Republican Budget Plan to Cut Medicaid Means Cutting Care for the Poor, Sick and Elderly

Maybe Republican legislators should renounce their own future healthcare to set an example for others before they try to cut off healthcare for millions of working people at the end of their lives or those who are otherwise unable to afford profit-driven healthcare?

 

Cutting Medicaid Means Cutting Care for the Poor, Sick and Elderly

by Ezra Klein

The part of Paul Ryan’s budget that’s going to get the most attention is his proposal to privatize and voucherize Medicare. But the part that worries me the most is his effort to slash Medicaid, with no real theory as to how to make up the cuts.

Ryan’s op-ed introducing his budget lists Medicaid under “welfare reform,” reflecting the widespread belief that Medicaid is a program for the poor. That belief is wrong, or at least incomplete. A full two-thirds of Medicaid’s spending goes to seniors and people with disabilities — even though seniors and the disabled are only a quarter of Medicaid’s members. Sharply cutting Medicaid means sharply cutting their benefits, as that’s where the bulk of Medicaid’s money goes. This is not just about the free health care given to some hypothetical class of undeserving and unemployed Medicaid queens.

But perhaps cutting it wouldn’t be so bad if there were a lot of waste in Medicaid. But there isn’t. Medicaid is cheap. Arguably too cheap. Its reimbursements are so low many doctors won’t accept Medicaid patients. Its costs grew less quickly than those of private insurance over the past decade, and at this point, a Medicaid plan is about 20 percent cheaper than an equivalent private-insurance plan. As it happens, I don’t think Medicaid is a great program, and I’d be perfectly happy to see it moved onto the exchanges once health-care reform is up and running. But the reason that’s unlikely to happen isn’t ideology. It’s money. Giving Medicaid members private insurance would cost many billions of dollars.

That’s why it’s well understood that converting Medicaid into block grants means cutting people off from using it, or limiting what they can use it for. You can see CBO director Doug Elmendorf say exactly the same thing here. There’s just not another way to cut costs in the program. You can, of course, work to cut costs outside of the program, either by helping people avoid becoming disabled or making it cheaper to treat patients once they become disabled or sick, but those sorts of health-system reforms are beyond the ambitions of Ryan’s budget.

To get around some of this, Ryan’s op-ed talks about state flexibility, with the implication being that states have some secret Medicaid policies they’ve been dying to try but that the federal government simply hasn’t let them attempt. But the truth is there’s been a tremendous amount of experimentation in Medicaid over recent decades. Indiana converted its Medicaid program into health savings accounts. Tennessee based its program around managed care. Massachusetts folded its Medicaid money into Mitt Romney’s health-care reforms. Oregon tried to rank treatments by value. Some of these reforms have worked well and some haven’t worked at all, but none have solved the basic problem that covering the sick and disabled costs money, and you can’t get around that by trying to redesign their insurance packages. For that reason, block-granting Medicaid ultimately means cutting health-care coverage to the poor, the elderly and the disabled, even as it doesn’t actually address the factors driving costs throughout the health-care system.

Morning Line: The Mafia in the House

by Sam Smith

Raw Story reports that "a new NBC/Wall Street Journal poll found Monday that 76 percent of Americans consider it unacceptable to cut Medicare, while 67 oppose cutting Medicaid, despite their deficit concerns."

On Tuesday, the pluto pimps of the House GOP proposed a budget plan drastically cutting both Medicare and Medicaid.

Why would they take on two-thirds to three-quarters of the public on such issues? Simply because under the new rules of the game, in the wake of the Supreme Court decision on campaign financing, the public no longer matters that much.

The archaic media will continue to play this as an ideological matter, but it is not. The goal of the House Republicans is not fiscal conservativism but governmental elimination in as many forms as possible in order to satisfy its major campaign contributors. If they felt they could get away with attempting to abolish anti-trust, product liability and environmental limits on industrial pollution, they would add them to their list.

The Washington entropic elite will continue to speak of things like the need for "adult conversation" on the budget, but it is hard to have such a dialogue when the other party puts a knife to your throat.

Here's an excerpt from the Washington Post description of the budget plan:

|||| The proposal urges a sweeping transformation of federal health programs that would wipe out funding for Obama’s health-care initiative and end Medicare as an open-ended entitlement. Medicare, the federal health program for the elderly, would be replaced for those under age 55 with a system of premium supports to buy insurance policies in the private market.
Medicaid, the health program for the poor, would come in for sharper cuts, totaling $771 billion over the next decade.

On discretionary spending, Ryan’s plan would match Obama’s call for Pentagon and war funding, but it proposes major cuts to domestic programs totaling $1.6 trillion over the next decade - holding growth in education, transportation, justice, food safety and other programs well below the rate of inflation.

Ryan also proposes to overhaul the tax code, lowering the top rate for individuals and corporations from 35 percent to 25 percent. . .

Ryan also rejects calls to raise taxes on high earners to finance Social Security benefits at their current levels, one of the most popular methods of repairing the program’s finances. ||||

Admittedly, the Democrats have enabled some of the attack. After all, Clinton wantonly dismantled welfare programs and Obama resurrected the horrible Alan Simpson from his blessed obscurity to help undo Social Security.

Still, if the Ryan budget plan were to pass, it would be perhaps the greatest political assault on the federal government since the South seceded. It's aim is to weaken government in every form possible as quickly as possible, reversing 80 years of American political progress. The sole beneficiaries would be the ultra wealthy - whether as individuals or as institutions with LLC and Inc after their name.

In fact, such legislation would also be an act of reckless and willful manslaughter since it would inevitably result in the deaths of thousands of Americans stripped of needed support.

While manslaughter is not a legally defined criminal offense as long as it's carried out as a legislative act, what the House Republicans are doing such be regarded in every other regard as crime rather than politics. They are simply serving as the Mafia hit men for America's hyper elite.

The Progressive Review/Undernews

The Washington Post and Paul Ryan's Wonky Math

by Peter Hart

Dean Baker's Beat the Press is the best Early Warning Media Mythbuster. It's simple: You read it every morning before you read the papers (he is up before you are, trust me) and you're well prepared to deal with the economic nonsense you'll be subjected to.

Today (4/6/11) he proposes this headline for stories about Rep. Paul Ryan's budget blueprint:

Representative Ryan Proposes Medicare Plan Under Which Seniors Would Pay Most of Their Income for Healthcare

Baker writes: "That is what headlines would look like if the United States had an independent press." He explains that the central idea in Ryan's plan--voucher-like "premium support" instead of Medicare--will leave people paying a lot for healthcare. It's a simple idea, but not one that is expressed so simply in many press accounts.

Take one Washington Post article today (4/6/11) by David A. Fahrenthold. It leads with this:

This is the essential question for Rep. Paul Ryan: Can this man really manage the hardest sales job in U.S. politics?

That might be "essential" for him, but it's of little importance to us. We need to know what the plan actually wants to do. But papers too often find space to run these kinds of man-in-the-news profiles at the expense of telling readers, as often as they should,  how policy ideas will affect them.

In the piece we learn that Ryan "is the lanky, wonky chairman of the House Budget Committee" and "an unlikely revolutionary." The Post tells us that "Ryan studied economics in college, and in Congress he has embraced the weedy issues of the federal budget." One source seems to think that "sticking to his wonky reputation would be a good idea."

Back to the sales job:

So far, the sales pitch appears to be classic Ryan. He will make his case with earnestness and a hope that a quiet explanation of budget math can swing the country in a way that previous politicians could not.

He's just trying to explain math! That's nice, since the Post article doesn't:

The vision also includes a change in the Medicare program, in which the federal government acts as a health insurer for seniors. In coming years--Ryan's plan does not apply to people who are already 55--he would shift the program so that seniors would choose a private health plan. The federal government would then provide "premium support" to help them pay for coverage.

The main math question is how much "support" seniors will get. The answer is not much, and certainly not enough to cover the skyrocketing cost of healthcare. Pointing this out should be part of every story--even ones that tell us that Paul Ryan's a "wonk."

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Ryan’s Unbelievable Path to Prosperity

FOR IMMEDIATE RELEASE
April 6, 2011
11:31 AM

CONTACT: Center for American Progress (CAP)

Megan Smith
Phone: 202-741-6346
Email: msmith@americanprogress.org

Ryan’s Unbelievable Path to Prosperity

New House Republican Budget Plan Relies on Fantastical Heritage Foundation Predictions

WASHINGTON - April 6 - The budget put forth by Congressman Paul Ryan (R-WI) for fiscal year 2012 beginning in October makes fantastical claims about its impact on investment, economic growth, and jobs. Rep. Ryan is basing claims of incredible economic benefits from his 2012-2021 budget proposal—that cuts taxes for the rich and lumps burdens onto middle-class families—on forecasts generated by an economic model from the conservative Heritage Foundation. We’ve been down this path before.

And it wasn’t pretty. Nor was it a prosperous path for most American families. Twice before, in 2001 and 2003, the Heritage Foundation provided economic forecasts purporting massive economic gains from President George W. Bush’s tax cuts similarly slanted toward the very rich. To put it mildly, the Heritage economic model is worth less than a broken clock, which can at least be right twice a day. And something doesn’t smell right about their latest predictions either—the ones that Rep. Ryan is trumpeting in support of his “Path to Prosperity.”

If Heritage’s model boasts any track record at all, it is that the opposite of what it predicts will happen, which means Rep. Ryan’s new budget plan would be more aptly named “Path to Prosperity, But Only for the Rich.” Consider the think tank’s most recent predictions for the House Republican budget plan with its past failures.

The Heritage economic model predicts:

  • Nearly 1 million additional jobs created in 2012, with the unemployment rate falling to 6.4 percent. Actually, at the pace of job creation they estimate, unemployment will likely be around 8 percent by the end of 2012. Heritage's job-creation estimate would need to be more than 2.3 million higher between now and 2012—more than 50 percent higher than their estimate—in order to actually reach an unemployment rate of 6.4 percent by the end of 2012; past Heritage predictions overestimated job creation by an average of 6.2 million jobs per year.  
  • An additional 2.1 million jobs by 2021, which they say will lead to an unemployment rate of 2.8 percent. This rate is below what most economists—and the Federal Reserve—consider inflationary. Well before reaching this rate, the Fed would certainly intervene to create more unemployment and slow the economy. That the Heritage model doesn’t reflect this demonstrates it is not based in reality.  
  • Average 2.7 percent real annual growth in gross domestic product after accounting for inflation; past Heritage predictions overestimated GDP growth by nearly 1 percentage point, which means they overstated growth by a factor of more than one-third.  
  • Housing investment will grow, incredibly, at more than double the pace of its peak in the 2000s housing bubble, while business investment will grow at more than double the pace of the business cycle between 2001-2007. Past Heritage predictions for investment overall would grow 5.4 percent annually, while actual investment grew by less than half of that at 2.1 percent a year.

We’ve seen the reliability of Heritage economic modeling before. There’s no reason to believe it now, either.

But this time around, the Heritage model’s economic forecasts touted by Rep. Ryan are not just fantastical, they are wildly fantastical. We now have the data to evaluate the economic policies of tax cutting slanted toward corporations and the wealthy at the expense of middle-class families during the Bush presidency. We also have the data to evaluate the credibility of the Heritage Foundation’s economic model. Both are clear failures that should be rejected by policymakers and the American people. So let’s dig a little deeper into Heritage’s inauspicious record.

Heritage economic model’s inauspicious record

Economists use models to predict how changes in policy or other factors will potentially affect economic outcomes. But, as with any modeling exercise, the real issue is what assumptions about how the economy works go into the mix. And it’s those assumptions that are the fatal flaw of the Heritage model.

The Heritage estimates begin with the Joint Committee on Taxation’s model of the effects of tax changes on the federal budget. They incorporate this into a so-called “dynamic” model of the economy. Heritage’s model incorporates what they believe to be changes in people’s behavior that will occur as a result of the changes in tax policy, thus the moniker “dynamic.” The problem isn’t that Heritage models behavior; it is that their model of behavior is not connected to how people in our economy have been shown to actually behave.

The Heritage model then compares its estimates to the Congressional Budget Office “alternative fiscal scenario,” which include the fixes to the Alternative Minimum Tax and Medicare payments to physicians, both of which Congress repeatedly “fixes” every year. Heritage researchers then claim that the difference between that CBO baseline and their model’s output is what we should expect if Ryan’s budget is implemented. Since their model includes unrealistic models of how people will react to the Ryan policy changes, this leads to fantastical estimates of output and employment growth.

Anyone can make an economic forecasting model. But the true measure of a model’s worth is how accurately it forecasts future economic developments. Before looking at what their model predicts for the Ryan budget proposal, it’s important to understand how well this model has performed in the past. Heritage analyzed the 2001 and 2003 Bush tax cuts using a similar dynamic scoring methodology. In 2001 they predicted that if the Bush tax cuts were implemented, between FY 2002 and FY 2011 income for a family of four would increase by $4,544, investment in our economy would grow 1.9 percent a year, gross domestic product would grow by an average of 3.3 percent per year, more than 1.6 million more jobs would be added, and the unemployment rate would average to 4.7 percent over the 10-year period. But that’s not what happened.

In fact, the period following the Bush tax cuts yielded one of the worst economic performances, as investment growth, employment, and output were slower than in any other economic recovery in the post-World War II era. Further, rather than growing by nearly $5,000, for the first time in any economic recovery since the end of World War II, our nation’s middle-class families saw their incomes fall after factoring for inflation.

The actual feeble performance of our economy under the Bush-era tax cuts was a far cry from what the Heritage Foundation’s economic model had predicted. Take, for example, Heritage’s 2001 forecasts for job creation and GDP growth effects from the Bush tax cuts. To measure the effect of the Bush tax-cut policies, Heritage’s forecasts and actual economic performance are compared to a baseline scenario of what would have happened in the absence of any policy changes. Heritage’s model did not fare well in predicting the job-creation effect of the Bush tax cuts (see Figure 1).

In every year, the Heritage model simply gets the employment forecasts wrong, even before the start of the Great Recession in December 2007. Between 2001 and 2007, Heritage predicted the economy—spurred by the tax cuts—would add an average of 739,000 new jobs in addition to what would have been created in the baseline scenario. Instead, the Bush tax cuts failed to even maintain job creation at the baseline and job growth fell short of the baseline by 5.5 million jobs per year on average, and 6.2 million fewer per year than predicted by the Heritage model.

Including the years of the Great Recession shows the Heritage job forecasts to be even farther from the mark. But perhaps it is too much to ask their forecasting model to predict the drastic economic consequences of the tax-cutting policies it supported. And as the Bush tax cuts underperformed, the economy also fell farther and farther away from the baseline employment scenario, let alone the egregiously errant Heritage model predictions (to see Figure 2 and for the full article, click here).

Heather Boushey is a Senior Economist at the Center for American Progress. Adam Hersh is an Economist at the Center.

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The Center for American Progress is a think tank dedicated to improving the lives of Americans through ideas and action. We combine bold policy ideas with a modern communications platform to help shape the national debate, expose the hollowness of conservative governing philosophy, and challenge the media to cover the issues that truly matter.

Ryan Turns Knife on Medicare, Medicaid

Rep. Paul Ryan of Wisconsin, the Republican chairman of the U.S. House Budget Committee, unveiled two proposals this week which if enacted would constitute a mortal threat to our nation’s health – particularly to the health of our seniors and our most vulnerable populations.

The first proposal, Senate Joint Resolution 10, would amend the Constitution by imposing rigid and arbitrary restraints on federal spending. The second, his fiscal year 2012 federal budget resolution (misleadingly and eerily called “The Path to Prosperity”), would essentially kill the Medicare program and gut Medicaid, among its other nasty effects.

Both proposals should be emphatically rejected.

Ryan clearly has health care on his hit list. He stressed the problem of health care costs during his final testimony to President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform last December. He said then that he would borrow pieces of the commission’s report for the federal budget, but his latest proposals are in fact much more radical.

The Deficit Commission report stated that if the national health law did not control health care costs, then that ought to trigger more drastic changes in health care spending. Rather than wait for a trigger, Ryan is moving full steam toward the dismantling of our public health programs for the poor and elderly, and the creation of an even more fragmented, privatized and dysfunctional health care landscape than we have now.

Seniors to join the growing ranks of the under-insured

Ryan would change Medicare from a guaranteed benefit program to a limited spending program which pushes more seniors into the private market. Similar to the new federal health law, seniors would be given a defined amount of money that they could use to purchase private insurance on an exchange. Such subsidies are expected to grow more slowly than overall health care costs, so that as insurance premiums rise, seniors would be pushed into skimpier plans that would leave them unable to afford needed care and financially vulnerable should they have a serious accident or illness.

The dismantling and privatization of Medicare, which would be completed by 2022, would actually lead to higher overall health care costs and poorer health for our Medicare population. Health care costs would be higher because of the added private-insurer expenses of profit and inefficient administration. For example, Medicare Advantage plans, run by the insurers, currently cost about 10 times more to administer than the traditional Medicare program.

It is also possible that increased cost-sharing in the form of higher co-pays and deductibles would cause seniors to delay or forgo necessary care leading to greater costs on the back-end for a greater number of and lengthier hospitalizations. (In a darker, bone-chilling moment, one economist recently remarked that delayed care leading to early deaths results in reduced U.S. health spending.)

Further privatization of Medicare will also increase the fragmentation of our health care financing, which will weaken the program’s ability to negotiate fair prices for goods and services.

Ryan describes this change as similar to Medicare part D, for which he voted in 2003. This is another scary thought. The result of Medicare part D was greater confusion and obstacles for seniors, a huge new burden on taxpayers, and windfall profits for the pharmaceutical industry.

Medicaid will shrink in a time of growing need

Regarding Medicaid, Ryan proposes to change the federal portion of the program’s funding to block grants. This means that rather than deciding what part of the population qualifies for Medicaid and adjusting the amount of money allocated based on need, as we do now, states will instead receive a defined lump sum to use as they see fit.

This approach is misleadingly marketed as providing states with greater flexibility. However, Ryan also wants to cut Medicaid spending by $1 trillion over the next 10 years, which will effectively eliminate the Medicaid expansion envisioned under the federal health law and impose even more severe limitations on the number of people and services that will be covered.

In times of growing unemployment and poverty, with more people needing Medicaid, there will be fewer dollars and no guarantee that people will be able to enroll. This will effectively leave millions of our most vulnerable citizens unable to receive necessary services, leading to increased suffering and deaths.

Ryan seriously suggests that those who qualify for Medicaid should be put into the private insurance market in the mistaken belief that this will provide greater choice and cost efficiency. But this is ludicrous, given the well-known track record of the private insurers. 

Correct diagnosis, wrong prescription
  
Ryan does get one thing right: he correctly observes that health care costs are intimately tied to our nation’s budget problems. Health care expenses are expanding way out of line with our economic growth. And yet for all of this spending, a third of our population is either un-insured or under-insured, the medical bankruptcy rate is high, and our health outcomes are relatively poor.

What Ryan fails to understand is that Medicaid and Medicare are not the cause of our rising costs, but rather are the victims of our broken health care system. Medicaid and Medicare costs are actually rising more slowly than our private sector costs. For more on this, see this summary from a congressional briefing on Medicare and the deficit.

Ryan’s plans mirror the austerity measures being pushed in many states across the country and represent an escalation of the worst proposals put forth by the bipartisan Deficit Commission. These growing threats to our social programs require that we step up our defense of the public health infrastructure and make an even louder case for an improved Medicare for all.

As for Ryan’s proposal for a constitutional amendment to cap federal spending, one wonders how much of it is driven by political grandstanding.

S.J.Res.10 would limit federal spending to 18 percent of the gross domestic product, something that hasn’t occurred since 1966. (It’s currently around 24 percent of GDP.) This may sound like a laudable goal until one realizes that during an economic downturn, as we are currently experiencing, there is a much greater need for government spending on programs such as food stamps, unemployment benefits and public health insurance.

A new, arbitrary ceiling on federal outlays could prove disastrous. Noted economist Joseph Stiglitz makes the case that a temporary increase in investment in public programs is required in a downturn in order to make economic recovery possible.

Rep. Ryan hinted at his true agenda during the final meeting of the Deficit Commission when he said that he liked discretionary caps. Significantly, his constitutional amendment would exempt military expenditures in times of war (a seemingly permanent condition for the U.S. today) from such caps.

Greater urgency to protect our right to health care

Section 4 of S.J.Res.10 is also a matter of concern, particularly for single-payer advocates. It states that any bill that raises taxes or imposes a new tax may only pass with a two-thirds majority vote in Congress. Because a national single-payer program would replace current health spending on insurance premiums and out-of-pocket expenses with a new, equitable, and progressive system of taxation to finance universal care, this undemocratic amendment would constitute another obstacle to enacting an improved Medicare for all.

Yet it is precisely single payer that’s the solution to our health care and economic crises: an improved and expanded Medicare-like system that covers everyone. This will achieve the goals of a universal, comprehensive health system which controls our health care costs, relieves businesses of the burden of providing health care coverage and provides a framework within which quality of care and health outcomes will improve. My testimony and that of others presented to the Deficit Commission last summer made that argument.

It is imperative that we take a strong stance to end this assault on our health. Speak to your elected officials today. Tell them to reject Ryan’s proposals. And tell them you want a real solution to our health care crisis: single-payer national health insurance as embodied in H.R. 676.

Margaret Flowers

Dr. Margaret Flowers is a congressional fellow with Physicians for a National Health Program and a pediatrician based in Baltimore. She is also a board member of Healthcare-Now. She can reached by email at: margaret@pnhp.org

What, Is Behind GOP Medicare Plan? Private Insurance Industry

Who, Not What, Is Behind GOP Medicare Plan? The Private Insurance Industry

Pay much attention to the insurers behind the curtain

by Wendell Potter

Democrats who think Paul Ryan and his Republican colleagues have foolishly wrapped their arms around the third rail of American politics by proposing to hand the Medicare program to private insurers will themselves look foolish if they take for granted that the public will always be on their side.

Rep. Paul Ryan’s budget proposal would radically reshape both the Medicare and Medicaid programs. (Credit: J. Scott Applewhite/Associated Press) Rep. Ryan’s budget proposal would radically reshape both the Medicare and Medicaid programs. It would turn Medicaid into a block grant, which would give states more discretion over benefits and eligibility. And it would radically redesign Medicare, changing it from what is essentially a government-run, single-payer health plan to one in which people would choose coverage from competing private insurance firms, many of them for-profit.

Poll numbers would seem to give the Democrats the edge in what will undoubtedly will be a ferocious debate over the coming months and during the 2012 campaigns. An NBC/Wall Street Journal poll conducted February 27-28 showed that 76 percent of Americans considered cuts to Medicare unacceptable. The public is almost as resistant to cutting Medicaid, at least for now: 67 percent of Americans said they found cutting that program unacceptable as well.

According to a story in Politico this week, Democrats “with close ties to the White House” think Ryan has handed them a gift that will keep on giving. They believe the Ryan blueprint will enable them to portray Republicans as both irresponsible and heartless, hell-bent on unraveling the social safety net that has protected millions of Americans for decades. That message will be the centerpiece of the Democrats’ advertising and fundraising efforts, unnamed party strategists told Politico.

Perhaps. But know this: Ryan et al would never propose such a fundamental reshaping of those programs unless they were confident that corporate America stands ready to help them sell their ideas to the public. Like big business CEOs, Congressional Republicans wouldn’t think of rolling out Ryan’s budget plan without a carefully crafted political and communications strategy and the assurance that adequate funding would be available to carry it out.

Republicans know they can rely on health insurance companies—which would attract trillions of taxpayer dollars if Ryan’s dream comes true — to help bankroll a massive campaign to sell the privatization of Medicare to the public.

Four years ago, in a secret insurance industry meeting in Philadelphia, I saw numbers that were similar to those in the NBC/Wall Street Journal poll. The industry’s pollster, Bill McInturff of Public Opinion Strategies, told insurance company executives, who had assembled to begin planning a campaign to shape the health care reform debate, that Americans were rapidly losing confidence in the private health insurance market.

For the first time ever, he said, more than 50 percent of Americans believed that the government should do more to solve the many problems that plagued the U.S. health care system. In fact, he said, a fast-growing percentage of Americans were embracing the idea of a government run “Medicare-for-All” type program to replace private insurers.

The executives came to realize at the meeting that the industry’s very survival was dependent upon the successful execution of a comprehensive campaign to change public attitudes toward private insurers. They needed to convince Americans they “added value” to the health care system, and that what the public should fear would be more government control.

Knowing that a campaign publicly identified with the industry would have little credibility, the executives endorsed a strategy that would use their business and political allies — and front groups — as messengers.

The main front group was Health Care America It was set up and operated out of the Washington PR firm APCO Worldwide. The first objective was to discredit Michael Moore’s documentary, SICKO, which was about to hit movie screens nationwide. Moore’s film compared the U.S. health care system to those in countries that had “Medicare-for-all” type programs run by governments. The American system, dominated by private insurers, did not fare well in Moore’s cinematic interpretation.

The front group painted Moore as a socialist but also went about the larger task of scaring the public away from “a government takeover of the health care system.” Part of that work involved persuading Americans that any reform bill expanding Medicare or including a “public option” would represent a government takeover.

The industry knew it had to enlist the support of longtime allies such as the U.S. Chamber of Commerce, the National Federation of Independent Business and the National Association of Health Underwriters to repeat the term “government takeover” like a mantra. It also had to get conservative talk show hosts, pundits and politicians to play along. And play along they did. In the debate preceding one key House vote involving a public option, a parade of Republicans took to the floor to repeat the industry’s favorite term: government takeover.

To help make sure the term stuck, America’s Health Insurance Plans (AHIP), the insurers’ lobbying group, funneled $86 million to the Chamber of Commerce to help finance its advertising and PR campaign against any reform legislation that included the public option. It worked like a charm. Polls showed during the course of the debate that public opinion was increasingly turning against the Democrats’ vision of reform. By the time the bill reached President Obama in March 2010, the public option had been stripped out, and public support for reform was well below 50 percent.

As a testament to the success of the industry’s campaign, PolitiFact, the St. Petersburg Times’ independent fact-checking website, chose “a government takeover of health care” as its “Lie of the Year” in 2010. (The 2009 Lie of the Year was the fabrication that the Democrats’ reform bill would create Medicare “death panels.”)

While they were leading the effort to torpedo the public option, the insurers were lobbying hard for a provision in the bill requiring all of us to buy coverage from them if we’re not eligible for a public program like Medicare or Medicaid. They won that round, too. That provision alone will guarantee billions of dollars in revenue the insurers would never have seen had it not been for the bill the president signed.

But even that is not enough for the insurers. For many years, they’ve lobbied quietly for privatization of Medicare, with significant success. They were behind the change in the Medicare program in the 1980s that allowed insurers to offer what are now called “Medicare Advantage” plans. The federal government not only pays private insurers to market these plans, it pays them an 11 percent bonus. That’s right: people enrolled in Medicare Advantage plans cost the taxpayers 11 percent more than people enrolled in the basic Medicare program.

During the Bush administration, the insurers persuaded lawmakers to allow them to administer the new Medicare Part D prescription drug program. That has been a major source of new income for the many big for-profit insurers that participate in the program.

Rest assured that insurers have promised Ryan and his colleagues a massive industry-financed PR and advertising campaign to support his proposed corporate takeover of Medicare. If Democratic strategists really believe that Ryan has all but guaranteed the GOP’s demise by proposing to shred the social safety net for some of our most vulnerable citizens, they will soon be rudely disabused of that notion. The insurers and their allies have demonstrated time and again that they can persuade Americans to think and act — and vote — against their own best interests.

The People's Budget: What a "Centrist" Budget Should Look Like

by Jeffrey Sachs

WASHINGTON - Just when it seemed that all of Washington had lost its values and its connection with the American people, a bolt of hope has arrived. It is the People's Budget put forward by the co-chairs of the 80-member Congressional Progressive Caucus. Their plan is humane, responsible, and most of all sensible, reflecting the true values of the American people and the real needs of the floundering economy. Unlike Paul Ryan's almost absurdly vicious attack on the poor and working class, the People's Budget would close the deficit by raising taxes on the rich, taming health care costs (including a public option), and ending the military spending on wars and wasteful weapons systems.

There are now four budget positions on the table. Far to the right is Paul Ryan's plan, an artless war on the poor that would take a meat-cleaver to Medicaid (health care for the poor), food stamps, support for child care, the environment, and the rest of government other than the military, Social Security, and Medicare (that is, until 2022, when the slashing would begin on Medicare coverage as well). Ryan would keep taxes below 20 percent of GDP (specifically, 19.9 percent of GDP in 2021), at the cost of destroying entitlements programs and other civilian spending.

Then there is President Obama's budget, which is really a muddled proposal in the center-right of the political spectrum. It would keep most of the Reagan-era and Bush-era tax cuts in place. Like the Ryan proposal, Obama's tax proposals would keep total taxes at around 20 percent of GDP. The result is a major long-term squeeze on vital programs such as community development, infrastructure, and job training. Also, Obama's plan never closes the budget deficit, which remains as high as 3.1% of GDP in 2021.

In the progressive middle is the People's Budget. Like Ryan's plan, the People's Budget would cut the budget deficit to zero by 2021, but would do so in an efficient and fair way. It would close the budget deficit by raising tax rates on the rich and giant corporations, while also curbing military spending and wrestling health care costs under control, partly by introducing a public option. By raising tax revenues to 22.3 percent of GDP by 2021, the People's Budget closes the budget deficit while protecting the poor and promoting needed investments in education, health care, roads, power, energy, and the environment in order to raise America's long-term competitiveness. The People's Budget thereby achieves what Ryan and Obama do not: the combination of fairness, efficiency, and budget balance.

The fourth position is the public's position. The Republicans often say that they want Congress to respect the voice of the people. The voice of the people is crystal clear. In one opinion survey after the next, the public says that the rich and the corporations should pay more taxes. The public says that we should tamp down runaway health care costs through a public option, one that would introduce competition to drive down bloated private health insurance costs. The public says that we should get out of Iraq and Afghanistan and reduce Pentagon spending. (Just yesterday, Defense Secretary Gates let loose the predictable Pentagon canard that we should stay in Iraq if the Iraqi government asks for it. Better yet, we should respond to what the American people are asking for: to bring our troops home).

The fact is that the People's Budget is the public's position. That's why it is truly a centrist initiative, at the broad center of the U.S. political spectrum. Ryan reflects the wishes of the rich and the far right. Obama's position reflects the muddle of a White House that wavers between its true values and the demands of the wealthy campaign contributors and lobbyists that Obama courts for his re-election. Many Democrats in Congress have also gone along with the falsehood that deficit cutting means slashing spending on the poor and on civilian discretionary programs, rather than raising taxes on the rich, cutting military spending, and taking on the over-priced private health insurance industry. Only the People's Budget speaks to the broad needs and values of the American people.

The current budget negotiations have been a dialogue among the wealthy. The big debate has focused on which programs for the poor should be axed first. There has been no discussion of raising taxes on the rich, and quite the contrary, the White House and the Republican leadership agreed to further tax cuts last December. Obama has repeatedly expressed regret at slashing community development, energy support for the poor, and other programs, but he is not fighting the trend, only regretting it.

The Missing Economic Context of Budget Impasse Reports

by Jim Naureckas

In coverage of the budget negotiations in Washington, which have largely revolved around how much money will be cut from the federal budget, it's rarely acknowledged that the standard economic assumption is that reducing government spending at a time of diminished economic activity will destroy jobs. As a rule of thumb, every $1 billion in spending cuts eliminates roughly 10,000 jobs. (The Economic Policy Institute provides a slightly more sophisticated explanation here.)

Given the the public consistently tells pollsters that job creation should be the country's top priority--often picked over deficit reduction by wide margins--this information should be included in every article on the budget debate. Thus when the New York Times (4/8/11) says that the Obama administration has agreed to $34.5 billion in cuts, and House Speaker John Boehner is pushing for $39 billion, the paper should note that the administration's position would cost approximately 345,000 jobs, while Boehner's would reduce employment by about 390,000.

I suspect that the inclusion of this information would rapidly change the debate.

http://www.fair.org

Rep. Ryan's Free-Market 'Death Panels'

By Robert Parry

The consequences of three decades of anti-government Reaganism and free-market extremism are now coming clearly into view, a cruel and brutish America split sharply between a few lucky haves and many desperate have-nots.

As Rep. Paul Ryan proudly declared in unveiling the Republican budget plan for fiscal 2012, “This is not a budget; this is a cause.”

It is the “cause” advanced in the modern era by President Ronald Reagan and economist Milton Friedman. It calls for further slashing the tax rate for the richest Americans by another ten percentage points, from 35 percent to 25 percent, while enacting a wide range of domestic spending cuts, including phasing out the Medicare health program for the elderly as it has existed since the 1960s.

Under Ryan’s plan, senior citizens in the future would have to select a private health insurance policy with the government paying “premium support” worth about $8,000 to the company, thus shifting a heavier, even crushing, financial burden onto the elderly.

And, since Ryan’s plan also would repeal President Barack Obama’s health reform, which prohibits insurance companies from excluding coverage of “preexisting conditions,” senior citizens suffering from chronic illnesses might find themselves unable to get coverage of those ailments and likely consigned to a premature death.

As medical writer Sheila Guilloton noted about Ryan’s plan, “What is not clear or even addressed is the problem of putting eligibility to purchase health insurance back in the hands of the health insurance industry.”

Even today, people just shy of Medicare’s 65-year-old threshold find themselves either shunned by insurance companies or paying exorbitant amounts. Yet Ryan envisions thrusting Americans over 65 into that same predicament, only worse because they are more likely to have health problems and are less likely to be under a company plan.

“For older people the prospect of getting and paying for private health insurance is daunting,” Guilloton wrote “For instance, in Connecticut a PPO with a $5,000 deductible would cost a 60-64 year old and spouse between $1,400 and $1,900 a month. And that cost presumes that they either are part of a company group plan or have no pre-existing conditions.

“The plan to return control of access to health insurance companies without addressing the issue of eligibility and cost control is simply to return to the very pattern of abuse in place before the attempt at health care reform.”

The elimination of Obama’s health-care reform also would remove requirements that insurance companies devote a high percentage of their premiums to medical services rather than diverting the money to higher executive salaries and greater profits.

In other words, Ryan’s plan would fatten the insurance industry's bottom line by squeezing the elderly on health care. In effect, the plan would create a free-market “death panel” by forcing many senior citizens to skip necessary care.

Ryan also would “save” large sums by turning the Medicaid program for the poor into a state block grant system, which would leave states little choice but to also turn their backs on many sick and disabled.

No Balanced Budget

Yet, even as Ryan touts his goal of cutting government spending by more than $6.2 trillion over the next decade, compared to Obama’s budget, Ryan’s plan would still not result in a balanced federal budget for nearly three decades, let alone pay off the accumulated national debt.

That’s because Ryan would accompany his steep spending cuts with lower tax rates for the wealthiest Americans. And those lower tax rates – based on an ideological devotion to Reagan’s “trickle-down economics” and Friedman’s “free-market” extremism – have been a principal cause of the debt problem.

Remember just a decade ago, after President Bill Clinton and the congressional Democrats raised the tax rates modestly, the U.S. government was running a surplus and was on a path to eliminate the entire federal debt.

Then, President George W. Bush and congressional Republicans began enacting tax cuts again.

Those tax cuts – combined with Bush’s two wars and the financial crisis caused, in large part, by inadequate federal regulation of Wall Street – flooded the U.S. government ledgers with trillions of dollars in red ink.

So, the logical remedy would seem to be to combine some reasonable spending cuts with a surtax on millionaires and billionaires. There also could be huge savings if the United States shifted to a “Medicare-for-all” health system that eliminated the expensive private insurance middlemen.

But that would go against Reagan/Friedman dogma about giving virtually all power to corporations and trusting in the “magic of the market.” Therefore, Ryan’s “solution” is to savage domestic government spending, weaken government regulatory powers and pass more tax cuts for the wealthy.

Since he unveiled his budget plan this week, Ryan has been widely hailed by the mainstream U.S. news media as a “courageous” visionary, a thoughtful guy who is brave enough to make the tough choices.

In watching the correspondents on CNN and CNBC – not to mention Fox – it’s almost as if the revenue side of the budget crisis is non-existent. “Political courage” only comes from destroying the remnants of Franklin Roosevelt’s New Deal and Lyndon Johnson’s Great Society, if not Theodore Roosevelt’s progressive era.

Why not repeal the entire 20th Century and take the nation back to an era of two Americas, a few living in the lap of luxury and most living hand-to-mouth?

Most media talking heads appear to be either devotees of free-market economist Milton Friedman or careerists who know that no one ever lost a promotion by promoting the anti-government doctrine of Ronald Reagan. (Reagan, of course, got his big start in politics in the 1960s by decrying Medicare as socialist oppression.)

The Cost of Reaganism

The American people are now paying the price for the lack of nearly any critical coverage of the Reagan presidency, as was apparent last February in the hagiography broadcast and written about the 40th president around the centennial of his birth.

The syrupy handling of Reagan and his legacy has had a powerful impact on the judgment of the American people. According to a recent Gallup poll, Americans rated Reagan the greatest president ever, five percentage points ahead of Abraham Lincoln, who came in second.

When the Reagan mythology is combined with the powerful influence of the right-wing media, it shouldn’t be a great surprise that many average Americans don’t blame Reagan and his anti-government policies for why their incomes have stagnated or sunk over the past three decades.

Instead, many Americans, especially white men, have been encouraged to blame “guv-mint” and its supposed favoritism toward minorities and the poor. So, some don “revolutionary war” costumes and join Tea Party groups, which are often quietly funded by politically savvy billionaires.

Unlike the duped average guys, the billionaires – the likes of the oil magnate Koch brothers and media mogul Rupert Murdoch – are keenly attuned to their class interests. They know the only serious check on their extraordinary powers would be a democratized and energized federal government.

So, they invest in the faux populism of the Tea Party and Fox News to rile up the white guys with anti-government rage.

Meanwhile, on the opposite side, American progressives have tended to be ineffective in presenting a consistent or coherent message to the people.

Though many progressives recognize the practical value of reforms like Medicare in making the lives of average Americans longer and more fulfilling, some on the Left preach an unrealistic perfectionism that finds little value in imperfect reforms. They almost invite the worst social pain as the only route to some “revolution.”

The combination of these factors – a well-organized Right against a largely disorganized Left – has brought a bleak future into sharp focus.

It can be seen through the lens of Paul Ryan’s budgetary "cause." It would leave sick elderly to die and the nation’s domestic infrastructure to decay, while insurance companies would reap more profits and the super rich would be taxed even less.

It’s an outcome that would have put a crooked smile on the lips of Ronald Reagan and Milton Friedman.

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there.

http://www.consortiumnews.com

Consortiumnews.com is a product of The Consortium for Independent Journalism, Inc., a non-profit organization that relies on donations from its readers to produce these stories and keep alive this Web publication.

Mr. Serious: The Ryan Budget Plan and the Beltway Media

by Fairness and Accuracy in Reporting (FAIR)

NEW YORK - The budget proposal released last week by Rep. Paul Ryan (R.-Wisc.) includes tax cuts for the wealthy, tax hikes for the middle class, drastic cuts in spending and a radical restructuring of Medicare that would shift most of the cost of healthcare to seniors. Its dubious claims of deficit reduction rely on fatally flawed assumptions and inexplicable projections (Center for Budget & Policy Priorities, 4/7/11; CEPR, 4/11).

But much of the media coverage about the plan has presented Ryan's proposal as a serious solution to long-term budget problems, or at least the starting point of a serious conversation about the topic.

In Time magazine (4/18/11), readers learned that Paul Ryan--described as having "jet black hair and a touch of Eagle Scout to him..."

The magazine also declared that he is "a PowerPoint fanatic with an almost unsettling fluency in the fine print of massive budget documents."

Deep into the article, readers get this parenthetical warning:

(He's also been criticized for peddling fuzzy math and rosy projections. A Washington Post factcheck deemed his budget full of "dubious assertions, questionable assumptions and fishy figures.")

So someone with "an almost unsettling fluency in the fine print of massive budget documents" has presented a budget plan full of obvious problems.

How can both things be true?

For too many media outlets, probing the details of the plan is less important than telling an appealing political story: that finally someone has presented a "serious" budget proposal. Lacking evidence to demonstrate the plan's seriousness, media cite Ryan's biography in order to supply the necessary credibility.

Thus the Washington Post (4/6/11) explained that Ryan is "wonky" and "an unlikely revolutionary." The Post added that "Ryan studied economics in college, and in Congress he has embraced the weedy issues of the federal budget." The Post's lead wondered if Ryan can "really manage the hardest sales job in U.S. politics." The paper seemed to think so:

So far, the sales pitch appears to be classic Ryan. He will make his case with earnestness and a hope that a quiet explanation of budget math can swing the country in a way that previous politicians could not.

Ryan's "budget math" relies on, among other things, wildly implausible estimates concerning unemployment and government spending (Conscience of a Liberal, 4/6/11). As salesman to the corporate media, it seems Ryan is largely succeeding.

He's been making the media swoon for months now, as the January 25 New York Times made clear:

He is the guy with the piercing blue eyes, love for heavy metal on his iPod and a reputation among Democrats, including President Obama, as a Republican who has put forward budget ideas that are thoughtful and serious, if not in sync with their own.

New York Times columnist David Brooks (4/4/11) called Ryan's budget plan "the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes.... The Ryan budget will not be enacted this year, but it will immediately reframe the domestic policy debate." Brooks went on to declare that "the Ryan budget will put all future arguments in the proper context," closing with this: "Paul Ryan has grasped reality with both hands. He’s forcing everybody else to do the same."

Even those who disagreed with Ryan's plan found ways to praise it. In Time (4/18/11), Fareed Zakaria wrote that "Ryan's plan is deeply flawed, but it is courageous." Zakaria adds that "Ryan makes magical assumptions about growth--and thus tax revenues," and that other aspects are "highly unrealistic." But still he concludes that he applauds it as "a serious effort to tackle entitlement programs."

And on NBC's Chris Matthews Show (4/10/11), pundit Gloria Borger declared:"We have to give Paul Ryan an awful lot of credit because, as all of our august colleagues have said, yes, it does define the conversation for 2012."

In a piece for Time.com, reporter Michael Grunwald (4/7/11) noted the incongruity of such praise and wondered, "What's so brave about fuzzy math in the service of Tea Party ideology"?

The Washington Post factcheck of the Ryan plan by Glenn Kessler (4/6/11)--the one cited in passing by Time--represented a genuine attempt to assess Ryan's proposal. When Ryan claims that the Congressional Budget Office (CBO) found his plan would produce surpluses by 2040, most outlets report it as fact--like the April 5 Los Angeles Times, which explained that Ryan's budget, according to the CBO, "would dramatically improve the nation's overall fiscal picture, reducing deficits projected in President Obama's budget and moving the federal government into surplus by 2040."

The Post's Kessler, however, reports that this claim "seriously overstates the case," since the CBO analysis "reflects the scenarios that Ryan has concocted. There are, for instance, no real revenue estimates, just an assumption that federal revenues will remain at about 19 percent of GDP." The spending cuts imagined by Ryan are equally implausible--a "bare-bones government...not experienced since before the Great Depression."

Kessler also noted that Ryan claims substantial savings--$1.4 trillion, in fact--from a repeal of the new healthcare law--without any explanation for why he rejects the CBO's determination that a repeal would actually cost hundreds of billions. The verdict was, as Time parenthetically noted, that Ryan's plan was based on "dubious assertions, questionable assumptions and fishy figures."

This illustrates one of the awkward ironies of corporate media "factcheck" articles. If the essential claims made by a politician are in fact wildly misleading, then it's not nearly enough for that to be said one time in one brief article. That assessment should be part of every single report on Ryan's budget, if journalists intend to do their job.


GOP's Medicare Plan Would Be a Windfall for Insurers

by Wendell Potter

Rep. Paul Ryan's plan to privatize Medicare would accelerate a trend started several years ago by corporate CEOs and their political allies to shift ever-increasing amounts of risk from Big Business and the government to workers and retirees.

If enacted, the Ryan plan would represent a windfall of unprecedented proportions for insurance corporations and other businesses.

For millions of average Americans, many of whom already are finding it impossible to save for retirement, it would represent financial calamity. The nation's middle class would pay dearly for Ryan's proposed shredding of the social safety net that Medicare currently provides.

Ryan, chairman of the House Budget Committee, wants to dismantle the Medicare program and replace it with a system of vouchers. Starting in 2022, the government would give the average 65-year-old Medicare beneficiary $8,000 a year to buy coverage from a private insurer. That's the amount health care analysts estimate will be what Medicare will spend on every 65-year-old in 2022 if the government doesn't turn it over to private insurance companies.

While that might sound fair on the surface, it would actually be a very bad deal for people who turn 65 that year, compared to those who turn 65 in 2021. That's because commercial insurance plans are much more expensive, and operate far less efficiently, than the current Medicare program.

Insurers Spend Less on Medical Care, More on Executive Pay, Marketing

The amount of money commercial plans actually spend to pay medical claims has been declining rapidly over the past several years, while the amount they spend on administrative activities such as marketing and underwriting -- and to pay executives and reward shareholders -- has been increasing. That's why Congress included a provision in last year's health care reform law to require insurance firms to spend no more than 20 percent of their policyholders' premiums on overhead. By contrast, the current Medicare program spends just 3 percent of its budget on administration.

The nonpartisan Congressional Budget Office (CBO) says the $8,000 voucher won't be nearly enough for seniors to buy comparable coverage from private insurers and pay the additional out-of-pocket costs that those insurers would require them to pay. The amount the average 65-year-old would have to shell out to buy private insurance in 2022, according to the CBO, will actually be $20,510. Seniors would have to pay the difference -- $12,510. If Medicare is not privatized, the difference would be $6,150.

Ryan Plan: Insurers' Dream Come True

Here's why this would be a dream-come-true for the insurance industry: The more health plan enrollees have to pay out of their own pockets, the less insurers have to pay for medical care. The money that insurers avoid paying out in claims goes straight to their bottom line -- and into shareholders' pockets.

Insurers have been shifting more and more of the cost of care to their policyholders over the past several years by enticing -- or pushing -- them into plans with ever increasing deductibles. This trend is part of what Yale professor Jacob S. Hacker called "the personal responsibility crusade" -- making people more responsible for the management and financing of the major economic risks they face -- in his 2006 book, "The Great Risk Shift."

This crusade has been led by Republicans and insurance company executives who have been saying for years that the best way to control medical costs is for Americans to have more "skin in the game." That's an expression that former Aetna CEO Jack Rowe used often before he retired in 2005, the year he made $22.2 million. It was also a sound bite favored by the CEO I used to work for, CIGNA's Ed Hanway, before he retired in 2009. Hanway's total compensation that year was almost $111 million.

The problem is, most Americans have far less skin to put in the game than CEOs like Rowe and Hanway or even Rep. Ryan, who makes $174,000 as a member of Congress. The median household income in the United States was just $49,777 in 2009, which was down $335 from 2008.

That decline, by the way, was the continuation of another trend that began as the Clinton era was ending and the George W. Bush era was beginning. Median household income in the United States peaked in 1999 at $52,388 (adjusted for inflation). It fell more than $2,000 during the eight years of the Bush administration.

During that time, health costs rose dramatically. According to the Kaiser Family Foundation, the average annual health insurance premium for family coverage increased from $5,791 in 1999 to $13,770 in 2010. The average amount that workers contributed out of their own pockets for family coverage increased from $1,543 to $3,997.

Ryan's Plan Will Throw the Elderly Back into Destitution

With household incomes declining, Americans have had far less money to put into retirement. According to a recent survey conducted by Opinion Research Corp. for America Saves and the American Savings Education Council, less than half of current workers are saving enough to have a "desirable standard of living in retirement."

If workers are having this much difficulty saving for retirement, where in the world will they find the money to pay what Rep. Ryan would make them pay for Medicare coverage when they turn 65?

Ryan's "blueprint" is one that will take America back to the pre-1965 days when senior citizens were losing their homes and their farms to pay for medical care. They were becoming destitute -- and dying much earlier than they are today -- because insurers would not sell them coverage because they were too much of a risk to insure, and there was no safety net for them.

That's exactly the same place future senior citizens would find themselves if Ryan's plan to privative Medicare ever becomes public policy.

Wendell Potter is the Senior Fellow on Health Care for the Center for Media and Democracy in Madison, Wisconsin.

PR Watch

"Courageous," "Bold," "Serious," Paul Ryan -- Booed?

by Steve Rendall

Wisconsin Rep. Paul Ryan (R-Wisc.) is used to being celebrated by pundits for his "courageous," "bold," "serious," budget proposals (even though his numbers don't add up). Indeed, Ryan has become a genuine media darling.

So it must have been a little surprising to find himself being booed earlier this week, at a town hall meeting he hosted in his congressional district.

It happened after one attendee at the event, a constituent describing himself as a "life-long conservative," challenged GOP views on income disparity, taxes on the wealthy, and raising the income cap on Social Security taxes:

The middle class is disappearing right now. During this time of prosperity, the top 1 percent was taking about 10 percent of the total annual income, but yet today we are fighting to not let the tax breaks for the wealthy expire? And we’re fighting to not raise the Social Security cap from $87,000? I think we’re wrong.

The boos came a moment later when Ryan responded insisting, "We do tax that top."

The contrast between the easy ride Ryan's had from professional journalists and the way he was challenged by his constituents demonstrates (once again) the disconnect between pundits and the people they often claim to speak for. (As Think Progress reports, a recent Washington Post-ABC News poll "found that 72 percent of Americans wanted Congress to raise taxes on wealthy Americans making more than $250,000 per year.")

In the summer of 2009, the corporate media frequently covered town hall meetings where Democratic politicians were challenged, sometimes even shouted down, by opponents of the party's healthcare initiatives. So far Ryan's awkward town hall moment has created an online buzz, but besides a few mentions on MSNBC (e.g. 4/20, 4/22) and 0ne Chicago Tribune report, it's received scant corporate media attention.

http://www.fair.org

A Report Card Comparing Federal Budget Proposals

FOR IMMEDIATE RELEASE
May 6, 2011
2:28 PM

CONTACT: Dēmos

A Report Card Comparing Federal Budget Proposals

Demos Releases Side-by-Side Budget Plan Analysis As Bi-Partisan Talks Heat Up In Washington

WASHINGTON - May 6 - Only two of five current budget proposals put our nation on a sustainable path with public investments needed to accelerate the economic recovery and rebuild a strong middle class, according to a new report card published by the policy center Demos.

This unique report card, which grades the five leading federal budget proposals across eight major categories, provides a side-by-side comparison as bi-partisan budget talks heat up in Washington.  Upcoming bi-partisan proposals are expected to reflect the current political brinksmanship in Washington rather than the urgent need to invest in America’s future, modernize our revenue base and rebuild the middle class.
 
“Budgeting for America’s Middle Class: A Report Card Comparing Federal Budget Proposals” analyzes each plan on how it prioritizes the financial success and security of working families. The eight budget categories examined are: jobs and public investment; health care; Social Security and retirement income; education; defense policy; fair and adequate revenues; and long-term debt reduction. 
 
The report card shows how the three budget proposals receiving the most political attention disregard strategies proven essential to the creation of a middle class. Surprisingly, Paul Ryan’s plan is the only one of the five that fails to detail the revenues needed to reach his debt reduction targets, while the Congressional Progressive Caucus has the most ambitious target for deficit reduction.
 
“A fiscal plan should chart a course for rebuilding America’s endangered middle class, but two of the leading budget plans fail the middle class and the President’s barely breaks even,” said Heather C. McGhee, Director of Demos’ Washington Office and co-author of the report. 
 
Demos’ overall findings for each of the five budget proposals are as follows:
 
Overall Grade F: “The Path to Prosperity” from Representative Paul Ryan: 
--Destroys 900,000 jobs in 2012, cuts early childhood spending by 14 percent, takes away healthcare from millions of citizens, denies Pell Grants to 1.4 million students, dramatically reduces federal revenue, and provides large tax cuts to the wealthy.
 
Overall Grade D+: Proposal from Erskine Bowles and former-Senator Alan Simpson: 
--Destroys over four million jobs over the next four years, dramatically cuts early childhood spending, forces long-term cuts to Medicare and Medicaid, cuts student aid by $48 billion over the next four years, permanently caps revenue, and significantly cuts future Social Security benefits.
 
Overall Grade C: “Deficit Reduction Plan” from President Obama:
--Forgoes new stimulus for deficit reduction, raises no new corporate revenue, increases defense spending, protects education and low-income programs from cuts.
 
Overall Grade A-: “People’s Budget” from The Congressional Progressive Caucus: 
--Creates jobs with trillions spent in public investment, increases child care and Pell Grants, allows the government to negotiate drug prices, closes foreign tax loopholes and ends both the Bush tax cuts and deployments in Iraq and Afghanistan in 2013.
 
Overall Grade A-: “Investing in America’s Economy” from Our Fiscal Security, a collaborative effort of Demos, the Economic Policy Institute, and The Century Foundation: 
--Favors immediate stimulus over deficit reduction until unemployment falls to six percent, creates jobs through trillions spent in public investment, provides universal early child care, reduces healthcare costs without increasing burdens on beneficiaries, and makes the tax code more progressive.
 
“Budgeting for America’s Middle Class: A Report Card Comparing Federal Budget Proposals” is available for syndication on blogs and websites.
 
The full report card is available at http://bit.ly/k5GHGm
The abbreviated report card is available at http://bit.ly/mJFk8z
Download graphic: http://bit.ly/jiiptc
 
For interview requests, please see contact information above.
###
A multi-issue national organization, Demos combines research, policy development, and advocacy to influence public debates and catalyze change. We publish books, reports, and briefing papers that illuminate critical problems and advance innovative solutions; work at both the national and state level with advocates and policymakers to promote reforms; help to build the capacity and skills of key progressive constituencies; project our values into the media by promoting Demos Fellows and staff in print, broadcast, and Internet venues; and host public events that showcase new ideas and leading progressive voices.

Protests Against Paul Ryan's Plan Changed Medicare Debate

by John Nichols

Paul Ryan claims the protests heard so very loud and clear during the House Budget Committee chair’s town hall meetings in April had no influence on his thinking about Medicare.

Perhaps Ryan really does have a tin ear.

But the outcry over his plan to mess with Medicare, heard in Wisconsin communities from Milton to Kenosha, and at spring recess sessions in the districts of Republican freshmen from Pennsylvania to Florida, obviously influenced other Republicans.

Images from Kenosha – a historic factory town in Ryan's district, where hundreds of people showed up to criticize his scheming to cut benefits for working Americans while giving billionaires and multinational corporations new tax breaks – were featured nationally on broadcast network news shows.

Cable news programs focused intense attention on the story. MSNBC's Ed Schultz devoted much of a program last week to the outcry. (In addition to a blistering analysis of the congressman's proposal by the host, this writer provided some on the ground reporting from Kenosha, including details of a brief interview with Ryan, who was typically dismissive of the popular discomfort with his plan.) But other networks -- even Fox -- at least touched on the congressman's troubles.

The reporting was noticed in Washington where, last week, GOP leaders began almost immediately to distance themselves from Ryan’s plan to use Medicare funds to enrich the private insurance firms that have donated so generously to his campaigns.

The disarray among House and Senate Republicans is evident, as they send contradictory signals about how they will treat Medicare and Medicaid in negotiations around Ryan's budget plan. Even as they claim to still be sympathetic to the budget committee chair's plan, GOP leaders are retreating from it.

House Speaker John Boehner now describes the Ryan plan -- which was endorsed by his caucus in a House vote barely a month ago -- as just “one idea” among many.

The No. 2 Republican in the House, Eric Cantor, says he's looking for alternatives to Ryan's proposal.

House Ways and Means Chair Dave Camp, D-Michigan, says he does not plan to hold hearings regarding Ryan's plan.

The operative term among Republicans now is that the budget committee chair's proposal is a “starting point" -- not a destination.

What does this tell us?

The town hall protests across the country shook the GOP.

And the particular protests in Ryan's Wisconsin district had a two-fold impact:

A. They pierced Ryan's image of invincibility. He had long peddled a claim that he could win with these ideas in working-class areas. That was called into question and GOP members from around the country noted it.

B. They made Medicare an issue in Wisconsin and nationally -- even New York where, in a special election for an open U.S. House seat, Democratic contender Kathy Hochul has surged after attacking Ryan’s plan. As the Buffalo News notes, "The Hochul campaign... has recognized the special dynamics of what looms on May 24 and employs an aide with experience in special elections. The campaign has recognized early on that the educated voters who will vote on Election Day know their issues, that they know the term “Ryan budget,” and they know that a major overhaul of Medicare as we know it is part of the deal that Corwin supports. It’s why issues matter in a special election. “I had no idea [at the campaign’s start] that the Ryan budget would be in play,” said (a) Democrat close to the campaign. “But it’s in play.”

What this all adds up to, whether Ryan wants to admit it or not, is the truth that a grassroots intervention by citizens in Wisconsin and states across the country appears to be changing the course of national policymaking.

John Nichols

John Nichols is Washington correspondent for The Nation and associate editor of The Capital Times in Madison, Wisconsin. His most recent book is The “S” Word: A Short History of an American Tradition. A co-founder of the media reform organization Free Press, Nichols is co-author with Robert W. McChesney of The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again and Tragedy & Farce: How the American Media Sell Wars, Spin Elections, and Destroy Democracy. Nichols' other books include: Dick: The Man Who is President and The Genius of Impeachment: The Founders' Cure for Royalism.

Paul Ryan's $34 Trillion Tax Folly

by David Cay Johnston

If repairing your car cost 18 percent of your income, would you buy a new car? Of course you would.

Now imagine that your mechanic tried to persuade you to keep the jalopy with a clever tax argument: The costs of your annual car tax and registration would decline over time, saving you money. Keep the car long enough and you would save a third of a year's income just in taxes.

That sounds appealing, unless you stop to think about how much more you would pay for repairs as your vehicle ages and breaks down ever more often.

Now imagine that your mechanic's savings estimate relied on data that could be analyzed to determine how much of your tax savings would be offset by higher repair costs, but he did not give you those figures. So you do the analysis and find out that for every dollar of tax you save, you would spend $5 to $8 on repairs.

How would you react? Would you laugh out loud at your mechanic? Or get mad? Or walk away in disgust at his lack of candor? Would you not only buy a new car, but also look for a trustworthy mechanic?

This analogy describes the "roadmap" for future taxes and spending on Medicare being marketed by House Budget Committee Chair Paul Ryan, R-Wis.

Ryan is touting his plan to replace Medicare, the universal healthcare plan for older Americans, with a form of defined contribution plan. Ryan would replace universal care with a subsidy for older Americans to pay for health insurance in the private marketplace.

There is not a scintilla of evidence that the private insurance market is clamoring to enroll anyone over age 55 for full medical coverage, especially those with a preexisting condition. Yet Ryan would repeal the 2009 law sponsored by President Obama that requires insurers to take people with preexisting conditions.

Ryan's plan would save taxpayer dollars, no doubt about it. But it would not save money. In fact, it would add tremendously to total healthcare costs, which now run 18 cents of every dollar in the economy. That is twice what we spent in 1980. Other modern countries spend 9 to 12 percent of their economy on healthcare and yet manage universal coverage, some with little or no out-of-pocket costs.

The problem is not, as Ryan posits, that taxpayers cannot afford Medicare. The problem is that we cannot afford our existing sick care model with its massive denial of services, loss of productive capacity by injured and sick individuals who get inadequate treatment, and billion-dollar fortunes for the few positioned to scoop up healthcare dollars by selling what should be utterly unnecessary services, like private health insurance.

Ignoring decades of actual data showing that health as a business drives costs up, Ryan displays his faith in the magic of markets as competitive forces to lower prices. I'm a huge fan of markets, but not all markets lower prices. Some, by design, compete to drive costs up. Healthcare, like electricity, is one of those markets that tend to reverse competition's higher prices. That is a reason why every other modern country uses a universal healthcare model, some with competitive features, some without.

Applying Ryan's own data to Social Security estimates and to the official Congressional Budget Office data and using the CBO "alternative scenario" that Ryan prefers shows total expected health costs for older Americans and how they would be borne.

So what happens if we buy the Ryan plan? For those age 55 and older, not so much. But a lot changes starting in 2022, when today's 54-year-olds turn 65, through 2084, the end of the 75-year period covered by Social Security trustee projections.

David Rosnick and Dean Baker, economists at the Center for Economic Policy and Research, crunched the numbers. Whether you like their liberal views or hate them, Rosnick and Baker are just spreadsheet mechanics in this exercise.

Reduced to net present value, Ryan's plan would save $4.9 trillion in taxes from 2022 through 2084, the numbers reveal. That's not chicken feed. In fact, it is within range of the close to $6 trillion shortfall in Social Security between now and 2084.

But the official data show that private insurers pay providers more than Medicare for the same services. That's because government uses its buyer power -- and political power -- to hold down payments to healthcare providers. Thus, each dollar shifted out of Medicare in to individuals buying private insurance or paying out of pocket buys less healthcare.

So the net present added individual costs would be more than $25 trillion, using Ryan's preferred CBO alternative scenario. Running the numbers using the CBO baseline scenario, the added cost is $39 trillion.

Back out the tax savings, and the net cost is north of $20 trillion using Ryan's preferred and nonstandard baseline and $34 trillion using the standard CBO baseline.

So for every dollar Americans would save in taxes, they would shell out $5 more from their own pockets using Ryan's preferred baseline, and nearly $8 using the standard baseline. When you stack a plan in favor of its advocate and the additional costs are five times the savings, like the story of the mechanic trying to keep getting paid for fixing up a clunker, the plan should be greeted with laughter, derision, or disgust. I go for all three -- in that order.

Rosnick and Baker call this net extra spending of between $20 trillion to $34 trillion waste. That's their political judgment. I'll stick to the facts: The Ryan plan shifts costs and raises them at the same time. Spending $5 to save $1 is nuts. Spending $8 to save $1 is lunacy.

Hardly anyone knows about the gargantuan added costs because of the way Ryan is marketing the plan. Like the mechanic, Ryan is looking out for his agenda and being deceptive by omission.

The idea -- promoted by Ryan as inherent truth -- that market forces will cut costs is absurd. No one lying on a litter in pain from an accident or who was just told they have a cancerous tumor is going to start negotiating price any more than airline passengers are going to cross-examine the pilots on their skill and training. Even if you did, do you have the technical knowledge to compare physicians?

There is a smarter path, one that saves taxpayers money and reduces healthcare costs. That is to junk our taxpayer-subsidized model in favor of a modern healthcare system.

In addition to saving money, a modern healthcare system would reduce paperwork, eliminate time wasted by businesses on health insurance, and make labor markets more fluid because small employers would not be forced to discriminate against people with preexisting conditions.

A well-designed modern system also would focus on prevention to minimize preventable chronic conditions and reduce the massively wasteful use of costly technology like MRIs, which are needed for only very limited diagnoses.

A modern system would cover everyone. Currently about one in seven has no insurance, and at some time during the year one in four goes uncovered, a situation not found in any other modern country. Universal coverage would cut emergency room costs and provide care for chronic diseases like cancer and diabetes.

It would end the practice of doctors who deny care getting bonuses, as detailed in my book Free Lunch.

Universal coverage would save money -- lots of it. Indeed, if all we did was get universal coverage without the profits, paperwork, and fights over claims denial that are the hallmarks of healthcare as an insurance business rather than a public service, our federal budget would be in balance soon.

Ryan's plan is to replace universal care for seniors with vouchers to help buy insurance in the private market. One of Ryan's defenders, Diana Furchtgott-Roth, charges me with error in my previous Tax Notes column for describing the Ryan Medicare plan as a voucher system that would pay less than the actual costs of healthcare.1 In her column, Furchtgott-Roth wrote that Ryan is proposing "premium support" and that "premium support is not a voucher."

So what did Ryan himself say back on April 5 at an American Enterprise Institute event? "My roadmap does have vouchers."

Ryan cited one trivial difference between his plan and what people usually think of when the word "voucher" is mentioned -- the payment would go directly to the insurer issuing a policy, rather than to the insured to hand to the insurer. That seems more efficient, so if Ryan's plan becomes law I hope that proviso remains. But the hard fact remains that Ryan's own videotaped words disprove what Furchtgott-Roth wrote almost a month later.

Now, it is true that the Ryan plan anticipates some adjustments in vouchers based on age and health status, as Furchtgott-Roth observed. But it still leaves a gap. In fact, the Rosnick-Baker analysis shows that by one measure, that gap would be so large that the voucher (fixed at $6,600 in today's dollars) would cover less than a third of the estimated cost of insurance ($20,600 in today's dollars).

A senior without the capacity to pay that extra $14,000 would be forced to suffer with inadequate or no healthcare.

Ryan would halve the federal tax burden of the top 1 percent, a policy that is as explosive as an economic bomb and that I will explore in a future column.

For now we need to think about the immorality and higher costs of Ryan's plan -- and the portions embraced by 237 other House Republicans -- not only to destroy Medicare as a universal health plan, but also to slash aid for the powerless.

David Cay Johnston is the author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill).

Deconstructing a Paul Ryan Sound Bite

Ryan's budget cuts spending that helps average Americans to fund tax cuts for rich Americans.

by Sam Pizzigati

Rep. Paul Ryan from Wisconsin revels in his reputation as America's ultimate conservative policy "wonk." He plays the part well. At the drop of a hat, the Republican lawmaker can rattle off a stream of stats that make his rich-people-friendly budget nostrums seem almost reasonable.

Last month, for instance, Ryan smoothly dispatched an angry constituent who dared challenge the tax-no-rich federal budget plan that has made the Wisconsin lawmaker a right-wing hero. That constituent, speaking at a town hall meeting, had just finished noting he saw "nothing wrong with taxing the top." Ryan saw his opening — and pounced.

"We do tax the top," Ryan earnestly responded. "Let's remember, most of our jobs come from successful small businesses. Two-thirds of our jobs do."

"You got to remember," he went on, "businesses pay taxes individually. So when you raise their tax rates to 44.8 percent, which is what the president is proposing, I would just fundamentally disagree. That is going to hurt job creation."

For Ryan, a perfect sound bite. He made, in seconds, the case against raising taxes on the rich.

The wealthy, that case goes, already pay taxes aplenty. As hard-working — and mostly small — businesspeople, they can't afford to pay more. And if you try to make them, they won't be able to create jobs.

Does any of this hold water? Do we already "tax the top," as Ryan rushes to claim?

The facts: Taxpayers at America's tippy top — taxpayers with the nation's 400 highest incomes — have seen the share of income they pay in federal income tax drop from 51.2 percent of their income in 1955 to 18.1 percent in 2008.

How about Ryan's claim that the president wants to raise the tax rate to "44.8 percent"? Ryan here is blurring the distinction between top "marginal" tax rates, which apply only to a portion of one's income,  and a taxpayer's overall tax liability, the total amount that he or she is required to pay.

Our tax code currently sports a top marginal rate of 35 percent, down from 91 percent in the 1950s. But this 35 percent top rate only applies to the portion of one's income over $379,150, not total income. President Obama wants to raise our top rate to 39.6 percent.

Americans also pay a federal payroll tax for Medicare. Under the health care act passed last year, wealthy Americans will soon pay a 3.8 percent Medicare surtax on income over $250,000 they make from investments. Until now, no Medicare taxes have been collected from taxes on investment income.

The health care reform act also puts a 0.9 percent payroll tax on wage income over $250,000, income that has previously gone untaxed.

Rep. Ryan, to get to his "44.8 percent," has mixed all these income and payroll tax rates together, a blatantly bogus exercise, especially because most small businesspeople don't make anywhere near $379,150, let alone $250,000. The actual small business income average is just over $100,000.

Paul Ryan's sound bite smudges another key reality as well: The big money America's rich make doesn't come from "creating jobs." The big money comes from "capital gains," the profits the rich make buying and selling stocks and other assets. These profits currently face only a 15 percent tax.

Few small businesspeople make much money off capital gains. Instead, they make their money when customers in their communities have jobs and money to spend. If the Ryan budget ever gets all the way through Congress — the House has already blessed it — small businesses would have fewer customers with dollars to spend. The reason: Ryan's budget cuts spending that helps average Americans to fund tax cuts for rich Americans.

Paul Ryan's sound bites have shoved what we need — substantially higher taxes on the rich — off the political table. We need to get them back on.

Sam Pizzigati

Sam Pizzigati edits Too Much, the Institute for Policy Study's online weekly newsletter on excess and inequality.

 

 

 

 

What Americans Want: The People’s Budget

The Congressional Progressive Caucus lays out a surprisingly popular vision of the future.

by David Moberg

A national budget tells a lot more about a country and its politics than simply where the government’s money comes from and where it goes. As President Obama rightly stressed, it is also “about the kind of future we want …[and] the kind of country we believe in.”

But as happens so often in the United States, the political and media establishments distort the public debate by accepting the right-wing’s framing. In this case that means the issue is simply deficits and spending cuts, not national needs and adequate revenue. In this context, Rep. Paul Ryan (R-Wis.), the architect of the Republican budget plan, gets taken seriously when he proposes—with echoes of Vietnam—that we destroy Medicare in order to save it.

Consequently, the public is confused. More significantly, the corporate media give progressive alternatives short shrift, even though opinon polls show the public often supports such measures.

The United States could do much better with more active and—yes—even bigger government, partly because many of the things our society needs, the government can do more efficiently, fairly and effectively than private individuals and businesses in a market.

The corporate press, acting in its own self-interest, is loathe to report this fact.

For example, where have you read about “The People’s Budget”? It is an alternative budget offered by the 81-member Congressional Progressive Caucus that takes steps toward a saner role for government while reducing the deficit more and faster than either Ryan’s “Plan for Prosperty” or Obama’s plan.

The People’s Budget immediately rescinds Bush tax cuts for the rich and lets the others expire (retaining some changes especially beneficial to the middle class), but it also taxes estates progressively, imposes the millionaire’s tax proposed by Rep. Jan Schakowsky (with several new, higher income tax brackets for the very rich), taxes capital gains as regular income and imposes a financial speculation tax.

The People’s Budget also enacts a healthcare public option and mandates negotiation of prescription prices to reduce healthcare spending. It cuts wartime and baseline military spending and provides for bringing troops home from the wars in Southwest Asia. The budget strengthens Social Security by expanding the base of taxable earnings, and it increases spending for job creation, education, clean energy, infrastructure, transportation and scientific research.

Conventional budget wisdom

On the other hand, the Republican plan imposes two-thirds of its cuts on modest-income households, according to the Center on Budget and Policy Priorities (CBPP).

By making Medicaid an underfunded block grant, it guarantees taking healthcare from the needy, including the elderly poor. Privatizing Medicare with underfunded vouchers will double the out-of-pocket expenses for the average future 65-year-old. Privatization not only shifts costs to seniors but also increases their overall medical costs, since private insurance is less efficient than Medicare. And for good measure, the Ryan plan repeals the Affordable Care Act and its cost controls.

The plan also contains absurd giveaways, such as $4.2 trillion in tax cuts mostly for the very affluent over the next decade, and even repeals some recently passed regulations of the financial industry. Despite all the deficit hullaballoo, Ryan’s plan only slightly reduces the deficit in the next decade (by $155 billion) because his destructive cutting mainly funds the tax cuts. Ryan does set long-term plans to reduce federal spending from 23.75 percent of gross domestic product to less than 15 percent by 2050, the lowest share since 1951. But a bipartisan proposal made in early February to cap spending at even 20.6 percent of GDP would “force deep cuts in Medicare, Medicaid and Social Security,” according to the CBPP.

By contrast, President Obama would make modest cuts in military spending, end the Bush tax cuts for the rich, and limit tax expenditures (e.g., tax credits and deductions). He would impose tighter cost controls on Medicare and make Medicaid more flexible while preserving both programs. He proposes a “debt fail-safe” trigger to enforce reduction of debt to his target levels. But his budget would maintain investments in education, infrastructure and research.

On the issues, the public seems much more on the president’s side—and would even support a more progressive solution.

American dreams vs. reality

Indeed, Obama is overly conservative.

Given a choice, most Americans prefer a much more egalitarian society, according to a 2010 study by Duke and Harvard economists.

Most rich industrial countries recognize that government must play a large role to achieve social solidarity, comparative economic advantage in a global economy, and satisfy voters’ preferences, but the United States has nearly the lowest tax revenue as a portion of GDP of all 34 countries in the Organization for Economic Cooperation and Development. And compared to other OECD countries, the United States is near the bottom in terms of equality and ranks extremely low on social spending, poverty rates, ease of escaping poverty, life expectancy, infant mortality, voter participation and other indicators.

When pollsters at the University of Maryland presented voters with information and a variety of options on the budget, on average they increased taxes (especially on incomes over $100,000 or more), cut military spending and increased spending on education, job training, environmental protection and alternative energy far more dramatically than Obama did. In another poll, the same researchers found that only 59 percent of Americans think a free market system is best—a sharp 15 percentage point drop from 2009.

Similarly, the Democrats, and progressives in general, have failed to make a political issue of how the right has successfully, and quite consciously, instituted polices that have redistributed wealth upward. Over the last 25 years, the top 1 percent of American households more than doubled their share of the national income from 12 to 25 percent.

If income growth had been distributed equally since 1979, University of Wisconsin professor Joel Rogers calculates, households in the bottom four-fifths would each be making $5,600 to $10,100 more per year, thus increasing consumer demand to stimulate the economy and an ability to pay taxes. But as incomes for the 400 richest households quadrupled over the past dozen years, their tax rate fell by nearly half, thanks to both rate cuts and tax loopholes.

Instead of debating the fairness of this inequality, Washington is focused on the government’s large deficit. Conventional wisdom—recently offered by Standard & Poor’s, which has been wrong on every major economic crisis of the past 15 years—dictates dealing with the deficit quickly. Yet the deficit hysteria ignores two points. First, the country urgently needs more—and better—jobs. Second, while conventional wisdom also mandates deep cuts in government spending to address the deficit, increased revenues would deal with the problem equally well.

We are burdened by the deficit today thanks to Bush tax cuts (which favored the rich), the wars in Afghanistan and Iraq, the financial crisis, the resulting Great Recession (with less revenue and increased costs) and rising healthcare costs (made worse by Bush’s poor design of the Medicare prescription drug program).

The people’s choice

Yet the Democratic Party has been overly willing to seek a compromise that accepts—but tempers—Ryan’s framework, while giving inadequate attention to how the deficit actually grew.

As a result of their muddled message, according to an April Democracy Corps poll, voters initially approved the Ryan budget by 48 to 33 percent and gave Republicans a 16-point advantage over Democrats on having the best budget approach. But given more complete information, support for Ryan’s budget fell sharply. In other words, the Democrats (perhaps in thrall to corporate interests) have failed to forcefully articulate the vision voters already support.

The People’s Budget, on the other hand, reflects the historical context. It is also more in tune with the sentiments of voters than either Ryan’s or Obama’s plan. Overwhelmingly, multiple polls show that voters oppose deep cuts in or radical transformation of Medicare (78 percent opposed in a Washington Post poll). By large margins, voters support a surcharge income tax on millionaires and billionaires, which is similar to the higher rates Rep. Schakowsky proposes (81 percent in a March NBC/Wall Street Journal poll). And a majority favors military spending cuts as a first step in deficit reduction (56 percent in the Post poll).

The People’s Budget is a lot more courageous, sensible and honest than either Ryan’s plan or Obama’s. It is a program that progressives and—if ardently championed—most Americans would support as a path not only to a responsible budget but also to a more prosperous, equitable future.

David Moberg

David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy. He can be reached at davidmoberg@inthesetimes.com.

 

Paving the Road to a Hungrier, Unhealthier, and Less-Educated US

Massive spending cuts will make the future bleaker for millions of Americans.

by Deborah Weinstein

The number of poor children had already grown by 2.1 million in 2009 over pre-recession levels, with continuing high joblessness among parents raising concerns that poverty will continue to worsen for some time. Since kids who spend more than half their childhood in poverty earn on average 39 percent less than median income as adults, we can expect lasting costs that will hurt the nation's future economic growth.

And yet, a majority of House lawmakers want to narrow the deficit by making things worse for today's kids.  

If House Budget Committee Chairman Paul Ryan's proposal takes effect, or the even more extreme House Republican Study Committee's budget plan prevails, the nation's economic future will inevitably get bleaker. Those proposals would reduce the food assistance, medical care, and education available to poor children. When children don't get adequate nutrition, research shows that they are more likely to suffer illnesses and hospitalizations. Poor health can trigger developmental problems that take a toll on school performance.

The House passed Ryan's proposal in April along party lines. Not one Democrat supported it and all but four Republicans voted in favor of it. In the Senate, five Republicans joined every member of the chamber's Democratic majority in rejecting it.

The House budget, best known for Ryan's proposal to radically change and mostly privatize Medicare, would also reduce spending on food stamps by 20 percent over the next decade. If such a deep cut were implemented through caseload reductions, it would mean 8 million fewer people receiving food stamps, according to the Center on Budget and Policy Priorities. If instead the cuts took effect by reducing the amount of assistance each family receives, a family of four would lose $147 a month.

Since about half of food stamp recipients are children, such cuts would hurt the chances that those kids will graduate from high school or college, increasing the likelihood of lifelong poverty. The Republican Study Committee's cuts are far deeper. They would cut food stamps in half over 10 years.

These proposals would have similarly harsh impacts on medical care. The House budget cuts, if implemented solely by reducing eligibility, would deny Medicaid to nearly half the people who rely on it now, according to the Kaiser Family Foundation. More likely, there would be some combination of denying people altogether and reducing the care or increasing the costs for those who remain eligible. Either way, the impact would be severe. Again, the Republican Study Committee proposal would inflict even deeper cuts. That proposal calls for halving Medicaid spending by 2021.

How would these plans handle education spending? They'd cut it. We know that the House budget would cut education by nearly one-fifth next year and by a quarter by the end of the decade, with 1.7 million fewer low-income college students qualifying for Pell Grant scholarships. U.S. military spending, which nearly totals the combined military expenditures of every other nation on earth, wouldn't be cut at all. The Republican Study Committee doesn't spell out most of its education cuts, but it would cut all appropriations except for military spending by about 70 percent by 2021. Education funding would be slashed from preschool through college.

The GOP deficit reduction plans rely solely on massive domestic spending cuts that would heap more trouble on the recession generation's already grim prospects. That's counterproductive. Slower economic growth will cut tax revenue and make it harder to nix the government's persistent budget deficit problem. Balanced-budget amendments and other proposals to place drastic limits on total federal spending would result in cuts at least as deep as the Ryan and Republican Study Committee budget plans.

There's a better way. We can take a more responsible and effective approach that would gradually narrow the deficit and spare the programs that low-income Americans rely on through a combination of fair revenue increases and spending cuts that don't exempt the military. Otherwise, we'll wind up denying opportunities for a middle-class life to millions of our children.

Deborah Weinstein

Deborah Weinstein is the executive director of the Coalition on Human Needs, an alliance of national organizations working together to promote public policies that address the needs of low-income and other vulnerable populations. www.chn.org

 

 

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