Paul Tullis's Grim Tidings

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The Right’s Favorite Lie About Social Security

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One of the most insidious falsehoods that rightists like to perpetrate about the deficit they’re suddenly so keen on reducing—after having overseen an 80% rise in military spending and the largest unfinanced entitlement expansion ever during the Bush administration— is that Social Security is bankrupting the nation.

We saw this last week in the NY Times, with Ross Douthat writing, “everybody knows the only way to really bring the budget into balance is to reform (i.e., cut) Medicare and Social Security…”

Then today, here’s the WSJ‘s Gerald F. Seib claiming, “Any serious talk of attacking the long-range federal budget deficit has to acknowledge the need to control the coming explosion in the cost of [Social Security and Medicare].”

But as Mark Weisbrot’s excellent outfit, the Center for Economic and Policy Research, points out—and as anyone who’s ever looked at their paystub ought to know—”Social Security does not contribute to the deficit. It is financed by a separate designated tax.”

Seib continues with the old rhetorical trick of leaving out the most significant fact if it contradicts your argument, citing the CBO to state that “spending on…Social Security…is to rise by 70%…over the next 10 years.”

Yet, as CEPR writes, “The most recent projections from the Congressional Budget Office show that [the Social Security] tax will be sufficient to fully fund benefits through the year 2039 with no changes whatsoever.”

So, OK, Gerald, granted—Social Security spending is headed straight up for a decade. But that’s not the cogent fact. What matters is that it’s fully paid for already, for 95% of the next TWO decades AFTER your time frame.

The reason Republicans are doing this is to rationalize privatization, benefit cuts, raising the retirement age, and any other ways they can come up with to slash the most successful, most imitated anti-poverty measure in history. President Obama’s task force to “reform” the program is co-chaired by a Republican who spent his entire career in the Senate trying to privatize and cut benefits.

We’ve already largely replaced company pensions with 401(k)’s, which means that most people’s retirement savings have flatlined over the last 10 years. What if you were retiring in March, 2009 with a Social Security fund in the stock market? Your nest egg would have been about 60% what it could have been just seven months earlier, and less than half its value three years previous.

I have no problem raising the retirement age for people under 40; their life expectancy is more than a decade longer than it was for people at Social Security’s beginning.

But why isn’t there any discussion of raising the limit of income subject to Social Security tax way, way above the current $106,800?

And why doesn’t the Republicans’ discussions of deficit reduction include the bloated,  out-of-control Pentagon, which is still buying equipment to fight a land war in Europe and stuck in a counterinsurgency it’s not prepared for and keeps failing at?

And why did every Republican in the House vote against health care reform, when, as CEPR shows here, “If the United States had the same per person health care costs as any of the countries which enjoy longer life expectancies than the United States, then it would be facing long-term budget surpluses“?

There’s no other explanation: Because the GOP would rather enrich the military contractors and pharmaceutical companies that pay its bills.

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Written by ptullis

October 5, 2010 at 11:49 am

Midterm Elections: Is the Shine Wearing Off the Tea Party?

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Latest polls:

In the California Senate race, Barbara Boxer now has an 8 point lead, widening the spread from 2 back in March.

Just a few weeks ago, Meg Whitman had a 7-point lead over Jerry Brown. Now, after Whitman has poured tens of millions more dollars into attack ads which factcheckers have called disgraceful in their inaccuracy, Brown has a 5 point lead.

In Pennsylvania, Twoomey had a 10-point lead; it’s now tied at 45 each.

Rand Paul/Conway: was once more than a 15 point lead for Paul, now Conway—a Democrat in Kentucky—is just 2 points behind.

Majority Leader Harry Reid, a top target of the GOP, was tied with the Tea Part challenger Angle; now Reid has a 5 point lead.

This reminds me that in 1951, Frank Sinatra’s record label had just dropped him. He was walking past a theater where Eddie Fischer was performing; Fischer fans taunted Sinatra.

Who gave Eddie Fischer a thought between the 1950’s and last week, when he died?

The point is this: Americans love the new new thing. The Tea Party was a sexy fad. Now the shine has worn off, and people are realizing what they are: inexperienced extremists with no vision for how to run the country except to grind government to a halt at the moment its citizens need it more than since…what, 1957, when the National Guard started integrating southern schools?

Prediction: The midterm elections will have the usual ruling-party losses, but nothing more. Forget about the GOP taking the House or Senate. Obama’s mandate renewed, and hopefully his confidence restored so he can end the Bush tax cuts for the rich and ram cap-and-trade down their fucking throats the way Cheney did with the giant welfare-for-polluters act known as the Energy Bill of 2005.

Suckas!

Written by ptullis

September 29, 2010 at 3:39 pm

Cantor’s Song: House minority whips spins a tall tale in the WSJ

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One of my favorite ways to indulge in masochism first thing in the morning is by reading The Wall Street Journal.

Today’s edition had a few gems from the Republican Party, but on a per-word basis of untruthful omissions, misleading statements, red herrings and pure bunk, the best piece by far is Rep. Eric Cantor’s (R-VA) op-ed.

He’s explaining why the GOP “won’t back down” on opposing the tax “increases” which “President Obama and Speaker Nancy Pelosi want…for those who happen to fit their description of ‘middle class.'”

That’s an interesting way of putting it. The president and speaker actually only oppose extending tax cuts that were to expire at the end of this year. These tax cuts—and their expiration—were enacted by a Republican Congress, and signed into law by a Republican president. But in Republican rhetoric, allowing a Republican law to expire as the Republicans themselves planned it to is a tax “increase.”

The “fit their description” part is also curious. If anything, Obama’s and Pelosi’s definition of middle class is expansive toward the wealthier end of the scale: They’re for extending the tax cuts for anyone making less than $200K a year. Only 4.3% of Americans earn more than that. So someone at $199,999 isn’t exactly in the “middle;” they’re in the top 20% of earners. I don’t know what universe it is that the top 20% is the “middle,” but apparently that’s not enough for Cantor; he implies that even people making more than $200k are “middle class.”

Cantor’s untruthful omission is the fact that the people who make the most money in the US aren’t getting it through earned income; they get it mostly through capital gains and dividends, which are taxed at 15%—far below even middle class marginal tax rates. In fact, the richest 400 Americans paid only 16.6% of their income in federal income taxes in 2007—even as their incomes rose.

But Cantor doesn’t stop there. He holds up the old Republican canard that “job creators…lack certainty” regarding “the tax and regulatory system.” This is how Wall Street and their pals in the GOP are holding the economy hostage: They don’t invest in the private sector and they don’t lend to small businesses (in whose name Cantor claims to be acting) because they “lack certainty.”

What would bring them certainty? Why, tax cuts for the rich, of course! To mix metaphors, what they’re saying is, Give us our free lunch or we won’t play ball. By the way, there’s no guarantee they will open the spigots of capital if they get the tax cuts they’re demanding for people earning a greater share of national income than at any time since the Gilded Age.

Then Cantor derides the “failed stimulus.” Here are the facts on the stimulus:

• President Bush enacted an economic stimulus in early 2008. If stimulus is so bad, why was it good enough for Bush?

• The CBO says Obama’s stimulus reduced unemployment by between 0.8% and 1.7%.

• Economists at Moody’s and Princeton say unemployment would be above 11% and GDP would be nearly $500bn lower. (Thanks to James Surowiecki for those last two.)

Some failure!

Later in that same sentence (way to pack the bullshit, Cantor!), the Minority Whip says private industry is better at creating jobs than government action. So how did Pres. Bush do in his 8 years?

1.5 million jobs LOST. The Republicans are like Superman: They created so many jobs that job creation went backwards!

Then Cantor disses “the new health care entitlement.” The biggest entitlement in the last 40 years, though, was Medicare Part D—passed by a Republican Congress and a Republican president, with no way of paying for it.

However, ObamaCare, as the Journal likes to call it, actually pays for itself—and saves money in the long run, according to CBO.

The next insult is a GOP favorite: accusing the Democrats of “class warfare.” Apparently, in the GOP universe, cutting taxes for the richest 5% of the country while income for the middle three quintiles stagnates; letting hedge fund managers (who made an average of $1bn each in 2009) declare the earnings they make on other people’s money their own capital gains so they can avoid paying a fair share; and calling the expiration of a law they themselves enacted a tax increase—none of this is class warfare.

But trying to change it, or even criticizing it, is.

The final rhetorical flourish is a red herring. Cantor writes (and he’s factually correct), “roughly half of all small business income in America will face a higher rate…”

If you’re a small business owner (like me), you probably read that (like I did) and think there’s a 50-50 chance your taxes will go up under Pres. Obama’s plan. But look carefully: “…half of all small business income…”

Because Bush was so expert with his policies at packing income at the upper end of the scale, half of all small business income in the US is earned by only about 750,000 people. How many small businesses are there in the US? 29.3 million.

For those of you keeping score at home, that’s 2.5% of the total of small business owners whose taxes will go up.

And some Americans want to put these disgraceful, hypocritical, selfish liars in charge again? Hard to believe.

#30#

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Written by ptullis

September 20, 2010 at 3:30 pm

Why McCain is a hypocrite on “don’t ask don’t tell”

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Sen. John McCain (R-AZ) has vowed to block a defense appropriations bill if an amendment that’s been added to it which would end the military’s anti-gay policy isn’t taken out.

This is ironic, because the tactic of adding unrelated pieces of legislation to existing bills without a committee vote or floor debate was invented by none other than John McCain.

As Hal Espen wrote in an article I edited for Men’s Journal,

Southwestern activist David Hodges, policy director of the Tucson-based Sky Island Alliance, recalls McCain working behind the scenes in 1988 to craft a rider that exempted the construction of a University of Arizona telescope facility, in the middle of habitat for a critically endangered subspecies of red squirrel, from the Endangered Species Act. It was an unprecedented tactic, and soon anti-environmental riders were being attached to all kinds of legislation in Washington. “I don’t know that he knew what he was unleashing,” Hodges says, “but we certainly did.”

Just another day at the office for the Republican hypocrisy machine.

Written by ptullis

September 20, 2010 at 1:13 pm

Propositions 16 and 17: Welcome to the corpocracy

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On June 8, Californians will vote on a couple of exceptional propositions that are the first attempts in decades by corporations to use the ballot initiative process to change the law in their favor.

California’s ballot initiative system was implemented during the Progressive era to enable citizens to amend the state constitution without going through the legislature (though the legislature can also put initiatives on the ballot). The idea was to provide citizens with a method of protecting themselves from well-funded special interests lobbying the legislature by giving them their own direct avenue to lawmaking.

It’s ironic, therefore, that the system should become a means by which well-funded special interests circumvent the legislature—because they know that a well-informed professional lawmaker would never buy what’s now being propagated in an ad campaign paid for by the state’s largest private utility, PG&E.

Prop 16, the “Taxpayers’ Right to Vote Act,” would require a 2/3 majority in a voter referendum to create or expand any municipally-owned utility, which in most of the state would mean competing with Pacific Gas & Electric or shutting it out of a potential market. PG&E is the measure’s sole sponsor, and has spent $44 million pressing for passage. (The company told shareholders to expect a short-term decline in share price as a result of the expenditure, originally budgeted at $35 million.)

Nearly every city, town, county, consumer group, environmental group, and newspaper in the state opposes the measure, along with AARP, the League of Women Voters and even another large private utility, San Diego’s Metropolitan Water District.

“This is a for-profit corporation trying to kill off its not-for-profit rivals,” said San Francisco Supervisor Ross Mirkarimi told the SF Chronicle. “Prop. 16 is a colossal fraud perpetrated on the people of California.”

PG&E wants to hike rates because it spent a lot of money on dirty-energy infrastructure just before California passed its Renewable Portfolio Standard, requiring the state to get 20% of its energy from fossil-fuel-free sources by the end of this year. Success of Prop 17 would put the kibbosh on efforts to quash the rate hike.

The company’s ad dollars have shouted down proposals to create public utilities in the past—and those only needed a bare majority to pass. Experts say the 2/3 requirement, which is a major factor in the annual disaster in California known as the state budget, would effectively doom any future proposal—and with it efforts to accelerate the transition to green energy.

Prop. 17 got on the June 8 ballot through a $3.5 million signature-gathering campaign by Mercury Insurance Co. The company has been accused of illegally discriminating against some applicants, but Prop. 17 would make such behavior OK, and roll back other consumer protections. California’s Insurance Commissioner (yes, since 1991 California has had a statewide elected official with this title), a Republican, has written of Mercury’s “lengthy history of serious misconduct [and] contempt toward and/or abuse of its customers.”

Nothing like these initiatives has been tried since 1988, when the law which Prop 17 is attempting to overturn was enacted. That November, there were four competing insurance-related initiatives on the ballot, one of which was backed by an insurance company that spent over 90% of the money in support of it. Until then, insurers could deny coverage on the basis of race, religion, sexual preference, choice of boxers over briefs—literally anything. Because there were competing initiatives, and it was a November Congressional election with relatively high turnout, the propositions got a ton of press coverage and a consumer-friendly one that Ralph Nader supported won the day. It limits the factors that an insurer can take into account when deciding whether to offer coverage, and at what price, to factors that actually have a statistical bearing on one’s likelihood of getting into an accident.

Ever since ’88, I was told by Eric McGhee, an expert on voter initiatives at the Public Policy Institute of California, companies have been discouraged by the experience from pursuing their agendas through the ballot-intitiative process and have instead mainly spent their political-influence money on lobbying. McGhee says they largely prefer lobbying to campaign contributions because it’s more likely to get them the specific break in the law that they’re seeking.

This isn’t to say corporations have stayed out of initiative campaigns, but it’s usually been on the No side, to stop a proposition placed on the ballot by citizens or the legislature that goes against their interests. With 16 and 17, the companies are pro-actively seeking to change the law in their favor in a way that’s exceptional.

One longtime academic observer of California politics told me the measures will fail if voters pay close enough attention and the “No”‘s can raise enough money.

But that’s a big if. PG&E is outspending the No’s by more than 1000:1 (yes, one thousand to one.) As for the former question, we’ll just have to wait and see on June 8. The companies have been hitting the airwaves to pump the notion that they’re looking out for Californians’ best interest, but if that were so it could put PG&E afoul of the law: SEC regulations require the publicly-traded company to place shareholder value above other concerns, so either its $44 million investment is in its own best interest, not Californians’, or it risks legal action. PG&E’s lawyers and executives may be greedy, craven and cynical, but I doubt they’re stupid.

The failure in ’88 discouraged companies from using ballot initiatives to push their agendas for a generation. But someone at one of the groups opposing the measures told me that the PG&E attempt is “the most brazen attempt” he’s ever seen.

If PG&E &/or Mercury are successful, it could have as strong an influence as ’88 did, but in the opposite direction, unleashing corporate money into the initiative arena like never before—and showing the rest of the country what life post-Citizens United might look like.

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No free lunch: Why Republican policies always end up biting you in the ass

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The Wall Street Journal today editorializes that the Cape Wind clean energy project that recently won the approval of the Interior Dept. is a “lousy deal” because it may, if the pricing scheme proposed by the company operating the wind farm is approved by regulators, produce energy at double the price consumers in the area now pay.

Here’s what’s also going to be expensive, if we don’t move aggressively toward a clean energy future:
•Rebuilding after hurricanes, which will be stronger and more frequent with a warmer Atlantic Ocean. Hurricane Andrew, in 1992, cost $41.5b in 2010 dollars.
•Cleaning up after oil spills, such as is now being played out along the Gulf Coast. Current costs are estimated at $350m and rising.
•The price of food, as fertile soil is lost to heat and drought.

I could go on, but you get the point: Conservatives don’t want to pay now, but we’ll all end up paying later. The difference is that the costs now are knowable, and so easier to plan for.

The Journal says that Cape Wind will result in “$443 million in new energy costs.” It doesn’t say among how many people these costs will be spread out, or over how long a period of time; if it’s 5 million people who might get power from Cape Wind, over 40 years (which seems like a reasonable amount of time for it to function), then we’re talking about a whopping $2.21 per person per year.

Disinvestment—the inevitable result of their tax-cuts-to-solve-everything approach to governing (if you can call it that)—also ends up costing more in the long term. Case in point: In 1978 Californians voted to cap their property taxes. This was hailed as a great moment, the people taking power away from big scary mean government, and launched an anti-tax movement that can be said to be the roots of the “Tea Party” (which boasts among its membership people who are on Medicaid yet rail against “people looking for handouts” and “the whole welfare mentality”). But since public schools get the bulk of their funding from this pool, the state’s schools went from tops in the nation to down around Mississippi’s somewhere. Obviously this would not have been the sole factor (conservatives will probably blame unions and immigrants), but it cannot be said that the way to improve outcomes in education is to reduce its funding.

Now you’ve got companies saying the students we’re graduating are too dumb for them to hire (I can point you to the surveys if you’re interested). So we get a lot of unemployed people. But Republicans don’t want to pay unemployment benefits. Some of these people turn to crime—and Republicans are always happy to lock people away. Here’s the problem: It costs about $25000 a year to incarcerate someone.

California spends about 1/3 that figure per pupil on public education. So would you rather educate people now, or get car-jacked by them later?

This would be funny except the pattern gets played out again and again. Look at the news today: It’s conventional wisdom on the conservative blogs (and leaking into the mainstream press) that the reason Greece and Spain are so screwed (if they are indeed screwed; the $18b per year bailout compares favorably with the $144b a year we’re spending in Iraq) is because of their overly generous welfare states. The implication is that there but for the grace of God go I, i.e., the US will be headed down this road if we don’t cut back on entitlements (somehow the Pentagon’s budget, which has nearly tripled in the last 20 years, is always left out of these discussions).

Now consider Republican policies: They want every company to be free to move their operations to wherever labor is cheapest. They don’t want to pay to retrain the workers left behind for the service jobs that are all our economy creates anymore. They don’t want to give them unemployment insurance over the long term. They don’t want to pay to educate their kids, so that the kids don’t grow up into the same predicament as their unemployed parents.

So what are they supposed to do? Live off the fat of the land? Become bond traders? Whoops, that won’t work—their education is shit. Work retail? Great—but who’s going to buy the stuff they’re selling?

Is there something I’m missing here?

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Gates' speech puts Pentagon where Rumsfeld had it in 2000

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Credit Defense Secretary Robert Gates for having the cajones to stand up to the military brass and the pork barons in the Congress, cajoling each to cut wasteful spending; stop fighting the Cold War; and eliminate projects from the budget that do nothing for national security, but help members of Congress get re-elected.

The irony here is that this is exactly the work Donald Rumsfeld was brought in to do a decade ago. (It’s a job that’s needed doing for 20 years; in the meantime we’ve spent about $7,300,000,000 on defense—not including appropriations to pay for the wars in Iraq and Afghanistan.)

Rumsfeld was known, from his experience in private industry, as an aggressive cost-cutter. (Disclosure: Rumsfeld’s son and I were buddies in college; Rumsfeld’s best friend’s wife and my mother are close friends.) Perhaps more importantly, as head of the pharmaceutical giant G.D. Searle & Co., he earned the reputation as being someone who could change minds and push agendas in government: he shepherded Searle’s artificial sweetener, aspartame, through FDA approval.

Of course, 9/11 significantly re-arranged Rumsfeld’s to-do list. Bush might have thought to replace him with a wartime SecDef; Rumsfeld’s do-it-on-the-cheap M.O.A. proved terribly ill-suited to preparing for the fall of Iraq, and its occupation. (Condoleeza Rice, a Soviet scholar, didn’t exactly have the background to deal with the new threat, either.)

Anyway, here’s hoping Gates is successful. With the Pentagon accounting for almost half of all discretionary spending, we clearly can’t continue along this path much longer.

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Written by ptullis

May 10, 2010 at 8:03 am