Month: November 2011

Castrated servants of Royalty

by digby

The right leaning, safety net slashing Simpson-Bowles consensus of two is being revised. Rightwards:

“As I have thought about it…under the Affordable Health Care Act we provide subsidies for people who have really chronic illnesses and people who have limited incomes so they can afford health care insurance in the private sector,” Bowles told the panel during an exchange with Sen. John Kerry (D-MA). “And that didn’t exist before the Affordable Health Care Act. That means that people 65, 66, 67 will still be able to get health care insurance. So as I think about it I could support raising the health care age for Medicare since we have other coverage available under the Affordable Health Care Act.”

In private budget negotiations earlier this year with House Speaker John Boehner (R-OH), President Obama entertained the same idea — a slow increase in the Medicare retirement age — provided Boehner find votes for over $1 trillion in new revenues. The discussions quickly fell apart.

The proposal infuriates progressives, and other defenders of single-payer Medicare, who note that the proposal is regressive — hitting elderly minorities and poor people who have lower life expectancies hardest — and shifts costs on to seniors, states, employers, and other federal programs. And it doesn’t save much money.

Golly, I sure do hope they improve those subsidies because it’s going to be damned expensive for older people in their 60s already, many of whom barely hang on until Medicare kicks in. (And that’s assuming the subsidies aren’t “reformed” the wrong way as we keep looking for more “balanced approaches” to ensuring that rich people don’t have to pay taxes.)

I’m sure the ACA Panacea faction will back it though. After all, it shows such faith in a program they love that doesn’t yet exist.

Here’s the data:

The principal study of the effects of raising the Medicare eligibility age, by the Kaiser Family Foundation, estimates that its increased state and private-sector costs would be twice as large as the net federal savings. If the proposal were fully in effect in 2014, Kaiser estimates, it would generate $5.7 billion in net federal savings but $11.4 billion in higher health care costs to individuals, employers, and states.

The fundamental purpose of deficit reduction is to strengthen the economy over the long term. The relentless rise in health care costs is the key driver of projected long-term deficits that policy­makers must address. But reducing federal health care costs by raising state and private-sector health care costs even more makes little sense, as it only increases the burden that health care costs place on the economy as a whole. The goal should be to slow the growth of health care costs system-wide, while extending coverage to all Americans. This proposal does just the opposite on both fronts — raising costs system-wide and increasing the ranks of the uninsured.

The Kaiser report found that if policymakers raised the Medicare eligibility age to 67:

65- and 66-year-olds would face higher out-of-pocket health care costs, on average. Two-thirds of this group — 3.3 million people — would face an average of $2,200 more each year in premiums and cost-sharing charges.

State Medicaid costs would rise as some of those who lost Medicare coverage (those with the lowest incomes) would obtain coverage through Medicaid instead.

Some people contend that policymakers should raise Medicare’s eligibility age to 67 to match the scheduled increase in Social Security’s “full retirement age” to 67. This argument may seem plausible at first blush. But in reality, it reflects a misunderstanding of how Social Security works.

Most Social Security beneficiaries do not begin drawing benefits at Social Security’s “full retirement age.” To the contrary, about half of Social Security retirement beneficiaries begin to draw benefits at age 62, and two-thirds begin to draw benefits before 65.a

If a beneficiary does not claim benefits at 62, his or her monthly benefit is increased on an actuarial basis for each month that the beneficiary delays claiming, up through age 70, so that the expected lifetime value of benefits remains about the same. Indeed, Social Security’s “full retirement age” (some­times called the “normal retirement age”), now 66 and scheduled to increase to 67, has become a misnomer. It is not the age at which most retired workers claim benefits, nor is it the age of claiming that produces the highest monthly benefit.

Raising the age of eligibility for Medicare thus would not better align Medicare and Social Security. The programs are not currently aligned, since there is a lag of up to three years between when most people claim Social Security and when they become eligible for Medicare. And raising the Medicare eligibility age would push the two programs further out of alignment, rather than bringing them closer together.
a Owen Haaga and Richard W. Johnson, “Social Security Claiming and the Business Cycle,” paper prepared for the annual conference of the Retirement Research Consortium, August 4, 2011.

Employer costs would rise as more 65- and 66-year-olds whose employers offered coverage to their retirees received primary coverage through their employer rather than Medicare.

All Medicare beneficiaries would pay higher premiums because the removal of 65- and 66-year-olds, who are typically healthier than the overall Medicare beneficiary population, would leave the Medicare beneficiary population costlier, on average, to cover.

People under age 65 who buy coverage through the new health insurance exchanges would face higher premiums to help cover the cost of insuring the many 65- and 66-year-olds who would enter the exchanges; the 65- and 66-year-olds would be less healthy, and more costly to cover, on average, than other people who bought coverage through the exchanges.

I’d imagine that an additional $2,200 a year doesn’t sound like much to people who are making these decisions. But to many of the people who have to pay them it’s more than they have. They’ll forego paying it, take their chances on the fine and put off needed care until they qualify for Medicare. A whole lot of people are already doing this at the age of 63 and 64 and will probably continue to under the ACA since the premiums will still be high and the subsidies will not be enough.

On a political level, I just don’t know what to say. If Democrats think they’re going to be rewarded for being the “grown-ups” who fixed the deficit by cutting Medicare, I think they’re dreaming.Certainly, giving up the issue as a weapon against the Republicans seems downright daft.

It’s possible that the Democrats would vote against this en masse. Certainly, most Democratic House members are saying they will have none of it (at the moment, anyway.) I suspect they’ve heard quite a bit from their constituents on this and are very leery of signing on to anything that cuts benefits. (Speaking of which — why doesn’t the confidence fairy care if the public is hoarding its money in terror of being out on the sidewalk when they’re old?)

Meanwhile, the Village is living in Bizarroworld:

To fall short of the $1.2 trillion minimum goal necessary to avoid automatic cuts would come as an overwhelming letdown that would likely roil the stock market as well as the political landscape.

Wall Street analysts warn of the likelihood of another credit downgrade, and pollsters warn of a backlash from independent voters.

“All of them collectively will bear the success or failure,” former Sen. Byron Dorgan (D-N.D.) said of the panel’s 12 members. “I suspect there’s a lot pressure on members of this supercommittee.”

Dorgan said finding enough in spending cuts and new revenues to avert the automatic cuts of the sequestration process would mark “a small signal for success.”

The panel’s members are confronting risk on all sides. For Senate freshmen like Pat Toomey (R-Pa.) and Rob Portman (R-Ohio), and ambitious House Democrats like Chris Van Hollen (Md.) and Xavier Becerra (Calif.), signing onto any agreement could alienate segments of their party’s base and threaten their advancement in leadership.

“There are worse things than no deal,” said Rep. Jan Schakowsky (D-Ill.), a House liberal who served on the Simpson-Bowles deficit commission and who has warned against slashing entitlement benefits. “A bad deal is worse than no deal.”

Yet in spite of warnings from liberals and conservatives, voices in the political center insist that no outcome is worse than failure.

“The consequences for failure are very significant,” Dorgan said. “If it’s failure, it exacerbates the feelings people have about the country and Congress not being able to right the ship.”

Rep. Steven LaTourette (R-Ohio) said, “I’m sure they’re all trying their hardest, but the risks to the country are pretty significant if they don’t produce something. … It will be seen as a sign we can’t get anything done.”

Speaker John Boehner (R-Ohio) has acknowledged the pressure on the members of the supercommittee. During a press conference last week, he said the panel’s assignment was “as big a task as I’ve seen since I’ve been here.”

Senate Minority Leader Mitch McConnell (R-Ky.) in September said, “Failure is not an option.”

CNN aired a graphic last week suggesting the panel’s members would be viewed as eunuchs — the castrated servants of royalty — if they could not produce an accord.

Think about that for a minute.

The polls all say that the people do not want these safety net programs cut and are far, far more concerned about the current economic crisis — which requires that the government spend more money. This Super Committee is tasked with slashing the hell out of the budget in order to assuage a bunch of wealthy debt fetishists who are spending vast amounts of cash to make that happen. Are they suggesting that the people are the Royalty and the wealthy string pullers who are demanding austerity are the peasants? Or is it, as I suspect, that because “everyone agrees” that entitlements must be slashed, that’s no longer considered controversial — it’s the resistance to a token tax hikes of millionaires that are provoking this Village “populism.” (What a beautiful scam …)

As for whether these politicians will be “punished”, I honestly don’t think anyone will care. The financial world has much bigger fish to fry at the moment and the Tea Partiers already had their moment during the debt crisis. The zeitgeist has shifted and it seems that the only one who’s noticed is the President (who nonetheless promises to sign whatever atrocity these “peasants” come up with.) The Village is stuck in a delusionary vortex in which the people will punish them in the next election if they fail to give them the austerity they have clearly stated they do not want.

The gravest danger at the moment is that the Republicans see this moment for what it is as take yes for an answer. Pray for gridlock.

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Colbert and Ketchup Part II

Greece

by digby

For those of us who find the Greece/Euro situation a little bit mystifying, Kevin Drum has provided a very simple explanation in the form of a Q&A. He starts off explaining that the “deal” that’s being offered to Greece basically says “you’re screwed”, consigning them to many, many years of very harsh austerity and the people don’t like it. (The kind of harsh austerity that can lead to an extremely unstable political environment, by the way.)It goes on from there:

Well, them’s the breaks.

But it puts Greece into a death spiral. They can’t pay their debts, so they cut back, which hurts their economy, which makes them even broker, so they cut back some more, rinse and repeat. There’s virtually no hope that they’ll recover anytime in the near future. It’s just endless pain. What they need is total debt forgiveness and lots of aid going forward.

That doesn’t sound like a very attractive option for the rest of Europe.

No, it’s not.So maybe they should just let Greece default and wash their hands of them.

Here’s the thing, though: Greek debt is largely held by German banks that made the loans. [See update below.] If Greece has been irresponsible, so were the German banks that happily loaned out the money. So if Greece defaults, the banks go kablooey. But they’re too big to fail, which means the German government would be forced to bail them out. And guess where the bailout money comes from? Tax dollars.

This means that German taxpayers have a bleak choice. They can shovel lots of money to Greece to keep them from defaulting, or they can refuse, and then shovel lots of money into German banks to keep them from collapsing. Either way, German taxpayers are going to foot the bill. They just haven’t quite accepted this in their gut yet, and it’s hard to blame them. They’re pretty badly screwed no matter what.

Hmmm. Given that choice, they might decide they’d rather give their money to German banks than to Greek civil servants. What happens then?

Greece defaults. And that almost certainly means that Greece exits the euro.

Why?

It’s the growth thing again. If Greece defaults, nobody will loan them any money. That means huge cutbacks, which means the economy will tank, which means even more cutbacks, etc. The traditional way out of this spiral is a massive devaluation of your currency. But Greece doesn’t have a currency. It has the euro.

So if they want their economy to grow again, they have to (a) default, (b) exit the euro and re-adopt the drachma, and (c) devalue the drachma. This will cause massive amounts of pain, but it will also make Greek exports super cheap, which will eventually revive their economy.

So why not just let that happen?

It’s just too catastrophic to consider. German banks, of course, would collapse and have to be bailed out. Ditto for banks in other countries that have lots of exposure to Greek debt. But that’s not the worst of it. If Greece exits the euro, it will become terrifyingly obvious that other weak countries might exit too. Portugal, Spain, and Italy are the obvious candidates. Investors, spooked at the thought of their money being stuck in a country that might exit the euro and devalue all its bank deposits, would start huge runs on banks in those countries. The ECB would have to intervene and provide liquidity without limit. It would be a disaster.

So exiting the euro can’t be allowed?

Right.

But if there’s no exit, there’s no devaluation, and Greece is pretty much screwed forever.

Right.

So who wins?

It depends on who blinks. Exiting the euro would be no picnic for Greece. But they could decide it’s better than endless indenture, and threaten exit in order to get a better deal from the Germans. Then the Germans have to decide whether to call their bluff.

Wow.

Exactly. Wow. Everyone knows that somebody’s going to lose a huge pile of money over this. What’s really happening right now is a very high-stakes negotiation to figure out just how the losses are going to be parceled out. Stay tuned.

There’s more at the link.

For a similar analysis of the fallout, here’s Mohamed El Erian in Foreign Policy.

Yikes.
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More Civil Liberties Erosion
by David Atkins

I often find myself caught between the Obama Administration’s critics and its defenders, labeled an Obamabot by one group and an Emoprog by the other–often for the exact same post. This one is likely to be no different.

One of the cases where I have defended the Administration most vigorously is the Guantanamo prison issue. Critics have disparaged Obama for breaking his promise to close Guantanamo, while ignoring the fact that the Administration did try to do it, but ran up against a Congress that overwhelmingly refused to try detainees in the United States. That left the Administration with three options: 1) maintain Gitmo as is; 2) free everyone at Gitmo; or 3) make a political show of closing Gitmo, while finding a different prison in the same legal no-man’s land. The Administration wisely chose against the cop-out the third option would have been. The second option, while pleasing to those most concerned with civil liberties, is not at all satisfactory in that while many at Gitmo were and doubtless are innocent and should never have been there in the first place, a great many of them are very dangerous people who should receive a fair trial for their alleged jihadist crimes, but should under no circumstances be released to rejoin the global jihad movement. None of which highlights the political problem for the Administration in simply releasing the prisoners, which would guarantee the President’s electoral defeat in 2012. The blame for the current situation lies not with the President, but with the gutless Congress and a right-wing media willing to fearmonger regardless the cost.

But it’s very, very hard for me to continue defending the Administration when I read stories like this:

Lawyers representing detainees at Guantanamo Bay, Cuba, say authorities at the military base have begun reading privileged attorney-client communication — in a sharp break with past practice.

Legal mail is the principal means of communication between detainees charged in military commissions and their military defense attorneys,who are based in the Washington area.

In a letter Tuesday, nine of the attorneys wrote to William K. Lietzau, deputy assistant secretary of defense for rule of law and detainee policy, to object to authorities reading their mail to clients at the detention center. They asked that the commander at Guantanamo Bay be ordered to “cease and desist the seizure, opening, translating, reading and reviewing of attorney-client privileged communications.”

A military official, who spoke on the condition of anonymity because he was not authorized to discuss the issue publicly, said that privileged mail between attorneys and their clients has always been clearly marked as such.

Previously, military personnel at Guantanamo Bay opened the mail in the presence of detainees — thus ensuring there was no contraband in the envelopes — and handed it to them without reading the contents.

Last month, the official said, Rear Adm. David B. Woods, the new commander at the prison, changed the policy and insisted on checking that the communication was relevant to commission cases.

These men have been held captive without a trial or the decent treatment we give even our worst serial killers, for many years now without end. Al Qaeda is in worldwide retreat. It is madness to be abusing what few human rights remain to these prisoners by essentially revoking attorney-client privilege, if for no other reason than the fact that if these people ever do get the fair trial they deserve, abusing their Constitutional rights will make it harder to secure a conviction.

If the Administration truly wants us to believe that it wishes to close Guantanamo and see justice done at long last in the case of these detainees, it could start by not violating the few Constitutional rights they have left.

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The good ones

Ann Coulter and the good blacks:

Hannity wondered why liberals were, in his words, so “threatened” by Cain. Coulter was blunt in her response.

“Our blacks are so much better than their blacks,” she said, speaking of Democrats. “To become a black Republican, you don’t just roll into it. You’re not going with the flow…and that’s why we have very impressive blacks in the Republican party.”

Democratic African Americans are just lazy I guess.

Real America and the occupation

by digby

I know that this is an unpopular observation at the moment, but it’s still true:

I keep having this feeling that liberals believe that the ground has shifted so substantially that these old fault lines are no longer operative. It’s possible, but it’s not showing up yet. People are very attached to their tribal identities and it’s going to be very hard to shake them loose.

FWIW, I have mixed feelings about this. I think it’s good for OWS to address the politicians. But the one thing I think shouldn’t be messed with is the voting process itself. After all, we’re all appalled at the conservative program to restrict the vote around the country and standing in the way of average voters exercising the franchise seems like a dicey approach.

But I could be wrong. A lot of people think this is going to be a very exciting action that will draw out a strong response and advance the discussion. So, I guess we’ll see. Iowa is right in the heart of Real America and ought to provide some insight.

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Cheaters Never Prosper?

by digby

Matt Taibbi had a conversation with Will Cain, who claimed that the Occupy Wall Street people are just jealous of the Masters of the Universe. Taibbi disagreed:

“I find the one thing [the protesters] have in common revolves around the human emotions of envy and entitlement,” he said. “What you have is more than what I have, and I’m not happy with my situation.”

Cain seems like a nice enough guy, but I nearly blew my stack when I heard this. When you take into consideration all the theft and fraud and market manipulation and other evil shit Wall Street bankers have been guilty of in the last ten-fifteen years, you have to have balls like church bells to trot out a propaganda line that says the protesters are just jealous of their hard-earned money.

Think about it: there have always been rich and poor people in America, so if this is about jealousy, why the protests now? The idea that masses of people suddenly discovered a deep-seated animus/envy toward the rich – after keeping it strategically hidden for decades – is crazy.

Where was all that class hatred in the Reagan years, when openly dumping on the poor became fashionable? Where was it in the last two decades, when unions disappeared and CEO pay relative to median incomes started to triple and quadruple?

The answer is, it was never there. If anything, just the opposite has been true. Americans for the most part love the rich, even the obnoxious rich. And in recent years, the harder things got, the more we’ve obsessed over the wealth dream. As unemployment skyrocketed, people tuned in in droves to gawk at Evrémonde-heiresses like Paris Hilton, or watch bullies like Donald Trump fire people on TV.

Moreover, the worse the economy got, the more being a millionaire or a billionaire somehow became a qualification for high office, as people flocked to voting booths to support politicians with names like Bloomberg and Rockefeller and Corzine, names that to voters symbolized success and expertise at a time when few people seemed to have answers. At last count, there were 245 millionaires in congress, including 66 in the Senate.

And we hate the rich? Come on. Success is the national religion, and almost everyone is a believer. Americans love winners. But that’s just the problem. These guys on Wall Street are not winning – they’re cheating. And as much as we love the self-made success story, we hate the cheater that much more.

In this country, we cheer for people who hit their own home runs – not shortcut-chasing juicers like Bonds and McGwire, Blankfein and Dimon.

That’s why it’s so obnoxious when people say the protesters are just sore losers who are jealous of these smart guys in suits who beat them at the game of life. This isn’t disappointment at having lost. It’s anger because those other guys didn’t really win. And people now want the score overturned.

I hope he’s right. Certainly, a civilized society depends upon it. But I’ll never forget the conversation I had with a smart neighbor after Bush vs Gore was decided. I wondered why there wasn’t more of an outcry and he said, “Americans respect people who will stop at nothing to get what they want. They’re winners — and that’s all that matters.” It seemed a bit simplistic, but I did wonder how it could be that a man who stole the presidency of the United States could ever win re-election. But he did.

This is Bob Badeer (a trader at Enron’s West Power desk in Portland, CA, where all these tapes were recorded) and Kevin McGowan (in Enron’s central office in Houston,TX, as he mentions in the transcript):

KEVIN: So,

BOB: (laughing)

KEVIN: So the rumor’s true? They’re fuckin’ takin’ all the money back from you guys? All those money you guys stole from those poor grandmothers in California?

BOB: Yeah, grandma Millie, man. But she’s the one who couldn’t figure out how to fuckin’ vote on the butterfly ballot.

KEVIN: Yeah, now she wants her fuckin’ money back for all the power you’ve charged right up – jammed right up her ass for fuckin’ 250 dollars a megawatt hour.

BOB: You know – you know – you know, grandma Millie, she’s the one that Al Gore’s fightin’ for, you know? You’re not going to –

BOB: Grandma Millie –

Mayor 1% joins the Limbaugh chorus

by digby

Mayor 1% (and Unity 2012 dream boat) is starting to show his true spots:

Mayor Michael Bloomberg said this morning that if there is anyone to blame for the mortgage crisis that led the collapse of the financial industry, it’s not the “big banks,” but Congress.

Speaking at a business breakfast in midtown featuring Bloomberg and two former New York City mayors, Bloomberg was asked what he thought of the Occupy Wall Street protesters.

“I hear your complaints,” Bloomberg said. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t gave gotten them without that.

“But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and congress certainly isn’t going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for.”

Bloomberg went on to say it’s “cathartic” and “entertaining” to blame people, but the important thing now is to fix the problem.

Yeah. Let’s not play the blame game. (Well, except we do need to teach the silly serfs — who took loans from people who were offering them — a lesson they won’t soon forget.)

What he said is just an outright lie (a zombie lie, in fact) and he knows it. The key is to ensure that the dizzy bimbos of the press, who worship his alleged “moderation”, don’t see his endorsement of this toxic rightwing propaganda as if it came down from Mt. Sinai.

I think this is a signal that the 1%ers are getting agitated for real (as opposed to the crocodile tears they shed everyday about being called “fat cats” by their friends in the White House.) Bloomberg has always been one of them, of course, but he’s been the designated moderate, put out there to pretend that they give a damn about the peasants. He’s joined the Limbaugh crowd with this one.

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Mitt, Tagg and the Schemers

by digby

One of the problems with aristocracy has always been that succeeding generations of nobles tend to be, shall we say, a little less astute than their forebears. Sometimes they are just less ethical. Either way, this could be a problem for one of our current nobles:

Mitt Romney, his son Tagg, and Romney’s chief fundraiser, Spencer Zwick, have extensive financial and political ties to three men who allegedly participated in an $8.5 billion Ponzi scheme. A few months after the Ponzi scheme collapsed, a firm financed by Mitt Romney and run by his son and chief fundraiser partnered with the three men and created a new “wealth management business” as a subsidiary.

In an exclusive interview with ThinkProgress, Tagg Romney confirmed their business relationship, but falsely claimed that the men were cleared of any wrongdoing associated with the Ponzi scheme. Tagg Romney told ThinkProgress that his three partners collected about $15,000 from their involvement in the Ponzi scheme. Court documents obtained by ThinkProgress show that the legal proceedings are ongoing and the men made over $1.6 million selling fraudulent CDs to investors.

Read on at Think Progress for the details. Mitt’s right in the middle of this. And I think the most damning thing about it is the fact that this happened in 2009. He knew he was running for president again and this was long after the meltdown, where they could have hidden their theft in the maelstrom. (And you have to love the fact that some of the principles were also involved in the notorious Allen Stanford Ponzi scheme. Doh.)

But then Mitt’s a certified Master of the Universe so it’s not surprising that he would believe that he’s immune from criticism for his ill-gotten gains or the company he keeps. (But then the allegedly anti-Wall Street Tea Party is far more upset about his lack of consistent social conservatism than they are about the fact that he’s one of the malefactors of great wealth, so he’s probably right.)

This scheme may be too complicated to hurt him in the election. This is the sort of scandal that takes dogged determination by political operatives and cooperation from the mainstream press to really gain traction, and that’s a very particular Republican party specialty. But you never know. This looks like it might just be sloppy enough to get somebody’s attention. And it couldn’t have happened at more inauspicious time. It’s rare in America that anyone really cares if the rich are stealing, but right now they do. And Mitt is very, very rich.

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