Quick Post: Health Care Costs in Nevada

Sources: If you want to see a comparison of the prices for various medical procedures and treatment in southern Nevada the LVRJ has an article posted.  The full report (Excel format) is here.  The Washington Post also provides a link.  Information regarding the Northeastern Nevada Regional Hospital (Elko) is listed here in the CMS report.  There are no listings shown for Lovelock, Battle Mountain, or Winnemucca.  There are links for Renown (Reno) Carson Tahoe (Carson City) St. Mary’s Regional Medical Center (Reno).

Results: One of the more common items for comparison might be good old fashioned pneumonia,   “194″ in the parlance of the database.  Treatment at St. Mary’s Regional Medical Center will cost an average of $23,022.  The same category at Renown costs $26,254.72.  At Carson Tahoe Hospital the average charges are $26,827.44.  Northern Nevada Medical Center average charges in the #194 category are $33,326.77.  A #194 will cost an average of $29,775.81 in Elko.

Not a lot of this will make much difference to someone in an ambulance — it takes some time to figure that the ‘related links’ on the original page is where you want to go in order to use the search feature to find area hospitals — an unconscious patient won’t care if it takes forever to download and then view the full Excel version, but this really isn’t helpful for “medical expense planning purposes.”

Another point to remember is that these numbers are from CMS-Medicare which only deals with patients 65 and over, and other restricted categories.  Thus, we’re dealing with costs associated with treatment for elderly or disabled patients.

The problem with health care costs — other than the fact that they’re entirely too high –is their opacity, a feature described in this handy Consumer Reports article.   There’s more in the Business Day section of the New York Times as well.

What’s a little fraud among friends? Medicare, Medicaid fraud enforcement

There is a 31 year old Las Vegas, Nevada resident who recently pleaded guilty to two felony counts related to health care fraud. [LVSun] There were 100 prosecutable health care fraud cases in Nevada in 2012, that would be 100 too many.  The frauds come in a variety of manifestations: drug abuse, bogus claims, over-billing, identity theft, and staged “accidents and injuries.”  Some felony-minded souls appear to believe that a little fraud is allowable in order to reap a bit of reward from the burgeoning coffers of the health insurance corporations.  It isn’t.  The situation becomes unconscionable when Medicare and Medicaid are the targets of the fraudulent activities.

Last year saw some particularly egregious cases, such as the following:  “federal authorities announced on May 2 they had arrested 107 health care providers, including doctors and nurses, in several cities and charged them with cheating Medicare out of $452 million.”  [Forbes]

Speaking of Medicaid, in  April 2012 an Inspector General’s report for FY 2011 informed us:

In fiscal year 2011, MFCUs conducted 10,685 Medicaid fraud investigations and saw 824 convictions. MFCUs conducted 4,134 investigations into patient abuse and neglect, including patient funds cases, and saw 406 convictions. [FHC] *MFCU: Medicaid Fraud Control Units

The top five states for Medicaid fraud prosecutions were: California, Texas, New York, Ohio, and Kentucky.  [IG2012]  The report on Medicare wasn’t any more comforting:

Federal officials set up the Medicare Fraud Strike Force in 2007, which visited at random nearly 1,600 businesses in Miami, ground zero for Medicare fraud, that had billed Medicare for durable medical equipment.  Officials found that nearly a third of the businesses, 481, didn’t even exist, yet they had billed Medicare for $237 million over the previous year, according to National Public Radio. [Forbes]

Medicare and Medicaid aren’t functions of those ravenous profit centers otherwise known as the health care insurance corporations, thus even the dubious rationalization doesn’t apply.  That hasn’t stopped the fraudsters:

“Since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 825 individuals who collectively have falsely billed the Medicare program for more than $2 billion .  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”  [DoJ]

That’s the bad news, there is some good news to report on the subject of Medicare fraud:

“The Obama Administration has made important strides in reducing fraud, waste, and abuse across the government. Over the last two years, the Centers for Medicare & Medicaid Services (CMS) has implemented powerful new anti-fraud tools and designed and implemented large-scale, innovative improvements to our Medicare program integrity strategy to shift beyond a “pay and chase” approach to preventing fraud before it happens. CMS is also collaborating more with the private sector, law enforcement, and our state partners to harness best practices in our fight against health care fraud.

These efforts are paying off. In FY 2012, the government recovered a historic $4.2 billion and has returned a record-breaking $14.9 billion dollars to taxpayers between 2009 and 2012, up from $6.7 billion dollars over the prior four years.”  [DHHS]

We could happily note the improvement in Medicare fraud enforcement efforts and the returns that accrue to American taxpayers, BUT the House Republicans — in the “interest” of saving taxpayer dollars (and not raising taxes on millionaires and billionaires) — offer their “serious” budget proposal which transforms Medicare into a voucher/coupon program in which the Every Man For Himself policy extends into the health care insurance domain.

What could possible go wrong? Let us count the ways.  (1) Nothing in the GOP or Ryan Plan puts the brakes on the increases in health care costs — only in the individual’s remuneration for health care insurance costs.  There is no inducement in this proposal to reduce either the costs or the urge to game the system because of the mounting out of pocket costs.  (2) It is assumed that if Medicare as we know it is mutated into a privatized system that the fraud enforcement costs will be reduced at the federal level, which totally ignores the expenses incurred at the state levels wherein much of the anti-fraud activities take place.  (3) We cannot assume that the expenses involved in prosecuting national cases of interstate health care insurance fraud will be magically disappear by merely transferring the locus of funding — the Department of Justice might still exercise its authority to prosecute such cases — of course at public expense for the benefit of the health care insurance industry.

What we should be considering, in our own economic self interest, is the enhancement of funding for Medicaid Fraud Control Units, and the efforts to increase the effectiveness of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint project of the Department of Health and Human Services and the Department of Justice.

Madness in March

** Nevada’s own Sin City Siren has an outstanding Bracket, created especially for those who are interested in seeing how state and localities across this country are competing to see which can have the most regressive, reactionary, and repugnant statutes limiting the rights of women to make their own decisions (as in Small Government?).   Do click over and copy the brackets, and then share them with family and friends!

** The Nevada Progressive updates information about the continuing Soap Operas which are the lives of former Mega-Lobbyist Harvey Whittemore and the ever charming but perhaps a shade duplicitous Heidi Gansert.  Steve Sebelius added another page to the continuing drama that is Assemblyman Steven Brooks (D-NLV).  For the video version, see Ralston Reports.

*** The Nevada Rural Democratic Caucus reprints a good piece from Jim Hightower on how the GOP wants to transform Medicare into “We Don’t Care.”  For a refresher course in how Republicans have the wrong end of the stick on the Medicare issue, consult this March 10th post in Perrspectives:  In Five Charts. Congresswoman Michele Bachmann (R-LoonyTunes) should get more exercise dodging questions from reporters about how she substantiates her claims on the floor of the House that the Affordable Care Act “kills people.” [ThinkProg]  For those in the fact based universe:

While the main coverage expansion provisions will go into effect in 2014, the ACA has so far saved seniors over $6 billion on prescription drugs, reduced administrative overhead, deterred private insurers from requesting double digit premium increases, kept millions of young people on their parents’ health care plans, and provided 34.1 million people with Medicare preventive services without additional cost-sharing. [ThinkProg]

*** And, if we thought the continuing Management by Crisis thing was over in House Republican quarters — here comes Speaker John Boehner with the Demand, (Demand I say), that every dollar increase in the debt ceiling (The Debt Ceiling I say) will “require a dollar in spending cuts.”  Another day, another manufactured crisis.   Before one gets too hysterical about The Great Big Debt Crisis — read “Paul Ryan and Eric Cantor Are Trying To Con You Into Paying Their Debts. “

*** Things we could be talking about if it weren’t for the manufactured debt “crisis” compliments of the GOP majority in the House of Representatives:

(1) The report that nearly two out of three hate crimes committed in this country goes unreported. [The Grio]

(2) The filibuster of Richard Cordray’s nomination to head the Consumer Financial Protection Bureau. [TPM]  Of District Court nominee Elissa Cadish, who withdrew her nomination after Senator Dean Heller (R-NRA and Shooting Sports Foundation) questioned her bona fides on the unrestricted and unlimited right to pack shoulder firing missile launchers as prescribed in the 2nd Amendment. [Bloomberg] Or, the filibuster of Appeals Court nominee Caitlin Halligan, who had the temerity to do her job and participate in a lawsuit of behalf of the City of New York in a lawsuit again gun manufacturers. [Bloomberg]  Or the hold placed on the nomination of Scott C. Doney, to head the NOAA — Mr. Doney relinquished his nomination. [NOLA] Or, Senator Roy Blunt (R-MO, and Tobacco Industry) placing a hold on the nomination of Gina McCarthy to head the EPA, because he has a problem with levee plans, which is interesting because McCarthy’s area of expertise is “fuel efficiency” and clean air administration. [LAT]  Here’s the list of nominations pending in Senate Committees.   Two days ago Bloomberg News oped asked “Are Republicans  Abusing the Filibuster?”  the answer still looks like YES.

***  Perhaps we could even be paying more attention to the latest report card release from the American Society of Civil Engineers on our nation’s infrastructure — hey! we’re up to a D+ now.  But, why worry — Nevada only needs about $2.7 billion to maintain and upgrade our drinking water delivery systems, another $2.9 billion to deal with our sewage; while we have 149 high hazard dams, and 40 structurally deficient bridges.  [ASCE]  Maybe we’re waiting for our kids and grandkids to pick up the bills?

A Shot In the Sequester Battle: GAO Report on BRAC Implementation and Implications for Civilian Cost Cutting

Something for the Nevada Congressional delegation to consider while pounding away on the Sequester question is a report today from the GAO concerning the Cost of Base Realignment Actions (COBRA) by the U.S. Department of Defense.  If the intention is that our military operations become more fiscally rational, and our military system more structurally efficient — we have a way to go.

Our first clue is that when a report shifts from a complimentary tone concerning Department of Defense efforts at fiscal responsibility to the next sentence beginning with the word “however,” something is amiss.  For example, after commending the DoD’s projections about costs of base realignments, here comes the punch line:

“However, DOD’s process for providing the BRAC Commission with cost and savings estimates was hindered in many cases by underestimating recommendation specific requirements that were entered into the COBRA model. For example, military construction costs for BRAC 2005 increased from $13.2 billion estimated by the BRAC Commission in 2005 to $24.5 billion after implementation ended in 2011.”

We’re all familiar with cost overruns in construction projects, and with under-estimations of expenditures, but a +93.18% level is much more difficult to explain.   There’s (a) something wrong with the model? (b) something wrong with the estimates? or (c) something wrong with both of these inputs?  The GAO Report explains:

“GAO found that other cost estimates increased because requirements were initially understated or not identified as inputs into COBRA. DOD also did not fully anticipate information technology requirements for many recommendations. For example, the initial information technology cost estimate for one recommendation was nearly $31 million, but implementation costs increased to over $190 million once those requirements were better defined.”

In short, the difference between the idea and the implementation proved to be far more expensive than initially estimated.   Moreover, the methods used to guide its projections didn’t fill the bill:

“DOD was unable to always document the methodology used to estimate savings from reducing military personnel positions. Therefore, to increase the fidelity of the initial cost estimates that DOD submits with its recommendations to the BRAC Commission for a future BRAC round, GAO is recommending that the Office of the Secretary of Defense (OSD) improve the process for identifying and estimating the cost of requirements for military construction and information technology and update the guidance on documenting how it identifies military personnel position-elimination savings.”

Or, not to put too fine a point to it, the U.S. military (a) didn’t do a very good job of estimating the costs associated with construction and IT demands, and (b) needs to figure out a way to substantiate its estimates of the results of eliminating redundant or unnecessary positions.   The GAO provides a helpful example:

“By implementing BRAC 2005, DOD closed 24 major bases, realigned 24 major bases, eliminated about 12,000 civilian positions, and achieved estimated net annual recurring savings of $3.8 billion; however, the department cannot provide documentation to show to what extent it reduced plant replacement value or vacated leased space as it reported in May 2005 that it intended to do.” (emphasis added)

And, when the documentation is faulty it is difficult, if not nearly impossible to determine if the actions taken are producing any real savings to U.S. taxpayers.   Part of the problem associated with generating cost savings in the Department of Defense may well be related to the priority given to the implementation of the BRAC recommendations themselves.

“Although reductions in excess infrastructure to generate cost savings remained an important goal for DOD, the extent and timing of potential costs and savings, including the number of years it would take for the savings to exceed costs, was included as “other” or secondary criteria. As a result, many BRAC recommendations were not expected to produce 20-year net savings. Also, the BRAC Commission added contingency clauses to some recommendations, which allowed some outcomes to be defined by events or decisions that could occur after Congress could have prevented the BRAC recommendations from becoming binding, if it so chose. Hence, Congress had limited visibility into the potential cost of those recommendations.”

If the Department is realigning for strategic purposes then it might be logical to conclude that savings aren’t the main priority.  However, if the Department is called upon to further reduce costs as the result of sequestration, a Grand Bargain, or other Congressional maneuvers, then Congress definitely needs more “visibility” into the process.

One of the more helpful components of GAO reports is that they don’t merely criticize, but also offer recommendations for improvement.  In this case there are three:

“GAO is suggesting several matters for Congress to consider for amending the BRAC statute if it decides to authorize future BRAC rounds. First, if cost savings are to be a goal of any future BRAC round, Congress could elevate the priority DOD and the BRAC Commission give to potential costs and savings as a selection criterion for making BRAC recommendations. Second, Congress could consider requiring OSD to formally establish targets that the department expects to achieve from a future BRAC process and require OSD to propose selection criteria as necessary to help achieve those targets. Finally, Congress could consider whether to limit or prohibit the BRAC Commission from adding a contingent element to any BRAC recommendation and, if it is to be permitted, under what conditions.”

The first makes perfect sense.  If, in fact, cost savings and not strategic considerations are the priority then Congress should say so.  Secondly, more thought should be given to forming implementation targets and setting BRAC priorities.  Finally, if “contingent elements” are to be added we need more oversight into what will be allowable, and under what conditions it would be permitted.

All of this argues against the Meat Axe Approach to the reduction of federal spending.   There may very well be a message here which could be applicable to other government agencies.

There are at least two reasons why agencies, military or civilian, might adjust their operations: Strategic (providing better or more efficient service), and Monetary (getting by with less expenditures of public funds.)

The first asks the question how can we better and more efficiently implement our core mission to serve the people of the United States, while the second simply asks what can we cut in order to save money.  If we extrapolate the military situation into civilian terms then we can more readily see the implications of cost cutting for its own sake.

At this point it would be well to consider the nature of budget cutting and the rationales offered therefore.   Budgets can be cut to save money, but not so much that the agency cannot perform its central mission, or budgets can be axed to prevent an agency from conducting its basic business.   In this context, the House Republicans will be re-introducing the Ryan Budget 2.0 (or whatever version count we’ve now achieved).

“The plan by the GOP vice-presidential nominee is expected to lock in cuts to agency budgets, and curb the future growth of benefit programs like food stamps and Medicaid and contain a controversial proposal to turn Medicare into a voucher-like program for seniors younger than 55. Ryan said it’ll take relatively small additional spending cuts beyond those proposed last year to demonstrate balance.” [USAToday]

What if we were to apply the GAO recommendations on BRAC implementation to the civilian side of the budget proposed by the House Republicans (or, for that matter, to the budget amendments being compiled on the Senate side)?

The Medicare Question

Are the House Republicans proposing to voucher-ize the Medicare program into a coupon-care operation because they want to save money, or because they want to revert to a privatized system of health insurance acquisition for the elderly?  In GAO/BRAC terms — is the proposal strategic or savings oriented?  The Tea Party/GOP response could well be “both.”  Adopting their ideology assumes that privatizing the system would in theory save money and secure the basic provision of health care for elderly Americans in a “free market.”   This is an essentially locular position.

The main cavity is that health care markets in the United States aren’t working like commodity markets, never have and never can.  “Health” is not a commodity.  People don’t make economic choices about the purchase of health care services.    A “strategic” view would incorporate this concept.  As there is no logical way to argue that U.S. military presence in Korea is “unessential” at the moment — there is no way to validly argue that the access to health care service can be fobbed off into a market which commodifies the un-commodifyable.

The Oversight Question

As the GAO recommended more Congressional visibility in the issues raised by BRAC policies, we might want more transparency in the strategies asserted by Congress in others, civilian, functions.  One example might be the CFPB. The Consumer Financial Protection Bureau has never been popular with Republicans, who seek to replace it with a “committee” structure beholden to bankers and Wall Street investment houses.   Again, we come to the question of whether the proposed cuts are “strategic” or “cost saving” in nature.

Initial estimate projected  it would cost about $143 million to get the agency up and running, and Republicans immediately revised this downward in 2011 to $80 million. [HuffPo]  Budgeting for an agency in “creation mode” offers a point of comparison with Defense Department efforts to “re-create” some of its functions and their implementation.   The CFPB needs to hire employees (as the DoD needs to recruit personnel compatible with its mission) and to “build out core supervision and enforcement capability.” [BIB CFPB pdf] The FY 2013 Administration Budget calls for $261,119,000 for enforcement and supervision (up 22% from FY 2012) and $126,025,000 for consumer engagement and responses to consumer concerns about financial products being marketed to them. (Up 49% from FY 2012)

A suggested reduction in the FY 2013 budget for the practical elements (supervision of financial services and engagement of consumers in understanding financial products and services) means that someone is making a “strategic” decision about how resources are to be allocated for these basic functions.  Do we, for example, put “bases” in all major U.S. cities, or do we attempt to function with a single centralized base of operations in Washington, D.C? Do we appropriate funds for minimal staffing in all “bases,” or do we strive for moderate staffing levels in some, minimal in others?

The Final Question

Removing for the moment those ideological radicals who really want no government and no regulation of major economic or environmental factors (physical or social) in our lives (save for the defense contractors in their Congressional districts?) it’s reasonable to assert that when we say “smaller government” we say we want more efficient government.  If this is truly the object then why not consider applying the GAO recommendations to the budget conversation?

We want the best cost projection models possible. Further, we want to know if the estimations are predicated on cost savings or strategic considerations.  We deserve to know the Congressional priorities in budget allocations, and finally we should be told — in terms as clear as possible — if changes are to be made who made them and why.

Nevada and the Silli-Quester in the Mythical Land of Moonshine

Happy News: “Annual adjustments to Nevada’s labor market show the state’s unemployment rate for 2012 dropped from a preliminary estimate of 11.6 percent to 11.1 percent and that Nevada gained 18,100 in employment over the year, up from the previous estimate of 9,300.” [DETR pdf] A graph of Nevada unemployment rates for the past five years shows:

The current rate is reported as 10.2%.   The Nevada YOY employment growth rate is 1.7%. [DETR]  Any improvement is acceptable, but more would obviously be better.  Unemployed workers curtail spending — a drag on local retail economies, and unemployed workers who curtail spending pay less in sales taxes.   The improvement in employment figures during 2012 showed up in the state sales tax information:

“Statewide taxable sales for December 2012 of $4,343,847,392 represents a 3.0% increase over December 2011 and a 5.1% increase for the fiscal year.  The largest increases in statewide taxable sales were realized by Food Services and Drinking Places, up 5.4%; Specialty Trade Contractors, up 60.9%; Motor Vehicle and Parts Dealers, up 10.0%; Clothing and Clothing Accessories Stores, up 5.9%; and Telecommunications, up 38.2%.”  [NDT Dec 2012]

Now we can get to the philosophical part.  A state which reduces its spending not only reduces the level of service to its citizens, but it also constrains the aggregate demand in its own economy.   As of 2010 Nevada ranked 32nd in the nation as categorized by state GDP ($127.5M).  The budget proposed by Governor Sandoval restores some hiring, reduces furloughs, and addresses some infrastructure needs. [pdf download]  We’ll be paying for this with a relatively regressive tax structure.

(Full Size Chart click here (pdf)]

Operating grants are funds from federal sources.  The “other” taxes are the Modified Business Tax, insurance taxes, and property related taxation.  We are “pleased” to promote ourselves as a state without personal or corporation income taxation, so we are stuck with taxing sales, property, gaming, and business operations.  All dependent in one way or another on consumer spending.  Be ye rich or poor you’ll spend the same amount for sales tax on a box of bolts.  Further, we’re going to jeopardize our fragile recovery by adopting Austerity Economics at the federal level.

Here comes the Silli-quester part of the puzzle.  Note the 8.09% drop in federal spending in Nevada since the last budget in the previous chart.  Now, imagine we’re going to use a meat axe to cut this level back even further.  The cuts won’t all come at once, but if the sequestration of funds continues there will be reductions in spending for Title I schools, for nutrition programs, and for other government services.   States with less regressive taxation structures might be able to absorb the reductions with less pain, but Nevada doesn’t have even that minimal luxury.   Its revenues are closely tied to the employment levels both domestically and nationwide.

At this point we need to deal with some conservative mythology which underpins the current demands for federal spending reductions.

#1. The first thing required to create a debt or deficit crisis (and these two things are not synonymous) is to convince the populace we have The Very Worst Debt Crisis Ever In The History Of Humanity.  We don’t.

“In fact, we’ve been here before.  In 2009, the federal budget deficit was a whopping 10.1% of the American economy, and back in 1943, in the midst of World War II, it was three times that — 30.3%. This fiscal year the deficit will total around 7.6%. Yes, that is big. But in the Congressional Budget Office’s grimmest projections, that figure will fall to 6.3% next year, and 5.8% in fiscal 2014. In 1983, under President Reagan, the deficit hit 6% of the economy, and by 1998, that had turned into a surplus. So, while projected deficits remain large, they’re neither historically unprecedented nor insurmountable.”  [Salon]

Notice, that if we do nothing — the deficit will still decline from 7.6% of GDP to 5.8% in FY 2014.  And, it’s hardly the Greatest Worst Thing That’s Ever Happened.   It is, however, the only peg on which the GOP controlled House of Representatives can attempt a bit of hostage taking thanks to the provisions of Article I, Section 7 of our Constitution. “All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other bills.”

#2. ” Our spending, our spending I say, is Out of Control.” Not so much.  Consider this often published chart from Forbes Magazine on federal spending by recent administrations:

So, when does 1.4% annualized growth in spending become “out of control” compared to the first Reagan term 8.7%? Or, to the two Bush II administrations rates of 7.3% and 8.1%?

#3. “But, but, but…we’re saddling our grandchildren with DEBT!”  Before the hysteria becomes too cloying, it’s well to remember that federal debt isn’t anything like household debt.  Unless, of course, your household can issue Treasury Bills and Notes which are universally recognized as safe investments.  You and I have creditors.  The United States of America has investors.   And, better still, some of our grandchildren — the ones on whom we have bestowed gifts of Savings Bonds — are some of those investors.  In fact, as of 2011 the Federal Reserve held about 16% of our public debt, state and local governments held about 6%, and domestic and private investors owned 32%. [GAO]

#4. “But, but, but…we’re literally getting owned by China!”  Yes, foreign investors hold the remaining 46% of our public debt, but they have reasons for that which don’t sound like Gloom and Doom.  For example, we are the world’s reserve currency.  The good old U.S. dollar was used in about 80% of all financial transactions in global foreign exchange markets as of April 2011.  That being the case, we can borrow on the Full Faith and Credit of the U.S. to make up for gaps in our own savings rates.

“…an economy open to international trade and investment, such as the United States, essentially can borrow the surplus of savings of other countries to finance more investment than U.S. national saving would permit. The flow of capital into the United States has gone into a variety of assets, including Treasury securities, corporate securities, and direct investment. [GAO]

Further, true to the don’t put all the eggs in one basket rule for investors, our foreign counterparts aren’t pouring all their investment into our public debt, as the following fancy graph from the GAO report demonstrates:

#5. “We have to reform entitlement programs or we’ll never get out of this No Good Horrible Debt.”   Not. So. Fast.   Now, we’re getting down to the core  part of the conservative strategy.  “Reform” in that context means Privatize.   Let’s dispense with the Social Security part of the issue first.

“…today the Social Security trust funds hold $2.8 trillion in government bonds. These reserves have been built up with the contributions that workers and employers have paid into the system for the dedicated purpose of paying Social Security benefits. These funds are held in legally established trusts and cannot be used for any purpose other than paying benefits. According to the latest Trustees’ report, Social Security can pay full benefits through 2033, and roughly 75 percent of benefits beyond that time.”  [AARP]

Those bonds are non-commercial, highest priority Treasuries not available to Wall Street Bettors and Traders.  Social Security adds not one thin dime to our national debt, and therefore, as President Ronald Reagan once stated, should NOT be part of any “deficit reform” package. [PoliticusUSA] If we’d like to make the system even more secure there’s always the option of raising the cap on earnings subject to Social Security. [EPI]

“But, but, but… there’s nothing but IOU’s in the Social Security Trust Funds.”  I’d like to get some of those IOUs… but as a private investor I can’t.  They are privileged funding sources for the Social Security Administration and I can’t play with them in the equities markets.   The SSA phrases this more elegantly.

“There can be no question that the Federal old-age and survivors insurance and disability insurance trust funds and the Board of Trustees of those funds were created by and are subject to laws enacted by the Congress of the United States. To that extent, they are a part of the United States Government. These funds, however, are entities separate from and independent of the rest of the Federal Government. The income and disbursements of the funds are not included in the administrative budget of the Government. Instead, the President reports their operations separately in his Budget Message to Congress and the Board of Trustees is required to submit to Congress annually a report on the operations and status of the funds. The debt obligations held by the trust funds are shown in Treasury reports as part of the Federal debt, and interest payments on these obligations are regularly made by the Treasury to the trust funds. They are redeemed in cash by the Treasury whenever necessary for disbursements by these funds. (emphasis added) [SSA]

#6. “But, but, but, Medicare is going broke!“   Medicare does have problems, the worst of which are rising costs of health care in the United States.  To wit, the conservatives offer the following canard — Obamacare endangers Medicare.  No, actually it doesn’t.   If by “endangerment” one means that the Affordable Care Act provisions have saved the popular program about $6 billion in drug costs — then let’s have more endangerment, please. [HuffPo]

And if by endangerment, one means that the provisions of the Affordable Care Act are beginning to bend the curve on rising health care costs, then let’s have more:

“Douglas Elmendorf, Director of the CBO, noted that while much of the savings are the result of a loss of wealth due to the recession. But, for the first time, Elmendorf was willing to say that a ‘significant part’ of the savings are the result of structural change in how healthcare is now being delivered.” [Forbes]

We might also want to consider allowing the Department of Health and Human Services negotiate for Medicare supported prescription drugs?  Or, we could pause a moment from the current hysteria, and allow some of the provisions of the ACA to kick in, and support the efforts of the Administration to curb Medicare fraud and abuse.

“According to the Congressional Budget Office, this health-reform legislation will reduce budget deficits by $119 billion between now and 2019.  And only around 1% of American households will end up paying a penalty for lacking health insurance.

While the Affordable Care Act is hardly a panacea for the many problems in U.S. health care, it does at least start to address the pressing issue of rising costs — and it incorporates some of the best wisdom on how to do so. Health-policy experts have explored phasing out the fee-for-service payment system — in which doctors are paid for each test and procedure they perform — in favor of something akin to pay-for-performance. This transition would reward medical professionals for delivering more effective, coordinated, and efficient care — and save a lot of money by reducing waste.” [Salon]

A reduction in the deficit of $119 billion by 2019 sounds like we’re headed in the right direction — without privatization or voucherization or whatever the popular conservative term of the day might be.

Moonshine

In the dark world of conservative TeaParty GOP thinking, Nevada and 49 other states will have to absorb a reduction in federal spending — thus crimping their already strained budgets — because of a debt crisis that really isn’t critical, deficits which are NOT out of control but are actually declining, and social safety net programs which are (a) not adding anything to the Hideous Heinous Debt, or (b) being reformed without resorting to radical prescriptions like privatization or voucherization.

The current caterwauling by the GOP about the deficit or the debt is part and parcel of the only way they can obstruct the Obama Administration — using the appropriation  powers granted unto them in the House of Representatives.  They will hold the national economy hostage in their own moonlit nightmare of irrelevance, clutching the only cudgel at hand.

Leverage?

Some members of the chatterati may have taken Archimedes a bit too literally: “Give me a place to stand and with a lever I will move the whole world.”  Often too much emphasis is placed on the fulcrum and not quite enough on the part about the ancient mathematician needing a place to stand.  The word of the week sounds like “leverage” in Washington, D.C. Who has it? Who doesn’t? And, so what? The So What part isn’t all that interesting.

Although the pundit class is thoroughly fascinated at the moment with how much leverage the President and the Republicans may each possess after the self inflicted Fiscal Cliff fiasco, most of their comments can be categorized as post game “analysis” of the variety which is more commonly associated with post game “analysis” of a sporting event.  It’s never quite enough to declare one team or another victorious based on the scoreboard numbers — “we” have to “know” why one team won and the other lost.  In reality, we really don’t.

So, in the parlance of political reporters emulating the post game questions of their sports writer colleagues — can the President win the next game? A game of Debt Ceiling already scheduled by the Republicans and given official status by the post game analysts.

It depends on where you stand.

There are two major elements of the federal debt that deserve serious scrutiny.  First, during the Bush Administration’s policy of credit card conservatism we racked up two wars (off the budget and supported by supplemental appropriations), a major addition to the Medicare program (Medicare Part D, also unpaid for) and one major Recession.  All were guaranteed to increase the national debt.  The first two increased spending and the latter cut into the tax base.

Secondly, we do need to reduce the national debt, but how we do it is important.  This is one of those occasions which calls for a scalpel, not a meat axe.

It is also important to stand on firm ground.

A few facts are in order.  The first part of standing on terra firma before attempting to leverage anything is to dismiss some media mythology about trends in the national budget deficits.  The following chart should provide an illustration of the inaccuracy of the Now That A Democrat Is In The White House The Deficit Is Out Of Control Myth:

The chart illustrates what happens when two wars, one major Medicare addition, and a nasty Recession contribute to national spending. It also shows the effect of Obama Administration policies mentioned earlier, a point at which we should note that the Bush Administration toted up about $5.1 trillion in expenses, while as of last June the Obama Administration’s policies resulted in about $983 billion in spending.

In short, if we are really serious about deficit reduction then we need to eschew the policies that got us into this mess in the first instance, i.e. unnecessary tax cuts, and two very expensive wars.

OK, so if we don’t get involved in more military operations, we resist the myth that tax cuts somehow cause economic growth (which they never have), and we regulate our financial markets more effectively in order to mitigate the excessive enthusiasm of traders who created the last great mess, then where do we cut?

It’s time for another reality check.

Here’s where the money goes:

Since Social Security is a self-funding program, which as President Reagan famously cautioned in 1984 doesn’t add to the federal deficit (video), we can take that 20% out of the equation right now.  Anyone who is truly serious about the single issue of Social Security solvency should be clamoring to increase the cap on earnings liable to the payroll tax, currently set at a measly $110,000. We also need to remove the mandatory spending from the discussion because what we cut will have to be from discretionary spending.

The FY 2013 budget calls for spending $666.2 billion by the Department of Defense.  Another $80.6 billion is allocated to the Department of Health and Human Services (Medicare, Medicaid), and the Department of Education (Pell Grants, Title I, student loan guarantees, etc.) is scheduled to spend or entail $67.7 billion while the 4th largest chunk of the budget goes to the Veterans Administration which has $60.4 billion in scheduled spending.

In short, we’ve budgeted for $1,510 billion in discretionary spending in FY 2013.  The Department of Defense is on track to receive 44.12% of ALL the discretionary spending in the national budget.   Yet calls to cut military spending brings on the wailing of voices, the gnashing of teeth, and the rending of garments about “making us less safe” in an uncertain world.  In spite of all the wailing, gnashing, and rending — that one single department consumes 44.12% of the entire pot of discretionary spending is something we ought to be discussing.

Medicare is another matter.  IF we are truly serious about deficit reduction then we need to have more than the simplistic discourse already in evidence.  There is a false choice being presented, as though the only options are to privatize the Medicare program (give Granny a coupon and let her go out and find her own insurance) or to create a Single Payer national health care system.  While I wouldn’t be sorry to see a Single Payer system, this is an argument for another day.  The point is that there are options between these two proposals.

The central focus point should be that nothing which doesn’t have a bearing on health care cost containment is going to make much difference in the spending levels.   Privatization doesn’t address the cost containment issue, and a single payer system without cost containment elements is merely a recipe for increased expenses.

Now that the campaign season is over we can dismiss the Republican rhetoric about “Obama cut $716 out of Medicare,” and consign to the dust bin the notion that the Affordable Care Act somehow impinges on Medicare benefits.  Business Week explains:

From 2010 to 2019, Obamacare trims payments to providers by $196 billion. They agreed to take a cut because they will get so many new patients, thanks to the individual mandate. Another $210 billion will be generated by raising Medicare taxes on the wealthy (that’s households earning more than $250,000). Another $145 billion comes from phasing out overpayments to Medicare Advantage. About 25 percent of seniors use the program—in which private plans compete for Medicare dollars—instead of traditional fee-for-service Medicare. Under Obamacare, the government has to keep Medicare Advantage costs in line with those of traditional Medicare. More savings come from streamlining administrative costs.

Thus, if we trim payments to providers, phase out over-payments for profitable private health care policies, and put some reins on administrative costs we’ll find about $716 billion in savings for the Medicare program.  Other cost savings may also be the result of more efficient record keeping, especially in the pharmaceutical segment.  Anyone who’s dealt with the medical issues of an elderly parent knows of multiple prescriptions written from several physicians who may or may not consult with one another.  The result can be as minimal as two (or three) prescriptions for the same medication at different dosages; or, as detrimental as two prescription medications which should not be taken together.

However, the bottom line is still the bottom line — unless and until we are ready to discuss health care cost containment we’ll be immersed in the rhetoric of low bludgeon and high dudgeon without much result.

When we discuss funding for the Department of Education it’s important to note that the FY 2013 discretionary requests yield an official number, $69.8 billion — if we include Pell Grants.  Pell Grants constitute about $22.8 billion of the total, a decrease from $23.8 billion in the FY 2011 budget.  Without the Pell Grants the total discretionary spending in the FY 2013 budget is $47 billion.   There are two constituencies with major stakes in arguing about these funds.

Parents.  Unless one is amenable to the elitist argument that kids should have access to only the level of education their parents can afford (which makes social mobility a moot point) parents are going to need assistance paying for their children’s education.  Whether we like it or no, education is a labor intensive business.  We can trim educational spending by continuing what the Obama Administration has started — saving approximately $61 billion by cutting the banks out of their role as middlemen in the student loan program [NYT]– but it really doesn’t do to cut efforts to educate our young people.  It also doesn’t make economic sense since a college degree is worth money in the marketplace.

Local school districts.  Cash strapped and semi-starved local school districts rely on funds for Special Education programs, Title I services, School Lunch programs, to make up budget shortfalls.  While the level of federal involvement at the local level isn’t all that much it does cover expenses local districts would be hard pressed to meet were the monies cut.

Hostage Taking

How we fund, or de-fund, these major activities depends on who is being held hostage and by whom.   Did the President allow the Republicans to gain “leverage” by taking the tax rates off the table in the next Congressionally manufactured debt ceiling debacle. Or, are we going to change hostages?

Will the Republican stance be that all other programs must be cut in order to spare the 44.12% consumed by the Department of Defense?

Will the GOP position be that Medicare must be privatized in order to practice “sound fiscal responsibility?”

Will the GOP position be that Social Security must be “reformed” (read cut) in the interest of “fiscal accountability and deficit reduction” even though it adds not a nickel to the federal debt?

Will the Administration simply say — You manufactured this debt ceiling “crisis” live with it?  Remembering that if the national credit rating is downgraded this will likely mean that the cost of borrowing (yields paid to those who invest in Treasuries) will go up, exacerbating the problem rather than addressing it.

Will the point be made to the American people that while the credit card analogy is handy, the United States of America doesn’t have creditors it has investors.  Our federal government accesses funds by issuing bonds.   And WE own most of those bonds.

Here’s the little chart again:

42.2% of the money “borrowed” by the U.S. government is an asset for U.S. individuals and financial institutions.   Today’s yield curve doesn’t indicate a government which is having to pay all that much to get people and institutions to invest in it:

Even 30 year bonds are paying only 3.0% interest.

The amount of leverage always depends on where one stands and places the fulcrum.

Yes, We Could Be Having A Serious Deficit Reduction Discussion?

At some point in the ongoing discussion about federal debts and budget deficits everyone needs to get serious.  Serious, that is, about doing that which will reduce our federal deficit spending.  Really serious, not as in “let’s wave a Debt Crisis Flag every three months to advance an agenda including the privatization of Social Security and the voucherization of the Medicare program.”

Let’s start with the obvious.  Social Security doesn’t add a dime to the national debt.  If the words of a progressive blogger won’t suffice, how about listening to former President Ronald Reagan?  (video here)  So, discussing “reforms” to the self funded Social Security program as a means to reduce the national debt is extraneous to any serious deficit reduction discussion.

One way to approach the privatization of Social Security is to change the frame of reference, such as altering the connotation of “entitlement” from some earned benefit to which we are entitled because we paid for it, to one which has a tinge of “welfare” about it.  Social Security is not a welfare program — it is an earned benefit.  People who have paid into it all their working lives have every right to expect to be getting something back.  Social Security is not a retirement program.  It is a program which seeks to prevent abject poverty for elders.   Nothing in the Social Security program prevents anyone from maintaining a self-contributory retirement account of any shape or form.   Indeed, the benefits from Social Security are low enough that retirement to the Gated Golf Paradise Of Your Choice can only happen if you have a self-contributory retirement savings program. Anyone suggesting that “entitlements” such as Social Security “have to be reformed” to ease the burden on the federal debt (1) doesn’t have a clue what they are talking about, and (2) is regurgitating anti-safety net talking points from radicals who want to privatize all retirement income programs to the benefit of Wall Street investment firms.

Medicare does have some issues.  The first, and most readily apparent, is that the Medicare Part D (prescription drug) segment is, and always has been, underfunded.  However, the really big monster under the Medicare bed is the increasing cost of health care in America.  When private health care corporations started buying up religious organization/private, state, and locally supported hospitals the profit motive surged in the sector.  Health care must now generate a profit.  Savings, which were once achieved for the purpose of reducing costs for local tax payers or donors to religiously based institutions, now accrue to the corporate bottom line — not to taxpayers, donors, or patients.

The second factor is technology.  We do have the best medical treatment providers in the world.  However, best often translates into “most expensive.” We have all manner of devices and gadgets and equipment and gear to save or sustain lives.  Our hospitals take it as their mission to save or sustain life, which is all well and good until the emotional meets the economical.  There are “death panels” in this country, but they aren’t governmental — they are familial, with families making ‘end of life’ decisions which horrifically in some instances are based on what the family can afford.   Frankly speaking, we don’t do a very good job of educating our citizens about advance directives.  Some conservatives set up a howl when they noticed the Affordable Care Act provided for paying physicians or other medical professionals who provided ‘end of life’ counseling for their patients — however, a little counseling might go a long way toward reducing the anxiety of hospital personnel and the trepidations of family members.  It could also provide some savings in the long run.

Returning to the Big Problem — the Medicare Part D component; we knew in 2003 that the Part D segment would  cost approximately $534 billion.  [Foster pdf] Simply put, “the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit,..” [Forbes]  The part about “dedicated financing” is important.  While the Social Security trust funds have dedicated financing (payroll taxes) there were no provisions to increase the revenues available to finance the Part D enhancement.   There is something unappealingly ironic about the current GOP insistence on “entitlement reform” because “Medicare is broken,” when it was the GOP majority in 2003 that Broke the Program.

Ways to ‘reform’ the Medicare program have been suggested which do not require “voucherizing” the entire thing and sending seniors back to pounding pavement in order to find affordable health insurance plans.  We could consider means testing for the prescription drug benefit.  We might take under advisement lifting the earnings cap for payroll taxes from the current $110,000 level and dedicating a portion of the revenues toward the Part D program.  We could allow the Department of Health and Human Services to negotiate for prescription drug prices the way the Veterans Administration bargains for prescription drugs for VA hospitals and clinics.

If we are REALLY REALLY SERIOUS about ‘reforming’ Medicare then it would be helpful to get past the silly voucherization proposals, referred to as “structural reform” in Speaker Boehner’s response to the President, [Boehner pdf]  and get to the core of what makes health care expensive — we could talk about health care cost containment, dedicated financing for Medicare, and lifting the earnings cap.   We might also want to take a deep breath and see if the Affordable Care Act’s provisions, such as eliminating tax payer subsidies for profitable private Medicare Advantage insurance policies, could achieve some savings over the next decade.

However, it’s getting relatively obvious that the Republicans aren’t terribly serious about deficit (debt) reduction when their offers are strictly ideological (privatize and voucherize) and the proposals don’t address the monster of their own creation — the lack of financing for Medicare Part D.

Buzz Words and Generalities.   Speaker Boehner is offering (pdf) “pro-growth tax reform that closes loopholes and deductions while lowering rates.”   This phrasing is coming perilously close to the older verbiage: Waste, Fraud, and Abuse.  As if we could make up any gaps in program funding by simply cutting out the WFA.  Most anti-tax advocates cite the WFA as some massive potential figure which if reduced could cure all our fiscal woes.  When pressed to provide total figures associated with the largely mythical WFA these advocates provide outlier examples of welfare fraud, some particularly egregious Pentagon payments to contractors, and perhaps a bit of information from Internet e-mail chain letters.  The WFA numbers have yet to yield up the level of financing needed to close budget gaps in the Pentagon or any other government activity.

The arithmetic from “loopholes and deductions” doesn’t add up either.  The same sort of fantastical thinking is required to equate the WFA savings and the L&D revenues.  These mythological creatures are based on the same gossamer upon which anti-tax advocates conjure up the notion that an inordinate amount of the U.S. budget is allocated to foreign aid.  The average American has come to believe that foreign aid takes up 10% of the federal budget, when if fact it consumes only 1%. [NYM]

The Republicans also appear to be consuming their own rhetoric on savings associated with reductions in federal employee compensation.

“Cutting pensions and benefits for government workers is popular, but once again most Americans overestimate how much that costs the government. On average, Americans think the federal government spent 10 percent of its 2010 budget on pensions and retiree benefits; the OMB figures indicate the real number is about 3.5 percent.” [CNN]

The moral of this story is that if the amounts of spending on pensions and benefits, or the amounts that can be retrieved by closing loopholes and eliminating deductions, are grossly inflated, then the resulting policy and budget decisions will be widely off the mark.

Unfortunately, the same type of ideologically based proposals which are the core of Speaker Boehner’s “structural reforms” i.e. voucherization and privatization of Medicare appear to inform his suggestions about federal employee compensation, and another favorite GOP target, SNAP (food stamps.)

The program is already under assault from all sides, considering the appropriations being entertained in the agriculture bill.

The Senate’s version of the farm bill would reduce overall funding by $23 billion, with a reduction in food stamps of $4.5 billion over five years. The House Agriculture Committee is proposing to cut funding by $35 billion — with nearly half the overall cut coming from reductions in food stamps by $16 billion over five years. [Atlantic]

But there’s a problem here.  Food stamps have a beneficial effect on the national economy.

“Those who believe in cutting SNAP funding as a cost-saving measure should know that food stamps boost the economy — not put a strain on it. Supporters of federal food benefits programs including President George W. Bush understood this, and proved the economic value of SNAP by sanctioning a USDA study that found that $1 in SNAP benefits generates $1.84 in gross domestic product (GDP). Mark Zandi, of Moody’s Economy.com, confirmed the economic boost in an independent study that found that every SNAP dollar spent generates $1.73 in real GDP increase. “Expanding food stamps,” the study read, “is the most effective way to prime the economy’s pump.” [Atlantic]

If the object of the game is to increase federal revenues by generating a higher GDP along the formula proposing that a growing economy produces jobs, and more jobs yield more taxable income, and more taxable income means more revenue — then the GOP has the SNAP portion of the argument exactly backwards.  They are proposing to cut a program which actually generates more economic growth.   If one seriously believes that economic growth means more revenue and hence less indebtedness, then one can’t seriously advocate cutting programs which elevate levels of economic growth.

All Pain and No Gain.  The two sides don’t seem to be speaking to the same fiscal slope, cliff, gully, whatever.  From the Republican perspective the damage to the economy might be done by The Specter of Rising Taxes.  Those legendary Job Creators — who are now seeing record corporate profits while wages continue to stagnate — might not invest, and hence there will be no economic growth.  This is fundamental Supply Side Hoax thinking.  That it has been, and still is, a hoax is demonstrated neatly by this graph from the Federal Reserve Bank of St. Louis:

The blue line represents wages, the red line corporate profits.  If corporate well being were the driver of overall economic growth and  well being then why has the blue line been trending downward since 1970?  The answer is simplicity itself: Supply Side Economics is a Hoax of the First Water.

A deficit reduction plan predicated on ideology, urban legends, misunderstandings, and economic illiteracy isn’t SERIOUS.   That conclusion further advances the argument that the Republicans aren’t really serious about debt or deficit reduction, but merely see the issue as a flag to be waved in the van of their attack on the social safety net, a banner of privatization signaling their allegiance to Tea Party politics.

The Fiscal Bluff and GOP Politics As Usual

Vegas Jessie posts a timely letter from a small business owner to Rep. Joe Heck (R-NV) along with a predictable response from the Congressman, which just as predictably doesn’t directly address the issues raised by the correspondent.  Heck, as Vegas Jessie observes “presented nothing new or nothing of any practical application…”

No one should be surprised.  The Republican Party — in all its glorious disarray in Nevada — hasn’t had a new idea since St. Ronald de Reagan opened his presidential campaign at the Neshoba (Mississippi) County Fair.  The current incarnation of Republicanism is as obvious as it has been since the Days of Lee Atwater and Company.  The name of the game is still the same; GOP support for the wealthy and their agenda, including privatizing, voucherizing, and shredding the social safety net.  Their first major tactic is simply obscurative, the second is obstructionist.

The Politics of Distraction

The Benghazi Blitz: So, will someone explain, cogently and rationally, why any sentient human being would be passionately concerned about Ambassador Susan Rice’s preliminary information about the attack on the Benghazi consulate?  There isn’t one. Ambassador Rice could secure the imprimatur of the Pope and it wouldn’t suffice to satisfy Senator John McCain’s need to have a topic at hand for his weekly appearance on some Sunday Villager Shows.  If Ambassador Rice explains that the talking points were prepared by the intelligence agencies, then McCain complains that the intelligence community was at some unspecified fault AND that Ambassador Rice should have “asked better or more questions.”  If she had released NO information regarding the Benghazi attack then McClain would clamor about the lack of commentary.  In short, there’s no way to win — this is simply a distraction from larger issues, as well as a way for a Senator facing a term limit on his committee assignments to remain “relevant.”  The issue does make for a nice side show for the Chattering Classes, but accomplishes  nothing to advance political issues of any import.  It’s also an effort to “Create-A-Problem.”

Create-A-Problem Politics

The current Debt Crisis provides an excellent example of “Create-A-Problem” politics.  The process of setting a “debt ceiling” has been around since 1917 when it was an initial step toward financing the costs associated with World War I.  The debt ceiling has been raised without much controversy 74 times since 1962, including 10 times since 2001. [CNN] However, the Congress — imbued with an abundance of Tea Party enthusiasm and plutocrat campaign money — decided to transform the Debt Ceiling to a Debt Crisis in 2011.

Combining the national debt issue (run up by the Bush administration’s tax policies + two wars kept off the books + a nasty recession), with the Republican raison d’etre, repealing the New Deal and the Great Society, gave the GOP its talking points: We ‘must reform entitlements’ (privatize Social Security and voucherize Medicare) and bring down the debt along with other government activities associated with serving the needs of those American people who aren’t ensconced in corner offices.

That privatizing Social Security and voucherizing Medicare are wildly unpopular doesn’t faze the average Republican servant of power.  Thus, cutting these programs must be carefully couched in a climate of fear.

The GOP would have us all a-tremor as if Annie Wilkes, Baby Jane Hudson, Leatherface, Norman Bates, and the Riddler were at the doorstep.   “Social Security… is going broke…has been raided…is going bankrupt…won’t be there for our grandchildren….”  None of this is true, but that doesn’t stop the GOP from using the talking points.

Since this line of attack didn’t work in 2004, 2008, and 2012, there’s a back up plan.  Encapsulated as, “We have to ‘reform’ Social Security and Medicare because we’re going broke.”  Here’s where the manufactured Debt Crisis comes into play.

The outcome of the Big Budget Manufactured Crisis of 2011 was the Budget Control Act, a complicated piece of legislation which gave the White House what it wanted — an extension of unemployment benefits and a second stimulus package in exchange for allowing the Corner Office denizens to continue enjoying their Bush Era tax cuts.  [Corn, MJ]  The Obama Administration (contrary to the Villager Narrative) didn’t get played:

“At a postelection meeting with labor leaders and progressive activists, several of whom were itching for a tax cut fight with the Republicans, White House aides were blunt. To win these stimulative shots, Summers told them, we’re going to have to give up on killing the tax cuts for the rich. “Getting more for our people is more important than getting less for their people,” he said at the meeting.” [Corn, MJ]

The Obama Administration won the first round, and if anything could be more convincing that the Republicans are driven by the need to protect the income of the top 1% the Budget Control Act then someone missed the memo in which the GOP agreed to two things which would have been unconscionable for them under ‘normal’ circumstances  (unemployment benefit extensions & a second stimulus) in order to preserve the lower tax rates for the Upper Uppers.

Distractions and the Creation of the Fiscal Bluff

The Budget Control Act of 2011 sowed the seeds of its own destruction.  The Joint Select Committee on Deficit Reduction (Super Committee) included in the legislation was supposed to ‘solve’ the deficit reduction problem admitted failure in November 2011:

“After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.”

It might be interesting to find out how many people thought the Super Committee had any chance, however remote, to succeed in the first place.  The posturing, positioning, and palaver of 2011 gave the Administration what it wanted, and kicked the tax issue into the 2012 elections.

At this point the Fiscal Cliff becomes the Fiscal Bluff.  The Bush Tax Cuts are due to expire with the last toot of the last manufactured-in-China paper New Year’s horn.   There are new cards on the table, but the GOP is still playing with a very used deck.

McConnell’s old card, propose the discredited Romney unspecified loophole plan, cut corporate taxes, and tax lower income people (GOP code is “broaden the tax base”) It’s no accident the Bowles-Simpson Commission earned the sobriquet “Cat Food Commission.”

“Well, I don’t think it’s a secret that for our part, Republicans have shown a clear willingness to make tough choices in order to find a solution to the trillion-dollar deficits of the last four years. “We’ve been open to revenue by closing loopholes, as long as it’s tied to spending cuts and pro-growth tax reform that broadens the base and lowers rates. This is the model laid out by the Bowles-Simpson commission, and it’s a model both parties should step forward and embrace.”  [RCP]

McConnell went a bit further, playing an even older card, and  putting social safety net programs up for grabs on the GOP side of the table:

“McConnell said Republicans want any agreement to avoid the so-called “fiscal cliff” to include adjustments to eligibility and benefits in the Social Security and Medicare programs.”  [LCJ]

Cantor’s old card, put the Affordable Care Act ‘on the table’ as a bargaining chip in deficit reduction talks.  By Cantor’s lights it’s a bloated entitlement.

“During an appearance on Fox News on Monday, House Majority Leader Rep. Eric Cantor (R-VA) asserted that Obamacare “ought to be on the table” for cuts during ongoing budget and deficit-reduction negotiations between President Obama and Congressional leaders.” [Times24/7]

That the Affordable Care Act actually reduces the federal deficit by $143 billion in the next decade appears of little concern to Representative Cantor.  The Republicans, and their health insurance corporate allies, don’t like the provisions of Obamacare, ergo they’ll throw it out as a possible chip — which has about as much chance of success as promoting  a Dachshund High Jump Contest.

House Speaker John Boehner’s old card is the same as Cantor’s, put Obamacare on the table.

“The president’s health care law adds a massive, expensive, unworkable government program at a time when our national debt already exceeds the size of our country’s entire economy. We can’t afford it, and we can’t afford to leave it intact. That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge.” [Cin.Com]

What’s expensive about a program that decreases the deficit by $143 billion over the next ten years?    Speaker Boehner’s tactical argument is little more than a repetition of the 33 ceremonial House votes to repeal the Affordable Care Act.   [LAT]

The Affordable Care Act repeal suggestions are pure bluff — what politician could possibly believe that the President wouldn’t veto a bill repealing his signature piece of legislation?

The American public must then be left with the unmistakable conclusion that it is more important for the Republicans to protect the income of the Richer Rich than to secure  Social Security, Medicare, and Affordable Care Act for the middle class, as they play all the old games bluffing their way toward the Fiscal Cliff of their own devising.

Mark Amodei, A National Debt Primer – With Charts and Pictures

Representative Mark Amodei (R-NV2): “As a fiscal conservative, I believe that our nation’s deficit is out of control. We now borrow 42 cents for every dollar we spend. The bloated federal government spends some of that money on frivolous projects that benefit only a select group of special interests and other needless expenses. A significant portion of revenue also goes to fund Medicare, Medicaid, and Social Security — programs that are headed towards insolvency and need significant reform to become financially viable.”

Not. So. Fast.

#1.  I believe that our nation’s deficit is out of control. We now borrow 42 cents for every dollar we spend.   Really?  Easy there Lone Ranger, there’s something breathless about this that doesn’t reflect historical reality.  For example, as of 2009 the federal deficit stood at 10.1% of the U.S. economy. However, during World War II our debt stood at 30.3% — and the nation didn’t collapse, and we won the war.  In FY 2012 we’re looking at a deficit of some 7.6%, not a happy number, but nowhere near the historical high; and, before we become even mildly hysterical about the figure we should note that March 2012 budget projections (pdf) from the Congressional Budget Office the projection should decline to 6.3% in FY 2013, and drop to 5.8% in FY 2014. [MJ]

How is something “out of control” when it’s actually declining?

#2.  From whence comes the borrowing?  Of the current (March 2012) totals,  $15,885.5B debt, $6,397.2B is owned by the Federal Reserve and Intergovernmental holdings, another $9,185.1B is privately held.  $184.8B is in the form of U.S. Savings Bonds.  State and Local governments hold $436B of our national indebtedness, while foreign investors hold $$5136.0B of it. [Treas.doc]  If the Debt is a monstrous, heinous, horrible problem — we should ask again — why hasn’t the yield curve moved? As we can see from the chart for today’s yield curve, it’s costing us less that 1% to “sell” American debt for most securities.

Further,  if we look at the trends in interest rates for U.S. securities, the trend is generally downward.

One doesn’t need to be an academically trained economist to observe that someone (indeed, lots of people) think U.S. securities are a good investment.  If the DEBT was a horrible, heinous, terrible, icky thing this would not be the case.

#3. “The bloated federal government spends some of that money on frivolous projects that benefit only a select group of special interests and other needless expenses.”   What, pray tell, is a frivolous project?  Would it be the TARP disbursements to our national banking system in the wake of the Crash of 2007-2008?

Of course, we could have let the financial system collapse in a messy heap and launched another Great Depression…

How about wasted taxpayer dollars in the Pentagon?  The New York Times offers a person the chance to figure out how to save money in the Defense Department, in order to meet the “cuts” deemed necessary above the current savings proposed by the Obama Administration.  By the way, good luck with this exercise!

OK, what about the inevitable Solyndra talking point/question?  Return with us now to the Jon Stewart Show (video) , which pointed out that the private sector rate for investing in eventually bankrupt companies as exemplified by Bain was a generous 22%, while the number of Department of Energy’s record is a more reasonable 8% bankruptcy rate.  (October 25, 2012)

#4. “A significant portion of revenue also goes to fund Medicare, Medicaid, and Social Security — programs that are headed towards insolvency and need significant reform to become financially viable.”

Here comes the “we gotta reform entitlements” argument.  In a reality based world we “don’t gotta do much reforming.”  And, we certainly don’t need to hand the Wall Street Wizards the coffers of the Social Security Administration.  As has been discussed numerous times on this blog, Social Security is NOT going bankrupt.  In 2011 Social Security ended the year with a $2.7 TRILLION surplus.

“So why all the talk about Social Security “going broke?” That theme filled the news after release of the latest annual report of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, as Social Security is formally called.

The reason is that the people who want to kill Social Security have for years worked hard to persuade the young that the Social Security taxes they pay to support today’s gray hairs will do nothing for them when their own hair turns gray.

That narrative has become the conventional wisdom because it is easily reduced to a headline or sound bite. The facts, which require more nuance and detail, show that, with a few fixes, Social Security can be safe for as long as we want.”  [Johnson, Reuters]

Medicare and Medicaid are another matter.  We DO need to do something to reduce health care costs.  And, if we’re serious about adding resources to the trust funds which support Medicare and Social Security we could increase the capped rate of $110,100 in earnings.   There is no question of Social Security viability.  We do have some work to do to make the savings in the health care segments — there will be some savings with the implementation of the Affordable Care Act — the infamous $716B cut — which turned out to be $716B in savings in part from reducing the taxpayer subsidization of profitable private Medicare Advantage plans.

Before Representative Amodei, and his Republican cohorts, take the jump off the fiscal cliff, which they created, (pdf) they might want to attend to the FACTS concerning entitlements — those programs to which we are entitled because we paid for them — and to consider the proposition that it is not a good thing to balance the federal budget on the backs of the elderly, the ill, and the disabled.

No one could be that stupid? Could they? Updated

There are two notions, both dangerous, lurking in the 2012 election.  They are as alive and well in Nevada as they are in Florida, or any other “swing” state. They are both wrong.

The first is that the Republicans really truly wouldn’t think of doing something so idiotic as to actually transform the Medicare program from a defined benefit framework to a “coupon care” program in which seniors would have to beat through marketing bushes to find health insurance corporations willing to sell them policies.

The Medicare Malaise

Haven’t we been listening?  Republican have been trying to stop or privatize the Medicare program since 1964. [Politifact]  They called it “socialized medicine” then and they are still calling it “socialized medicine” now.  Fast forward to 2012 — the Ryan Budget Plan first called for transforming the Medicare program to a voucher (premium support) plan and later changed the plan to allow people to opt for the traditional program.

Tweaking the plans allows the GOP to rebuff charges that they are “eliminating” the Medicare program — however, what’s left after a significant number might opt for private insurance plans would be the least healthy and wealthy among us, making the traditional program all but unsustainable.

Secondly, the “option” idea so beloved by the Republicans is already available under the Medicare Advantage banner.  An elderly person can, and many do, purchase highly profitable  Medicare Advantage policies from private health insurance corporations.  By adopting the Romney/Ryan scheme the “choice” essentially moves from being able to chose between traditional Medicare and Medicare Advantage plans to being a “choice” between private health insurance corporation policy offerings in the long run.  The Romney/Ryan plan offers current seniors their choice between traditional Medicare and Medicare Advantage-like policies — but makes the choice much less likely and more expensive for those soon to reach retirement age.

Every election since 1964 has contained some Medicare element incorporated into the dialogue and the conversations have remained almost identical.  Medicare is either “socialized medicine,” or it’s a “government take over;” what hasn’t changed is the GOP intention to transform it into a so-called “free market” program to the benefit of health insurance corporations and their Wall Street allies.   This isn’t a line of attack they dreamed up for the 2012 elections. It IS the expressed intent of a party which appears to have fewer and fewer moderate members each election cycle.   Moderates who might have been counted upon to keep the transformation of Medicare at bay have been losing ground in the GOP.  The extremists who believe the Free Market Fairy will be able to sprinkle enough dust to justify privatization are the ones at the helm.

The extremists lead us to the second topic about which we should be listening more closely.

Are you listening ladies?

No one would be dumb enough to really call for a Personhood Amendment to the U.S. Constitution — would they?  They certainly would.  No one in this day and age would be arguing about “legitimate” rapes? Surely not. Oh, yes they are.

A Rape Is A Rape — Or is it?

“Richard Mourdock, the Republican candidate for the U.S. Senate in Indiana, said in a debate on Tuesday that “even when life begins with that horrible situation of rape, that is something that God intended to happen.” [NBC]

“Trying to distance himself from the “legitimate rape” comment that Rep. Todd Akin (R-Mo.) made last week, Pennsylvania Senate candidate Tom Smith (R) stirred up further controversy by comparing a pregnancy caused by rape to “having a baby out of wedlock.”  [HuffPo]

“Vice presidential candidate Paul Ryan says that he personally believes that rape is just another “method of conception” and not an excuse to allow abortions.”  [OTB]

Missouri Senatorial candidate Todd Akin’s classic: “First of all, from what I understand from doctors [pregnancy from rape] is really rare,” Akin said. “If it’s a legitimate rape, the female body has ways to try to shut that whole thing down.” [Atl]

One major candidate making a fool of himself is an outlier, two is unfortunate, three is a trend — and four is an indicator that these candidates, all male and all Republican, have little regard for women’s health, and less regard for women’s choices.  This isn’t a recent bloom of this particularly nasty philosophical fungus.  Let’s return to October 2009.

Senator Al Franken (D-MN) sought to insert an amendment into the Defense Appropriation Act to prevent the government from doing business with contractors who would not allow employees to take rape cases to court 30 — yes, THIRTY — U.S. Senators voted No. [Sen 308]

Alexander (R-TN)  Barrasso (R-WY)  Bond (R-MO)  Brownback (R-KS)
Bunning (R-KY)  Burr (R-NC)  Chambliss (R-GA)  Coburn (R-OK)  Cochran (R-MS)  Corker (R-TN)  Cornyn (R-TX)  Crapo (R-ID)  DeMint (R-SC)  Ensign (R-NV)  Enzi (R-WY)  Graham (R-SC)  Gregg (R-NH)  Inhofe (R-OK)
Isakson (R-GA)  Johanns (R-NE)  Kyl (R-AZ)  McCain (R-AZ)
McConnell (R-KY)  Risch (R-ID)  Roberts (R-KS)  Sessions (R-AL)  Shelby (R-AL)  Thune (R-SD)  Vitter (R-LA)  Wicker (R-MS)

What does it say about the Republican Party when four of its candidates for major offices in 2012 and thirty of its Senators in 2009 have medieval (or earlier) political stances on rape?  *The Franken Amendment passed and was signed into law — no thanks to the Dirty Thirty who opposed it.

What does it say about a political party when it controls the House of Representatives and passes 55 bills with topics running the gamut from de-funding Planned Parenthood to restricting abortion rights to weakening domestic violence provisions?  [TPM]

What does it say about a political party when its standard bearer’s campaign refused comment on the House Energy & Commerce minority report on “anti-women” bills was released in September?  Or, when its standard bearer can’t be relied upon to answer even a simple question about support or opposition to legislation calling for equal pay for equal work?

Sometimes the obvious is the honest.  Voting for the Republican candidates in 2012 is hazardous to women’s health — if they are elderly, or approaching retirement age and expect Medicare to be there for them.   It is just as hazardous if the woman in question is young and facing the prospect of diminished health care services like the loss of affordable treatment at Planned Parenthood clinics, or  if Republicans can repeal Obamacare and its provisions for cancer screenings.   It is truly hazardous to the health of women of child bearing age who having been raped must assume the cost of taking the pregnancy to term, and then bear the responsibility for raising the child — or the trauma of both the rape and the act of releasing the child for adoption.

Did it occur to the Republican candidates, who so easily dismiss the controversy about ill-informed or downright brutal remarks on rape and its potential consequences by saying they were “misunderstood,” that they’ve yet to offer any legislation dealing with the economic burden placed on the women under consideration?  Much less the social, and psychological burdens which must be carried for a lifetime?

If the comments made during this campaign season by major Republican candidates, and the actions of Republicans in the Senate, and the actions of the House of Representatives during the 112th Congress, aren’t enough to convince any sentient person that the GOP means what it says — there isn’t much more to speak of — until they actually do it.  And, they’re getting closer each election.

We’d all be much better off if this stops before we say — “I didn’t  think they’d really DO it.”

UPDATE: Think Progress helpfully adds more names to the roster of Republican candidates who share these antiquated and uninformed views:  Rep. Steve King, Rep. Roscoe Bartlett, CT Senatorial Candidate Linda McMahon, PA Senatorial Candidate Tom Smith, WI State Rep. Roger Rivard, and OH State Rep. Jim Buchy.

See also: Sally Kohn, Salon, August 24, 2012.