Tuesday, November 29, 2011

The RepubliCon war on the facts, part 56

Bruce Bartlett, former adviser to Kemp, Reagan, etc., who seems to have contacted reality now reveals the war that Gingrich and other RepubliCons are waging against reality. They are using one of the most effective methods of attacking effective government: cut budgets, cut staff who know anything.

Sunday, November 27, 2011

A Republican friend wrote me: "In fact, no Republican I know is for laissez-faire or for the abolition of Medicare or Social Security. Democrats, especially Pelosi and friends, say Republicans want to abolish these entitlement programs. Not true."

My Response:

The idea of social insurance was originated as a practical plan by Otto von Bismark, not exactly a screaming liberal, I believe as way to neuter Marxism. Roosevelt enacted the first social insurance in the US, the Social Security program.

I have heard Republican conservatives for the past fifty years philosophically rejecting the idea of government social insurance programs, and attempting to replace them with something with a market component, and generally with an eye to making them market based, and not government social insurance programs, particularly compulsory ones, which advocates say are necessary for them to be a reliable social safety net.

Starting with Goldwater and Reagan:

Reagan campaigned on behalf of for the AMA against the passage of Medicare, an effort which was the launch of his political career. Reagan spent much of his 1964 speech introducing Goldwater supporting. Goldwater’s view that Social Security should be made voluntary

Note that Goldwater and Reagan's original position was to make social security completely voluntary. That abolishes the programs as entitlements, because if you don't have the money to fund your own program for yourself, you are not entitled to anything more from the government, right? The "socializing" of insurance is gone, and so far as I can see that is the whole point of the recurrent efforts to change social insurance programs.

W Bush's plan to partially privatize Social Security was a centerpiece of his 2004 campaign.

Furthermore, Bush made it clear philosophically that this was but a first step: In 2000, Bush said "It's going to take a while to transition to a system where personal savings accounts are the predominant part of the investment vehicle. ...This is a step toward a completely different world, and an important step."

I heard Republicans screaming bloody murder at a town hall meeting at South Lakes High School in the summer of 2009 about Obama's compulsory government health insurance, and all of the Republican Presidential candidates propose to repeal it, I believe.

The current Ryan proposal on Medicare would “extinguish medicare as a guaranteed coverage program for new enrollees and would replace the program with healthcare vouchers.”

The point is that all these are efforts to start dismantling Social Insurance programs with guaranteed coverage.

I should emphasize that the point of these is not to reduce the cost of these programs and provide similar coverage, at least as judged by their evaluation by the Congressional Budget Office, which is generally regarded as pretty non-partisan. Bush's program would not have put Social Security current benefits into a hole. Ryan's proposal would greatly reduce future health benefits, unless health care costs were greatly constrained, and his plan did nothing to contain health care costs. (Unlike Obama's, according to the CBO.)

In light of all of this I think it is just plain fact that Republicans have had a big problem with government social insurance programs, particularly compulsory ones, and have wanted to at least partially replace them with private market mechanisms. Because of Goldwater's, Reagan's, and it seems W. Bush's unvarnished views, I think it is understandable that Democrats view the current efforts as a first step to completely replacing comprehensive government programs with private ones. Certainly Republicans have never said "we want to restrict the private segment to x%" Quite the contrary.

Currently it may be that very few current Republican elected officials say "I want to abolish social security and medicare", but the record over decades is that they keep trying to reduce them as government insurance programs as much as possible. And they do want to abolish compulsory Health Insurance. Is there something I'm missing here about Republican opposition to government social insurance?

The response to the above was to stop talking about it, but to repeat that no Republican wants to dismantle the entitlements. This depends on what you mean by "dismantle." It you mean by "dismantle": they should not be mandatory or cover everybody, so they are no longer "entitlements", then the above shows that they do indeed want to dismantle.

Saturday, November 12, 2011

Dean Baker on Housing and the Recession

As Dean Baker was one of the few to correctly identify the housing bubble early, and predict the bust, I am always particularly interested in what he has to say about housing. In a correction to information linked in my last post, Baker argues that we are not suffering not from the aftermath of the financial crisis, but the aftermath of the housing bust. The current recession is the result of reduced demand on housing, because of the collapse of the housing market at many places in the country. When housing comes back, so will the economy. Incidentally, Baker's solution is that people should have the option of converting their underwater or about-to default-mortgages to rentals. Makes sense to me. I wonder why Obama is not on board?

Sunday, November 6, 2011

Matt Taibi's take down of the "Blame Barney" RepubliCON

In Rolling Stone, Matt Taibi takes down the "Blame Barney" lie that Barney Frank and Fanny Mae and Freddy Mac were the main cause of the financial collapse in the US. As this is the main Republicon narrative about the great recession, it is worth refuting.

Here's the nub of the argument:

"The whole game was based on one new innovation: the derivative instruments like CDOs that allowed them to take junk-rated home loans and turn them into AAA-rated instruments. It was not Barney Frank who made it possible for Goldman, Sachs to sell the home loan of an occasionally-employed janitor in Oakland or Detroit as something just as safe as, and more profitable than, a United States Treasury Bill. This was something they cooked up entirely by themselves and developed solely with the aim of making more money.

"The government’s efforts to make home loans more available to people showed up in a few places in this whole tableau. For one thing, it made it easier for the Countrywides of the world to create their giant masses of loans. And secondly, the Fannies and Freddies of the world were big customers of the banks, buying up mortgage-backed securities in bulk along with the rest of the suckers. Without a doubt, the bubble would not have been as big, or inflated as fast, without Fannie and Freddie.

"But the bubble was overwhelmingly built around a single private-sector economic reality that had nothing to do with any of that: new financial instruments made it possible to sell crap loans as AAA-rated paper."

The whole article and the follow-up rebuttal are well worth reading. Addendum Monday November 7. Krugman today links to two excellent articles on "the big lie" of the innocence of Wall Street in the financial collapse. I hope this issue is getting enough noise to get into TV coverage.

Thursday, November 3, 2011

Paul Krugman has posted the chart to the left, based on the recent CBO report on income inequality. What it makes clear is that the income inequality has not been driven by education differences, but by policy of huge tax cuts for the rich, and "deregulation" which enabled them to plunder the economy. While the top twenty percent, less the top one percent, barely increase in relation to others, the huge shift was from the lower 80% to the top 1%. And, as Krugman points out, it is actually the top .1% who really made out like bandits—perhaps because they were bandits, legalized or not.