For the Virtual Green Room: May 29, 2011...
Things I want to have at the forefront of my brain--for when I am surprised, as I will be, by an unexpected question from an unexpected direction while talking to reporters, phone callers, passers-by, radio interviewers, cable TV interviewers, etc....
A baker's dozen:
On Glenn Hubbard's claim that Obama has "ruled out long-term entitlement spending restraint": Nancy Ann Min De Parle: "[T]he tools in the Affordable Care Act and other steps... already taken will save nearly $120 billion for Medicare over the next five yearss.... While we’ve made real and significant progress, there is more work to do... the President’s framework... includes reforms that would save at least an additional $200 billion for Medicare over the next decade. The framework would: (i) Bend the long-term cost curve by setting a more ambitious target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018, through strengthening the Independent Payment Advisory Board (IPAB). (ii) Reduce Medicare’s excessive spending on prescription drugs and lower premiums for beneficiaries without shifting costs to seniors or privatizing Medicare..."
On Republican claims that contractionary fiscal policy is expansionary: Jonathan Chait: "Neil Irwin: 'Republican leaders urge a steep and swift reduction in government spending... that these cuts would strengthen economic growth not only in the distant future but almost immediately. That view is at odds with many of the nonpartisan groups...' [Alesina's] study... suggests that deficit reduction can increase growth.... But Noah Kristula-Green.... 'The problem: [Alesina] found very few cases.... 9 examples out of 107... more... problematic... is that... growth and deficit reduction occurred [only] in countries where cuts in spending were accompanied with... looser monetary policy... conservative-derided quantitative easing (QE2)...' In short, the proposition that cutting spending will increase short-term economic growth is totally unserious. The one piece of alleged ballast turns out not to support the case."
On Mitt Romney's claim that uncertainty about government policy hobbles the recovery: Will Wilkinson: "The principal themes of Mitt Romney's speech here in Des Moines earlier this afternoon were that America's economy remains a wreck because Barack Obama's a rank amateur whose woeful inexperience, ignorance of the requirements of a robust economy, and faintly un-American taste for the public-policy fashions in Europe, has created a climate of economic uncertainty that has retarded recovery." One more time: uncertainty about government policy shows itself in: (a) businesses who say they are unusually worried about government regulation, (b) investors who are willing to pay unusually high prices for insurance against inflation, and (c) savers who demand unusually high rates of return before they will lend. We see none of these things right now--what we see is a simple shortage of aggregate demand.
On the OECD's claim that stimulative economic policy is "largely exhausted; therefore, we have to 'go structural': Paul Krugman: [I]t’s just that can’t-do spirit.... [T]he report writes as if a period of 4 percent inflation rather than 2 percent inflation would be a terrible thing... it would be really horrible if we had inflation at the same rate as prevailed during Morning in America.... [O]ne of the main arguments for higher inflation when you’re facing a zero lower bound [is that] it would reduce real interest rates.... Third... a period of modestly higher inflation would help reduce that private debt overhang, which would help promote economic recovery, which would in turn raise revenues and help the fiscal situation. In sum, the case for higher inflation is vastly better than the OECD is willing to acknowledge."
On Thomas Saving and John Goodman's claim that the Ryan plan has no larger Medicare cuts in it than the Affordable Care Act does: Saving and Goodman: "In light of the heated rhetoric of recent days, it is worth noting that for everyone over the age of 55, there is no difference between the amount of money the House Republicans voted to spend on Medicare and the amount that the Democrats who support the health-reform law voted to spend. Even for younger people, the amounts are virtually identical with GDP indexing..." The key here is "GDP indexing." Ryan says that the Ryan plan does not have "GDP indexing" but "CPI indexing"--and that makes half the difference. The other half of the difference is that the Ryan plan requires that Medicare beneficiaries pay the (expensive) administrative overhead and (expensive) profits of private insurance companies, while the ACA does not.
On Irwin Stelzer's claim that investors are worried about a U.S. default: Stelzer: "All know that the crisis will be resolved by a last-minute deal.... All the negotiators, but not all investors. The gross value of contracts insuring against a U.S. default, although still small relative to the size of the Treasury debt market, has doubled from a year ago..." Each investor thinking they need insurance against a U.S. credit default event is matched by one who thinks they can make money providing such insurance. The volume is an indicator not of average investor opinion but of opinion spread. Average investor opinion can be read off of the price of U.S. credit default swaps. U.S. credit default swaps today cost 40% of what they cost in late 2008 and the same as they cost a year ago.
On Michael Barone's claim that Secretary Sibelius is "waiving away the law" for Obama campaign contributors: Barone: "If Obamacare is so great, why do so many people want to get out from under it?... Union members are only 12 percent of all employees but have gotten 50.3 percent of Obamacare waivers.... What other factors may be considered? Political contributions or connections? (Unions contributed $400 million to Democrats in the 2008 campaign cycle.) The [HHS] websites don’t say..." The Department of HHS: "Mini-med plans... do not provide security in the event of serious illness or accident, they are unfortunately the only option that some employers offer.... [T]he Affordable Care Act allows these plans to apply for temporary waivers from rules restricting the size of annual limits to [coverage].... Waivers only last for one year and are only available if the plan certifies that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access.... No other provision of the Affordable Care Act is affected by these waivers: they only apply to the annual limit policy..."
On Joe Nocera's claim that Democrats should not scorn Paul Ryan: "While the Democratic Party might be well served in trying to use the Ryan plan to bury their political opponents, the country itself is not. The debate we need is not about whether Medicare should be reformed, but how.... It would be nice if we could treat the Ryan plan not as an object of derision but as a launching-off point for a serious debate..." It would have been nice if Paul Ryan had proposed a Medicare plan that could be a launching off point for a serious debate--the Medicare reforms in the Affordable Care Act are such a launching-off point. The problem is that Ryan didn't: instead, he proposed something that is rightly an object of derision. That's not a problem with the Democrats. That's a problem with Paul Ryan and the Republicans.
RERUN: On Speaker John Boehner's claim that only Democrats have voted to cut Medicare: Era Klein: "Someone should have told John Boehner that the Ryan budget includes the Affordable Care Act’s Medicare cuts..."
RERUN: On Stephen Moore's claim that "in reality" the Democrats are proposing a 62% top income tax rate: Moore's op-ed is simply not reality-based. There is no such proposal for a 62% marginal top income tax rate, not from any Democratic office holder or advisor. Moore claims that "in the late 1980s, the U.S. was nearly the lowest taxed nation in the world, and a quarter century later we're nearly the highest." The U.S. today has a smaller tax share of GDP than every single other G-7 nation. The reason that the U.S. collects a larger share of taxes from the rich is that our incomes today are much more skewed toward the rich than those of other G-7 nations.
RERUN: On the Wall Street Journal's editorial claim that "the regulatory tax on Americans is now larger than the income tax": The WSJ editorial board writes: "so-called independent agencies like the Federal Reserve... were a perfect 0 for 17 in failing to estimate costs as well as benefits [of regulation]..." Are they seriously claiming that the Federal Reserve has overregulated financial markets over the past decade because it hasn't been writing bureaucratic reports explicitly enumerating and comparing costs and benefits?
RERUN: On Republican opposition to raising the debt ceiling: Right-leaning Clive Crook: "Tea Party true believers may be salivating.... Shutting down the government [by blocking the debt-ceiling increase is a button [Republicans] dare not press.... To do it in 2011, with the economy laid low and financial markets still twitchy, would be the limit of irresponsibility. It would be betting the recovery to make a point. This time, political annihilation might follow, and the party would deserve it..."
SPEAKS FOR ITSELF: David Brooks on how the Republicans should destroy Medicare the next time they try: "I do think that is the lesson. The Republicans are telling themselves, this year, it's different. This year the people are so disgusted by the debt they want us to be serious. And so what they effectively did was, they saw a line of battlements and a field of 400 yards with no cover, and they ran straight at it. And they get mowed down. And so I think a lesson for the Republicans has to be, do something more crafty. Don't just run straight at it..."
