Relevant and even prescient commentary on news, politics and the economy.

Paul Krugman Gets Berned. Er, Burned.

In a speech to a Morgan Stanley group on April 18, 2013, WikiHillary praised the Simpson­Bowles deficit reduction plan, which included reforming the tax code to increase investment and entrepreneurship and raising certain taxes and trimming some spending and entitlements to make them more sustainable.

The ultimate shape of that grand bargain could take many forms, she said, but Hillary stressed behind closed doors: “Simpson-­Bowles … put forth the right framework. Namely, we have to restrain spending, we have to have adequate revenues and we have to incentivize growth. It’s a three-­part formula.”

She is right. We’ll never get out of this economic rut, and protect future generations, unless the business and social sectors, Democrats and Republicans, all give and get something — and that’s exactly where WikiHillary was coming from.

WikiHillary for President, Thomas L. Friedman, New York Times, today

Eeewwwwwe.  I mean, um … yikes.

Friedman, of course, has spent the last decade or more obsessively pushing a “Grand Bargain.”  He says in today’s column that he wishes Clinton had campaigned on this.  In order to build an electoral mandate for it, see.

Seriously; he says this.

Paul Krugman, by contrast, has spent the eight years or so trashing deficit mania, and the last five years mocking Simpson-Bowles.  And Simpson and Bowles.  And their ilk.  Including Thomas Friedman.

Also in Friedman’s column today:

In an October 2013 speech for Goldman Sachs, Clinton seemed to suggest the need to review the regulations imposed on banks by the Dodd­Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010. Her idea was not to get rid of all of the rules but rather to make sure they were not imposing needless burdens that limited lending to small businesses and start­ups.

As Clinton put it, “More thought has to be given to the process and transactions and regulations so that we don’t kill or maim what works, but we concentrate on the most effective way of moving forward with the brainpower and the financial power that exists here.” Again, exactly right.

Friedman thinks this, too, would have been a hit with the public if only Clinton had had the guts to campaign on it.

Krugman in his Twitter feed has been pushing the proposition that Clinton really, honestly, dammit, was the strongest possible Democratic nominee to beat Trump, cuz she so deftly baited him during the first debate into his weeklong meltdown about that former Miss Universe, and no other candidate would have thought to do that.  Then again, there are a few possible candidates whose victory would have been assured without that.  But, whatever. Candidates who speak like this, for example.*

And he responded to some pundits’ dismay at the tail-wagging-the-dog role that Clinton’s campaign consultants and friends—as Frank Bruni put it recently, the extensive array of Clinton whisperers—who crafted everything from minutia to the very raison d’être for her candidacy, by insisting that that’s what consultants do.  Making me wonder why we don’t just cut to the chase and cut out the puppet, and nominate a consultant instead.

None of this matters now, of course.  I’ll reiterate, yet again, that I believe that Clinton is a genuinely different candidate, politician, and in important respects, person now than she was until recently.  And I support her wholeheartedly now.  But even if she were who she was in 2013 I’d be supporting her, if grudgingly.

But the instant I read that Friedman column—particularly the part about Clinton telling Morgan Stanley she supports Simpson-Bowles—I thought of Krugman.  And wondered whether upon reading that, if he did, he was moving close enough to the bonfire to feel a tad Berned.

____

*The link, inadvertently omitted originally, is to an op-ed by Elizabeth Warren in yesterday’s Washington Post titled “Elizabeth Warren: Trump didn’t invent the ‘rigged election’ myth. Republicans did.” The second Friedman excerpt also was not indented here originally.  All is now corrected.  10/20 at 2:12 p.m.

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Shorter Mitch McConnell: “Zero Social Security COLA Too Generous”

Way to rally the base Turtle Neck!

NY Times: No Social Security Raises Even if Medicare Soars

WASHINGTON — The 60 million people on Social Security will not receive any cost-of-living increase in their benefits in 2016, the government said Thursday, but because of a quirk in federal law, nearly one-third of Medicare beneficiaries could have record increases in their premiums unless Congress intervenes.

CNN: Sources: McConnell floats entitlement changes in high-stakes fiscal talks

McConnell is seeking a reduction in cost-of-living adjustments to Social Security recipients and new restrictions on Medicare, including limiting benefits to the rich and raising the eligibility age, several sources said.

Now it is true that Social Security policy geeks like me and maybe some other readers/contributors to Angry Bear can have an informed discussion on the pro’s and con’s of CPI-U vs CPI-W vs CPI-E vs Chained CPI-W and their respective effects on Social Security “actuarial imbalance” and “unfunded liability over the infinite future horizon”. God knows I am up for that discussion any time and feel free to weigh in on the comment thread.

But you have to be pretty politically brain dead to propose holding the Debt Limit hostage to demands for COLA reductions in the same damn week that SSA announced that COLA would be zero for 2016. Boy that should rally seniors to the polls to vote Republican next year.

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Who foots the "grand deal (no capitalization on purpose)" costs.

by run75411

Who foots the “grand deal (no capitalization on purpose)” costs.

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Everything You Need to Know about the Fiscal Cliff Deal “Wonkblog” Zachary Goldfarb

This was the model to describe what would happen if the Grand Deal increase in taxes fell upon those Household Taxpayers making greater than $200,000 (individual) and $250,000 (family) (Tax Policy Center) . Slight error in the chart also, the 20-60% should be 20-40% of Household Taxpayers. The impact should be similar.

The Bill Itself: ‘‘American Taxpayer Relief Act of 2012’’ I have not had time to go through this bill with a fine tooth comb yet. Amazing how they can write 157 pages of strike this and insert this in a matter of days. While it does not look that alarming, Obama has again displayed his feet are made of sand which wash away with the tides of adversity. An abbreviated cheat sheet can be found here: “Your fiscal cliff deal cheat sheet” Wonkblog Suzy Khimm

The big winner of the day? Milk subsidies will continue.

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The GOP’s extortion demands: cut Social Security or we’ll shoot the country in the foot

The GOP’s extortion demands: cut Social Security or we’ll shoot the country in the foot

The GOP created the fiscal cliff beginning with the “temporary” tax cuts passed in 2001, 2003 and 2004 under the Bush administration, all as purportedly temporary provisions with sunset dates.  They hoped that the passage of the tax cuts would, as generally happens when people have more of something they like, lead people to demand making all of the cuts permanent.  The result would be a huge tax decrease for the wealthiest taxpayers, and a rather insignificant tax decrease for most Americans.

In many ways, their strategy worked.  Most Americans forget that they didn’t think they really had to have a cut in income taxes back in 2001, and they don’t want to pay more taxes than they are paying now, even a little bit more.   And the Great Recession means that for many Americans who are suffering deep financial injury still because of the housing and jobs crisis, every tax dollar saved is a step back to normalcy.
But the tax cuts pushed by the GOP joined together with the tremendous costs of the preemptive wars pushed by the GOP to create a veritable snowballing deficit. 

Under Bush, we went from surplus in year one, to huge deficits the rest of the time (with much of the impact of the deficit hidden by the purportedly temporary nature of the provisions and the annual passage of an AMT patch that didn’t have to be included in the calculation of the deficit until the particular patch was passed).  Those two huge drivers of the deficit were treated by the GOP at the time as inconsequential, as GOP stars claimed that “deficits don’t matter.”  See Dick Cheney to Congressional Republicans: don’t stop spending, The Oregonian (July 18, 2012) (noting Cheney’s current advice to keep spending on the military and retelling the story of Cheney’s telling then Treasury secretary O’Neill that “Reagan proved that deficits don’t matter”).

Part of the right’s goal, of course, was to use the increases in deficits that their tax cuts caused as a rationale for “starving the beast”–forcing the Democrats to accept cuts (they of course called them “reforms”) to the parts of governnment that the right doesn’t like.  That meant reduction to the benefits from, and privatization of, Social Security and Medicare and reduction of government employee pensions and maybe, in a far right dream world, the elimination of any federal role in basic research funding, disaster emergency responses, and education.  Meanwhile, the right would continue to push for increased spending on the parts of government it likes (military spending, for example–see Cheney’s July 2012 admonition to the GOP to keep spending on the military, above) and continued favorable tax subsidies for the wealthy and big corporations (carried interest, domestic manufacturing deduction, etc.) even if that continued to add to the deficit and the debt.

The GOP’s tune changed when the flagrant underregulation of the financialized economy (deregulation, of course, having been begun with Reagan and continued for decades now) resulted in the financial crisis that became the Great Recession and then a Democrat was elected president.  GOP lawmakers suddenly thought deficits were bad (when they were created by Democratic presidents to respond to crisis).  And debt–which had been spiralling upwards under the Bush regime with increases in debt ceiling hardly noticed–suddenly was a monster that must be contained.  And all of this could be used by those on the radicalized right every time the debt ceiling had to be increased to extort from those not on the right the right’s desired changes in social justice programs.

In other words, the radicalized GOP set the conditions in motion that allowed them to hold us hostage now, through their control of the House of Representatives, in an extortion campaign.  In that campaign,  they demand that they get the changes to Social Security and Medicare and Medicaid that they want (the so-called “reforms” to so-called “entitlement” programs that amount to the beginning of the unraveling of the New Deal that the right so detests) in exchange for their going along with increases to the debt ceiling that are necessary because of the irresponsible tax and spending policies that they pursued while in office or the measures that were necessary to shore up the financial system when it threatened collapse due to the deregulatory push that has gone on for forty years funded by and supported by the right (and some  Dems in the middle as well).

So guess what.  We shouldn’t be surprised at all to hear today that U.S. House Speaker John Boehner says the GOP rightwingers will maybe agree to some “revenue” increases so long as they get their extortion payments–concessions from liberals that will ultimately lead to the reduction and/or privatization of Social Security and Medicare and other government programs.  And of course this is double-speak anyway, since Boehner and his compatriots on the GOP right still ascribe to the frequently disproven  market fundamentalism that believes that deregulation and “simplification” (meaning tax cuts) leads to economic growth that automatically results in revenue increases even without tax changes intended to raise more tax monies. 

As Tiron and Rubin note in the Bloomberg piece reporting on Boehner’s statements, his speech “sounded conciliatory and didn’t alter the Republican position on tax policy” but “marked the start of political positioning and negotiations over what to do about the so-called fiscal cliff of $607 billion in combined tax increases and spending cuts.”   He isn’t agreeing to tax increases: he just wants to be able to use the kind of  manipulative tweaking of the data to get the desired result called “dynamic scoring” that the GOP right has been pushing for decades as a way to “prove” that their deficit-creating tax cuts really aren’t costing anything!  See Roxana Tiron and Richard Rubin, Boehner Would Accept New Revenue under ‘Right Conditions’, Bloomberg.com (Nov. 7, 2012)

Boehner called for concessions, stating “The president must be willing to reduce spending and shore up entitlement programs that are the primary drivers of our debt.”  Id.

Harry Reid (Senate majority leader) said “We’re happy to deal with entitlements, but we’re not messing with Social Security.”  It’s hard to know for sure what that means–maybe they are willing to reduce Medicaid and Medicare benefits? Too bad he didn’t say that we need to expand Obamacare to make it Medicare for all, so that we can get control of health care costs while providing much needed support particularly to the elderly at the end of life.  But at least he did say something that should translate to “we are not going to change Social Security.”

So the game is on.  The GOP intends to continue pushing its same old medicine of tax cuts for the rich and entitlement cuts for the rest of us.  I hope the Democrats have gained a little bit of backbone from the election so that they will push for wiser spending on public infrastructure and wiser tax policies in areas from estate and capital gains taxes to corporate subsidies.

cross posted with ataxingmatter

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