By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen
The Beltway wonkosphere spent most of yesterday shooting the fish in the barrel that is the Paul Ryan “Path to Prosperity” budget. Here’s a representative sample. From the looks of it, the Ryan budget for fiscal year 2014 looks mostly like the Ryan budget for FY2012 and FY2011, with the added extra of banking the tax hikes he didn’t vote for in the fiscal cliff deal. It includes the same vague goal of marginal tax brackets at just 10% and 25%, the same voucherization of Medicare, the same “repeal of Obamacare” while keeping all the revenue-raisers from Obamacare intact, the same block-granting of mandatory spending like Medicaid and food stamps (Ryan calling welfare reform a “success” because child poverty rates initially came down is completely disingenuous, ignoring the economic boom that happened at the same time), etc., etc. This year’s model balances the budget by 2023, but that’s largely a factor of the austerity already put into place over the last couple years.
It’s not all that illuminating to see the same cast of characters make the same pronouncements on Ryan’s plans. At least the mask did slip for a moment today: in a press conference, Ryan insisted, “We are not going to give up on destroying the healthcare system.”
The more noteworthy story in the budget wars was the sneak preview of the Senate Democrats’ contribution to the debate. No full package, but some topline numbers, which includes $1.95 trillion in deficit reduction over the next ten years, split between tax hikes and spending cuts, with a token $100 billion in new spending in the first year on a “jobs program.” So sequestration would get replaced with larger deficit reduction by almost a factor of two.
This is smaller than Ryan’s $5 trillion in cuts, which all come from the spending side. It’s also both unnecessary and unpopular. The deficit is already shrinking too rapidly for the economy to accommodate. And you cannot find more than a couple small regions of the budget where voters would endorse the cutting.
Here’s where the Senate Democrats, led by Patty Murray, lay down the axe:
The spending cuts are divided up this way: $493 billion in domestic savings, including $275 billion in health care cuts that the Democratic source said would not harm seniors or families. Defense spending would be cut by $240 billion in accordance with troop drawdowns from overseas operations. An additional $242 billion in savings come from reduced interest payments.
It’s perhaps possible to come up with $275 billion in health care cuts that “would not harm seniors or families,” but that would have to include reducing payments to stakeholders, something our captured Congress has found nigh impossible, especially when they’ve already handed over the forced market that insurers and hospitals and drug companies accepted as payment for their token give-backs in the Affordable Care Act. At any rate, with discretionary spending already on a trajectory lower than what we spent as a percentage of GDP in the Eisenhower Administration, there’s no need to go lower there even while cutting health care. The usual argument here is that cuts to social insurance help “protect” the discretionary budget, but they both come up for cuts here. And of course, this is the perceived leftward pole in the debate (The Progressive Caucus will release a budget tomorrow, which will promptly get unfairly ignored by everyone in Washington).
In the middle of all of this is the White House. And they appear to be engaged in the tactic of saying different things to different audiences. To the public, the President sat down with George Stephanopoulos and claimed that “My goal is not to chase a balanced budget just for the sake of balance,” and that he’s focused on growing the economy. He also took a few swipes at the big fat target that is the Ryan budget.
Behind closed doors, the tone was, shall we say, different:
President Barack Obama told Senate Democrats on Tuesday that his budget to be released in April would align closely with their priorities.
He also warned that Democrats need to embrace at least some changes to unsustainable entitlement programs in order to achieve their long-term priorities.
The president made the case, senators attending the luncheon said, to protect entitlements for future generations — a key Democratic priority in negotiations with Republicans over a deficit reduction deal known as a grand bargain.
But Obama acknowledged that Social Security and Medicare — big drivers of federal spending — wouldn’t survive without some changes to save money. Obama added that Republicans must first agree to more revenue hikes before the White House would concede on changes to entitlement programs, senators attending the luncheon said.
Still out grand bargaineering, I see.
I don’t really feel it necessary to refute the fearmongering over threats to Medicare and Social Security’s “survival.” The real worry as far as survival goes consists of the survival of senior citizens, who have next to no retirement savings and require expanded Social Security benefits. Unless you want senior poverty rates to explode and catfood prices to surge, that’s going to be the important next step. Yet the White House is on board with a switch to chained CPI that would represent up to a $1,000 annual cut for older seniors.
Ultimately the budget wars represent the same old story: Obama wants his grand bargain, Republicans want low tax rates. Most of the rest is just theater, about who can stick the other with the worst aspects of any compromise politically. It’s always worth understanding where people line up, but after enough of this go-round, you can’t possibly not have divined it.
As to whether this will ever resolve itself, I think Republicans see what’s occurred so far as pretty decent to their eyes. Tax rates remain manageable for the rich, government has been shrunk, and their reticence to come to a deal just means that every politician in America keeps talking about the deficit and austerity in a time of high unemployment. What’s more, they have a steady stream of more roadblocks to ensure the conversation stays right there. We’ve been on this track ever since the famous Obama “pivot” to the deficit in 2010, and little else of consequence has since been accomplished. As long as we’re on budget/austerity/catfood watch, forget progress. Republicans understand this at some level.
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Yes, the whole point is reduced taxes on the ultrarich, maintenance of the defense boondoggle, and a tightening noose everywhere else. I guess that qualifies as ‘change’, but calling it ‘hope’ is something of a stretch.
I wonder who all those misty eyed liberals lining up behind BHO in 08 and 12 will be romanticizing in 16? All this would be funny if it were not so disastrous for real people who thought they were playing by the rules and didn’t understand what the game was.
“I wonder who all those misty eyed liberals lining up behind BHO in 08 and 12 will be romanticizing in 16? ”
Hillary Clinton. Bank on it.
GWB was the Polk of our era. Obama and Clinton are working on being the Taylor, Fillmore, Pierce, and Buchanan.
I’m not sure how long it’ll take before things break loose. We are not guaranteed to get a Lincoln.
Warren, who will be in charge of nailing a disclosure form, in simplified language, onto the barn door saying that it is, in fact, shut. Clinton is so twentieth century.
Naw. Warren may have people lining up behind her early on, but recall that Obama wasn’t the popular candidate of young liberals to start with. John Edwards was.
Yes, and it took electronic voting, stuffed caucuses, outright theft, and a pussy bomb to get rid of him.
Ms Warren, by all appearances, looks to be premade as ‘reasonable.’
Honestly, I can’t think of a single American politician that inspires me with confidence – although I guess there are a few who are at least not disgusting.
jared bernstein wrote: “Ryan himself seemed to almost distance himself {from the ryan budget} in an interview with Larry Kudlow on CNBC.”
that was revealing; this is all just about meeting the requirements of the bill that kicked the debt ceiling can down the road to May…no one takes these new budgets seriously; the congresscritters just want a package on the table to avoid the penalty of having their pay withheld…
There is something huge, in my opinion, missing from the “debate.”
For anyone with some savings and some income, a portion of Social Security benefits are taxed at the Federal level and by some but not all States. What would be the impact on the health of the SS Trust Fund if these taxes were returned to it rather than paid into the Treasury? What would be the impact of something similar for Medicare? What would be the impact of a more progressive tax scheme on “transfer payments?” Who can make these calculations?
While it would probably not be politic to speak outloud about “means testing” of Social Security, in fact the door to that is already ajar. Yet it may be the most palatable from of increased taxes on the wealthy class for whom Social Security and Medicare are nothing more than subsidies to what they will pass on to their heirs. Meanwhile, we as a nation are seriously talking about reducing already inadequate payments to elderly people who have no other means.
My memory of reading through the Report of the Trustees of the Social Security Fund is a bit hazy, but I think the funds arising from taxation of SS income are credited to the Fund.
This is a clear-cut and easily applied method of SS “means testing.” It’s possible to easily (well, not politically) play around with both the rate and the level at which benefits are taxed.
Means testing for Medicare? I do thing that would be bureaucratically cumbersome, as well as throwing up incentives to cheat.
Excellent framework outlined. In USA as well as Canada there is a quest for yield by citizens to invest in their own retirement instruments supplemented by Social Security in which is a funded through taxation by citizens. Since yield is insufficient in this economy to support a healthy retirement plan, the question remains what political support is there for reductions in Social Security. In Canada for example the majority federal government would be defeated in Parliament as the country would revolt on the mere mention of reduced Canada Pension Plan payments. Even the 1996-99 austerity budgets were free of any attack on CPP. For both countries the transition out of ZIRP and bailouts to TBTF cannot come too soon.
As long as any surplus funds in Social Security are spent to run general government functions and backed by Treasury issued IOU’s, as current law requires of surplus funds, no problems are really being resolved. For at some point, funds must be raised, through general revenues, i.e. taxes, to cash out the IOU’s in the SS trust fund. The same money ends up being funded twice, once for future beneficiary payments, and once when needed for current payments to beneficiaries, while artificially holding down general taxes.
The only way that ‘real’ savings for the future can be achieved is if non-USgovernment backed paper is used to store the savings. Otherwise, any talk of making changes to achieve savings for future beneficiaries is only hype as SS is strictly a PAYGO program. There are no future savings possible, only cuts in payments to beneficiaries.
BTW, currently the average wage earner gets 93% of what their lifetime contributions to SS returned to them in the form of benefits. Higher wage earners get less, lower wage earners more, on average (depending on how long they live). Reducing benefits will reduce the percentage of contributions that are returned.
The argument that SSI surpluses are just bogus IOU’s is not totally sound. SSI holds 2.6 Trillion in US Treasuries. The Market has a valuation for all maturities of US Treasuries and they are actively traded. As of this morning there were buyers for billions of US Treasuries. The buyers don’t seem to preface their bid with knowing the identity of the seller.
Every time I see a bat-shit crazy politician like Ryan, talking his Ayn Rand MMT, I feel that the scene is not quite finshed. Keep think that a proper ending would be a big black sedan pulling up next to him when he is talking crazy. Out steps two burly hospital attendants attired in white, they force him into a strait-jacket and drive away, Ryan ranting the whole time.
Obama understands this as well:
–“As long as we’re on budget/austerity/catfood watch, forget progress. Republicans understand this at some level.”–
Pretty obvious Obama has no strong desire for strong and decisive environmental/climate change actions.
He has no desire to reduce the costs of going to college to any substantial degree.
He has no desire for any large infrastructure renewal programs.
Essentially Obama is a man without any vision at all other than to cement the stranglehold of Wall St and Big Pharma/Healthcare on most of the people of the country.
I have seen enough to believe that Obama holds the average American with the respect that a farmer holds for his cattle.
Ahh Brindle, I know a few farmers/ranchers who actually treat their cattle ok. I’d wager that any people without money (and lots of it) mean less than the dirt on Obama’s shoes to him.
Actually, a farmer views cattle as an asset.
We The People are just an inconvenience.
…or as Noam Chomsky would say, “superfluous population.
No, they are well aware we are assets as well, as can be seen by the cataloguing, pervasive supervision and (minimal) veterinary support. We produce milk and wool and draft labor for them, at the expense of our own children, comfort and health. Of course, when we don’t produce, whether voluntarily or otherwise, out comes the electric prod, or the shotgun…
Were the “Soylent Majority”
http://www.youtube.com/watch?v=eo5CDlVWAoE
I agree with you on some level, Brindle, but …. I am becoming increasingly frustrated with people who grouse about “Obama’s lack of vision.” Or, “Obama’s inability to negotiate.” Or, “Obama’s caving in to the opposition.”
As if the mess we are in is the fault of one man. And, if we could just find another man – the “right” man (or woman) – we would have jobs, free education, high-speed rail lines linking cities, jobs, solar panels on every house, and a national health system.
What one person could we elect who could produce these desired results? Our energies are consumed with the four-year national election cycle; volunteering for day, months, to knock on doors and make phone calls. Then, we spend the next couple of years complaining.
I don’t have an answer. I’m just sooooo frustrated with the system.
Instead of sepnding the same time and energy on people in need.
If that one man, the president, is an amoral person, his negotiating skill set etc. mean little.
Brindle, our system is amoral. We are ruled by the corporates, whose sole reason in life (and death) is to make money. That’s it. They can make money from imprisoning whole populations of people. They can make money from denying health care to sick children. They can make money from building weapons that will smash children into splinters of bloody bone and flesh. They can make money from blowing up mountains and dumping poisons into 10,000 year old aquifers.
It’s all good. Profits are good. Bigger profits are better.
Don’t distract from our existential problem by railing over one amoral man.
If the one amoral man in question has the power to influence policy this way or that, and he is using all his powers of office and exposure to advance the BS Obama Catfood Plan, then he is worth some railing over. Especially if that railing leads to usable ideas on how to confound his politics and frustrate his knavish tricks.
“As if the mess we are in is the fault of one man. ”
The US is pretty close to an elected dictatorship at the federal level. Heck, the dictator claims the right to murder people in their beds. He is obviously not constrained by Congress or courts.
I believe a lot can be done at the state and local level, and outside the political system. But within the federal political system, there’s a reason people focus on “one man”.
(for the peanut gallery, google “assassination orders” and Obama)
Nathaniel, no “dictator” operates in a vacuum. One amoral – or evil, if you prefer, person cannot operate the drones, disappear people, pass draconian laws, maybe, but not execute them, or sell off government assets to private corporations.
There have to be thousands of willing hands and minds to do the evil/amoral deeds. Which come first – the amoral dictator or the minds that sniff the spoils if they obey the orders?
If the deeds are not ordered, the deeds are not done. A successful focus on the orderer of the deeds might leave the deed-doers without orders, and therefor not doing deeds.
Actually, we had a runaway train barreling down the tracks going toward… real reform. Real consequences for bank criminals. Real change.
See there was real fear, so it was a really good chance to get something done.
Through a really heroic effort, really putting in the effort, Barack Obama almost single handedly derailed that train and made sure to save the old, corrupt system for a little while longer.
It’s really quite a substantial accomplishment.
Obama did have big infrastructural plans in December of 2008. The MNC’s shot him down and you ended up with the severely weakened ARRA……
Check out the change in the labor participation growth rates by cohort. The elderly are moving back in the work force at very high rates, as those less than 65 years old are declining.
http://advisorperspectives.com/dshort/charts/index.html?employment/LFPR-Growth-since-2000-25-64-and-65plus.gif
less an economic analysis i’d be looking more at a psycho logical one
both ryan an obama grew up without fathers and dependent on government programs
each to some extent are running away from and refuse to face their past
That’s right Dave, the dynamics haven’t changed very much since Carter/Clinton between the Right and the Center. The Right draws a firm line, the Center wants to appear reasonable which they define as willingness to compromise, and the left is not coherent enough or powerful enough to change this dynamic. For example, the left might draw a line in the sand over a substantial increase in the minimum wage, but without any debate I could detect, they have set it so low – $9-10 dollars per hour linked only to inflation adjustments that they cannot stir much passion over it. The previous decade’s fascination if not fixation with productivity achievements (not so much about what labor’s share ought to be) – Dean Baker says $16.47 or $21 per hour depending on assumptions, has disappeared. But even the 9-10 dollar proposal (Sen.Harkins has it at 10.00 or so) does not seem to entered the grand bargaining dynamics.
If the left had the ability to draw these lines, it would force the center to choose which way they lean – and make the leanings more embarrassing. Labor had a chance to draw its line this Labor Day – they didn’t even issue a major speech or policy address – which might have said: we’re not the party packhorses anymore unless we get this…but of course they did not…
I think it might not be a bad idea to push the idea of a 12-16 dollar minimum wage…phase in time could be the flexibile part of it…and make it the fulcrum of dealing with the center…not the cure all for what ails the economy from the left’s diagnosess…but not a bad place to make a stand and a break with irrelevance.
Oh well, I know Elizabeth Warren has our backs… No cat food for ma or pa or moi while she’s on watch. She must be so busy making sure Democrats don’t sell their own soul that neither she nor anyone from her staff (I assume she has a staff) even answers her phone in MA.
Does Elizabeth Warren hold strong views on the catfood issue? I don’t know. She does hold a strong and very informed position on the need for better financial regulation and the continued shenanigans of the banks. She, Vitter, and Brown are pushing for breaking up the banks but unfortunately its doubtful the three of them can overcome the Senate’s desire to maintain the current financial structure, along with the strong lobbying efforts of the financial industry. We probably need another financial crisis to prompt action.
But my main point is that while Warren is a strong advocate in the realm of financial regulation, that doesn’t mean she is also a strong advocate in all spheres of the progressive cause. Nor should it necessarily be held against her. How many of our senators hold positions that perfectly align with ours? I can think of none. They aren’t perfect. We can appreciate them for their strengths. If we condemn them for having faults, who gets spared? “Let he who is without sin cast the first stone.” There sure seem to be a whole lot of posters without sin. [grin] So far she’s done well with the banks. Let’s give her a break, let her have some time, it’s only been a couple of months, and see what comes of the banks.
BTW, I’ve tried to call too and it IS frustrating not to be able to reach anybody. And one SHOULD be able to reach their representatives (she’s not mine though). In her defense, I bet she gets lots and lots of calls though, tons more than most senators. She’s getting calls from all over the country, from people like me, for example. I suspect that’s a large part of the problem. I don’t know what the solution is, a larger staff????
Actually, I hope I am being unfair to Senator Warren. I’m simply sore from Obama, Sanders, Kucinich, Schneiderman, and many others and feel the beginnings of yet another Vichy Democrat, pardon the pleonasm, start to take relief in Elizabeth Warren.
So far she has scolded some people. Surely she is smart enough to know that will not suffice. Now she is behaving exactly as good freshwoman Senators are supposed to, Elizabeth Warren Blasts Senate Republicans.
As Yves put it some time ago, Warren as Senator is likely to become a largely non-threatening ornament.
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A link got clipped in the following sentence from above comment:
Now she is behaving exactly as good freshwoman Senators are supposed to, Elizabeth Warren Blasts Senate Republicans.
Cutting into Social Security and Medicare goes to the soul of the Democratic party. It has been at the very core of the party since the Great Depression. These programs literally defined the party for over 70 years. All Democratic politicians from the House or the Senate simply by virtue of their party are legitimately expected to have clear views on that subject even if on no other. In theory, if you are a Democrat, you are pro safety net. Of course that has changed as the political center has been dragged ever rightward. But so-called progressive Democrats are still defined (the default) as being for these programs and thus pro little guy. As it turns out, many of them are now willing to toss the programs and the old and young to the privatization wolves for a few campaign funds. These are called Vichy Democrats (turncoats, traitors, deeply hypocritical) for very little reason other than because of their duplicitous position on this specific issue alone. So Warren can not get a pass simply because her specialty might be in finance and banking. Moreover she campaigned very explicitly on a progressive platform of a fair deal for the little guy and the social safety net is synonymous with that whole concept.
Yves has pointed out elsewhere that Warren’s decision to become a Senator had negative sides and perhaps one of them is the fact that she can not afford to simply be a one issue representative. If she does not clearly come down on the side of defending Social Security and Medicare, she will have failed an implicit (and probably explicit) promise she made when she ran as a progressive Democrat.
Where I live cat food costs more than a can of pork & beans … just an observation of the most pointless kind.
Nothing but the best for the likes of us then.
Shill for Fix the Budget and Third Way advocates that minimum wage must be REDUCED, not INCREASED, else terrible things will happen to the economy run by and for the .01%.
In a NYT Op-Ed no less, and entitled “The Hidden Costs of the Minimum Wage.” What would those be — the 3% of the economy that the Kleptocracy has been unable to grab for itself?! This man Casey is a piece of work. But he’s from U. of Chicago.
http://economix.blogs.nytimes.com/2013/03/13/hidden-costs-of-the-minimum-wage/
Correction — Mr. Casey’s screed against paid labor is *Not* an Op-ed piece but his entry today in the NYT “economix blog.”
Imagine if Merikins applied the same budget plan to their household incomes. First thing that goes to the chopping block are credit cards –no more credit card purchases based on future earnings. Goodbye to the mortgage industry because people must save cash for the full house purchase. Cars -another belly-up operation. Adios Gas stations at $60 bucks a pop for a fill-up. Furniture stores, grocery stores, clothing stores, starbucks, mcdonalds, vacation resorts and (drums please) the profitable non profits –EDUCATION Industry. Just to name a few, all these Merikan corporate industries would go belly up tomorrow without Merkin households accruing short and long-term debt. Yet, the irrational alternate reality world of Congress and President claims that we need to bite the austerity bullet to balance the budget….. Go figure, they must be students of the new math.
I suggest they look at the one dollar bill, “This Note is legal tender for all DEBTS… Gee, guess that makes our monetary system a debt-based business.
And imagine if households had to have all liabilities funded 75 years out. Children would be working in the coal mines funding those college tuitions, mortgages, senior pensions and health care bills coming down the road. Sacre bleu, la charge de la dette prendrai de l’ampleur insoutenable, non?
It still never ceases to amaze me that politicians manage to sell voters on the idea that America, the wealthiest country in the world, cannot afford to take proper care of its elderly.
The catfood commission or light up that cigar club… and enjoy it!
Some letters Herbert Spencer had written to the English weekly The Nonconformist were republished as a pamphlet, THE PROPER SPHERE OF GOVERNMENT. “Government does more harm than good the moment it goes beyond the simple upholding of natural rights.
It is wicked to attempt to prevent the poor from perishing.
Wicked, wicked, wicked. It is cruel. Cruel, cruel, cruel. Do not interfere with God’s will, but be an English gentleman, and stand aside and watch! Get this, God wants you to enjoy your cigar.” – Hubert
“It is wicked to attempt to prevent the poor from perishing.”
“Do not interfere with God’s will,”
“Get this, God wants you to enjoy your cigar.” – Hubert
Skippy… The foundational axioms you have rolled up and smoke! So said L. Blackiensfiend… eh.
It is wicked to attempt to prevent the poor from perishing […] God wants you to enjoy your cigar
There’s the spirit!
Aurtur, Aurtur, sacre tonnére, où l’avez vous mis la boutielle de Croizet cette fois-ci?!
Sadly, it is Herbert Spencer that is against natural rights. A perversion of nature he was. A true conservative would overthrow the free enterprise system.
Herbert Spencer
Andrew Carnegie, already a titan of the business world, was sitting with friends on the moors of Scotland when the group took up the question of which author they would take with them if stranded on a deserted island. One said Shakespeare, another chose Dante. Carnegie didn’t hesitate. “Herbert Spencer,” he said.
Of all the writers that Carnegie read and studied throughout his life, he said that the English philosopher Herbert Spencer was the one who influenced him most. Spencer’s writings provided the philosophical justification for Carnegie’s unabashed pursuit of personal riches in the world of business, freeing him from the moral reservations about financial acquisition that he had inherited from his egalitarian Scottish relatives.
In his “Autobiography,” Carnegie wrote about the dramatic effect of reading both the naturalist Charles Darwin and Spencer.
“I remember that light came as in a flood and all was clear,” Carnegie wrote. “Not only had I got rid of theology and the supernatural, but I had found the truth of evolution. ‘All is well since all grows better’ became my motto, my true source of comfort.”
Spencer adapted Charles Darwin’s notion of natural selection and applied the theory to human society in a philosophy that became known as “Social Darwinism.” It was Spencer who coined the term “survival of the fittest,” using it to apply to the fate of rich and poor in a laissez faire capitalist society. Spencer argued that there was nothing unnatural — and therefore wrong — with competing and then rising to the top in a cut- throat capitalist world.
“Spencer told [Carnegie] that it was a scientific fact that somebody like him should be getting to the top,” says historian Owen Dudley Edwards. “That there was nothing unnatural about it, wrong about it, evil about it.”
Not only was competition in harmony with nature, Spencer believed, but it was also in the interest of the general welfare and progress of society. Many successful capitalists of the late 19th century embraced Spencer’s philosophy. These captains of industry used his words as justification to oppose social reform and government intervention. As Spencer said, these would interfere with the natural — and beneficial — law of survival.
http://www.pbs.org/wgbh/amex/carnegie/peopleevents/pande03.html
Skippy… And some wonder how we got here, why things have worked out as they have, in the last 100ish years… eh.
1). Demand a 1% Wall Street Sales Tax. Not some miniscule fraction of a percent. One Full Percent. It’s time freeloading gamblers pay up.
2). Nationalize the Fed. They’ve shown themselves during recent crisis years willing to issue credit to cover up for the zero due diligence, securitization regime Greenspan endlessly rationalized. Now it’s time the Fed issue credit for the sake of developing a phyisical economy worthy the 21st century. That Schactian fascist Bernanke need have Alexander Hamilon rammed up his you know what.
3). Send a postcard to the White House with one word written: “Nuremberg.”