The budget proposal from the Congressional Progressive Caucus.

There is another budget in Congress besides the unreal idiocy offered by the libertarian/Republican Ryan. It's the budget offered by the Congressional Progressive Caucus. Paul Krugman describes the budget. He carefully points out how it is a proposal that gives the numbers showing how it will work, unlike Ryan's magic- and lie-based fantasy budget.

The CPC plan essentially balances the budget through higher taxes and defense cuts, plus some tougher bargaining by Medicare (and a public option to reduce the costs of the Affordable Care Act). The proposed tax hikes would fall mainly on higher incomes, although not just on the top 2%: super-brackets for very high incomes, elimination of deductions, taxation of capital income as ordinary income, and — the part that would be most controversial — raising the cap on payroll taxes.

[...]

Although I couldn’t find share of GDP in the working paper, it’s right there on the home page. Revenues are 22.3 percent of GDP in 2021. That’s 3 points higher than what Ryan claims his plan would produce, although he hasn’t explained how he’s going to make up for those $3 trillion in tax cuts for the rich.

This would be a record level of revenue for the peacetime federal government, but it would still leave the overall tax take, including state and local, far below levels in most other advanced countries. And the point is that this would balance the budget without the savage cuts assumed in the Republican plan, or even the still painful cuts in the Obama plan. We supposedly face a fiscal crisis; why shouldn’t significant tax hikes be part of the response?

Unlike the Ryan budget proposal, the progressive budget actually reduces the deficit, and it does so without smoke, fantasy and mirrors.

This budget exposes the fact that Ryan's presentation is not designed to reduce the deficit. It is intended to change the basic relationship of government with the American people, setting the model back to the days of the American robber barons.

The American MSM is not going to look at this budget proposal. It doesn't fit with the small-town atmosphere of the people in Washington,D.C. who style themselves as the "normal Americans" who should rule this country.

Liberty means getting control of the climate away from the oil and coal companies

Van Jones tells 'the 10,000 youth climate activists at the Power Shift conference in Washington DC to “shift the power” and lead the clean power revolution. He argued that both parties need to be held accountable for their failures.' This is from Think Progress:

"Jones argued that President Obama is like the friend who has the potential to be an A-plus student, but is only getting C’s and D’s. Jones told the assembled youth from campuses around the nation they can be a “hero for making sure your friend gets an A-plus on his presidency.”

Van Jones described how we have a civilization “fueled by death” — fossil fuels from plants and animals that died millions of years ago:

We pull out of the ground death. We burn death in our power plants. Why do we get shocked when we get death in our sky as global warming, death in our oceans as oil spills, death in our children’s lungs as asthma and cancer?

The strongest moments of his speech came when he discussed America’s basic principles, in the context of arguing with “your uncle Joe” who watches Fox News at the Thanksgiving table. “Don’t you believe in liberty?” Van asked. “Shouldn’t we have the right as Americans to be energy producers?” he asked. “Shouldn’t we have the right and liberty to be free from energy companies who dictate how much we pay, what air we breathe?” Coal and oil companies try to divide us with cultural stereotypes and political ideology, when a green economy is actually the truly American economy:

The stereotype is that solar power is just hippie power. But it’s also cowboy power, farmer power, rancher power, and Appalachian mountain power!

Van Jones addressed the Tea Party movement that sees him as a “terrorist” and “communist.” “I’m glad our sisters and brothers in the Tea Party are talking about liberty,” he said. However, he said, they’re missing something important. The Pledge of Allegiance doesn’t just talk about liberty being integral to our nation:

The Pledge of Allegiance says liberty and justice for all!

With his voiced raised to the diverse crowd, Van Jones said “justice for all” includes justice for minorities, justice for women, justice for gays, and justice for the poor.

“Shift the power!” Van Jones concluded to thunderous applause.

Obama is way too center-right for America. The up-coming generation may well bring this to public view where it really should be.

Speechless in the face of shameless Republicans

This is good!



[h/t Digby]

Ryan's Medicare proposal is dead already. Good riddance.

Does anyone really think that Paul Ryan's Vouchers-for-Medicare plan can work? Ask the insurance industry which companies want to offer health insurance to the over age 65 demographic. This is from Benjy Sarlin at Talking Points Memo.

Unlike the Affordable Care Act, which mandated that millions of young and healthy Americans purchase insurance with government subsidies, the Paul Ryan plan would instead bring the oldest, sickest, and least profitable demographic to the table. And with the CBO projecting that the average senior would be on the hook for over two-thirds of their health care costs within just 10 years of the plan's adoption -- a proportion that is projected to worsen in the long run --- the government subsidies backing them up may not bring in enough profitable customers to make things worthwhile.

"If reimbursement rates are too low to provide basic benefits, they'll tell the government, 'You do it,'" one insurance lobbyist told TPM. "I don't think they can require they lose money, they'd just pull out."

Dan Boston, a veteran lobbyist for health care providers and co-owner of Health Policy Source, said in an interview with TPM that he was taking a "wait and see" approach on the GOP budget before judging its value. (The American Hospital Association opposes the plan). But he cautioned that a major concern would be whether hospitals and private insurers would be left on the hook for low-income seniors eligible for both Medicare and Medicaid, who could run up significant costs with little hope of ever paying them off.

"I think everyone is going to be looking at the viability of the funding," he said.

Any so-called insurance company that tried to offer policies to the Medicare demographic would not last two years.

Ryan's plan is a perfect example of the crap that Republicans and much of the MSM call thoughtful and innovative. Ann Rand would have loved this stuff.

[Cross-posted at Social Security & Medicare Notes.]

We heard Obama's speech yesterday. Sounded good - but...

Let's start out with the very positive reaction from Rachel Maddow:

Visit msnbc.com for breaking news, world news, and news about the economy

Rachel is buying what Obama has to say. I do suggest that you read the speech as Rachel suggested. Here is the speech.

Really, it sounded great - if you believe Obama. Here's another view of Obama. This video comes from several months ago, but it really fits right here. This is an interview with liberal economist Michael Hudson..



Yeah, I liked Obama's speech. He said the right things and he made the right promises. Unfortunately he didn't go far enough. That's both sides of the budget issue. So now take a look at Paul Krugman's take on the speech:

Style: I liked the way Obama made a case for government at the beginning. I liked the way he accused Republicans of pessimism, of abandoning a hopeful vision of America. Good that he went after the Ryan plan — and good that he went after the cruelty of that plan. If you ask me, too many percentages. Oh, and whichever speechwriter came up with “win the future” should be sent to count yurts in Outer Mongolia.

Substance: Much better than many of us feared. Hardly any Bowles-Simpson — yay!

The actual plan relies on some discretionary spending cuts, this time including defense — good, although I think too much is being cut from domestic spending. It relies on letting the Bush tax cuts for the rich expire — finally! — plus unspecified reductions in tax expenditures.

The main thing, though, is the strengthened role of and target for the Independent Payment Advisory Board. This can sound like hocus-pocus — but it’s not.

As I understand it, it would force the board to come up with ways to put Medicare on what amounts to a budget — growing no faster than GDP + 0.5 — and would force Congress to specifically overrule those proposed savings. That’s what cost-control looks like! You have people who actually know about health care and health costs setting priorities for spending, within a budget; in effect, you have an institutional setup which forces Medicare to find ways to say no.

And when people start screaming about death panels again, remember: you can always buy whatever health care you want; the question is what taxpayers should pay for. And compare this with a voucher system, in which you have insurance company executives, rather than health-care professionals, deciding which care won’t be paid for.

Overall, way better than the rumors and trial balloons. I can live with this. And whatever the pundits may say, it was much, much more serious than the Ryan “plan”.

Update: I should probably say, I could live with this as an end result. If this becomes the left pole, and the center is halfway between this and Ryan, then no — better to pursue the zero option of just doing nothing and letting the Bush tax cuts as a whole expire.

Update update: I don’t want to step too much on the administration’s selling point, but progressives upset by the claim that there are three dollars of spending cuts for every dollar of tax increases should be aware that there’s a bit of creative labeling going on. As I understand it, they’re counting both interest savings and reductions in “tax expenditures” — subsidies through the tax code — as spending cuts. It’s a much more balanced plan if you look at the balance between revenue increases and non-interest outlays.

Update update update: The Times has a good side-by-side comparison. A world of difference — and Obama made the moral as well as practical case for his version.

So I like the direction of the speech, though I don't think it went nearly far enough to present as the beginning of the negotiations from the liberal side. Krugman has that correct. This is where the negotiations should end up, not where they should start. The conservatives are flat out crazy extremists. The other problem, though, is how much can Obama be expected to live up to his promises?

Krugman starts on Ryan's budget proposal

Paul Ryan's plan is "...voodoo economics, with an extra dose of fantasy, and a large helping of mean-spiritedness." That's how Paul Krugman describes the fantasy budget document that Paul Ryan offered to American voters this week. Some details from his column:

...the Ryan proposal trumpets the results of an economic projection from the Heritage Foundation, which claims that the plan’s tax cuts would set off a gigantic boom. Indeed, the foundation initially predicted that the G.O.P. plan would bring the unemployment rate down to 2.8 percent — a number we haven’t achieved since the Korean War. After widespread jeering, the unemployment projection vanished from the Heritage Foundation’s Web site...

[...]

the original voodoo proposition — the claim that lower taxes mean higher revenue — is still very much there. The Heritage Foundation projection has large tax cuts actually increasing revenue by almost $600 billion over the next 10 years.

A more sober assessment from the nonpartisan Congressional Budget Office tells a different story. It finds that a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts. In fact, the budget office finds that over the next decade the plan would lead to bigger deficits and more debt than current law.

[...]

Mr. Ryan and his colleagues are assuming drastic cuts in nonhealth spending without explaining how that is supposed to happen. How drastic? According to the budget office, which analyzed the plan using assumptions dictated by House Republicans, the proposal calls for spending on items other than Social Security, Medicare and Medicaid — but including defense — to fall from 12 percent of G.D.P. last year to 6 percent of G.D.P. in 2022, and just 3.5 percent of G.D.P. in the long run.

That last number is less than we currently spend on defense alone; it’s not much bigger than federal spending when Calvin Coolidge was president, and the United States, among other things, had only a tiny military establishment. How could such a drastic shrinking of government take place without crippling essential public functions? The plan doesn’t say.

[...]

then there’s the much-ballyhooed proposal to abolish Medicare and replace it with vouchers that can be used to buy private health insurance.

The point here is that privatizing Medicare does nothing, in itself, to limit health-care costs. In fact, it almost surely raises them by adding a layer of middlemen. Yet the House plan assumes that we can cut health-care spending as a percentage of G.D.P. despite an aging population and rising health care costs.

The only way that can happen is if those vouchers are worth much less than the cost of health insurance. In fact, the Congressional Budget Office estimates that by 2030 the value of a voucher would cover only a third of the cost of a private insurance policy equivalent to Medicare as we know it. So the plan would deprive many and probably most seniors of adequate health care.

And that neither should nor will happen. Mr. Ryan and his colleagues can write down whatever numbers they like, but seniors vote. And when they find that their health-care vouchers are grossly inadequate, they’ll demand and get bigger vouchers — wiping out the plan’s supposed savings.

If this is supposed to be seriousness from the Republicans, I'd hate to see what the pundits considered not serious. This reflects badly on both the Republicans and on the pundits who have lauded Ryan for his "courage" in presenting this piece of garbage.

Ryan offers magic to lower health care costs. Democrats offer rational system called ACA

Ezra Klein has an important posting on Ryan's health care proposals. The point he makes is that while the media has fallen in love with Ryan's vision of a new health care policy that, if implemented, would shift the increase in health care costs away from the government and onto the sick, the Democrats have an actual plan that includes many elements designed to actually lower health care costs. In short the Affordable Care Act actually includes many rational elements which will lower health care costs, Ryan offers the magic of the invisible hand and a snake-oil salesman's promise that if the insurance payments are changed, providers will change what they charge to get and keep patients well.

At the heart of Ryan’s budget are policies tying the federal government’s contribution to Medicare and Medicaid to the rate of inflation — which is far, far slower than costs in the health-care sector typically grow. He achieves those caps through cost shifting. For Medicaid, the states have to figure out how to save the money, and for Medicare, seniors will now be purchasing their own insurance plans and, in their new role as consumers, have to figure out how to save the money. It won’t work, and because it won’t work, Ryan’s savings will not materialize.

Even Ryan’s fans agree you can’t hold health-care costs down to inflation. But even if you grant that Ryan’s target is too low, his vision for reforming Medicare would like miss a more reasonabke [sic] target, too. Consider the program Ryan names as a model. He said his budget converts Medicare into “the same kind of health-care program that members of Congress enjoy.” The system he’s referring to is the Federal Employee’s Health Benefits Program, and cost growth there has not only massively outpaced inflation in recent years, but actually outpaced Medicare, too. Ryan’s numbers are so fantastic that Alice Rivlin, who originally had her name on this proposal, now opposes it.

Democrats don’t just have a proposal that offers a more plausible vision of cost control than Ryan does. They have an honest-to-goodness law. The Affordable Care Act sets more achievable targets, and offers a host of more plausible ways to reach them, than anything in Ryan’s budget. “If this is a competition betweenRyan and the Affordable Care Act on realistic approaches to curbing the growth of spending,” says Robert Reischauer, who ran the Congressional Budget Office from 1989 to 1995 and now directs the Urban Institute, “the Affordable Care Act gets five points and Ryan gets zero.”

So from Ryan we get promises of magic, smoke and mirrors that will lower health care costs if we just keep the government from paying for them. His magical vision is to shift all cost increases off to the patient. The magic does nothing to actually lower health care costs.

In constrast the Democrats have the already enacted and partially implemented Affordable Care Act which does the following

The Affordable Care Act’s central hope is that Medicare can lead the health-care system to pay for value, cut down on overtreatment, and cut out treatments that simply don’t work. The law develops Accountable Care Organizations, in which Medicare pays one provider to coordinate all of your care successfully, rather than paying many doctors and providers to add to your care no matter the cost or outcome, as is the current practice. It also begins experimenting with bundled payments, in which Medicare pays one lump-sum for all care related to the successful treatment of a condition rather than paying for every piece of care separately. To help these reforms succeed, and to help all doctors make more cost-effective treatment decisions, the law accelerates research on which drugs and treatments are most effective, and creates and funds the Patient-Centered Outcomes Research Institute to disseminate the data.

If those initiatives work, they head over to the Independent Payment Advisory Board (IPAB), which can implement cost-controlling reforms across Medicare without congressional approval — an effort to make continuous reform the default for Medicare, even if Congress is gridlocked or focused on other matters. And if they don’t work, then it’s up to the Center for Medicare and Medicaid Innovation, a funded body that will be continually testing payment and practice reforms, to keep searching and experimenting, and when it hits on successful ideas, handing them to the IPAB to implement throughout the system.

The law also goes after bad and wasted care: It cuts payments to hospitals with high rates of re-admission, as that tends to signal care isn’t being delivered well, or isn’t being follow up on effectively. It cuts payments to hospitals for care related to infections caught in the hospitals. It develops new plans to help Medicare base its purchasing decisions on value, and new programs to help Medicaid move patients with chronic illnesses into systems that rely on the sort of maintenance-based care that’s been shown to successfully lower costs and improve outcomes.

I could go on, but instead, I’ll just link to the Kaiser Family Foundation’s excellent primer (pdf) on everything the law does. The bottom line is this: The Affordable Care Act is actually doing the hard work of reforming the health-care system that’s needed to make cost control possible. Ryan’s budget just makes seniors pay more for their Medicare and choose their own plans — worthy ideas, you can argue, but ideas that have been tried many times before, and that have never cut costs in the way Ryan’s budget suggests they will.

So what will America get from the government in order to control runaway health care costs? Ryan's promises of magic, smoke and mirrors with no system of accountability for the effectiveness of health care services? Or the Affordable Care Act the Democrats have, at great cost, already crafted and begun to implement which takes a solid, working approach to actually improving the effectiveness and efficiency of the health care procedures themselves?

I'll take the output of the practical mechanic over the wild promises of the flashy "magician" any day. So will any intelligent grown up.

Krugman on Ryan's non-serious budget proposal

This is what Paul Krugman wrote last week. He must have had an advance copy of Paul Ryan's speculative fiction budget proposal.

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” That, according to Herbert Hoover, was the advice he received from Andrew Mellon, the Treasury secretary, as America plunged into depression. To be fair, there’s some question about whether Mellon actually said that; all we have is Hoover’s version, written many years later.

But one thing is clear: Mellon-style liquidationism is now the official doctrine of the G.O.P.

Here's what Krugman wrote today in his blog:

Paul Ryan’s Multiple Unicorns
Gosh. For a plan that supposedly sets a new standard of seriousness, Paul Ryan’s vision (pdf) depends an awful lot on unicorn sightings — belief in the impossible. Let me review the top three unicorns.

First, the plan assumes that tax cuts will set off a literally unprecedented boom. Here’s again, is what is assumed about unemployment:

House budget proposal

So Ryan is claiming that unemployment will plunge right away; that by 2015 it will be down to the levels at the peak of the 1990s boom (and far below anything achieved under the sainted Ronald Reagan); and that by 2021 it will be below 3 percent, a level we haven’t seen in more than half a century. Right.

Then there’s the Medicare business. According to the CBO analysis, a typical senior would end up spending more than twice as much of his or her own income on health care as under current law. As Dean Baker points out, this means that seniors would end up paying most of their income for health care. Again, right.

But in a way, the worst part isn’t the Medicare plan: it’s the fact — which so far has not penetrated the debate — that the biggest source of supposed savings in the plan isn’t actually health care, it’s an assumption that federal spending on everything except health and Social Security can somehow be squeezed, as a percent of GDP, to a small fraction of current levels"

Here’s the table, from Ryan’s own report:

""

Notice the marked area at the bottom: Ryan is assuming that everything aside from health and SS can be squeezed from 12 percent of GDP now to 3 1/2 percent of GDP. That’s bigger than the assumed cut in health care spending relative to baseline; it accounts for all of the projected deficit reduction, since the alleged health savings are all used to finance tax cuts. And how is this supposed to be accomplished? Not explained.

This isn’t a serious proposal; it’s a strange combination of cruelty and insanely wishful thinking.

From an economic theory point of view it's as though Ryan is rejecting all of the understanding of economics that has grown up since the 1920's. But worse, Ryan is not only rejecting the theory of economics. He is rejecting the data that has been collected since 1932 that proves he is wrong.

Krugman is quite correct. The Republicans are practicing unicorn-based "economics."