Up With Steve

Our new issue has arrived—inside:

What the UN owes Haiti

Living and breathing in the shadow of Chevron

Are Memphis prosecutors trying to send an innocent man back to death row?

Kimani Gray: Guilty Until Proven Innocent

Prominent Democrats — including the President and House Minority Leader Nancy Pelosi — are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation. 

This is even before they’ve started budget negotiations with Republicans — who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions. 

It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.

For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy.  

In reality, average working people have been stymied because almost all the economic gains of the last three decades have gone to the very top. The middle has lost bargaining power as unions have shriveled. American politics has been flooded with campaign contributions from corporations and the wealthy, which have used their clout to reduce marginal tax rates, widen loopholes, loosen regulations, gain subsidies, and obtain government bailouts when their bets turn sour. 

Now five years after the worst downturn since the Great Depression and the biggest bailout in history, the stock market has recouped its losses and corporate profits constitute the largest share of the economy since 1929. Yet the real median wage continues to fall — wages now claim the lowest share of the economy on record — and inequality is still widening. All the economic gains since the trough of the recession have gone to the wealthiest 1 percent of Americans; the bottom 90 percent continue to lose ground. 

What looks like the start of a more buoyant recovery is a sham because the vast majority of Americans have neither the pay nor access to credit that allows them to buy enough to boost the economy. Housing prices and starts are being fueled by investors with easy money rather than would-be home buyers with mortgages. The Fed’s low interest rates have pushed other investors into stocks by default, creating an artificial bull market. 

If there was ever a time for the Democratic Party to champion working Americans and reverse these troubling trends, it is now — forging an alliance between the frustrated middle and the working poor. This need not be “class warfare” because a healthy economy is in everyone’s interest. The rich would do far better with a smaller share of a rapidly-growing economy than a ballooning share of one that’s growing at a snail’s pace and a stock market that’s turning into a bubble. 

But the modern Democratic Party can’t bring itself to do this. It’s too dependent on the short-term, insular demands of Wall Street, corporate executives, and the wealthy.  

It was Bill Clinton, after all, who pushed for repeal of Glass-Steagall, championed the North American Free Trade Act and the World Trade Organization without adequate safeguards for American jobs, and rented out the Lincoln Bedroom to a steady stream of rich executives. 

And it was Barack Obama who continued George W. Bush’s Wall Street bailout with no strings attached; pushed a watered-down “Volcker Rule” (still delayed) rather than renew Glass-Steagall; failed to prosecute a single Wall Street executive or bank because, according to his Attorney General, Wall Street is just too big to jail; and permanently enshrined the Bush tax cuts for all but the top 2 percent.

Meanwhile, over the last several decades Democrats have allowed Social Security taxes to grow and its revenue stream to become almost as important a source of overall government funding as income taxes; turned their backs on organized labor and labor-law reforms that would have made it easier to form unions; and then, even as they bailed out Wall Street, neglected the burdens of middle-class homeowners who found themselves underwater and their homes worth less than what they paid for them because of the Street’s excesses. 

In fairness, it could have been worse. Clinton did stand up to Gingrich. Obama did get the Affordable Care Act. Congressional Democrats have scored tactical victories against social conservatives and Tea Party radicals. But Democrats haven’t responded in any bold or meaningful way to the increasingly concentrated wealth and power, the steady demise of the middle class, and further impoverishment of the nation’s poor. The Party failed to become a movement to reclaim the economy and our democracy. 

And now come their pre-concessions on Social Security and Medicare. 

Technically, a “chained CPI” might be justifiable if seniors routinely substitute lower-cost alternatives as prices rise, as most other Americans do. But in reality, seniors pay 20 to 40 percent of their incomes for healthcare, including pharmaceuticals — the prices of which are rising much faster than inflation. So there’s no practical justification for reducing Social Security benefits on the assumption inflation isn’t really eating away at those benefits as much as the current cost-of-living adjustment allows.   

Likewise, although a case can be made for reducing the Medicare benefits of higher-income beneficiaries, as a practical matter their savings are almost as vulnerable to rising healthcare costs as are the more modest savings of middle-income retirees. “Means-testing” Medicare also runs the risk of transforming it into a program for the “less fortunate,” which can undermine its political support. 

In short, Medicare isn’t the problem. The underlying problem is the sky-rocketing costs of health care. Because Medicare’s administrative costs are a fraction of those of private health insurance, Medicare might be part of the solution. Medicare for all, or even a public option for Medicare, would give the program enough clout to demand health providers move from a fee-for-service system to one that paid instead for healthy outcomes. 

With healthcare costs under better control, retirees wouldn’t be paying a large and growing portion of their incomes for healthcare — which would alleviate pressure on Social Security. I’m still not convinced a “chained CPI” is necessary, though. A preferable alternative would be to raise the ceiling on the portion of income subject to Social Security taxes (now $113,600). 

Besides, Social Security and Medicare are the most popular programs ever devised by the federal government, which is why Republicans hate them so much. If average Americans have trusted the Democratic Party to do one thing it has been to guard these programs from the depredations of the GOP.  

Putting these two programs “on the table” is also tantamount to accepting the most insidious and dishonest of all Republican claims: That for too long most Americans have been living beyond their means; that we are rapidly approaching a day of reckoning when we can no longer afford these generous “entitlements;” and that prudence and responsibility dictate that we must now begin to live within our means and cut back these projected expenditures, particularly if we are to have any money left to invest in the young and the disadvantaged. 

The truth is the opposite: That for three decades the means of most Americans have been stagnant even though the overall economy has more than doubled in size; that because almost all the gains from growth have gone to the top, most Americans haven’t been able to save enough for retirement or the rising costs of healthcare; and that because of this, Social Security and Medicare are barely adequate as is.  

Paul Ryan’s House Republican budget takes on Medicare, but leaves Social Security alone. Why should Democrats lead the charge on either? 

The Republicans are already slashing help for the young and the disadvantaged. Democrats shouldn’t succumb the lie that the elderly and young are in competition for a portion of a shrinking pie, when in fact the pie is larger than ever. It’s just that those who have the largest and fastest-growing portions refuse to share it. 

We are the richest nation in the history of the world — richer now than we’ve ever been. But an increasing share of that wealth is held by a smaller and smaller share of the population, who have, in effect, bribed legislators to reduce their taxes and provide loopholes so they pay even less. 

The budget deficit “crisis” has been manufactured by them to distract our attention from this overriding fact, and to pit the rest of us against each other for a smaller and smaller share of what remains. Democrats should not conspire. 

Needy children should be getting far more help, better pre-school care, better nutrition. Seniors need better healthcare coverage and more Social Security. All Americans need better schools and improved infrastructure. 

For your weekend reading, Larissa MacFarquhar’s New Yorker profile of programmer and Internet activist Aaron Swartz, “Requiem for a Dream.” Much has been written about Swartz in the wake of his January suicide and you might well — and understandably so — be Swartz-ed out. That said, this piece illustrates him not as martyr figure or genius figure or any other kind of figure, but as a complicated, brilliant and difficult human being. MacFarquhar uses block quotes from the people closest to him and juxtaposes the quotes against one another to illuminating effect. This paragraph in particular struck me. It articulates so well the nature of writing online and what effect that can have on readers. I’ve been thinking about it all week:

Prose creates a strong illusion of presence—so strong that it is difficult to destroy it. It is hard to remember that you are reading and not hearing. The illusion is stronger when the prose is online, partly because you are aware that it might be altered or redacted at any moment—the writer may be online, too, as you read it—and partly because the Internet has been around for such a short time that we implicitly assume (as we do not with a book) that the writer of a blog post is alive.

-Nell

House Republicans who voted against final passage of the Violence Against Women Act are taking credit for helping renew the domestic abuse legislation.

The lawmakers’ desire to have it both ways reflects the irreconcilable tension between wanting to appear on the right side of an extremely popular issue and wanting to preserve their credibility with conservative groups who vowed to punish those who voted for VAWA.

Rep. Steve King (R-IA), a potential Senate candidate in 2014, said in a statement that hesupported the bill because he understood “the importance of reauthorizing VAWA.”

“I supported this legislation because I know how important it is to empower women in difficult situations,” King said. “If a woman is at risk, she should know that she has a place to turn for support and assistance. I supported VAWA in 2005, 2012, and today I voted in support of the House version to see that victims of domestic violence and sexual assault have access to the resources and protection when they need it the most.”

The State Department is reportedly close to completing a review of a proposed extension of the Keystone pipeline, to transport oil from Canadian oil sands to the United States. The pipeline is controversial to be sure, and environmentalists contend that, in order for President Obama to remain faithful to his renewed commitment to combat climate change, he must reject the pipeline proposal. Famed NASA climatologist James Hansen has said that moving to oil sands would be “a step in exactly the opposite direction” of what President Obama claims he wants to do in his second term.

So, just how bad are Canadian oil sands for the planet? According to a report published by the Congressional Research Service in June of last year, Canadian oil sands are dirtier — and emit more greenhouse gases — than pretty much every other major source of crude oil. According to the graph above from the report, production emissions from Canadian oil sands are 102% higher than emissions from Middle Eastern crude oil, 92% higher than emissions from Venezuelan crude oil and 53% higher than emissions from Mexican crude oil.