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Sure, we urgently need to repeal the sequester.  (You can tell your Representative that here.) But it’s even more important to repeal the insane thinking that led to the sequester.

That means repealing the deficit babble that still dominates Washington (and provided the theme for the President’s weekly Saturday address). It means repealing a conservative Republicanism which is based, not on economic philosophy, but on an atavistic hatred for government in any form.

Most of all, it means repealing the politics of deprivation and replacing them with the politics of growth. We’ve learned that contractionary policy based on government cuts is … well, contractionary.  And that expansion policy is needed if we want the economy to expand.

The argument shouldn’t be about where we should be cutting, but about where we should be spending more money.

Have You Hugged a Keynesian Today?

Pity the poor Keynesian. This benighted economist has been vilified, ridiculed, and marginalized for decades. What was the Keynesian’s crime? To imagine that the proven economic principles which fueled our post-Depression and postwar growth were still proven economic principles.

The assault on Keynesian thinking went hand in hand with other mythologies of the New Economy: You don’t understand our new theories, the Keynesians and neo-Keynesians were told. You’re mired in the thinking of the past.  You don’t understand the information economy. You can’t grasp financial innovation.

And your old models of government action in recessionary times are obsolete because they’re not creative enough. (That’s an especially objectionable word in this context. This is economics, not a university extension course on “Self Expression With Clay.”) (more…)

I won’t waste space in this blog discussing the harmful effects of the sequester. If the recent FAA debacle doesn’t give you an idea of how bad this is, or how bad it will get, nothing will.

 

Instead, I want to highlight just how crazy the Republican position is on this issue.

 

For the past four years, the party has made it its mission to obstruct President Obama’s agenda, and to whittle away at the power of the federal government so that the country can safely be run by special interests without the pesky intervention of the law. On the economy, the GOP has tried everything they can to drain the public sector of much-needed tax revenues and to channel even more money into the hands of their wealthy donors. After all, who needs public roads, subways, housing, hospitals, schools, and the police department when the rich can buy all those services privately?

 

But even knowing the Republican mindset, the party’s stance on the sequester has left me scratching my head. Granted, the Democrats are as much to blame for the sequester as their opponents, and the political calculation behind it has clearly backfired since our Congress is so dysfunctional that it cannot reach a deal even when confronted with a crisis. But whether you look backwards or forwards, it is the Republican obsession with austerity that led to this, and which is continuing to make it impossible to find a solution.

 

While the Republicans say they would cooperate with Democrats to repeal the sequester, what they want in return makes the whole exercise pointless. More precisely, they are willing to stop the spending cuts triggered by the sequester only if the Democrats agree to even bigger spending cuts and for even more public services! (more…)

For years now Senate Republicans have been filibustering … everything. At the end of last year there was an effort to convince Democrats in the Senate of the need to reform the filibuster so things We the People need to get done could get done. At the last minute, however, this effort was scuttled by House Majority Leader Harry Reid who instead made a gentleman’s agreement with Republican leader Mitch McConnell. So now Republicans are filibustering … everything. And Reid, in a strongly-worded statement, threatened to issue a sternly-worded letter.

Silent Obstruction

In the last few years pretty much everything We the People were hoping to accomplish to make our lives better was filibustered by Senate Republicans. So many bills and nominees that were so important to us … the American Jobs Act, a terrible cost. The Bring Jobs Home Act and the Ending Offshoring Act to end tax incentives for sending jobs and factories out of the country, the Public Option, the DREAM Act, the Repeal Big Oil Tax Subsidies Act, the Emergency Senior Citizens Relief Act, and the DISCLOSE Act so we could at least know what companies and countries were bribing our politicians. … Just so much cost…

Public Doesn’t Know

The public doesn’t even know that so many important acts and nominees have been filibustered! The public believes a filibuster is Senators taling all night, but rules changes allowed Senators to block bills without doing anything. The media did not report these obstructions as filibusters, only saying things like “the Senate failed to pass a bill to…” or “Senate rules requiring 60 votes …” or, most destructive to democracy, “Democrats failed to gain -passage of …” The public had no idea what was happening, no idea of the extent of the obstruction, and no way to know who to hold accountable for the failure of government to accomplish anything. Democracy can not function without an informed citizenry. (more…)

So far, the much-dreaded “sequester” — some $85 billion in federal spending cuts between March and September 30 — hasn’t been evident to most Americans.

The dire warnings that had issued from the White House beforehand — threatening that Social Security checks would be delayed, airport security checks would be clogged, and other federal facilities closed — seem to have been overblown.

Sure, March’s employment report was a big disappointment. But it’s hard to see any direct connection between those poor job numbers and the sequester. The government has been shedding jobs for years. Most of the losses in March were from the Postal Service.

Take a closer look, though, and Americans are starting to feel the pain. They just don’t know it yet.

That’s because so much of what the government does affects the nation in local, decentralized ways. Federal funds find their way to community housing authorities, state unemployment offices, local school districts, private universities, and companies. So it’s hard for most Americans to know the sequester is responsible for the lost funding, lost jobs, or just plain inconvenience.

A tiny sampling: Brandeis University in Waltham, Massachusetts, is bracing for a cut of about $51 million in its $685 million of annual federal research grants and contracts. The public schools of Syracuse, New York, will lose over $1 million. The housing authority of Joliet, Illinois, will take a hit of nearly $900,000. Northrop Grumman Information Systems just issued layoff notices to 26 employees at its plant in Lawton, Oklahoma. Unemployment benefits are being cut in Pennsylvania and Utah.

The cuts — and thousands like them — are so particular and localized they don’t feel as if they’re the result of a change in national policy. (more…)

No jobs. No growth. Falling income. Unaffordable colleges. A dying middle class. Young people without hope.  The greatest economic inequality in modern history.

And yet, in the midst of the Long Depression, we’re told that President Obama intends to cut Social Security.

According to reports, the new presidential budget proposal will also include job-killing spending cuts and a Medicare cost hike that will increasingly affect the middle class with every passing year.

The president says this isn’t his “ideal plan,” but he doesn’t say what his ideal plan would look like – and he certainly isn’t fighting for a better one.  He also claims his budget offers “tough reforms,” which rings of self-satisfaction rather than sorrow.

He’s decided on his next move. What’s yours?

This budget represents a moral challenge for everyone, especially those of us who voted for him. I’ve already gone here to let my elected officials know that I unconditionally oppose these budget cuts. Join me.

Death of a Thousand Cuts

Call it “the unkindest cut of all.” What makes the chained CPI particularly unkind is the fact that millions of Americans have already had their Social Security benefits cut.  Benefits are determined based on a person’s lifetime earnings, so any significant loss in income now results in a benefit cut later. (More details here.)

Long-term unemployment is a benefit cut. A stagnating wage is a benefit cut. Wealth inequity is a benefit cut.

How many more cuts can the American people stand?

A Deep Cut

How big is the president’s chained-CPI cut? For someone who retires at 65, it would be:

— a 3.7 percent cut at age 75;
— a 6.5 percent cut at age 85;
— and a 9.2 percent cut at 95.

What about the dollar cost of the president’s cut? For the average earner, cumulative benefits would be cut by:

— $4,631 – more than three months of benefits – by age 75;
— $13,910 – nearly a year of benefits – by age 85;
— and $28,004 – more than a year and a half of benefits – by age 95.

Unless the president’s budget excludes the chained CPI from IRS calculation, it would also lead to tax increases for all income except that in the highest tax bracket. So his Social Security cut would also be a middle-class tax hike. (more…)

John Boehner, Speaker of the House, revealed why it’s politically naive for the President to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. “If the President believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a statement released Friday.

House Majority Leader Eric Cantor agreed. He said on CNBC he didn’t understand “why we just don’t see the White House come forward and do the things that we agree on” such as cutting Social Security, without additional tax increases.

Get it? The Republican leadership is already salivating over the President’s proposed Social Security cut. They’ve been wanting to cut Social Security for years.

But they won’t agree to close tax loopholes for the rich.

They’re already characterizing the President’s plan as a way to “save” Social Security — even though the cuts would undermine it — and they’re embracing it as an act of “bi-partisanship.”

“I’m encouraged by any steps that President Obama is taking to save and preserve Social Security,” cooed Texas Republican firebrand Ted Cruz. “I think it should be a bipartisan priority to strengthen Social Security and Medicare to preserve the benefits for existing seniors.” (more…)

Two recent news reports indicate that the President is “strongly considering” cuts to Medicare and Social Security in his upcoming budget, which is to be released in less than ten days.

The question’s been asked for four years: Why would Obama want to cut these popular and successful programs, especially when there are better solutions out there (and Social Security doesn’t even contribute to the deficit?)

It’s time to ask a new question: Why wouldn’t he cut them?

Bad News

Last Friday the Wall Street Journal reported that the President’s cuts would be “aimed in part at keeping alive bipartisan talks on a major budget deal.” No, you’re not experiencing déjà vu. We’ve heard this story before.

The Journal was vague on the President’s specific cuts, though it did cite the “chained CPI” cut to Social Security. (The Administration described those cuts as a minor “technical change,” although they’re technically less accurate than the current and already inadequate formula. They’d come to 6.5 percent of a 75-year-old’s benefits and 9.2 percent of a 95-year-old’s.)

The; New York Times reported that the President and House Republicans “have quietly raised the idea of broad systemic changes” to these programs as part of a broad “fiscal deal.” It also provided more detail on the President’s newest proposed Medicare cut, which would combine the deductibles for outpatient and hospital Medicare coverage. That would increase annual out-of-pocket costs for 80 percent of Medicare recipients (while typically lowering them for people who are hospitalized during the year.)

The rationale is that it will discourage the use of unnecessary medical care. That’s a misguided notion. But the President and his staff has shown a proclivity toward this kind of shallow wonkery in their support for misguided concepts like the excise tax on health insurance plans with higher than average costs.  The White House economic team may very well believe that this plan would “discourage people from seeking unneeded treatments” (as the Times puts it).

Bad Policy

Nevertheless, both cuts are bad ideas. The Medicare change is based on a model of health economics which fails to understand how health care decisions are made in the real world and relies on old (and challenged) studies, including one from the RAND Corporation, which claim such cuts reduce the use of unneeded services without reducing the use of necessary care.

As for the “chained CPI,” it’s already been dissected at length (we included a small compendium of critiques here).

Seniors and near-seniors today are facing a retirement crisis of tragic proportions, which a New York Times’ editorial outlines. That underscores the fact that these changes are both unwise and unkind. (more…)

This week our federal government effectively shut down the Fung Wah bus company.. Fung Wah had a loyal customer following because it was ridiculously dirt-cheap, $15 one-way from New York City to Boston. But it was dirt-cheap because it was a death trap on wheels.

Transportation officials didn’t wait until a tragic accident happened to shut it down. Good.

Sometimes libertarians argue that we don’t need government safety regulations because business already have an incentive not to put their customers at risk. But clearly, not every business owner is so enlightened.

Or libertarians may argue that customers themselves will put unsafe companies out of business by voting with their wallets. But sometimes customers can’t know how unsafe a company is until it is too late. Until then, they’ll make hipster videos celebrating low prices and jokingly shrug off safety concerns, putting pressure on competitors to cut corners as well.

Thankfully, we don’t have a libertarian government. We have an active government with a mandate to protect public safety.

But now that our government is functioning under the thumb of sequester, we can’t be sure it will have the resources to meet the mandates we give it.

One month since the sequester hit, Republicans are feeling vindicated that Americans don’t “notice much of a difference”, supposedly proving that we’re only cutting rolls of fat, and we can function just fine with greatly shrunken government. (more…)

In Washington, austerity-hungry Republicans called the sequester’s “across the board” spending cuts a “victory” — until their districts feel them. Then they complain about the cuts, but still demand cuts somewhere else and add new demands that someone ELSE decide what should be cut. This is because Republicans talk about cuts, but the American Majority doesn’t want cuts.

Please send us examples of sequester supporters in Washington who go home and cry about how it is hurting their constituents.

The Sequester

Some people think the “sequester” has something to do with racing horses. But it’s a technical word for the “across-the-board” budget cuts resulting from when the Republicans took the “debt ceiling” hostage, demanding big cuts in government or they would force the country to default on our promises to pay our debts, which would crash the economy.

They demanded these cuts, and they called the cuts a victory. That is, until the citizens who voted them into office started feeling the cuts.

In D.C. Sequester’s Cuts Called A ‘Victory’

In Washington Republicans called the sequester cuts a “victory.”

In the Washington Post, “Tea party owes this victory to ‘establishment’”: “This will be the first significant tea party victory in that we got what we set out to do in changing Washington,’ said Rep. Tim Huelskamp (Kan.), a tea party Republican elected in 2010.”

In Slate, “We Took a Hill and Defeated the Enemy”:

The conservatives argued that they’d taken the worst the president and the press had to offer during the sequestration fight. They’d won. They would win again.
“In Vietnam, we took a hill and defeated the enemy, then we retreated and let the enemy take over,” said South Carolina Rep. Jeff Duncan. “In the sequester we’ve held that ground … the momentum is with us.”

(Note that there is no discussion of solving the country’s problems, only of defeating “the enemy” — government.)

Republicans even “cheered” that the sequester was going forward. In the New York Times: “Boehner Halts Talks on Cuts, and House G.O.P. Cheers”: “Republican aides say privately that Mr. Boehner sees no need to negotiate; Republicans are in a good place, they argue, because they want spending cuts and those cuts are happening.”

See Terrance Heath’s collection of GOP “victory” claims: “The GOP’s “Sequester Cheerleaders” Greatest Hits … So Far”

But Back In Their Districts … They Cry About The Harm Done By Cuts

They cry for cuts, cuts, cuts. When the cuts happen in their districts they cry for cuts somewhere else, cuts somewhere else, cuts somewhere else.

The poster child for this hypocrisy is of course Rep. Michelle Bachmann (R-MN) who decries government spending but goes home to her district and instead cries about airport tower closings and other harm done by cuts… Greg Sargent at the Washington Post explains, in “Michele Bachmann, ardent foe of spending cuts (in her district)“:

Michele Bachmann has taken a fair amount of heat lately for various over the top statements about the evils of government spending, from her false claim that 70 percent of food stamp money goes to “bureaucrats” to her false claim that President Obama and his family enjoy $1.4 billion in personal “perks and excess.”
But there’s nothing like a few spending cuts in your own district to concentrate the mind. (more…)

There are few areas where the corruption of the national media is more apparent than in its treatment of Social Security. Most of the elite media have made it clear in both their opinion and news pages that they want to see benefits cut. In keeping with this position they highlight the views of political figures who push cuts to the program, treating them as responsible, while those who oppose cuts are ignored or mocked.

This pattern of coverage was clearly on display last weekend. Both the New York Times and Washington Post decided to ignore the Senate’s passage by voice vote of the Sanders Amendment. This was an amendment to the budget put forward by Vermont Senator Bernie Sanders that puts the Senate on record as opposing the switch to the chained CPI as the basis for the annual Social Security cost-of-living adjustment (COLA).

Switching the basis for the COLA to the chained CPI is one of the most beloved policies of the Washington elite. The idea is that it would reduce scheduled benefits for retirees by 0.3 percentage points annually. This amounts to a cut of 3 percent after 10 years, 6 percent after 20 years, and 9 percent after 30 years.

If a typical retiree lives to collect benefits for 20 years the average cut in benefits over their retirement ends up being around 3 percent. This is a much bigger hit to the typical retiree, who relies on Social Security for more than two-thirds of their income, than the tax increases put into law this year were to the typical rich person. (more…)