Daily Archives: December 28, 2011

by | December 28, 2011 · 4:51 PM

Washington Post Fudges Facts on Deficit Debate

By Luke Brinker

Lori Montgomery has what economist Dean Baker rightly terms a “front page editorial” in today’s Washington Post. Montgomery laments that for all of the new Congress’s talk about decreasing the federal budget deficit, lawmakers took little action to actually reduce it. The piece contains two overarching flaws: its tacit assumption that not solving the deficit nownownow is something to mourn, and its analysis that to save the republic, seniors’ Social Security benefits must be cut in the future.

Montgomery ignores the empirically proven fact that harsh austerity regimes aimed at reducing a country’s budget deficit worsen the country’s economy (thereby leading to diminished tax revenues and even higher deficits). A July 2011 paper from the International Monetary Fund looked at 173 instances of austerity and determined that ”a 1 percent of GDP fiscal consolidation reduces real private consumption over the next two years by 0.75 percent, while real GDP declines by 0.62 percent.” (h/t Ezra Klein).

The article asserts that “Social Security and Medicare pose a long-term threat if there are no constraints on benefits.” As economist Christina Romer might say, this claim is “oh so wrong.” Let’s start with the latter program. Montgomery makes the all-too-common mistake of conflating Medicare with the problem of rising health care costs, which are indeed driving long-term budget deficits. The solution is not to cut Medicare, with its much more efficient spending, and replace it with a less-efficient “premium support” model (like, say, the  Ryan-Wyden plan), which would only shift costs without addressing their underlying causes (too many unproven and unhelpful procedures, fee-for-service medicine, and so on).

By arguing that cutting Social Security is essential to the nation’s fiscal health, Montgomery certifies her status as a Very Serious Person among the Peter G. Peterson Foundation crowd. What she doesn’t do is display a basic comprehension of how the program actually works. Here’s Baker:

The piece also includes several comments to the effect that Social Security and Medicare will break the budget. In fact, Social Security’s costs are rising very gradually. Furthermore, its projected benefits are fully paid for through the year 2038 with no changes whatsoever in the program. Even after that date, if Congress does not change the law, Social Security cannot contribute to the deficit. It would only be able to pay out about 80 percent of scheduled benefits (roughly 10 percent more than the average benefit received by today’s retirees).

Moreover, economists at the Congressional Budget Office conducted a study last year finding that a two-percentage point increase in the payroll tax paid by both employers and employees over 20 years would make up for the program’s 75-year shortfall. (It’s also worth noting that only the first $90,000 of income are subject to the payroll tax. This means that working- and middle-class families pay a dramatically higher proportion of their incomes into Social Security than the affluent.)

Unless the Post commits itself to budget reporting that bears some relationship to reality, it’s unlikely that its flagging fortunes will be revived anytime soon.

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by | · 2:03 PM

Deal or No Deal: Deal Making Lost in 2011

By John Stang

Much will be written in the next few days by opinion makers about the best and worst of the year that was2011.  It was a year for change and hope, as all years begin.  Certainly, I had optimism.  Alas, like any other political year, it came and went without much celebration, and more dread than necessary.  The art of the deal, which was oh so necessary, was not preserved.  In fact, the “dealmaking” often got the shaft.  From Washington to Europe to the Middle East, no one could play Monty Hall to save the future.  We should not be surprised that Time Magazine named the protester as the person of the year.  With the political world in gridlock, grassroots populism was the only way to save the political process from destroying itself.

The Beltway surely disappointed most, the place where compromise must happen in order to solve any crisis.  The 111th Congress ended 2010 with a bang.  Despite the Democrats losing the House and much of the Senate in the midterm elections, Leaders Nancy Pelosi and Harry Reid still put on a show until the very end.   In just the lameduck session alone, the START nuclear treaty was ratified by the senate, “Don’t Ask, Don’t Tell” was repealed, a food safety bill was passed, and the extension of the Bush Tax Cuts.  Then, the GOP came to Capitol Hill.  The Tea Party was ready to go.  Most of the bills they tried to pass could not make it through the Democratically controlled senate.  A symbolic repeal of Obamacare and Paul Ryan’s Path to Prosperity budget (which voucherized Medicare and did not even touch defense spending) were all examples of political posturing that the senate could never pass.

It got worse.  In April, a government shutdown was barely averted as an 11th hour deal was struck by the House and Senate leadership.  What kept it waiting was the silly policy riders that would not keep planned parenthood funded or fund that bastion of communist liberal hippies (as many on the right would call them) at NPR and public television.   In August, Tea Party House members grew even more boisterous and stood firm against raising the debt ceiling, on debt we already owed I might add.   There intransigence led to a deal that ran awfully close to the August 2nd deadline and the lack of political expediency on the issue cost the U.S. its coveted AAA bond rating from Standard and Poor.  Deficit reduction is what they wanted.  However, the Republicans would not negotiate on a mix of spending cuts and tax increases.  Out of those negotiations, came the almighty Supercommittee to find $1.3 trillion in deficit reduction over the next 10 years.  With 12 congressmen of all stripes, no agreement could be reached.  Finally, the penacle of this nonsense hit in December when the House refused to extend the payroll tax cut for 2 month after it was agreed upon by Senate leaders.  Admittedly, it was better to extend it for a year instead of 2 months, but the compromise had already been set and Boehner couldn’t control his caucus.  Eventually, the House caved after the PR tide turned against them.  Not to mention that just before that fight there was another one that could have caused a partial government shutdown.  Yes, it was a terrible year for Washington.

Congress has some of the lowest approval ratings for a reason, even greedy Wall Street bankers rank higher on the most trustworthy sources.  I can’t imagine that 2012, a presidential election year, will not help soothe matters over.

It’s not like the rest of the world was focused that much on making deals that were worthwhile.  In U.S. foreign policy, the president failed to reach an agreement with the Israelis and Palestinians after Israel refused to agree to settlement freezes.  An Iran deal broke down in Geneva at the beginning of the year.  With the recent IAEA report, that is less likely to ameliorate the situation.  There was an agreement at the U.N. Security Council for a NATO “No Fly Zone” in Libya, but sadly Syria is stuck on a road to nowhere.

Across the pond, Europe continues to burn.  In November, French President Nicholas Sarkozy and German Chancellor Angela Merkel worked out a plan on paper to try and further integrate the Eurozone for a “fiscal compact” in Brussels.  While the 17 member countries agreed to try and work together, a complete agreement has not been reached.  New stringent rules on debt have been the norm, although how much exception to the rule could be the breaking point.  Not to mention that the U.K. will not sign on the agreement or contribute to the bailout package and getting all 17 countries to change the charter will not be an easy matter.  Meanwhile, Greece, Ireland, Italy, Portugal, and Spain weigh heavily on every Europeans mind.

Let’s not forget the greatest crisis of them all, climate change.  The December Durban, South Africa Climate Conference left little hopes for anything substantial to get done.  China and India, some of the largest Carbon Dioxide emitters will no be willing to comply with binding reductions on greenhouse gas admissions, which is a step up from before.  However, no new emissions targets were set and a new binding agreement to replace the Kyoto Protocol will not happen until 2015 and then countries have 5 years to comply with it.  Good luck getting the already divided congress to pass that.  With temperatures ever rising and the crisis escalating, some even compare Durban to almost climate denial in a legal sense.

The world is stuck a mode of politics versus need.  The most conservative elements, meaning the establishment that exists, is unwilling to budge on anything.   With the Arab Spring and Occupy Wall Street as representations of a new kind of politics that are on the way, maybe there is hope.  Although, even those movements only represent a one way ticket for change.  In the political realm it takes two to tango.  One side must be willing to meet the other halfway.  Unless that happens, compromise will see yet another year of disappointment.

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by | · 10:30 AM

Ron Paul’s Foreign Policy is Not Left Wing

By Luke Brinker

As he battles Mitt Romney for first place in next Tuesday’s Iowa caucuses, Rep. Ron Paul is coming under fire from his GOP rivals, the New York Times reports today.

Rick Santorum is known primarily for his hard-line social conservatism, but he has also been the field’s leading critic of Paul’s isolationist foreign policy. Santorum told an Iowa audience that because Paul is “to the left of Barack Obama on national security,” he is an unacceptable nominee for the party.

Oy vey.

I suppose we can begin with the insinuation in Santorum’s comment that being to President Obama’s “left” on national security is an impressive feat. This is a president, mind you, who has dramatically expanded George W. Bush’s stealth drone attacks, signed the National Defense Authorization Act over civil libertarians’ vociferous objections, significantly increased the American military presence in Afghanistan when even foreign policy establishment centrists like Leslie Gelb were cautioning against such a move, devoted much of his Nobel Peace Prize acceptance speech to justifying the use of American force, and signed Osama bin Laden’s death warrant. Some Chomskyite.

Paul disagrees with each aforementioned Obama policy. But does that make him a leftist when it comes to foreign policy? While I have always recoiled at Arianna Huffington’s trite rhetoric about the need to move “beyond left and right,” foreign policy is truly a subject area in which traditional left-right labels are often unhelpful. Like such historical right-wingers as Charles Lindbergh, Calvin Coolidge, Robert Taft (known as “Mr. Republican” in his mid-century heyday), and Pat Buchanan, Paul is an isolationist. That entails opposition to foreign wars and skepticism about deeply rooted American alliances, including the one with Israel. While the GOP has become more uniformly hawkish, it is historically illiterate to assert that Paul is a Republican anomaly in his foreign policy and national security positions. Of course, foreign policy is about more than whether or not the US should go to war in a specific situation or whether the US should adopt a more evenhanded approach to the Israeli-Palestinian conflict. On those other matters, Paul is nobody’s idea of a left-of-center thinker, as Ben Adler notes:

Just because Ron Paul opposes imperialism and unnecessary invasions of foreign countries doesn’t mean he has a liberal or progressive bone in his body. Paul is a nationalist and isolationist, staunchly opposed to multilateral organizations. This isn’t good for international peacekeeping or other humanitarian efforts, nor arms control. Paul opposes all foreign aid. Promoting democracy and human rights are of no interest to Paul, even through peaceful means. He also opposes immigration and wants to eliminate America’s constitutional policy of birthright citizenship.

As Michael Cohen explains in Foreign Policy, Paul’s foreign policy would undermine many progressive aims. “There is far more to Paul’s view than just his opposition to U.S. military adventurism,” writes Cohen. “Paul also believes that the United States should depart from all international organizations and global alliances. This includes not just NATO, but also the United Nations and the World Health Organization.” Indeed, in 1990 Paul appeared in a crazed video of the John Birch Society claiming the UN would take away Americans’ gun rights, property rights and their right to practice religion freely.

Indeed, one of Paul’s most prominent supporters is right-wing conspiracy crank and radio host Alex Jones. Jones is a fervent 9/11 truther, a proponent of New World Order conspiracy theories, and is convinced that socialists, the Rockefellers, and the Trilateral Commission are plotting to establish one-world government. I’m not ascribing any of these views to Paul himself (although his 1990s newsletters suggest he would be inclined to agree with Jones), but the underlying assumption behind Jones’s thinking – that government is a malicious, socializing force – is not one to which those to the left-of-center would subscribe.

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