12/18/2012 archive

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

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Dean Baker: Michigan Republicans Deny Police Officers and Firefighters the Right to Work

That is what the headlines would say if anyone really believed that the anti-union laws passed last week in Michigan actually had anything to do with the rights of workers. When the legislature outlawed contracts requiring workers who benefit from union representation to pay for that representation, it explicitly exempted the police and firefighters’ unions. If this law was actually about the “right to work,” the Republican legislature and Governor Snyder were effectively denying the right to work to the state’s police officers and firefighters.

Of course this law has nothing to do with the right to work (RTW), as everyone involved knows; that is just the spin from the anti-labor coalition. This is why police unions and firefighters’ unions were exempted. The Republicans were trying to buy off these workers with special favors, not singling them out for punishment.

There is no issue of rights involved in this dispute. The question is whether workers, through their union, can sign a contract that imposes conditions on employment, just as the employer can impose conditions on employment.

New York Times Editorial: Reason to Hope After the Newtown Rampage

This is a country that has a history of facing tragedy and becoming better for it. It is a country that recoiled in horror at the Triangle shirtwaist factory and took steps to protect the lives of factory workers. It is a country able to rethink deeply seated beliefs – as it did with discrimination against blacks and women and is now doing with antigay discrimination. [..]

So we have found real reason to find hope in the determination to effect change that followed the murders of 20 children and seven adults in Newtown, Conn., last Friday. President Obama said it unequivocally on Sunday – the enormity of controlling the culture of guns and the epidemic of gun violence “can’t be an excuse for inaction.”

Yes, Mr. Obama has said that before, after two previous mass killings during his tenure, and did nothing. The hurdles are just as big as they were before, but there are signs that people are willing to rethink their views.

Pretty damn bad.

What Chained CPI Means, and Why a Cut in a Time of Inadequate Social Security Benefits Makes No Sense

By: David Dayen, Firedog Lake

Monday December 17, 2012 2:45 pm

Let’s just make clear what chained CPI is all about. The idea here is that you should not measure the cost of living simply based on the consumer price index, and then raise the costs accordingly with the rise in prices. Instead, economists say, you have to account for the substitution effect in response to price shifts. When someone cannot afford steak, maybe they buy more chicken, the theory goes. By “chaining” the CPI to account for the substitution effect, you’re really shrinking the inflation in the index, because you’re assuming that the individual will spend less by changing their lifestyle. As a result, cost of living adjustments based on a chained CPI will rise more slowly that COLAs based on an unchained one.

…

(T)he idea of chaining medical treatment, as if you can just substitute a hip replacement with something cheaper, is silly. Overtreatment does exist, but the concept of a senior citizen shopping for cheaper medical care is actually kind of cruel.

Shifting to CPI-E would actually reflect the real costs of seniors, and would have their cost of living adjustment keep up with their actual needs. But of course, that’s not the goal of public policymaking. It’s to “save money,” in this case at the expense of the elderly, particularly those over the age of 80.

Chained CPI only makes sense if you think Social Security benefits and the cost of living adjustment are currently adequate enough for seniors. The fact that 15.1% of seniors are in poverty, according to the newest measure, shows that this is not at all the case. We need higher, not lower, Social Security benefits, as retirement security outside of the program withers. But adequacy is not the goal of those who want to slash benefits. And Democratic enablers call it something they can “live with.” Obviously none of them are 80 or older.

Obama’s Latest Fiscal Slope Offer: I’m Missing the Part Where Republicans Give Up Something

By: David Dayen, Firedog Lake

Tuesday December 18, 2012 6:00 am

From where I’m standing, this is a deal for the President to break his promise on tax rates, allow half of the fiscal slope to go forward, probably cut as much as 2% from GDP in 2013, and enact permanent benefit cuts to Social Security (and other government benefits) as well as unspecified cuts to health care programs, in exchange for…

1. a routine extension of unemployment insurance;
2. no more than $50 billion in infrastructure, probably less;
3. a permanent extension of things Congress does annually like clockwork (making them permanent is good public policy, but doesn’t functionally change much);
4. the chance to do this again in two years.

Meanwhile, Republicans give up tax rates that were going up anyway, an unemployment extension that they have yet to fail to pass, and a bit of infrastructure. That’s it, in exchange for cuts that will put discretionary spending well below traditional levels, cut Social Security benefits and basically ensure smaller government through caps and cuts.

More on Chained CPI, the Benefit Cut for Social Security on the Table in Fiscal Slope Discussions

By: David Dayen, Firedog Lake

Tuesday December 18, 2012 6:45 am

First of all, this is a benefit cut of about 0.3% a year, as Dean Baker points out. He adds that “This loss would be cumulative through time so that after 10 years the cut would be roughly 3 percent, after 20 years 6 percent, and after 30 years 9 percent.” Actually if we started using chained CPI in 2002, we’d be 3.6% behind today. That’s well over $1,000 a year, and the situation grows worse over time. So the greatest impact would be on the oldest seniors, which happens to correlate with the poorest.

If you think that senior citizens have had it too good for too long, getting that sweet sweet cost of living adjustment to make them unfairly wealthy, then maybe you think chained CPI is a solid idea. If you think that the highest expense for a senior is medical costs, that seniors don’t exactly comparison shop when they need medical care, that they cannot substitute along those lines, and that a cost of living index that features that substitution effect prominently doesn’t correspond to the real costs seniors face, well, you would be right.

…

(A)s supporter of a Social Security deal Kevin Drum says, adopting chained CPI for Social Security by itself is a terrible deal. Even if all of the savings from it get plowed back into reducing the long-term income gap, it doesn’t do enough by itself to eliminate that. It reduces the trust fund gap by about 1/3. Which means that fiscal scolds would still be clamoring for a deal to “fix” Social Security, and the fact that the solutions were entirely on the benefit side this time around won’t matter. This is just an invitation to more cuts down the road.

Paul Krugman tries to rationalize and bargain and basically gives a lifeline to cutting these benefits, at a time when senior poverty is on the rise. Ask yourself: are Social Security benefits, which average around $13,000 a year, currently adequate to serve this population, especially when 40% of seniors rely on it for over 90% of their income? Is the solution to 15.1% of seniors in poverty to cut their benefits slowly over time? Should the centerpiece of a deal to reduce the budget contain a benefit cut to a program that has its own dedicated funding stream and no budgetary impact?

UPDATE: First, Krugman has a new post up, saying he is now “marginally negative” on the deal after being “marginally positive.” He ignores the $800 billion in extra budget cuts in the deal.

Also, if anything I undersold the impact of chained CPI, since it would affect federal employee benefits that are tied to COLA, like postal workers.

Here is what Atrios (trained economist BTW) says-

To The Phones

White House

202-456-1111

Your senators

Your House member.

No cuts to Social Security.

Gaius Publius @ Americablog offers this helpful digest-

What are we protecting?

We’re protecting three social insurance programs. These are:

    ■ Social Security

    ■ Medicare

    ■ Medicaid

What are we protecting them from? Anything that:

    ■ Reduces benefits

    ■ Turns the program from insurance to welfare (which only the “deserving” have access to)

How are these programs being threatened?

As near as I can tell, these are the threats. Note to foxes – this is the hands-off list. Each of these seven items is a benefit cut:

Social Security

    1. Raising the retirement age

    2. Chained CPI instead of current COLA

    3. Means-testing benefits

Medicare

    4. Raising the eligibility age

    5. Increasing Part B premiums

    6. Increasing “cost-sharing”

Medicaid

    7. Shifting costs to the states by any means, such as “federal blended rate,” etc.

Serious People Could be Seriously Embarrassed: Why It’s Important that We Not Go Off the "Fiscal Cliff"

Dean Baker, CEPR

Friday, 14 December 2012 09:51

Much of the media has spent the last month and a half hyping the impact of the “fiscal cliff,” the tax increases and spending cuts that are scheduled to take effect at the end of the year. They have been warning of a recession and other dire consequences if a deal is not struck by December 31st. As we are now getting down to the final two weeks and the prospect that there will not be a deal becomes more likely, many in the media are getting more frantic.

What they fear is yet another huge embarrassment, if people see the deadline come and go and the economy doesn’t crash and the world doesn’t end.

…

In other words, if January 1, 2013 comes and there is no deal, we will likely see that the Serious People were again out to lunch. This will be yet another blow to the credibility of the people who are telling us that we have to cut Social Security and Medicare and do all sorts of other things that somehow always seem to have the effect of hurting the poor and middle class.

Of course many may say that the Serious People have recovered from past humiliations. After all, how long did it take them to get over the fact that not one of them was able to see the $8 trillion housing bubble whose collapse wrecked the economy? And there can be little doubt that they will quickly rewrite the history so that none of them was actually issuing the dire warnings we keep hearing about the fiscal cliff.

But some people will remember, and there will always be people rude enough to bring up past mistakes. So the Serious People really do have a lot at stake here. If we go past January 1 and there is no deal, they will be very unhappy.

Crafting a boom economy

By: Jim VandeHei and Mike Allen, Politico

December 11, 2012 04:35 AM EST

What is striking, though, is that if you put everyone from President Barack Obama and Senate Majority Whip Dick Durbin to House Speaker John Boehner and Portman on truth serum, they basically agree: Washington could set the economy on a very safe course, if not on fire, through a half-dozen policies that are not partisan.

The country’s most influential CEOs, who have been meeting with Obama and congressional leaders on these very topics, are telling them if they do some or all of this, investment, market growth and jobs will quickly follow.

Bank of America CEO Brian Moynihan said long-term commitments to measures such as tax reform and trade would provide a “certainty premium” that would help bring corporate cash off the sidelines. “If we can just allow people to keep their confidence up by getting some of these issues off the table,” he said, “you would see the economy grow and momentum continue to build, and unemployment continue to ease down, and housing starts [go] up and housing prices [go] up. All that will continue to build on itself.”

…

Officials largely agree Congress should cut domestic spending, including a nice chunk out of defense, because the budget is bloated, outdated and often designed to placate specific lawmakers or defense contractors. But it will take entitlement changes, which both sides say are inevitable, to get U.S. debt levels where they need to be, which in turn plays into investment into everything from U.S. companies to Treasury bills.

“The critical problem is entitlement reform, and if taxes even have to go up to get an entitlement deal done, that still solves the vast majority of the issue,” said Kenneth Griffin, who founded Citadel LLC, a hedge fund, and is worth an estimated $3 billion. He is a Republican.

Nearly every lawmaker and staffer will tell you privately that they know the Social Security retirement age needs to go up, the rate of growth of benefits needs to be slowed on a sliding scale that protects the poor, the cap on income subjected to the tax that finances the program needs to rise and the rich should get smaller or no payout from the program.

They will also tell you Medicare, which is on pace to be insolvent in 12 years, is a much, much bigger mess and threat to long-term economic vitality – and much harder to solve. Yes, the rich need to get smaller benefits, but that is almost meaningless in terms of fixing it. Ultimately, many Americans will have to get less generous benefits that start to kick in at an older age – and those changes need to start a decade from now. Otherwise, the math simply doesn’t work.

Delusions of Wisdom

Paul Krugman, The New York Times

December 11, 2012, 3:33 pm

In said (above) piece they talk to various Very Serious People, and divine the insider consensus on What Must Be Done – which mainly seems to involve, naturally, cutting Social Security and Medicare while reducing corporate tax rates.

What I find remarkable about this piece is that after everything that has happened these past five years or so, Jim VandeHei and Mike Allen still take it for granted that these people actually know what they’re talking about; the whole premise of the article is that the insiders really do have the key, not just to good policy, but to achieving a dramatic rise in the growth rate.

Now, they don’t tell us everyone they talked to; but I think we can safely assume that, with few exceptions, the insiders in question:

• Believed that financial deregulation was a great idea, because bankers had really learned to manage risk
• Did not believe that there was a housing bubble
• Insisted that budget deficits, even in a depressed economy, would send interest rates soaring any day now
• Insisted that austerity measures would promote recovery, not hurt it, because of the confidence fairy

…

The whole theme of the Politico piece is that great things would happen if only the insiders could override all this messy democracy stuff. But the real lesson is that those insiders are not only self-dealing, but profoundly ignorant and wrong-headed. It’s too bad that so many journalists still can’t see that.

Why is Washington Obsessing About the Deficit and Not Jobs and Wages?

Robert Reich

Thursday, December 13, 2012

So why are we debating how to cut the deficit when we should be debating how best to use the cheap money we can borrow from the rest of the world to put more Americans to work?

Because too many Democrats inside and outside the Beltway have ingested the deficit cool-aide that the “serious people” on Wall Street have serving for two decades.

And the President has been all too willing to legitimize their deficit obsession by freezing federal salaries, appointing a deficit commission, and, now that the election is over, going back to deficit-speak.

A month after the election Obama was on Bloomberg Television saying business leaders need “a deal on long-term deficit reduction” before they’ll increase hiring.

That’s just not true. Before they’ll increase hiring they need customers.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

December 18 is the 352nd day of the year (353rd in leap years) in the Gregorian calendar. There are 13 days remaining until the end of the year.

On this day in 1918, the House of Representatives passed the 18th Amendment to the Constitution, along with the Volstead Act, which defined “intoxicating liquors” excluding those used for religious purposes and sales throughout the U.S., established Prohibition in the United States. Its ratification was certified on January 16, 1919. It was repealed by the Twenty-first Amendment in 1933, the only instance of an amendment’s repeal. The Eighteenth Amendment was also unique in setting a time delay before it would take effect following ratification and in setting a time limit for its ratification by the states.

Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

The amendment and its enabling legislation did not ban the consumption of alcohol, but made it difficult to obtain it legally.

Following significant pressure on lawmakers from the temperance movement, the House of Representatives passed the amendment on December 18, 1917. It was certified as ratified on January 16, 1919, having been approved by 36 states. It went into effect one year after ratification, on January 17, 1920. Many state legislatures had already enacted statewide prohibition prior to the ratification of the Eighteenth Amendment.

When Congress submitted this amendment to the states for ratification, it was the first time a proposed amendment contained a provision setting a deadline for its ratification. The validity of that clause of the amendment was challenged and reached the Supreme Court, which upheld the constitutionality of such a deadline in Dillon v. Gloss (1921).

Because many Americans attempted to evade the restrictions of Prohibition, there was a considerable growth in violent and organized crime in the United States in response to public demand for illegal alcohol. The amendment was repealed by the Twenty-First Amendment on December 5, 1933. It remains the only constitutional amendment to be repealed in its entirety.

Democratic Hawaii Senator Daniel Inouye, age 88, has died from complications of a respiratory infection at Walter Reed National Military Medical Center in Washington, DC. Sen. Inouye has represented Hawaii in both the House and the Senate since it became a state in 1959. He was  the first Japanese-American to serve in the U.S. House of Representatives and later the first in the U.S. Senate. He was elected to the Senate in 1963.

At the time of his death, Sen. Inouye was the most senior senator and  the second longest serving U.S. Senator in history after Robert Byrd. As the most senior senator, he was chosen President pro tempore by the Senate, making him third in the presidential line of succession after the Vice President and the Speaker of the House of Representatives. That post now goes to Sen. Patrick Leahy (D-VT).

Sen. Inouye served in the army during WW2 from 1941 to 1947, first as a volunteer in the medical corps and later in the European theater. In 1945, during a battle in Italy with German troops, he was severely wounded but continued to lead his men in battle:

On April 21, 1945, Inouye was grievously wounded while leading an assault on a heavily-defended ridge near San Terenzo in Tuscany, Italy called Colle Musatello. The ridge served as a strongpoint along the strip of German fortifications known as the Gothic Line, which represented the last and most dogged line of German defensive works in Italy. As he led his platoon in a flanking maneuver, three German machine guns opened fire from covered positions just 40 yards away, pinning his men to the ground. Inouye stood up to attack and was shot in the stomach; ignoring his wound, he proceeded to attack and destroy the first machine gun nest with hand grenades and fire from his Thompson submachine gun. After being informed of the severity of his wound by his platoon sergeant, he refused treatment and rallied his men for an attack on the second machine gun position, which he also successfully destroyed before collapsing from blood loss.

As his squad distracted the third machine gunner, Inouye crawled toward the final bunker, eventually drawing within 10 yards. As he raised himself up and cocked his arm to throw his last grenade into the fighting position, a German inside fired a rifle grenade that struck him on the right elbow, severing most of his arm and leaving his own primed grenade reflexively “clenched in a fist that suddenly didn’t belong to me anymore”.[13] Inouye’s horrified soldiers moved to his aid, but he shouted for them to keep back out of fear his severed fist would involuntarily relax and drop the grenade. As the German inside the bunker reloaded his rifle, Inouye pried the live grenade from his useless right hand and transferred it to his left. As the German aimed his rifle to finish him off, Inouye tossed the grenade off-hand into the bunker and destroyed it. He stumbled to his feet and continued forward, silencing the last German resistance with a one-handed burst from his Thompson before being wounded in the leg and tumbling unconscious to the bottom of the ridge. When he awoke to see the concerned men of his platoon hovering over him, his only comment before being carried away was to gruffly order them to return to their positions, since, as he pointed out, “nobody called off the war!”

The remainder of Inouye’s mutilated right arm was later amputated at a field hospital without proper anesthesia, as he had been given too much morphine at an aid station and it was feared any more would lower his blood pressure enough to kill him.

Although Inouye had lost his right arm, he remained in the military until 1947 and was honorably discharged with the rank of captain. At the time of his leaving of the Army, he was a recipient of the Bronze Star Medal and the Purple Heart. Inouye was initially awarded the Distinguished Service Cross for his bravery in this action, with the award later being upgraded to the Medal of Honor by President Bill Clinton (alongside 19 other Nisei servicemen who served in the 442nd Regimental Combat Team and were believed to have been denied proper recognition of their bravery due to their race).

The senator had been hospitalized since the beginning of this month, fighting complications of a respiratory infection. Doctors were concerned about his blood oxygen levels.

His staff said that his last word was “Aloha.”

Sen. Inouye is  is survived by his wife, Irene, a son, Ken, and a granddaughter named Maggie. Inouye’s first wife, Margaret, died in 2006.