Entitlement Reform a Hoax

Published on Monday, January 7, 2013 by RobertReich.org

The Hoax of 'Entitlement' Reform

by Robert Reich

It has become accepted economic wisdom, uttered with deadpan certainty by policy pundits and budget scolds on both sides of the aisle, that the only way to get control over America’s looming deficits is to “reform entitlements.”

But the accepted wisdom is wrong.

Start with the statistics Republicans trot out at the slightest provocation — federal budget data showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase.

And Census data showing 49 percent of Americans living in homes where at least one person is collecting a federal benefit – food stamps, unemployment insurance, worker’s compensation, or subsidized housing — up from 44 percent in 2008.

But these expenditures aren’t driving the federal budget deficit in future years. They’re temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically, including 22 percent of our children.

What about Social Security and Medicare (along with Medicare’s poor step-child, Medicaid)?

Social Security won’t contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund.

That fund has been in surplus for the better part of two decades, as boomers contributed to it during their working lives. As boomers begin to retire, those current surpluses are disappearing.

But this only means the trust fund will be collecting from the rest of the federal government the IOUs on the surpluses it lent to the rest of the government.

This still leaves a problem for the trust fund about two decades from now.

Yet the way to deal with this isn’t to raise the eligibility age for receiving Social Security benefits, as many entitlement reformers are urging. That would put an unfair burden on most laboring people, whose bodies begin wearing out about the same age they did decades ago even though they live longer.

And it’s not to reduce cost-of-living adjustments for inflation, as even the White House seemed ready to propose in recent months. Benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Besides, Social Security’s current inflation adjustment actually understates the true impact of inflation on elderly recipients — who spend far more than anyone else on health care, the costs of which have been rising faster than overall inflation.

That leaves two possibilities that “entitlement reformers” rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered.

What’s left to reform? Medicare and Medicaid costs are projected to soar. But here again, look closely and you’ll see neither is really the problem.

The underlying problem is the soaring costs of health care — as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing — combined with the aging of the boomer generation.

The solution isn’t to reduce Medicare benefits. It’s for the nation to contain overall healthcare costs and get more for its healthcare dollars.

We’re already spending nearly 18 percent of our entire economy on health care, compared to an average of 9.6 percent in all other rich countries.

Yet we’re no healthier than their citizens are. In fact, our life expectancy at birth (78.2 years) is shorter than theirs (averaging 79.5 years), and our infant mortality (6.5 deaths per 1000 live births) is higher (theirs is 4.4).

Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.

For example, almost 95 percent of cases of lower back pain are best relieved by physical therapy. But American doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. There’s not much money in physical therapy.

Another example: American doctors typically hospitalize people whose diabetes, asthma, or heart conditions act up. Twenty percent of these people are hospitalized again within a month. In other rich nations nurses make home visits to ensure that people with such problems are taking their medications. Nurses don’t make home visits to Americans with acute conditions because hospitals aren’t paid for such visits.

An estimated 30 percent of all healthcare spending in the United States is pure waste, according to the Institute of Medicine.

We keep patient records on computers that can’t share data, requiring that they be continuously rewritten on pieces of paper and then reentered on different computers, resulting in costly errors.

And our balkanized healthcare system spends huge sums collecting money from different pieces of itself: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.

Cutting or limiting Medicare and Medicaid costs, as entitlement reformers want to do, won’t reform any of this. It would just result in less care.

In fact, we’d do better to open Medicare to everyone. Medicare’s administrative costs are in the range of 3 percent.

That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

Healthcare costs would be further contained if Medicare and Medicaid could use their huge bargaining leverage over healthcare providers to shift away from a “fee-for-the-most-costly-service” system to a system focused on achieving healthy outcomes.

Medicare isn’t the problem. It may be the solution.

“Entitlement reform” sounds like a noble endeavor. But it has little or nothing to do with reducing future budget deficits.

Taming future deficits requires three steps having nothing to do with entitlements: Limiting the growth of overall healthcare costs, cutting our bloated military, and ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries).

Obsessing about “entitlement reform” only serves to distract us from these more important endeavors.

This work is licensed under a Creative Commons License

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.

more Robert Reich

Source URL: http://www.commondreams.org/view/2013/01/07-3

 

Exploiting Your Mother

Exploiting your mother?  No, not you.  But Republican legislators and candidates, who are trotting out their moms in campaign ads, to support their sons in claiming that they would never, never, never do anything to hurt Social Security or Medicare.  At least, not for their mothers.  And other seniors.  And maybe other people over 55.  If their mothers trust their sons, then the voters sure can.  So now Paul Ryan is taking his mother with him on his tour around Florida today.   I guess that is insurance against anyone hurling brickbats at him, as they have been doing.  Presumably attendees will be too respectful of his mother to dissent.  But I truly feel sorry for her if they do.

Note 1:  Of course if Social Security and Medicare are for current seniors was short-changed, these wealthy Republican legislators’ mothers would be taken care of.  Imagine the pensions that some of them probably already receive in addition to their entitlements.  I am not even in their class.

Note 2:  Of course, in fact, Conservative plans would affect SS and Medicare of current seniors.

·         They are trying to change the COLA structure so that annual increases would be less.  That would take effect sooner rather than later.

·         If they repeal ACA, seniors would lose some benefits they have started receiving under ACA the last few years, such as free preventative health care, annual screenings, no annual or lifetime caps, no pre-existing conditions (in the case of their private supplemental plans), savings on donut hole of Medicare Part D, and others.

 Note 3:  I do not understand how they can talk of raising the eligible age to receive Social Security and Medicare.  In this time when unemployment rate is high, and particularly devastating to older citizens who will either never find work again, or find work only at much lower wages than they received before.  Many are already filing for Social Security early, and consequently reducing their lifetime payments.  But still are not eligible for Medicare, cannot afford private insurance, and may not qualify for Medicaid.  They ought to, rather, LOWER the age to apply for Social Security and Medicare benefits, without a reduction in payments.  To age 62 or even 60, in order to free up the job market for younger people.  It probably won’t cost that much more than for someone to be on unemployment insurance, food stamps, and Medicaid.

What do you think?

[Note:  I may be mistaken on some of these details, but I have tried to keep up with the politics and economics of Social Security and Medicare.  Please feel free to question, correct or modify this item.]

Gramma Windy

Musings Fri Aug 20 to Wed Aug 15

I'd better get these musings posted before they get to be too many to read at a sitting:

Bob Shrum remarked, in response to item about the mega farmer that Romney visited with in Iowa, that next thing you know he will visit a 5-star restaurant with $300 meals and say that it is a food bank.  Gramma Windy says:  I guess now, if you ask Romney, he will say:  “I like farms.  Some of my best friends own 54 of them.”

Says Gramma Windy:  The most important amendment:  #9.  “The enumeration in the Constitution of certain rights, shall not be construed to deny or disparage others retained by the people.”  This very clearly states that (1) the government cannot deny a man and a woman the right to enter into heterosexual marriage, if they so choose.  Or force either one of them to marry a same sex partner, against their will, and (2) the government cannot force a woman to have an abortion, or to use contraception, against her will.  Or deny her the right to have as many children as she chooses.

Overheard:  Just remember this: If the right wing can't count on your vote, they don't want your vote to count.

If pharmacists can decline to fill women’s prescriptions for contraceptives, according to their conscience, can grocery store checkout clerks who are teetotalers decline to run up purchases of liquors, according to their conscience, and can waitresses who are vegans decline to serve meat to their customers, according to their conscience?

During his 14 years in office, Paul Ryan only had two bills passed:  (1) to name a postoffice, and (2) to get tax breaks for archers.  Because he is into archery. 

So Dick Gregory suggests that the conservative mantra is that:  Look, we’re going to do something really, really hard on Medicare, and we’re going to do something really, really hard on Social Security…Yeah, but how about something really, really hard on the rich?

Rachel Maddow says that Ryan is not a fiscal conservative, he is a supply-sider, which is that you cut taxes on the rich as deeply and as often as you can then sit back and watch the magic happen.  Used to be called voodoo economics. 

How dare they pontificate about the undeserving poor?  Those right-wing pundits of Fox News and conservative talk radio who are paid millions of dollars a year to bloviate, to spew brown stuff out of their mouths, are the least productive members of society.   What have they ever done for you or me?  They do not inform or educate us, make not even a pretense of elevating the discourse, foster hate and stir up resentment, distort and distract and destroy civility, foster conspiracy theories, demonize members of any demographic, civil, or political group outside of themselves, make a mockery out of journalism.  How can they sleep nights?  How can they live with themselves?  How do they justify their existence?  How do they fool their followers?  How do they justify those millions?  They are unproductive parasites on society. 

Lawrence O’Donnell says we know how Paul Ryan’s career will end.  He’s 85 days away from becoming the next losing vice-presidential candidate who will never become president.  See http://www.msnbc.msn.com/id/45755883/ns/msnbc-the_last_word/#48654868  Ezra Klein, whom I consider  to be one of the most knowledgeable and articulate about budget and monetary policy, says here that  the Medicare discussion so far has made him want to slam his head into the wall a thousand times. 

Did you see where Ryan was heckled at the Iowa State Fair—questions shouted about war on the middle class and cuts to Medicare—and the protesting women were hauled away by security, he remarked that they couldn’t be Iowans, because Iowans are respectful.  But, according to Ed Schultz, they are members of a group called the Iowa Citizens for Community Improvement.  Hmmm, sounds like community organizers to me.  Meanwhile, President Obama was also at the fair, over in the beer tent buying beers for customers.  When he plunked down money enough for ten beers, the crowd started chanting:  “Four more beers, four more beers.”

BTW, here is a video clip of a Ryan “Pay to play” last fall, in which he jeers at a 71-year-old man being taken down for heckling him.  http://www.salon.com/2012/08/13/paul_ryan_thinks_losing_entitlements_is_funny/?source=newsletter

Problem with hecklers at Ryan and Romney appearances, it will give the Romney team and supporters the excuse to arrange for busloads of protesters to show up at Obama and Biden appearances to try to shout them down.  They’ve got the money to do it.

D J Dione says that Romney has done a rare thing, brought Republicans and Democrats together, because how often do you hear them cheering for the same thing, The Ryan Pick for VP.

The majority of white men vote Republican.  What?  Are they not related to, or in relationship with, women?    Aren’t they affected by issues that affect women—pay scale, reproductive rights, health care, child care?

Andy Borowitz places Sarah Palin above Paul Ryan as a VP candidate, because, although Palin didn’t read, Ryan read Ayn Rand.

The most common reaction to Ryan’s pick as VP by Republican strategists and campaign operatives ranges from gnawing apprehension to hair-on-fire anger [according to Politico].

FOX NEWS a cult?  Someone pointed out that a characteristic of a cult is that members are warned not to listen to anyone else, not to read anything not approved by them, that everything else is a LIE, LIE, LIE.  And that is what Fox News purveyors such as O’Reilly, Hannity, also radio spewers such as Beck and Limbaugh, tell their viewers, listeners, all the time.  “Don’t listen to those liberal commentators, don’t turn on msnbc or pbs, don’t turn on Air America, don’t read mediamatters.  They will poison your mind and destroy your faith.”   When I read something posted by a conservative vilifying Ed Shultz, Al Sharpton, Rachel Maddow, Lawrence O’Donnell, and others, I know that they haven’t even turned them in.    They are only repeating what they have been told to believe. 

The Ryan Pick--Don't be Complacent

I don't usually post a whole item from the web, but this one bears reading in its entirety, in the light of Democrats gloating over Romney's choice of VP.

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AlterNet [1] / By Don Hazen [2]

9 Reasons Romney's Choice of Paul Ryan for Veep Is Smarter Than You Think

Continued from previous page

August 12, 2012 |

When Republican presidential candidate Mitt Romney tapped Paul Ryan, the 42-year-old Wisconsin congressman, to be his running mate, progressives went on a happy-thon. That Romney chose the House Budget Committee chairman known as the architect of draconian budgets that would make huge cuts in every aspect of the safety net -- not to mention his quest to turn Medicare into a voucher program -- just seemed like major blunder. My colleague, Joshua Holland, called it Romney's biggest mistake. Many were gleeful and shocked that Romney would seemingly play right into the Obama message on how the Romney agenda harms the middle class.

But I wasn't so happy. The Romney decision signals several things about the future, and none of them good -- rather scary and ugly, as a matter of fact. My gut told me that, for the Republican vice presidential candidate, I would much rather have a non-entity like Portman or Pawlenty as the Republican than a right-wing rock star. Any day.

Progressives are right when they say Ryan represents everything that shows how out of touch the Republicans are with the needs of the country. But they are not looking at Romney's Ryan decision for what it is -- a hugely dangerous step toward getting the Koch brothers' hand-picked star right to the verge of the presidency, which, if it should it come to pass, could dramatically transform the nature of American politics for our lifetimes. Whether Romney wins or loses, the Ryan pick poses a threat to the well-being of the nation.

If Romney wins, then Ryan occupies the Number Two spot with a money base and huge constituency of his own, far more than any vice president has ever enjoyed. With his own leadership PAC and a close relationship to the Koch-funded Americans For Prosperity astroturf group, it is hard to imagine how Ryan doesn't immediately become a co-president or, at least, the most powerful VP in history. And, and this is a win-win for Charles and David Koch, the right-wing billionaire brothers: If Romney loses, then Paul Ryan is sitting pretty to be the nominee in 2016, when there is no incumbent....a far easier race to win after eight years of President Barack Obama, the Democrat, presiding over a difficult economy whose recovery Republicans have done everything they can to obstruct. I have always felt that many conservatives intent on taking over this country, known for their long vision and patience, have this strategy.

And on the ugly side, the choice of Ryan says this Romney campaign, in contrast to even the McCain campaign, will be a no-holds-barred, vicious personal attack on Obama and everything associated with the Democrats -- scapegoating unions, public employees, poor people, immigrants, people characterized by Ryan as the "takers, not the makers [3]." This is the way the conservatives know how to win campaigns, and they are going all out to rip the Dems to shreds. If it doesn't quite work in in this year's presidential race, they could very well control of both houses of Congress come January.

Here are nine reasons that Romney pulled the trigger on Ryan, and why they make a lot of sense:

1. Romney was in danger of losing badly, so a gamble was worth the risk.

The polls and trends were going in the wrong direction as Obama was ahead by 9 percent among all voters and 11 percent among independents. As Michael Goodwin writes in the New York Post [4]:

Romney was on course to lose the election...perhaps by a landslide...Independents, despite being unhappy with Obama, were even more unhappy with Romney. And too many Republicans remain unenthusiastic about their party's nominee.

So Romney had to do something to energize the campaign, or he was dead in the water. Pick Ryan.

2. Romney is now seen as bold. By picking a controversial choice, a young, mediagenic, so-called brainy numbers guy, and one loved by the conservative base, Romney passed up the gaggle of more boring white guys who populated the pundits' predictions, to pick the radical one. But here, in fact, Romney has it both ways. Ryan is not a Palin or a Rubio -- a wild card -- but rather a well-positioned Republican with major mainstream and corporate credibility, whom the media often has gone ga-ga over. And Ryan is an insider -- Erskine Bowles (the co-chair of the Bowles-Simpson Deficit Commission, and rumored to be the next Secretary of the Treasury), has lavished lots of praise on to Ryan, who served on the commission, as have many others.

3. Did I mention Ryan is Catholic? We hear how the conservative Catholic bishops are trying to push Catholic voters to Romney, who has obviously come late to his anti-abortion stance. And among Catholic voters, Romney's Mormonism isn't exactly a plus. Still any anti-abortion politician is better than Obama in the bishops' minds. For the bishops, their task became easier with Ryan (even if they have a problem or two with his budget proposal), who is as conservative as they come, being against abortion even in cases of rape and incest. Those Catholics who are inclined to vote conservative are now very excited. And, in fact, it's not just far-right Catholics to whom Ryan appeals. A lot of voters in this country, for some reason, really like candidates who stick to rigid principles, even if those principles contradict their own. Ryan will get some of those voters.

4. Romney now has even more money. Romney has been doing fine, raising hundreds of millions from investment bankers and other pots of big wealth from the 1/10th of the top 1 percent. Still the Ryan choice is a huge motivator to the group of rabid right-wing billionaires around Charles and David Koch, the billionaire brothers who fund and raise money for right-wing candidates, and an array of right-wing groups. Ryan has been a Koch favorite for years, supported and featured in myriad ways. The Kochs have promised, with Karl Rove, to raise $400 million for the so-called "independent superPACs". Now, with all those billionaires jazzed over Ryan, the sky may be the limit. There is talk of the superPACs and the Romney campaign raising and spending $1.2 billion -- and now maybe even more.

5. Romney gets the full Koch election infrastructure. Solidifying the alliance with the Kochs is even more about infrastructure than campaign dollars, which will be plentiful. As my colleague Adele Stan, who covers the Kochs and conservative election field operations, explains:

The Kochs, via Americans for Prosperity and Faith and Freedom Coalition, own the infrastructure for the ground game in the swing states. They've been building it for years. That's not something any amount of money can build in the three months leading up to the election. Romney really, really needs Koch buy-in.

5. Ryan seals the deal for a base-motivating campaign in the worst tradition of the Republicans. Republicans win when they run to their base, and play the "us versus them" card for their anxious constituencies. Voter suppression tactics of all sorts are in play, especially in Florida and Pennsylvania. Taken together, Ryan's earnest demeanor and brutal budgets act as an a elixir for grassroots conservatives; the base will now be super-motivated.

Bush won two terms without winning the majority of the popular vote because the GOP wanted the win more than the Democrats -- and Republicans cheat more. As Thomas Schaller writes at Salon [5]:

By picking [Ryan], Romney provides a powerful signal that he is willing to counter Obama's failed attempt to unite America with an unapologetic attempt to win via econo-demographic divide and conquer politics.

6. The Romney campaign will now be the most brutal, race-tinged, fact-absent, expensive, technologically sophisticated campaign ever run. This presidential race is increasingly polarized. Polling shows that Obama has lost most of the non-college-educated white male voters he was able to capture in 2008. As Charles Blow points out [6] in the New York Times:

A staggering 90 percent of Romney supporters are white. Only 4 percent are Hispanic, less than 1 percent are black and another 4 percent are another race.

And of uncommitted "swing" voters, Blow writes:

Nearly three out of four are white. The rest are roughly 8 percent blacks Hispanics and another race.

Schaller adds: "Don't be surprised in the Romney-Ryan ticket engages in the sort of racially tinged, generationally loaded entitlement politics practiced by the Tea Party..."

7. While the VP pick isn't going to change the mind of many independent or hard-core party voters, it is a move to bring all elements of the party in sync. Progressive pundits, just a few days ago, were saying: Oh, the VP pick doesn't make much difference...maybe, at best, a 2 percent swing. Today is apparently a new day, and progressives are pouncing on this choice as being a huge plus for Obama. Well, ya can't have it both ways. Republican wins are always about turning out the base to the polls. Ryan probably won't make that much difference on the large scale, but he becomes the thunderbolt to rouse the base, which appears to love him, even if he is a media-created fraud. In fact, Ryan may be the most effective political phony in America.

8. Repeat: Paul Ryan is the most effective phony in American politics today. When Romney picked Ryan, he was grabbing one of the great teflon politicians of all time. Ryan has a tremendous ability to appear earnest while lying through his teeth, as he did recently when he repeated Romney's lie about Obama and welfare work requirements. Ryan represents what Salon's Joan Walsh calls [7]the "fakery at the heart of the Republican project today." She adds:

[Ryan,] the man who who wants to make the world safe for swashbuckling, risk-taking capitalists hasn't spent a day at economic risk in his life.

Guys like Ryan "somehow become the political face of the white working class when they never spent a day in that class in their life," writes Walsh. He has, she says, a "remarkable ability to tap into the economic anxiety of working class whites and steer it toward paranoia that their troubles are the fault of other people -- the slackers and the moochers, Ayn Rand;'s famous 'parasites' ..."

9. The Conservative tribe is now ready to fight all of its enemies. The conservatives and Republicans know what team they are on -- and that tribal identity is more important to them than any idea of hegemonic cultural identity could possibly be to liberals. For one, the conservative team is almost totally white, and far more homogenous, while more than 43 percent of Obama's supporters are people of color. Add in that conservative brand of resentment -- the "makers versus the takers" -- and it becomes clear who represents the conservative notion of a "maker." With Ryan as the standard-bearer for the self-described "makers," the team has its galvanizer.

The social psychologist Jonathan Haight and his researchers have compiled a catalog [8] of "six fundamental ideas that commonly undergird moral systems: care, fairness, liberty, loyalty, authority and sanctity."

Among them, he finds that group loyalty and identification is important among conservatives, but not among liberals. As William Saletan describes Haidt's thesis [8] in the New York Times Book Review:

Social conservatives see welfare and feminism as threats to responsibility and family stability. The Tea Party [9] hates redistribution because it interferes with letting people reap what they earn. Faith, patriotism, valor, chastity, law and order — these Republican themes touch all six moral foundations, whereas Democrats, in Haidt’s analysis, focus almost entirely on care and fighting oppression.

Come election time, that array of values makes the Republican project more formidable. It is why, when conservative ideas are not popular, when significant majorities of Americans disagree with conservatives, they still have enormous capacity to exercise outsized influence, controlling much of the public debate -- and are on the doorstep of winning control of all three branches of government. Despite their minority status, the tribal thing still leverages far more power than is fair or many thought possible.

In the end, it doesn't really matter whether Romney picked Ryan out of desperation, or may have had to take Ryan as a deal for support from the Kochs, or may have felt Ryan was actually the best man for the job. Whatever the reason, the Ryan pick does a whole lot for the Romney campaign --conferring money, authority, media attention, change of tone, and more. Probably the most overarching plus, though, is that by adding Ryan, Romney has brought the whole Republican-conservative tribal deal together, which, from my vantage point only increases -- not decreases -- the chance of the Republicans defeating Obama in November.

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Source URL: http://www.alternet.org/election-2012/9-reasons-romneys-choice-paul-ryan-veep-smarter-you-think