Elites agree: it’s time for you and your kids to pay for their failures

Today’s POLITICO has one of those only-in-the-Beltway kinds of stories that make you wonder if there’s any signs of life there at all.  Reported by Jim VandeHei and Mike Allen, it’s a synthesis of elite opinion (lawmakers and staffers from both sides of the aisle, as well as business executives) about what needs to be done to get our economy back on track once and for all.  Now certainly, there’s some good stuff in there — expanding immigration for high-skilled workers, for instance, is something that is long overdue.  But let’s be clear here.  The elite agenda for “fixing” our economy calls for significant doses of sacrifice from the middle class and working poor and precious little sacrifice from them.

Let’s start off with the sacrifice that the elites are willing to make — an increase in taxes for those making over $250,000 a year.  This would raise the top marginal tax rate (on income over $250,000) from 35% to the Clinton-era rate of 39.6%.  That’s certainly something, although one could fairly argue that returning to the tax rates that coincided with the best period of economic growth this country has had in the last 20 years might not be the worst thing in the world.  But let’s look at what isn’t on the table.

Changes to capital gains taxes?  Nope.  They’ll continue to get their much lower rate, meaning that folks like Mitt Romney or Paris Hilton who live off of investment income will continue to pay tax rates in the 15% range — lower than many middle-class and working poor families.  Not only that, but hedge fund and private equity investors will still get to treat their regular earnings as investment income instead of wage income, saving some individuals millions in tax liability every year.

Taxes on financial transactions or financial speculation?  Nope.  In the wake of the financial market meltdown in 2008, some suggested using a transaction tax on stock or bond transactions or higher rates on short-term capital gains as a means to both discourage speculative activity that makes the markets more volatile as well as creating a fund to deal with the damage created by current (and future) market failures.  These are still not on the table.

Breakup of the largest financial institutions?  Nope.  The 2008 market meltdown required government intervention to prevent the collapse of institutions deemed “too big to fail”.  What largely happened in these cases is that other large banks ended up buying the failing banks.  So an industry that was already unduly concentrated and prone to risk has become even more concentrated and even more prone to risk (despite some of good provisions in Dodd-Frank).

All of these items would represent real sacrifice for the elites in our society, but they’re not on the table.  What are they asking of the middle class and the working poor?  Oh, not much, except the gutting of perhaps the two most effective government programs at providing income security and health care to Americans.  Banks and financial institutions get bailouts when they make bad decisions.  Now the government is poised to give you insecurity when you retire after decades of hard work.

Sacrifice for thee, not for me

Medicare is the largest contributor to the future deficit problem due the explosion in both the number of seniors citizens and the continuing rise in health care costs (at a rate much faster than inflation in the rest of the economy, which means it will have to be part of the solution.  But there’s smart ways to reform Medicare and stupid ways to reform Medicare.  As befits our current political dialogue, the ones that are being debated are the stupid ones.

One of most likely changes to Medicare is an increase in the age of eligibility from 65 to 67.  At a base level, this doesn’t sound like that big of a deal.  Well, the problem is that in trying to save the federal government a little money, we’re going to end up spending a lot more overall.  Increasing the age to 67 would save the federal government about $5.7 billion a year, but would raise individual out-of-pocket expenses by $3.7 billion, and increase the insurance premium expense for employers by $4.5 billion.  Already, we’ve made the overall system less efficient by $2.5 billion, but we’re not done yet.  Adding 65- and 66-year-olds to the general health insurance pool is going to make everyone else’s health insurance more expensive (because the overall population will be sicker) — that’s another $2.5 billion.  Finally, states are going to have additional health expense on some of these seniors totaling about $0.7 billion.  If you total it up, the financial cost to society of changing the Medicare eligibility age is twice as large the savings we would see in the deficit.  That’s not a good trade-off.  (And that’s before we look at some of the non-financial impacts.)

There are smart ways to save money — significant money — in Medicare going forward.  We can end fee-for-service payment policies and replace them with paying providers for results.  We can give Medicare enhanced power to negotiate prices with suppliers — particularly for prescription drugs.    We can research the statistically most effective and cost-efficient ways to treat conditions and encourage providers to use those guidelines.  These are the types of reforms that we should be pursuing.

Perhaps even more galling in the context of the current budget debate is the fact that Social Security is getting dragged into the mix.  Social Security contributes nothing to our nation’s current budget deficit.  In fact, Social Security ran a $69 million surplus in 2011 and is projected to run surpluses for the next decade.  We have 20 years before the Trust Fund is exhausted (under current projections), and the simple act of removing the cap on the payroll tax would resolve at least 95% of the projected deficit going forward.  And if we did nothing, the cost of filling the gap after the Trust Fund is exhausted is less than 1% of GDP — a relative pittance compared to Medicare.

Instead, we’re seeing the same shortsighted tactics on Social Security as we are on Medicare.  What’s on the table is an increase in the retirement age from 67 to 70, and changing the way inflation is calculated so that such increases would be smaller than they are today.  These changes would have severe negative impacts on future retirees, but they would only raise 1/3 of the money that removing the payroll cap on the wealthy would.  Yet, no one’s really talking seriously about major reform to the payroll tax cap.

Big bad ideas

These reform plans for Medicare and Social Security are based on two big ideas, both of which are misguided.  The first bad big idea is “People are living longer, so increasing the eligibility ages is no big deal!”.  And while that’s true, it’s not true in the same way for everybody.  Wealthy Americans have seen their life expectancies improve by six years since 1977, while folks in the lower half of the income distribution have seen only an increase of one year in that time period.  These workers are more likely to be in blue-collar industries that are more reliant on physical labor.  Working in those jobs in their upper-sixties with questionable health insurance just isn’t a winning proposition.

Source:  The Incidental Economist

Source: The Incidental Economist

The other really bad big idea in these plans is “We have to protect current seniors”.  It’s certainly true that low- and middle-income seniors shouldn’t be expected to see substantial changes to these programs.  But if this is the kind of crisis that makes one of our political parties willing to risk defaulting on our bonds, maybe rich seniors should make some sort of contribution to solving the problem?  Certainly, there are wealthy seniors (and seniors-to-be) who could afford to pay co-pays for Medicare or take some means testing on their Social Security check today.  It hardly seems fair to think that the bill for this financial mess should be borne primarily by the children and grandchildren of those who ran up the credit card in the first place.  If we’re not willing to require any sort of contribution by today’s seniors (and seniors-to-be) to solving this crisis, aren’t we in fact admitting that it isn’t a crisis and just a problem that needs to be addressed in a reasoned manner?

Passing the buck and the bill

And it gets worse yet.  Many of the elites pushing these sorts of “solutions” to the problem are simultaneously pushing for so-called tax reform that would lower corporate taxes.  David Cote, the CEO of Honeywell, has been one of the key public faces behind Fix the Debt, a business organization that has made a large effort to influence the debate.  Cote loves to talk about tax reform as a part of this process, but what he doesn’t like to talk about is that he’s really trying to eliminate the corporate income tax.  If corporate taxes are eliminated, guess who’s going to get the bill to make up the lost revenue?  (Hint:  It’s not David Cote.)

I’m not opposed to tax reform.  But tax reform shouldn’t consist of a series of handouts to one group while demanding sacrifices from another.

And guess what else isn’t on the table as part of these negotiations?  Any real attempt to focus on the unemployment problem.  Basically, at this point we’re left to hope that if the elites get their way and extract the appropriate sacrifice from everyone else that the certainty created by such maneuvers will suddenly convince business owners to start creating jobs.  Of course, that notion in and of itself is misguided.  Businesses don’t create jobs out of certainty — they create jobs because there is demand for their product and services.  To create demand for their products and services, we need to have a population that has jobs and disposable income to spend.  Cutting Medicare and Social Security while squeezing government spending through austerity does nothing to improve the employment picture or improve household income.

We have a medium- to long-term deficit problem that needs to be addressed.  The important thing we need to remember is that it’s far more important to do the right thing for all of our citizens than to just earn political scalps by “raising taxes on the wealthy” or “cutting entitlements”.  These problems are about more than numbers on a spreadsheet — they have real world impacts that CEOs or lawmakers or writers for Washington D.C. political journals will never have to deal with.  It’s time for the voices of those who don’t attend Georgetown cocktail parties to be heard as part of this process as well.


115 Responses to “Elites agree: it’s time for you and your kids to pay for their failures”

  1. Well done, Sean. You do a nice job of presenting the facts. We have a mess and it will take true shared sacrifice to get back on track. Its been a long time since we have even gotten close to a level playing field for true opportunity for all to prosper within the law. Too many are above the law or below the law, causing those of us in the middle to bear most of the sacrifices. We cannot continue on this path without serious reflection on the disasterous impacts of various policies of the past and those being lobbied for our future. Remember Rome?

  2. Are you starting to get it? The federal government is unsustainable. We make the failed European countries look pretty good. Our debt is staggering. Obama wants more of it. What a plan. Maybe he should just cut everyone who doesn’t earn 100,000 a year a check for the difference. I mean why stop now. Let’s spend all of the world’s money before it’s gone. We can just owe the rest of world everything.

    We do have a big problem with entitlement programs. they only work under continuing population growth. We don’t have that, and so these programs are now unsustainable. But even more worrisome is discrecanary spending. That’s massive as well. And our monetary policy is a joke. I think we’re already over the cliff, and there’s no way to climb back on top of it. Our federal government is going to destroy all of us, because they think through spending comes power. that might have been true once upon a time. Now it’s economic death. The day is coming where the dollar won’t be the world trading currency. We are finished when that day arrives, and few understand it is coming, and could even happen during Obama’s term. In fact, one has to wonder at this point if it’s not a goal of this administration. WHen you combine the QE nonsense with the unlimited debt increase proposal, that adds up to one thing. A new world currency, and the financial demise of America.

    • Good grief, Chicken Little… “coming after all of our families”, “going to destroy all of us”, “we are finished”. Such a fixation with a desire to see failure, just because the majority of Americans have rejected your tactics and point of view. I am reminded of the definition of a fanatic: someone who only believes in one thing and won’t change the subject. (Unless you have some facts to back up your visions of despair; however, every time I ask for facts, Mr. Brunette, you seem to have always left them in your other reality. Most unfortunate.)

      A balance is needed, and that was the point of the piece. Random cuts that make great sound bites are akin to the point presented here: http://www.gocomics.com/candorville/2012/12/06

      This has been the conservative premise for decades: cut, cut, cut. But any good business knows that cutting elements that are essential to growth only produces negative returns, thus hurting the business in the long run (which Sean illustrated above with specifics and details). Even more importantly, we’ve tried the “cut for the rich because it’s good for us all” approach, and it has left us with massive deficits while never delivering on that golden salvation that is hyped so much. Balance is needed; we should pursue efficiency, not blind loyalty to the mantra of either side. Part of long-term efficiency means making fact-based decisions, not proclaiming the coming of the apocalypse every time someone offers a better solution that isn’t yours.

      • No one wants to see failure, (well, maybe Obama, given his policies). Government spending isn’t going to solve the problem. It makes it worse. We have to reign in the federal budget. It’s unsustainable. As to entitlements, the only way to fix them is reduce services, or have more people paying in. We aren’t going to have more people paying in, The lower birth rate has already occurred. You can’t go back and fix that. SO you either have to cut services, OR you can fund these another way. If you choose more funds, you damage economic growth.

        • “No one wants to see failure, (well, maybe Obama, given his policies).” That, combined with your doomsday prognostications without any facts to sustain them, shows the underlying source of your perspective. Party loyalty is admirable, up to the point that it is worshiped above the needs of the nation.

          Sean already pointed out below that the population is growing, so that argument is shot (unless you take the approach that Fox News does that white population growth should be the major driving force behind that figure; yes, they did actually say that on the air).

          And you still ignore the fact that the cuts in services will actually cause a restriction and decline in the economy. When you cut Social Security benefits, a person who is living off of them has to redirect other funds to those basic survival costs. Often their families will do the same. This reduces their other purchases, which reduces the demand to produce those goods and services, which reduces the need to employ those who were part of that production, which only continues the spiral.

          I’m not arguing for unlimited government programs, and from what I can tell neither is Sean. The measure of future action should always be what produces the best and most efficient result; in that case, your path fails, Mr. Brunette. The conservative fixation with supply-side economics ignores the realities of demand limitations and Maslow’s hierarchy of needs.

          The real proof of that is that we’ve tried this conservative approach for decades, and it’s never delivered the promised results. While the overall philosophy is radically different, the greatest parallel I see to the conservative tactics behind the “cut our way to prosperity” approach comes from the Bolsheviks. They were convinced that the masses would never understand the need for their “glorious revolution”, so they took it upon themselves to force their vision on millions in a reckless and harmful manner. Their argument: once we get our rules in place, you’ll realize it’s good for you, so don’t question it.

          This comparison may sound extreme… until you look at the rhetoric coming out of the ultra-right. Until you read how conservatives in the 1930’s argued that Social Security would enslave American workers forever. Until you listen to an audience that applauds the idea of letting someone die if they can’t afford a life-saving procedure. Until you see plans that want to cut revenue, even when the deficit looms larger on the horizon, so we can give tax cuts to those who are investing that money overseas and not in America. Until you hear people advocate for an approach that independent analysis shows will hurt the economy, just so Grover Norquist’s ideal view of government shall eventually become law. Until you read about a lackluster candidate blaming his loss on the 47% who he deems to be mindless automatons, bought by the government (ignoring the flaws in himself and his party, of course). Until you read the comments proclaiming the end of the world, unless their revolution comes into being (sound familiar, Mr. Brunette?).

          This conversation started on facts, and nothing said to this point contradicts the facts Sean offered. Until that changes, the idea of implementing this conservative “vision” you champion requires the majority of Americans to ignore what is in their best interest, and the short and long term interest of the nation. It requires a uniform adherence to one perspective, even in the face of evidence to the contrary. This inherently contradicts the flexibility and practicality required to function in a free market.

          • Now you want to infer that I’m a racist. Typical left-wing retor.

            • I never implied such a thing; I merely pointed out that your argument about population growth of the United States was incorrect, and obviously so. It’s an argument I’ve heard before from the right-wing, and it seems to dismiss a large portion of the population as being nonexistent. Maybe you would care to explain the source of your particular claim, given the obvious evidence to the contrary.

            • Indeed, I didn’t even say the Fox News segment was racist (maybe slightly humorous and tone-def, but very amusing in general, especially the slogan “procreation, not recreation” at the end). Their point was that non-white birth rates and immigration was driving population growth, and they felt it was a healthy thing, but that the white population wasn’t doing it’s part.

              If you wish to look up the segment, it was from John Gibson (“White People ‘make more babies'”).

              The point was more on the fact that you offered an argument that had no factual foundation, unless you ignore large chunks of reality and the population of America.

          • Until you listen to an audience that applauds the idea of letting someone die if they can’t afford a life-saving procedure. Why are you bringing Obamacare into this discussion?

            • It illustrates the point, quite clearly, that the far-right has taken a position so inflexible and detrimental as to contradict the economic needs of the nation, and holds to it out of ideology regardless of the effect it has on the average American.

              • I think you missed my point, that it is Obamacare that will result in people’s death due to expense, not the GOP.

                • People are dying due to the expense of health care right now; Obamacare (which originated as a conservative approach to health care supported by the National Review and implemented by Republicans at the state level) is an attempt to address that.

                  After all, it wasn’t a liberal audience that cheered on national TV when asked if a person without insurance should be left to die without medical treatment.

                  • State level… republic of states… we’re finally getting somewhere. No cheered for someone left to die over a lack of medicl coverage. What a crock of manure.

                    • You can actually hear people cheer in the background when it’s suggested that society should just let someone without insurance die.

                      Not knowing the truth doesn’t make it less true, Mr. Brunette.

                    • Lame. The Paulites cheered everytime he spoke. They were not cheering someone dying for crying out loud. And that’s the Libertarians, not the Tea Party, nor conservatives.

                      You like to dig up some whack-a-do moment that anyone GOP says or does and assume it’s the party flatform. Nice wide brush you use there.

                    • You like to dig up some whack-a-do moment that anyone GOP says or does and assume it’s the party flatform. Nice wide brush you use there.

                      Pot, meet kettle.

                    • This was one particular instance… there are others, too. The point still holds: the GOP abandoned a conservative plan to provide health insurance once a Democrat took up the calling. The Tea Party, as the most vocal voice of the party (and the one you mimic in your tactics), would rather have no solution.

                      True, this doesn’t represent all of the GOP, just many of their most vocal. In particular, given your comments on this forum, it is only fitting to paint you in the colors you choose to wear, Mr. Brunette.

                    • Go back to state level programs where you were starting to make sense, and leave the Paulite hatin’ aside. You were starting to see where the divide exists.

                      And I don’t think I’ve ever cited a Democrat and assumed that was the party platform. My opinions of their platform come from their actions, not words, or applause lines over some dopey comment.

                    • It wasn’t just the comment, it was the lack of reaction from many in the GOP leadership. Rick Perry used it as a campaign moment to reject the notion, and eventually Romney issued a statement against it. But McConnell refused to condemn or even reject the idea when asked about it on Meet the Press, and much of the GOP leadership followed suit. Thus the point: there is a blind adherence to opposition of government in any form, regardless of the effects. Some members of the GOP are starting to break from this, but they are being singled out for challenges by those who see only one way to think, and try to ridicule all other ideas (sound familiar, Mr. Brunette?).

                      Hence the reference. My hope is that the rest of the GOP leaves this behind.

                    • Oh, blah blah blah. Now your painting with a 3 foot wide brush again. Show me anywhere in the party platform that states we want people to die from lack of insurance. You can’t because it doesn’t exist. Seriously, grow up. Read the platform before you accuse someone, or cite some actionable law or something. BUt taking a “cheer” of all things, out of context, is just plain childish.

                    • Again, I’m not painting the whole GOP with that brush, just those who are so rigid in their ideology as to be inflexible to any other solution. I cited examples; you may not like them, but your own comments on these forums reflect that very attitude. If you don’t like the comparison, then I suggest you change your rhetorical tactics.

                      Take this article, for instance. Sean presented cases where both parties are looking at solutions that do more harm than good. Your inherent response was to criticize all government action (and predict the end of the world as we know it), which shows an ideological rigidity that completely misses the point.

                      There is too much of that rigidity in the GOP. Those who try to be more flexible are threatened to be cast out. The libertarians have their own form of this logic, but so does the GOP as a whole, and it is counterproductive to any long-term resolution. Every instance where you cry about someone “coming after all of our families” is just proof of that.

                    • Coming after all of our families only refers to the sales tax increase, and you know it. You are being absurd again.

                    • The true absurdity is arguing that those who disagree with you are “coming after everyone’s families.” It’s that degree of absolutism that creates the inability to find practical solutions. So if you are claiming not to be a fan of absurdity, then your tactics should reflect that.

                    • No, the true absurdity is being unable to face the reality that despite the DFL claim to only raise taxes on the rich, that they are looking at more revenue from the sales tax, which does effect every family. It’s a fact. Every single person pays sales tax.

                      You see that’s the slight of hand that is wrong with this class warfare BS. The Democrats always say they only coming after the rich, but then while you’re all cheering for that, they do somehing in the background that effects all of us.

                      In the meantime, you think there’s been a victory. Obama continues to run around, saying folks don’t pay thier fair share, (which is utterly ridiculous), and in the meantime mkaes more policy decisions that hurt us all, like QE X. But just keep cherring. I guess when we all on food stamps, you’ll be happy.

                      And now that will be criticized as extreme speak, despite more people being on food stamps than ever before. It’s the reality that is extreme. Pointing it out is just plain honest.

                    • QE is a Fed policy, not an Obama policy.

          • The measure of future action should always be what produces the best and most efficient result; in that case, your path fails, Mr. Brunette. On the contrary, it is the federal government providing the worst of any sort of efficiency. The farther away from the problem, walking up the governmental hierarchy, the less efficient the results. You seem to want to place the federal government for the top level of Maslow’s hierarchy. Which is very telling when you think about it. In other words, how Marxist of you.

            • Nonsense, Comrade Brunette. You insist that all government is bad, even when the evidence shows otherwise. You insist that cutting benefits will spur growth, even when independent studies show it would suck money out of the economy to meet the basic needs of survival. You insist on only one point of view, and the demonization of all others. And you never offer facts, only the fierce rhetoric of a revolutionary. Hence, the deserved comparison.

              In other words, Mr. Brunette, your approach is to totalitarian to be healthy for America. It is blind adherence to a collective ideology, nothing more.

              • I insist no such thing. But is certainly true that in most respects government as implemented through union contract and control, along with the most ineffective budgeting process known to exist, result in massive inefficiency, leaving one no other choice than to see the federal government as the last choice to solve our needs, rather than the first. It’s the heart of what being a Republic means. And your buddy seems to want to end that with constant expansion of federal power. History shows us this will fail, and will fail miserably.

                • And yet you have no counter to the facts that are presented that show the GOP approach as being overly broad, attacking programs that do work in ways that undermine the economic growth of the nation. That was the core of the original article; instead, you offer a straw man without ever presenting any evidence to the contrary.

                  That is blind allegiance, especially when coupled with the predictions of utter destruction and damnation that headline your posts. When you can show facts and acknowledge them, then it will be different. Until then, it’s just blind dogma at the expense of sound policy, nothing more.

                  • What is the sound policy you speak of? And seriously, your painting with such a broad brush that I can’t even tell who you are referring to when you make statemtns regarding the GOP and it’s positions. Our positions is that we spend too much in federal government. That most certainly is the case, and if not reigned in, it will destroy us. If you just raise taxes and debt limits willy nilly we are going to have big problems. You can cram your head in sand if it makes you fell better.

                    • My head is not in the sand; in that regard, I have no desire to follow in your failed example, Mr. Brunette.

                      The point of Sean’s premise was that many of the proposed solutions actually will cause a greater harm to the economy; therefore, cuts and allocations should be judged by what produces the greatest benefit. To which you blared the line of “cut, cut, cut” without any sensible thought of the economic consequences (and then you toss in your doomsday warnings, just for some thuggish seasoning).

                      You are loyal to party, not to reality, and too many of the GOP leadership follow that path. You still have no facts to counter the main premise of the article, just anger and accusations. So in that regard, I will leave you buried in the comfort of your reality, as limited as it may be.

            • As an example: if the federal government is always the most inefficient, then why is the administrative cost of Medicaid about one-fifth of the cost of the average insurance company?

              I’m not saying that we automatically turn to government; however, I’m also not buying the corrupted conservatism that sanctions any sort of private enterprise, no matter how corrupt or inefficient, as the way to go.

              • If the administration of Medicare were effective, this would be a great argument. There are to be sure, inefficiences with private insurance, however, due to the profit motive, work is always being done to improve actual efficiency of the entire product.

                • True… unless that profit motive can still be achieved without a need for efficiency. That is the reality of much of the current health care market, where executives can make significant amounts of money while still offering poor care and red tape. That is why the model originated through conservative channels (and later incorporated into Romneycare and Obamacare) relies on exchanges of various private companies to force competition. Only for those who fall between the gaps does the government offer coverage.

                  That is a major flaw without an easy answer. I do not want to limit the rewards one can find through innovation, but right now executive compensation allows for the rewarding of waste and incompetence in many cases. Thus, assuming that the private market inherently is more efficient is a false premise.

                  My solution: assume nothing. Look at the facts and figures, as Sean did above, and set policy based on maximum benefit.

                  • WHy do you imagine that an executive would even want to make a huge profit to the detriment of the quality of his product? WHo would use a product if it was ineffective? Do you really imagine there will be any cost controls without competition to provide better more efficient and effective insurance? No wonder you stick to Marxist principles.

                    • No, Comrade Brunette, it is you that cannot function outside of your collective mentality. Most unfortunate, but your choice.

                      The fact is that there are multiple examples where executives do what maximizes their personal profit at the expense of the long-term success of the business. This happens because executives can move fluidly, and are often guaranteed exorbitant compensation before demonstrating any return from their stewardship. If compensation was linked to performance, it would be a different story.

                      So, once again we have more name-calling, but nothing to back up your comments. Nothing.

                      Particularly on the point that Obamacare was built on the idea of encouraging competition; on the notion of looking for what is most efficient, not just what fits an ideology. In those areas, Mr. Brunette, yours is the greatest adherence to a collective consciousness I have ever seen. No matter what evidence is shown to the contrary, you have your solution, regardless of the cost to the American economy and people. That approach, by definition, is the opposite of the free market. It comes at the expense of being able to explore options based in reality that will deliver the maximum return.

                      Good luck with that, comrade.

                    • If compensation was linked to performance, it would be a different story. Which it is, so I guess it’s time to hear that story instead of your fantasyland theories.

                      I have to ask you, do you use private insurance, and if so, why? Does it save you money, or would you be better served to only have catastrophic coverage? If it saves you money, then bingo, we have a satisfied customer. If it doesn’t, why do you use it?

                      You should try speaking with a CEO sometime. You might actually learn what their days are like. Or even speak with any officer in a large company. Profits come from efficiencies and value. Otherwise there is no customer base. I really get tired of buffoons who think insurance companies are evil. If they are, so does everyone use them. It’s not like air. You don’t need insurance. You can pay the bills yourselves. WHy not use a co-operative where the profits come back to the members? Does anyone make a living working at a co-op, or can just any moron off the street run the complexities of an insurance company?

                    • Do you really believe all executive compensation is equitably tied to performance? The Hostess Board was handing out bonuses to its executives as its business was swirling down the drain. Look at Wall Street during the financial meltdown. The state of corporate governance in this country right now is dreadful.

                    • My wife was working comp at RESCAP (GMAC) during the meltdown. I can tell you that yes, there are bonuses paid out to executives during down times. But those bonuses are for fiscal periods previous to the downturn, and are contractually obligated to be paid out. Big execs received huge bonus after the meltdown, but these were payment for the banner years leading up to the crash. The bonuses to any Hostess execs were ties to previous fiscal period objectives being met. That how much of the higher compensation comes about. They get a good payment for growing the business, or what ever set of objectives they’ve agreed to. And when they are met, they pay them out. Typically, 50% to 100% is tied to company or divisional performance. These are incentive programs, and they work very well ensuring that execs get paid when they do well, and not so well when they fail. Go look at next year’s Hostess bonuses if you want to see what this year’s performance is worth.

                    • If Hostess was making its objectives, then its Board was doing a lousy job of setting objectives. It’s not uncommon.

                      I work at Supervalu. In our last fiscal year, we delivered our fourth consecutive year of sales declines and the stock went down 22% (reaching single digits after peaking at 49 in 2007). Our CEO got a $700K bonus and a raise in his base salary for that “performance”. Then, he got fired after the first quarter of the current fiscal year, which wasn’t appreciably worse than the performance he had delivered at any point since he had the job.

                      The reality is the boards of directors are made up of corporate executives who treat their executives the way they want to be treated. And our laws on corporate governance make it very difficult for shareholders to influence those decisions. Even a “no” vote on say on pay isn’t binding on the Board, and it’s effectively impossible for non-institutional shareholders to impact Board elections.

                    • Well said, Sean.

                    • Do you really think you know why these execs received thier bennie’s? Do you have idea what the objectives were for the individuals you are upset with, and do you have any idea the fiscal period for which the rewards applied to?

                      I can tell you it made my wife sick to be directing these payouts to these lousy exec at GMAC, but it was for previous performance, and it follows the contracts that are made with these people.

                      I’ve been there. I worked for a company who did very well year and not so great the next. During that following poor year, I was given a huge bonus, because A: I delivered on my objectives, and B: the company did very well the previous year. It’s how the game is played. They are called incentives. I know that doesn’t happen in the union world, so you might struggle with it, but it’s effective.

                      In the union world, my dad used to work extra hours off of the clock to help meet deadlines. Those dealines meant big bonuses. But because it was a union shop even the slackers received the same bonus he did. Pretty disgusting to see your efforts go towards comp for doorknobs.

                      These guys at Hostess took some risks. Sometimes thet paid off and they did well. Next year, they won’t get squat. unless they somehow turn things around.

                    • I do know why these execs got their bonuses. Such information is available in SEC filings for publicly traded companies. Yes, those performance rewards were in line with their contract. The problem is that the Board did a lousy job of setting the objectives in the contract that triggered those bonuses.

                      It’s not a union issue (I’m not a union employee. I work in finance. So considering you know nothing about my background, don’t spout your ignorance.). It’s a governance issue.

                      I love capitalism and the free market. It can be a remarkable force for good, and freedom. But much of what we have going on in our economy today is a horrible distortion of what capitalism and the free market should be.

                      Yes, some of that is the fault of government — which sticks its nose in some areas it shouldn’t and fails to stick its nose in some areas it should. Much of it, though, is the fault of people in the business world who have allowed it to become cronyist and corrupt at the highest levels.

                    • I now full well you’re not in union. Never said you were. I did imply that you seem to love the union model of total equal pay, never mind the results. That’s not free market.

                      Can you maybe list for me those objectives that were shall we say, objectionable? Which ones did you have a problem with, and why?

                    • I love the “union model of total equal pay, never mind the results”? Where have I said that?

                      It would be a lot more productive if you respond to things that I’ve actually said, and not those that you imagine me to be believe.

                    • Incidentally, the objectives themselves weren’t met. But the Board gave an exception and paid the bonuses anyway. Bad governance.

                • Why do you argue that the administration of Medicare is ineffective? It’s certainly not inefficient when compared to the current alternatives.

                  • Why? Oh I dunno. Decades of fraud. It’s broke. Easy to be efficient with other people’s money. There’s zero incentive to make it efficient. Zero incentive to reduce costs. Zero incentive to reduce fraud.

                    • If there’s no incentive to reduce fraud, how do you explain this?


                      If there’s no incentive to reduce costs, then how do you explain the $716 billion in Medicare savings in the ACA?

                      Listen, you can argue that these things don’t go far enough or that they’re bad policy. But to say that they don’t exist indicates that you’re living in some sort of factless fantasyland.

                    • 1 in 10 dollars paid is fraud. Medicare also shifts much of the admin costs to the provider. Costs per enrollee are actually higher than private insurance, but since the average cost of elderly care visits are higher, the percentage looks better. It is indeed less efficient then most private insurance.

                    • The 10% fraud figure isn’t exactly correct. While the “improper payments” payments amount is near that level (8.4% in 2011), it’s not all fraud. Much of those “improper payments” are in fact valid expenses that were incompletely or illegibly documented.

                      I will agree that more needs to be done, though. The Obama Administration is taking some good steps on this, and I hope that their projections on this come true (they believe they can eliminate two-thirds of the “improper payments” in the next five years). Hopefully, Congress will continue to allocate money for this purpose.

                    • Cite sources; until then, I’m not holding my breath, with all due respect.

                    • I don’t agree with all the logic in the report. Fact is, you can’t exclude things like profit from evaluating private insurance costs, because that’s part of the model.

                      I would also argue that looking on a per patient basis is as incomplete a measure as per dollar. The best measure would be administrative costs per claim, but I’m not sure we’re ever going to see that figure.

                      Generally speaking, the report is probably correct that the gap in administrative costs is not as wide as commonly reported, but I don’t believe that they’re essentially even as this report states.

    • Your comment is full of distortions and misinformation.

      If you honestly think Western Europe looks good compared to America right now, I encourage you to pack up and move there. Because Germany is the only country that is producing economic results comparable to ours right now, and they’re doing it with far more socialism than we are.

      If you’re talking about debt, both parties are responsible, and neither party has a particularly compelling solution. Let’s not forget that the Paul Ryan budget doesn’t bring the budget into balance until sometime in the 2030s (and that’s only if all of his rosy scenarios come to pass). That “solution” isn’t exactly commensurate with the hair-on-fire rhetoric from you and other members of your party.

      The U.S. has a growing population. Between now and 2050, we’re projected to add 109 million folks, which would be the 5th largest population increase on the planet.

      Non-defense discretionary spending is capped for the next decade by the 2011 Budget Control Act, which will save nearly $800 billion over that time. These reforms will reduce non-defense discretionary spending to their lowest level as a % of GDP since they started tracking this stat in 1962.

      Medicare is a problem going forward, but it’s only partially a demographic problem. It’s also a health care system problem. We need to focus on reforms to make the system more efficient (as noted above) instead of looking for ways to save money by kicking people off the system.

      The fear-mongering about our currency just isn’t founded at this time. Even in the midst of these politically manufactured “fiscal cliff” and debt ceiling crises of recent years, worldwide investors have been flocking to buy our T-bills.

      • From a debt prospective, yes we have more than all of Europe. And it’s not fear mongering when the process of replacing the dollar as trading currency is already under way. It’s going to happen, because we keep devaluing our currency. Stronger economies will pick this up evenutally. When that happens the prices of everythng imported goes way up, especially oil, which drives everyhting else up. It’s a major concern, but is hardly mentioned in the media.

        We still have our good credit rating, but it’s going to fall if these problems aren’t fixed, and then the t-bill purchases will go to safer investments.

        • When two-thirds of the world’s currency reserves are in dollars, it’s going to be terribly difficult to undo that in a hurry. It’s reasonably likely that over time — two to three decades, probably — the dollar will be replaced by a basket currency made up of dollars, euros and yuan. This was inevitable, based on how large the Chinese economy will become. But we have time to adjust and prepare for the impacts (and to recognize that the dollar will still likely be the largest driver of the value of the new currency). It’s not a crisis that requires us to blow up the social safety net today.

          • Really? How fast did it happen to the Brits?

            • The shift from the pound sterling to the dollar was already underway before Bretton Woods (it started after the end of WWI). We’re not seeing any dramatic shift away from the dollar today — in fact, more of the world’s currency reserves are in dollars today than in 1995.

              And perhaps even more of note is that while there has been a slight decline over the last decade, there’s no global consensus on what should replace the dollar. The euro holds less of the foreign currency reserves today than it did in 2003, for instance.

              • Yes, but what triggered the Brits loss of this status?

                • Primarily it was the fact that the American economy had grown larger. Let’s not forget that it took about 40 years for the dollar to become the largest reserve currency AFTER the U.S. became the largest economy in the world.

                  • Primarily it was because the Brits had a huge debt problem, which made their currency less stable. that we were bigger gave us the ability to bully them into the modifications.

                  • Kinda leads us to the point doesn’t it? Massive debt = BAD. Continued massive debt = new world currency. History. Wash. Repeat.

                    • The real reason behind the switch was that the American economy had grown so much larger. By the end of WWII, the U.S. economy was about 5x larger than the U.K.’s. It only made sense at the time of Bretton Woods to have the world’s reserve currency linked to the largest economy.

                      Incidentally, the UK had high debt in the post WWI and WWII periods not because they were profligate social spenders, but rather because they had fought wars in which their very country was at stake. The UK had made substantial progress in reducing their debt in the 1930s prior to the outbreak of WWII.

                    • SO are you starting to see the reason for the concern yet? Extreme debt. Falling currency value. Unsustainable government spending. Lower credit ratings. Our status is in grave danger, and we squabble over who pays an extra percent in taxes versus dealing with the real problems at hand. Leadership. Failure. Obama.

                    • Again with the hair on fire….

                      If you actually took the time to read the posts, or to study the history, you’d see that it wasn’t the size of domestic spending and government that forced the change, but global shifts in economic power coupled with massive war expenditures. That has evidence behind it; your claim does not. Yours just repeats the party line.

                    • Again with some mythical party line BS. This isn’t a party line. It’s history repeating itself. We will no longer be the world currency if things do not change. The party line isn’t let’s get obtain a lousy credit rating to speed up this process. The party line is that we have to get spending under control. That’s just a fact. We cannot possibly tax our way out of this 16 trillion dollars of debt and expect our economy to grow.

                      Unfortunately, you want the federal government to solve problems they have no idea how to solve. How long has the war on poverty been going on, and look at us today. More people on food stamps than ever. Bang up job the feds are doing.

                      Does matter how the brits came to the debt? No. Out debt now outpaces our entire GDP. That’s unsustainable. And of course the pain will be felt by all, because all elected all of these idiots to continue down the road to destruction.

                      It’s really a simple reality, that we all need to face. We are, as a nation, screwed. It’s gone too far. If we raise the debt limit, our credit rating falls. If we don’t we have tough choices to make, and if we default on anything, or credit rating falls. No one wants this to happen. No one wants to see our credit rating downgraded, because that is the begining of the end of our being the world currency.

                      then there’s fact, if you want to look at how the QE issues are affecting Johnny 6-pack. Every single time this administration performs a new QE release, our dollar buys less. Guess what that does to your retirement, or your pension. It devalues that which you have saved. Everything costs more, and suddenly your retirement is insufficient. It in effect cuts Soc Sec benefits without touching the rates! When you retire, and the dollar can’t buy a gum ball, will it matter wether you have an extra $50 month or not. Not when that only buiys a loaf of bread.

                      It’s time to get real. Financial hell is right in front of us. We have to cut spending, and our current idiot in charge has it off the table. It’s purely insane.

                    • The debt limit in and of itself is basically meaningless. All raising the debt limit does is accommodate the spending that has been approved by Congress.

                      It was the height of hypocrisy that last year the House GOP passed the Ryan budget (which would, like the Obama budget, add trillions to the debt over the next decade) and then refused to raise the debt limit.

                    • Who said they wanted uncontrolled federal spending and taxation? No one on this forum. That is the straw man you create when you can’t address the facts presented (which you still haven’t done).

                    • How did Congress approve of any spending increases when there’s been no budget passed for years?

                    • There hasn’t been a civics-class version of the federal budget process since the Clinton administration. But every year, Congress passes a series of resolutions that set the spending authority for the federal government for the coming year.

                    • Per the Constitution, Congress (the House of Representatives, in particular) must originate all spending legislation. Hence, your point is wholly void of sense or fact.

                    • So what is the issue on the debt ceiling then? WHy is a different discussion if the spending is already approved? Or is it that when the revenue falls short, and no one has had the guts to reign in spending, that we have to deal with these issues? I know Drew won’t understand this or discuss it rationally, but perhaps Sean will. WHy do we even have a debt limit, if not to prevent us from going too far inour spending? What’s it’s purpose, and how is that at odds with the rest of the process?

                      I mean, what your suggesting is that Congress already said we could spend 4 trillion this year, but we only have 2.5 trillion of projected revenue, for example, (it’s pretty close to that depending on who you beleive), but for arguments sake, why is there a debt limit if we can just pass resolution after resolution to spend to our hearts desire?

                      And how do we ever expect to get any of this under control wihtout a budget?

                    • The debt ceiling was instituted during WWI to make it easier for the Treasury to issue bonds by allowing them to issue bonds up to a certain limit. Before that time, Congress approved each batch of bonds individually.

                      In 1979, Congress passed reforms that tied the increase of the debt ceiling to the approval of spending authorizations. This was repealed by the Republican-controlled Congress in 1995.

                      Some believe that the debt ceiling is actually unconstitutional, per the 14th Amendment (Section 4). But it certainly seems as if fight over the debt ceiling are unnecessary. After all, if Congress approves a budget that pushes the debt level of the United States over the debt ceiling, one should assume that it is in fact their intention to raise the debt ceiling. Having political fights and risking default is completely unnecessary.

                    • You don’t need to lecure me on the Constitution and spending, Drew. My point is certainly valid. If you want to lecture someone on the Constitution, I’d start with Obama. He wants to gain this authority.

                      And again, even though Congress authorized spending for certain programs, you fail to address what the purpose of the debt ceiling is, and why we’ve ever had one to begin with.

                    • Again with the name calling, Mr. Brunette… so disappointing.

                      If the debt ceiling is important, then why did the GOP blow right past past it for years? Why was one form of deficit spending OK, but the other is evil?

                      The vote on the debt ceiling has always held an element of pageantry, but the question Sean offered that you still haven’t addressed is that blind adherence to sound bites causes cuts that actually cause harm. Still haven’t heard you address that yet.

  3. Isn’t it amazing that the states, (at least a good deal of them) are the ones who are getting this right? The states are getting themselves under control with austerity measures that make sense, and state deficits are coming down, while the feds just keep going up. Kinda illustrates who should be handling things. Because the higher up the government hierarchy you go, the less control exists, the less accountability exists, and the more freedom is lost, all while everything grows out of control. We are repeating history, and this nation is heading for disaster.The interest along on existing debt will compund and rob us all in the end. It has got to stop now.

    • Isn’t it interesting that the most conservative states all take in more money from the federal government than they give in? Strange that in order to make your point of states getting it right, many of those taking your approach have to rely on money paid in by the other states to balance their budgets.

      In other words, the point you just made undermines your argument.

      • Name for me the states that have gone from huge deficits and now seeing surpluses who achieived this through some new federal assistance.

        • Again, a dodge… is it not true that most of the “conservative” states take in more money from the federal government that they pay in?

          • You’re the dodging. I’m asking for an example. Name for me a state where it’s deficit was resolved by the federal government. You can’t because it didn’t happen.

            • I don’t know if there’s a state that has been solely resolved by the federal government. The last two budgets in this state relied significantly on new federal monies to close the gap, though. The last Pawlenty budget used stimulus money to pay for ongoing budget programs, while the first Dayton budget took advantage of Medicaid provisions from the ACA.

              Drew’s larger point is that states that “red states” tend to be (in Republican lingo) “taker” states — that is, the federal government gives back to them more than they pay in taxes, while “blue states” (including MN) tend to “maker” states that pay more in taxes than they get back from Washington.

              • And those states were that way when they had the big deficits as well, so that wasn’t the solution to the problem now was it?

                • It still shows that the philosophy of “cuts at all cost” that you cite at the state level only works with federal subsidy. Hardly a successful example that you would make it out to be.

                  • Gee there’s only 50 states to pick from. I’d have thought one of them would have fit your “theory”. I wonder why you quote me as “cuts at all cost” when that was never said. Liberals…

                    • Your first response is always “cut, cut, cut” even when Sean showed evidence as to how this would actually tax the economy. If the shoe fits, wear it, Mr. Brunette.

  4. Very engaging forum, gentleman. I think John may have learned a thing or two.

    • I’ve elanerd that when you present facts to liberals they get pretty quiet.

      • Really? I’m still waiting for your “facts” from the photo I.D. discussion. They never seem to come

        • The facts were in the amendment, It didn’t pass so we’ll never know now will we. I notice you can’t answer the question when I present the evidence. Like the Medicare admin cost figure being wrong. Like states balancing their budgets. I’m sure you can try to jam some crazy quote from some whack-a-do in somewhere to bolster your argument.

          And then the phony outrage over calling someone a name, that didn’t happen. Unless you count being called a liberal. Which, if I were you, I’d either own it, or stop being a liberal. No sense being so dishonest with yourself.

          • I am a liberal on some issues, a conservative on others. I allow for other evidence and perspectives, something you do not.

            As far as the evidence you presented on Medicare goes, Sean beat me to it as far as pointing out some of the issues (like their comment about an inherent value add to the administrative costs with private insurance, which is a fairly big assumption).

            As far as states balancing their budgets, most of the ones that did very well had a natural resource boom (like North Dakota) or some other factor, which hardly is political at all. You still haven’t addressed the point that many of the states that are the most conservative rely heavily on federal dollars paid in by other states to balance their budgets. Your view is too convenient to be of practical application.

            As for calling names, you’ve accused me of being illiterate, an illegal voter, ignorant, and a host of other things. All of the quotes are still on this forum. Strange that you never remember those things after the fact, Mr. Brunette.

            • You said above that I called you name, yet I can’t find it. I’ve said you were illiterate, although I still do assert you have a hard time reading what is written. I certainly never said you were an illegal voter. Ignorant, although comes with liberal, I guess I’ve perhaps implied it in that sense.

              How convenient that you can’t pick any state to bolster your false assertion. The when evidence is presented that hows medicare isn’t so efficient you have nitpick and parse, and obfuscate with the name-calling BS. Liberals… 🙂

              • So when you disagree with our evidence it’s “truth-telling”, but when we disagree with your evidence it’s “nitpicking”. What’s the point of continuing, John? Is it possible to disagree in a civil, reasoned fashion or must it devolve into something lower?

                • That’s not what I saying. I’m saying when Drew is presented with something he can’t agrue against, he resorts to picking it apart by stating that I call him names, or imply that he’s illiterate or ignorant, rather than address the point.

  5. “It’s clear at this point, that you have only one intent, and that is stop the reduction of fraud in our election system, by any means necessary.” https://brickcity.wordpress.com/2012/09/06/how-the-voter-id-amendment-could-change-voting-in-this-state/#comment-1726

    “YOU WANT FRAUD TO CONTINUE! It’s all that’s left at this point.” https://brickcity.wordpress.com/2012/09/06/how-the-voter-id-amendment-could-change-voting-in-this-state/#comment-1744

    “Or are you just some guy of the street who wants to muddy the amendment so he can keep cheating?” https://brickcity.wordpress.com/2012/08/30/it-might-get-loud-ernie-leidiger-attends-a-voter-id-forum-at-a-senior-housing-facility/#comment-1700

    Then it goes into my need to support fraud so I could vote/have “my party” win (and no, I’m not an official or activist for any party, and never claimed to be). Again, if this was not your intent, then I would welcome a retraction or clarification.

    This could go on forever, and I have found much traction in showing others this forum and letting the conduct of all involved be judged on the words alone (as they should; I do not endorse enforcing a single point of view). However, it has the potential to hijack the conversation, which is unfair to the original author.


    Let’s set that aside, and get into the heart of this. Both Sean and I read your source, and pointed out obvious concerns with it. It may indicate a smaller gap in efficiency between Medicare and private insurance than what gets reported, but it still calls into question the automatic assumption of greater efficiency through the private sector. Efficiency shouldn’t be assumed, it should be measured, and the original point of all of this was that Sean pointed out areas where both parties go for easy cuts and sound bites, rather than making the proper evaluation. Your response was to associate government spending with economic decline, which I found contrary to the evidence presented, and so asked why you described those who took a different view to your own as deliberately participating in the destruction of America.

    Mr. Brunette, you had some interesting points on the decline of the British as the global economic leader; however, points were presented, with evidence, that demonstrated the global conflicts and the expansion of the American economy were more to credit for this. It is an intriguing discussion, but to use it to prognosticate on the destruction of America’s standing is a stretch, to say the least.

    So, to that end, let’s go back to the original point. Mr. Brunette, would you agree that there is strong evidence that cutting government programs without careful examination of the long-term effects has the potential of causing economic harm that outweighs any benefit gained? If so, then doesn’t this call for a measured approach that examines all options, and not just those favored by one party?

    • So I take you did vote to continue today’s frauduelent election system? I mean it’s pretty clear that the fraud will continue.

      • Again, Mr. Brunette, none of your claims of fraud in the discussion on this topic turned out to be credible; in fact, most of your “evidence” turned out to be false or unfounded, if not contradictory to your points.

        You claimed to have evidence of states where voter ID didn’t hurt same-day registration, only to have Sean show that neither of your examples were even accurate (one state you cited didn’t even have same-day registration). To which you responded that the proof was in your notes… which never materialized.

        You vehemently insisted that this would affect absentee voting, until I pointed out that a source you were quoting insisted it would, with an example ballot to prove it, to which you responded with… nothing. Nothing at all.

        Your sources about the “fraud” were exposed as highly partisan, while others used conservative sources to debunk the claims. The fact is that Minnesotans rejected this hollow shell of an idea because it was poorly worded and conceived. (I also find it highly convenient that when it comes to gun regulation, you want a limited approach that is practical and narrow in scope, but when it comes to voting rights you favor stripping people of their vote based on false evidence and the suspicion that someone might be doing something wrong, even though you can’t prove it.)

        Minnesotans rejected this ill-begotten idea, and if the campaign had continued for another month the margin would have been even greater. They didn’t all decide to support your fictitious “fraud”; they decided that the legislature should actually take the time to write a law that makes sense. So howl if you will, but this boogeyman you keep referencing is only in your head, Mr. Brunette.

      • *Amend third paragraph:

        You vehemently insisted that this *wouldn’t* affect absentee voting, until I pointed out that a source you were quoting insisted it would, with an example ballot to prove it, to which you responded with… nothing. Nothing at all.

        • There was no sample ballot as part of the amendment. That would come later when the laws were written to unhold the amendment. Are we REALLY going down this road again? You may as well have asked me for a moon rock to prove your theory. I couldn’t procure that either. You should really look at all of the election laws that exist in the state. Almost none of which are spelled out by our constitution.

          • And therein lies a key point: the amendment was so poorly written that even its proponents could not agree on what it actually meant. You quoted a source that contradicted one of your key arguments in favor of the amendment. Why should people vote for something that limits rights, when key portions cannot even be coherently explained by those in favor of it? This was an attempt to bypass the legislative process that should have exposed and rectified such egregious problems. Thus the people of Minnesota rejected it, as they should.

            As for the “fraud” argument, your statement above opened that up, especially since you disappeared from the conversation when the points I mentioned were brought up. We still don’t have the examples from other states that you promised, nor the clarification on absentee ballots, nor an explanation as to why multiple conservative organizations soundly reject your claims of fraud through voter impersonation.

            If you’re going to offer a claim, Mr. Brunette, you should be able to defend it. In this case, in that regard, you have completely and irrevocably failed to do so.

    • My point is this. While the President goes on and on with his class warfare B as in B, S as in S, that the real problems get buried. He’s got the whole nation beleiveing the rich somehow don’t pay their fair share, and the sheeple swallow that line, all the while his administration is destroying our futures through rampnat spending and devaluation of the dollar, which will likely lead to the financial demise of America. I cannot beleive that anyone in this country doesn’t beleive our number on problem is our national debt, fueled by unsustainable government spending.

      Your 401K, or your pension, and certainly your social security becomes worth less and less each and every year, and you’re worried about a minscule cut in benefits, all the while this administration is cutting the usefullness of that which you have set aside, by making it worth less and less with each passing year.

      Look at the latest prosal. 1.2 billion in new revenue 800 billion in new spending, cuts to come later? Are you serious? There’s no debt reduction in this proposal. We still are way below fiscally sound policies, and therefore, we will lose our credit rating, the debt ceiling will rise, and again, who will suffer? Every single American. Because when it’s over and done, everything will cost more. Do you get that? The grand bargin ends the payroll tax break, raises revenue on people over 400K, and so not only will you have less money in your paycheck, but now everything will cost more then it did the day before. The value of the dollar will continues it’s decline, and yet, some will claim victory. Except no one wins. Not one person.

      • That may be an answer to some question, but not the one that was asked.

        The question, as stated above:

        Mr. Brunette, would you agree that there is strong evidence that cutting government programs without careful examination of the long-term effects has the potential of causing economic harm that outweighs any benefit gained? If so, then doesn’t this call for a measured approach that examines all options, and not just those favored by one party?

        • As long as the long-term effect includes that cost of borrowing the money to continue the funding. If austerity measure help to maintain the value of the dollar, everyone wins in the long run.

          • That’s at least a start for conversation.

            Your presumption is that the money needed is inherently borrowed, which is true with the current deficit if (and only if) you refuse to look at additional revenue. In that case, asking for an evaluation of the debt incurred is a reasonable request as part of the consideration.

            However, an extension of Sean’s article above could be the need to evaluate the choice between adding/maintaining tax cuts and cutting government programs. In that case, I would argue that a holistic view must be taken that also considers the reductions to the economy from the cuts, along with the potential for future debt from either approach.

            Pure austerity has rarely proven to be successful in the long term. For instance, a state that chooses to cut funding for highway repairs in order to balance out tax cuts risks inhibiting economic growth through the deterioration of the infrastructure. This creates the scenario where the lack of investment becomes a limiting reagent to growth and prosperity. There are multiple examples of this, some from situations where debt forced the issue, and others by choice and philosophy (the Antebellum South as an example).

            I’m not calling for unlimited taxation; however, I do challenge the notion that the first action should always be to cut, cut, cut. It should be fluid to adjust to conditions, and based on the efficiency of return.

            • while you state there is an increase in revenue, since it’s till far below the deficit, there is no increase in realized revenue. Therefore any further spending will result in more borrowing. If the president were serious, there would be no new spending as part of the bargain. We are tapped.

              • However, if the cuts result in a reduction of the economy that is of greater magnitude than the reduced spending, then the net effect would also be increased borrowing (which is the example Sean demonstrated above). In that case, other avenues should be pursued that allow for continued economic growth in a balanced manner. This may include targeted spending that stimulates the economy in such a way as to spur growth, which leads to more future revenue.

                • If targeted spending worked, we’d be out of this mess after four long years of misery.

                  • We lost about $6 trillion in economic activity due to the recession. $800 billion in stimulus isn’t going fill that gap completely.

                  • Targeted spending wasn’t the issue under discussion. The point was that austerity for austerity’s sake can actually adversely affect an economy, and if that is the case then it should be rejected in favor for measures that promote responsible economic growth. In this case, the conversation was really about where to put money, in benefits and services or in tax cuts, and the evidence that the cuts to benefits would cause a restriction of the economy that would outweigh any benefit gained.

                    Additionally, one could use your same argument and apply it to tax cuts. That has been the mantra for decades, and we’ve seen a steady and constant reduction in the rates for upper income earners. And yet the promised land of perpetual growth has never been achieved (I believe Sean already presented data on this in an earlier article). All the more reason for a balanced approach based on the overall gain for the nation’s economy.

                  • Note: I realized I referenced the term “targeted spending” as part of my point, but not in the most accurate way. My apologies for any confusion.


  1. And There’s Nothing To Be Done | Brick City Blog - December 28, 2012

    […] these arguments are even more dishonest in another way.  As we’ve discussed before, these sorts of arguments are just other ways of framing the debate to protect entrenched interests […]

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