If you're playing checkers on a checkerboard, but your opponent is playing chess, it's only a matter of time until you lose. And that's the problem in fighting against the enemies of Social Security and Medicare who are rallying around the flag of so-called "fiscal responsibility" this week. The attack on these two popular programs is part of a decades long war-a game of chess, if you will-that all too few of us understand.
Earlier in the Virtual Summit, Kim Wright provided a hint of what it's all about by calling attention to Cato Institute document from 1983, when the very immediate prospect of Social Security running out of money lead to the creation of the Social Security Trust Fund:
The Cato Institute described their long-term strategy (implemented after the last major Social Security reform in 1983) this way:
So here we are. As promised, the American people have been bombarded with a steady stream of pronouncements that Social Security is bankrupt, broken, or just too expensive. In truth, what these folks really mean is that they don't [want] Washington to honor its obligations to the Social Security trust fund.
Cato's "Lenninst strategy" also included building up a cadre of those who stood to benefit from privatization--some just a little, others enormously:
What we must do is construct a coalition around the Ferrara plan [for gradual privatization], a coalition that will gain directly from its implementation. That coalition should consist of not only those who will reap benefits from the IRA-based private system Ferrara has proposed but also the banks, insurance companies, and other institutions that will gain from providing such plans to the public.
As it turns out, of course, the "other institutions that will gain from providing such plans to the public"--Wall Street--turned out to be almost entirely responsible for the current financial crisis--a crises that impacts the long-term health of Social Security far less than it impacted those institutions themselves. The difference is, of course, that due to its enormous political clout Wall Street has managed to save itself--temporarily at least. Social Security--not being a wealthy special interest--remains far more vulnerable, just like Medicare, Medicaid and all other programs that "only" benefit the American people at large.
Still, even a full awareness of what Cato proposed, and how well the follow-through has conformed to its vision doesn't fully explain the nature of the chess game. To understand that, we need to turn to the creation of Europe's first modern welfare state by Otto von Bismark in the 1880s, and to Gosta Esping-Andersen's classic 1990 study, The Three Worlds of Welfare Capitalism.
This week, Rachel Maddow did an excellent segment on presidents and the debt:
There's just two problems--not for Rachel, but for the entire Democratic establishment, and frankly the entire supposedly fact-checked and "objective" media: (A) What took so long? and (B) Where's the endless repetition?
As you can see from the following chart (same underlying figures the second chart in last weekend's diary, "Everything Versailles says about the debt is wrong") Republican's haven't engaged in responsible budgeting since Ronald Reagan rolled into town 30 years ago:
It's not just that Republicans are "fiscally irresponsible." It's that they're constantly using Keyensian-style deficit spending to drive the economy, all the while claiming that what's driving the economy is the "free market forces" they've "unleashed." Of course, Keynes never said that government should run deficits all the time. They were supposed to run countercyclically--when non-governmental demand plummeted, the way it has since mid-2008. Running deficits all the time--not little ones--has a really bad effect on the economy, because it more than "unleashes" those magical "free market forces", it gets them turbo-charged, intoxicated and headed right off the nearest cliff.
I don't care how smart you are. You can't make good policy against a background chorus of constant lies.
This is a public service announcement in light of (a) the increased hyperventilation over the current deficit, and (b) the gathering storm to form a Catfood Commission to return senior citizens to the age of Dickens.
Versailles:
The GOP is the party of fiscal responsibility, and Democrats have to show they can reign in spending in order to prove they can govern responsibly.
Reality:
The GOP is the party of intentional fiscal disaster. They are destroyers of government in the short run as well as civilization in the long run. (See Natasha's diary from yesterday afternoon/evening, "The Destruction of Reciprocity.") They know that people--even a majority of Republicans and conservatives--want the government to spend money to make people's lives better in ways they can't do for themselves. The only way to stop this is to financially ruin the government. So that's what they've been trying to do ever since Reagan took office in 1981. This, in turn, is intended to force the Democrats to "act responsibly" by doing the most politically unpopular cutting for them. Barack Obama is just dumb enough to not only fall for this, but to break his arm patting himself on the back for being so virtuous.
The Data:
The most important measure of fiscal health for sovereign governments is not the size of the debt, but the debt-to-GDP ratio. Roughly speaking, fiscal responsibility consists of maintaining or reducing the ratio, fiscal irresponsibility consists of increasing the ratio absent a clear and compelling reason--such as fighting WWII, financing an energy transition to avoid catastrophic global warming, that kind of thing. (More accurately, the above should apply over the course of the business cycle, but for purposes of evaluating presidential performance, we're stuck with the rough approximation.)
So what does the record of fiscal responsibility since the end of WWII look like? Well, as it happens, we were predominantly responsible until Ronald Reagan took office in 1980, and predominantly irresponsible ever since. Exceptions: Nixon-Ford were (arguably) just a teeny bit irresponsible. Bill Clinton was significantly responsible:
That's as close to a laboratory controlled experiment that you're ever going to see in political history, and conclusion is utterly damning to the GOP.
Table of underlying data (from Wikipedia) on the flip.
To hear Senator John McCain tell it, it is earmarks that caused the nation's economic collapse and the loss of 2 million jobs in the last three months.
That's right, the road to hell is paved with $250,000 grants to renovate a hospital and $100,000 for a community program to help at-risk youth (both, according to the Taxpayers for Common Sense database, earmarks in the recent appropriations bill McCain railed against). If only taxpayers realized that $95,000 of public money was headed straight to Sanilac County, Michigan to help replace their bus fleet, they'd certainly revolt.
Why all the fuss about projects that make up a maximum of 1.9% of the spending in the omnibus appropriations bill? In part, because stories about a few outlandish pork barrel projects make for great press. Who would miss an opportunity to rail against the next bridge to nowhere?
And in part, I believe, because it distracts from conservatives' underlying point, that it's not just earmarks but government spending as a whole that's problematic. After all, as Senator Minority Leader Mitch McConnell argues, the appropriate thing to do during a recession, when there is no private sector demand to drive the economy, is to cut government spending and so make sure the government can't boost the economy either. Most economists would disagree.
The most persuasive argument I've heard against earmarks is that they can become a conduit for political corruption. After all, felonious former Senator Ted Stevens used to lead the Senate in earmarks, some of which appear to be connected to a variety of special favors for the Senator. But I read that as a call for transparency, and for campaign finance reform that really gets big money out of elections, not a crusade against modernizing someone's local courthouse or upgrading a town septic system.
The campaign schedule has been pretty intense over the last week and will continue to be so until the BIG day on Tuesday, November 4th. I want to congratulate everyone for putting so much effort into this year's election, not just for an individual campaign, but for the entire Democratic ticket. I've seen people in every community throughout the 5th district working to make sure the message is getting out.
I want to remind everyone it is important that we finish strong. Don't take anything for granted, ignore the polls and work like the polls show our candidates 5 points down. Remember, while all indications show Barack Obama will be our next president, if we believe the polls, Al Gore would be concluding his second term or we would be working to re-elect President John Kerry right now.
Earlier this week I received an email from a 5th district voter with very strong pro-life beliefs who would like to vote for me. She told me via email that she is comfortable that I am Catholic and my stance on pro-life issues is similar to that of Sen. Robert Casey. She feels it is very likely Barack Obama will be elected President and the Democratic Party will gain seats Congress. Where her concern lies is what actions a newly inaugurated President Barack Obama and a United States Congress with a strong Democratic majority will take after January of 2009. She is afraid there will be a far left agenda that will attempt to overturn pro-life initiatives put into effect like the ban on partial birth abortions.
In my response back to her, I explained that my agenda when I arrive in Washington will be exactly what I've been campaigning on. I want to concentrate on fiscal responsibility, a national energy policy that stresses domestically produced alternative fuels, health care and health insurance reform, saving and strengthening Social Security, rescinding No Child Left Behind and bringing our troops home from Iraq. I also mentioned that I will not stand for Congress losing sight of what the agenda must be -- solving the problems important to the middle class.
Throughout the campaign I've been involved in several candidate forums with my opponents for the open seat in the 5th Congressional District. Additionally, during the final 5 weeks of the campaign there will be several additional opportunities for voters in the 5th district to watch all three candidates debate the important issues facing the district and the nation. The important question voters should consider while watching or listening to these events is which of the three candidates really understands the important problems facing our nation.
There are several issues that clearly define and differentiate where I stand and what I believe in versus my two opponents. I've found that my stances on Health Care Reform, the future of Social Security, understanding the economic problems in the 5th district and, most importantly, fiscal responsibility by the federal government separate me from my two opponents.
The last few weeks have seen our nation's economic and financial institutions in the most critical condition since the days in 1929 when the stock market crashed and banks failed sending the country into the Great Depression. This morning I came upon an online headline that read "Bush team, Congress negotiate $700 Billion Bailout". At first glance, the general public probably feels that this is welcome news. However, there are many troubling details about this plan by the lame duck Bush administration that the American people need to be aware of. Below are some of the details about the plan found online at http://apnews.myway.com/articl...
1. The rescue plan would give Washington broad authority to purchase bad mortgage-related assets from U.S. financial institutions for the next two years. It does not specify which institutions qualify or what, if anything, the government would get in return for the unprecedented infusion.
White House Announces Bush Administration to Leave a Record Budget Deficit of $482 Billion.
Since January when we began our campaign for the 5th District seat in the US Congress, I've consistently stressed that my biggest concern is the fiscal mess that has happened in Washington. This week, White House officials admitted the Bush administration would leave office in January 2009 with a record budget deficit sitting on the books of $482 BILLION. This record $482 billion deficit is coupled with a record debt of $9.5 trillion.
On January 20th, 2001, when George W. Bush was sworn in to his first term in office and the Republican Party had control of both houses of Congress, the United States government had a record budget surplus, our economy was in a period of record expansion and the national debt was being paid down. In fact, if the Bush adminstration would have continued the fiscally responsible polices from the 90's by continuing to grow the surplus and pay down the debt, the federal debt could have been retired by 2013.
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