Month: April 2013

What does and doesn’t “drive the deficit?” Don’t ask the press corps.

by digby

Read this quote from a CNN journalist. I’m sure you can spot the error, right?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: … today, this morning, President Obama in the Rose Garden as his budget is officially unveiled and he’ll be talking about how deficit reduction is important, but he’ll say it’s not the only thing that needs to be done. The deficit reduction can’t be done at the expense of investing in things like education and job training and infrastructure, which are some new areas of spending we are expected to see in the budget because we have seen the outline in recent days.

One of the big talking – one of the big headlines that folks will be talking about today will be what the carrot to Republicans. It is — you may have heard referred to as chained CPI. Well, what the heck is that, you may say? That is an adjustment to how Social Security benefits are doled out. This is something that Republicans are happy that is in his proposal and many liberals are very upset about, because it would reduce the spending to Social Security recipients, which is obviously a huge driver of the deficit. But it would reduce the spending by decreasing the cost of living adjustments, those increases that seniors see. And this would have a very real impact for a lot of seniors who rely on Social Security for their income; they’re on a fixed income and this is where they get their money just to do their household expenses.

Yes that’s right:

This is something that Republicans are happy that is in his proposal and many liberals are very upset about, because it would reduce the spending to Social Security recipients, which is obviously a huge driver of the deficit.

You know that it has no effect on the deficit. And journalists should know this too. But they are using the same logic that most Americans will use by assuming that the Democratic President would never suggest cutting their benefits in a deficit reduction package if it had no effect on the deficit. It is rather hard to believe that a Democrat would use seniors as bait, I’ll grant that.

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Revenue neutral corporate tax reform: what could go wrong?

by digby

Oh good:

President Barack Obama is expected to use his budget proposal to call on Congress to overhaul the corporate tax system in a way that doesn’t generate additional revenue, a move that is sure to anger liberal Democrats in the Senate.

The White House didn’t respond to requests for comment on the expected language, which several sources said would be included in the fiscal 2014 budget proposal that will be unveiled Wednesday.

Beyond calling for revenue-neutrality, it’s not clear how deeply the president’s budget will wade into the choppy waters of corporate tax reform.

The budget move is a concession of sorts by Obama, who released a framework for corporate tax reform last year that would have raised $250 billion over 10 years.

But it likely will not be enough to entice Republicans who want individual and corporate tax reform, with no overall revenue increases, done as a package. And liberal Democrats — already fuming over the administration’s plan to change the way Social Security benefits are calculated — aren’t pleased.

“Corporations are not overtaxed in America,” Sen. Tom Harkin (D-Iowa) said Tuesday. “Let’s be frank about that. We need to close a lot of loopholes and we need to raise some revenues — bottom line.”

Hey, don’t worry about it. We’re going to close those loopholes and raise tons of money because Americas corporate tax lawyers and lobbyists will never, ever, ever be able to open new ones. They just aren’t very good at what they do compared to the congress. So that’s good.

From watching TV this morning, let’s just say I’m feeling the love from the Village for this budget. I’m going to guess that every wealthy, celebrity centrist and liberal pundit would vote for it, so all the congressmen and Senators from DC should definitely support it.

Update: I think Krugman has this nailed today. He points out that this is, once again, a strategy that’s supposed to make the American people blame the republicans for everything bad that’s happened to them if they refuse to deal.

Since the beginning, the Obama administration has seemed eager to gain the approval of the grownups — the sensible people who will reward efforts to be Serious, and eventually turn on those nasty, intransigent Republicans as long as Obama and co. don’t cater too much to the hippies.This is the latest, biggest version of that strategy. Unfortunately, it will almost surely fail. Why? Because there are no grownups — only people who try to sound like grownups, but are actually every bit as childish as anyone else.

After all, if whoever it is that Obama is trying to appeal to here — I guess it’s the Washington Post editorial page and various other self-proclaimed “centrist” pundits — were willing to admit the fundamental asymmetry in our political debate, willing to admit that if DC is broken, it’s because of GOP radicalism, they would have done it long ago. It’s not as if this reality was hard to see.

But the truth is that the “centrists” aren’t sincere. Calls for centrism and bipartisanship aren’t actual demands for specific policies — they’re an act, a posture these people take to make themselves seem noble and superior. And that posture requires blaming both parties equally, no matter what they do or propose. Obama’s budget will garner faint praise at best, quickly followed by denunciations of the president for not supplying the Leadership (TM) to make Republicans compromise — which means that he’s just as much at fault as they are, see?

He’s absolutely right. It’s perfectly illustrated by what I wrote about the harmony and understanding between David Brooks and EJ Dionne on this subject.

I do love this idea that they’re allegedly just trying to prove the GOP is feckless and obstinate. If they don’t really want these policies it seems just a teensy bit reckless to make the assumption that the Republicans won’t take yes for an answer, don’t you think? It’s only the American economy and the health and welfare of its most vulnerable populations being used to make a political point.

On the other hand, all the Very Serious Pundits can pontificate endlessly about the stupid-American-people-who-need-to-be-forced–to-take-their-medicine, and that’s what they live for.

Update II:

Awesome:

Last August, at the Democratic National Convention in Charlotte, I sat in on a meeting between several top current and former Obama officials and a few dozen executives whose support they were trying to enlist in the upcoming fight over the fiscal cliff. (The terms of my being allowed in the room were that I not publish anything until after the election.) Much of the meeting was given over to a question-and-answer session, and one of the first questioners wanted to know why going over the cliff would be such a bad thing. It would, after all, achieve the tax increases Democrats were seeking.

Jon Carson, a top White House official, replied that the $1.2 trillion sequestration cuts that were part of the fiscal cliff worried him and other officials. Not only the cuts to social programs, but also the cuts to the military budget. “They’re too deep,” he said. Although sequestration was delayed until March 1, those cuts ultimately were not averted. The Pentagon budget will be cut by $500 billion over the next decade (an additional $100 billion in deficit reduction comes from interest savings). While it may have troubled the White House, many Democrats regarded this as a huge gift—military cuts were something many of them desired but few would actually argue for. Sequestration delivered more than they could have imagined.

Guess what? The White House still doesn’t like those cuts. And Obama’s new budget, released today, makes this clear. Although the White House doesn’t advertise this fact in the six-page budget overview it put out this morning, the new budget eliminates nearly all of the cuts that sequestration imposes on the Pentagon. Instead of $500 billion in cuts, Obama proposes only $100 billion, and you have to look closely to spot it (“$200 billion in additional discretionary savings, with equal amounts from defense and nondefense programs”).

Along with the well-advertised cuts to Medicare and Social Security benefits, this is something that should appeal to the GOP. “It’s another one of the peace offerings in Obama’s package to Republicans,” Robert Litan, the director of research for Bloomberg Government and a former official of the Office of Management and Budget, told me.

I think that’s being a little ungenerous, don’t you? It’s also a beautiful and thoughtful gift to the Military Industrial Complex.

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The Austerians must be forced to compete in the political marketplace

by David Atkins

Eduardo Porter writes an excellent column today in the New York Times about the foolishness of the austerity experiment in Mexico, noting that it wasn’t until the implementation of what amounted to debt forgiveness in the guise of “Brady bonds” that the Mexican economy was able to grow enough to take care of its people while also paying back its creditors at least in part.

But it’s the end of his analysis that is most thought provoking:

Yet perhaps the most important lesson to be had about the dynamics of economic crises and relief is about what it takes to motivate the political will to act.

To some extent, we owe the Brady plan to the cold war. Political unrest simmered across Latin America. In 1988, Mexican voters almost ousted the party that had ruled the country since 1929. The region, Washington feared, risked falling into Soviet clutches. Arizona’s governor, Bruce Babbitt, even called Mexico “the ultimate domino.”

Lt. Col. John C. Mangels, studying at the Air War College in 1988, caught the flavor of thinking at the time. “A financially devastated and chaotic Mexico would strongly interfere with our ability to maintain an East-West balance,” he wrote. “The long-term security threat from Mexico thus hinges on economics.”

In a speech almost three years ago, Mr. Brady asked himself whether something like the Brady plan could work now. “I’m not sure,” he answered. “The level of cooperation I’ve described doesn’t happen by chance, or easily.”

So far, Southern Europe’s 1930s-style depression as done little to sway Europe’s paymasters in Berlin. But the quagmire across the southern tier could rend Europe as deeply as the Iron Curtain divided East and West. Isn’t it time for another U-turn?

No one wants to relive or recreate the horrors of the Soviet Union. But the existence of an alternative economic ideology meant that corporate plutocrats had to reduce suffering and mitigate their own excesses for fear of losing another domino to the dreaded Evil Empire. To put it in terms even they might understand, the existence of competition in the political marketplace forced them to create a better product for fear of losing paying customers.

What exists today is an economic monopoly wherein the excesses and rent-seeking of the world’s wealthiest continue unchecked.

This, too, is what makes the President’s offer to cut Social Security so galling. Seen within the tiny box of Washington politics, a certain kind of case might be made for offering such a thing as an alternative to a potentially worse sequester, or as a bulwark against potentially worse actions in a Republican administration. Such cases are weak at that, but placing the conversation on these grounds is a mistake in itself.

All around the world, wages are being subverted to artificially boost asset growth. The modern global economy is fundamentally broken and increasingly unstable.

True leadership isn’t about trying to “bring both sides together” to attempt to muddle through some terrible compromise in order to prop up the system that is failing the world’s poor and middle classes so miserably.

True leadership offers an alternative to the crushing neoliberal consensus that all labor must be cheap and fungible on a global scale, with corporations and plutocrats able to play governments off one another like puppets on a string, and a bare modicum of safety net provisions just adequate enough to prevent starvation and death by easily communicable disease.

True leadership would aim to provide competition in the marketplace of political ideals, an island refuge in the storm and shining city on a hill to which battered nations and peoples could turn as an example of what is possible.

The world still seeks such leadership in order to give the laissez-faire Austerians the actual competition they so richly deserve.

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#FF @PrezBillyJeff

by digby

Colbert and Clinton on social networks:

The Colbert Report
Get More: Colbert Report Full Episodes,Indecision Political Humor,Video Archive

“There’s nothing worse than a friendless tweeter”

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You cannot make a good argument for cutting Social Security


by digby

Mike Koszcal has efficiently pulled together all the relevant arguments in favor of the Chained-CPI — and then very properly demolishes them one by one.  He takes on the idea that that it’s a more accurate measure of the cost of living (which, if true, would mean that it wouldn’t require all these “fixes” to keep the elderly out of poverty), the idea that it’s no big deal, “not much a cut so nobody will really notice”, and the daft idea that we’ll be able to “fix” it down the road, the most fatuous argument of all.

But this gets to the fundamental stupidity of the politics:

You’ll hear arguments that a Grand Bargain is necessary, so it’s better to bring Social Security into long-term balance now, with Democrats at the helm, than in the future, when there will be less time and an uncertain governance coalition. You can get fewer cuts and more revenue than you would otherwise and take the issue off the table for the foreseeable future to concentrate on other priorities.

But if that’s your idea, then this is a terrible deal and sets a terrible precedent, because this deal would accomplish none of your goals. You’d cut Social Security without putting in any new revenue. And it wouldn’t be sufficient to close the long-term gap, so the issue would stay on the table. Indeed, the deficit hawks would probably be emboldened, viewing this as a “downpayment” on future cuts, and require any future attempts to get more revenue for Social Security, say by raising the payroll tax cap, to involve significant additional cuts.

Indeed it would.

This is the real point of this according to the CPBB, the head of which, Bob Greenstein, Chris Matthews referred to as “God” yesterday on his show. The rationale is purely political in that “we need to do this under a Democrat because it will be so much worse under a Republican.” Here’s his latest iteration of this argument:

Progressives who strongly dislike the chained CPI proposal should consider whether there is any chance that congressional Republicans will agree to raise revenues by curbing tax expenditures without some significant entitlement changes. And if (as I believe) there is no real chance, what’s preferable: the chained CPI with protections for the very old and the poor, or measures such as converting Medicare to premium support, raising the Medicare eligibility age to 67 and risking having some 65- and 66-year-olds go uninsured, and cutting Medicaid deeply and making ours more of a two-tier health care system based on income?

You know, I don’t care if they agree to raise revenue at this point. I don’t know when that became the holy grail of the Democratic Party, but it certainly isn’t mine and most definitely not in exchange for cutting social security and medicare benefits. Have they not proved over and over again that when you give them an inch they demand a mile? At this point it’s clear that the pursuit of deficit reduction is a suckers game and we should just take a break.

This is a false choice and from the tenor of his argument, I’m guessing even he is going a little bit wobbly. Perhaps he realizes that everyone in DC is using his endorsement to explain their willingness to do the thing that nobody wants done and he sees where that’s going to leave him when all is said and done.

And anyway, Konzcal explains exactly why this is so daft:

As Michael Lind, Joshua Freedman, and Steven Hill of the New America Foundation, along with Robert Hiltonsmith of Demos, expertly document, Social Security should be expanded in the years ahead, not cut.

Retirement security is meant to be a three-legged stool of Social Security, private savings, and employer pensions. The last two legs of that stool have been collapsing in the past few decades, and there is no reason to believe that this will change in the near future. 401(k)s have been a boon for the rich to avoid taxes and save money that they’d be saving anyway, while it isn’t clear that average Americans have saved enough to offset declining pensions. Median wages have dropped in the recession and are likely to show little growth in the years ahead, which makes building private savings harder. There isn’t a ton to cut – even the middle income quintile of retirees, making only around $20,000 a year, get 62 percent of their income from Social Security.

There are many ways to boost Social Security, and the New America paper introduces one. But as the authors note, “[a]ny strategy that expands the reliable and efficient public share of retirement security in America would be an improvement over today’s system, which is biased toward the affluent and skewed toward private savings.” And the best way to do programs is to build out programs that already work well.

Does anyone think there’s a snowball’s chance in hell of doing that if we cut the most popular and well-run program in the country and turn it into a means-tested welfare program?

When seniors get angry …

by digby

Voting for this only makes sense for someone who never has to run for re-election:

Older Americans don’t like President Barack Obama’s proposal to reduce future increases to Social Security benefits, according to a new poll by AARP.

Like many polls before it, the latest from the senior advocacy group finds overwhelming bipartisan opposition to cutting benefits. Eighty-seven percent of registered voters 50 and older said it’s “very important” that policymakers not cut benefits for current or near retirees.

Obama has proposed reducing future benefits by making annual cost-of-living adjustments less generous. Almost every year, the Social Security Administration adjusts benefits based on the prices of various consumer goods, including things like food and health care. Obama’s proposal would change the way the government measures inflation from the current Consumer Price Index to what economists call “chained CPI.”

Last year, beneficiaries received a 1.7 percent boost. If the adjustment had been calculated using chained CPI, seniors and other Social Security recipients would’ve received a 1.4 percent adjustment. The policy switch would save more than $100 billion over 10 years.

Sixty-nine percent of voters said they opposed or strongly opposed the chained CPI, according to AARP, while 16 percent said they supported it. Sixty-five percent said they’d have a less favorable opinion of their member of Congress if he or she supported the policy.

Here’s a little historical reminder about what happens when the Seniors get mad:

“I was out there on the street with him that day,” recalled Jim Jaffe, Rostenkowski’s longtime press secretary. “When you see the video with the old lady chasing him down the hill, I was there. It was a wonderful media moment.”

It was not so wonderful for Rosty, as the powerful chairman of the House Ways and Means Committee was known. The moment, nearly 21 years ago to the day, was captured in an iconic video clip that has served ever since as a warning to lawmakers about the way seemingly good intentions in Washington can go very bad back home.

The Medicare Catastrophic Coverage Act, first unveiled by President Ronald Reagan, became law in July 1989. The measure provided seniors on Medicare with protection against catastrophic medical expenses and coverage of prescription drug costs. The benefits were to be paid for exclusively by the elderly receiving them, with high-income seniors paying an extra premium surtax.

Soon after Congress passed the law on an overwhelmingly bipartisan vote, Rosty returned to his district. It was there, after a fairly civil meeting with seniors resentful over having to pay higher taxes for coverage they either already had from a former employer or didn’t want, that he was accosted by an angry mob of Social Security recipients.

As the Chicago Tribune reported the next day, Aug. 19, 1989:

Congressman Dan Rostenkowski, one of the most powerful politicians in the United States, was booed and chased down a Chicago street Thursday morning by a group of senior citizens after he refused to talk with them about federal health insurance. Shouting “coward,” “recall” and “impeach,” about 50 people followed the chairman of the U.S. House Ways and Means Committee up Milwaukee Avenue after he left a meeting in the auditorium of the Copernicus Center, 3106 N. Milwaukee Ave., in the heart of his 8th Congressional District on the city’s Northwest Side.

Eventually, the 6-foot-4-inch Rostenkowski cut through a gas station, broke into a sprint and escaped into his car, which minutes earlier had one of the elderly protesters, Leona Kozien, draped over the hood. Kozien, one of more than 100 senior citizens who attended the gathering, said she had hoped to talk to Rostenkowski, her congressman, at the meeting.

But Rostenkowski clearly did not want to talk with her, or any of the others who had come to tell their complaints about the high cost of federal catastrophic health insurance. “These people don’t understand what the government is trying to do for them,” the 61-year-old congressman complained as he tried to outpace his pursuers.

“This was a setup,” said Jaffe, who can be seen in the video ducking into the backseat of the car. “They were standing with made-for-television signs about how he had sold them out.”

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“A threat that is serious and not speculative”

by digby

This strikes me as being very bad:

The administration has said that strikes by the CIA’s missile-firing Predator and Reaper drones are authorized only against “specific senior operational leaders of al Qaida and associated forces” involved in the Sept. 11, 2001, terror attacks who are plotting “imminent” violent attacks on Americans.

“It has to be a threat that is serious and not speculative,” President Barack Obama said in a Sept. 6, 2012, interview with CNN. “It has to be a situation in which we can’t capture the individual before they move forward on some sort of operational plot against the United States.”

Copies of the top-secret U.S. intelligence reports reviewed by McClatchy, however, show that drone strikes in Pakistan over a four-year period didn’t adhere to those standards.

The intelligence reports list killings of alleged Afghan insurgents whose organization wasn’t on the U.S. list of terrorist groups at the time of the 9/11 strikes; of suspected members of a Pakistani extremist group that didn’t exist at the time of 9/11; and of unidentified individuals described as “other militants” and “foreign fighters.”

In a response to questions from McClatchy, the White House defended its targeting policies, pointing to previous public statements by senior administration officials that the missile strikes are aimed at al Qaida and associated forces.

Micah Zenko, an expert with the Council on Foreign Relations, a bipartisan foreign policy think tank, who closely follows the target killing program, said McClatchy’s findings indicate that the administration is “misleading the public about the scope of who can legitimately be targeted.”

The documents also show that drone operators weren’t always certain who they were killing despite the administration’s guarantees of the accuracy of the CIA’s targeting intelligence and its assertions that civilian casualties have been “exceedingly rare.”

If this is true it means that the administration has been lying through its teeth about this, which isn’t as bad as doing it but it’s very, very bad.  What exactly is supposed to be the point of this drone war if it’s just killing a bunch of tribesmen? Is it a favor for Pakistan, a strategy to terrorize civilians into never ever being terrorists? What?

They need to come clean here because the way this sounds, it’s target practice and that’s just horrifying.

Update: More on the targeted killing operation from Zenko here. Also horrifying:

the CIA made this choice [to take up targeted killing], not because they thought it was the best strategy, but reportedly because they did not think they were capable of detaining and interrogating individuals without also torturing them.

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QOTD: Bernie Sanders

by digby

Paul Ryan, in the worst budget ever presented in the history of the United States, did not mention Social Security, so of course [Obama] owns it,” Sanders said as he left a rally outside the White House, where he and a handful of congressional Democrats, Social Security advocates, and labor leaders denounced Social Security cuts on Tuesday.

“And I suspect that our Republican friends will make sure the American people understand that he owns it, and make sure the American people understand that any Democrat who supports cuts in Social Security and benefits for disabled vets will also be forced to own that,” Sanders said. “From a political point of view it is to my mind just a really dumb tactic. I don’t understand it.”

And in case anyone thinks he’s kidding about Democrats having to own a vote for a Grand Bargain, take a look at this flyer from the 2010 campaign in which right wing Tea Party extremist Ron Johnson beat Russ Feingold for the US Senate:

Click on that to see where he promises to protect Social Security benefits too.

Does anyone seriously believe that the Republicans will not run similar campaigns in an off year election in the incumbent President’s second term? They wouldn’t do that would they?

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Austerian Rhapsody


by digby

Hilarious:

There is a new European musical production, sung and performed in soaring operatic style, that tells the true story of the June internet war between Paul Krugman, the noted Keynesian economist, and Toomas Hendrik Ilves, the president of Estonia. The first shot rang out when Krugman published a blog post titled “Estonian Rhapsody” criticizing the Baltic state’s austerity measures. Later that day, Ilves, a national figurehead who commands no real executive power, retaliated by opening up a salvo of indignant and sometimes vulgar tweets, decrying Krugman as ignorant, “smug, overbearing & patronizing.”

No, seriously, it’s for real. Here are the lyrics for the first and second movement:

Nostra Culpa

I.

Economic triumph?
A natural experiment
Wonders of austerity
Economic triumph?

Poster child?
Incomplete recovery

Stimulate!
Estonian rhapsody
Austerians
Stimulate!

Fiscal stimulus trumps
Increased public debt
Devalue!

II.

Austerity in the wasteland
Dumb & silly East Europeans
Unenlightened
Nostra culpa

Frozen pensions
Lowered salaries
Internal devaluation
Nostra culpa

Gray apartments
Just wogs
Someday will understand
Nostra culpa

smug, overbearing & patronizing
Sh*t on East Europeans
Chill
Nostra culpa

Chart ‘o the day

by digby

Most of you know that the Chained-CPI is a cut in Social Security, disability and retirement benefits. But how about this?

Yeah, it’s a backdoor tax increase that falls disproportionately on those making between 20 and 50 thousand dollars a year:

The group getting the biggest tax hike is families making between $30,000 and $40,000 a year. Their increase is almost six times that faced by millionaires. That’s because millionaires are already in the top bracket, so they’re not being pushed into higher marginal rates because of changing bracket thresholds. While a different inflation measure might mean that the cutoff between the 15 percent and 25 percent goes from $35,000 to $30,000, the threshold for the top 35 percent bracket is already low enough that all millionaires are paying it. Some of their income is taxed at higher rates because of lower thresholds down the line, but as a percentage of income that doesn’t amount to a whole lot.

All told, chained CPI raises average taxes by about 0.19 percent of income. So, taken all together, it’s basically a big (5 percent over 12 years; more, if you take a longer view) across-the-board cut in Social Security benefits paired with a 0.19 percent income surtax. You don’t hear a lot of politicians calling for the drastic slashing of Social Security benefits and an across-the-board tax increase that disproportionately hits low earners. But that’s what they’re sneakily doing when they talk about chained CPI

Oh, and let’s not forget. That tax hike, by law, goes to pay for George W. Bush’s wars not to shore up Social Security. And since these benefits cuts only add a very small amount to the Social Security trust fund, we’ll be back with another campaign to cut more within a couple of years:

President Obama says he wants to take this “off the table.”  Does that look like it will be off the table?
In fact, it does almost nothing top fix the problem it purports to fix while forcing Democrats to betray their principles.

If people care about the future of Social Security, benefits should be expanded, and the cap on earnings should be lifted so that the wealthy have to pay as much of a percentage of their wages as everyone else does.  (In fact, I’d be willing to guess that even average people would be much happier to pay taxes for Social Security and medicare than Pentagon overruns.) Cutting benefits is just a nail in the coffin of our vital and necessary Social Security system.  I’m sure the Pete Petersons of the world are very pleased.

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