William Greider, writing in The Nation, didn’t mince words when it came to explaining what’s at stake in the looming fight over Social Security—and Medicare along with it. Anyone who wants to understand what most mainstream media are omitting from their reports on the deficit commission and the drive to end Social Security as we know it should immediately read Greider’s piece. (Disclosure: I am a longtime contributor to The Nation.)
The politics: They are screwy, Greider says. A popular Democratic president standing on the third rail of politics? C’est impossible! Yet, Greider notes:
The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.
Obama is being coy about his grand bargain, Greider reports. “He ducks questions about his preferences, saying only that ‘everything has to be on the table.’” As Campaign Desk has pointed out, that’s the same song that his commission co-chairs, Alan Simpson and Erskine Bowles, are singing. It’s also vintage Obama, and the parallels between this fight and the last one are remarkable. Recall that he used the same tactics during the debate on health reform. Every option (except single payer) would be considered, but he was coy about his intentions to support one of them—the public plan. In the end, there was no White House enthusiasm for a public option, and it died aborning.
Greider argues that Obama is “arm in arm with GOP conservatives like Wall Street billionaire Pete Peterson, who for decades has demonized Social Security as a grave threat to the Republic,” and has spread around $12 million to sell the public on the notion that Social Security is in dire straits. (Disclosure: Peterson is a CJR funder.) It’s his version of “Nixon goes to China,” Greider says, “a leader proving his manhood by going against his party’s convictions.”
Embracing conservative ideas? Why, that’s exactly what his health reform legislation was all about—the individual mandate; taxing good benefits secured by unionized workers; tax credits to help folks buy private health insurance; high deductible plans to encourage “personal responsibility.” Those are all Republican/conservative solutions that finally found receptivity from a Democratic president.
The economics: They are screwy, too. Greider argues that, despite the conservative propaganda about Social Security being the cause of the deficit problem, cutting the program “will have no impact on the deficit problem that so stirs public anxiety.” Then why is the program that is wildly popular with the public and has lifted the elderly out of poverty on the chopping block? Here’s his answer:
Targeting Social Security is a smokescreen designed to reassure foreign creditors and avoid confronting the true sources of US indebtedness. The politicians might instead address the cost of fighting two wars on borrowed money or the tax cuts for the rich and corporations or the deregulation that led to the recent financial catastrophe and destroyed vast wealth. But those and other sources of deficits involve very powerful interests. Instead of taking them on, the thinking in Washington goes, let’s whack the old folks while they’re not watching.
Greider urges citizens to mobilize and ask politicians to pledge to keep their hands off Social Security. I urge the media—which after all, supply the public with their information on the subject—to start reporting what’s really going on, and delve into the politics, the economics, and, most important, what affect all this cutting will have on those in their thirties, forties, and fifties who will have no other source of retirement income, except Social Security.
As I mentioned here http://www.cjr.org/campaign_desk/more_words_of_wisdom_from_alan_1.php#comments
attacking the safety net is more than just bad politics, it's bad politics at the worst time. During a recession like this, when the economy's assets have lost a tremendous amount of value while its debt (which was used to purchase those assets) has not, it's awful policy for the government to talk about deficit reduction. You cannot have an economy where the primary activity is paying debt.
http://en.wikipedia.org/wiki/Paradox_of_thrift
This is what happened in Japan. It is inexcusably stupid for Obama to let it happen here.
Not to mention cruel to those who were paying benefits, expecting to receive them when their turn arrived only to find that their share was consumed to fund wealthy tax cuts and bank bailouts.
#1 Posted by Thimbles, CJR on Tue 25 May 2010 at 03:18 PM
http://www.huffingtonpost.com/2009/12/03/bernanke-channels-willie_n_378963.html
"Sen. Jack Reed (D-R.I.) followed Bennett and pointed out that "there's only really two ways you can deflect this deficit, and that's either by cutting expenditures or raising income taxes or other forms of taxes."
Reed asked him if he could think of other ways, but Bernanke returned to entitlement money as the way to balance the budget.
"Willie Sutton robbed banks because that's where the money is, as he put it," Bernanke said. "The money in this case is in entitlements."
There's also money at the very top of the income ladder. Reed asked if Congress would be wise to tax some of it. Full of suggestions when it came to cutting entitlements, Bernanke was suddenly overtaken by a bout of policy modesty.
"Would you take taxes off the table?" Reed asked.
"Those decisions are up to Congress," Bernanke said.
"Well, your predecessor signaled very strongly that the tax cuts in 2000 were appropriate," Reed reminded him.
"I have not done that. I've done my best to leave that authority where it belongs, with the Congress," Bernanke said, just moments after telling Congress to cut entitlement spending."
#2 Posted by Thimbles, CJR on Tue 25 May 2010 at 03:25 PM
Wow, one wonders how Greider (certainly no fan of intellectual consistency if judged by his previous writings) can be so deceptive and lazy when analyzing Social Security/Medicaid/ Medicare’s role in ballooning the federal budget deficit.
The economics: They are screwy, too. Greider argues that, despite the conservative propaganda about Social Security being the cause of the deficit problem, cutting the program “will have no impact on the deficit problem that so stirs public anxiety.”
How could you justify, let alone quote as support of your main argument, something so mind bogglingly stupid? Restructuring (and yes, that includes cuts) Social Security/Medicaid/Medicare will have no impact on the federal deficit? These are three of the five largest line items in federal budget and are projected to be the three largest line items in the federal budget within a decade.
Oh, that’s right, Greider tells us about that massive “surplus” the Social Security trust fund has built up over the past several decades. Problem is they loaned it to congress and in order to pay it back money from the discretionary portion of the budget will have to be used. Its not like its sitting in a bank account somewhere …. Well, I guess some of it sits in my account seeing as that’s what they will likely loot in order to pay off their constituency.
Targeting Social Security is a smokescreen designed to reassure foreign creditors and avoid confronting the true sources of US indebtedness. The politicians might instead address the cost of fighting two wars on borrowed money or the tax cuts for the rich and corporations or the deregulation that led to the recent financial catastrophe and destroyed vast wealth.
In the 2011 budget alone, we will spend $2,165 billion on Social Security/Medicaid/Medicare. That’s more than three times the DOD’s 2011 budget and twice the total cost for all operations in Afghanistan and Iraq to date. I know it’s tough to give up the ghost on long held beliefs that the sole source of our debt is the DOD, but numbers don’t lie.
But those and other sources of deficits involve very powerful interests. Instead of taking them on, the thinking in Washington goes, let’s whack the old folks while they’re not watching.
Oh right, the AARP is as helpless as a kitten when it comes to defending the interests of social security recipients.
Greider urges citizens to mobilize and ask politicians to pledge to keep their hands off Social Security.
Even though its one of the largest contributors to the deficit …. gotcha!
I urge the media—which after all, supply the public with their information on the subject—to start reporting what’s really going on, and delve into the politics, the economics, and, most important, what affect all this cutting will have on those in their thirties, forties, and fifties who will have no other source of retirement income, except Social Security.
Ohhh … ohhh … I know! How about they start saving more! What a novel idea!
The more I read CJR’s dispatches on social security, the more I am reminded of Baghdad Bob proclamations of US forces breaking on the gates of Baghdad while M1’s lob rounds into his briefing room.
Take Thomas Lang’s exercise in head burying from 2005 (one of many for Lang):
It was initially thought that Social Security’s outlays would exceed its revenues in 2018, but now that year has been moved ahead to 2017. That means Social Security’s finances are worsening. In truth, as the report itself notes, it means nothing of the sort.
With prognostications like this, its no wonder Lang doesn’t work here anymore. He must have taken his uncanny clairvoyance to the track, hit a couple of trifectas, and retired early. Trouble is, Social Security had to dip int
#3 Posted by Mike h, CJR on Wed 26 May 2010 at 12:07 PM
Check out the link:
http://en.wikipedia.org/wiki/Military_budget_of_the_United_States
Defense-related expenditure Total Spending "$1.003–$1.223 trillion
Check out the graph:
http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2007.png
Medicaid and Medicare are the cost drivers that are rising out of control because those subsidize the costs of sickest and most uninsurable.
Social Security is a constant cost per person that's fixed to inflation (Oh, whoops, not this year). The only cost driver is the number of people collecting and the crisis that's 30 or so years off could be avoided with an adjustment of the payroll tax percentage, the retirement age requirement, or the payroll tax cap (if you make more than the $106,800 Social Security Wage Base. like a billion bucks, you get taxed 6% of the $106,800 Wage Base, not the billion dollar salary. This could be eliminated).
Defense spending is the largest single area (yeah it's fun to bunch different entitlements all up like you do, but it's not honest) and it's an area with incredible amounts of waste. It eats half the discretionary budget (for things like schools and science and such) and it's not self funded like social security is with the payroll tax.
But it's funny how you have all these problems now, when 10 years ago you had a budget surplus that Greenspan warned posed a threat to the private economy unless severe tax cuts were enacted.
And it's funny how the conservative solution 5 years ago was to create a system of private accounts that would cost 2 trillion new dollars to divert social security revenues to stock market accounts while paying out benefits.
And it's funny how the conservative president would start 2 unfunded cost drivers like Iraq and Afghanistan while cutting taxes.
I thought Cheney said deficits don't matter.
Perhaps conservatives should shut the hell up until they have a track record of fixing problems instead of just making them. Just a thought.
#4 Posted by Thimbles, CJR on Wed 26 May 2010 at 01:04 PM
The Social Security crisis aint 30 years off. Every dime of the “Trust Fund” IUO’s that the Social Security administration has to cash in comes directly out of general revenue. And thye had to start doing that this year, not 2018.
Removing the payroll tax cap is an interesting idea and one that is not without precedent. As is, less than half the population pays for all federal discretionary budget items, so it would seem appropriate to shift an increasingly larger burden of our ever growing welfare state’s expenses to a smaller and smaller group of taxpayers. After all when you rob 1 Paul to pay 10 Peters, you bet your ass that Peter will show up every other November to reward you.
But that idea doesn’t seem to jive with Greider original thesis where he described FICA taxes as “forced savings”. That would mean anyone who earns above the median income would see a negative rate of return in these “forced savings” accounts … which doesn’t really sound like a savings account to me. Sounds more like charity.
Defense spending is the largest single area (yeah it's fun to bunch different entitlements all up like you do, but it's not honest)
Isn’t that what you just did when you threw the @1,223 billion number out there from Wikipedia? Consistency isn’t your strong suit, is it? Are you angling for job here at CJR, your mix of politics and analytical skills would seem to suit management here.
Just a thought.
Anhoo, you should dig a bit deeper than the like of the disgruntled Paul O’Niel for your quote mining. Regardless of whether or not the quote was accurate (or accurate but false as the press like to use em), it seems that people like Paul Krugman and John Kenneth Galbraith are on board with this philosophy. And why shouldn’t they be? After all, there really are no differences between the $300 billion deficits we were running 5 years ago and the $2 trillion deficits we are running now. Just another decimal place really.
It’s not like printing that much money is bad for an economy. Hell, look at Zimbabwe! They are a model of wealth and prosperity.
#5 Posted by Mike H, CJR on Wed 26 May 2010 at 01:59 PM
"Isn’t that what you just did when you threw the @1,223 billion number out there from Wikipedia? "
No, it isn't. If you want to break down social security into it's component programs and administrative costs and compare the tabs, that's perfectly fine.
Same with medicare and medicaid.
What you did is you bundled three different sectors, added up their fractions of the budget, and compared them to one's.
I have no problems with my consistency.
#6 Posted by Thimbles, CJR on Wed 26 May 2010 at 02:57 PM
Now that I have a little more time:
"Removing the payroll tax cap is an interesting idea and one that is not without precedent. As is, less than half the population pays for all federal discretionary budget items, so it would seem appropriate to shift an increasingly larger burden of our ever growing welfare state’s expenses to a smaller and smaller group of taxpayers. After all when you rob 1 Paul to pay 10 Peters, you bet your ass that Peter will show up every other November to reward you."
Who's the Paul and who's the Peters? Everybody gets old, not everybody has a secure pension - especially after the money boys raided them most everybody are going to need every penny of their social security and, since they paid for it, they should get it. What seems like charity is cutting capital gains taxes, cutting taxes for the wealthy, and starting two unfunded wars which are paid for with borrowed money, some from Asia, some from social security.
You see, Real Americans don't mind charity when it's giving corporations retroactive rebates on the Alternative Minimum Tax or unfunded cuts to taxes on higher income brackets and their capital gains. And when the IRS is underfunded and can only go after low income tax cheats because the upper income cheats, although ubiquitous, are expensive to pursue, that's fine and dandy too. Patriotism means cheering for things, not paying for them.
No, Real Americans hate charity when it goes to poor people. For most people, FICA taxes are forced savings and a heavy load upon their consumer budget, considering many of them have negative savings to begin with.
For people making a hundred thousand and above? The percentage equates to more money taken, but much less reduction in quality of life. Taking 6% of a $45,000 dollar family's income involves a lot more pain than taking 6% of a $500,000 dollar banker's income. For those above the Base Wage, social security payment is an obligation to maintain the fiscal health and security of the country that has blessed them and the people they share it with in their non-productive years.
And the thing about social security is that it ends up being a fiscal stimulus. Old people live and buy things in America, mostly in their towns. Social Security circulates capital. Defense spending is a waste. It stimulates economies abroad. It stimulates the defense contract industry to produce 10 billion dollars a year in unworking missile shield waste and equipment to confront the empires of 40 years ago. Maybe you can make the argument that the recipients of military training and subsidized education contribute value to a high skilled labor force, but there are more efficient ways to do this without tossing money at 12 billion dollar Gerald Ford Super Carriers while forcing old people who've lost their house values - if not their houses, their 401k's, and their company pensions to starve by cutting their social security.
"Anhoo, you should dig a bit deeper than the like of the disgruntled Paul O’Niel for your quote mining. Regardless of whether or not the quote was accurate (or accurate but false as the press like to use em)"...it was sure proven true in his conduct. Cutting taxes in the midst of 2 wars, pushing an unfunded prescription drug bill that banned the government from negotiating prices, dumping billions of dollars by the planeload into Iraq and Haliburton, etc.. that was your conservatives doing. And if they had their way, they would have added 4 trillion over two decades to the debt as a result of their social security privatization bid. They took a surplus and, in the midst of a boom, they turned it into record deficits while letting the economy blow up through overleveraging. Deficits didn't matter.
And now they do, because the economy is on the verge of free fall. In that situation you don't run deficits because you want to, you run them because nobody else can. If you don't spend the money, nobod
#7 Posted by Thimbles, CJR on Wed 26 May 2010 at 09:06 PM
Alan Grayson Honors The Dead http://www.youtube.com/watch?v=TV9TRoYMtjs&feature=player_embedded
I want to commend all of you for working so hard and being so strong at helping the whitehouse and congress begin to address our U.S. and Global healthcare crisis. You have been AWESOME! my fellow Americans and peoples of the World. America and the World is better and safer for it. My greatest pride is the knowledge that I am one of you. And that you really get it. You really understand the importance of it all.
There are some potentially very good things in the healthcare legislation. Especially with the reconciliation fix’s. The Democrats, Bernie Sanders and the Whitehouse did a GREAT! job of fighting to produce the best healthcare legislation that they could. They have earned all our strong support. And we should give it to them.
But it was your relentless pressure and hard work that made the difference. Whatever good comes from this healthcare legislation, America and the peoples of the World will have each of you to thank. You were smart, creative, courageous and relentless. You fought together for the best legislation possible. And when you had to, you fought alone. No matter who stumbled and fell you continued to push and forge ahead. Fighting for the lives and health of the American people and the World. YOU SHOULD BE PROUD OF YOUR-SELVES :-)
It may come to pass that future generations will look back on us and say that we were ALL Americas Greatest Generations. And that healthcare reform was our finest hour. You should be proud of our leaders President Obama, Speaker Pelosi, Majority Leader Reid and the many other Democratic and independent fighters for the people in congress. They proved them-self worthy of the leadership of a GREAT! PEOPLE.
But we are not done yet. This was just the beginning of healthcare reform, not the end. WE THE PEOPLE OF THE UNITED STATES, ARE NOT! divided on healthcare legislation. The vast majority of you have been consistently crystal clear that this legislation does not go far enough. You want a strong Government-run Public Option CHOICE!! available to everyone on day one. And you want it NOW!
YOU MUST NOT ALLOW AN INDIVIDUAL MANDATE TO STAND WITHOUT A STRONG GOVERNMENT-RUN PUBLIC OPTION CHOICE! AVAILABLE TO EVERYONE.
WE THE PEOPLE have been crystal clear that we want an end to dependence on for-profit healthcare and the for-profit proxies called private for non-profit healthcare. The American people want the CHOICE! of a strong Government-run Public Option to replace their need or dependence on healthcare providers whose primary motivation is profit. Rather than providing the highest quality, easiest accessible and most affordable medically necessary healthcare possible. This is what the rest of the developed World has. And the American people want it too. They want healthcare ASSURANCE! Not, for-profit health insurance. And they want it NOW!
Now is the time to continue the push for a strong Government-run Public Option CHOICE! available to everyone that wants it on day one. Rationally it’s clear what we have to do to get this done. SUPPORT THE DEMOCRATS that supported you with a Public Option choice, and REMOVE as many republicans as you can. Not one republican in congress was willing to step across the isle to support a strong Government-run Public Option CHOICE!! available to everyone on day one. NOT ONE! Let no candidate prevail this November that does not support a Strong Government-run Public Option.
47,000 AMERICANS die each year from lack of healthcare. 120,000 die from treatable illness that don’t die in other developed countries. Hundreds of thousands of you are dieing from medical accidents in a rush to profit. And Millions of your are injured. Millions more are driven into bankruptcy. All for the privilege of paying
#8 Posted by jacksmith, CJR on Thu 27 May 2010 at 10:50 AM
Keynesian stimulus didn’t work during the last great depression and it aint working today.
You can continue to stick your head in the sand and scream “there’s nothing wrong with social security/Medicare/Medicaid/entitlements and it’s our bloated military budget that’s solely responsible for our deficits”. Spending on entitlements is expected to eat up more and more revenue every year. That’s just a fact. The defense budget will wind down as the wars in Afghanistan and Iraq do.
Funny thing about those “unfunded tax cuts” you mentioned, the CBO has figured the countries next 10 year budget deficits at about $8.5 trillion. This calculation was made assuming that the Bush tax cuts will expire this year. So where is this additional $8.5 trillion going? Its not going to tax cuts …. and its not going to the DOD (whose entire budget for the next 10 years is significantly less than that number) … hmmm I wonder what could be accounting for all these additional deficits …. Could it be with social security/Medicare/Medicaid/entitlements! They are the fastest areas of growth in the budget and the only ones we have no control over.
As far as “Bush’s deficits”, he did enter into office with a budget surplus but he also entered into office with a recession (which began in Q1 of 2001) with the end of the dot com boom and there was that little tiny event more commonly referred to as 9/11. Certainly the prescription drug legislation added a large chink to it but baby, that aint nothing when compared to the budget buster known as “Obamacare”!
#9 Posted by Mike H, CJR on Thu 27 May 2010 at 03:24 PM
"Keynesian stimulus didn’t work during the last great depression and it aint working today."
Oh goody. Another Amity Shales dittohead. I'm sorry, I can't hear you over the sounds of the economy post WW2.
PS. The stimulus that Obama is doing is weak, tax cut heavy, and conservative. Larry Summers hates infrastructure and that's what needs to be built right now. But yes, Keynes alone is not enough to right the economy. The banks also need to be purified, not kept in the hands of frauds. You can't sustain an economy while thieves at the top keep skimming off the fattest portions for themselves.
I'll get to the rest later but for now I'll just stand beside you and admire the beautiful burning strawman.
#10 Posted by Thimbles, CJR on Thu 27 May 2010 at 07:06 PM
"You can continue to stick your head in the sand and scream “there’s nothing wrong with social security/Medicare/Medicaid/entitlements"
Ahh. What a beautiful straw man. Here's the facts, social security is a funded program. Medicare and medicaid are also funded, but the medical pharmaceutical industries is taking ever increasing slices for itself to meet the demands of investors. Their costs are running well above inflation for reasons I've often gone into, and solutions to these cost driving problems have been blocked repeatedly. By who? Conservatives. The ones who pushed that unfunded pharma bill which increased the debt by 600 billion over 10 years and didn't have cost controls. Funny how conservatives never talk about that.
"and it’s our bloated military budget that’s solely responsible for our deficits”.
You said yourself that social security had a trust fund that had been borrowed away by congress. To pay for what?
"Spending on entitlements is expected to eat up more and more revenue every year. That’s just a fact. The defense budget will wind down as the wars in Afghanistan and Iraq do."
Yes spending on entitlements will rise if you don't use your power as a purchaser to negotiate reduced rates. I wonder why the government doesn't do that...
And there was a giant surplus built up by Clinton to help deal with the baby boomer load on the social security system, but somehow that disappeared. I wonder how that happened...
And people always claim there will be a wind down of defense expenses once peace time arises, but that never really seems to happen. I wonder why that is.
"Funny thing about those “unfunded tax cuts” you mentioned, the CBO has figured the countries next 10 year budget deficits at about $8.5 trillion. This calculation was made assuming that the Bush tax cuts will expire this year. So where is this additional $8.5 trillion going? Its not going to tax cuts …. and its not going to the DOD (whose entire budget for the next 10 years is significantly less than that number)"
Yeah, you've got a demographic problem. There's three solutions to a demographic problem:
1) you can use government power to restrict the cost per person through systematic changes. Single payer health care is an example of such a solution.
2) you can accumulate reserves for when the demographic problem starts to manifest. Whoops. You elected a republican, Goodbye reserves.
3) you can kill the demographic prematurely. This can either be done by direct extermination or indirect starvation of the benefits they live on.
"As far as “Bush’s deficits”, he did enter into office with a budget surplus but he also entered into office with a recession (which began in Q1 of 2001) with the end of the dot com boom and there was that little tiny event more commonly referred to as 9/11."
Oh cute. So Obama is to blame for the moving decimal points now, but the recession and 9-11 were to blame for the moving negative sign then.
Consistent.
"Certainly the prescription drug legislation added a large chink to it but baby, that aint nothing when compared to the budget buster known as “Obamacare”!"
The prescription drug benefit added about 600 billion, Obamacare adds about 800, according to the CBO on page 22 of this doc.
http://www.cbo.gov/ftpdocs/113xx/doc11379/Manager'sAmendmenttoReconciliationProposal.pdf
The effect of this 788 billion spent is a reduction in the deficit (compared to the cost without the bill) by about 100 billion, page 19 of the doc.
This is the problem with conservatives, they complain about fiscal this and fiscal that, but talk about raising revenues or regulation and they become anarchists.
#11 Posted by Thimbles, CJR on Thu 27 May 2010 at 09:35 PM
The stimulus that Obama is doing is weak, tax cut heavy, and conservative. Larry Summers hates infrastructure and that's what needs to be built right now.
Because it worked so well in Japan over the past 20 years … and the United States in the 1930’s for that matter.
The banks also need to be purified, not kept in the hands of frauds.
And how does one purify a bank? I say let them liquidate and be sold to stronger institutions that didn’t make the same mistakes. Not all US banks made terrible decisions and are in dire financial shape. Would you propose we nationalize them, because if you go there ….
Here's the facts,
Oh goodie!
social security is a funded program.
Funded with IOU’s.
Medicare and medicaid are also funded,
Also funded via IOU’s … but go on.
Their costs are running well above inflation for reasons I've often gone into, and solutions to these cost driving problems have been blocked repeatedly.
The problem is people are living longer and using more medical resources per capita to do so, the simple solution (one alluded to by many) is, for the lack of a better term “death panels”, or rationing or prioritizing if you prefer euphemisms. Better hope gramps don’t need that mitral valve replaced.
You said yourself that social security had a trust fund that had been borrowed away by congress. To pay for what?
A more accurate way of saying that would be the trust fund “loaned” that money to the fed. In fact they are mandated to loan that money. It’s the law. What else are they going to do with the money, put it in a bank?
Yes spending on entitlements will rise if you don't use your power as a purchaser to negotiate reduced rates. I wonder why the government doesn't do that...
They will rise regardless because demographics are driving it. No amount of negotiating will change that, reduce it a bit to be sure, but not nearly enough.
And there was a giant surplus built up by Clinton to help deal with the baby boomer load on the social security system, but somehow that disappeared. I wonder how that happened...
9/11, a recession, and fiscal stimulus in the way of tax cuts, unrealistic CBO projections on future economic activity. In case you were wondering.
And people always claim there will be a wind down of defense expenses once peace time arises, but that never really seems to happen. I wonder why that is.
Are you really saying that there was no reduction in defense spending after the Cold War? Facts don’t seem to be your strong suit today.
you can use government power to restrict the cost per person through systematic changes. Single payer health care is an example of such a solution.
Death panels, yes I know, you already mentioned that one.
you can accumulate reserves for when the demographic problem starts to manifest. Whoops. You elected a republican, Goodbye reserves.
This demographic train wreck began in 50’s. Regan actually extended the life of Social security in 1984 keeping it solvent decades longer than it would have been otherwise. Whoops, guess you forgot about that.
you can kill the demographic prematurely. This can either be done by direct extermination or indirect starvation of the benefits they live on.
Yes, we all remember the “before time” when American retirees were placed on Icebergs and floated off to sea or sent to Carousel. Because we all know that a 10-20% cut in SS income and increasing the retirement age inevitably leads to a recreation of a Holdomor like famine for the elderly.
Oh cute. So Obama is to blame for the moving decimal points now, but the recession and 9-11 were to blame for the moving negative sign then.
I actually applaud the president f
#12 Posted by Mike H, CJR on Fri 28 May 2010 at 12:00 PM
It's my bedtime so I'll drop a couple of lines now and finish up later maybe.
"And how does one purify a bank? I say let them liquidate and be sold to stronger institutions that didn’t make the same mistakes. Not all US banks made terrible decisions and are in dire financial shape. Would you propose we nationalize them, because if you go there …."
No. No. No. You just... where to start...
Okay. How do you liquidate a bank. Oh, that's right! The bank goes under, the FDIC insures deposits, the government separates bad assets from good ones, clears out the shareholders and culpable officers, and sells the healthy bank with good assets back to the market.
Financial institutions don't just liquidate because when they do they undermine market confidence and the whole market tumbles. People get afraid to deposit money. Banks get afraid to make loans. Everyone holds tight to whatever possessions are in reach.
The big wall street banks don't have an FDIC. They do have deposits. They got caught with too many bad assets and bad bets. One way to handle this problem was the Swedish way.
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html
Take the failed over, fix the books, clear out the crooks and the stupid, claim the upside when the market recovers.
The other way is the Japanese way. Keep the banks operating whatever way you can, through cash infusions, low interest borrowing, changing accounting rules, whatever... and wait for the bad assets to recover their bubble high values, because once they do, the problem just goes away. And if that takes a decade or more, leaving assets stagnant and depreciating for that time, so be it.
http://www.huffingtonpost.com/diane-tucker/adam-posen-one-big-lesson_b_180557.html
Except there's a problem. You get a race condition. Banks won't lend while the assets on their balance sheet are worthless. Consumers can't buy while they can't get loans. Asset values won't rise while consumers can't buy. The assets will never recover their bubble values and as long as bank balance sheet health is dependent on asset recovery, neither will the banks.
You need government to fix this condition. Infrastructure spending helps, bank repair and solvency helps more. I'm afraid you have no idea what you are talking about, Amity.
#13 Posted by Thimbles, CJR on Fri 28 May 2010 at 03:31 PM
Jesus. We're all Hoover now.
http://krugman.blogs.nytimes.com/2010/06/06/lost-decade-here-we-come/
"The deficit hawks have taken over the G20:
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.
These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.
It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US...
The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound."
From an indirect post at Digby:
http://www.eurotrib.com/story/2010/6/6/1482/55267
"After thinking about it for a bit, I'm not sure the same phenomenon we see here isn't happening internationally. It's an article of faith among financial elites across the planet that the welfare state is an abomination and this is a global opportunity to end it. Each culture will deal with it slightly differently --- riots in Greece, marches in France, blog posts in America. But in the end, the result, short of revolution, will be similar everywhere --- the post-war welfare state will be weakened or destroyed. The left is barely relevant anywhere anymore and they simply do not fear any kind of serious populist uprising. I'm not suggesting conspiracy. I think it's more of a natural result of ideological capture."
I don't want to use Naomi Klein's/Jeffery Sachs' words, but the financial crisis is being used to administer global shock treatment. We're going to be "cured" of the welfare state, Europe and America.
This is truly horrific economics at this time.
#14 Posted by Thimbles, CJR on Sun 6 Jun 2010 at 06:53 PM