Monday, November 15th, 2010
16

When They Say "Everyone" Must Sacrifice, They Mean Poor People

There is no spectacle quite so stirring as the pundit swaggering to the bar of public opinion to deliver a good and shrill scolding. So let us tend to the chastisements of Washington Post columnist David Broder—recently heard hailing an invasion of Iran as an economic stimulus measure—as he now urges the stiff medicine of the Bowles-Simpson deficit-reduction plan on a feckless American public. Broder is, after all, the dean of American political journalists (though I’ve always found this locution puzzling, since so few political journalists actually seem to graduate—and perhaps more to the point, when was the last time anyone reported an actual dean saying anything remotely relevant to anything outside his or her own chosen bureaucratic warren?) But let such caviling pass: Deans are also in the business of study-body discipline, so let’s glumly don our letter jackets and shuffle over to his office waiting-room for our paddling.

For you see, in Broderland, the noble co-chairs of the president’s debt commission, Erskine Bowles (he of the six-figure Morgan Stanley board salary) and Alan Simpson (he of the decades-long crusade to decimate Social Security) are administering “the equivalent of a cold shower after a night of heavy drinking.”

Never mind that, in structural terms, there’s no evidence that the sizable $1.4 trillion federal deficit represents anything all that intoxicating—indeed, it is much more in the nature of a desperate defibrillator session than a giddy bender. Our present deficit—which is already shrinking, by the way—largely represents necessary efforts to spark consumer demand amid a world-historic economic slump. And far from incidentally, it also reflects the legacy of the longer-term fiscal chicanery of the Bush years, which kept two major tax cuts, two wars and an enormous expansion in Medicare benefits largely off the books.

Never mind as well that the rhetoric of deficit hawks—almost always conceived as a respectable draping for the usual D.C. entitlement brigandry—translates, amid present conditions of contracting demand, into disastrous economy policy. “Our biggest problem isn’t the size of pending federal budget deficits or debt but an anemic recovery that may drag on for years,” writes former Clinton Labor Secretary Robert Reich. “If Congress and the president started right now to cut the federal deficit—slashing spending and raising taxes on the middle class—our anemic economy would quickly become comatose.”

No, our dean won’t be detained by such mere empirical concerns. Math is hard—and more to the point, the resolve of discipline-minded public servants is so inspiring!

After all, he interviewed the sage public servants Bowles and Simpson in Boston this summer, “and they made very plain that they were going to lay out what it would take to solve this problem, in all its gory detail.” And Broder can scarcely conceal his own stoic glee in reporting their verdict: “Everyone and every institution will have to contribute—no, genuinely, sacrifice—if we are to repair the damage to our economic health. No area of government spending will be spared…. The tax system will change and collect more from the people than it does now.” And the upshot of all this exhilarating sobriety? Why, more bipartisanship—the hooch that sends the David Broders of the world into their own besotted deliria, for years on end:

No Democrat can believe, looking around, that he or she can protect all the programs passed since the New Deal and Great Society days. Not with all those Republicans and Tea Partyers sitting there with their knives out. And no Republicans, no matter how ideologically isolated, can believe that the Democrats whose votes will be needed for any package will permit all the sacrifices to be made only on the spending side—especially in the low-income programs.

Well, no, actually. The Simpson-Bowles package of proposals tilts almost unilaterally to the right—not exactly a shock, given the high concentration of deficit commission staff who are also drawing salaries from the father of all entitlement hysterics, Peter G. Peterson. (Broder could have stumbled upon this illuminating conflict of interests if he’d bothered to consult the coverage by his own Post colleague Dan Eggen.) As Reich and others point out, the draft commission plan says virtually nothing about what’s driving the bulk of government spending into the red: the explosion of private-sector health-care costs. “More than half of health-care costs are paid by the government," economist Dean Baker notes, “hence the public-budgetary impact of our private system…. Simpson and Bowles’s report seeks saving in public-sector health programs, primarily by making patients pay more for care. But there is no discussion of the private health-care system that is the root of the problem.”

Which is not to say the document is silent on health care per se—as a far more intellectually honest columnist, the L.A. Times’ Michael Hiltzik, observes, Bowles and Simpson champion one brazenly ideological sop to the right as a putative cut in health care costs: a proposal to "impose tort reform to ‘pay lawyers less and reduce the cost of defensive medicine'"—defensive medicine being the GOP buzzphrase for “plaintiffs attorneys fees,” since trial lawyers are major Democratic party donors. And how much does “defensive medicine” contribute to the actual spike in health care costs? As Hiltzik explains, “According to CBO testimony in 2008, zero percent. That’s right, zero.”

Nor, as Baker points out, is there any effort in the commission’s preliminary report to bring our dubiously productive financial system under any remote measure of fiscal discipline, despite its outsized role in stoking the housing market’s $8 trillion collapse.

Simpson and Bowles apparently never considered a Wall Street financial-speculation tax. This is an obvious source of revenue that even the International Monetary Fund is now advocating in recognition of the enormous amount of waste and rents in the financial sector. It is possible to raise large amounts of revenue from such a tax.

University of Massachusetts economist Robert Pollin and I calculated the potential revenue at more than $100 billion a year, with little impact on productive economic activity. The main impact would be to reduce the shuffling of financial assets.

Instead, the pain here unduly falls on low-to-middle-earning Americans, as is always the case when deficit hawks try to impress each other with their manly command of cold, hard fiscal truth. As Baker explains, Simpson and Bowles achieve the bulk of their proposed spending cuts by…

raising the retirement age, cutting benefits for middle- and higher-income workers, and reducing the annual cost-of-living adjustment so that retirees would no longer see their benefits rise in step with the consumer price index. Raising the retirement age seems more than a bit unfair, since most of the gains in life expectancy have been going to workers in the top half of the income distribution. Workers in the bottom half have seen minimal gains in life expectancy over the last three decades.

The cuts in the benefit formula will hit anyone who has average wage earnings over their lifetime of more than $36,000. This is not most people’s definition of affluent.

All of which gives a rather prodigious lie to Broder’s pundit-fairy tale about “everyone” being sternly summoned by Messrs Bowles and Simpson “to contribute—no, genuinely sacrifice” in the cause of choking off government spending at the very moment when it desperately needs to expand. And really, all macroeconomic considerations aside, there’d be one incalculable benefit of preserving the present retirement age, and enforcing it more aggressively in the private sector: David Broder would have been handed his gold watch, and started collecting his dean’s pension, 16 years ago.



Chris Lehmann will be quizzing you on the membership of the National Commission on Fiscal Responsibility and Reform later.

16 Comments / Post A Comment

lawyergay (#220)

Chris Lehmann is a national treasure.

Baroness (#273)

Superb post, I agree.

riggssm (#760)

This is like seven or twelve long reads in a row. So many fantastic links to follow. Can't wait to finish it later on.

Pop Socket (#187)

It's a good thing that cat food cans now come in smaller sizes so that our fixed income seniors who don't have a punditry job parroting right wing talking points to fall back on can share the sacrifice.

gabba_gabba_hey (#6,046)

Hey, so, how should I go about stopping this?

For real, it's pretty clear that everything already sucks, and people are actively trying to make it suck more. It seems pretty monumentally difficult to stop the things that already suck, but maybe it's time for some left-leaning activity to plug this shithole before it's law?

Please guide me, Chris Lehmann! I am saying that completely in earnest!

gabba_gabba_hey (#6,046)

p.s. I would also be happy with some guidance on how to whip up lefty populist frenzy.

Chris Lehmann (#222)

I can offer no guidance, alas, beyond the standard desperate plea to buy my book and use it as the basis for a left-populist uprising! http://www.orbooks.com/our-books/richpeople/?utm_source=pressrelease&utm_medium=email&utm_campaign=richpeople

LondonLee (#922)
gabba_gabba_hey (#6,046)

Ah, shit, looks like the book only comes in paperback, though—how's it gonna break windows?

Actually, though, as much as I'd like to do Londonish protests, the problem where the majority of politically-minded people who live in DC work in politics, and all the students in DC are there because they want to work in politics eventually, seems hard to overcome without shipping a bunch of people in. And our train system sucks!

So, any ideas where to protest/occupy in NYC?

SeanP (#4,058)

Realistically, it's pretty much already stopped itself. Even getting the required number of signatures on the report (14 of 18 commissioners must approve) is thought to be highly unlikely. And then it would have to be passed by Congress and signed by the president. And whatever you may think of the spinelessness of Democrats… this thing includes tax increases. So you can forget about any Republicans voting for it.

Sure, the newly GOP-ified House is likely to try to pass even more horrific stuff, but that seems unlikely to get through the Senate. You can help in the usual way – by calling your Congress-critters. They need to understand that there's going to be rioting in the streets if they take the axe to Social Security, for example. Become familiar with the issues (thanks Chris for your part in the education process!) and contact your reps.

KarenUhOh (#19)

I'm sure the 15+ million people in this country who can't get work are cheered to know the retirement age is going up.

LondonLee (#922)

That's the sort of proposal that looks like a good idea to people who have never worked in a factory before.

Is that Erksine Bowles's head or did his neck just blow a bubble?

kneetoe (#1,881)

I recommend sitting back and watching it die of natural causes.

Aloysius (#1,808)

If the republicans really wanna stick it to trial lawyers the best thing they could do is pass universal health care. PI lawyers working on contingency love high medical bills.

lexalexander (#2,960)

"Tort reform" is going to save money? Oh, please. The cost of all malpractice litigation judgments/settlements/etc. as a percentage of total U.S. health care costs works out to the equivalent of about a nickel on a $24 lunch tab. These people are not serious.

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