Friday, April 08, 2011

It's Shutdown Friday!

Actually, it will be Shutdown Saturday tomorrow; today is Brinkmanship Friday, as Senate Democrats and Congressional Republicans posture about the nature of the disagreement: Speaker of the House of Orange John Boehner claims it's because Democrats won't agree to enough cuts in the budget, while Senate Majority Leader Reid says it's because the Republicans insist on a policy of defunding Planned Parenthood. For his part, President Obama, trying to preserve a role of impartiality to help get a deal done, is staying silent about which of the two is lying (and it could be both).

The nastiest turn involves the paychecks for our military, which have been made hostage to a deal: the Administration has determined that under current law there is no provision to pay them in the case of a shutdown, the Republicans cynically proposed a bill to fund the military for the rest of the fiscal year, but added some of their dreaded policy riders. Obama said he'd veto it, and the Senate won't take it up; neither House of Congress has put forward a "clean" military funding bill that pays the military's personnel costs without a bunch of political statements, something both sides claim to want.

Splitting the Difference
Congresswoman Michele Bachmann of Minnesota, the head of the Tea Party Caucus, has been able to take a surprisingly objective view of the dispute. She's not going to vote for any budget agreement, because the negotiations were not aggressive enough for her, particularly in de-funding the provisions of the health care insurance reform act passed last year. This allows her some perspective: she argues for a clean military funding bill if general agreement can't be achieved in time, but she believes the problems can be resolved, and she believes the issue of policy riders (new provisions of law added to the budget) has been resolved.

If this is true, that would be a major step toward resolution: in particular, the riders seeking to prevent the E.P.A. from enforcing the Clean Air act and water protections were unacceptable, to me and to President Obama, and would have put blame for a shutdown squarely on an indefensible will to prevent enforcement of the law. The tipoff that the EPA policy rider has indeed been taken off the table was a series of votes in the Senate to restrict the EPA that failed, despite the support from a few Democrats in coal-mining states.

The issue to de-fund Planned Parenthood is a little different, not just a matter of a policy rider, and I'm somewhat sympathetic to the Republican view. Not that the government should refuse to fund the women's health services Planned Parenthood provides, but I understand an objection to the way it is done. Funds for services such as these should be grants provided on a competitive application basis to the organization(s) that can do them most effectively, not an entitlement--the same goes for the funding for the Corporation for Public Broadcasting's assistance to rural radio, an issue which also seems to have dropped off the table. Planned Parenthood does not use the money provided to pay for abortions--that is already prohibited by law--but if it can count on the Federal government for 30% of its funding every year, that affects its general funding strategy. I liken this to the battles the higher education institutions have to get money from the US government: those are for specific purposes, loss of grants have consequences on their general funding, and there is competition for them.

Bachmann said that Boehner told his caucus there is a $6.5 billion gap in the cuts agreed. To her, that was a minor amount, a couple of tenths of a percent of the budget, but with so many areas off the table, it sounds like a pretty large portion of a small number of agencies' funding. What I have read is that there is a disagreement about certain agencies which get their appropriations over a multi-year plan: the Democrats have agreed to cut some of the money from this year's portion, while the Republicans don't trust that money would not be spent later. There would seem to be a fairly easy solution: reduce the multi-year budget by the agreed amounts.

Deficits: Don't Worry!
For a completely different perspective, I recommend reading this article in The Nation (April 4 issue) by Australian economist William Mitchell; his argument is that both sides are wrong, and the budget deficits do not matter (particularly in this economy). Essentially, because governments like the US issue their own currency, there is no need to balance budgets, and inflation results from deficit spending only when the economy is at full capacity (which we are currently nowhere near). One point in particular struck me--his argument that the deficit does not have to be converted into debt through sale of bonds.

An interesting argument, one that deserves to be heard, but certainly one going against a strong public opinion in favor of deficit reduction, and one that seems disingenuous in a couple of ways: 1) tell it to the bond markets!--regardless of economic reality, they would likely react quite harshly, in terms of effective interest rates for bonds and Treasury bills, to a decision not to move against deficits or monetize them in bond sales; and 2) I think his argument would be stronger if he addressed the looming demographic issue in some way.

Paul Ryan Contra "Stoner"
A noble man...can endure no other enemy than one in whom there is nothing to despise and very much to honor.
---Friedrich Nietzsche, On the Genealogy of Morals

We agree with those who say this shutdown skirmish is a waste of ammunition; the real issues are larger ones of long-term military investment strategy, Medicare, Medicaid, and Social Security. Wisconsin Republican Representative Paul Ryan tried to inject long-term issues into this mess of small-ball this week; he has drawn praise from "adults" of all political persuasions for his effort.

Representative Ryan is a serious man, and an honorable one; however, his specific proposal on Medicare is a declaration of war, among others, and so I have no choice but to declare him my enemy.

He proposes to convert Medicare from a defined-benefit, fully-paid Government health care insurance program for the elderly (OK, except for co-pays) to one in which the government will provide a specific amount of money to beneficiaries for them to get private insurance. He would propose to convert the program starting for those turning 65 in 2122, and thereafter. There is no doubt: this conversion would be made to save money for the Federal government and would be a reduction in the value of benefits for those currently more than 10 years away from receiving them--I suppose 10 years being exactly the amount of time those people need to make other plans for payment of their healthcare costs for their lives as seniors.

I am one of those who will be 65 in 2122, and while I don't know the fine-print detail of which side of the line I'll be on, I resent the line-drawing in either case: either I will be drawing a much larger benefit than my comrades a few months younger, or I will be hugely penalized for not being born a few months sooner. What's he got against people my age?

(I remember a similar line drawn on the draft when I was 19: I was in the last cohort subjected to the draft lottery; my birthdate got #13 of 366 that year, though they didn't actually call people up, so in a similar way I was both lucky and unlucky, for no good reason).

Politically, I can only view Ryan's ploy as an attempt to split the Boomers (already a hugely politically-cloven group)right down the middle (coincidentally, or not, that is right at the peak of number of annual births at the height of the postwar Baby Boom), or to placate the seniors at the expense of the young. Mostly, though, it's yet another Republican sop to the rich: the real solution, the one that is certain to be adopted in the end, is to make those who can afford it pay more for their Medicare benefits.

What I would support is an approach that broadens Medicare eligibility by age, identifying the value of the benefit (X=cost of the program annually/number of recipients), and having recipients report that value as income and paying tax, if they are required to do so. The elderly and poor would thus be protected from the remedy to the cost problem, thus preserving the original intent of Medicare. I would also offer up this bone to the wealthy: they could deduct X as a cost the Federal government does not need to spend if they decline their Medicare coverage and get private coverage (to the standards of the Affordable Care Act) instead--since they can already deduct health insurance if they itemize, this would be a substantial double benefit, might make private healthcare for the elderly more competitive (which it surely is not now, and would not be affordable under the Ryan plan).

I've got an alternate to the Ryan plan, one just as likely or unlikely to become law, one that is no more or no less unfair than his, and which would do just as good a job of saving Federal expense: if these healthcare subsidy payments are such a good substitute for Medicare benefits, let's put all his constituents, those privatizing, union-busting Wisconsinites who elected him, on those vouchers right now, and use the savings to pay for Medicare/Medicaid benefits for all the constituents of my Congressional district (NM-3) who need them.

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