedicate it to Social Security. One-quarter of the surplus for important projects …
tonight we’re going to hear some phony numbers about what I think and what we ought to do. …
this is a man who has great numbers. He talks about numbers. I’m beginning to think not only did he invent the Internet, but he invented the calculator. It’s fuzzy math. It’s a scaring — he’s trying to scare people in the voting booth. Under my tax plan that he continues to criticize, I set one-third. The federal government should take no more than a third of anybody’s check. But I also dropped the bottom rate from 15% to 10%. Because by far the vast majority of the help goes to people at the bottom end of the economic ladder. …
After my plan is in place, the wealthiest Americans will pay a higher percentage of taxes then they do today…
Let me tell you what the facts are. The facts are after my plan, the wealthiest of Americans pay more taxes of the percentage of the whole than they do today.
First of all, that’s simply not true what he just said, of course. And secondly, I repeat to you —
MODERATOR: What is not true, Governor?
That we spent — the top 1% receive 223 as opposed to 445 billion in new spending. The top — let’s talk about my tax plan. The top 1% will pay one-third of all the federal income taxes. And in return, get one-fifth of the benefits, because most of the tax reductions go to the people at the bottom end of the economic ladder. …
GORE: I think that what — I think the point of that is that anybody would have a hard time trying to make a tax cut plan that is so large, that would put us into such big deficits, that gives almost half the benefits to the wealthiest of the wealthy. I think anybody would have a hard time explaining that clearly in a way that makes sense to the average person.
BUSH: That’s the kind of exaggeration I was just talking about. (LAUGHTER)
But the top 1% will end up paying one-third of the taxes in America and they get one-fifth of the benefits.
Under my plan, if you make — the top — the wealthy people pay 62% of the taxes today. Afterwards they pay 64%. This is a fair plan. You know why? Because the tax code is unfair for people at the bottom end of the economic ladder. If you’re a single mother making $22,000 a year today and you’re trying to raise two children, for every additional dollar you earn you pay a higher marginal rate on that dollar than someone making $200,000, and that’s not right. So I want to do something about that.
By: Jonathan Chait, Daily Intel, October 4, 2012
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