Category: Politics As Usual

The rebirth of the zombie benefit cut

~ susie ~ 3 Comments

As I’ve been predicting, talk of the chained CPI is rising again as part of a budget deal. Remember, this also means a major tax hike for the working poor! Michael Hiltzik of the LA Times:

The chained CPI has risen to walk among us again in the muttering and jawboning around the government shutdown/debt limit standoff and the search for an exit. We’re hearing again about a “grand bargain” on the government deficit — never mind that the deficit is falling, not rising — that would trade, say, cuts in Social Security and Medicare and some kind of tax reform for an end to the government shutdown and an increase in the debt limit.

In other words, the average person gets a kick in the slats, and the politicians in Washington get to deliver it. That’s some bargain.

A few things to remember about the chained CPI, which I’ve written about here, here, and here. (If you’re going to kill a zombie, you have to keep coming at it.)

First, its vaunted accuracy is a myth. An index like the CPI can’t be judged more or less accurate, because it measures only what it’s defined to measure. Does the market basket measured by the CPI accurately define what people spend money on? Yes, if they spend money on what’s in the basket. And we know that retirees don’t spend money the same way as young or middle-aged families; they spend disproportionately more on healthcare and housing.

The agency that produces the inflation index recognized that elderly consumers are a special case bydeveloping an experimental index, known as the CPI-E, for those 62 and older.

What really makes the chained CPI  attractive to budget cutters is that it consistently comes in lower than the traditional CPI. For retirees, the gap builds over time; after 30 years, benefits would be 10% lower than under the traditional CPI. The CPI-E, however, rises slightly faster than the traditional index. That’s why you never hear pundits praising it for its “accuracy.”

The chained CPI also involves another nasty shock for average Americans. For the sake of fairness, using it as the Social Security cost of living measure would mean using it for other government calculations indexed to inflation, such as income tax brackets.

What would that mean? Well, according to the Tax Policy Center, it would hit low-income taxpayers especially hard. Someone earning $30,000 to $40,000 would get whacked three times as hard, measured by the tax increase as a share of total income, as someone earning more than $1 million.

Social Security advocates have always considered President Obama to be a little squishy when it comes to resisting Republican efforts to cut Social Security and Medicare and hit the middle class with higher taxes. Thus far, Democrats in Congress have held the line.

But every crisis brings yet another effort to preserve the prerogatives of the wealthy and take the cost out of middle- and working-class hides. On this occasion, when the costs of the shutdown have fallen on Head Start children, medical patients and middle-class workers, to slice away another portion of their safety net would be a truly unspeakable act.

Both sides want it

~ susie ~ 2 Comments

I don’t know if Ian Welsh is completely right, but I think there’s a large element of truth:

I don’t know if there’ll be a debt default. What I do know is this: if Obama doesn’t want to default he has options. Forget the platinum coin nonsense (though he could if he wanted), Obama can just tell the Treasury to keep on keeping on, and continue selling treasuries. There isn’t anything Congress can do about that, they don’t have the votes to actually impeach him, they don’t have an army, they don’t have the balls to, say, lock up the Treasury Secretary. In short, they don’t have an army.

Now I assume Obama doesn’t want a default. But, to be sure, I could be wrong. Why? Because a default throws all the cards in the air. It lets you remake the country in your image. Obama has long wanted a “Grand Bargain” and the ultimate neo-liberal no-no is defaulting on bond-holders. Then, of course, there are all the SS checks…

If there is a default, whoever sets the terms of the new arrangement gets to remake America in their image. Obama might want a crack that that.

Hey, no big deal

~ susie ~ 4 Comments

Remember that most congressmen got elected because they were good at socializing and gladhanding, not because they’re rocket scientists. They deal in marketing and strategy, not reality:

In interviews with more than a dozen GOP lawmakers, the Republicans rejected the notion that Washington could default on its debt unless a borrowing increase is approved before Oct. 17. For the United States to actually default, these Republicans argue, the Treasury Department would have to stop paying interest on its debts—something GOP lawmakers claim is inconceivable.

“There’s always revenue coming into the Treasury, certainly enough revenue to pay interest,” said Rep. Justin Amash, R-Mich. “Democrats have a different definition of ‘default’ than what we understand it to be. What I hear from them is, ‘If you’re not paying everything on time that’s a default.’ And that’s not the traditionally understood definition.”

If this sounds familiar, it’s because it has been Republicans’ line of attack since their debt-ceiling battle with Obama in the summer of 2011.

Then, as now, the GOP argues it’s not the debt limit that would cause default, it’s Obama. The country would have the funds to pay its creditors if the administration would just delay payments to certain agencies.

Hoping to turn that argument into law, Republicans have touted legislation that would force Treasury to prioritize which bills it pays, pushing interest payments to the country’s creditors, as well as to senior citizens and veterans, to the front of the line and putting everything else second.

The measure makes for solid messaging—few voters are likely to disagree that Social Security and veterans’ disability payments should be top priorities—but budget wonks and financial industry experts criticize the idea.

“I don’t know any serious person who doesn’t think this will be cataclysmic,” said Steve Bell, a former Republican staff director of the Senate Budget Committee and now senior director with the Bipartisan Policy Center.

This is, of course, a wonderful setup for the Grand Bargain. We had to! To save the country! These Republicans just aren’t rational!

And this “no big deal” is the new talking point.

Ventura/Stern 2016?

~ susie ~ 3 Comments

http://youtu.be/9MA0PGGg0i4

Jesse Ventura says he and Howard Stern couldn’t possibly fuck things up any worse than the people in there now. I don’t know about that; he’s prone to saying some really stupid, paranoid shit and doesn’t understand about the debt. He does say some things I like, but no one would ever let him implement his policies.

Negotiations 101

~ susie ~ 2 Comments

My old pal Hecate with some advice for the president:

So, I’m an old woman who didn’t go to HLS and wouldn’t presume to imagine that I could lead the United States. But I’ll still, as someone who’s actually been in the field, practiced law, and successfully negotiated good outcomes for my clients, presume to give Mr. Obama some advice.

If I were sitting today where you sit, Mr. Obama, almost at the confluence of the Anacostia River, the Washington Chanel, and the Potomac River, here’s what I’d do:

I’d announce that, now that the government’s been closed for two days, I’m unwilling to sign anything but a clean bill to fund the government, except that now I also want the Rapeublicans to approve all of my judicial nominees who have been languishing in Congress lo these many years.

Tomorrow morning, I’d eat breakfast, put on my nice suit, walk out into the Rose Garden (it’s gorgeous in DC this week) and announce that now that I’ve slept on it, I won’t sign anything except a clean bill with approval of all of my judicial nominees and statehood for DC. I’d wave to the reporters, go play golf (include a woman this time, Mr. President), review their homework with my daughters, and get a massage.

On Friday, after I had lunch at the Palm with my wife (have the crabmeat cocktail and the steak salad, rare), I’d walk up to Dupont Circle and say that I’d been discussing it with Ms. Obama and, now, I’m unwilling to sign anything except a clean bill with approval of all of my judicial appointees, statehood for DC, and a new bill of Elizabeth Warren’s choosing.

I’d take the weekend off, go to Camp David, let the girls and the dogs run around and enjoy Indian Summer in Maryland, have dinner with some crazy, wild-eyed liberals, and make sure the press knew who they were and what we ate (include arugula and craft beer on the menu).

On Monday, I’d wait.

On Tuesday, I’d give a speech and announce that, having thought about it over the weekend, in the calm of Camp David, I also need a new program of really strong controls on financial markets.

You get the picture.

Right now, the only people upping the ante are the Rapeublicans. In order to “meet in the middle” and appear “reasonable” Mr. Obama has to move towards their position. That’s no way to negotiate.

Rapeublicans who are watching the polls go even further down on the notion of shutting down the government (they’ve already crossed that Rubicon — another river reference — so what the heck), need some additional motivation to move towards Mr. Obama. And they need to see that continuing to hold out will cost them even more.

Maybe, in the end, Mr. Obama shows what a reasonable guy he is by compromising on a new bill of Elizabeth Warren’s choosing and half of his judicial appointees. That’s how negotiations work.