Obama's "Mandate" To Slash Medicare, Medicaid & Social Security

by: Paul Rosenberg

Sat Jan 17, 2009 at 14:41

Did you know that Obama has a mandate to slash Medicare and Medicaid?  Probably not, I'd wager.  But it seems that Obama believes he has such a mandate, according to an item at the Washington Posts' website ( h/t Digby ), that reads, in part:

Obama To Hold Fiscal Responsibility Summit

President-elect Barack Obama will convene a "fiscal responsibility summit" in February designed to bring together a variety of voices on solving the long term problems with the economy and with a special focus on entitlements, he said during an interview with Washington Post reporters and editors this afternoon.

"We need to send a signal that we are serious," said Obama of the summit.

Those invited to attend will include Senate Budget Chairman Kent Conrad (N.D.), ranking minority member Judd Gregg (N.H.), the conservative Democratic Blue Dog coalition and a host of outside groups with ideas on the matter, said the president-elect....

Obama said that he has made clear to his advisers that some of the difficult choices--particularly in regards to entitlement programs like Social Security and Medicare - should be made on his watch. "We've kicked this can down the road and now we are at the end of the road," he said.

This is not just something he didn't run on.  It is, in fact, the exact opposite of what he ran on-or at least appeared to, as can be seen from economist Dean Baker's op-ed in The Guardian, a few days earlier, in which he wrote:

Although Social Security is paid for long into the future, Medicare does face problems due to the explosion of private sector health care costs. The way to address Medicare's shortfall is to fix the private health care system, as President Obama has pledged to do.

The truth of Baker's statement is readily apparent from the following chart, which I presented in my diary from last April, "Medicare Myths--Don't Blame The Boomers".  Our medical costs are far higher than other countries with a significantly larger share of older citizens:

Not only is Obama's "fiscal responsibility" kick at odds with his actual mandate and his own health care proposals, it reflects a deeply ideological worldview that--far from being bipartisan or "post-partisan"--is strongly opposed by solid majorities across the political spectrum.  It is the very essence of Versailles insiderism.

Paul Rosenberg :: Obama's "Mandate" To Slash Medicare, Medicaid & Social Security
Who's On Board?

The Post reported:

Those invited to attend will include Senate Budget Chairman Kent Conrad (N.D.), ranking minority member Judd Gregg (N.H.), the conservative Democratic Blue Dog coalition and a host of outside groups with ideas on the matter, said the president-elect....

So, Blue Dogs in. Progressives? Not so much.  Surprised?  Didn't think so.  The agenda here "difficult choices--particularly in regards to entitlement programs like Social Security and Medicare" is straight out of the fiscal slasher movie on CNN last weekend, IOUSA, which Digby blogged about earlier in the week, and which was thoroughly debunked by economist Dean Baker and his associates at the Center for Economic and Policy Research (CEPR), which he co-directs, when it first came out in theatrical release last fall.

The materials CEPR put together included a viewer guide (PDF), a brief snippet of which gives some quick insight into who the players are,  But first, a little taste of how the guide debunks one of the underlying lies behind this "documentary":

15:10 - The film refers to ways to balance the budget, implying that this should be a target for fiscal policy.

In fact the government can run deficits forever, as long as the growth of debt does not exceed the growth in GDP. The essential condition for fiscal stability is that the ratio of debt to GDP does not rise over time.

16:00 - The films refers to deficits of $200-$300 billion as not doing well.

In fact, the government could sustain deficits of this size forever. With deficits at these levels, the ratio of debt to GDP would be falling.

16:29 - These deficits are described as being unsustainable over the long run.

Deficits in the range of $200 billion to $300 billion can be sustained indefinitely. If the U.S. government ran a deficit of $300 billion annually for the next hundred years, then the ratio of debt to GDP would fall to less than 4 percent.

And now, some of the co-conspirators in putting this over on the American people:

18:59 - Senator Judd Gregg says the debt absolutely guarantees that our children will have a worse quality of life than we do.

None of the standard projections from the Congressional Budget Office, the Office of Management and Budget or any other authoritative source supports Senator Gregg's assertion.

19:40 - Alice Rivlin blames just 3 programs (Medicare, Medicaid and Social Security) for most of the deficit problem.

The problem with Medicare and Medicaid is the broken U.S. health care system. Social Security will be fully financed from its designated tax until 2049. Therefore, it makes no sense to blame Social Security for the budget problem. The projected increase in its outlays over the next four decades is covered by taxes already collected or that will be collected....

27:00 - Robert Rubin says that there are very difficult trade offs in cutting spending or raising taxes.

It would have been worth mentioning reforming the health care system as a third possible way to deal with excessive deficits.

So, that's Judd Gregg, who's going to be at Obama's "Fiscal Responsibility Summit," and a couple of quinitessential Democratic insider heavyweights on fiscal affairs.  Not Paul Krugman. Not Joseph Stiglitz.  None of that Nobel Prize riff-raff. Also quoted elsewhere in the movie were Ron Paul and Warren Buffett.  Who knew that they were the very embodiment of Obama's victory?

Obama's ACTUAL Mandate

In sharp contrast to Obama's plans to slash Medicare, Medicaid and Social Security, there were some things he talked about quite freely during the campaign, and USA Today recently did a poll on them. So let's take a quick look at the poll, beginning with a bit of an intro from the story, "Poll: Americans believe Obama will deliver despite down times" [emphasis added]:

WASHINGTON - Americans are as down as they've been in decades about the state of the country and its polarized politics, even as they express soaring confidence that Barack Obama will be able to turn things around.

A USA TODAY/Gallup Poll finds stratospheric expectations for the incoming president that his own supporters acknowledge may be unrealistic. A majority of those surveyed say Obama will be able to achieve every one of 10 major campaign promises, from doubling the production of alternative energy to ensuring that all children have health insurance coverage....

The towering ratings Obama receives from most Americans will give him political capital as he tries to pass his proposals, including a mammoth economic stimulus package that he says will cost about $850 billion. Those high hopes could give way to disenchantment, however, when problems erupt or promises are delayed - something Obama already has warned Americans to expect.

Those surveyed distinguish among his campaign promises, ranking some as more crucial than others.

Their clear priorities are the issues that hit home. On a list of campaign promises, five pocketbook issues take the five top spots, among them expanding health care for children and reducing health care costs. They include doubling the production of alternative energy, a step Obama says would help reduce reliance on gas and its volatile market.

Seven of 10 call it "very important" to them personally that he keep those promises. His pledges to cut income taxes for working families and pass a stimulus package that will build and repair bridges, roads and schools also are among the top five issues.

Slashing Medicare, Medicaid and Social Security  obviously is not on the list of promises.  No one is clamoring for him to do that.  No one voted for him to do that.

Here is the summary table of results from the USA Today poll:

How important is it to you, personally, that Barack Obama keep these promises? And, just your best guess, will he be able to accomplish them?
PromisesThose who said "very important"Yes, he will be able to accomplish them
Ensure all children have health insurance coverage 73%62%
Double the production of alternative energy 70%59%
Reduce health care costs for the typical American family by up to $2,500 per year 70%56%
Enact a major spending program to strengthen the nation's infrastructure of bridges, roads and schools 60%80%
Cut federal income taxes for 95% of working families 57%53%
Withdraw most U.S. combat troops from Iraq within 16 months 51%54%
Increase U.S. military strength in Afghanistan by at least two brigades 43%68%
Lift restrictions on government funding of embryonic stem-cell research 42%61%
Close the U.S. prison for terrorist suspects at Guantanamo 32%59%
Make it easier for labor unions to organize 28%59%
Source: USA TODAY/Gallup Poll of 1,031 adults taken by landline and cellphone Friday-Saturday. Margin of error: +/- 3 percentage points.

So, #3 on the list--with 7 in 10 saying it's "very important" that Obama deliver--is "Reduce health care costs for the typical American family by up to $2,500 per year."  And this is precisely what Baker is saying would be key to controlling the deficits that Obama is so worried about--but somehow forgot to explicitly hammer home during the campaign.

The Public Mandate For PRESERVING Medicare, Medicaid & Social Security

Now let's contrast the results of the USA Today poll with with the General Social Survey questions on spending on Social Security and protecting and improving the nation's health, questions which show a broad and powerful public mandate--stretching back for decades--for preserving or increasing national spending on health care and Social Security.  These same exact questions have been asked for several decades now, with only modest variations in the levels of support over the years.  This is the combined results for 2000, 2002, 2004 and 2006:

    Spending on improving &
    protecting nations health
    Too Little80.178.365.274.2
    About Right16.819.027.521.4
    Too Much3.
    Spending on Social Security
    Too Little65.566.554.361.9
    About Right31.429.637.833.0
    Too Much3.

As can be seen, the differences between conservatives and liberals in terms of thinking we're spending "too little" are in the 10-15% range, but even a solid majority of conservatives think we are spending too little on both.

This means that Obama is planning a course of action to the right of a majority of American conservatives.  How, exactly, is this "reaching out to them"?  Indeed, when one adds in those conservatives who think our spending levels on these programs are "about right", we find that Obama's planned policy direction is to the right of more than 9 out of 10 conservatives.

Where did he get a mandate to do that?

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fiscal responsibilty (4.00 / 12)
fiscal responsibility has never been anything but a code word for cutting programs that help ordinary people, it has never meant anything else. The very same people who enacted Bush's disastrous tax cuts want to steal social security.

If they were sincere about fiscal responsibility, they would be talking about passing Medicare for All, which would save 350 BILLION a year.

Right (4.00 / 9)
I'm waiting for the "fiscal responsibility" forum in which he invites anti-war groups, labor etc. to discuss how to cut the defense budget.

[ Parent ]
politics of the past, right there (0.00 / 0)
I guess your outlook will depend on whether you see Obama as a different kind of politician, or whether you think he's more of the same.

The truth about Saxby Chambliss

[ Parent ]
Versailles insiderism? (4.00 / 2)
That article you're using is an example of Versailles insiderism.

I think I agree with Steve Benen's take on this.

I Hope You're Right (4.00 / 6)
And I freely agree that you can't trust the WaPo, the NYT or any of them.

But neither can you deny the sorts of people he has been listening to, and the ways he has leaned (such as his recent insistence on TARP 2, with non-binding promises to the likes of Merkley).  The folks mentioned for this summit are not the sorts you'd want if you were aiming dead center on health care reform as your object.

Now, maybe he's meeting with these folks precisely because he wants to get them onboard early.  And maybe I'm 100% wrong in my read of this.  If so, no one would be happier than I.  I just think there are times when one must be hyper-vigilant, and not simply trust to good feelings.

My bottom line is pretty simple, here: if red flags go up because folks think he's headed in the wrong direction, how is that a bad thing, even if we're mistaken?  We've sent a message anyway that folks are paying attention, they aren't happy with even hints of heading that direction, and they are ready to start mobilizing if there are further indications in that direction.

Sometimes, doing your civic duty means be willing to be wrong.  What differentiates me from the wingnut alarmists is that I'm going to be pleased as punch to be proven wrong, and even now, initially, I'm non-defensive about the possibility.  I've said all along that I find Obama difficult to read, and I agree with comment by DaveW in my earlier diary, picking up on Simon Schama from Bill Moyers Journal last night:

SIMON SCHAMA: .... His great strength is that he does know all these worlds. The question, really, was whether he knows too much. Whether he has too much experience of all these worlds to be able to say enough of input really. Time for a decision. We have no idea if he's any good at that. We're about to find out.

Until we really does commit, and "say enough of input really. Time for a decision," my confusion will be well-founded, I think.  I would be much more mistaken, I think, if I were not quite clear about my lack of certainty.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Our course is obvious (4.00 / 6)
Sometimes, doing your civic duty means be willing to be wrong.  What differentiates me from the wingnut alarmists is that I'm going to be pleased as punch to be proven wrong, and even now, initially, I'm non-defensive about the possibility.

Exactly.  It doesn't matter if Obama is a closet conservative, a Blue Dog sympathizer, trying to look good in the eyes of the Versailles, or simply appearing open to cutting benefits in order to actually build a consensus for raising limits on payroll taxes like he suggested during the election.  Our job is to push back on cutting benefits while being open to raising payroll limits on taxes.

Right now I get a nice little bonus at the end of each year as my payroll taxes reach the limit.  As much as I may enjoy the extra cash, that is just stupid.  I did nothing to earn that.

[ Parent ]
Well Obama is (2.67 / 3)
actually right that our medicare costs are unsustainable.  But the fiscally responsible way to do that is to reform the health care system.  He's hired Peter Orszag as Budget Director, who has argued very forcefully that universal health care is a fiscal urgency, and that you can't deal with Medicare without addressing the larger healthcare crisis.  Framing health care reform as a fiscal responsibility issue is absolutely the right way to go.  Its not only politically savvy, it is also true.  

Its social security where Obama makes me more uneasy.  Obama has always included social security as part of the list of problems that he would solve, although he still says that social security is pretty easy to solve.  Nevertheless, if this whole idea of a "grand bargain" involves slashing social security benefits and raising the retirement age, than Obama really is a tool.  And we really would live in a perverse universe.  The scary thing about it is what Digby said.  The fact that it is Obama initiating it, creates a Nixon-to-China dynamic that actually makes it more possible than it would ever be with a Republican.  It mutes criticism on the left.  I truly don't know what kind of president Obama will be.  But it is quite clear that he has no problem using language that makes progressives very uncomfortable.    

[ Parent ]
It's Like Schroedinger's Catsville, Man (0.00 / 0)
Democracy's either healthier than ever, or else, like, totally dead.

Only it's a supperposition of both.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Huge difference in the two stories for sure... (0.00 / 0)
I much prefer yours and Benen's.  

[ Parent ]
I Prefer That Version As Well (4.00 / 1)
But the universe doesn't really care what I prefer.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
It doesn't care about what I think, either... n.t (0.00 / 0)

[ Parent ]
Is this his idea for health care reform? (4.00 / 1)
I certainly hope not and this definitely isn't what he ran his campaign on.  

didn't he run on raising SS taxes (0.00 / 0)
Specifically, having a donut from around $100,000/yr to $250,000/yr and then taxing additional income?   This was a big issue in the primaries, since Clinton was against it.

New Jersey politics at Blue Jersey.

But That's A MODEST Reform That Would Have Nicked The Wealthy (4.00 / 2)
And, in fact, it's a variation on a reform that progressives have long offered as the sort of minor tweak that could help ensure the long-term viability of Social Security.

The way things have worked for quite some time now is that privatizers scream, "The sky is falling! The sky is falling!"  And progressives respond by showing that it's not, but then add, "However, if you want to be on the safe side, there are a few things you can do to add a little cushion, and the top of the list is to lift the cap on payroll taxes."

Obama doesn't do that, because he doesn't want to raise taxes on those making $100-$250k, which is where he gets the donut hole from.  But the basic idea is--rather typically--a progressive idea given a voodoo economics twist.

Still, this comes from the exact opposite mindset of those he's now talking about sitting down with.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Peter Orzsag (4.00 / 1)
Obama appointed SS cutter Peter Orzsag to OMB and there was hardly a peep from anyone but Matthew Rothschild. Our side has been asleep at the wheel for months while Obama has been recruiting every DLCist he could find to outrepublican the Republicans

Here is something I hope you, other bloggers pick up on (4.00 / 1)
In We Don't Need No Stinkin' Single Payer Health Care?, I have some OECD health care cost graphs which show how the United States is paying on some estimates 8 times more than other industrialized nations in health care costs.

I also link to a great Frontline documentary, Sick Around the World.  

They too show that the United States is plain getting ripped off in medical costs in comparison to other industrialized 1st world nations.  

Anyone wanting to rewatch Michael Moore's SiCKO, it's here.

Isn't it interesting how we do not hear about this when those very costs are U.S. budget busters?  And if they are so concerned about the budget all of a sudden, why the hell did they just grab around $350 Billion dollars for the financial sector (banks)?


The Economic Populist

To be fair... (0.00 / 0)
Assuming the financial institutions remain solvent, we get back that $350 billion, plus interest (5% for the first $350b under Bush, who knows under Obama).  In all likelihood, some institutions will not remain solvent, so some of that money will not get back to us, but it really is a different category then "spending".

To be fair the other way, the progressive counter-arguement is true investments in our infrastructure and people also have a rate of return associated with it, so one can compare the two equally.  But I believe that counter-arguement only goes so far; investment spending is longer term and less direct then purchasing quasi-liquid assets like preferred company stocks.  In other words, the bailout shouldn't count against the books as an expense and we can do both.

[ Parent ]
If Obama moves on this . . . (4.00 / 1)
General Strike

May 1, 2009

if not rescinded

one week general strike

Nov 1, 2009

if not rescinded

one month general strike

May 2010.

general strike? (0.00 / 0)
are you high? we couldn't even pull off not-one-dime day in Jan. 2005. We couldn't even get people to stop shopping.

A general strike is incredibly difficult to pull off, witness the fact that it has never been done in this country, not even in the thirties, when we had a real leftist movement.

[ Parent ]
not to mention the bond market will strike back (0.00 / 0)
a worker strike is no match for a bond market strike. cuts will be made to something if the bond market wants it. future soc sec payment cuts are a pretty good candidate imho.

~* the * Will * to go on *~

[ Parent ]
Third Rail (4.00 / 2)
It is well known that SS is the third rail of U.S. politics.

Mr. Hope-Change may think he has the political capital to pull this off, and repay his pals on Wall Street by doing so.

He will find out he's wrong.

And you're right.   "We" suck when it comes to organizing anything.

It won't be "we" who will be doing it.

[ Parent ]
This isn't 2005 (0.00 / 0)
and it isn't a shopping boycott.

My blog  

[ Parent ]
Govt Spending Puts Social Security at Risk (4.00 / 1)
Look, Obama is a total shit I agree, but you have to also look at this in terms of the stimulus and the TARP and the balance sheet of the Federal Reserve. Social Security, according to the SCOTUS is tax revenue, not a debt obligation. As a tax revenue Congress can spend it any way it likes. Why this matters is how it relates to the governments balance sheet. T-Bills are debt obligations of the US government, and our ability to service them effects our ability to issue more and affects the strength of our currency. As we create policy which inflates our budget deficit past a Trillion per year, the ability of the US govt to service its debt will come into greater question. There is a fine balance, but if T-bill yields come under any pressure which threatens the govts ability to roll over its debt, then the govt will need to find ways to lower spending or lower its liabilities. Lower spending is obviously out the window since everyone seems to want the govt to spend more. So it will need to lower liabilities so it can barrow more so it can roll over its debt and or keep a stimulus program going. What are the biggest liabilities out there? T-Bills, Soc Sec, Health Care. T-Bills they will obviously not default on as that wouldn't work if they are trying to sell more. That leaves Soc Sec and Health Care.

So they may cut Health Care spending. A National Health care program one would think would be the best way to go, reducing national (not federal) health care costs through efficiency gained in a consolidated program. This is a little counter intuitive, as this will raise federal health care spending, but the govt can make up for this with a slightly higher income or business tax to pull in revenues to compensate. The net gain would be to the economy where there would be more free money to spend on things other than pushing insurance denial letters around.

Or they may cut Soc Sec benefits. This is actually less complicated since its just a direct cut to the budget and doesn't involve pissing off their health industry donors. It does risk pissing off the elderly, but 100 to 1 says that's not how it goes down. 100 to 1 says they fuck the younger tax payers who vote less. This is how unions do it, and I suspect this is how they will do it at the Federal Level. The elderly will continue to get their checks, but benefits for future generations will be cut. This is a net tax increase for the younger, who are already going to be facing a tax increase to pay for the stimulus and various TARP and Fed Rsrv programs. That said, in a worse case scenario where the bond market gets fed up with monatization of debt by the Fed Rsrv I would wager that they also cut current payments.

Why does this work and not count as a default on Soc Sec debt? Because the Soc Security money is just tax and was already spent by Congress, and Congress does not have to pay back itself. Congress has already spent every dime of the Soc Sec fund. In exchange it issued notes to Soc Sec which it likes to claim are just like T-Bills. In fact they are not. They are not tradeable on the market and the govt can default on them without effecting its credit rating. So all they are is a rolling budget line item that is paid out of tax revenue, of which Soc Sec is a portion. You think Soc Sec tax is separate, but really, its not.

Everyone should think about this as they call for greater stimulus packages, and more TARP or Fed quantitative easing. First and foremost the RISK is to the Soc Sec fund, among other budget items. If you want to decrease pressure on Soc Sec default risk, then you need to reduce spending somewhere else or raise taxes or both. But that is the opposite of where we are headed right now. One thing you can count on is the govt will default on Soc Sec and other entitlement programs before it lets the T-Bill market collapse, because if that happens then the whole federal government will implode. And they wont let that happen.

~* the * Will * to go on *~

I'm Not Saying Obama's A Total Shit (4.00 / 3)
And I don't get where you can assume that's my attitude.  He's a politician, and as such he is absolutely bound to do some things that I think are perfectly horrible.  Look at FDR and the internment camps.  That's the nature of the political beast.  In the same spirit, I've vigorously defended LBJ for his remarkable domestic agenda, the very same President I spent most of his time in office demonstrating against over Vietnam.

Now, as to the substance of what you're writing about, you seem totally oblivious to the short-term crisis situation we're in, and how that differs from long-term realities.

I can pretty much guarantee that everyone in the world holding a substantial piece of our debt knows the difference, and is not at all worried about trillion dollar debts over the next 2 or 3 years, provided it restabilizes our economic, and avoids the worst-case scenario we're facing now, which could crash the worldwide economic system.

The trick here is going to be keeping our heads as a domestic political system, and not getting frightened into doing any number of jackass stupid things in the short run.  If we can do that, we will have all sorts of options available in the long run.  If we don't, we won't have any.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
we disagree (0.00 / 0)
sorry, didn't mean to put words in your mouth. but I happen to think Obama has turned into a total shit. that the country needs to police him on of all things soc sec is galling. the guy campaigned on the exact opposite position of what is recent statements seem to be insinuating.

as for the spending and the economy, i happen to disagree with you other than we are in a short term crisis. right now I think we're turning a short term crisis into a long term one and that I don't think any of the policies we are pursuing right now will destabilize the economy, and that we are actually making a worst case scenario worse.

btw - there is probably a lot of front running of treasuries right now as the Fed Rsv has sworn to buy them. yields may sit at 0% for 10 years, or maybe we'll spend ourselves into deeper trouble. but we face a solvency problem and nobody in power wants to face that, and that makes me very pessimistic.

why do you think Obamaram wants to discuss entitlements and "fiscal responsibility"? just being patsy for conservatives? or does it also have to do with concern about the US balance sheet? neither are good. time will tell.

~* the * Will * to go on *~

[ Parent ]
We Have One Point Of Agreement (0.00 / 0)
as for the spending and the economy, i happen to disagree with you other than we are in a short term crisis. right now I think we're turning a short term crisis into a long term one and that I don't think any of the policies we are pursuing right now will destabilize the economy, and that we are actually making a worst case scenario worse.

I agree that this is the one danger that towers over all others.  And I agree specifically with how Krugman has been framing it.  This is not to say that there may not be more to it than that. Indeed, I'm sure that there is.  But I think that Krugman has locked onto the most salient aspect, at least for now.

To wit: we need a stimulus that goes big to make sure that it gets the job done.  If it does, we pull out of this relatively quickly, get unemployment down sooner, rather than later, and solve all sorts of budgetary difficulties in doing so.  It's also quite important, however, to address the mortgage hemorraging that's going on right now.  That seems to be far less certain, and more of a wild card, as we don't have anything, really, to compare our situtation to.  At least not comprehensively.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
IOUSA "thoroughly" debunked (0.00 / 0)
I really don't think CEBR truly debunked the film.  Both the criticism and the film point to the same issue, private expenditures for health care, Medicaid/Medicare can break the bank.  Also in IOUSA it says clearly SS is solvent.  

Then, some of the CEBR comments about how the dollar was over-inflated and caused a larger debt to income ratio...
uh, I think that needs to be debunked.  Who here doesn't believe Americans have been living on home equity, credit cards and more debt to sustain a standard of living?

Then, trying to debunk that the trade deficit is not that high or a significant problem.....well, in terms of GDP, which he fails to note, there too it is 5-6% of US GDP which is amazingly high.  So, the trade deficit is a very real problem.

I think the problem is focusing in on the messenger instead of the causes and solutions.  People take this film as cannon folder to privatize social security and deny people health care.  The underlying facts are not what needs to be attacked....it's those absurd solutions and promoting the real solutions to bring down the costs need to be examined.

Anyone has an objective cost estimate of H.R. 676, single payer universal health care?  


The Economic Populist

very good points (0.00 / 0)
for example, it would be nice to see the military budget put on the chopping block first, and upper income tax bracket raised.

I am also 100% against the stimulus package and various TARPS and fed programs, so I would like those eliminated too (i know I will find mixed support here for that). A different TARP which IPOs new banks or gets better equity terms I could support. It would cost us a hell of a lot less anyway, which would reduce pressure on these other programs. The medical stuff needs to be consolidated. Which will however mean layoffs in the insurance sector, but that's exactly where the waste is.

~* the * Will * to go on *~

[ Parent ]
CBO 2009 budget report (0.00 / 0)
I did an overview of the CBO budget projection report The Very Bad Year is Just the Beginning.

(I pull out some critical graphs, link to original report is there too).  

One of the things noted is the Bush tax cuts are a huge reason it's so high ($1.2 trillion)

Also mentioned is Iraq.


The Economic Populist

[ Parent ]
Well, Robert (4.00 / 1)
I've been reading Dean Baker's debunking of economic reporting off and on since the late 1990s, and I've grown quite used to his style.  I think you're over-interpreting him.

He tends to hone in quite closely on BS at the micro level to dispute the arguments being made.  His writing in this mode is not intended to be a holistic political economy take, it's intended to be a prophylatic against really muddled, confused and ignorant argumentation.

The things Baker says re trade have to be read in that context.  They are not the things I would say, but my purposes would be broader and less specifically focused than his are.  Still, what he says is true.  The film-makers purpose in saying things like 'we are dependent on foreign countries to finance the budget deficit' is at least partly xenophobic, and definitely fearmongering.  To the extent that Baker counters that, he's not only factually right, but politically helpful.  

I agree 100% with this:

I think the problem is focusing in on the messenger instead of the causes and solutions.

But Baker is right to dispute "facts" such as claiming we have to balance budgets (as opposed to maintaining average deficits that shrink debt/GPD ratios) and the like.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
FYI (0.00 / 0)
On EP, we have a middle column of other economic blogs who write good juju, accurate stuff.  He's pulled in.  

So don't think I disagree with him always at all, and he writes such insightful "call outs" on the press kit called mainstream media, he's a must read, it is just this issue.

Sure he can dispute some facts but what seems to be going on here with IOUSA is getting kind of sidetracked to attack the film instead of that privatization/for profit/screw the people agenda that use these sort of facts to try to create a crisis (Shock Doctrine) to enact really, really bad policy..like privatizing social security when the statistics and results are so well documented it's more expensive, more risk, doesn't work....

or try to further deny health care benefits which puts the U.S. at a further competitive disadvantage, hurts our society, is more costly than before and so on.


The Economic Populist

[ Parent ]
I Agree He's Super-Focused On The Film (4.00 / 1)
and at this point I'm not really sure what our differences are, then.

I also realize I may have inadvertantly struck a tone as if I know more about Dean Baker than you.  I was actually just trying to explain how I read him and why, the better for us to understand one another.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
never a problem (4.00 / 1)
I didn't take it that way, just clarifying, while I went through this particular document and criticized the critique.  For some reason I will say some of the left like to ignore deficits as if examining things honestly will open the door to that inane policy proposals (privatize, cut social services, safety nets, benefits, et. al).

I do think overall the "left" ignores the trade deficit and also seriously ignores manufacturing.  We have a series on EP, called Manufacturing Monday (or Tuesday if he can't get to it) by Johnny Venom which goes over all of the stats on U.S. manufacturing for the week.  It's just at death's door, what can I say and the trade deficit reflects that.  

Right now Baker has something interesting in that a strange side effect (?) of the layoffs has raised the median wage by 23%?  Very cool find although I'm unsure what is behind it esp. potentially layoffs are disproportionately happening in lower wage jobs?

Anyway, I didn't take that as you thought at all.  Your blog post...
I wrote something similar over a week ago.  

I think you need to call this out and more importantly we all need to bring more attention, awareness to the real reforms that would reduce costs plus give American true health care for all.  



The Economic Populist

[ Parent ]
Thank you. (4.00 / 1)
Truth has an ally here; some, while fighting for policies of different stripes, bend and twist the truth to suit their needs.

America as a whole consumes far more than it produces. A belt or two somewhere needs to be tightened; but you won't here that from those fighting to preserve their precious programs because it doesn't "help the cause".

To Paul Rosenberg: keep in mind that the growth predictions used by "the left" to claim that Social Security is solvent into the indefinite future are actually no different than Laffer/Kudlow economic theory. As we are seeing now, the "growth" we have had wasn't really there. The growth we will have under the Obama stimulus will be more of the phony growth we had after the 160$billion stimulus of 2008: namely, one quarter of debt-fueled-yet-still-anemic growth masking an attrition of many % of GDP.

As we look into the mid-term future we see red ink growing and the economy shrinking as our unsustainable economic and environmental way of life implodes. One would think that any and all "break even" models for the Social Security trust fund would be jettisoned by the rational.

Now you could re-configure the models to preserve Social Security et. al. by 1) increasing the amount of money paid in to the system by post-Boomers and 2) reducing the outlays.

If you want to kill the economy and actually start a Generational War, choose 1. If you want the Boomers to reap what they have sown (isn't that the essence of justice?) you will choose path 2.

Clearly the Boomers have paid something into the system so it would be wrong to compensate them for that payment. Yet they really didn't pay enough to merit what they expect to collect. Save the system by 1) getting the Social Security money out of the general fund so that Enron-style accounting doesn't let people think our deficit is only 11 trillion. If the Social Security money had been in a lock box all along, the deficit would be approaching 50 trillion even now. How yo ask? Becase we actually already spent the Social Security money paid in by the boomers (and then some) by putting it in the general fund..

And 2) reduce the outlays. Yes people would have to consume less, but that would actually be a boon to the souls (or modern soul-equivalent) of Obese America.

[ Parent ]
You're Both Over- and Under-Simplifying Here (0.00 / 0)
I'm an old radical who is used to arguing on several different levels, or within different spheres, if you will.  At one level, I think it inevitable that the existing capitalist order will pass away, because it is ultimately not sustainable, and Keynsianism is a mere patch to help extend capitalism's shelf life.  But at another level, Keynes is clearly right, whereas the "free traders" and voodoo economistgs are wrong, and it is simply mistaken to equate the two.

I began writing a longer reply but came to the conclusion it was worth recasting as a diary, so I beg your indulgence until the morrow, when I hope to have it in satisfactory condition.  

Till then, suffice it to say, I will grant you that it is possible for some to advocate blindly for simply trusting that the economy will do well enough till 2049.  It's just that I'm not really interested in paying attention to anyone so foolish as that, and I certainly don't depend on their arguments in furhtering my own.

A fuller explanation to come.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
but Paul (0.00 / 0)
I'm in the math class and fundamentally economic fairness and justice does require a firm foundation in economic theory, statistics, cause/effect of real policy.  Sometimes one thinks something sounds great on the surface but in practice it's the worst prescription ever.  

Statistics, graphs, mathematics, economic theory, and all of this boring as shit juju (to many, not to me) is where the answers really reside.

Case in point, Karl Marx....hey man, reads great, sounds great and completely FUBAR in terms of how people, groups, societies behave and ends up enabling totalitarian institutions.  


The Economic Populist

[ Parent ]
Sorry My Promise Could Not Be Kept (0.00 / 0)
So I'll work on that diary for next week.

But where I think I can answer your concerns is simply to say that (a) SS is stable so long as our economy continues to grow as it has throughout most of our history, and (b) while there my be some problems with this assumption from a hardline deep ecology perspective, I don't find that perspective persuasive.  Our wealth can continue to increase, while the material foundation for it is utilized far more efficiently than ever before.  The generalization of Moore's Law.

The problem, heretofore, is that the benefits of these developments have been hoarded by elite actors who generally had little or nothing to do with the productive advances in the first place.  And, of course, the common resources and public investments that made them possible are routinely not repaid at all.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Paul - Friday Movie Night (0.00 / 0)
Over on EP, we have a series Friday Movie Night, where I go dig out some super cool videos about economics that are online.

Anywho, click the link.  I know well the infamous SS arguments and I made a point to pull out of IOUSA the clip where David Walker basically admits SS is solvent.

But on the fundamental issue is recognizing economic reality, stats....yes, that is a major issue on a host of topics that we do not have policy firmly grounded in economic reality.

Another "left" issue is immigration.  I mean my God, the denial that this affects domestic labor markets, wages, the supply/demand of labor is astounding.  

Then, on the "right", the denial of social safety nets being critical to the United States economic competitiveness, the absolute denial that mixed economies are actually more economically competitive than the United States is also astounding.

Right now we have a host of "authors" trying to rewrite the Great Depression and say that FDR's Keynesian based policies didn't work.  Hell yes they worked.  

My attitude is those with philosophies have trust funds.


The Economic Populist

[ Parent ]
Ah, yes (4.00 / 3)
the problem with our economy is not vast sums spent on war, wall street, or the wealthy getting tax cuts. The problem is the blind, the orphans, widows, the poor, and the elderly living it up at government expense. We have promised to provide for them, and what society can possibly afford that?
DeanOR, one of the latter.

Hilarious article (0.00 / 0)
Thank you.  

I needed a moment like this while I was on break.

btw you also need to figure pensions into this (0.00 / 0)
Obamarama hasn't even decided, heck, mentioned what is going to be done about rescuing/let die muni pensions. These funds are underwater big time and states and unions are screaming to be bailed out. If Obama decides he wants to help them that's going to be another massive expansion of the budget deficit. The Federal balance sheet needs to be considered in sum to debate all this. There ultimately is no free lunch.

~* the * Will * to go on *~

What plans to "slash"? (4.00 / 1)
I've read the article linked at the top of this diary and see no plans for Obama to do any "slashing." All he's attributed as saying is that we need to deal with the entitlement programs on his watch and that he plans to convene a "summit" on this in February.  He doesn't even make any claim of a "mandate," at least not in the article cited by this diary.

So, unless there are other sources I'm overlooking or missing, I don't see any reason for alarm.  I personally don't think it's worrisome to address Social Security and Medicare.  Eventually, changes need to be made, and that does not necessarily imply that programs will be slashed, any more than it means that taxes will be raised.  I think it's ok to start the process of evaluating the options, which is all I see that Obama is planning to do.    

You Have To Read Things In Historical Context (4.00 / 5)
There's a long history here of efforts to dramatically disavow the social contract, and folks like the Blue Dogs and Judd Gregg are part of that long history.  As are a whole slew of Wall Street "Bipartisan" types.

If this article had said that Dean Baker, Sheila Kuhl (leading CA legislative advocate for single-payer), Physicians for a National Health Program and Change To Win were going to be participating, then I would have written a very differnt diary.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Change to Win? (0.00 / 0)
I sure as hell don't want the SEIU representing me on health care.  Didn't they go to war with the CA Nurses union, wage busting it too recently?  There is serious discontent w/in the SEIU and frankly the SEIU has been very quick to throw professional workers under the bus....so well, I don't want them negotiating my health care.  

How about add these guys.  (The link points to a cost estimate of H.F. 676).


The Economic Populist

[ Parent ]
Yeah, That Was A Bad Choice To Pull Out Of The Air, In Light Of SEIU (0.00 / 0)
From where I sit they are so schizophrenic.  The main interactions I have with them center around their organizing at the Ports of LA and Long Beach, which has been vital and exemplary regarding building a broad coalition of groups.  OTOH, I've done very little coverage of the SEIU health care side of things, which, of course, should have been paramount in making this comment here.

I can only plead situational distraction, as I'm struggling with a system that's very buggy and unstable today.  It's making me a bit rushed as I try to keep juggling things.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
yeah (0.00 / 0)
I don't know what the hell is going on there in total either, but ....if any of these reports are true (and we know corporate interests also run anti-union propaganda campaign so figuring out what even has credibility is rough) ....frying pan to fire!

I guess have to look at this by their policies, deals and then power structure.  It does look real bad that it's not democratized and to me the entire concept of union to work, has to be strongly democratized or else...wala, corruption/power grab will abound.  

It would be awesome to find an objective, credible source to track or find some objective investigative journalism where we could trust the reports.    


The Economic Populist

[ Parent ]
key point (0.00 / 0)
Wasn't one of the things we liked about Obama that he tries to encourage debate and he doesn't shy away from the people he disagrees with?

The truth about Saxby Chambliss

[ Parent ]
This post is ridiculous (4.00 / 2)
Paul, I like that you and the other front pagers maintain a critical attitude - it's important to hold our elected leaders to the fire. I don't always agree with everything you guys write, but you also do make some good points along the way and it's important to get opposing views from the left.

But that said, this post is beyond ridiculous. It takes one statement Obama made and extrapolates to Obama calling for "slashing Social Security, Medicare and Medicaid." Then you go into a rage, practically calling for Obama's head.

Let's break this down:

(1) Obama didn't even mention Medicaid, which isn't in an especially difficult shape other than underfunding by states due to the recession - a problem that is being rectified by the proposed stimulus package.

(2) On Social Security:

"Social Security, we can solve," [Obama] said, waving his left hand.

As you yourself mentioned, the only major Social Security reform Obama proposed was lifting the cap on payroll taxes - a progressive solution. Nothing Obama said conflicts with that, nor is there a shred of evidence he's considering "slashing" benefits or privatizing the system.

(3) Lastly, on Medicare, all Obama said was this:

"The big problem is Medicare, which is unsustainable.... We can't solve Medicare in isolation from the broader problems of the health-care system."

This is exactly what you quoted Dean Baker saying, so it seems especially odd to quote Baker in opposition to Obama.

This post is knee-jerkism run amok.

Now, if Obama comes out next year with plans to privatize Social Security and privatize and cut Medicare, then I'll tip my hat to you for being more prescient than myself. But until there's any evidence that Obama is doing that - something that is completely in contradiction both with everything he has said in the past but also everything he said in the WP interview - I'm going to have to roll my eyes at this.  

Look At The Context (4.00 / 3)
Who is he meeting with?  Who is he not meeting with?  What other actions is he taking or refraining from taking right now?  What do the people he's listening to on other things have to say about "entitlement reform"?  What are people's long-term agendas?

Is there a benign explanation for all this?  Yes.

Should we take that that explanation on faith? No.

Given the stakes, should we be extremely wary and vigilant?  Yes.

Would I be very happy to have been totally wrong?  Yes.

Would I still be glad that I wrote this as a potential early warning? Yes.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
I must have missed (4.00 / 1)
the announcement of a high profile fiscal responsibility summit with a special focus on lefties discussing the problem of unsustainable tax cuts for the wealthy, not to do anything but just to discuss it. Wasn't there also an announcement of a fiscal responsibility summit emphasizing the unsustainable military budget?  

[ Parent ]
He's a Politician People, Be Very Careful! (4.00 / 2)
I voted for him too but, I have to share Paul's deep concern.  The cabinet picks have been a mixed bag but decidedly conservative in financial and trade areas.  And don't forget another insider, Cass Sunstein, has had a very large influence on Obama's ideas of governance.  You throw in FISA, Joe Lieberman, Rick Warren, and now this blue ribbon committee, it just is a big caution light.

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." - SCOTUS Justice Louis Brandeis

[ Parent ]
agreed. this is nutty. (0.00 / 0)
Do they do this with all politicians, or just Obama? Seems fishy.

[ Parent ]
Fishy? (4.00 / 2)
What harm could possibly come from publicly worrying about slashing SS and Medicare?  Don't we want this concerns and this kind of "backlash", even if not accurate in terms of what Obama said?  Don't we want it to be absolutely crystal clear what is and is not acceptable to us?

[ Parent ]
coming up with (0.00 / 0)
wild theories before a President is even inaugurated is outlandish.

[ Parent ]
It's So Outlandish (4.00 / 1)
That folks who work on K Street get paid 6- and 7-figure salaries to do it for private clients.  They start thinking about this sort of stuff back when folks are forming exploratory committees.

Does the phrase "behind the curve" have any meaning at all to you?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
sdfds (0.00 / 0)
does get solid evidence mean anything to you? if this were a trial, you'd get laughed out of court with this weakness.  www.dobetter.com  

[ Parent ]
But This ISN'T A Trial (0.00 / 0)
And the parameters are entirely different, particularly when so much is potentially at stake.

But, I must admit, this is pretty smooth recovery attempt on your part.  I give you a 9.5 on style points.

Content, not so much.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
sdfs (0.00 / 0)
You're absolutely right; this isn't a trial. It's a blog. You are, therefore, free to make claims with no evidence and not be required to stop. We laugh, though, nonetheless. And I guess we both lack content, huh?

[ Parent ]
I'm Not Making Claims With No Evidence (0.00 / 0)
I'm not saying anything has happened or will happen.  I am saying it may happen, and here's why I'm worried about it.

This hardly seems like a novel or remarkable activity.  People have been doing this since the dawn of time, long before there were logs, much less blogs, notwithstanding your attempts to exoticize and stigmatize what I'm doing.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Nope, no forest there (4.00 / 2)
just a bunch of . . . trees. All growing close to each other.

Montani semper liberi

[ Parent ]
Beats The Hell Out Of Shrubbery, Though (0.00 / 0)
Monty Python meets Molly Ivans waving good-bye and good riddance.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]

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