Hard Truths

I want to make a followup point to my post last night about the deficit commission. Mainly, that post said that if you're serious about the long-term deficit, you need to be serious about healthcare costs. That's pretty much the whole ballgame. The rest is fluff. Matt Steinglass comments:

Mr Drum writes for a liberal magazine. And here he is saying that the main thing we need to do in order to restrain growth in the deficit and in government spending, which will otherwise bankrupt us, is to cut the biggest government entitlement programme, Medicare....Shouldn't this be big news for our contrarian press? "Liberals Call for Cuts to Entitlements!" Aren't we amazed that supposedly big-government liberals want to slash the projected Medicare budget? What an example of responsible bipartisanship on their part!

And yet the press pays absolutely no attention to this. In general, liberals are given no credit whatsoever for acknowledging reality and calling for cuts in social-welfare entitlement programmes. So here's what I'm hoping. I'm hoping some of you read my initial comment about wanting to retweet what Kevin Drum wrote on this and thought, "Well obviously a liberal who writes for Mother Jones would be saying that in the long term massive budget deficits threaten our future, and the only way to seriously reduce that long-term deficit is to slash Medi...wait a minute." Just take that "wait a minute", and maybe give people some credit for coming to reality-based conclusions.

Actually, this is only half the story. It's true that I think we need to rein in spending on both Medicare and healthcare spending in general. Be amazed, conservatives! But there's a flip side to this: the American population is aging and medical care is getting more expensive. This is simply a fact, and it means that even if we slow the rate of healthcare inflation we're going to need more money for healthcare. You want Hard Truths? That's a hard truth. We need to rein in healthcare spending and we need to raise taxes to pay for the higher healthcare costs of an aging population. Anybody who's serious about addressing the long-term deficit needs to deal with this instead of indulging in fantasies.

But fantasies are largely what we get from the co-chairs' report. Nick Baumann takes a closer look at what kinds of cost cutting they recommend for Medicare and concludes that it's (a) politically unrealistic and (b) ineffective anyway:

This is seriously third-rail stuff. There's medical malpractice reform....strengthening the Independent Payment Advisory Board [which is] already under attack by Senate Republicans....Seniors' copays and deductibles would increase.

....After putting forth proposals that will irk trial lawyers, doctors, hospitals, and seniors, the co-chairs still aren't done — they also want to take on Big Pharma....The rest of the co-chairs' health care proposals include ticking off veterans, whose copays would increase; medical colleges, who would receive less in federal subsidies; and states, which would receive less money to cover long-term care for poor seniors. In short, the chairs' health care proposals will force nearly every significant interest group in America to take a haircut.

The kicker is that, under the co-chairs' proposal, a large part of the health care "savings" would be immediately spent [on the "doc fix"]....This is the ultimate proof of Kevin's point: even though our main budget problem is that health care costs too much, the deficit commission wants to spend most of its controversial health care "savings" on making sure that doctors keep getting paid at a level that satisfies the American Medical Association. It's more evidence of just how difficult the long-term deficit problem really is.

In other words, they've offered up a plan that's almost impossible to envision passing, and even at that it would accomplish barely anything. This deserves far more serious attention from centrist deficit hawks, and it deserves attention on both sides of the deficit equation. On the cost control side it means thinking bigger, and on the revenue side it means acknowledging that taxes will have to go up regardless. Liberals will naturally resist a lot of the cost cutting proposals, but at least they acknowledge that cost cutting has to happen. That's a start. But conservatives? I don't have to tell you their position. This makes reducing the long-term deficit impossible. Dealing with healthcare spending can only be done if both sides have political cover, and that means both sides have to make those famous Tough Choices we hear so much about. That will only happen when conservatives start acknowledging demographic reality.

Tax Cut-O-Rama

A couple of days ago I suggested that Democrats, having screwed up their response to the extension of the Bush tax cuts before the election, shouldn't bother wasting time on it during the lame duck session either. Instead, "Allow the Bush tax cuts to expire completely and let the 112th Congress deal with it."

After thinking about it, I'd like to revise and extend those remarks. Basically, there's not much time in the lame duck session, and wrangling over the tax bill could pretty much eat it up completely if Dems allow it to. So what I really think is this: either Dems should punt it into the 112th Congress or they should just cave in quickly and pass a comprehensive extension quickly. But if they do the latter, please please please tell me they're not going to do what McClatchy suggests they might do:

The Bush-era tax cuts that are set to expire on Dec. 31 are expected to be extended temporarily by the lameduck Congress, with a two-year extension the most promising compromise.

....On the Republican side, Sen. Orrin Hatch, R-Utah, who's slated to become the top Republican on the tax-writing Senate Finance Committee, said this week that a temporary extension "would garner support from Democrats and Republicans alike. That path forward is an extension of all the tax relief well past the next election."....The temporary extension is gaining momentum because it would allow both parties to use the issue in the 2012 campaign. And making the tax cuts permanent wouldn't require a vote until a lame duck session after the 2012 presidential election.

Look, I get it: Democrats are idiots. Nothing we can do about that, I guess. But the whole reason the tax issue imploded on them this year is because the Democratic caucus couldn't handle the strain of separating the middle-income tax cuts from the high-earner tax cuts during election season. Why would they set themselves up for the exact same dynamic two years from now?

So if they're going to do this, extend the cuts for three years. The economy could probably use an extra year of tax breaks anyway, and a three-year extension means they'll come up for renewal in 2013, when they can be dealt with relatively calmly. And Republicans can hardly object to an extra year of tax cuts, can they?

(Well, yeah, of course they can. But it would be a stretch even for them.)

Democrats have already proven they can't handle the electoral pressure of separating the tax cuts during an election year. There's no reason to think they're going to grow a stiffer spine in two years, and Republican control of the House will make it harder to separate them anyway. So be smart. If they're going to cave, cave for three years.

Here's the lead story today from those noted communists at Bloomberg:

Investors around the world say President Barack Obama is bad for the bottom line, even though U.S. corporations are on track for the biggest earnings growth in 22 years and the stock market is headed for its best back-to-back annual gains since 2004.

The quotes in the rest of the story really have to be read to be believed. I'm not going to bother excerpting any of them because I haven't had breakfast yet and my blood sugar needs immediate attention. Long story short, though, they just want them some nice tax cuts. Everything else is just fluff.

Missile Control Hysteria

I suspect that 67 votes just aren't there to approve the New START strategic arms treaty no matter when it comes up for a vote, so in a way the arguments pro and con don't matter very much. Still, the sheer level of shriekiness and hysteria that conservative opponents are mounting is remarkable even for an era practically personified by conservative shriekiness and hysteria. That's especially true considering how favorable the treaty is for U.S. interests and the fact that it boasts almost unanimous support by military and national security pros of all stripes.

Anyway, that's all just a preamble to Fred Kaplan's latest deconstruction of anti-New START hysteria, this time from the dynamic duo of John Bolton and John Yoo. It's all right here, and worth reading just for its comprehensive look at how empty the opposition is. It's really something.

Troops OK With Gay Troops

This is unsurprising, but still welcome news:

A Pentagon study group has concluded that the military can lift the ban on gays serving openly in uniform with only minimal and isolated incidents of risk to the current war efforts, according to two people familiar with a draft of the report, which is due to President Obama on Dec. 1.

More than 70 percent of respondents to a survey sent to active-duty and reserve troops over the summer said the effect of repealing the "don't ask, don't tell" policy would be positive, mixed or nonexistent, said two sources familiar with the document. The survey results led the report's authors to conclude that objections to openly gay colleagues would drop once troops were able to live and serve alongside them.

Apparently the Marine Corps remains the biggest obstacle, but even there only 40% of all Marines are concerned about lifting the ban. That seems pretty manageable. I don't expect the reactionary right to change its tune on this regardless of the evidence, but this report might still be enough to break loose a few Republican votes for repeal of DADT in the lame duck session. Keep your fingers crossed.

Is the Deficit Commission Serious?

I've been trying to figure out whether I have anything to say about the "chairman's mark" of the deficit commission report that was released today. In a sense, I don't. This is not a piece of legislation, after all. Or a proposed piece of legislation. Or even a report from the deficit commission itself. It's just a draft presentation put together by two guys. Do you know how many deficit reduction proposals are out there that have the backing of two guys? Thousands. Another one just doesn't matter.

But the iron law of the news business is that if people are talking about it, then it matters. So this report matters, even though it's really nothing more than the opinion of Alan Simpson and Erskine Bowles. So here's what I think of it, all contained in one handy chart from the Congressional Budget Office:

Here's what the chart means:

  • Discretionary spending (the light blue bottom chunk) isn't a long-term deficit problem. It takes up about 10% of GDP forever. What's more, pretending that it can be capped is just game playing: anything one Congress can do, another can undo. So if you want to recommend a few discretionary cuts, that's fine. Beyond that, though, the discretionary budget should be left to Congress since it can be cut or expanded easily via the ordinary political process. That's why it's called "discretionary."
  • Social Security (the dark blue middle chunk) isn't a long-term deficit problem. It goes up very slightly between now and 2030 and then flattens out forever. If Republicans were willing to get serious and knock off their puerile anti-tax jihad, it could be fixed easily with a combination of tiny tax increases and tiny benefit cuts phased in over 20 years that the public would barely notice. It deserves about a week of deliberation.
  • Medicare, and healthcare in general, is a huge problem. It is, in fact, our only real long-term spending problem.

To put this more succinctly: any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn't maintain approximately that ratio shouldn't be considered serious. The Simpson-Bowles plan, conversely, goes into loving detail about cuts to the discretionary budget and Social Security but turns suddenly vague and cramped when it gets to Medicare. That's not serious.

There are other reasons the Simpson-Bowles plan isn't serious. Capping revenue at 21% of GDP, for example. The plain fact is that over the next few decades Social Security will need a little more money and healthcare will need a lot more. That will be true even if we implement the greatest healthcare cost containment plan in the world. Pretending that we can nonetheless cap revenues at 2000 levels isn't serious.

And their tax proposal? As part of a deficit reduction plan they want to cut taxes on the rich and make the federal tax system more regressive? That's not serious either.

Bottom line: this document isn't really aimed at deficit reduction. It's aimed at keeping government small. There's nothing wrong with that if you're a conservative think tank and that's what you're dedicated to selling. But it should be called by its right name. This document is a paean to cutting the federal government, not cutting the federal deficit.

Hard Truths

Jon Chait makes a pretty good point after reading Ruth Marcus's latest column:

One of the defining beliefs of sensible-center Washington establishment types is that elected officials need to make Tough Decisions, including unpopular decisions, rather than just try to skate through to the next election. However, a second set of beliefs held by this group is that, if you do lose an election, this proves that all your ideas were not just politically unwise but substantively wrong.

[Some excerpts from Marcus's column.]

....What's fascinating to me is that Marcus believes not only that elections are completely ideological judgments, but that those judgments ought to be adopted by the party in power. Here President Obama was doing all kinds of unpopular things — bailing out banks, bailing out the auto industry, cutting hundreds of billions from Medicare — because he felt those courses of action were responsible. And then he loses seats, in part because of those hard decisions, and now he's supposed to admit that his policies were bad?

This is something that Obama doesn't get enough credit for. As Jon says, the centrist establishment is pretty unanimous in believing that presidents need to tell the nation Hard Truths and not simply Pander To Their Base. Well, Obama followed their advice more than most presidents. And guess what? His liberal base wasn't amused and the nation didn't really want to hear hard truths while unemployment was hovering around double digits. This should come as a surprise to exactly no one.

If this were just another example of pundit blathering about the election, it might not matter. But guess what? The president's deficit commission just produced a draft report (about which more later), and once again Beltway pundits are going to lap it up. Why? Because it Tells Hard Truths and Attacks Sacred Cows. It also proposes a bunch of stuff that will be stupendously unpopular. Somehow, though, Obama will once again be expected to endorse a bunch of unpopular stuff without becoming unpopular himself. Because if that happens, it will somehow represent the reaction of honest heartland workers who want to hear a president who cares, not one who spouts percentages of GDP and healthcare inflation rates. The fact that he didn't listen to what they wanted — which is always the same: more spending, lower taxes, and a smaller deficit — will, as usual, represent a failure to connect with Real America. Funny how that always seems to be the verdict on Democratic presidents.

Sarah and the Media

I think Karl Smith gets today's award for most incorrect statement of the day:

Sarah Palin looks to be on the losing end of a brawl with the Wall Street Journal....

By definition, Sarah Palin cannot be on the losing end of any argument with the mainstream lamestream media. It is unpossible. I demand an immediate retraction from the elitist Professor Smith.

I read this story back when our November/December issue came out, but I see that it's now up on the web. It's Charlie LeDuff's look at Detroit through the lens of a police tragedy that happened earlier this year while an A&E crew was following a SWAT team for an episode of The First 48, one of its reality shows, ending in the death of a 7-year-old girl:

The SWAT team tried the steel door to the building. It was unlocked. They threw a flash-bang grenade through the window of the lower unit and kicked open its wooden door, which was also unlocked. The grenade landed so close to Aiyana that it burned her blanket. Officer Joseph Weekley, the lead commando—who'd been featured before on another A&E show, Detroit SWAT—burst into the house. His weapon fired a single shot, the bullet striking Aiyana in the head and exiting her neck. It all happened in a matter of seconds.

....Compounding the tragedy is the fact that the police threw the grenade into the wrong apartment. The suspect fingered for Blake's murder, Chauncey Owens, lived in the upstairs flat, with Charles Jones' sister...."It was a total fuck-up," [a high-ranking Detroit police official] said. "A total, unfortunate fuck-up."

But that's just the start. LeDuff was born and raised in Detroit, and this is one of the best looks at the city and its pathologies that you'll read. It's worth a few minutes of your time.

Republicans and the Young

Over at FrumForum, Nils August Andresen tries to figure out why university students have become so anti-Republican even though they themselves haven't gotten especially more liberal over the past few decades. A changing ethnic mix might be part of it, but:

Let me advance another hypothesis. Today’s top students are motivated less by enthusiasm for Democrats and much more by revulsion from Republicans. It’s not the students who have changed so much. It’s the Republicans.

....Under Presidents Eisenhower and Nixon, Republicans championed science and knowledge. But over the past 30 years, national Republicans have formed an intensifying alliance with religious conservatives more skeptical of science and knowledge....Educated people may also be extra-sensitive to policy positions that do not make logical sense. While individual elements of the Republican platform can make sense on their own, the combination of demands to reduce the deficit, plus increase Medicare spending, plus opposing reform meant to save costs, plus uncompromising insistence on tax cuts just does not add up. Granted, Democrats have also behaved irresponsibly in opposition. Still, I think it’s fair to say that over the past decade, the Republicans have convinced educated America that they are the less policy serious party.

Just to be clear: my guess is that this is primarily a reaction to social conservatism. Students at top universities just can't stomach the anti-gay, anti-feminist, anti-civil rights, anti-religious-tolerance attitude of the current GOP. But Andresen's conjecture about "policy positions that do not make logical sense" may have something to it too. In the mid-70s, for example, liberal interest groups engaged in their own version of magical thinking by pushing hard for the passage of the Humphrey-Hawkins full employment act, which essentially tried to mandate low unemployment by fiat. Jimmy Carter eventually managed to water it down into a purely symbolic piece of legislation, but the sheer spectacle of liberal lunacy on display for months on end probably turned off a lot of smart students. Liberals eventually learned their lesson on this score — overlearned it, in fact — but their place in the magical thinking department was immediately taken over by supply-side Republicans, who have gotten ever more hardened and ever balmier during the past couple of decades.

I doubt that this is the main cause of the defection of the elite university vote, but it could be part of it. Older voters might be willing to accept Republican incoherence simply because it's in their interest to do so and they don't really care if the arguments make sense, but younger voters don't have that same motivation. Republican magical thinking doesn't really benefit them, so they're just repelled by it.

(Via Jon Chait.)