UA-43475823-1

The Wrongologist

Geopolitics, Power and Political Economy

Will Dems Counter the GOP’s Plan to Cut Social Security?

The Daily Escape:

Fall in Paradise Valley, Yellowstone NP – photo by Annie Griffiths

The mid-terms are coming, and we are having difficulty focusing on some important issues, because America has a short attention span, and we’ve been Kavanaugh ‘ed and Khashoggi ‘ed so much lately.

Two issues that are linked are the amazing deficit caused by the Trump tax cuts, and the moves being plotted by Mitch McConnell, Paul Ryan and others to cut Medicare, Medicaid and Social Security.

Let’s start with tax revenues. It was clear to critics that the 2017 GOP tax cut was going to quickly increase the budget deficit and add $ trillions of the national debt, and here it is:

The federal deficit grew by nearly $800 billion over the first fiscal year of Trump’s presidency, during which the Republican Congress passed a tax cut targeted mostly to corporations and the wealthy, which is projected to add more than $1 trillion to the deficit over the next 10 years.

And it didn’t take long for Republicans to insist that the deficits were actually caused by Social Security, Medicare, and Medicaid, not their tax cuts for corporations and the wealthy. From Vox:

Fresh off the news that the deficit is increasing under President Donald Trump, Senate Majority Leader Mitch McConnell told Bloomberg News that Congress should target Social Security and Medicare for cuts to address the growing federal debt.

The White House and GOP leaders promised America that the tax cuts would pay for themselves, but they haven’t. The growing federal deficit hasn’t caused Republican leaders to reconsider their tax policy. Instead, they argue that entitlement reform — Republican-speak for cuts to social safety net programs — is what’s really needed to address the federal deficit. From McConnell’s interview with Bloomberg this week:

It’s disappointing, but it’s not a Republican problem….It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.

Republicans have opposed Social Security and Medicare since they were created. But because these programs enjoy overwhelming support from the American people, they would not normally talk about their plans for benefit cuts three weeks before an election.

But, they are doing just that.

This is a real issue, since those programs make up a large share of federal spending: Medicare was 15% of the federal budget in 2017, and it’s projected to grow to 18% by 2028. Social Security is a bigger chunk of the budget (24% in 2016), and our aging population will put a greater strain on the program. Here is the budget breakdown:

Democrats want to expand, not cut these programs. Republicans may see their last, best chance to cut them slipping away with the mid-terms. They seem determined not to let that happen, so this will be a big issue in the lame duck sessions. The GOP will use the cost of their tax giveaways as the excuse to do what they have wanted to do to social programs all along.

If the GOP is talking like this before the mid-terms, imagine the carnage if they keep control of both Houses of Congress!

People who want to defend Social Security and Medicare better work hard to get out the vote in November. And the latest news about the House isn’t encouraging. Larry Sabato’s Crystal Ball reports that Democrats aren’t there yet:

A race-by-race analysis of Democratic House targets shows the party is close to winning the majority, but they do not have it put away, in our judgment, with Election Day less than three weeks away.

Barring a big, positive late change in the political environment in favor of Republicans, the bare minimum for Democratic House gains is in the mid-to-high teens. The needed 23-seat net gain is not that far beyond that and there are many different paths Democrats can take to achieve it.

He says Dems can count on 18, but need 23…

Assuming that the Dems won’t go along with the GOP’s planned social spending cuts, Republicans will try to blame Nancy Pelosi, Chuck Schumer and the Democrats, assuming their cuts to social programs fail.

Republicans will say “Democrats plan to raise taxes on tens of millions of middle-class Americans” to cut the deficit, and that’s true. But, it would be just a part of the package of fiscal moves to cut the deficit, with the primary focus on clawing back some of the massive Republican corporate tax cuts.

Democrats need to talk this up in the next three weeks to counter the GOP’s clearly articulated game plan.

Facebooklinkedinrss

50% of American Births are Now Financed by Medicaid

The Daily Escape:

(Street art, Panama City  Panama, 2015 – photo by Wrongo)

A report by the Kaiser Family Foundation is an eye opener. The 2016 Kaiser Family Foundation Medicaid Budget Survey asked states to report the share of all births in the state that were financed by Medicaid in the most recent 12 month period for which state data were available.

The results are staggering. Half of the states in the country reported that 50% or more of births were financed by Medicaid, with New Mexico reporting the highest number of births financed by Medicaid, 72% in 2015. New Hampshire was the lowest at 27%. Eight states said that 60% or more of births were financed by Medicaid, while in another eight states, Medicaid had financed between 27% and 37% of the births.

Kaiser provided no analysis for their survey, and an interesting question to answer would be the demographics of Medicaid-financed births. Kaiser did include this map showing percentage of births financed by Medicaid:

(Source: Kaiser Family Foundation)

The map shows us the states which would have been hurt the most by the proposed cuts in Medicaid that the GOP tried to enact in the failed Trumpcare bill. Of the 14 states with more than 54% of births financed, only New Mexico and Nevada voted for Hillary in 2016.

So, Trump and the GOP will have plenty of explaining to do if Medicare is cut deeply on their watch, since these are many of the states that helped elect Trump, and put both houses of Congress in Republican hands.

One question is, what will be different if the government cuts Medicaid? We have an indication from Texas. The state cut off money to Planned Parenthood clinics in 2013, and that led to thousands of women failing to get birth control. Medicaid pregnancies subsequently increased by 27%, according to a research paper published in The New England Journal of Medicine last year.

The time for an economic reset in America is long overdue. Conservatives will blame the poor, or Obamacare, or both for the surprising data on government-financed births. Liberals will say it is a failure of the social contract. But, when 50% of births occur to people who can’t afford them, it is clear that our economic system needs fixing.

OTOH, it is good thing that we encourage pre-natal care for all, which gives these babies a better start in life.

Our unequal economy rolls along unchanged, because the comparatively well off middle and professional classes keep electing politicians that defend the current system against the 50% who are America’s working poor. Creating a war between the have some’s and the have little’s has worked throughout history.

This is the new America. Many in the former middle class are living on the edge of poverty, and we know it. Is inequality changing America? You bet.

It is incumbent on both parties to deal with Medicaid-financed births.

Time for a tune. Here is Madonna with “Papa, Don’t Preach”, released in 1986. At the time, the song caused discussions about its content, with women’s groups and those in the family planning field criticizing Madonna for encouraging teenage pregnancy, while anti-abortion groups saw the song as having a pro-life message. Decide for yourself. Here is “Papa Don’t Preach”:

Those who read the Wrongologist in email can view the video here.

Takeaway Lyric:

Papa I know you’re going to be upset
‘Cause I was always your little girl
But you should know by now
I’m not a baby

The one you warned me all about
The one you said I could do without
We’re in an awful mess
And I don’t mean maybe, please

Papa don’t preach I’m in trouble deep
Papa don’t preach, I’ve been losing sleep
But I made up my mind, I’m keeping my baby,
I’m gonna keep my baby

Facebooklinkedinrss

Make Social Security Great Again

A senior House Republican is circulating a proposal that would make major cuts and changes to the Social Security system.

Insiders think this is a move to contravene President-elect Trump’s vow to leave the retirement program for 61 million retirees and their families untouched.

The proposal was drafted by Rep. Sam Johnson (R-TX), chair of the subcommittee on Social Security of the House Ways and Means Committee. It was formally introduced as a bill last Thursday. It includes two measures that might attract some interest from Democrats. One would increase retirement benefits for lower-income workers, and another would increase the minimum benefit for low-income earners who worked full careers.

OTOH, other provisions put in place a series of highly controversial measures long debated by both parties. Those measures include:

  • Gradually raising the retirement age for receiving full benefits from 67 to 69.
  • Adopting a less generous cost of living index than the current one.
  • Inaugurating means testing by changing the benefits formula to reduce payments to wealthier retirees.
  • Eliminating the annual COLA adjustments for wealthier individuals and their families.

Democrats think that Johnson’s plan, if adopted, would cut current benefits. From Nancy Pelosi:

Slashing Social Security and ending Medicare are absolutely not what the American people voted for in November…Democrats will not stand by while Republicans dismantle the promise of a healthy and dignified retirement for working people in America.

Rep. Johnson is 86 and has both a military pension and a congressional pension, so Social Security is far less important to him than it is to you.

For Republicans, Johnson’s bill is the opening salvo in a much larger conversation about Medicare and Medicaid in the coming year. Speaker Paul Ryan (R-WI) and House Budget Committee Chair Tom Price (R-GA), who will be the next secretary of health and human services, are both on record as wanting major changes to Medicare and Medicaid.

Democrats see the 2017 GOP plans as a frontal assault on the nation’s social safety net.

The argument has been that the Social Security trust fund will run out of money, but it is not in imminent danger. The Trustees Report in March warned that the fund will begin running out of money in 2034 when beneficiaries will have to face a 21% benefit cut.

Last week, Rep. Tom Cole of Oklahoma, a House Republican, and Rep. John Delaney of Maryland, a Democrat, renewed their support for a plan to create a bipartisan, 13-member panel to recommend to Congress ways to prevent the massive trust fund from running out of money while extending its solvency for another 75 years.

They envision that the new commission would operate along the lines of one created 35 years ago, in the Reagan administration. That commission helped pave the way for legislation that extended the life of Social Security by 50 years. Some possible proposals, such as raising the retirement age, increasing federal payroll tax revenues or altering the cost of living adjustments to save money will trigger strong opposition from the AARP, progressive activists and Democrats.

It’s long been a GOP theme that since Social Security needs a fix by 2033, we need to cut benefits now. Never mind that a minor upward adjustment to the income limit for the Social Security tax would resolve the problem with no cuts to benefits.

We’ll see if President Donald J. Trump supports this bill, after saying very loudly during the campaign that he was against touching Social Security.

Maybe the J stands for “just kidding.”

Since we’re on the verge of becoming “great” again, or, at the very least, having the trains run on time, maybe El Jefe can get the GOP to leave Social Security alone?

If you’re someone who requires the aid that social security brings and are having trouble making a claim, you may wish to contact someone like a Social Security disability lawyer in KY. This way you’ll have some expertise on side so that you can put forward a case that could have a better chance of succeeding than if you go it alone.

Facebooklinkedinrss

The Pandering Pant Load

Trump is a thin-skinned Pandering Pant Load© with rabbit ears: He hears everything that is said about him and responds to it all. Say something, and @realDonaldTrump will tweet back something nasty.

We saw two examples of his pandering in the past few days. First, Trump attended “Rolling Thunder” an annual event which brings hundreds of thousands of motorcyclists to DC to raise money for POW-MIA’s of the Vietnam War. On Sunday, He told about 5,000 that illegal migrants in the US are often better cared for than the nation’s military veterans:

Thousands of people are dying waiting in line to see a doctor. That is not going to happen anymore

Although Trump has used this comparison of the treatment of immigrants and veterans before, it isn’t true. Congress and many states have written an assortment of laws and policies designed to restrict government services to people living in the country illegally.

Could Congress do more for vets? Absolutely. Do we do less for them than we do for illegals? NO.

We know that the Pandering Pant Load© claimed to have raised $6 million for veteran’s groups, including $1 million of his own money when he held a fundraiser for veterans’ causes in place of an Iowa debate that he skipped.

But so far, he hasn’t distributed it, or said where it is going. He is expected to hold a news conference today to announce the names of the charities selected to receive the money. We’ll see.

Still, when you tell an interest group that you will do more for them than we do for illegals, you are setting the bar very low.

Second, the Pandering Pant Load© supposedly told House Speaker Paul Ryan (R-Wis.) he supports cutting Social Security but cannot admit it publicly because it would hurt his election chances, according to Bloomberg BusinessWeek. Trump said of cutting Social Security:

From a moral standpoint, I believe in it…But you also have to get elected. And there’s no way a Republican is going to beat a Democrat when the Republican is saying, ‘We’re going to cut your Social Security’ and the Democrat is saying, ‘We’re going to keep it and give you more.’

Bloomberg reported that The Pandering Pant Load© made the above comments during the May 12 meeting with Mr. Ryan aimed at improving ties between them, citing an unnamed source who was in the room.

So the deal was made, and what we have been watching is theater. And from a “moral standpoint”, Trump just lies about what he plans to do, because his audience is against it?

HuffPo reported that Trump’s opposition to cutting Social Security (SS) has been both a hallmark of his campaign and one of his greatest departures from traditional conservative ideology. Now it seems, he is simply pandering. Consider this:

  • Many conservative House Republicans told The Huffington Post shortly after the May 12 meeting with Ryan that that they were unconcerned about Trump’s public posture on Social Security.
  • Why? Because Trump policy advisor Sam Clovis had already appeared to reverse course on May 11, indicating that Trump would be willing to consider cuts as president.

The media have their nice, shiny Trump, and they have signed on for the whole ride, so don’t expect to hear much more about his pandering.

The Pant Load will try to dupe people (this week, Vietnam Vets and the middle class) into voting against their interests, because he is sure that they can’t be bothered to pay enough attention to understand that he’s lying.

The truth is that SS faces a funding gap beginning in 2034. Without Congressional action to either raise the program’s revenues or scale back benefits, there will be an across-the-board benefit cut of approximately 20%.

We all know this.

Why is the Pandering Pant Load© being dishonest about it? Maybe the real shock shouldn’t be that Trump is devoid of integrity; if he’s breathing, he’s lying.

It’s that his base doesn’t seem to care that he’ll throw them under the bus without a second thought.

Facebooklinkedinrss

100% of Jobs Created Since 2005 Were For Contractors or Temps

And that’s why so many Americans are scared. Neil Irwin in the NYT’s Upshot brought us the bad news that 9.4 million new jobs created during the period from 2005-2015 were temp jobs or contracting jobs.

What’s worse is that those jobs add up to more than 100% of the jobs created by the US economy during that period. That means there was an overall decline of about 400,000 in people working as employees for an American corporation during those 10 years.

The news is based on a study by labor economists Lawrence F. Katz of Harvard and Alan B. Krueger of Princeton that found that the percentage of workers in “alternative work arrangements” — including working for temporary help agencies, as independent contractors, for contract firms, or on-call — was 15.8% of total employment in 2015, up from 10.1% a decade earlier. More from Irwin:

By contrast, from 1995 to 2005, the proportion had edged up only slightly, to 10.1% from 9.3%. (The data are based on a person’s main job, so someone with a full-time position who does freelance work on the side would count as a conventional employee.)

This raises bigger questions about how employers managed to shift much the burden of providing our social safety net to workers, and about the economic and technological forces driving the shift.

The change has profound implications for social insurance. More so than in many advanced countries, corporations in the US carry a large share of the burden of providing their workers with health insurance and paid medical leave when employees are sick. US corporate employers pay for workers’ compensation insurance, and for unemployment insurance benefits for those who are laid off.

These are part of the government-sponsored safety net in other countries.

In addition, US employers help fund their workers’ retirement, formerly, through pensions, but now more commonly, through 401(k) plans. These are also part of the government safety net elsewhere.

While the Affordable Care Act has made it easier for independent contractors to get insurance, there’s little doubt that these workers are now carrying more of the financial burden of protecting themselves from misfortune than they would have shouldered with a more traditional company-employee relationship.

Perhaps most significant, the implicit contract between an employer and an employee is that there is a relatively high bar for firing employees. If the economy turns down or business slows, a contract worker is far more likely to be out of a job or out of the job faster, than a conventional employee.

This is a large factor in the growing job insecurity we see since the Great Recession.

Moreover, the study shows it was likely that companies caused this shift in terms of employment, not employees who were looking for more freedom and flexibility. If 2005 to 2015 had been a period when workers had a lot of power in the job market that might have been plausible, but it wasn’t. More from Irwin:

The unemployment rate was above 7% for nearly half of the period, from the end of 2008 to late 2013. Employers had the upper hand. That suggests it’s more likely that employers were driving the shift to these alternate arrangements.

So, companies took advantage of the weak job market since the Great Recession. In addition, improvements in technology have enabled the shift. New technology allows remote measurement of how successful each worker is, regardless of their location, and it allows the employer to monitor contractor progress, giving the company the power it needs to move to contracting, or to a temp workforce.

Making employees into contractors benefits only the employers, not the workers, and it may help explain the disconnect between the anger and insecurity we see on the 2016 presidential campaign trail, and the clearly positive employment and economic news we’ve seen each month for the past few years.

Both are true, and that has profound implications, both politically and economically, for the next 10 years. A big question for the next decade is whether the rise in temp employment was a one-time shift, or whether it will continue in the years ahead, even in a tightening labor market.

At risk is whether employer-provided social insurance that has been a backbone of the 20th-century American middle class economy will still be with us in the 21st century.

And if the shift to contracting continues,and we become more of a 1099 nation,  it is a certainty that we will see a growing populist, anti-corporate electorate.

Facebooklinkedinrss