Friday, March 15, 2013

Expand Social Security. Expand Medicare. (Obamacare Already Expands Medicaid...)

There's a broad movement afoot -- underway for quite a while -- to slash spending. The conservatives favor slashing entitlements, and because of the various media bubbles -- DC beltway, talk radio, "mainstream" media, Faux News -- we're inundated with fear-mongering from deficit hawks who scream cut, cut, cut and Greece, Greece, Greece. This is not good because what bounces around the echo chamber isn't what we need to do right now.

Paul Krugman, Duncan Black, Dean Baker, and now Alex Pareene of Salon are among a tiny (vocal) minority that favor preserving and even expanding Social Security and Medicare. They prefer a slow balancing of the budget with emphasis on short-term spending and long-term deficit reduction with a view toward achieving a sustainable debt-to-GDP ratio. Sounds reasonable. It is. A large majority of Americans agree. Nonetheless, that means it's soundly rejected by:

Talking heads (brains optional). Also, see People, Serious, Very. captured in the wild by Alex Pareene. Although seemingly benign when encountered, especially in the Washington, DC, area, they can in fact be quite dangerous, most especially when people actually listen to them. They have a strange, bleating kind of call, which is surprisingly consistent across the breeds, sounding something like, "Everybody knows you're not serious if you're not ready to face up to dealing with entitlements." By which they mean cutting them, of course.

This, as Pareene pointed out, is really, really strange. As he says, "Begging Republicans to let us cut Social Security and Medicare is insane (no matter how much pundits lust after it)," the "us" being the Democrats who will suffer the most when they realize they've just facilitated cuts to wildly popular and successful programs. Part two of this two-step is the Republicans, during the 2014 election cycle, blaming the Democrats for cutting entitlements. Where have we seen this movie?

People love Social Security and Medicare and want to keep them, period. (See graph, left.) Social Security protects Americans against the incredibly shrinking pensions (something Republicans hate even more than Social Security and Medicare, if you can believe that) and, as Duncan Black points out, the failed 401(k) experiment that replaced those pensions. And Medicare provides the rate-setting that is used everywhere in the advanced world to slash health-care costs, everywhere except in the heath-insurance industry of America.

Okay, health insurers do bargain down healthcare costs, but not nearly so much as government rate-setting can.

This, then, is key to long-term debt reduction: Medicare is not out of control, healthcare costs are. How do you bring down healthcare costs? Answer: by setting lower rates of compensation to doctors and hospitals, the way Medicare can (and the way the rest of the advanced countries do).

As for Social Security, a few tweaks in the tax code can take care of it. How to do that has been known for years. Ask Robert Reich, he'll tell you. And tell you. And tell you.

So, do we need a Grand Bargain? If it means -- and it does -- cutting Social Security and Medicare as the price for new tax revenues, then we don't need one. A better strategy for Democrats is not to set themselves up for attack ads in 2014 and instead trade tax revenues for targeted spending cuts that replace the sequester, which means waiting for the sequester to bite and for Republicans to begin to sweat. And they will.

We can only hope that the Grand Bargain is actually a stupid game of chicken played out to placate the Very Serious People so that Congress can at least say they tried, with each side blaming the other for failing to enact cuts that neither side had the courage to claim. Obama gets to look like the grand mediator who was willing to go against his liberal base to (sigh) fashion a bipartisan solution, but oh well.

Weird roadmap to success if you ask me. Even weirder is feeling grateful that Congress can't get its act together: At least they're too incompetent to cause real damage.

Say, if I sprang for dinner, would that sway you?
(Answer before dinner, yeah! Answer after dinner, no!)

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