Tag Archives: Judd Gregg

Obama’s Stealth Entitlement Commission

Less than a month after the Senate rejected a proposal for a bipartisan entitlement commission, President Obama has created his own version by executive order. It is not, of course, called an “entitlement commission”–that unsavory term has been banished from the political lexicon, since it clearly frightens the geezers. Instead, it is called the National Commission on Fiscal Responsibility and Reform. (Who wouldn’t support that?) The shorthand names are the “deficit commission” and the “debt panel.” This last term is remarkably similar to the much-maligned “death panels”–which seems appropriate, since its primary purpose is to pull the plug on old-age entitlements. Despite protestations to the contrary, the commission exists primarily to make cuts to Social Security and Medicare.

The commission’s slant is evident from the choice of its two co-chairs: former Wyoming Republican senator Alan Simpson, a long-time foe of entitlements, and Erskine Bowles, the middle- right former Clinton chief of staff. The rest of the 18-member commission will include 6 Republican and 6 Democratic members of Congress, and four more members named by Obama. They are supposed to make a report and recommendations to the president in December, after the fall elections, and Obama is expected to forward the recommendations to Congress.

In the best-case scenario, Congress will do the same thing it has done with all of Obama’s other proposed reforms–i.e. nothing. Because if it acts at all, it will almost certainly decide to pay down the deficit at the expense of the social safety net. While Social Security may be the proverbial “third rail” of politics, the other debt-reducing options–raising taxes on the rich, or making corporations pay their fair share–will be seen as even more deadly in the current political climate.

An aggressive move to cut entitlements is, of course, a long-cherished conservative goal. The Heritage Foundation has been promoting the idea for decades, and was a major cheerleader for creation of a Congressional entitlement commission. Billionaire anti-entitlement activist Pete Peterson has bankrolled a huge lobbying effort for a commission that could ready the cuts, then ram them through Congress on a fast track yes or no vote. When that idea ran into heavy opposition in the Senate, Obama came up with his comparatively toothless version.

The driving force behind the commission—in addition to Peterson’s determined lobbying– is a group of conservative Blue Dog Democrats, some of whom would most likely be just as happy to see Social Security privatized. They will likely join with Republicans to support cuts in Medicaid, Medicare, and Social Security.

This same alliance will also be key to a scaled-back health care reform, which looks to bypass altogether the so-called liberals in Congress. Instead, it depends upon senior conservatives in the Republican party, led by retiring New Hampshire Senator Judd Gregg. Gregg has said he thinks the health care system needs changing, and he wants to engage in “constructive dialogue” with the president on reform. But any plan Gregg champions will have to be relatively meager and inexpensive. The fiscally conservative Gregg  joined with Democrat Kent Conrad to support the Congressional version of a debt commission, and he now seems to making common cause with the perennial Democratic health care compromiser, Max Baucus.

The long and the short of this situation is that  the Democratic administration, along with a small group of conservative Democrats in Congress, may make considerable headway toward doing what neither Ronald Reagan nor George W. Bush was able to pull off. They will likely make cuts to Social Security, while at the same time advancing Obama’s government-subsidized “automatic IRA” scheme, which would divert people’s earnings into 401K-style retirement accounts. These, of course, would be invested by Wall Street, helping to rebuild the finance industry. So in the end, we could see a de facto privatization of a portion of Social Security–the ultimate conservative dream, brought to us by the Democrats.

By the same token, the Democratic-led health care reform is likely to bring about some cuts to Medicare and Medicaid–the only single-payer health care this nation has ever known. It will do so while preserving the power and wealth of the health care profiteers who are largely responsible for skyrocketing costs.  The corporations, once again, are set to emerge victorious.

Meanwhile, the old, sick, disabled, and poor, who rely on entitlement programs, will bear the weight of the national debt. The low- and middle-income people still reeling from the recession–who need more, not less, government spending–will be left out in the cold, victims of what the Center for Economic and Policy Research calls “the deficit hawks who distract the public and policy makers from the policies necessary to bring the economy back to full employment.” 

The people and policies responsible for running up the deficit look like the only ones who won’t be taking a hit. In a report released on Wednesday called “Where Today’s Large Deficits Come From,” the Center on Budget and Policy Priorities added up the numbers and found: “In fact, the tax cuts enacted under President George W. Bush, the wars in Afghanistan and Iraq, and the economic downturn together explain virtually the entire deficit over the next ten years.”

Obama Cuts Deal To Reduce Social Security, Medicare, Medicaid

Hopes for any pretense of liberal change from the Obama administration collapsed yesterday, and not only because of the election in Massachusetts. While the Massachusetts voters were casting their ballots to install the upstart Republican Scott Brown to Ted Kennedy’s Senate seat, the White House was hammering out a closed-door deal to cut entitlements. Obama won the support of Democratic leaders for a plan to issue an executive order that would inevitably lead to reductions in Social Security, and especially Medicare and Medicaid.

The plan represents a capitulation to conservatives in both parties, and would leave Democratic liberals accepting unconditional surrender not only on health care, but on the most basic of all New Deal programs.  As hopes of even a tepid health care reform wane, the effect of this  plan, if accepted by Congress, will be to undermine the only single-payer health care programs this nation has ever known–Medicare for elders, and Medicaid for the poor. As an attack on entitlements, it has the potential to go beyond anything the Reagan and Bush administrations were able to achieve.

As the Washington Post explains this morning:

Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs — including Medicare, Medicaid and Social Security — that threaten to drive the nation’s debt to levels not seen since World War II.

The accord comes a week before Obama is scheduled to deliver his first State of the Union address to a nation increasingly concerned about his stewardship of the economy and the federal budget. After a year in which he advocated spending hundreds of billions of dollars on a huge economic stimulus package and a far-reaching overhaul of the health-care system, Obama has pledged to redouble his effort to rein in record budget deficits even as he has come under withering Republican attack.

The commission would deliver its recommendations after this fall’s congressional elections, postponing potentially painful decisions about the nation’s fiscal future until after Democrats face the voters. But if the commission approves a deficit-reduction plan, Congress would have to act on it quickly under the agreement, forged late Tuesday in a meeting with Vice President Biden, White House budget director Peter R. Orszag, and Democratic lawmakers led by Senate Majority Leader Harry M. Reid (Nev.), House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny H. Hoyer (Md.).

Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has long advocated creation of an independent budget panel, called the agreement an “understanding in concept” that holds the promise of at last addressing the nation’s most wrenching budget problems.

“This goes to the question of the country’s credibility with managing its own finances. This is essential for the nation,” Conrad said.

The commission is likely to form the centerpiece of Democrats’ efforts to reduce projected budget deficits, which have soared into record territory in the aftermath of the worst recession in a generation. Government spending to bail out the troubled financial sector and to stimulate economic activity have combined with sagging tax collections to push last year’s budget deficit to a record $1.4 trillion. The budget gap is projected to be just as large this year and to hover close to $1 trillion a year for much of the next decade. 

In other words: The national treasury has been driven into deep deficits by a financial crisis caused by Wall Street greed, compounded by two wars, tax cuts for the rich, and the high prices charged by health care profiteers. And where will we turn to make up for this loss? To the poor and the old, who cling greedily to their “entitlements.”

The claim is made that we need to make these entitlements “solvent” and “sustainable” in their own right, so they don’t “run out of money”–but that’s just political flim-flam. Social Security is in fact perfectly solvent, and the fiscal problems of the Medicare and Medicaid programs stem from the excesses of profit-based health care. If cuts are made to these programs, which have saved millions of Americans out of desperate straits, it will be because there’s simply no political will to do anything else to address the deficit.

All this represents a major victory for the corporate take-over mogul Pete Peterson whose foundation has put up $1 billion to lobby the proposal. His efforts have even involved  a financial news service that pushes this rich man’s plan, and that  has wormed its way into the Washington Post.  William Greider, who has long been covering the Peterson story, writes in The Nation:

The retired mogul has created a digital news agency he dubs “The Fiscal Times” and hired eight seasoned reporters to do the work there. “An impressive group of veteran journalists,” Peterson calls them. I hope they have shaken a lot of money out of this rich geezer. Because I predict doing hack work for him will seriously soil their reputations for objectivity and independence.

With his great wealth, Peterson could have also bought a newspaper to publish his dispatches, but he did better than that. He hooked up with the Washington Post, which has agreed to “jointly produce content focusing on the budget and fiscal issues.” (This media scandal was first uncovered by economist Dean Baker.) The newspaper is thus compromising its own integrity. It’s like buying political propaganda from a Washington lobbyist, then printing it in the news columns as if it was just another news story. Shame on the Post, my old newspaper. I predict a big stink like the one that greeted the Post when its publisher decided to hold pay-for-access “salons” for corporate biggies.

The deal is based on rickety interpretation of the country’s basic laws governing taxation.  Normally, any change in taxes must be passed first by the House, with legislation wending its way through the Ways and Means Committee up to the floor. This proposed arrangement short cuts—indeed appears to bypass—this procedure. The appointed commission is to make a recommendation on the budget after the election and that recommendation then goes straight to Congress where it might go through hearings,floor debate and a vote,or as some proponents of the idea would like, just get an up or down vote. To rub salt in the wounds, it was largely crafted not by members of the House, but by vice president and former Delaware senator Joe Biden along two senators–Kent Conrad, the North Dakota Democrat, once considered heir to the Great Plains progressive tradition, and conservative Judd Gregg, from New Hampshire. The man behind the commission plan is Pete Peterson.

The National Committee to Preserve Social Security and Medicare, which has been fighting against the creation of the commission, recently sent a letter to Congress, saying in part: 

We appreciate the concerns of legislators who are looking for a means of reducing the federal deficit and slowing the growth in the debt. However, we have significant concerns about any process – including the Conrad-Gregg Commission – that would disenfranchise American voters and subject Social Security beneficiaries to harmful cuts in benefits. As supporters of Social Security, we are surprised to see the federal deficit and the federal debt cited as the reason a commission needs to be established to make cuts in Social Security. The truth is that neither the $1.4 trillion deficit nor the nearly $12 trillion debt has anything to do with Social Security benefits.   

For nearly three decades, Social Security has taken in more revenue each year than it has paid out in benefits. These excess funds have been invested in special issue U.S. government securities. Thus, Social Security has effectively been loaning its excess funds to the federal government to spend on other programs. Rather than increasing the federal deficit, Social Security’s annual surpluses have actually been covering up the true size of the deficit in the general fund.

 

Happy New Year, Geezers. Please Die Soon.

The Wall Street Journal reports today on a temporary suspension of the estate tax (what conservatives call the “death tax”), which will go into effect on January 1, 2010.  The lapse dates back to the bundle of tax cuts passed under the Bush Administration in 2001:

Congress raised estate-tax exemptions, culminating with the tax’s disappearance next year. However, due to budget constraints, lawmakers didn’t make the change permanent. So the estate tax is due to come back to life in 2011–at a higher rate and lower exemption.

The WSJ piece is titled “Rich Cling to Life to Beat Tax Man,” and its interviews demonstrate, once again, that the rich really are different: They’re really creepy. It seems quite a few of them are making end-of-life decisions based on how it will affect their inheritance taxes.

“I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days,” says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. “Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?”…

To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. “We have done this at least a dozen times, and have gotten more calls recently,” says Andrew Katzenstein, a lawyer with Proskauer Rose LLP in Los Angeles.

The article focuses on people who are trying to keep their so-called loved ones alive until 2010 begins. But you can just as easily imagine all the  greedy bastards out there who are hoping their healthy old relatives will get really sick, really soon, so they can kick off before the year ends.

On the Atlantic‘s business blog today, Derek Thompson comments on the political implications of the year-long estate tax suspension. He highlights the hypocrisy of Republican policymaking, which that insists upon deficit reduction while simultaneously serving the interests of wealthy people like these, whose riches have to be wrested from their cold, dead hands:

I’ll be interested to watch how both parties deal with the tax for 2011. Naturally, Republicans are united against any action that involves not destroying the death tax forever. That includes Sen. Judd Gregg, the moderate Republican and co-producer of the fantastical commission to reduce the deficit, who has consistently supported every effort to whittle away the estate tax.

Obviously, one way to reduce the deficit is to reduce spending. But another way is to raise taxes — or at least to not kill the taxes that we already have in place. The Lincoln-Kyl bill in the Senate to cut estate taxes after the one-year hiccup would cost almost $250 billion over 10 years. That is, as they say, real money, and it’s hard for me to imagine how this tax cut would spur economic growth, since inheritance is passive. If we’re going to consider spending over the baseline part of PAYGO, we should do the same for government receipts below the baseline. So would Republicans plan to make up that money?