Buy a bit of economic justice

Raise the minimum wage

So, I've written the Washington Post, again. And, reliably, it does not appear that they will print my letter.

No matter. I almost prefer the opportunity to elaborate my point in a forum (this one) that I know will always make space for me and, from time to time, will be read by others.

In any case, here's what I wrote:

Editor,

I applaud Charles Lane's effort to broadly consider the merits of an increase in the minimum wage ("Better than minimum wage," Feb. 19). One quibble, though.

Lane reviews four of the possible effects of an increase that may minimize an employer's interest in cutting jobs when an increase in the minimum wage is mandated. But in concluding that an expansion of the earned income tax credit (EITC) is superior to an increase in the minimum wage, Lane appears to discount two of the potential benefits connected to an increase--lower turnover and higher organizational efficiency.

Why not capture those positives, too?. Get better at calibrating and regularizing increases in the minimum wage and spread the benefits of a broader EITC.

Jeff Epton

Brookland

But the truth is that I have more than one nit to pick with Lane's piece, and one happy observation to add, as well. I held back on the quibbles because the Post doesn't seem very receptive to extended critiques and I figured the one point--that Lane was posing an either/or choice when both would work--was substantial enough.

In any case, Lane's column kicks off with his characterization of Paul Krugman as a "liberal firebrand [who] is still economist enough..." to note that quickly raising the minimum wage by a substantial amount would create problems. This description ignores the fact that Krugman is also a Nobel Prize winner in economics and signals to the casual reader that Krugman is a partisan and Lane is not.

This is not good journalism. We are all partisans. Krugman is the one with the Nobel. With his characterization of Krugman the firebrand, Lane is also signaling from the beginning that he is going to come down in favor of some alternative to raising the minimum wage.

Applauding Lane for actually appearing to be carefully considering a minimum wage increase was a bit of sychophancy in the interest of getting the letter published. Say it didn't work, if you will. Say that sychophants will burn in hell, if you like, but I tried.

The issue my letter raises is that despite Lane's apparent willingness to consider all the pros and cons of raising the minimum wage, he actually dismisses two potential benefits pointed out in a study by John Schmitt of the Center for Economic and Policy Research (CEPR). Workforces that are compensated better at the low end may end up working with more enthusiasm and improved efficiency. In the long run, such improvements allow employers to recover costs. But Lane sees that potential benefit as less certain than the potential downsides, like the possibility of reduced employment overall, and fewer job opportunities for youth.

Indeed, Lane cites studies that show reduced unemployment for "young, low-skilled people" when the minimum wage goes up. That ought to be a genuine concern and should be addressed, even if the problem is not quite the one Lane defines. The fact is that many young people have been pushed out of the job market with increasing frequency as more older people, including those collecting Social Security, take part-time jobs just to make ends meet. Holding down the minimum wage doesn't serve either group.

There is a silver lining in Lane's column. He actually uses CEPR as a substantial source for his column. That's a big deal, and a credit to CEPR and to co-founders Dean Baker and Mark Weisbrot who have been a relentless voice for progressive economic policy. Lane has always been a centrist, at best, and has never seemed very willing to consider progressive policy options. But he does here, even if he ends up rejecting the idea of a minimum wage increase.

As George Lakoff tells us (a bit on Lakoff here), sometimes speech is action. Baker, Weisbrot and CEPR keep researching, writing and talking and have helped move the political discussion to the left.

A better column on the minimum wage by Harold Meyerson ran in the Post on Feb. 20. In "A jump-start for wages," Meyerson points out that the lion's share of the benefits from productivity gains have been going to employers, not workers, since 1973. "The decoupling of wages from the fortunes of big business has been going on for the past 40 years," he writes.

Meyerson cites another study that may not have crossed Lane's desk. "As a January report by Cal-Berkeley economist Emmanuel Saez documents, while the income of the wealthiest 1 percent of Americans rose by 11.2 percent during the recovery years of 2009-11, the incomes of the bottom 99 percent declined by 0.4 percent. That's some recovery," he observes. Read the rest of Meyerson's column here.

Cliff diving

Fiscally speaking, Obama's position only gets stronger

Why shouldn't President Obama demand Republican support for ending Bush-era tax cuts for the rich? Because if he doesn't find a way to compromise with John Boehner and Mitch McConnell, we will all go over the fiscal cliff?

The truth is Republicans have stronger reasons to avoid the cliff than Obama does and, surprisingly, many more reasons to go over it, as well. Either way, they face political damnation.

If we do take a dive, Boehner and McConnell know that Republicans will get the major portion of the blame. Their refusal to compromise will be portrayed as protecting lower tax rates for the rich. No amount of explaining will change that perception.

Obama will be criticized, too, but not as harshly, and he doesn't have 2014 election worries, either. Republican incumbents (House or Senate) planning on running for reelection will begin their campaigns fearing that intransigence on the fiscal cliff (and the debt ceiling, if it comes to that) will cost them politically.

Theoretically, going over the cliff will position Republicans to reach a "grand bargain" in January that includes tax cuts. The new year will create incentives for both sides to reach a compromise that restores some of the Bush-era tax cuts (except for high-income earners) and maintains the payroll tax exemption that will disappear at year's end.

A January compromise will allow Republicans to claim that they remain the party of tax cuts. Unfortunately for them, to get the cuts that will help maintain their brand (even though Democrats will want them, too), Republicans will likely have to agree with healthcare reforms that they have always opposed, like allowing the government to require competitive bidding for medical equipment and other items purchased by federal health-care programs.

Medicare and Medicaid reforms outlined by the Center for American Progress and generally supported by Democrats are projected to save $385 billion over 10 years, without affecting eligibility or benefit levels. Republicans have their own proposals for saving billions more in healthcare spending, but most of them come from delaying eligibility and raising costs for recipients. The credit for such reforms will go to Obama, not to Boehner, Ryan, Cantor, McConnell, et al.

That same Republican leadership will want to restore some of the cuts to the military budget that will result from going over the fiscal cliff and Democrats will want to do some of that, also. But they won't want it worse than the Republicans will and will be able to bargain for other things they want more, like a little bit more stimulus spending and reduced cuts in education and human service spending.

All of that compromising is going to make Republicans look weak to their core constituencies. It's a painful prospect; agree to tax increases to avoid going over the fiscal cliff and tarnish their anti-tax, anti-government brand, or strengthen the perception that they are defending tax cuts for the rich and agree to a compromise afterward that makes them look like a junior partner in supporting handouts to Democratic constituencies.

The only possible basis for Democrats to oppose going over the cliff is the possibility that doing so will result in instant and significant damage to the economy. (Just three weeks ago in Compromise or Betrayal, I did advocate compromising with Republicans before going over the fiscal cliff. What can I say? Like Obama on gay marriage, my thinking has evolved.)But there are all sorts of ways the government can blunt the immediate effects of tax increases and sequestration, delaying the pain for long enough to pass a fix in January. Obama has lots of cards to play now. After the cliff dive is done, his hand will be even stronger.

A meditation on the Romneys

comes to an improbable conclusion

Walking the dog a bit ago and musing, I came across something of a meditation about Ann Romney and about Mitt. I'm feeling pretty well-disposed right now (it turns out the defense of Obamacare is pretty damn good medicine), but I'm still not intending to write anything nice about the Romneys.

The meditation began with a focus on Ann's horse, which, we have been told, has been an important element in the treatment of Ann's multiple sclerosis. Really? And, so, are we to understand that we are to pay no attention to the wealth piled up in the corner, but focus instead on Ann's self, mortal like the rest of us?

I can manage a very little of that, but then the thought comes to mind: How incredibly privileged the Romney's are that they can afford such treatment. Yes, we will all shuffle off this mortal coil, but along the way some of us will suffer more.

None of this means that the Romney's are bad people (though wealth and cluelessness and the desire to lower taxes on the rich is the dangerous wish of a powerful person), but they do not a First Family make. According to media reports, Republicans are doing some serious investigation of their strategies and commitments and exploring options for the future. Let me suggest that they never run a person this rich for the presidency, again.

That wasn't a viable choice this time, and isn't going to be again, I'd wager (though I'm not willing to bet a Romney-style $10,000 on the proposition). Certainly, wealthy men and women are going to be the ones occupying the presidency for as far into the future as we can see, and will capitalize on their stature and our celebrity culture after they serve, but Romney was very likely a zero too far. His $250+ million fortune was less transparent than the fifty-times smaller fortune of the man he ran against and substantially larger than that of the Bush family.

But Obama made what he has on fame and book royalties, both things that have come to him fairly recently in life. And George W. Bush had a goofiness about him that persuaded lots of ordinary folks that Bush was a pretty ordinary guy, too. Lots of voters were okay with a goofy, rich man for president when times were good, but this time around, a rich man who has the same vibe as Thurston Howell III (on Gilligan's Island), would have been kicked to the curb sooner, and long before Obama sleepwalked through the first debate, if the economy had been only marginally better.

Thinking back on images of the campaign, I am struck by how often I recall pictures of Mitt looking befuddled or startled. Looking, in fact, like he has just run up against another manifestation of real life--like mere mortals questioning his judgement or his veracity--that he had never experienced before. Well, the only people I know of who are routinely protected from that sort of collision with reality are CEO's and the one percent. Don't kid yourself, you Republican deep thinkers, everyone was going to figure out that Mitt didn't have a clue, even if the Obama campaign had spent less money trying to convey that impression of Mitt.

I must say I don't envy Republican strategists right now. They must figure out a way to compromise on taxes and the deficit and Social Security and Medicare and the debt ceiling and immigration and infrastructure and climate change while maintaining strong connections to Tea Party supporters, half of whom will demobilize as the economy improves. For the Republican party as it is presently constituted, staying relevant in an age of adverse shifts in demographics and the electoral map  is like being up the creek without a paddle.

But the somewhat bizarre conclusion to my meditation is the thought that I really do wish the Republicans well. Democrats could use a hand governing the country at this very critical time. A Republican boost could be transformative.

First we reelect the president

Next we heal the world

Well, so much for my abilities at foreshadowing what I might do next. My last post ended with the hopeful observation that I might write next about "the Chicago Way (here or here, for example)," a concept intended to suggest that dirty tricks and corruption have been refined to an extraordinary degree by Chicago politicians, of which Barack Obama is one and whose campaign, as the story goes, is too slick and too malign for the honorable likes of Mitt Romney.

I intended to belittle the notion that Chicago was so exceptional in the way of corruption and cynicism, and to call on lessons from my own experience as a politician in Ann Arbor and as a journalist in Chicago and Dayton to support an opposite conclusion, namely that politicians are no more corrupt or venal than the rest of us. That's a point that I think needs elaborating and repeating, but I've lost interest in the idea as the topic for this post.

Instead I want to elaborate on a comment my friend "kpdriscoll," left responding to the previous post, a bit about October surprises and the unlikelihood that there are any secrets left about Barack that might come out at the end and damage his political position. I wrote that only Romney could be victimized by the sudden appearance or elaboration on one of his "secrets." I was thinking about, say, the release of previous years tax returns or some nasty story about Bain.

The piece was weak. I wrote what I did because at the time I was feeling a little puny myself. Hell, I've been feeling a little puny for the last month or so. And my lassitude, I am convinced, came from the dread I felt about this election. Obama will lose, Romney will win, I've been thinking for more than a month now, and what will follow will be more of the Republican attack on government, an attack that has already, in the 32 years since Reagan was first elected, significantly defunded the government with severe consequences for the poor, for public education, for college students, for consumers, for healthcare and for the environment, to select just a sample.

In réponse, KP cited Hurricane Sandy as really the only October surprise of this election cycle and expanded with the observation that Sandy injected climate change and the environment back into political debate, however belatedly. This is true, I guess, as far as it goes, but climate change has been injected back into a debate that has been substantially soured by the ongoing Republican project, aimed at deligitimatizing the notion that government can improve and advance our common interests.

The two-pronged attack, defunding and deligitimatizing government, have left the country in a perilous state, especially in regard to a challenge as enormous as global warming and seas rising. Of course, the complete collapse of the U.S. and the global economy would have go a long way toward slowing the increase in the average global temperature, but as George Lakoff points out in "Global Warming Systemically Caused Hurricane Sandy," burning the gas reserves of Exxon Mobil alone would raise the average global temperature high enough to threaten civilization as we experience it. "The oil stored by all the oil companies everywhere would, if burned, destroy civilization many times over," Lakoff continues.

Under such circumstances, it should be obvious that even worldwide economic collapse would not eliminate the threat of devastating climate change (devastating superstorms are already here). It will take a government-led project many times larger than the Marshall Plan, larger than all public and private space exploration to date, to back us away from the damage that has already been done and to do so in a way that maintains the livelihoods, aspirations and quality of life for billions worldwide. It may be that it cannot be done.

It may be that the damage done by Reagan, Bush, Cheney, Bush, Rove, Boehner, McConnell, Romney and others has already crippled the faith that Americans have in their own government to the point that any new Marshall Plan would sound like "Solyndra" in American ears. But taking on that lack of faith and restoring American belief in the power of government to transform the world we live in is the challenge before us.

Like I said, I've been feeling pretty puny. Keeping the faith in the face of the threat presented by Romney has been harder for me than the experience of living with 12 years of Reagan-Bush and another eight years of Bush the Younger. Of course, in this instance, the fact that Marrianne works in the Obama administration and brings home the lion's share of our bacon is a factor, too. Without Marrianne's earning power I'd just be an aging retiree on a fixed income with a 14-year old kid and a terribly spotty work record. I'd be toast. So, yes, I have a personal stake in the outcome.

But I have a personal stake in restoring faith in government. It will not be hearty individualism or capitalism or the right to carry firearms that will protect the lives of the people I love who will be here after I'm gone. It will be American faith in the grand possibilities of collective mission articulated and guided by a progressive, democratic government. Unfortunately, climate change is gonna' keep on comin' while the essential work of restoring faith gets done.

So, first, we need to reelect Obama. Then, at a minimum, we are going to need a President Obama ready to play rough with plutocrats and corporations that have been the principal beneficiaries of the widening wealth and income gap and the deregulation push of the last 30 years. Close that gap, restore justice in the marketplace, and lead.

Do that and billions of us will have a chance of living reasonable lives into the second half of the 20th Century. Fail that and watch the continuing march of reactionaries and worse leading us to a place we never dreamed was possible.

The Indictment of Mitt Romney

This indictment of Mitt Romney, raising questions about his fitness to serve as president of the United States, is past due. Of course, the simple fact of one’s unfitness to serve, would not prevent Romney from serving—one need only review the case of George W. Bush or, for that matter, the hallowed Ronald Reagan, who napped away at least the last half of his presidency while functionaries like Ollie North got away with murder.

But I digress. This indictment will frame the case against Romney based on his political flip-flops and prevarications, his mid-twentieth century air (far too retro for the challenges of our time), and the devastating simple-mindedness of his political program, at least insofar as it can be determined.

To make this case, the indictment will call upon the recent opinion pieces of several knowledgeable journalists and economists. It should be noted that the likely response from the Romney campaign to this indictment, other than studied indifference, will be to disparage both journalists and economists in sweeping terms.

No matter. Those who investigate and judge the particulars as outlined in this indictment will recognize that ad hominem attacks on the individuals (and their professions) quoted here are in no way a merit-based refutation of their arguments.

There is “…an existing stereotype of Romney and Republicans as wealthy white businessmen, clinking wine glasses while bemoaning the irresponsibility of the help,” wrote Michael Gerson in a column in The Washington Post on Sept. 21. Gerson, who was a speechwriter for George W. Bush, and may very well be the person who coined the phrase “compassionate conservative,” centered his column, “Ideology without promise,” on what the video of Romney at a Boca Raton fundraiser in May revealed.

The problem, Gerson wrote, isn’t really its power to confirm the stereotype of Romney, after all, “few imagined Romney to be a closet populist.” The problem is what the video suggests about “Romney’s view of the nature of our [current] social crisis.” Gerson’s elaboration of that crisis delves into the ways that the decay of neighborhoods, widespread job losses, poverty and personal financial collapse devastate individual lives and whole communities, magnifying their vulnerability and make government activism and creative policymaking an absolute necessity.

The Romney revealed in the video, and the incessant Republican political assault on the federal government, makes them worse than irrelevant. “…a Republican ideology pitting the ‘makers’ against the ‘takers’ offers nothing. No sympathy for our fellow citizens. No insight into our social challenge. No hope of change. This approach involves a relentless reductionism. Human worth is reduced to economic production. Social problems are reduced to personal vices. Politics is reduced to class warfare on behalf of the upper class,” Gerson wrote, in what might be the most withering dismissal that will be written by a Republican about Romney and his campaign during this political season.

A day later the Post published a piece by Ezra Klein also focused on Romney and the 47-percent video. (Unfortunately, try that I might, I cannot locate a web version of this article available for free.) In his piece “Romney’s skewed view on personal responsibility,” Klein, formerly a business writer for the Post and now one of their most frankly liberal op-ed columnists, demolished Romney’s pay-no-income-tax dismissal of half of the country. “…more than 60 percent of [the 47 percent] were working and contributing payroll taxes—which means they paid a higher effective tax rate on their income than Romney does,” Klein wrote, adding that “an additional 20 percent were elderly.”

Worse than Romney’s dismissal of low-wage workers and retirees, Klein continued, was his description of who he needed to care about politically. “I’ll never convince them that they should take personal responsibility and care for their lives,” Romney said.

The horror here is that the people Romney dismisses are the people who must take more, not less, responsibility for their lives, Klein wrote. The time spent commuting on public transportation and wrestling with the scheduling difficulties that result, the time spent worrying about how to get one’s children into decent, affordable schools, the energy spent deciding on what to pay or what to buy in any given week, managing a budget with no give and with holes in the safety net below, takes an enormous amount of responsibility and energy. Mistakes of judgment will be made, Klein wrote, citing studies that vividly demonstrate how fraught and consequential are the lives and decisions of the 47 percent.

“Romney, apparently, thinks it’s folks like him who’ve really had it hard. ‘I have inherited nothing,’ the son of a former auto executive and governor told the room of donors.’ Everything Ann and I have, we earned the old-fashioned way.’ This is a man blind to his own privilege,” Klein concluded.

Also applicable here might be former Texas Governor Ann Richard’s observation about Bush, the father. “He was born on third base and thinks he hit a triple.”

In another piece in the Post that ran the same day as Klein’s piece, Colbert King made the case that the most damning thing about what Romney said privately in Boca Raton in May is how dramatically it undercuts what he said to the NAACP in public at their July convention. (King’s column, titled in the print edition, “Not buying what Romney is selling,” King quoted Romney’s apparently sincere sympathy for African Americans who live in a country where equal opportunity is not “an accomplished fact.” Because that is the case, our bad economy is not “equally bad for everyone. Instead, it’s worse for African Americans in almost every way,” Romney told the audience.

King detailed Romney’s claims to understanding and empathy. “We don’t count anybody out,” Romney said, “Support is asked for and earned, and that’s why I’m here today."

But, King wrote, the stuff Romney told the NAACP audience in July doesn’t square with the stuff he said privately in May to wealthy supporters at the Boca Raton event. “Romney, of course, was slurring more than the members of the NAACP, wrote King. “He also insulted retirees, college students, Americans with disabilities and people who work for a living for not much pay.”

In speaking to the Boca Raton donors, “witness Romney, the Chameleon, telling that crowd what they wanted to hear,” King wrote, in the process raising the implicit question: Why would an audience of political donors want to hear a presidential candidate dismiss 47 percent of the country?

Though an important question in its own right, it is nevertheless a digression from this indictment and will therefore be left to another time. Instead we will move on with the observations of economist Dean Baker, co-director of the Center for Economic and Policy Research (CEPR).

In “Romney pledges a Fed that will screw workers” posted on the Truthout website on Aug. 27^th, Baker detailed the ways that a strong (read overvalued) dollar results in lost manufacturing jobs and depressed wages in the United States, and a huge international trade deficit. But the strong dollar also confers enormous benefits on corporations and the wealthy.

“The arithmetic on this is striking. Productivity is projected to grow by more than 25 percent in the next decade. If workers get their share of productivity growth, this would imply an increase in annual income for the typical family of approximately $12,000 by 2022. On the other hand, with a Fed following Romney's strong dollar policy, workers in 2022 will be lucky if their wages are as high as they are today,” Baker wrote.

In furthering the indictment of Romney, it should be noted that Baker does not confine his scorn to Republicans, identifying Robert (“Wall Street”) Rubin, Bill Clinton’s Secretary of the Treasury, as a principal architect of strong dollar policy. “While the strong dollar may be a loser for most people, it does offer large benefits for people like Mitt Romney, Robert Rubin, and other members of the 1 percent,” Baker added.

“These people are all heavily involved in global business and their money goes further when buying into China, India, and elsewhere when the dollar is stronger.

"In addition, there are retail companies like Walmart that have set up low-cost supply chains in the developing world that depend on an overvalued dollar. Do you think they want to see the price of the goods they purchase overseas rise by 20 percent when measured in dollars? The same applies to manufacturing companies like General Electric, which produce most of what they sell in the United States overseas,” Baker continued.

Itemizing Romney’s obvious disinterest in the fate of so many people should not be concluded without a look at his apparent position on women and health care. Notwithstanding his obvious affection for his wife, Ann, whom he makes use of in his efforts to reach autoworkers (“my wife Ann owns two Cadillacs”), he seems unaware of the need to make policy for the majority of American households led by single moms or with both parents working.

“… the Republican Party [has] just spent two full years using their power across the country to get involved in women's medical decisions and gay people's lives, and ... Mitt Romney [has] repeatedly vowed to do the same if elected,” wrote Marge Baker, an executive vice-president at People for the American Way.

In “Romney toWomen: Stop worrying about your bodies and just trust me,” posted on the Huffington Post website, Baker added “Yes, the economy and jobs are hugely important issues in this election (though ones in which Romney doesn't exactly have an advantage). So is foreign policy, which one Romney advisor dismissed this week as a 'shiny object.' But so are the personal attacks that Romney and his allies are lobbing at women.”

There is much additional testimony that could be brought to bear for this indictment, but brevity matters and is sometimes decisive. The election likely will come long before Mitt Romney is called into court to face these charges. And the outcome of the election will likely make further action against Mitt a substantial waste of time and energy.

In the meantime, does anyone care to defend the guy who led a gang of school boys in an assault on an effeminate classmate, who went on vacation with his dog in a crate on the roof of his car, who includes a number of NASCAR owners among his good friends, and who has said that he would not lift a finger on behalf of 47 percent of the country? If so, please respond on this site.

It's the European economy, stupid

In Obama vs. Romney, Merkel holds the key cards

So the Greek and Spanish economies are bleeding out all over the floor of the Eurozone. Blood drips from not-yet-fatal Italian wounds, as well.

A recently announced deal to bail out Spanish banks has put off the reckoning for now, but the next round of European panic is probably a few days away, at most. Bank failures or default on debt payments by one of the southern European countries seem all but inevitable, so does a deepening of the current Eurozone recession. When that happens it will be bad news for the increasingly fragile American economy, which appears unlikely to gather much strength between now and the November election.

Everyone knows what that means: Mitt Romney will defeat Barack Obama.

Though the race may be tight, if the global economic slowdown is big enough, Romney’s coattails may lengthen enough to protect arrogant and naïve Republican members of the House of Representatives from the election-day judgment they deserve. Spared from defeat, the Tea Party will plunge ahead with the deconstruction of the federal government’s capacity to initiate, maintain, protect, invest, underwrite and regulate. And aided and abetted by Tea Party populists, Romney will implement his own limited agenda deregulating corporations, privatizing benefits, socializing risk and subsidizing the wealthy.

By the time that’s done, Romney will have crashed whatever remains of the American economy and will be a one-term president, himself. But, afterward, it will take decades of progressive policies to restore a stable and fair economy that rewards effort rather than wealth.

Because the health of the American economy and the outcome of the election in the United States very likely rides on what happens to the Eurozone, Obama has been lobbying European leaders to save the Eurozone by bailing out and stimulating the economies of the southern tier. In this matter, with the English wandering around in their own economic funk and French socialists praying for relevance, German Prime Minister Angela Merkel swings the most weight. And Merkel’s instincts seem conservative. She has been a champion of tough love and bitter restraint for the Greeks. And although the recent deal with Spanish banks was more generous and forgiving, Merkel will err on the side of caution. She will prefer to avoid any further moves that rely on stimulus.

As the fifth biggest economy in the world and an industrial powerhouse, Germany likely can survive even a partial collapse of the Eurozone. But the German economy, too, is weakening, forcing Merkel to consider whether it is worth it to be the only European economy left standing after the dust settles. Ultimately, the policy math might lead to the conclusion that continued bailouts for weaker economies will be the best thing for Germany. If so, the American recovery will stagger ahead, possibly even gain steam in time for a few good job-creating months immediately preceding the November election.

Everyone knows what that means: Barack Obama will defeat Mitt Romney.

Whatever a second term for Obama might mean, it will not mean permanent tax cuts for the rich, new and large subsidies for dirty energy or a resurgent Tea Party. But the big question is this: If European failure will tank the American economy and, with it, Obama’s chances for re-election, what kind of advice might Mitt Romney’s campaign give Angela Merkel on the subject of medicating sick European economies? Before you answer that question, consider that the Reagan campaign in 1980 was alleged to have done something similar, completely undermining Jimmy Carter's re-election chances.

Achenbach for fun, Baker for the facts

Really, the debt is not a big problem


Joel Achenbach, author of a lot of "Why Things Are" and, sometimes, "Why Things Aren't" books, is generally great fun. Informative and humorous, he can tell funny, riveting stories about things that are generally neither fun or riveting. A recent example, "The Wow Factor: Reading between the pixels of the Hubble's latest images," which ran last December in the Washington Post, reads quick and easy and shares just enough science to make casual readers dangerous at dinner parties.

The Post frequently uses Achenbach to cover complex topical stories that need more than a little explaining, but his most recent story, "Will the debt break Washington?" tramples all over familiar ground, leaving behind little steaming piles of opinion valuable, perhaps, to farmers.

For primary source, Achenbach uses Bill Gross, founder of a large investment company, to pound what appears to be his main point, namely the national debt is "awful" and "hideous" and, in the worst case, either a Ponzi scheme or doomsday for future generations. None of this is actually true, but more to the point, none of it is helpful. If successfully reducing the debt becomes the highest immediate priority for Washington then several things happen along the way, including immediate and major tax increases, dramatic cuts in social programs, likely throwing the economy back into recession. If the hysteria around this issue should continue to grow, it seems plausible that banks and brokerage houses could even get their holy grail, the privatization of at least a portion of Social Security.

Achenbach also relies heavily on William Gale, an economist at the Brookings Institution, his source for the notion that large deficits now shift the cost of problem-solving onto future generations. But ultimately, Achenbach relies on himself. The new health care bill, which Achenbach admits will pay for itself, actually makes things worse "because its spending cuts and new taxes could have been used to reduce the deficit ... instead of being an offset for an entitlement expansion." In view of the prevailing notion that Congress routinely creates new programs without paying for them, the point is bizarre. After all, a program that pays for itself is, according to Brookings, most Republicans, and a host of pundits, a thing of beauty and the very definition of fiscal responsibility. In this case, the program that paid for itself also extends health coverage to another 25 million Americans, which ought to be celebrated as a tiny bit of social justice rather than disparaged as mere "entitlement."

Achenbach gives a little ground in his debt-is-coming, sky-is-falling assessment. "The latest news from the Treasury is hopeful: Tax revenues are slightly higher than anticipated so far this year. The TARP program to bail out financial firms has proved far less costly than expected. Investors from around the world still eagerly bid on Treasury notes at auction," he writes. And Achenbach does quote the far from panicky Peter Orszag, director of the Office of Management and Budget.

Orszag tells him that he believes the Obama administration can balance the budget, excluding interest payments, by 2015. Orszag concedes that reducing the debt will require political action in the future, presumably some combination of tax increases and spending cuts, but his comments do not support Achenbach's next point, which establishes parallels between Greece, Iceland and the United States. In the upshot, should the largest economy in the world go the way of a tiny tax haven and one of Europe's weakest economies then, yes, I suppose Achenbach will have been proven right.

But how different his piece would have been had he asked Dean Baker, co-director of the Center for Economic and Policy Research (CEPR) for his opinion. Fortunately, we can go directly to Dean for a progressive economist's view of the story Achenbach tells. Here's Dean's opinion, in its entirety from his "Beat the Press" blog:

"More Debt Fearmongering at the Washington Post

This piece includes the information that the national debt "totaled $8,370,635,856,604.98 as of a few days ago." Boys and girls are you impressed by that big number? Are you scared yet? This is Fox on 15th here -- they'll keep trying.

This sentence continues by telling readers that this number is not "even counting the trillions owed by the government to Social Security and other pilfered trust funds." How did the author determine that the trust funds were "pilfered." The government didn't do what he wanted it to with the money? Wow, that gives a reporter the right to say the money was "pilfered." Apparently it does at the Post.

The article does not include the views of any experts who do not view the debt as a serious problem. It presents an inaccurate assertion (in the context presented) from Brookings economist Bill Gale that the debt: "This [running up the debt] is all an exercise in current generations shifting burdens on future generations." Actually, the debt being run up at present is helping future generations by keeping their parents employed, improving the infrastructure and providing them with a better education. There is little or no real burden associated with this debt since much of the debt being issued is held by the Fed. The interest on these bonds is therefore paid to the Fed, which in turn refunds the money to the government.

Last week, the NYT reported that the Fed paid more than $47 billion in interest to the government. So, where is the burden on our children? If we do get the economy back to normal levels of output the deficit will be at a manageable level. Over the long-term, if we don't fix the health care system, we will face serious budget problems, but this is an argument about the need to fix our health care system, not about the deficit."

I probably could have confined my response to Achenbach to quoting Dean's opinion alone, but where's the fun in that? Joel Achenbach's got opinions, I got opinions, too.

The Budget Deficit and the National Debt Are Not the Problem

We all need more schooling on economic issues

and I say it ought to happen outside the classroom. My professors of choice? Dean Baker and Mark Weisbrot, the estimable co-directors of the Center for Economic and Policy Research (CEPR). But I begin today's self-taught lesson with a quick look at "Smart Debt, Dumb Debt -- There's a Difference," a column by E.J. Dionne in today's Washington Post.

"Because we never face up to how much we need government to do, there is a pathetic quality to our discussion of big deficits," writes Dionne. I have no particular quarrel with this statement or most of the rest of his column. But I am acutely aware that any discussion of the federal budget, the national debt and huge and vital programs like Social Security are extremely contested terrain. And when we get on that ground, most of us get quite emotional.

The debt, we hear, is a direct squandering of our children's future. Similarly, extended unemployment benefits, deficit spending, even social security, are transfers of wealth from hardworking people to irresponsible spendthrifts. Universal health coverage under Obama, it is said, is a trojan horse that will expand the socialist takeover of the country. Of course, most readers of this blog do not share such extreme perspectives, but they have their doubts, I am sure. These doubts are more often expressed in the form of a belief that social security will not be there when the gen-x and millenial generations need it. Or expressed as a belief that maybe the stimulus package didn't work or, perhaps, the amount of debt held by foreign investors is dangerously high.

Such doubts make a thorough discussion of federal spending difficult at any level. They may not move moderate Democrats and independents to sign up for tea parties, but they do undermine faith in a liberal understanding of government activism, and that uncertainty is channelled by Blue Dog Democrats who turn resistance to government initiatives into a political program, which in turn contributes to the apparent futility of Congress. So when E.J. Dionne calls us to a more rational discussion of government economics, I start looking for ways to ground the debate in a broader understanding of economic reality and government alternatives; I start looking at what Dean, Mark and CEPR can tell us. Here's some of what I found during today's search:

In "America's Public Debt: The Least of Our Worries," Weisbrot observes that the 2009 stimulus package (about $1 trillion) was far too small. Even the best estimates suggest that it has saved less than one-quarter of the 8.5 million jobs we've lost since the Great Recession began. Under the circumstances, deficit spending shouldn't be an issue, he writes:

"It is clear that there is no short-term problem with running large deficits in a weak economy: investors are buying up even long-term U.S. Treasury bonds at remarkably low real interest rates. Clearly the markets do not perceive that our government is heading into risky territory with its debt. Interest payments on the debt are currently just 1.4 percent of GDP."

In fact, more deficit spending is necessary, says Baker, in "The Budget Deficit Crisis Puzzle." More aggressive government action is the only way to create the jobs we need and stabilize the economy, Baker writes, putting to rest the notion that huge current deficits will permanently cripple the economy:

"...larger deficits will put many of our children's parents back to work. Larger deficits will increase the likelihood that parents can keep their homes and provide their children with the health care, clothing, and other necessities for a decent upbringing...
In spite of the deficit hawks' whining, history and financial markets tell us that the deficit and debt levels that we are currently seeing are not a serious problem. The current projections show that, even ten years out on our current course, the ratio of debt to GDP will be just over 90 percent. The ratio of debt to GDP was over 110 percent after World War II. Instead of impoverishing the children of that era, the three decades following World War II saw the most rapid increase in living standards in the country's history."

Elsewhere, Baker argues that the millenial generation will not be harmed by paying higher taxes to support baby boomer retirees. They face other problems, he writes:

"The projections from the Congressional Budget Office, the Fed and all other standard sources show that before-tax compensation will rise on average at the rate of about 1.4 percent a year. This means that after 20 years their compensation will be more than 30 percent higher than what workers get today. This means that even if they pay substantially higher taxes than workers today, they will still have substantially higher living standards.

The retirement of the baby boomers is likely to help millennials. It will reduce the supply of labor -- creating opening higher up on career ladders -- thereby allowing millennials to get better jobs with higher pay.

The real threat to millennial living standards are:

1) inequality -- the continuation of the recent trend where more money goes to the top of the income distribution;
2) a broken health care system -- protectionists in control of policy want workers to give all their money to insurers, drug companies, medical supply companies and highly paid specialists;
3) ecological problems -- if the people in Bangladesh can make our children pay for the damage we have done to their land and lives through global warming, then our kids may be in trouble;
4) incompetent economic policy -- if geniuses like Alan Greenspan and Ben Bernanke continue to control economic policy, then they may be able to create poverty even in a world of enormous potential affluence."

I could go on, but that likely would be a cruelty to those of you who have actually read this far. But I will end by suggesting that a full discussion of how to restructure federal spending is impossible without putting military spending on the table. I've written about militarism and military spending quite a lot. The dollars involved are huge, highly wasteful in terms of job creation, and encourage destructive interventions and even more wasteful expenditures to support those interventions. In the next decade the U.S. will spend at least $1.5 to $2 trillion to pay interest on that portion of the national debt that is directly caused by past military spending. Only those people who actually believe that the North Vietnamese attacked U.S. warships in the Tonkin Gulf with gunboats, or that Saddam Hussein had weapons of mass destruction, or that billions of dollars in military subsidies to Israel have enhanced national security, can sincerely argue that we ought to keep spending more than $1 trillion on our military every year.

Health Care: The Four Week Countdown

Democrats have a month, reconciliation is the only way

On CNN this evening, James Carville had nice things to say about the way Lamar Alexander and Tom Coburn opened today's health care summit between Democrats and Republicans. He also said that he thought Barack Obama was the "smartest guy in the room." It was painful to watch the six hour discussion, Carville said, because he was an ADD sort of guy, but it seemed a good setting for Obama to show what he had.

Never mind. Win the discussion or lose it, Obama knows time is running out on health care and the Democrats, They must act before the Congressional recess for Easter, which begins four weeks from Friday. If they don't, Democratic senators and representatives will return from their districts cowed by voter anger and anxious to do something, anything about the economy. But the thing is, without passing a health care bill, nothing Democrats do after April will sway an electorate ready to abandon them in sufficient numbers to cost virtually every single swing seat they hold now. And Harry Reid will go down, too.

So here's the deal: There is going to be a bill passed by reconciliation. Now is the time for every one who gives a damn about what's in the bill to lobby to make it as good as it can be--the 51 votes are there. And if the bill passes before April, it will do very little downstream harm. The republic will not collapse before November and the economy, with a little more government action, will stagger forward; not in a way that fixes much, but well enough to reduce some of anti-government anger that so frightens the Dems. And with health care off the agenda temporarily, expect Congressional Democrats to do a little better with economic and environmental issues.

Social Security Spending Helps the Economy

Military spending drives the deficit

I could have sworn that my 28th letter to the Washington Post, which follows here, would be the second one that they would publish. Alas, I was wrong, again, but it is the content that matters, not the quarrel. The letter focuses, once more, on how unhelpful it is to talk about the national debt and federal budget deficit without even acknowledging military spending. Dean Baker, of the Center for Economic and Policy Research (CEPR), also addressed the same opinion piece to which I'd responded. I've interspersed Baker's response, which ran in his weekly Beat the Press blog, in the text of my letter.

Editor,

So Robert Samuelson is calling on the Obama administration to be more open about future debt and deficit difficulties (“America’s Candor Gap,” Feb. 8), but his version of fiscal reality lacks some important details, as well. The federal government is projected to spend almost $46 trillion between 2011 and 2020, Samuelson writes, and $20 trillion will go to Social Security, Medicare and Medicaid. Such a “…budget is mainly a vehicle for transferring income to retirees from workers, who pay most taxes,” he continues.

But as income transfers go, Samuelson’s example is relatively benign. Most of the transfer in this instance is from younger workers to older ones and most of the money transferred is spent immediately on goods and services—a reliable exchange that helps to keep the economy going. And, as economist Dean Baker and others have pointed out (see a list of CEPR's many reports about Social Security here), if the cap on Social Security and Medicare taxes is raised, higher income professionals will bear more of the tax burden, making the income transfer even more positive for the economy.

But there is a less benign income transfer that Samuelson does not even mention: military spending of more than $1 trillion annually (the sum of Defense Department spending + national security spending + military spending in other departmental budgets + supplemental war spending + interest on that portion of the national debt attributable to deficit spending on the military in previous years). In fact, 25 percent of the six to eight trillion dollars that will be spent on interest on the national debt during 2011-2020 will be attributable to previous military spending.

Discussing the country’s fiscal hemorrhage without discussing the military budget falls far short of full disclosure.

***************************************************


Readers of this blog may find Dean Baker's report, "The Social Security Shortfall and the National Defense Shortfall" of particular interest.

Baker's response to the same column by Samuelson is here. More about the rise in Pentagon spending compared to the increase in spending for Social Security is here. Finally, it is worth noting that, in the last cited piece, Baker does not use the $1 trillion+ figure for military spending that I use because he includes only budgeted spending for the Department of Defense and does not include the additional spending itemized in my letter to the Post.

How the Right, and the Rest of Us, Can Shrink Big Government

Musings of a Snow Shoveler

It was so quiet on DC streets yesterday, you could hear yourself thinking. The streets weren't completely impassable, but only a tiny number of vehicles drove by; the great majority of cars were stuck in snowdrifts and garages. High mounds of snow narrowed the roadways, absorbing much of the noise made by the mainly emergency vehicles and snowplows that did pass by. There were no trains running on the four lines of railroad track about a block away, and the blowers and fans that heat and cool the air for the hospital buildings nearby were, for once, inaudible. Humans were out and about, shoveling and talking and, somehow, the otherwise sound-deadening qualities of the snow facilitated the easy travel of conversational voices.

A neighbor two doors away shoveled vigorously east, so I shoveled vigorously west. We met halfway, a proud moment in the ongoing process of reclaiming the public right-of-way. Like the meeting of the Central Pacific and Union Pacific railways, it was a moment deserving of celebration, so, though we've lived on the same block for three years, Scott and I introduced ourselves to each other for the first time in history. Sadly, the neighbor to our east has failed to shovel his sidewalk, so the full corner-to-corner pathway remains incomplete.

But before the historic meet up with Scott, I couldn't help reflecting that the economic output in the very big East Coast neighborhood, ranging from as far south as, say, North Carolina, north to New York state and west to Pittsburgh had dropped dramatically. In fact, probably the single most productive activity in the whole megalopolis was moving snow around, a lot of it volunteer activity. My own snow moving output for the weekend, about six hours worth at a conservative $25/hour (snowplow drivers contribute much more) ought to add about $150 to the Gross National Product.

This thought got me to the further notion that if people who are most particularly incensed by big government really wanted to advance their cause, they could go out and do an hour's worth of volunteer activity every week on behalf of someone less well off, sicker or older than they are. Cutting grass, building a wheelchair ramp, making dinner, picking up medicine on behalf of someone who would not be able to do those things themselves, might, in fact, leave them undone would add huge sums to the GNP. Moreover, doing them would be preventative. They would improve quality of life for the beneficiaries, increasing health and well-being, and reduce the cost of future government intervention.

Say, for argument's sake, that 10 million people, otherwise consumed by political frustration about Big Brother, did engage in this sort of volunteerism for an hour a week and 50 weeks a year. At a conservative labor value of $20/hr., these activities would add about $10 billion to GNP. If 10 million more progressives, wishing to encourage such volunteerism and desiring to share directly in the community-building process were to match the effort, we could add another $10 billion to GNP and dial down ambient political heat in favor of light. If the same 20 million were to also give away their spare change to the homeless twice a week, we could inject another $2 billion annually into local economies. If all of this were to happen on a yearly basis, the total would equal a modest stimulus package, and it wouldn't take 60 votes in the Senate to make it happen.

The Daily Paper Sets the Agenda

for today's blog

Health care (two stories) and the White House beer-sipping with Henry Louis Gates and James Crowley made the front page of the Washington Post today. Elsewhere in the paper there are more stories on health care, a short piece on the approval of a $636 billion military budget by the House, a look at Israeli settlements and a lengthy piece about corporate banks, TARP money and generous employee bonuses.


Health Care
In "Industry Is Generous To Influential Bloc," reporter Dan Eggen's story begins with a focus on Rep. Mike Ross (D-Ark.), leader of the Blue Dog opposition to important aspects of proposed health care reform. Ross has been the beneficiary of "at least seven fundraisers...held by health-care companies or their lobbyists this year," Eggen wrote. A reader of the story would be forgiven for concluding that the results of health care reform would be better if we also had public financing for political campaigns.

"Doctors Reap Benefits By Doing Own Tests" explores the corrosive effects that wealth and self-interest have on health care reform. "A host of studies and reports by academics and the federal government shows that physicians who own scanners order many more scans than those who do not," wrote Shankar Vedantam. Though Vedantam used multiple sources for the story and includes both pro and con opinions, the story ends with the conclusion "that eliminating incentives for needless care could reduce the nation's health-care bill by as much as a quarter." A further look at which key players in the current health care debate are getting the most money from medical PACs would have strengthened the story.
(Though it does not focus exclusively on campaign contributions by physicians' groups, this study tracks the flow of dollars to key members of Congress.)

Blue Dog Democrats show up again in "GOP Senators Try to Slow Health Talks," a story that takes a look at slow progress and difficult compromises in both houses of Congress. There are two health care columns on the Post's Opinion page. "Health Reform's Taboo Topic" outlines one way to control the tremendous amount of wasted dollars generated by "defensive medicine." The piece ends on a note of despair.

"The real crisis here is not that health care is broken; people of good will could come together and create the conditions for rebuilding the incentive structure of health-care delivery. The real crisis is that Congress is broken, and that it answers to special interests instead of the needs of all Americans."

Racism and White Skin Privilege

Yesterday's White House meeting (over beer and peanuts) between Barack Obama, Joe Biden, Henry Louis Gates and James Crowley moved the "national conversation on race" only the tiniest bit (Post stories here and here), but a series of halting starts on that conversation is way better than the usual silence on the matter.

There is no reason to be critical of the lameness with which that conversation is lurching forward, either. The burdens of race and racism are huge.

A significant portion of the great wealth of this country has been built out of the coerced labor of black people, which materialized as profit controlled by Southern slaveholders and their business partners in the North and which was subsequently reinvested in industrial development (notably railroads) and in westward expansion. African Americans have never been compensated for that exploitation, or for economic disadvantages and the social and cultural attacks that Black America has suffered since.

White skin privilege does not spread its benefits equally. The bounty has fallen preponderantly on the haves. Have nots get less, though almost all whites have more immunity from suspicion, detention and arrest than any African American, including Professor Gates.

Still, whether they choose to cop to it or not, whites approach conversations about race with their own version of the burden of history. Sgt. Crowley, an instructor on policing in black communities, is one of the Cambridge PD's go-to guys on race, and he couldn't handle the confrontation with Gates. For the average white person, showing up daily, perhaps, to a job that doesn't pay all the bills or feed the soul, maintaining a household wrestling with all the slings and arrows of life, facing up to the notion that black folks sacrificed blood and sweat to create your life of dubious privilege and entering in to a conversation about race must seem nothing short of dangerous.

Regardless, race remains a major variable in determining who gains and who loses and, not surprisingly, who lives and who dies. Focusing on a single African American on death row, Gary Younge's piece, "Beer and Sympathy," in the Nation suggests another subject area that a conversation on race should explore.


Military Spending Is Killing Us
Clearly, it's killing them (mostly Iraqis, Afghanis and Pakistanis), but Americans die, too, as weapons and weapons systems seek relevance and justification, their own compelling raison d'etre. But the cost of buying weapons and maintaining a huge military establishment drains funds that could be invested in domestic infrastructure, job creation and health care. In a country which has the highest infant mortality rate and shortest life expectancy among Western democracies, not investing in those things kills people.

But, as the Post reports today in "House Backs $636 Billion Defense Bill," the enormous sum we are spending includes lots of things even the Obama administration doesn't want. And though it is not included in the story, the fact remains that our military has no equal worldwide, is equipped for wars that we will never fight and is supported by a budget that will almost certainly exceed one trillion dollars a year by 2020, if not sooner. And that does not include military and related spending that is buried in other budgets (including energy, homeland security, spying and classified spending).


Israeli-Palestinian Conflict
There are deep, reasonable and contentious questions about Israel's continued existence as a limited democracy and Jewish theocratic state that need far more discussion in the United States, though it is unclear when we will have the gumption, as a nation, to have that discussion. It isn't even completely clear to all parties to the conflict that Jewish settlements on land that has been part of the West bank since 1967 are continuing violations of international law. But "Settlement Foes Take Fight to Israel's High Court" reports on the work of Israeli "anti-settlement activist Dror Etkes," who has assembled a database that should simplify the challenge of proving that the settlements have been established on land owned by Palestinians. After years of apparent dormancy, the story of Etkes' efforts is one of many examples of a revived Israeli peace movement.


"Bankers Bonuses Beat Earnings as Industry Imploded"


The Post also carried an article about the spectacle of bank's, so recently on the government dole, turning around and paying more than $30 billion in bonuses during the same 12-month period in which they received billions in federal aid. (Read the story here.) The story talks about steps various banks have taken to blunt some of the public criticism of their pay practices. But the biggest problems here lie with the zealous belief in "free markets" that have allowed banks and other major corporations to go largely unregulated and grow "too big to fail." Here's an old post from Robert Reich on the subject and a more recent one from Joseph Stiglitz on why we ought to breakup the big banks.

Health Care Reform Lurking

But Not Good Enough?

The Washington Post ran seven articles on health care, one on the front page, in an 18-page first section today. The coverage added up to more than 10 percent of the paper's first section. Hurricane Katrina may have been the last time that coverage of a single issue was so dominant in the Post, though I suppose I should check back issues to see if Michael Jackson's death might have made a similar footprint.

But the Post's focus is right on and the effort demands attention. In "Health Insurance Industry Spins Data in Fight Against Public Plan" writer David Hilzenrath says the industry is "cherry-pick[ing] the facts."

Citing an industry spokesperson who says the vast majority "of Americans are satisfied with their existing health coverage," Hilzenrath makes the editorially sound observation that the same poll shows that respondents also support "the creation of a public [health insurance] plan." Fetching additional data from another source, Hilzenrath observes that the public's apparent affection for their existing health insurance ought to be taken with a grain of salt. He writes:

"Those who described their health as "excellent" -- people who presumably had relatively little experience pursuing medical care or submitting claims -- were almost twice as likely as those in good, fair or poor health to rate their private health insurance as excellent."

In other words, if your health is good, and you're not relying on your insurance to keep you healthy, then you may not know if health care needs reforming (though one day, you will).. The percentage of those expressing approval for their existing insurance plans would also be lower if the 16 percent of Americans who don't have coverage were counted as at least neutral on the matter. Regardless, health insurers are likely the most powerful interest group at work on health care reform these days. And one reform, mandatory coverage, is naturally backed by health insurers.

The Post's front-page story "Like Car Insurance, Health Coverage May Be Mandated," explores the experience of mandated coverage in Massachusetts. In 2007, somewhere near 600,000 state residents, about 16 percent of the population, had no coverage. The state's health care reform required individuals to get coverage or pay a penalty, and required most employers to provide a coverage option or contribute to the overall cost. A year later, only three percent of residents were without coverage. Of that group about half paid the penalty rather than buy coverage, and "71,000 residents were exempted [from penalties] because they did not meet the minimum income levels."

A mandate will certainly benefit health insurers. If four out of every five Americans with no current coverage were to buy even $2,500 worth of health insurance (way below the current average premium), it would mean $80 billion a year in new revenue for the industry.

No rational person who doesn't work for a health insurer wants to create a new revenue stream for companies primarily responsible for the way we ration health care, but a mandate could dramatically reduce a variety of health care costs, including uncompensated emergency and hospital care. The amount of possible savings is unclear, but it's probably on the order of more than $100 billion each year. Several websites provide data that suggest the savings could be much higher. (Here and here are two of those sites.)

Op-ed pieces by Michael Gerson (a former Bush II speechwriter), "Health Care's Sensible Center," and Harold Meyerson (the only mainstream columnist I know of who identifies himself as a socialist), "The Can't-Do Blue Dogs," take apparently opposite positions on how much compromising Democrats ought to be doing on the road to getting health care done. But both writers are clear that the debate is largely between various positions within the Democratic party.

In my view, Gerson makes two big errors in his column. The first is discounting what President Obama might accomplish in the upcoming month. Obama may be too wounded politically by the continuing recession, growing unemployment and "trillions of dollars in stimulus and bailouts" to provide good leadership, Gerson writes. He also quotes William Galston of the Brookings Institution, who told Gerson that Congressional opposition to "boosting taxes on the rich" eliminates that option, but if Obama does enter the political fray with a specific list of reform requirements, taxing households with annual incomes of, say, $350,000 or more, ought to be completely doable. A reform bill promoted by House Speaker Nancy Pelosi envisions raising more than half a trillion dollars from such a tax (see the details here).

On this point, Meyerson is clear. Taxes ought to (and probably would) be paid, if not for "the Blue Dogs' ... deference to wealth." But even though I am anxious to see Obama weigh in on the subject, Steven Pearlstein ("Imperfect Health Reform Still Beats the Status Quo") sees Obama as "boxed in" and "lashed to the mast" of predicted deficits in both health care and federal spending. But so far, Obama's commitment to not raising taxes has been limited to individuals making less than $250,000 per year. To most of us, such an income threshold seems to go way beyond the middle-class, but it still leaves the president free to endorse tax revenues like those advocated by Pelosi.

For me, no analysis of this issue would be complete without checking on what Dean Baker, co-director for the Center on Economic and Policy Research (CEPR), has to say. Accordingly, here's "Taxing Health Insurance Premiums and Subsidizing Health Care Providers," which ran yesterday on truthout. Taxing the health benefits of working people won't do, Dean writes, but changing the drug patent system and relaxing immigration rules limiting entry of qualified medical doctors would cut $200-300 billion in annual health care costs.

The problem with all of this, as Ruth Marcus writes in "The F-22 Model for Medicare," is that current health care arrangements have always worked pretty good for insurers, providers and the shrinking numbers of workers with employer-provided health coverage. This creates both a powerful lobby for the status quo and another group of voters who simply have not supported dramatic reform. To Marcus, this sounds uncomfortably close to the experience with the endlessly funded F-22 fighter jet.
The lineup of powerful members of Congress who fought to maintain production of the F-22 despite the opposition of President Bush, President Obama, Sen. McCain and several secretaries of defense kept the program going. But just yesterday, Congress finally pulled the plug on the F-22.

On the way to a final optimistic note, Marcus advocates another reform not mentioned in the other articles, improvements to MedPAC or the Medicare Payment Advisory Commission, advocated in some form by the Obama administration and some members of Congress. Establishing "a MedPAC on steroids" would create huge Medicare savings and, in the process, reduce health care costs overall. "Because Medicare is the 800-pound gorilla of health care, its reimbursement policies also drive payment arrangements between private insurers and providers," she writes.

And, speaking of the F-22 and other good ways to save tens, maybe hundreds, of billions of dollars in military expenditures, lets give Marcus the last word.

"The politics of health care make the F-22 fight look simple. It won't be easy to expand coverage in a way that controls costs.

But maybe, just maybe, the naysayers are premature."

You Ought to Want a Revolution

Audacity Is Not Enough

The Congressional Budget Office says that the main health care proposals in front of Congress won't control costs and will plunge the U.S. into unmanageable debt (if we are not there already). The Washington Post reports (here), that the CBO's analysis has fueled further opposition by "fiscal conservatives" (a good number of congressional Democrats and virtually all Republicans) to health care reform. But the problem here is not the cost. The problem lies in the terms of the debate.

We are the only democratic, industrialized nation in the world that does not have universal health care. We spend more on health care with worse results than virtually all other democracies combined (see some ugly details here). Under the circumstances, no member of Congress should be pretending to outrage over the future costs of current proposals. If they were truly well-intentioned and effective at their jobs, they would have fixed the problem long ago. Privately, many of them might have wished to do better. If so, their better nature has been subverted. The only question is, by whom or by what?

In "It's Not Rationing, Stupid," Dean Baker nominates "the insurance industry, the pharmaceutical industry, the A.M.A., and the rest of the axis of evil opposed to meaningful health care reform" as the agents of reaction at work here. This seems a more than reasonable proposition to me. Further, given the extraordinary financial and social burden that health-care-for-private-gain places on working people, we ought to be on the verge of some sort of revolutionary moment.

Unfortunately, we are not. Yesterday, President Obama spoke at the NAACP's centennial celebration. I heard very little of his speech, but the full text is available here. The released version of the speech includes this: "so many in our community have come to expect so little of ourselves," but I heard him add "and so little for ourselves." This may have been some sort of wishful auditory hallucination, but it rings with a fundamental truth about the country and the difficulties with making change.

Labor, under attack and effectively divided against itself, is doing more than any other sector in the struggle for real health care reform, but it is simply not enough. And there is no other grouping of any significance organized to lead a struggle for decent health care for all. Going on 50 years ago, unions, senior citizens (represented by the AARP), African Americans organized in effective groups, and young people, in general, worked together to push the creation of Medicare, the last major health care reform here. Today such an achievement seems almost impossible.

I tire of the notion that the explanation lies in how little we expect of ourselves. That we have learned to expect so little for ourselves seems to explain more. The reaction to the liberal political victories of the '60s and '70s (e.g., voting rights, Medicare, abortion rights, another great health care advance) was a decades-long counterattack on the proposition that government could and ought to do things that the private sector couldn't and wouldn't do and does them effectively. The well-financed and relentless message that the free market creates wealth and does so reliably, that we regulate and intervene in the economy at our peril, won the day virtually every day for the last 30 years of the 20th century.

In the ideological vacuum created by the collapse of the economy, Republicans continue to rely on the same message. Well-meaning Democrats flounder in their efforts to frame a different picture. President Obama urges hope, but "expecting more from ourselves," is in his written remarks, "expecting more for ourselves," spills out only in the heat of the moment.

But that is the message that the generations born since 1970 need to hear. You have a right to expect more from government, but you must struggle to make that happen. Government of the people, by the people and for the people is always a work in progress. To the extent that you have come to believe that you must rely on yourselves individually, you are the victims of corrupt and entrenched interests that wish to keep you sidelined.

The United States is the only country in the world that has allowed health care to become a profit opportunity. If President Obama will not lead us the health care revolution that will serve the country best, you must lead him there. Young people elected Barack Obama to the presidency, now young people must lead him further.

Our Economic and Environmental Future According to Republicans and Democrats

Who Is Accepting the Challenges?
Who’s Putting Them Off?


The National Debt

The nearly unanimous Republican position on the growing national debt:
It creates a crushing burden for future generations to manage.

The Democratic position on the national debt, generally:
The cause of the debt is twofold.
• A large portion of the debt is the result of higher and higher interest payments on debt incurred by Republican administrations stretching over 20 years (Reagan, Bush I, Bush II) between 2000 and 2008.
• Debt incurred investing in reconstructing an economy that will grow and generate increased wealth in the future is defensible debt.


Climate Change

The Republican position on climate change, generally:
• Climate change is not scientifically proven.
• Even where there is evidence of climate change some of it will be benign and technologically manageable.
• Proposals to address climate change put too much burden on the private sector. The proposals also punish the United States while growing economies like China and India make things worse.

The Democratic position, generally:
• Some of the effects of climate change are already irreversible. We need to act now before things for future generations get much worse.
• Historically and currently, industrial and transportation policies of the United States have been significantly, if not primarily, responsible for much of the damage done to date. The United States must lead the world in addressing climate change, now.


Tentative Conclusion:

Republican claims about the future of the economy are debatable. Democratic claims are, also, but the notion that debt incurred to invest in the future now will pay off with growth and a larger GDP in the future make sense to me.

But the unwillingness of most Republican officials to concede that climate change is a real and growing threat completely discredits their claim to care about the burdens we are bequeathing to future generations. Democrats may not know quite what to do, but that makes sense in dealing politically with an unprecedented problem. We must act, and if action means a reduced standard of living now in order to preserve a reasonable standard of living in the future, we must accept that as a basis for sound climate change policy. And we should discount both the economic and climate change recommendations of all politicians who rail against "burdening" posterity with monetary debt and, in the next breath, suggest that it's OK to pass along the burdens arising from global warming.

GM and Chrysler

A Different Model?

I've criticized Washington Post columnist Steven Pearlstein in the past (check out "Letter to the Washington Post, #7" and "No Bailout"), so it's probably only fair to acknowledge when Pearlstein may have gotten it right. In particular, the federal investment in GM could turn out to be a very positive intervention in the long run.

In his Post column today (read it here), Pearlstein argues, as he has in the past, that GM and Chrysler and their suppliers are too big to fail. This could be just a rationale for a bad bailout. But I think Pearlstein is correct when he says that the government's investments in Chrysler and GM aren't bailouts, at all, but a massive intervention aimed at protecting jobs and pensions and manufacturing capacity.

Pearlstein points out that the intervention wasn't mandated, the Obama administration elected to intervene. In the process, original shareholders have been wiped out, or nearly so. The management teams that presided over the collapse of the two companies have been dismissed. "Bankers and bondholders who had the bad judgement, or the bad luck, to lend money to these companies" will get only pennies on the dollar.

But Pearlstein points out "any fair analysis would also show that the net present value of wage, benefit and job-security concessions agreed to by the United Auto Workers amounts to tens of billions of dollars." In exchange, some autoworkers will keep their jobs. Pensions will be cut, but will survive. And the union, its members and related organizations will own about one-eighth of GM and, I suppose, a similar share of Chrysler. The UAW will have to find a way to make this ownership share pay off, not a sure thing, but maybe a way to pressure the still giant auto companies to operate in the interests of all stakeholders in the future rather than in the interests of a privileged few.

And though I wish to give Pearlstein as strong an "attaboy" as possible for his column, his closing sentence opens up a whole new can of worms. "If President Obama can get most of our troops out of Iraq by the end of 2010, he ought to be able to get our money out of Detroit by then, as well," Pearlstein wrote.

I don't know about that analogy, Steven. First of all, I'm hoping that the U.S. investment in GM is not based on the same lies and deceptions that framed and covered the U.S. attack on Iraq. Second, we ought to be looking for some actual success story as a result of the GM investment, not a laying waste to the company. Finally, the troops in Iraq are, in significant numbers, moving to Afghanistan. Here's hoping that there are far better uses for the GM cash when we finally get it back.

Auto execs take the train (and love it)

So, it's been a bad week (month? year? decade? two decades?) for GM, Ford and Chrysler. Depending on the time span in question, they are failing financially and politically, not to mention competitively. Should we add environmentally, morally and millenially? As it turns out, with health care, pensions, housing and employment growing ever more problematic for millions of us, there is still some truth to the notion that as GM goes, so go we all.

This past week, the CEOs of the Shrinking Three got spanked in Washington, but still couldn't get paid. Rebuked for flying their separate corporate jets to town at a cost of tens of thousands of dollars, the sound of slamming doors had barely stopped ringing in their ears when the door opened one more time so that the House Democratic majority could kick Rep. John Dingell (D-GM) to the curb. The Dear John message was obvious as the Dems replaced Dingell with Henry Waxman (D-CA) as chair of the Energy and Commerce Committee.

In a separate press conference, congressional leaders suggested that the auto companies shouldn't bother to return to Washington without a plan we could believe in. A commentator on CNN suggested that the CEOs might have gotten a better response if they'd rode a bus to D.C.

But it's time for a compromise here. How about if they'd taken the train together from Detroit? Would that be better? Imagine all that time together--the ability to both relax and focus, to plan, even.

Cynicism aside, the execs (Richard Wagoner of GM, Alan Mulally of Ford and Robert Nardelli of Chrysler) are smart and experienced people who lead huge organizations with lots of resources and, even, creativity. Surely, they saw major parts of this crisis coming. And they have groupings within their organizations who have developed and promoted programs and projects that could be part of a creative plan to save the core of the domestic auto industry.

Sixteen hours on a train together discussing the obstacles and challenges might have resulted in the three arriving at Washington's Union Station as something other than puppies due for a whipping. There might have been more "you know, we've been talking," more "we can fix some of this," more "here's an idea I love," more "this is going to be painful, but here's the beginning of a plan for a greener transportation system in the United States and for Detroit manufacturing's role in that system."

Imagine Wagoner, Mulally and Nardelli running off the train yelling excitedly at each other. "You call, Pelosi. Tell her we'll be late, but we'll be there. We gotta find a Kinko's, make 500 copies of this proposal."

"I'll do it," shouts Wagoner. "But make it 1,000 copies. The press will want their own copy."

But the opportunity has passed them by. They came. They saw. They failed. And, anyway, you can't relax on Amtrak. It almost never runs on time or on decent track. Is there even rail service from Detroit to D.C.?

Still, there's always hope. And if they do come up with a plan that Washington can believe in, maybe they'll think to put a better rail system in it.