Category Archives: Entitlements

Beware The Zombie Curmudgeon Who Talks Of Tits

Ryan Grim at The Huffington Post:

Alan Simpson believes that Social Security is “like a milk cow with 310 million tits,” according to an email he sent to the executive director of National Older Women’s League Tuesday morning. Simpson co-chairs the deficit commission, which is considering various proposals to cut Social Security benefits.

Simpson’s email, which OWL chief Ashley Carson released publicly, (PDF) was sent in response to an April blog post Carson wrote for the Huffington Post. Carson criticized Simpson for repeatedly describing his Social Security opponents as “Pink Panthers,” arguing that the description had sexist connotations.

His email is peppered with exclamation points and condescension. At one point he urged Carson to read a certain graph, “which I hope you are able to discern if you are any good at reading graphs.”

Simpson concludes by implying that leading a major organization dedicated to the interests of middle-aged and elderly women is not “honest work.”

“If you have some better suggestions about how to stabilize Social Security instead of just babbling into the vapors, let me know,” he writes. “And yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ’em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million tits! Call when you get honest work!”

It’s unclear from Simpson’s email if he means Social Security is the milk cow or if he’s referring to America in general. A Simpson assistant responded to a HuffPost email saying that Simpson was traveling and unable to comment immediately. OWL is now circulating a petition calling on the former Republican Senator from Wyoming to resign.

Chris Good at The Atlantic:

Here’s the resignation call from Eric Kingston, co-director of Social Security Works:
“Alan Simpson’s comments are offensive and sexist and clearly demonstrate that he is unfit to continue to lead the President’s Fiscal Commission. His comments not only show his true view of women and older Americans but also his disdain for the very program he claims he is trying to protect – Social Security. Social Security Works is demanding that he resign immediately. If he will not, the President must fire him. Alan Simpson has no business deciding the fate of hundreds of millions of Americans’ retirement future.  He should have no power over Social Security, which provides vital economic support to millions of children and people with disabilities, as well as seniors and  their families.”

Andrew Biggs at The American Enterprise Institute:

It’s perhaps a sign of the times that you can’t make an analogy—albeit an analogy I can’t say I completely understand—without being called sexist. Eric Kingson of the left-leaning Social Security Works promptly obliged, coupled with a call to resign.

Personally I think Simpson’s comment was virulently anti-cow—everyone knows that cows have only four tits. Or teats. Whatever. That said, the guy’s from Wyoming so my guess is a cow that got only a little harsh language thinks it got off easy.

Finally, I think that fights like this are—get ready!—an udder waste of time. Simpson is silly to provide an opening like this; where’s the staff when you need them? And Kingson is immature to follow up with feigned outrage. If these folks truly get upset about a slightly strange cow analogy then they’re worse off than I thought.

But that’s where things stand today.

Paul Krugman:

I always thought that the deficit commission was a bad idea; it has only looked worse over time, as the buzz is that Democrats are caving in to Republicans, leaning ever further toward an all-cuts, no taxes solution, including a sharp rise in the retirement age.

I’ve also had my eye on Alan Simpson, the supposedly grown-up Republican co-chair, who has been talking nonsense about Social Security from the get-go.

At this point, though, Obama is on the spot: he has to fire Simpson, or turn the whole thing into a combination of farce and tragedy — the farce being the nature of the co-chair, the tragedy being that Democrats are so afraid of Republicans that nothing, absolutely nothing, will get them sanctioned.

When you have a commission dedicated to the common good, and the co-chair dismisses Social Security as a “milk cow with 310 million tits,” you either have to get rid of him or admit that you’re completely, um, cowed by the right wing, that IOKIYAR rules completely.

And no, an apology won’t suffice. Simpson was completely in character here; it was perfectly consistent with everything else he’s said, and with his previous behavior. He has to go.

Dean Baker at Hufffington Post:

I was also a recipient of one of Simpson’s tirades. As was the case with the note he sent to Carson, Simpson attached a presentation prepared for the commission by Social Security’s chief actuary. Simpson implied that this presentation had some especially eye-opening information that would lead Carson and myself to give up our wrong-headed views on Social Security.

While I opened the presentation with great expectations, I quickly discovered there was nothing in the presentation that would not already be known to anyone familiar with the annual Social Security trustees’ report. The presentation showed a program that is currently in solid financial shape, but somewhere in the next three decades will face a shortfall due to an upward redistribution of wage income, increasing life expectancy, and slow growth in the size of the workforce. The projected shortfall is not larger than what the program has faced at prior points in its history, most notably in 1982 when the Greenspan Commission was established to restore the program’s solvency.

It was disturbing to see that Simpson seemed surprised by what should have been old hat to anyone familiar with the policy debate on Social Security. After all, he had been a leading participant in these debates in his years in the Senate.

Simpson’s public remarks also seem to show very little knowledge of the financial situation of the elderly or near elderly. He has repeatedly made references to retirees driving up to their gated communities in their Lexuses. While this description may apply to Simpson’s friends, it applies to very few other retirees, the vast majority of whom rely on Social Security for the bulk of their income. Cutting the benefits of the small group of genuinely affluent elderly would make almost no difference in the finances of the program.

Furthermore, the baby-boom generation that is nearing retirement has seen most of its savings destroyed by the collapse of the housing bubble that both wiped out their housing equity and took a big chunk of the limited money they were able to put aside in their 401(k)s. Simpson shows no understanding of this fact as he prepares to cut benefits for near retirees.

He also doesn’t seem to have a clue as to the type of work that most older people are doing. While it is possible for senators to continue in their jobs late in life, nearly half of older workers have jobs that are either physically demanding or require they work in difficult conditions. Simpson seems totally clueless on this point when he considers proposals to raise the retirement age.

ECHIDNE of the snakes:

I find the e-mail insulting, rude, contemptuous and clearly one written by an anti-feminist. The whole tone of it is one of belittling the recipient whose work is not regarded as honest and whose ability to read graphs is doubted. Is that sexist enough for you?

The comment itself, about that wonder cow with 310 million tits, doesn’t sound sexist to me unless something I don’t get is hidden in the actual numbers? Is it the term “tits” that people view as sexist? I spend too much time in the bottom waters of the Internet to interpret tits that way. Men have them, too, and sometimes even moobs.

Jackie Calmes at NYT:

Alan K. Simpson, the Republican co-chairman of President Obama’s bipartisan fiscal commission, removed his “size 15 feet” from his mouth to apologize to a critic on Wednesday for a stinging letter in which he compared Social Security to “a milk cow with 310 million tits.”

The apology came as some liberal groups and members of Congress who oppose any changes to Social Security benefits called on Mr. Obama to fire Mr. Simpson, a former senator from Wyoming long known for his irreverent and often biting remarks.

But at the White House, Jennifer Psaki, the deputy communications director, said, “Alan Simpson has apologized and while we regret and do not condone his comments, we accept his apology and he will continue to serve.”


Mr. Simpson apologized in a letter to Ms. Carson, adding: “Over the last 40 years, I have had my size 15 feet in my mouth a time or two. To quote my old friend and colleague, Senator Lloyd Bentsen, when I make a mistake, ‘It’s a doozy!’ ’’

EARLIER: Beware The Zombie Curmudgeon Who Talks Of Lesser People

UPDATE: Bill Scher and Nicole Kurokawa at Bloggingheads

UPDATE #2: Glenn Greenwald


Filed under Entitlements, Political Figures

And Now We’re Running Out Of Stamps, Too!

Fox News:

Some Democrats are upset and advocacy groups are outraged over the raiding of the food-stamp cupboard to fund a state-aid bailout that some call a gift to teachers and government union workers.

House members convened Tuesday and passed the multibillion-dollar bailout bill for cash-strapped states that provides $10 billion to school districts to rehire laid-off teachers or ensure that more teachers won’t be let go before the new school year begins, keeping more than 160,000 teachers on the job, the Obama administration says.

But the bill also requires that $12 billion be stripped from the Supplemental Nutrition Assistance Program, commonly known as food stamps, to help fund the new bill, prompting some Democrats to cringe at the notion of cutting back on one necessity to pay for another. The federal assistance program currently helps 41 million Americans.

Arguably one of the most outspoken opponents on the Democratic side is Connecticut Rep. Rosa DeLauro, who has blasted the move as “a bitter pill to swallow” but still voted yes.

“I fought very hard for the food assistance money in the Recovery Act, and the fact is that participation in the food stamps program has jumped dramatically with the economic crisis, from 31.1 million persons to 38.2 million just in one year,” DeLauro said in an e-mail sent to “But I know that states across the nation and my own state of Connecticut also desperately need these resources to save jobs and avoid Draconian cuts to essential services for low income families.”

Carol Platt Liebau at Townhall:

The cynical political reasoning behind this move is the same as that which informs the Democrats’ position on school choice: Union members vote; poor people often don’t (and their children, trapped in terrible schools, can’t).

So much for the Democrats’ carefully cherished self-image as the “party of compassion”; let’s hope Americans don’t forget, when the rubber hit the road, where the Democrats’ first allegiance lay.

And I’d be willing to bet that a lot of those people collecting food stamps would rather simply get a job — that is, if they could, in the Obama economy.

Blue Texan at Firedoglake:

There was a study last year that showed half of all American children will at some point in their lives rely on food stamps.  Yes, 50%.

So how many children will have to go hungry because of a couple Republicans in the Senate?

Don Suber:

So Republicans hate children, do they?

The $26 billion stimulus bill to states — which included a $10 billion gift to the National Education Association and other teacher unions — came with a price: A curtailment in spending on food stamps.

Naturally, many of the robo-Democratic congressmen failed to read the bill as they flew in to D.C. to pass it, collect their sound-bites and fly back to vacation.

The public is reading the bill. It strips $12 billion from food stamps.

What is wrong with this picture?

SusanAnne Hiller at Big Government:

Same old rhetoric from Obama–punishing businesses–so it’s all ok.  States wouldn’t want to follow New Jersey Governor Chris Christie’s lead, would they?  If the states could find the cuts, they wouldn’t need to pillage the American taxpayer, and then they wouldn’t need a bailout.  California is broke, yet their teachers are the highest paid in the nation.  So, private sector greed is bad, but public sector (taxpayer funded–as in, you are taking your neighbor’s hard-earned money) greed is good?

Everyone knows that what the Democrats passed is another bailout–but, while the Democrats help their teacher base and spin that it’s for the children during this election season, another segment of the Democrat base will eventually suffer–the poor and families on food stamps.   How will they explain that away?  Additionally, the military and other departments and programs will be hit hard as a result of this legislation.

Below is the list of budgetary rescissions compliments of the new “fiscal hawks” in Congress.  It’s interesting how Democrats can find budget cuts and have no problem hurting the poor, working families, middle class, defense, and military, when it benefits the teachers and the unions on the US taxpayer’s dime.

If the Democrats are so willing to make these cuts (some permanent), reallocate appropriated funds, and rescind funds from the original stimulus bill of 2009 to meet the pay-go requirement, then why did they use unemployed Americans as political pawns in June when a deficit neutral unemployment bill was introduced and reported here on Big Government?  They could have fast-tracked that bill so that millions of unemployed Americans could have continued to receive benefits without a break–all in a bipartisan manner.

David Poff at Redstate:

We’ve seen it splattered all across the front pages; more spending for jobs, more spending for bailouts, more spending for Unemployment, more spending for Teachers and Unions and special interests. We’ve also seen deficits rise and the National debt reach numbers that don’t fit on WalMart calculators.

America is bankrupt and they (the ruling Political class) don’t even know it…or they don’t seem to care anyway. What else explains why they’d happily starve the “least among us” or force them to trample each other to death, fighting over a paltry scrap from the Master’s table?

And for all that so-called “stimulus” money that promised jobs we still don’t have, homes we still can’t afford, and infrastructure improvements (that would keep America working for a generation) that remain undone, why are we paving roads that cars can’t drive on?? Why do I have to find out about it while skimming state news about National candidates instead of seeing it splattered all across the so-called Media?

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Filed under Economics, Entitlements

And Donald Berwick Goes Down The Slides

Robert Pear in NYT:

President Obama will bypass Congress and appoint Dr. Donald M. Berwick, a health policy expert, to run Medicare and Medicaid, the White House said Tuesday.

Dan Pfeiffer, the White House communications director, said the “recess appointment” was needed to carry out the new health care law. The law calls for huge changes in the two programs, which together insure nearly one-third of all Americans.

Mr. Pfeiffer said the president would appoint Dr. Berwick on Wednesday. Mr. Obama decided to act because “many Republicans in Congress have made it clear in recent weeks that they were going to stall the nomination as long as they could, solely to score political points,” Mr. Pfeiffer said.

As a recess appointee, Dr. Berwick will have all the powers of a permanent appointee. But under the Constitution, his appointment will expire at the end of the next session of Congress, in late 2011.

Kate Pickert at Swampland at Time:

Republicans are downright angry that the White House, apparently without much warning, decided to circumvent Congress and critics who were gearing up for a high-profile fight over Berwick’s past statements.

(Among other impolitic utterings, Berwick has said he “is romantic about the NHS,” the UK’s oft-maligned nationalized health system, and believes “excellent health care is by definitional redistributional.”)

Maybe the Administration didn’t have the stomach for another partisan health care reform battle. Maybe it didn’t feel confident in its ability to defend Don Berwick’s contention that rationing should not be the boogeyman of health care policy. Maybe vulnerable Congressional Democrats successfully lobbied for a recess appointment, eager to avoid a contentious confirmation hearing that would bring health care reform to the fore just ahead of this fall’s election. Most likely, it was all of these things.

There was no doubt that Berwick’s confirmation hearing would have created fireworks and there was a chance he would have lost the battle and not garnered the votes needed to be confirmed. His past statements, in or out of context, were a perfect means to caricature the Administration’s health care policies as being all about government control at the expense of quality care. (This, despite that Berwick’s passions include better quality care and a better experience for patients in the hospital.)

In other words, it’s abundantly clear what motivated the White House to install Berwick via a recess appointment. But why do so less than three months after he was officially nominated? It’s not as if this is the only congressional recess on the calendar. CMS has been without a permanent head since 2006 and Berwick’s name has been bouncing around as a leading candidate for more than a year. And how hampered will Berwick be in his job because of the means by which he got it?

That’s what Gail Wilensky wants to know. She ran Medicare and Medicaid under George H.W. Bush and advised Congress on Medicare reimbursements from 1997 to 2001. She is also among a group of CMS administrators who worked in Republican Administrations and who admire Berwick and strongly support his nomination. (It should be noted that the list of medical societies, hospital groups, disease advocacy organizations and others who want Berwick to have the job is seven single-spaced pages.)

“It may have come to this but it didn’t have to happen so soon,” says Wilensky. Installing Berwick during a short Senate recess so soon, is “an in your face, picking a fight response and the guy that’s going to take it on the chin is Don Berwick.”

Ezra Klein:

Let’s get the obvious out of the way: If not for health-care reform, Don Berwick’s nomination to head the Center for Medicaid and Medicare Services would not be so controversial. As Thomas Scully, who headed CMS under George W. Bush, says: “He’s universally regarded and a thoughtful guy who is not partisan. I think it’s more about … the health-care bill. You could nominate Gandhi to be head of CMS and that would be controversial right now.”

But conservatives are making a serious mistake by forcing the administration to rely on a recess appointment for Berwick. Ultimately, what weakens Berwick weakens them, as Berwick, whether they know it or not, is one of the best friends they could have in the administration. That’s because insofar as Berwick is a radical, he’s a radical in favor of a patient-centered health-care system — a position that has traditionally been associated with conservatives, not liberals.

This has escaped notice because political activists don’t pay much attention to questions of delivery-system reform. Of the three legs that balance the health-care reform stool — cost, access and quality — cost and access have traditionally been at the forefront of the issue, and are both politically polarized topics. Quality, however, is a demilitarized zone: Conservatives aren’t for high rates of post-operative infections, and neither are liberals.

More than any other individual in the country, it’s been Berwick who has pushed to see quality occupy roughly equal billing with cost and access. His organization, the Institute for Healthcare Improvement, is principally known for gathering health-care providers and distributing information on how to do things such as “reduce Methicillin-resistant staphylococcus aureus (MRSA) infection.” This involves a lot of information on proper hand hygiene. It’s not a terribly ideological crusade.

Which is not to deny that Berwick himself is an ideological guy. He admits he’s an “extremist,” actually. The shame for him is that his manifesto — “What ‘Patient-Centered’ Should Mean: Confessions of an Extremist” — is behind the paywall at Health Affairs. Conservatives who can find themselves a password, however, will find much to like.

John Elwood:

Looks to me like the Senate went out for an intrasession recess on July 1 and will reconvene on July 12. That’s 11 days under the counting method employed by the Justice Department. While it’s on the aggressive end because it’s relatively short, there certainly are a number of precedents for recess appointments during intrasession recesses of that duration–including, if memory serves, President George W. Bush’s recess appointment of Judge Pryor to the Eleventh Circuit. President Clinton made one recess appointment during a 10-day recess, one during an 11-day recess, and 16 appointments during a 12-day recess. I believe that President George H.W. Bush made one recess appointment during a 13-day recess (although the shortest one I can find at this late hour is 17 days). See the government’s brief in opposition in Miller v. United States (especially pp. 26–27 n.5) and its opp. in Franklin v. United States (pp. 29–30) for more.

It is certainly not without controversy, however; Attorney General Daugherty said in dicta in one opinion that an adjournment for “5 or even 10 days” would be too brief to constitute a recess for purposes of using the Recess Appointments Clause.  But the Executive Branch (unsurprisingly) has been walking away from the Daugherty opinion  pretty much ever since.  And that is to say nothing about the considerable academic writing on the subject, much of which has been critical of intrasession recess appointments.  See, e.g., Michael Rappaport, The Original Meaning of the Recess Appointments Clause, 52 UCLA L. Rev. 1487, 1487, 1562 (2005) (stating that “one-month recesses seem too short” but acknowledging that the “prevailing interpretation” of the Recess Appointments Clause “allows the President to make recess appointments . . . during intrasession recesses of ten days and perhaps of even shorter duration”).

Philip Klein at The American Spectator:

This way, Berwick will assume his post without having to explain statements such as this: “Cynics beware, I am romantic about the (British) National Health Service; I love it.”

Nor will he have to answer for his extensive writings and speeches endorsing central health spending caps and government rationing of care to the sick, which I detailed here. At the time, I explained why his draconian views would make him dangerous as the head of CMS:

While Berwick would not have the authority to impose a British health care system on the United States in one fell swoop, as head of CMS, he would be running both Medicare and Medicaid. Given that the two programs alone account for more than one out of every three dollars spent on health care in America (all government programs combined account for 47 percent), private players tend to follow CMS’s lead. Berwick himself has made this point.

“(G)overnment is an extraordinarily important player in the American health care scene, and it has inescapable duties with respect to improvement of care, or we’re not going to get improved care,” he said in a January 2005 interview with Health Affairs. “Government remains a major purchaser.… So as CMS goes and as Medicaid goes, so goes the system.”

He also said that, “(T)he Holy Grail of universal coverage in the United States may remain out of reach unless, through rational collective action overriding some individual self-interest, we can reduce per capita costs.”

More specifically, has priased the British rationing board, the National Institute for Clinical Excellence:

“NICE is extremely effective and a conscientious, valuable, and — importantly — knowledge-building system,” Berwick said in an interview last June in Biotechnology Healthcare. “The fact that it’s a bogeyman in this country is a political fact, not a technical one.”

Justifying the move on the White House blog, communications director Dan Pfeiffer wrote:

Many Republicans in Congress have made it clear in recent weeks that they were going to stall the nomination as long as they could, solely to score political points.

But with the agency facing new responsibilities to protect seniors’ care under the Affordable Care Act, there’s no time to waste with Washington game-playing. That’s why tomorrow the President will use a recess appointment to put Dr. Berwick at the agency’s helm and provide strong leadership for the Medicare program without delay.

But this analysis doesn’t pass the basic smell test. Obama could have announced his CMS appointment at any time after winning the election in November 2008 if it were so urgent, but he waited almost a year and a half — until April of this year — to name Berwick. Conveniently, this was after the health care law had already passed. Had he appointed Berwick during the health care debate, it would have exposed how much Obama’s ultimate vision for U.S. health care borrows from the British model.

Ben Domenech at New Ledger:

Senators have expressed concerns about statements like these, as well as Mr. Berwick’s background. He is a nominee with little management experience poised to head the second largest insurer on the planet, an agency with more funding to disperse than all but the top 15 economies in the world. In fact, the White House’s decision to make this recess appointment is as much a demonstration of their unwillingness to have any debate about Mr. Berwick’s views occur in the public eye as it is of their concern that some in their own party have privately questioned whether he is outside the mainstream.

Such questions are of course appropriate. Thanks to the White House’s decision, they will not be answered. Understand: Mr. Berwick’s position as head of CMS will give him unprecedented power to apply his views on health care policy under President Obama’s new health care regime. Yet thanks to the White House’s game playing, he will not answer one question, not one, before he is ensconced in a position where his radical policy views will ultimately effect the lives and health care of every American.

As we saw in the process of Obamacare’s passage, there is nothing – not precedent, not tradition, not even the most basic expectations of fairness or responsible governance – that will stop President Obama and his allies in their quest to remake American social policy in their image.

Moe Lane:

A quick summary: Donald Berwick hates our healthcare system, wants to replace it with the monstrosity that the British have saddled themselves with, and the White House knows that a confirmation hearing would a: have all of that come out; and b: force a bunch of Democratic Senators to vote in his favor just before the midterm elections.

You know, George W. Bush wasn’t afraid of a little controversy when he thought that the underlying issue was important enough.  How does it feel to have voted for a coward for President, anyway? – I wouldn’t know; I’m a Republican.

UPDATE: Jonathan Cohn at TNR

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Filed under Entitlements, Health Care, Political Figures

OMG! He Touched The Third Rail!

Michael O’Brien at The Hill:

A Republican-held Congress might look to raise the retirement age to 70, House Minority Leader John Boehner (R-Ohio) suggested Monday.

Boehner, the top Republican lawmaker in the House, said raising the retirement age by five years, indexing benefits to the rate of inflation and means-testing benefits would make the massive entitlement program more solvent.

“We’re all living a lot longer than anyone ever expected,” Boehner said in a meeting with the editors of the Pittsburgh Tribune-Review. “And I think that raising the retirement age — going out 20 years, so you’re not affecting anyone close to retirement — and eventually getting the retirement age to 70 is a step that needs to be taken.”

David A. Graham at Newsweek:

In the face of plenty of demagoguing by both parties on deficits, Boehner’s stark statement is a welcome one. It’s a real policy suggestion, and it’s one that conveys to voters that they can’t get something for nothing: deficit reduction is going to be painful.

Some European countries are raising retirement ages as part of austerity measures: France’s decision to raise the age from 60 to the harrowing extreme of 62 years old practically caused riots, while Britain’s new government has announced plans to raise the retirement age from 65 to 66, with further increases likely. But in the U.S., there’s been little meaningful discussion on the topic.

That said, just making people work another five years probably isn’t quite the silver bullet Boehner suggests. For one thing, as Robert Reich and others point out, Social Security is a less serious problem than Medicare, the costs of which are growing faster. And liberal think-tankers wring their hands over such proposals, worrying that blue-collar workers, who are more likely to lose the ability to do their work at a young age, will bear the brunt of a retirement-age increase. No matter how overblown his rhetoric on the divisions facing the U.S., Boehner deserves credit for offering a serious, fiscally conservative suggestion, and openly discussing the sacrifices Americans will have to make.

Jane Hamsher at Firedoglake:

A month ago, John Boehner was warning that the commission planned to report its findings after the election, and that their plan could be passed by a lame duck congress with little fear of electoral accountability.

But in an interview with the Pittsburgh Tribune-Review, Boehner is now publicly expressing support for the very same ideas Rivlin proposes.  And he wants to use Social Security benefit cuts to fund the wars:

Ensuring there’s enough money to pay for the war will require reforming the country’s entitlement system, Boehner said. He said he’d favor increasing the Social Security retirement age to 70 for people who have at least 20 years until retirement, tying cost-of-living increases to the consumer price index rather than wage inflation and limiting payments to those who need them.

Boehner has a three-point plan here to get money for mo’ war: 1) raise the retirement age to 70, 2) adjust Social Security’s cost of living increases (COLA), and 3) reduce payments to those with higher incomes.

Jed Lewison at Daily Kos:

This is a big deal. It’s not just that he wants to cut Social Security, it’s that he says cutting Social Security would be at the center of the GOP’s fiscal policy if Republicans win the November elections.

And not only is Boehner saying he wants to raise the retirement age to 70, he also is proposing to ban Social Security recipients from earning “substantial” amounts of outside income. That’s a truly radical notion: John Boehner thinks people who have paid Social Security taxes their entire life should be denied Social Security if they earn outside income above a certain level.

So in Boehner’s view, everybody should pay for Social Security, but only some people should get it, and they shouldn’t get it until they are 70. And he’s pledging to push that agenda as Speaker. I think his ideas are ridiculous but he’s right on one thing: they do deserve to be at the center of the debate. Voters deserve to know that Republicans will try to gut Social Security if they win the elections this fall.

Jake Sherman and Simmi Aujla at Politico:

Democrats are attacking House Minority Leader John Boehner for his comments to a Pittsburgh paper about how America is in “revolt” similar to 1776 and Wall Street reform is like “killing an ant” with a nuclear weapon.

Boehner also touched on the third rail of politics, claiming that Social Security should raise the retirement age to 70.

The Democratic Congressional Campaign Committee issued a statement blasting Boehner, as did the Democratic National Committee and Senate Majority Leader Harry Reid (D-Nev.). Operatives are blasting his statements to the Pittsburgh Tribune Review all over the blogosphere.

But the reality is that Boehner’s comments are hardly out of line with what his own party has said – especially on Social Security and financial reform.

Rep. John Sullivan (R-Okla.), while noting he didn’t see Boehner’s comments, said that he wasn’t going to vote for the financial regulatory bill because “it’s going to hurt small banks, community banks…that weren’t doing the collateral debt obligations, collateral debt swaps and derivative trading.”

On Social Security, Sullivan seems to be in lock-step with Boehner.

“If we want to really get our debt down and really truly reform spending and what we do here in Washington all entitlement programs need to be looked at,” he said. “I think Social Security should be on the table. Whether we raise the age or not, that should be looked at.”

And the reality is that even House Majority Leader Steny Hoyer (D-Md.) may even find some agreement with Boehner on Social Security – in a recent speech Hoyer said raising the retirement age needs to be on the table.

Rep. John Boozman (R-Ark.) said “we need a national dialogue about how we make Social Security solvent” – but he wouldn’t touch Boehner’s words, saying he hadn’t read them and wasn’t familiar with the context.

“When you look at the fact that we’re blessed that we’re living so much longer with fewer workers, because of those kind of things, I believe it’s going to take the president, both houses of Congress, the American people buying whatever we do,” Boozman said Tuesday.

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Beware The Zombie Curmudgeon Who Talks Of Lesser People

Jane Hamsher at Firedoglake:

Each time the Catfood Commission holds its secret meetings, Alex Lawson of Social Security Works has been outside with his camera, shooting video of the closed front door as FDL runs a live stream on our front page. The Washington Post wrote it up recently.  As committee members go in and out of the room Alex asks them questions when he can, and yesterday he had an exchange with Alan Simpson that was…well, extraordinary.

Simpson is apparently a graduate of the Bobby Etheridge school of charm. Alex Lawson was incredibly respectful and polite as the crankly Simpson berated, interrupted and cussed him. Simpson has been a long-time supporter of rolling back the New Deal, and when asked about cuts he would recommend to the President and Congress on CNBC, Simpson said  “We are going to stick to the big three,” meaning Social Security, Medicare and Medicaid.  His sentiments haven’t changed.

CJR’s Trudy Lieberman recently ran down Simpson’s history of delicate statements on the subject of Social Security.   He is equally decorous on camera with Alex, who clearly knows a great deal more about the subject than he does.  Simpson starts from the premise that the Treasury will default on the bonds issued to the Social Security trust fund, because all the best people apparently know that it’s better to default on America’s senior citizens and plunge them into poverty than it is to default on, say, the Chinese.

Despite Simpson’s assertions, raising the retirement age to 70 IS a benefit cut.  It would put an estimated 1.5 million  senior citizens into poverty. After two years of watching billions of dollars in taxpayer money being paid out to Wall Street CEOs in lavish bonuses while the White House breaks every promise they’ve made to rein them in, that takes a fat load of nerve.

The commission is also looking into cutting Medicare benefits, because the deal guaranteeing no-bid Medicare contracts to the pharmaceutical industry by both Republicans and Democrats can’t possibly be abrogated.  The committee claims it’s independent, but it’s not THAT independent.  So, old people, too bad for you.

Erskine Bowles has returned to run the same play he ran during the Clinton administration, when he negotiated the secret deal between Bill Clinton and Newt Gingrich to cut Social Security benefits.  Despite warnings from both John Boehner and John Conyers that the commission will report its recommendations to a lame duck Congress who could pass it before the end of the term.  Both Harry Reid and Nancy Pelosi have promised to bring the commission’s proposals up for votes.

In the absence of any transparency coming from the committee about what transpires in its secret meetings, Simpson’s comments to Alex are the best insight we have into what is being discussed there.

Bottom line:  bon apetite, Grandma!

ALAN SIMPSON:  We’re really working on solvency… the key is solvency

ALEX LAWSON: What about adequacy? Are you focusing on adequacy as well?

SIMPSON: Where do you come up with all the crap you come up with?

SIMPSON:  We’re trying to take care of the lesser people in society and do that in a way without getting into all the flash words you love dig up, like cutting Social Security, which is bullshit. We’re not cutting anything, we’re trying to make it solvent.

SIMPSON:  It’ll go broke in the year 2037.

LAWSON:  What do you mean by ‘broke’? Do you mean the surplus will go out and then it will only be able to pay 75% of its benefits?

SIMPSON:  Just listen, will you listen to me instead of babbling?   In the year 2037, instead of getting 100% of your check, you are going to get about 75% of your check. That’s if you touch nothing. If you like that, fine. You’ll be picking with the chickens yourself when you’re 65.

So we want to take care, we’re not cutting, we’re not balancing the budget on the backs of senior citizens. That’s bullshit. So you’ve got that one down. So as long as you’ve got those two things down, you can’t play with anymore, that we’re not balancing the budget of the United States on the backs of poor old seniors and we’re not cutting anything, we’re stabilizing the system.

LAWSON:  Thanks for being so frank. My question is: raising the retirement age, is actually an across-the-board benefit cut?

SIMPSON:  There are 15 different options being discussed in here today, and why nail one of them…[inaudible]…if you would like to get one of them that pisses your people off.

Jason Linkins at Huffington Post


Alan Simpson, co-chair of the White House Debt Commission, provides a full and frank engagement with an activist questioning him on the proposed reforms of the Social Security system. He doesn’t duck. He doesn’t hide. He doesn’t grab the guy around the wrist or neck. And the cry-babies at Huffington Post complain that he uses profanity.

James Joyner:

I’m frankly amazed that Simpson spent 8 minutes, 20 seconds talking to some yahoo with a video camera.   Regardless, the problems he describes are real.    Social Security and Medicare are massive structural burdens, even compared to the spectacular cost of the wars in Afghanistan and Iraq.   Those will soon go away whereas the entitlement demands will continue to skyrocket.

Now, Hamsher and Lawson are right:  Simply raising the retirement ago to 70 won’t work, either.   There are many occupations that are too physically demanding to work that long.  And many people’s health declines much sooner than that.   The ultimate solution is going to have to be some combination of means testing and raising the ceiling on the FICA tax.   But that’s going to require an admission that Social Security and Medicare are subsidies for the less fortunate elderly rather than “insurance” programs wherein we fund our our retirement during our working years.

But that was always the intent!  They were poverty relief programs, designed to provide a safety net for people who couldn’t support themselves one they were no longer able to earn a steady paycheck.   Most jobs didn’t provide retirement annuities and many people don’t earn enough to save for retirement, much less for fifteen years of retirement.    I’m willing to kick in some money to help those people get by.

Instead, though, we’ve created a bizarre system where I’m paying a pretty nice chunk of change every month and being told that I’m paying for my own retirement.  Yet, even if we were able to sustain the current setup, my return from Social Security will be so modest that, barring unforeseen circumstances, it’ll be a tiny portion of my income.   And we’re bankrupting the system to keep up the illusion.

John Berry at Fiscal Times:

In the interview, Simpson maintained Social Security is already insolvent because it is paying out more than it is getting in tax revenue. It is not clear whether that will be true for the current fiscal year or the next few years, but it will be happening not too far in the future.

Then Lawson asked, “But what about the $180 billion in surplus that [the trust fund] brings in every year [in interest payments on the Treasury securities it holds]?”

“There is no surplus in there. It’s a bunch of IOUs,” Simpson said. “Listen. It’s two-and-a-half trillion bucks in IOUs which have been used to build the interstate highway system and all of the things people have enjoyed since it has been set up.”

Since Social Security finances were overhauled in 1983, tax revenues have far exceeded costs. That surplus went into the trust fund, was invested in Treasuries and has been earning interest for almost 30 years. Those annual surpluses meant that the government did not have to borrow as much from the public to finance whatever it spend money on. (However, interstate highways have not been financed even indirectly by Social Security surpluses, but rather by motor fuel taxes.)

Whenever tax revenues don’t cover Social Security costs, Simpson said, ” What do they do? They go to that trust fund and say, ‘We need the IOUs out of it.’ And they say, ‘You can have them, but you have to pay for them.’ So you’re taking a double hit on your own government. Makes no sense.”

Indeed, Simpson makes no sense. What is the “double hit”? The government didn’t have to borrow in the past, or pay interest on what it didn’t borrow. Now it has to borrow from the public and pay the interest. There’s no “double hit” involved.

Finally, Lawson said that his understanding was that part of the justification of the 1983 changes was “prefunding the retirement of the baby boom by building up that huge surplus.”

Simpson responded, “They never knew there was a baby boom in ’83.”

Well, Alan Greenspan, who headed the bipartisan commission that proposed the 1983 changes, would tell Simpson something different. The big demographic shift that began right after World War II was precisely why Social Security was expected to face a deficit as the number of workers relative to beneficiaries began to decline when the Baby Boomers began to retire. And that was why taxes were raised and benefits were cut then–to build up a trust fund surplus so benefits could be paid.

Edmund L. Andrews:

Simpson always likes to be outrageous in a cranky-old-man kind of way. It’s part of his charm. But as John points out, Simpson throws around a lot of claims that are just plain wrong and insulting to boot.  Among other things, he talks about Social Security being for the “lesser people.”  His comments threaten to undermine the commission’s credibility.

Paul Krugman:

OK, the immediate problem is the statements of Alan Simpson, the commission’s co-chairman. And what got reporters’ attention was the combination of incredible insensitivity – the “lesser people”??? — and flat errors of fact.

But it’s actually much worse than that. On Social Security, Simpson is repeating a zombie lie — that is, one of those misstatements that keeps being debunked, but keeps coming back.

Specifically, Simpson has resurrected the old nonsense about how Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments, never mind the quarter century of surpluses that came first.

We went through all this at length back in 2005, but let me do this yet again.

Social Security is a government program funded by a dedicated tax. There are two ways to look at this. First, you can simply view the program as part of the general federal budget, with the the dedicated tax bit just a formality. And there’s a lot to be said for that point of view; if you take it, benefits are a federal cost, payroll taxes a source of revenue, and they don’t really have anything to do with each other.

Alternatively, you can look at Social Security on its own. And as a practical matter, this has considerable significance too; as long as Social Security still has funds in its trust fund, it doesn’t need new legislation to keep paying promised benefits.

OK, so two views, both of some use. But here’s what you can’t do: you can’t have it both ways. You can’t say that for the last 25 years, when Social Security ran surpluses, well, that didn’t mean anything, because it’s just part of the federal government — but when payroll taxes fall short of benefits, even though there’s lots of money in the trust fund, Social Security is broke.

And bear in mind what happens when payroll receipts fall short of benefits: NOTHING. No new action is required; the checks just keep going out.

So what does it mean that the co-chair of the commission is resurrecting this zombie lie? It means that at even the most basic level of discussion, either (a) he isn’t willing to deal in good faith or (b) the zombies have eaten his brain. And in either case, there’s no point going on with this farce.

Brad DeLong:

You don’t name an arsonist to co-chair your fire department. If Obama wants his commission to do anything, he needs to replace Alan Simpson with a reality-based co-chair.


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Pee In A Cup And The Government Pays You (Well, Not Really)

Mara Gay at Politics Daily:

Senator Orrin Hatch (R-Utah) has proposed an amendment to the jobs bill today that would require Americans seeking unemployment benefits and welfare to pass a drug test.

He said the current social safety net only feeds their addiction to both illegal substances and help from the federal government.

“Too many Americans are locked into a life of a dangerous dependency not only on drugs, but the federal assistance that serves to enable their addiction,” the senator said in a statement. “Drugs are a scourge on our society — hurting children, families and communities alike.”

The amendment comes as an attempt to pass the $140 billion jobs bill failed in the Senate. The bill would extend unemployment benefits for millions of Americans, but its price tag has elicited objections from both Republicans and Democrats.

Hatch said his amendment would help save taxpayer money and reduce the national deficit.

“This amendment is a way to help people get off of drugs to become productive and healthy members of society, while ensuring that valuable taxpayer dollars aren’t wasted,” the senator said today.

Joan McCarter at Daily Kos:

Being unemployed just isn’t denigrating enough for Orrin Hatch. You have to be punished it for, put under suspicion. That’s the Republican way. What’s next? Poor houses?

Ezra Klein:

A while back, Matt Yglesias wrote an insightful piece arguing that “ideas about freedom and small government are totally irrelevant to the actual political agenda [of the Republican Party].” I was reminded of it by the news that small-government advocate Orrin Hatch wants the state to perform mandatory drug tests on every one of the 15 million people receiving unemployment insurance or welfare benefits.

Meredith Jessup at Townhall:

I can hear the ACLU’s screams of injustice now.  Truth be told, this seems like such a basic, commonsense notion.  It’s definitely not a new idea, but props to Sen. Hatch for reintroducing it, especially at a time when the country can’t afford to waste a dime.

Annie Lowrey at Washington Independent:

Currently, about 4.4 million families receive assistance through the Temporary Assistance for Needy Families program. On top of that, 9.8 million people are receiving unemployment insurance in some form. Millions more get other kinds of aid. Granted, the federal government does plenty of drug testing already, but does it really want to process 15 million new urine samples? Plus pay for all the court cases the law would create? The Drug Policy Alliance notes that “a 2003 ruling by a federal appeals court that covers the states of Kentucky, Michigan, Ohio, and Tennessee ruled that states cannot drug test welfare recipients because it’s unconstitutional.”s.

Matt Welch at Reason:

This is, alas, nothing new. In addition to social-welfare recipients, lawmakers have identified several other sub-classes of people ripe for being forced by the state to urinate on command, including (but not limited to) student athletes, kids who dare take part in other extra-curricular activities, and even kids who do nothing all day but draw “I Heart Conor” in their Pee-Chees. (They still have those, right?)

Always missing from these flippant tramplings of our privacy rights are two classes of people: Lawmakers themselves, and recipients of corporate welfare. Wouldn’t you feel just a little safer if Patrick Kennedy got his fluids checked on regular basis? Ya think some of those juicy subsidies for film productions ever land in the hands of people who use drugs?

The moral of the story here is not new, but bears repeating: If you are at all dependent on the state, whether by choice or force, and you don’t have the good manners to be powerful, you will always stand the risk of being treated like a patient at a criminal asylum. It is as good a reason as any other to resist further encroachment of the government on our private lives.


Famed Utah hazzan Senator Orrin Hatch proposed an amendment to the $140 billion jobs benefits extension bill today that would make make people seeking welfare benefits first pass a drug test. Welfare will now be a level playing field, as poor people will not be able to get away with taking steroids to make themselves super-poor. And also poor drug addicts will maybe starve and thus no longer be a problem, so that’s good.

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A Million Charts And Graphics To Say The Same Thing: Americans Don’t Like Foreign Aid

DiA at The Economist:

SOME highlights from this week’s Economist/YouGov poll:

• Little has changed when it comes to the health-care reform bill. Public opinion about the overall reform remains just about evenly divided, as it has for months. More than twice as many Americans think that their care will worsen under the bill than say it will improve, and more than half still expect to pay more because of it.

• Barack Obama’s overall rating remains below 50%. In this week’s poll, 46% approve of the way he is handling his job, while 47% disapprove.

• When asked which party would do a better job handling the budget deficit, Americans divide fairly evenly: 35% name the Democrats, 30% the Republicans, and 35% think they are about the same.

• When it comes to decreasing the deficit, cutting spending is a more popular approach than raising taxes, by a margin of 62% to 5%. And here’s what the public is willing to cut:

• Foreign aid makes up less than 1% of America’s total spending.

Annie Lowrey at The Washington Independent:

Today, an Economist/YouGov poll making the rounds shows that Americans would vastly prefer budget cuts to new taxes — by 62 percent to 5 percent. The poll goes on to ask Americans which government spending programs they would choose to cut: “If government spending is reduced in order to balance the budget, which of the following government programs should receive lower federal funding than they currently do?” (Respondents could pick more than one thing to axe.)

Here is how they responded:

The most expendable programs, according to poll takers, were mass transit, housing, agriculture, environment and foreign aid, the runaway winner at 71 percent. The problem? These programs together barely comprise 3 percent of the federal budget. Even if the programs were entirely eliminated, the cuts would do nothing to solve the United States’ long-term entitlement program.  Indeed, the responses had no obvious correlation with spending size.

The red bars in this graph indicate expenditures in the various areas:

The poll highlights the conundrum: Americans want to solve the long-term deficit program and want the federal government to run a balanced budget. They are willing to make budget cuts. But the government cannot cut enough from discretionary programs to bring the budget into check and ultimately to reduce the deficit. (Half of Americans still believe the government can.)

Ezra Klein:

The only program that more than a third of the public wants to see cut is foreign aid. Bummer, then, that it accounts for less than a single percent of the budget.

But the fact that people want a smaller budget deficit but no reductions in actual spending is old news, and well accounted for in Congress. What’s interesting about this chart, however, is that a sizable minority of the population wants to cut defense spending. In fact, defense spending’s size of the budget and the number of people who want to cut it match up much more closely than most of the other two bars on the graph.

You can make too much of this, of course. Only about a quarter of the population wants defense spending cut. But given how terrified politicians are to touch defense spending — we even invented a category called “non-defense discretionary spending” in order to protect it — maybe it’s time to take another look. Washington may consider defense spending sacred, but the country doesn’t — at least not more than anything else.

Kevin Drum:

Ah, the American public. God love ’em. The Economist asked if they’d rather tackle the federal deficit by cutting spending or raising taxes, and the runaway winner was cutting spending, by a margin of 62% to 5%. So what are we willing to cut? Answer: pretty much nothing.


there were only four areas that even a quarter of the population was willing to cut: mass transit, agriculture, housing, and the environment. At a rough guess, these areas account for about 3% of the federal budget. You could slash their budgets by a third and still barely make a dent in federal spending.

I suppose one of these days everyone’s going to have to figure this out. Apparently no time soon, though.

Jon Bernstein:

Just to pile on a bit, however: it’s even worse!  Not just because it turns out that the ideal point people pick for foreign aid turns out to be (if I remember correctly) something like 3% of the budget, which is far higher than the US actually spends.  But because if you break the category down, the same thing happens: the overall category (foreign aid) is unpopular, but the specifics are generally popular.  By far the biggest item is Israel, and Americans most love Israel, and think that the US should send them aid (the only poll I could find — bottom of the page — on this showed about half of respondents approved of current levels of military and economic aid, with a somewhat larger minority approving of cuts than the minority supporting increased levels).  I do suspect that voters probably would support cuts in aid to Egypt and Jordan, but the big increase in foreign aid in recent years is for fighting HIV in Africa, and (while I don’t have any numbers on it) I’m confident that voters are all for that spending.

I think the same is true in other categories, as well…”defense spending” is relatively less popular, but at least when I’ve asked students about it the only subcategory that wasn’t popular was new high-tech weapons, and that’s been fairly mixed.

Of course, a lot of this is incredibly soft, and so the results can be easily manipulated by changing question wording.  What’s more, when public opinion is inconsistent like this both sides are going to say that the public “really” supports them, but in fact what’s probably more accurate is to say that the public just doesn’t have rational opinions about a lot of things.  At any rate, anyone looking for logical consistency from voters on budget items is going to be very disappointed.

John Sides:

I want to suggest that the problem goes even deeper. The programs that make up the largest share of the federal budget are typically the ones that the fewest people want to cut. Consider this graph, in which I attempted to match most of the YouGov categories to a plausible counterpart in Obama’s FY 2010 budget proposal. (I drew on additional stories for information about the budgets for health research and highways. Foreign aid is estimated at 0.5% of the budget.)


As you move downward, into categories of spending that are increasingly popular, you get to the largest federal programs, particularly entitlement spending. Really, there is only one area of federal spending — national defense — that is sizable and that even a modest fraction (22%) is willing to cut.

In fact, there is a negative relationship between the budgetary share allocated to a policy area and the fraction who want to cut it. The correlation coefficient between the poll percentages and the budget percentages is -.33 (with or without the obvious potential outlier, foreign aid, included).

If Americans are forced to be specific, their recipe for cutting federal spending would do little to reduce spending.

Stan Collender:

There’s nothing new about this situation, of course,  Bruce reported remarkably similar results last December and it’s long been the case that the typical voter wants the deficit reduced without cutting spending or increasing taxes.  This latest poll shows that even the higher deficits of the past few years, which almost 60 percent of those responding said would be of great or some importance to them when they voted, hasn’t changed the situation at all.

Megan McArdle:

What I’d really like to see is a poll which reads off a list of the major areas in the federal budget, names the percent of the federal budget they compose, and then asks people which of these areas they think should be cut in order to close the deficit. Obviously, you couldn’t get too deep with this, since people can’t remember more than five or six numbers at a time. But the answer would be more interesting than noting that people with a poor command of the federal budget think we should cut the enormous fantasy programs they think are wasting all of our tax dollars.

Even more interesting would be if you paired this with some realistic tax math–if you made it clear to them that the budget gap also cannot be closed simply by raising taxes on “the rich”, but rather that it probably involves a broad-based regressive tax like the VAT.

But this would be very complicated, which is, I presume, why it hasn’t been done.

Josh Barro

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Today, We Are All Not Trust Fund Babies

Mary Williams Walsh at New York Times:

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.

The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.

Megan McArdle:

Every time I write anything about Social Security, I get at least one person arguing that everything is fine because after all, the trust fund is not going to run out until 2036 or so.

I want to assume good faith, but I have a hard time believing that anyone takes this argument seriously.  Today, because social security payments exceeded revenue, we’re going to either have to raise taxes, or borrow more money, in order to cover the benefits.
How would this be different if we didn’t have the trust fund?

More McArdle

Jacob Sullum at Reason:

Wait a minute. There’s a trust fund? Well, no, not really, the Times concedes in the 14th paragraph:

Although Social Security is often said to have a “trust fund,” the term really serves as an accounting device, to track the pay-as-you-go program’s revenue and outlays over time. Its so-called balance is, in fact, a history of its vast cash flows: the sum of all of its revenue in the past, minus all of its outlays. The balance is currently about $2.5 trillion because after the early 1980s the program had surplus revenue, year after year.

Now that accumulated revenue will slowly start to shrink, as outlays start to exceed revenue. By law, Social Security cannot pay out more than its balance in any given year.

For accounting purposes, the system’s accumulated revenue is placed in Treasury securities.

Translation: The government already has spent all of this money (and then some). All that is left in the “trust fund” is IOUs from one part of the government to another. And guess who has to make good on those IOUs? While there is budgetary significance to this accounting fiction (since Social Security cannot legally continue paying benefits after its notional reserve is officially exhausted), all this talk of a trust fund tends to obscure reality.

For example, the Times says there are “only three choices” when the imaginary trust fund disappears: “raise taxes, lower benefits or bail out the program by tapping general revenue.” Note that the first and third choices amount to the same thing: The government takes more of our money. For that matter, the program is already “tapping general revenue” in the sense that taxes must be used to repay the money the government has “borrowed” from Social Security.

Another point you might miss by focusing on the nonexistent trust fund is that Social Security is not a pension. As the Times notes in passing by referring to the program’s “pay-as-you-go” structure, it is a system of transfer payments, from young workers to old retirees. Yet the Times claims the tax and benefit changes of the 1980s were driven by the fear that Social Security could be transformed “from a respected, self-sustaining old-age program into welfare.” It already is welfare, with the perverse twist that the recipients are more affluent than the people funding their benefits. Proposals to privatize the system aim to change this situation by transforming intergenerational transfers into genuine retirement savings.

Doug Bandow at Cato:

There’s no there there when it comes to financing future benefits.  Either payments have to come down or taxes have to go up, unless we adopt real reform centered around personal accounts.  And the latter course seems ever more distant after Congress voted to expand federal control over every Americans’ health care.

James Joyner:

We’ve taken baby steps in the right direction by gradually raising the retirement age.  We’ll likely have to go further in that regard.   Despite my father’s recent passage at 66, the fact of the matter is that life expectancy for a 65-year-old is another 12.7 years.  That’s a long time to draw benefits from younger workers, especially in an economy where most of us work indoors.

Along those lines, we really need to get over the notion of a uniform  “retirement age.”   People who do dangerous, physically demanding work (coal miners, construction workers, firefighters, etc.) should be able to retire much earlier than teachers, writers, and bankers.

And, as usual, the financially successful will have to shoulder yet more of the burden.   It simply makes no sense for the wealthy to draw Social Security benefits that amount to a rounding error in their monthly income.  And, I’m afraid, we’ll have to gradually hike up the payroll tax ceiling.   I don’t like either of those options one bit.   They’re inherently unfair.  But I don’t know where else we get the money and we’ve got a new generation of retirees coming who we’ve promised to take care of.

Further, while I support widened “personal accounts,” it’s not going to solve the present-day problem, only put some endpoint to it.  And the recent collapse of the financial system, not healthcare reform, is the chief reason why it’s a political nonstarter for the foreseeable future.

John Hood at The Corner:

This tipping point wasn’t expected until 2016. Defenders of the status quo hastened to assert that the operating deficit doesn’t really matter because Social Security still has its massive trust fund of federal treasuries to draw on for many years to come. Surely no one doubts the soundness of federal debt, they say.

Apart from the real reasons to be concerned about hyperinflation and the dollar in the future, the creditworthiness of the federal government isn’t the point. In true government pension funds, such as those operated by state governments, the portfolio is made up of claims on the income of other institutions. If states filled their pension plans with their own state bonds, they’d be in big fiscal and legal trouble.

Think about it this way. Even if you have an excellent credit history and stable employment, you can’t increase your net worth by writing yourself a check. And if you store IOUs to yourself in a lock box, and lose your job, their existence won’t help you pay a single bill.

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The Paul Ryan Week That Was, Week Two

Paul Ryan’s “A Roadmap For America’s Future” website

Tim Fernholz at Tapped:

Republican Rep. Paul Ryan was in the news earlier this year after releasing a budget designed to eliminate the deficit and federal debt. Many argued that, though it contained radical changes in Social Security and Medicare as well as draconian budget cuts, it also represented a good-faith effort to make hard choices about the budget. But several new analyses show that not only is the plan incredibly regressive, it fails to actually solve the debt problem. Here’s your background on the issue:

  • Ryan’s Plan:A Roadmap for America’s Future” [PDF] was released in January; it promises major changes in social insurance, tax policy, and spending cuts that would cut deficits and gradually eliminate the national debt.
  • Tax Policy Center Analysis: However, the respected Tax Policy Center highlighted an important problem [PDF] in these calculations: The expected tax-revenue figures — approximately 19 percent of GDP — were assigned arbitrarily. When TPC ran the numbers, they found that Ryan’s plan was billions of dollars short and would also result in extraordinary regressive tax policy, with large cuts for the wealthy but tax increases [PDF] for almost everyone else.
  • Center on Budget and Policy Priorities Analysis: The CBPP took the TPC analysis and went one step further, looking at the impact on other government programs, noting that the plan “would eliminate traditional Medicare, most of Medicaid, and all of the Children’s Health Insurance Program (CHIP).” It’s funding for private Social Security accounts “would leave the program with a deep financial hole.”
  • The President’s Budget: For comparison, here is the Congressional Budget Office’s analysis of President Barack Obama’s preliminary budget proposal, which, while it does not purport to eliminate the deficit and the debt, it does propose the (barely) feasible goal of lowering the deficit to the point where the national debt is sustainable.

You can argue whether this cost control is better or worse than other forms of cost control. But it’s a blunt object of a proposal, swung with incredible force at a vulnerable target. Consider the fury that Republicans turned on Democrats for the insignificant cuts to Medicare that were contained in the health-care reform bill, or the way Bill Clinton gutted Newt Gingrich for proposing far smaller cuts to the program’s spending. This proposal would take Medicare from costing an expected 14.3 percent of GDP in 2080 to less than 4 percent. That’s trillions of dollars that’s not going to health care for seniors. The audacity is breathtaking.

But it is also impressive. I wouldn’t balance the budget in anything like the way Ryan proposes. His solution works by making care less affordable for seniors. I’d prefer to aggressively reform the system itself so the care becomes cheaper, even if that causes significant pain to providers. I also wouldn’t waste money by moving to a private system when the public system is cheaper. But his proposal is among the few I’ve seen that’s willing to propose solutions in proportion to the problem. Whether or not you like his answer, you have to give him credit for stepping up to the chalkboard.

Ramesh Ponnuru at The Corner:

I don’t share the liberal objections to it, particularly those that assume that his reforms would have no effect on medical inflation and then complain that he would leave people unable to keep up with it. I do, however, think that his tax proposal is flawed. The alternative, simpler tax structure he would allow people to opt into would have a child allowance smaller than current law, which already makes it too small. The effect would be to shrink the overall tax burden but to leave families with children paying a larger share of it. I think that this is lousy politics and policy, although one that Representative Ryan could easily correct.

Our entitlement programs overtax families with children. People who make the financial sacrifices needed to raise children are paying twice for those entitlements, both via their payroll taxes and via those sacrifices. Those who don’t have kids benefit in retirement from the fact that others have made those financial sacrifices. The tax credit for children should not be considered a special-interest tax break that we should try to move away from. It should be seen, rather, as a partial corrective to the bias against children in federal fiscal policy — and it should be expanded in order to provide a complete offset.

Jake Sherman at Politico:

Last Friday, Rep. Paul Ryan looked like President Barack Obama’s new Republican best friend. The president showered praise on everything from his substantive budget proposal to his family during the now-legendary question-and-answer session with House Republicans.

But rather than opening a hopeful new avenue for bipartisanship, the White House and Hill Democrats quickly went to work ripping apart Ryan’s “Roadmap for America’s Future” — which Obama himself said he had read.

Democrats accused the Wisconsin Republican of trying to privatize Social Security, cut taxes for the rich and increase them for the middle class. Medicare would be allowed to “wither on the vine.” Here we go again, Rep. Xavier Becerra (D-Calif.) said Thursday of Ryan’s proposal. On Capitol Hill, Office of Management and Budget Director Peter Orszag deconstructed the plan, saying it would address long-term fiscal problems but in a way that many policymakers might find “objectionable” because it would shift risks and costs onto individuals and their families.

In just a week, Ryan had gone from being seen as the smart conservative whom Obama might take seriously to being seen as the symbol of how Democrats believe Republicans would dismantle the social safety net if the GOP took control of Congress.

Republicans believe the criticism was a setup.

Matthew Continetti at The Weekly Standard:

Key fact: Ryan’s plan preserves the current entitlement system for everyone over the age of 55. The rest of us will see dramatic changes in the structure of Social Security, Medicare, Medicaid, and the tax code–changes the CBO says will solve the long-term budget problem, in ways that increase individual choice and limit government’s scope. If nothing is done, America faces high interest rates, inflation, and economy-crushing tax rates. Is this the future Democrats prefer? After all, they have provided no alternative way to achieve the Roadmap’s outcomes.

Why is the assault on Ryan irresponsible? Because Democrats are pretending that America’s future budget obligations aren’t a serious problem. They have no proposals to limit the growth in entitlements other than phantom reductions in Medicare reimbursement rates, a parodic “spending freeze,” and independent commissions whose recommendations Congress will probably ignore. Democrats clearly hope they can preserve their majorities by demagogic attacks on Ryan. Meanwhile, the crisis approaches.

Obama has no ideas to balance the budget. Ryan has a big one–one that nonpartisan analysts say would work. Thus, he’s now a target.

More Continetti at TWS:

Liberals have seized on the Roadmap in order to say that Republicans want to leave seniors in the cold. Today, the Wisconsin Democratic party organized a conference call, featuring Democratic Rep. Xavier Becerra of California and left-wing economist Dean Baker, devoted entirely to attacking Ryan and his plan. (Ryan participated in a conference call of his own to respond.) Meanwhile, the liberal Talking Points Memo website reports that House Democrats are planning to hold a vote on a resolution condemning the Roadmap and other attempts to introduce personal accounts into Social Security. This week’s blizzard interfered with the Democrats’ plans, however. Now the vote is up in the air.

The critics make two specific charges against Ryan’s plan. One involves revenues. It’s true that the Congressional Budget Office (CBO) did not score the revenue side of the Roadmap. (It would reduce the current six tax brackets to two, replace the corporate income tax with a business consumption tax, and eliminate the Alternative Minimum, dividend, capital gains, and estate taxes.)

But that’s because macro-economic volatility makes it close to impossible for the CBO to estimate revenues in, say, 2070. Instead, the CBO assumed that in the long-term, the Roadmap’s revenues would be similar to the historical average of 19 percent of GDP. You can agree or disagree with that assumption, but it seems fair enough to me — especially considering the growth potential of Ryan’s tax reform.

The second charge against the Roadmap is that “ends Medicare as we know it.” Yes, but only for Americans 55 or younger — these are the same people, in other words, who face a fiscal nightmare as entitlement spending surges in the coming decades and Medicare and Social Security become insolvent.

Expect liberals to focus heavily on Ryan’s “cuts” to Medicare. The Ryan camp’s response is that these are a far cry from the Medicare cuts in the Democratic health care reform. The $500 billion in cuts there would affect current beneficiaries — Ryan’s do not. Moreover, in the Democratic health bill, the cuts to Medicare would be pocketed and used to pay for … another entitlement!

Stephen Spruiell at NRO:

Ryan has put a credible plan on the table. It isn’t perfect, but no plan for controlling the cost growth at the heart of the entitlement problem is going to be uncontroversial. As Ryan put it to me, “If we are going to get serious about controlling costs, then either the individual is going to be in control of their health-care decisions or government is going to be in control.” Putting the individual in control sounds like the no-brainer choice, but in the past voters have expressed a preference for less risk, not more control, when it comes to their post-retirement well-being. Getting Republicans to embrace the politically perilous task of explaining to people that the status quo entails more risk, not less, will be no easy feat.

For now, the GOP leadership wants to proceed along two tracks: Stay away from big, specific reforms until the most dangerous items on the Democrats’ agenda have succumbed to the politics of the election cycle; and, meanwhile, develop a “Contract with America”–style set of positive agenda items on which to run. The plan is to pivot to this second track at some point between now and November. But details about this new contract have not been forthcoming. Will it include a specific plan for getting us out of the debt trap? Or will it eschew these for broad platitudes, so that the focus stays on the Democrats’ unpopular agenda?

The desire to remain vague is understandable as long as there is a threat that Obamacare might pass. And the political dangers of including something like the Ryan plan in the platform for 2010 are clear. But here’s the contrarian case:

The Democrats have already put forward a health-care bill that cuts Medicare, complete with the rationing board that inspired Sarah Palin’s memorable bit of resonant hyperbole. Medicare cuts are on the table, and we know how the other side would do it: price controls that force providers to leave the system and a federal apparatus that thinks it knows better than you or your doctor what treatments you need.

The Ryan alternative — reduced spending, but in voucher form, which allows patients to comparison-shop on quality and price —would likely prove to be effective at controlling costs, balancing out the spending reductions. And if we do nothing, we’ll get Medicare cuts anyway, in the context of a debt crisis that leaves us with no choice but to ration care.

Politicians do not generally consider elections to be good times for serious conversations about the nation’s problems. This year, the nation’s problems are so great that it’s possible the calculus has changed. If they want to appeal to the growing number of Americans whose heads are spinning at the size of Obama’s deficits, Republicans might need to start that conversation. Ryan’s plan provides as good a starting point as any.

Ramesh Ponnuru at The Corner, answering Spruiell:

Many Republicans have complained that President Obama’s agenda is too ambitious: that it attempts to do too many things at once, indeed to transform America. Conservatives have said that health-care reform should take the form of modest steps that reduce our problems with cost, access, and portability rather than an attempt to have Congress rationalize the entire system. Rep. Ryan’s plan is the mirror image of Obama’s agenda. It attempts to move America in a free-market rather than social-democratic direction, and I support that goal; but it is just as transformational, just as ambitious, just as immodest. I don’t think that the public, or the political system, can bear this type of comprehensive change. Nor do I believe the public really wants our politicians to offer a complete 100-year solution to making entitlements solvent; I suspect it would need them to prove first that they are equipped to make headway against the problem before it would trust anything so sweeping.

Rep. Ryan’s plan is a great way to provide the conservative movement with long-term goals, but it is not a practical agenda for incremental progress, and that’s what conservatives need more urgently.

Howard Gleckman at Tax Policy Center:

However, TPC found Ryan’s plan generates much less revenue than he projects. If all taxpayers chose the simplified system, it would produce about 16.8 percent of GDP by 2020, far below the 18.6 percent he figures for that year. If taxpayers chose the system most favorable to their situation, the Ryan plan would produce even less revenue—about 16.6 percent of GDP.

What does that mean in dollars? CBO’s most realistic projection of revenues (assuming  most Bush tax cuts are extended and many middle-class families continue to be exempted from the Alternative Minimum Tax)  figures the existing tax system would raise about $4.2 trillion in 2020. By contrast, Ryan’s plan would generate about $3.7 trillion, or $500 billion less in that year alone.

While TPC didn’t model the Ryan plan beyond 2020, the pattern of revenues it generates suggests it would be decades before it reaches his goal of 19 percent of GDP—very likely sometime after 2040.

Top-bracket taxpayers would overwhelmingly benefit from Ryan’s tax cuts. By 2014 people making in excess of $1 million-a-year would enjoy an average tax cut of more than $600,000. To put it another way, their after-tax income would rise by nearly 30 percent.

By contrast, the average taxpayer making $75,000 or less would pay higher taxes if they  chose Ryan’s two-rate alternative. If they chose the tax plan more favorable to them, they’d do a bit better. For instance, people making between $50,000 and $75,000 would typically get a tax cut of $157 in 2014, while those making between $40,000 and $50,000 would pay $128 more on average.

These estimates are subject to lots of uncertainty. For instance, we assumed Ryan’s 8.5 percent VAT—the new business tax—would generate about 4.3 percent of GDP in revenues. TPC’s Joe Rosenberg, who modeled the Ryan plan, believes that estimate is generous. But since no such tax currently exists, it is hard to know for sure.

One other caveat: TPC did not assume that taxpayers would change their behavior in response to this new tax structure. We know they would, of course, in some ways that would generate additional revenue and in others that would lose revenue. But because these changes are so uncertain, TPC did not include them in our revenue estimates.

As I’ve written before, Ryan deserves kudos for highlighting the nation’s fiscal challenges and putting out a real deficit reduction plan. But it is hard to see how this one adds up.

Paul Ryan:

The Tax Policy Center has completed a 10-year revenue estimate of “A Roadmap for America’s Future” that suggests that the tax reforms would raise slightly less revenue than claimed.  With respect to TPC’s analysis, Congressman Paul Ryan issued the following statement:

“I appreciate the Tax Policy Center’s effort to advance the debate on our need to get a grip on the explosion of spending and put the government on a sustainable path.  Our nation’s fiscal crisis is the result of Washington’s unsustainable spending trajectory, not from a lack of sufficient revenue.

“The tax reforms proposed and the rates specified were designed to maintain approximately our historic levels of revenue as a share of GDP, based on consultation with the Treasury Department and tax experts.  If needed, adjustments can be easily made to the specified rates to hit the revenue targets and maximize economic growth.  While minor tweaks can be made, it is clear that we simply cannot chase our unsustainable growth in spending with ever-higher levels of taxes.  The purpose of the Roadmap is to get spending in line with revenue – not the other way around.

“I look forward to continuing the dialogue with the Tax Policy Center and working with my colleagues in Congress to advance real solutions to our fiscal crisis.”

The following additional points should be considered when interpreting these results:

1) The Tax Policy Center’s revenue analysis of the Roadmap is not an “official” score of this plan.  The Joint Committee on Taxation (JCT) is responsible for providing the official revenue score of legislation before Congress.

2) The Roadmap’s revenue baseline was constructed last year, using CBO’s long-term “alternative fiscal scenario.”  This baseline incorporated an economic forecast from early 2009.  Since that time, economic forecasts have generally been lowered, which would tend to cause lower-than-predicted revenues over the near term.  The Tax Policy Center’s revenue analysis of the Roadmap uses an updated economic forecast from the one originally used to construct the Roadmap revenue baseline.  The different economic assumptions in these baselines likely explain a portion of the lower revenue prediction.

3) The Tax Policy Center analysis covers a 10-year period, but the Roadmap is a long-term plan with spending and revenue projections covering 75 years.  As such, the analysis is not consistent with the long-term horizon of the plan.  Staff originally asked CBO to do a long-term analysis of both the tax and spending provisions in the Roadmap.  However, CBO declined to do a revenue analysis of the tax plan, citing that it did not want to infringe on the traditional jurisdiction of the JCT.  JCT, however, does not have the capability at this time to provide longer-term revenue estimates (i.e. beyond 10 years).  Given these functional constraints for an official analysis, staff relied on its original work with the Treasury Department and other tax experts to formulate a reasonable expected path for long-term revenues given the tax policies in the Roadmap combined with the economic growth projections available at the time.

J.D. Foster at Heritage:

The TPC analysis is a good first step, but critically leaves out some important information on economic effects. By way of analogy, imagine the Congressional Budget Office providing an analysis of health care reform and ignoring any references to the consequences for health care costs or whether the ranks of the uninsured would rise or fall. Policymakers want to know if the legislation would “bend the curve” and that it substantially reduces the ranks of the uninsured. Analysis lacking this information would obviously be woefully incomplete.The TPC has done much the same by ignoring the stronger economy that would follow from enactment of the Ryan plan. As with health care reform and the uninsured, a fundamental motivation for tax reform is to improve economic performance, yet the TPC acknowledges its analysis is essentially static. Revenue forecasts aside, this is a substantial shortcoming of the TPC analysis that will hopefully be remedied in their follow-on work.

Foibles to Resolve
One foible in the TPC analysis is that it combines a rigorous methodology for assessing the revenue effects from the tax on individuals with a back of the envelope approach to estimating tax revenues from the new Business Consumption Tax (BCT) tax contained in the Ryan plan. If TPC does not have the tools for a rigorous assessment of the BCT, then so be it, but TPC should clearly indicate the difference in approaches and admit that its revenue forecast of the BCT carries an unusually high degree of uncertainty.

Another foible in the TPC analysis deals with the treatment of pass-through entities such as sole proprietorships. This is a difficult area and the TPC analysis usefully highlights an issue in the plan its designers may want to revisit. However, TPC arbitrarily assumes small business owners will take all their income in tax-exempt dividends rather than taxable wages. To be sure, this is a troubled area in the existing tax code, but the TPC assumption is most unreasonable, and creates an obvious downward bias in the total revenue estimate.

Finally, the TPC is known for its distributional analysis and it refers to distributional effects in its analysis. But where are the tables?

Philip Klein at The American Spectator:

I’d also add that “TPC did not assume that taxpayers would change their behavior in response to this new tax structure.” Yet in reality, if we had a new simplified tax code that didn’t tax savings or investment, and that eliminated the corporate income tax (while replacing it with a business consumption tax), as the Ryan plan does, it would generate more economic growth. While this economic growth may not make up for all of the revenue that TPC estimates would be lost, there’s good reason to believe, based on economic theory and empirical experience, that at least some portion of that “lost” revenue would be recouped by higher GDP. But the overaching point is that the Ryan plan, as scored by the CBO, shows that there’s a way to balance the long-term budget by keeping taxes at historical levels rather than raising them to levels that would cripple the economy. If critics acknowledge that Ryan’s reforms to Social Security, Medicare, Medicaid, and the health care system can make our nation solvent as long as we maintain historical levels of tax revenue, and the only argument left is over how to maintain historical levels of taxation, then I’d say that’s a major victory for Ryan.

Josh Marshall at TPM:

I guess it wasn’t such a hot idea after all to let Rep. Ryan (R-WI) score his own budget.

This is a story that deserves a lot of attention. For weeks, DC has been fawning over Rep. Paul Ryan’s ‘courageous’ Social Security and Medicare-slashing budget as a brave attempt to deal with mounting federal deficits. But it turns out the CBO didn’t really score his budget as he suggested. He asked him to score it on the basis of assuming his numbers were right.

But now an outside group has actually scored it and it turns out it leaves deficits much bigger than President Obama’s budget plan.

But hey, he’s the toast of Washington even though his numbers are pure fantasy.

Matthew Yglesias:

The CBO score that people are relying on to reach that conclusion doesn’t actually estimate how much revenue Ryan would raise, instead it just takes Ryan’s word for it that his ideas would raise 19 percent of GDP. That’s because the CBO doesn’t score tax issues, that’s done by the Joint Committee on Taxation. But if you look at what Ryan’s ideas would actually do, the truth is rather different:


So that’s the Ryan Ripoff in a nutshell—much lower taxes for the rich, higher taxes for ninety percent of Americans, and no balanced budget. All in the name of balancing the budget!

Matthew Yglesias:

Paul Ryan’s “budget roadmap” has terrified the GOP leadership, but thrilled conservative intellectuals with its calls for sharp cuts in Social Security, Medicare, Medicaid, defense, and all other government programs combined with privatization of Medicare so that a larger share of your diminished benefit goes to for-profit insurance companies. Less widely discussed is the tax aspects of Ryan’s plan. As you would expect from a conservative plan, compared to Barack Obama’s tax ideas Ryan would raise less government revenue. This is why he needs sharp cuts in Social Security, Medicare, Medicaid, defense, and all other government programs combined with privatization of Medicare so that a larger share of your diminished benefit goes to for-profit insurance companies.

The interesting thing, however, is that when the Center for Tax Justice (PDF) ran the numbers, they discovered that this isn’t the kind of tax cut that makes your taxes lower. On the contrary. Most Americans will pay higher taxes under Ryan’s plan than under Obama’s. Only the very richest will pay less.

Paul Ryan:

Yesterday, the Center on Budget and Policy Priorities [CBPP] published an error-riddled attack on what remains the only proposed solution to our nation’s fiscal crisis – “A Roadmap for America’s Future.”  Congressman Paul Ryan put forward this plan (H.R. 4529) to lift our nation’s crushing burden of debt, fulfill the mission of health and retirement security for current and future generations, and makes possible future economic growth and spurs sustained job creation.  The CBPP report is the latest is a series of partisan demagoguery against Ryan and the Roadmap – reminding the American people why bold, serious solutions are so rarely proposed in Congress.

In reviewing the CBPP’s analysis, it is important to keep in mind the lengthy series of factual errors and misleading statements – including the following:

Tax Reform

Claim: CBO was directed not to score revenues for the Roadmap by staff.  (pg. 2 –

Reality:  False. In fact, Congressman Ryan and his staff did ask CBO to analyze both the revenue and spending provisions in the Roadmap.  However, CBO declined to do a revenue analysis of the tax plan, citing that it did not want to infringe on the jurisdiction of the Joint Committee on Taxation (JCT).  The JCT is responsible for providing the official revenue score of legislation before Congress.  JCT, however, does not have the capability at this time to provide longer-term revenue estimates (i.e. beyond 10 years) that Ryan’s long-term solution requires.

Given these functional constraints for an official JCT cost estimate, Ryan relied on its original work with U.S. Treasury Department tax experts to formulate a reasonable expected path for long-term revenues given the tax policies in the Roadmap combined with long-term expectations for economic growth.

Claim: The Roadmap does not bring in the amount of revenue specified to the CBO according to the Tax Policy Center, and therefore it does not reduce the deficit as is claimed. (pg. 2)

Reality:  The Tax Policy Center does not give official revenue estimates, and in their analysis admit to significant uncertainty and unfamiliarity with a proposal of this size and scope. The tax reforms proposed and the rates specified were designed to maintain approximately our historic levels of revenue as a share of GDP, based on consultation with the Treasury Department.

Congressman Ryan stands by his numbers, and of course would be open to adjustments in the specified rates under his tax reforms if in fact TPC’s estimates are closer to reality than Ryan’s estimates.  We clearly cannot chase our unsustainable growth in spending with ever-higher levels of taxes – and the purpose of the Roadmap is to get spending in line with revenue – not the other way around.

Health Security

Claim: The Roadmap imposes no requirement that private insurers actually offer health coverage to Medicare beneficiaries at an affordable price. (pg. 10)

Reality:  Title III, Sec 301 of the Roadmap requires the Department of Health and Human Services to certify plans and publish an annual list of Medicare-approved plans, at least one of which must be targeted to the “special needs of Medicare’s highest cost seniors.”

Claim: The Roadmap provides no specific standards for Medicare benefits. (pg. 10)

Reality:  Title III, Sec 301 of the Roadmap defines qualified health coverage for Medicare.  The Medicare reforms are modeled on the Federal Employees Health Benefit Plans – giving all Americans the health coverage options enjoyed by Members of Congress.

Claim: The Roadmap would eliminate most of Medicaid and the entire SCHIP program. (pg. 10)

Reality: The CBPP described similar provisions in a health care proposal introduced by Democratic Senator Ron Wyden of Oregon (the Wyden-Bennett plan) as “converting Medicaid and SCHIP into effective supplemental wrap-around programs.”  The CBPP provides two dramatically different descriptions of the same policy.  This raises the question on whether CBPP’s analysis is dependent on the party affiliation of a proposal’s author.

Social Security

Claim: The Roadmap privatizes Social Security (title and on pg. 12)

Reality: The Roadmap makes no change for those 55 and older. It provides future retirees with the option to either stay in the traditional government-run system or to enter a system of guaranteed personal accounts. Neither option is privatized. In the personal-accounts system, the accounts are owned by the individual, and managed and overseen by a government board — not a stockbroker or private investment firm. People choosing the reformed system select from a handful of low-risk, government-regulated options — just as Members of Congress and Federal employees do.Claim: The Roadmap’s inclusion of personal accounts requires $4.9 trillion in general revenue transfers, more than the entire Social Security shortfall. (pg. 13)

Reality: The CBO concludes that the Roadmap reforms would result in zero general revenue transfers (pg. 44, Table C-1).  The CBPP analysis either relies on faulty or outdated data – or is simply dishonest.

Claim: CBO did not analyze the cost of the guarantee for personal accounts. CBPP estimates the cost of the guarantee would equal $2.9 trillion on a risk-adjusted basis. (pg. 14)

Reality: False. The Roadmap guarantees that all Americans that choose to take part in the personal account option would get back at minimum what they’ve contributed, adjusted for inflation.  The CBO explicitly modeled the cost of the guarantee for personal accounts, which they included in their cost estimates.  The CBO makes clear that the Roadmap reforms – including the cost of this guarantee – makes Social Security permanently solvent.

Claim: The Ryan plan would cut traditional guaranteed Social Security benefits compared to the benefits now scheduled to be paid. (pg. 12)

Reality: The Roadmap reforms, in fact, increase benefits for low-income individuals, and places Social Security on a sustainable path through common sense reforms.  To be clear, the current trajectory for Social Security would require a 24% cut in benefits or 31% increase in taxes on workers.

Reihan Salam:

If Paul Ryan’s office is right about the CBPP analysis of the Ryan Roadmap, I’ll be very disappointed. CBPP is an institution with a richly-deserved reputation for doing its work with great care.

The CBPP report does provide a very valuable service in its revenue estimates, which seems more plausible than others I’ve seen.

But note that attacks on the Roadmap haven’t primarily been about the revenue estimates, etc. Rather, they’ve centered on the idea that shifting to premium support and the Medicare Advantage model represents a dismantling of the welfare state, as does the use of personal accounts in a public retirement system. This is, in my view, highly misleading, and it’s easy to see why Ryan’s office might feel unfairly maligned.

In my view, the Roadmap is too optimistic on the revenue side and possibly too politically optimistic on the spending side, i.e., if we shift to a defined contribution model rather than a defined benefit, as I think we must, it is very plausible that upward political pressure on the contribution will be higher than the Roadmap assumes, consonant with health inflation overall. To be sure, the hope is that the shift to a defined contribution model will itself encourage a shift in the ecosystem that will help restrain health inflation, but we don’t have any guarantee of that, just as we have guarantee that the projections of how the Senate health bill will “bend the cost curve” in its second decade.

Ross Douthat:

But the bottom line is this: Paul Ryan has attempted, admirably in my view, to sketch out a vision of the welfare state that forestalls the massive tax increases that will be required if we remain on our current fiscal trajectory. But as a matter of policy and politics alike, this vision only make sense (and only stands a chance of appealing to the broader public) if it forestalls tax increases for everybody — and especially for those Americans who stand to have a very difficult time of it, if current trends persist, in the 21st century economy.

Jonathan Chait at TNR:

Ryan’s plan would make the federal tax code regressive, especially at the top, on top of an already-regressive state and local tax base. According to the Tax Policy Center, the richest 1% of all taxpayers, who earn more than 21% of the national income and currently pay about 25% of federal taxes, would pay 13% of federal taxes under Ryan’s plan. (Ryan’s response argues that the corporate income tax he’d eliminate is already born by consumers anyway, a contention most economists including the CBO reject, and even if true would only chip away slightly at the overall critique of his plan’s regressive nature.) Ryan’s tax plan alone would amount to the greatest shift of resources from the non-rich to the rich in the history of the United States, by far.

And that is just the beginning. Ryan would impose a series of dramatic social policy changes that would all push in the same direction. He would blow up the employer-based health care system, pushing workers into an under-regulated individual market. Instead of sharing medical risk with their fellow employees, they’d bear it entirely by themselves, which would be good for the healthy but bad for the sick. He would convert Social Security into primarily a network of individual investment accounts–meaning that some workers would do well and others poorly. And he would convert Medicare into a voucher system, capping the value of each voucher at well below the rate of medical inflation, which would make the elderly bear a far greater share of medical risk.

All these changes push in the same direction. The basic thrust of liberal public policy over the last century is to keep in places the market system but use government to slightly mitigate against risk–the risk of getting sick, the risk of outliving your savings, the risk that you just won’t make much money in the first place. The downside of these policies is that, in order to mitigate the downside risk, you also have to mitigate the upside benefit. If you’re unusually rich, you have to pay a somewhat higher tax rate than most people. If you’re unusually healthy, you have to subsidize medical care for people who aren’t. If you were able to invest well enough to cover your entire retirement, some of your good fortune will be siphoned off to those who weren’t. The rewards for getting rich, or merely being born rich, will remain enormous, just slightly less so than in a completely free market.

Republicans want to eliminate these mitigations of risk. Ryan would retain some bare-bones subsidies for the poorest, but the overwhelming thrust in every way is to liberate the lucky and successful to enjoy their good fortune without burdening them with any responsibility for the welfare of their fellow citizens.

Douthat responds to Chait:

It may not be as redistributionist as some would like (though any kind of means-testing has traditionally been anathema to many liberals), but it’s a long way from “Atlas Shrugged” territory.

Chait would no doubt counter that the voucher system Ryan proposes is still too ungenerous to low-income Americans, because the subsidies the roadmap envisions wouldn’t keep up with medical cost inflation. And he might be right: I suspect it won’t be possible, in the end, to keep the government’s share of G.D.P. as low as Ryan wants to keep it. But that’s a different kind of criticism, one that goes to how much we want to spend on entitlements overall, not whether we want to make them more or less redistributionist. On the latter question, there’s no question where Ryan stands: A big part of his plan for reining in the growth of government is to hack away spending (and implicit spending) on the wealthy, creating a welfare state that does more redistribution than it does right now.

“The rise of Ryan,” Chait concludes, “is a sign that the possibilities for bipartisan cooperation on domestic issues are, at the moment, essentially nil.” Change “rise” to “persistent caricaturing and misrepresentation,” and he and I agree.

EARLIER: The Paul Ryan Week That Was

UPDATE: More Chait

Paul Krugman

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Filed under Economics, Entitlements, Political Figures

The Paul Ryan Week That Was

Ezra Klein interviews Rep. Paul Ryan (R-Wisconsin):

Looking at your proposals for Medicare and Medicaid, I’d characterize your approach as privatizing programs and then capping the government’s contributions to them.

I think you compartmentalize the programs. Don’t do that. I’m trying to take a disjointed series of programs and transform them into a real health care market. You have to look at the other things I do in health care outside of the entitlement programs to get a full sense of what I’m trying to accomplish.

Obviously, you and I have different premises and philosophies, but you wrote a very good piece last year on the tax exclusion that really hit the nail on the head. I believe that by fixing the tax exclusion – which subsidizes the wrong people, by the way, people with jobs who already have health insurance – you’re attacking the root cause of health inflation. That’ll change the health care marketplace itself. Going forward, what I try to replicate in my Medicare and Medicaid proposals is a system that makes the patient the nucleus of the system. That will make a system in which doctors, hospitals and insurers compete against each other for the patient’s benefit.

When you talk about making people more powerful, that brings up some questions about the employer market. In theory, the employer market is big enough to have this effect. It’s big enough to work like a real market. But we both agree it’s not a real market, and even more, that you should end the exclusion. Where we part is on the question of who has the power. I’d say consumers don’t have the power. You’ll give consumers buying power. But I’d look at decisions power. And the real power there lies with doctors. I don’t do anything without a doctor telling me to do it. How does this change the doctor’s behavior?

What I also have in this bill is the health care services commission. It is a system whereby all these stakeholders in health care – providers, doctors, insurers, consumer groups, hospitals, unions – all come up with standard metrics that are standardized that we hold for price and quality and best practices. It’s a lot different than a comparative effectiveness approach. This way, the consumer sees who’s good and who’s bad. I think we need to make a big reach towards transparency.

I had lunch with a bunch of manufacturers yesterday. One gentleman had a 20-minute cataract procedure that cost $14,000. He couldn’t understand why it cost so much. In Milwaukee, the price of the same MRI ranges from $400 to $4,000. So you have a system in place that doesn’t function like a marketplace. You need to inject those market principles and an economic incentive to act on them. Then you have to break the insurance monopolies. That’s why I’m a fan of risk pools to subsidize people with preexisting conditions. I have a Medicare exchange to set up a certified Medicare system so people can select among those plans.

The whole point I’m trying to make here is that we have to understand these programs are growing themselves into extinction. The question, at the end of the day, is who’s going to be in control of this system. Is it the individual or the government? I don’t want the government more in control of the system.

Mark Thompson at The League:

This discussion/interview between Ezra Klein and Rep. Paul Ryan is the best thing I’ve seen in the health care debate in months.  Given Ryan’s position as a GOP point man on health care reform, his comments on Wyden-Bennett ought to give hope that maybe it could get enough GOP support to pass if the Dem leadership were willing to push it.  Regardless, the entire back-and-forth is interesting on both sides.  Even if you disagree with Ryan, I think you’ll also find it refreshing to hear a semi-prominent GOP politician speak knowledgeably and seriously about health care reform.

Ross Douthat:

Last year, Ryan mainly got attention from conservative pundits desperate to prove that their side had ideas as well. Now, though, he’s become the right-wing foil of choice for the Obama administration and liberal bloggers alike. The president went out of his way to mention Ryan’s roadmap during his “question time” with House Republicans last week, calling it “a serious proposal” and advocating a “healthy debate” about its contents. Yesterday, at a hearing before Ryan’s own committee, Peter Orszag likewise deemed the roadmap a “serious proposal,” albeit one whose approach to fiscal stability “many policymakers might find objectionable.” (Orszag had made similar comments during a conference call with reporters on Monday.) And the liberal commentariat has engaged in an extended debate about whether Ryan’s vision is “so honest it’s crazy, or so crazy it’s not serious.” (That line belongs to the Atlantic’s Derek Thompson, whose own conclusion is that the Ryan roadmap amounts to a “dystopian parable” of what our entitlement system might become.)

Liberals are giving Ryan his moment in the sun — or, if you prefer, his moment as a lightning rod — because they think that his small government plan makes big government look good. To a point, they’re probably right. The Ryan plan achieves a balanced budget, in large part, by transforming Medicare into a voucher program, with subsidies for the poor and means-testing for the better-off, and then holding the growth of the voucher below the projected growth in health-care costs. This would not be immediately popular with seniors, to put it mildly: It’s hard to imagine any scenario in which such a voucher could be kept low enough to achieve the kind of extraordinary savings Ryan has in mind (he envisions government spending dropping well below 20 percent of G.D.P.) without inspiring a full-scale revolt from the old-age lobby.

But the size of Ryan’s proposed voucher could be increased, to accommodate political realities, without doing violence to his overall vision of what government should be doing, and where it could be cut. And that vision is more appealing, I think, than many liberals are giving it credit for. What Ryan is proposing, ultimately, is a comprehensive blueprint for a conservative welfare state. A simplified tax code, consisting of a two-bracket income tax with a large standard deduction and a business consumption tax, would pay for a means-tested safety net, and a system of tax credits, risk pools and low-income subsidies would underwrite a free (or, well, somewhat freer) market in health care. In other words, Ryan would balance our books by shifting away from programs that shuffle money around within the middle and upper-middle classes — taking tax dollars with one hand and giving health-insurance deductions, college-tuition credits, home-mortgage deductions, Social Security checks and so forth with the other — and toward programs that tax the majority of Americans to fund means-tested support for the old, the sick, and the poor.

“If conservatives could design their ideal welfare state,” Paul Pierson has written, “it would consist of nothing but means-tested programs.” The Ryan blueprint doesn’t go that far, but it takes serious strides in that direction. Depending on how you fiddle with the tax rates and where you set the subsidies, his overall framework could be the basis for a welfare state that’s at once much smaller than the leviathan we’re headed for at our current rate of spending and more progressive in the way that it distributes spending and tax subsidies. It’s a conservative vision, clearly, and not a liberal one: It shifts much more responsibility to individual and families, overall, than anything most Democrats would be comfortable supporting. But in its broadest outlines, Ryan’s roadmap holds out the possibility of at least some common ground between the limited-government right and the redistributionist left — and long-term solvency into the bargain.

More Thompson at The League on Douthat’s piece:

I know that we’re rapidly reaching overkill on Paul Ryan this week, but I couldn’t let this dose of reality pass, coming as it does from a GOP politician:

At the same time, [Ryan] allowed that “the problem in the minority [is that] you sometimes revert into a posture where ‘I don’t have to do anything controversial, I just can be against that and win by default.’ I’m not interesting in winning by default. And I’m worried that if we get the majority back by default, we’ll screw up again.”

Read the whole thing.  Now, if only there were some way to get Ryan to usurp John Boehner or Eric Cantor…

Tyler Cowen:

I am very interested in voucher plans but here is one source of my unease.  Let’s say you are given a voucher for a health insurance plan and there is no legal requirement that the plan cover Parkinson’s.  Many people buy plans which do not cover Parkinson’s.  Some of those people get Parkinson’s.  Are we pre-committing to ignore the woes of those people?  If so, how exactly do we do this?

I’m not ruling this alternative out (there are plenty of cases where we let people die), I just want to know what are the surrounding institutional structures, what happens if these people show up at emergency rooms, and also whether this wouldn’t, eventually, give rise to a new “second tier” of lower-quality public sector institutions to handle cases not covered by insurance.

That is indeed one possible reform: a UK-like system for those who gamble and lose, with higher quality care for those who buy the more comprehensive or the more balanced policies.  (Maybe lots of people will buy gold-plated care for heart disease and nursing homes but go uncovered for neurological disorders, just to state one possibility.)  You’ll notice, however, a tension.  The better the second-tier public-owned institutions, the more people will gamble with low or unbalanced levels of coverage.  The UK-like system might take over large parts of health care, with a private insurance-based system for some subset of maladies only.

That’s not the end of the world but perhaps it should be evaluated as such.  You might already be thinking that parts of the nursing home and mental health sectors operate this way under the status quo.

There’s also a longer-run question, namely whether the seniors would prefer to capture those resources in the form of social security benefits — cash — and take their chances with the publicly owned institutions to a greater degree.  Maybe yes, maybe no, but those are the issues I think about when it comes to this kind of voucher plan.

Arnold Kling:

In my view, the question is not whether you like vouchers are not. Vouchers are inevitable, given the alternatives. Alternative 1 is to keep what we have, which is an open-ended commitment to reimburse health care providers for all procedures performed on people over the age of 65. That is not feasible–the budget blows up. Alternative 2 is to have government impose strong rationing of medical services to seniors. I think that is an unlikely alternative. It’s not just that I think that government would do a poor job. When it comes down to it, do politicians really want to be put in that position?

So, one way or another, we are going to get to a voucher system, in which seniors ration their own use of medical services. There are many potential problems with it, and it will take a lot of thought and a lot of trial and error to get to a system that balances collective risk-sharing and compassion with individual responsibility and fiscal reality. But in the end, it is the most realistic approach.

Nick Baumann at Mother Jones:

Now, Kevin says the plan is all “smoke and mirrors” because Ryan doesn’t say “how his spending limits will be met.” But using vouchers is actually a great way to set spending limits, if that’s what you want to do. The real problem with Ryan’s plan is that it’s the kind of plan you propose when you don’t actually have to pass a plan. Ross Douthat writes that “even if there were a politically-feasible path toward the kind of overhaul Ryan has in mind, it’s not clear how many Republican politicians would want to take it.” Even Rep. Mike Pence (R-Ind.), who appeared with Ryan at a press conference on Tuesday to discuss the plan, hasn’t embraced its proposals. The Atlantic‘s Derek Thompson has it right: “It’s a shocking budget, and the kind of thing that no party in power would ever have the cojones to propose.” It’s the “gradual extermination” of Medicare, Thompson says.

The biggest problem with Ryan’s plan is that it doesn’t actually control health care costs. It simply shifts the burden of paying for them from the public sector to individuals. Instead of the government going bankrupt trying to pay for medical care, it’ll be individuals. That’s all well and good for the rich, who might be able to pay for their own health care. But people who would have relied on Medicare are going to be out of luck. Medical costs wil rise much faster than the value of the voucher will. Ryan’s plan seems to pretend that the problem isn’t medical costs—it’s just that the government is trying to pay for them

Matthew Yglesias:

I think it’s important to note that taken as a whole this “plan” isn’t actually much of a plan. It’s handling of non-defense, non-entitlement spending, in particular, is just hand-waving. The part that looks like a plan is the part where for people under 55 there’s no Medicare, and instead you get health care voucher whose sum doesn’t keep up with the cost of medicine. Douthat says liberals are talking about this because we “think that his small government plan makes big government look good.”

I wouldn’t put it that way. The point I would make is that Ryan’s plan comes close to clarifying what it is that’s so expensive about the policy status quo—not waste, not inefficiency, not bureaucrats, not illegal immigrants, but the government’s commitment to providing health care to senior citizens. The core element of Ryan’s plan for Medicare isn’t that it involves means-testing or other cuts around the edges, it’s that it just abandons that commitment. Right now if you’re old, and you get sick, and there’s some treatment that will uncontroversially cure you, then doctors come and cure your illness no matter your income. The Ryanverse won’t look like that. Ryan’s vouchers will buy some kind of health insurance for all seniors, but over time that insurance will start looking pretty skimpy relative to prevailing standards of care. Lots of seniors will die preventable deaths due to lack of funds.

In essence, there’s a choice facing the country. We can maintain something like the tax rates that have prevailed for the past 40 years, which is what Ryan does, or else we can maintain something like the policy status quo that’s prevailed for the past 40 years, which is what Ryan doesn’t do. I think it’s pretty much inevitable that the future will involve some “give” on both points—higher taxes and changes to Medicare, in other words. What you mostly hear from the right, though, is the idea that we can make taxes lower and basically leave the country in the same place if we just cut down on earmarks. Ryan’s proposal inches toward conceding that that’s not the case, that the only way to keep taxes low is to radically revise not just the nature of Medicare as a program but the underlying principle that there’s a responsibility to ensure that seniors’ medical needs are taken care of in a comprehensive way.

UPDATE: DiA at The Economist

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