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eridani's Journal
eridani's Journal
January 28, 2013

'Cliff' Notes on Austerity 2.0 from the Institute for America's Future

The Challenge

The United States is in the midst of the most protracted unemployment crisis in modern history, and for vast segments of the population, the recession has never ended. Wages are still sinking; more than 20 million people are in need of full-time work. Yet, the national debate is fixated on fixing the debt rather than fixing the economy.

This is "austerity" economics, which demands cuts in government spending in the belief that this will reduce government deficits, even as it costs jobs and imposes hardships on people.

Mass unemployment, declining wages, and faltering growth suggests the United States has already suffered too much austerity, too soon. And yet the political debate is focused on how much more to impose. Washington imposed $1.5 trillion in spending cuts over 10 years in the 2011 “debt ceiling” deal. Washington stumbled past the year-end “fiscal cliff” with a deal that featured about $600 billion in tax hikes over ten years, including returning rates for the richest Americans back to Clinton era levels, and ending the payroll tax holiday, adding 2 percent to every working family’s payroll tax rate.

Now Congress has created an even more precarious fiscal peril to extort even greater cuts. Between now and the middle of May, we’ll hit the debt ceiling again, the automatic cut (sequester) of military and domestic budgets for the remainder of the year will kick in, and the temporary appropriations for government will expire. This sets up a new negotiation to forestall these ruinous calamities, now with Social Security, Medicare and Medicaid directly targeted.

The leaders of both parties suggest that more deficit reduction is needed and that it would help the economy. Not surprisingly, polls suggest that most Americans believe that cutting spending will help the economy, not harm the recovery. The reality is that spending is not out of control, the deficit is already plummeting, and we should be focused on fixing the economy to make it work for working people, not on austerity driven by wrong-headed deficit hysteria.

Make the Case

Start with the struggles families are facing. The budget debate now underway in Washington, focused on “fixing the debt,” misses the point. Americans are still suffering record levels of long-term unemployment. Poverty has risen to a level unseen in generations. Inequality is at new extremes. Wages are at the lowest percentage of the economy on record, while corporate profits are at the highest. We should be focused on fixing our economy.

Challenge the austerity myth. And here’s the real deal. You can’t fix the economy by “fixing the debt.” Cutting spending now will only slow the recovery, put more people out of work – and as we have seen in Europe, end up adding to our debt burdens.

In fact, fixing the economy is the necessary first step in getting our books back in order. Our deficits are largely due to the recession, with the costs of unemployment and the lost revenue from the loss of jobs. In these conditions, the best deficit reduction program is to put people back to work.

Even the slow growth we’ve witnessed has begun to reduce our deficits as jobs have been created. Despite all the hysteria, deficits are down by 25% compared to the economy, according to the Congressional Budget Office. They are falling faster than anytime since the demobilization at the end of World War II. And our debt level is basically stabilized for the next decade. More austerity – whether balanced between taxes and spending as the president calls for or focused just on spending cuts as Republicans suggest – will only serve to slow growth, cost jobs, and impede the recovery needed to get our books back in shape.

Worse, the austerity debate is now focused on whacking at the basic pillars of family security – Social Security, Medicare and Medicaid. The cuts under discussion – slowing the inflation adjustment for Social Security, raising the eligibility age for Medicare or the retirement age for Social Security -- would harm the most vulnerable in our society.

Describe the way out. Fixing our economy requires a very different agenda than mindless cuts. We need to invest in areas vital to our future, and stop squandering resources on things we don’t need and can’t afford. End the wars abroad, bring our troops home, and invest the savings in rebuilding America – putting people to work while modernizing our decrepit infrastructure, from roads and rail to broadband and the electric grid.

End the subsidies and tax breaks to big oil companies and invest the resources in research and development to capture a lead in clean energy and the green industrial revolution sweeping the country.

Crack down on global tax havens, tax Wall Street speculation, tax investors at the same rate as workers, and use that income to provide every child with the opportunity to learn, from universal preschool to affordable college.

Lift the minimum wage, empower workers to gain a fair share of the profits they help to generate and curb perverse CEO compensation schemes that give them million-dollar incentives to ship jobs abroad.

And fix the sole source of our projected long-term debt problems – our broken health care system. Don’t cut benefits for Social Security, Medicare and Medicaid. Instead, take on the insurance and drug company lobbies that have made our health care cost nearly twice what the rest of the industrial world pays.

Case in Point

We’ve done this before. The U.S. came out of World War II with a much higher debt burden than now – 125% of GDP. Yet worried about the GIs coming home to an economic depression, our leaders focused on fixing the economy. They passed the GI Bill that educated a generation. They subsidized housing and built the suburbs. They subsidized the conversion of wartime plants to civilian production. They sent billions of dollars to Europe to create allies and markets. They built the broad middle class that made America exceptional.

They generally ran deficits, added to the total national debt, but the economy grew faster, and by 1980, the debt was down to less than 40% of gross domestic product and not a problem. We call them the greatest generation. We would do well to learn from them.

The U.S. isn’t Greece, but it must avoid imitating Europe. The International Monetary Fund's chief economist recently acknowledged the failure of austerity in Europe, noting that spending cuts had a much more destructive effect on growth – driving the European Union back into recession – than the IMF had predicted. Austerity economics cost jobs and torpedoed growth. And it ended up increasing the debt burdens of the governments.


When they say: We're spending our grandchildren's money with all these government deficits.

You can say: We should be investing their future, not dooming them to a life of diminished opportunity and an old age filled with hardship and deprivation. We want to leave them opportunity in a robust economy. You want to leave them reduced security from Social Security and Medicare.

When they say: We can't afford these “entitlements” any more.

You can say: “Entitlements”? You can't talk about Social Security, Medicare, and Medicaid in the same breath. Social Security is still in surplus, forbidden by law from contributing to the deficit, and its mild long-term problems can be fixed by requiring high income earners to pay the same rate as everyone else. And the problem with Medicare and Medicaid isn't that their benefits are “generous” – they're not – but that our profit-driven health care system is too costly and must be fixed.

When they say: We don’t have a tax problem; we have a spending problem.

You can say: Billionaires are paying lower tax rates than their secretaries. Many multinationals like General Electric hide profits abroad and pay no taxes at all. Big oil and prescription drug companies pocked billions in unneeded subsidies. The Pentagon is spending almost as much as the rest of the world combined on the military. We’ve got both a tax problem and a spending problem. But our real challenge is making the investments we need to rebuild the country and educate the next generation – and cracking down on the unfair tax breaks and wasteful spending to pay for them.

When they say: We can’t afford trillion dollar deficits.

You can say: We can’t afford over 20 million people in need of full-time work, falling wages and a sinking middle class. In fact, the deficits are coming down in relation to the economy faster than anytime since the end of World War II. Any faster, it just might drive us back into recession. To fix the deficits, we need to fix the economy first. And focusing on deficits now won’t fix the economy.

Public Pulse
•At least two-thirds of Americans would support policies that reduce the deficit by asking the wealthiest Americans to do a little more: remove the $110,000 earnings cap on Social Security payroll taxes, increase Medicare premiums on higher incomes, limit mortgage deductions on expensive homes and end them on second homes, and end $1 billion in tax giveaways to the wealthiest (
•By 64 percent to 17 percent, voters say we should maintain Social Security and Medicare benefits, and address the deficit by increasing taxes on the rich rather than reducing Social Security and Medicare benefits (
•65 percent of respondents support providing $55 billion dollars over three years to modernize schools and rehire teachers (Democracy Corps).
•51 percent support investing $234 billion dollars in infrastructure, including rebuilding highways and bridges, as well as creating an infrastructure bank to finance major projects. (Democracy Corps).
•58 percent of people believe there is no need to cut spending for Medicare to reduce the federal deficit. (Kaiser Health Tracking Poll)

Hot Facts
•If we do nothing else, federal debt as a percentage of gross domestic product would continue to decline, not increase, for the rest of this decade (Center for Budget and Policy Priorities).
•If we had enacted President Obama’s proposed 2013 budget, which included $140 billion in jobs program spending, there would have been an additonal 1.1 million Americans back at work, paying taxes instead of collecting unemployment insurance. (Economic Policy Institute).
•Failing to spend money to maintain and upgrade our ports, waterways and airports could lead to the loss of as many as 1 million jobs (American Society of Civil Engineers).
•Austerity measures in Europe are predicted to shrink the Euro zone economy by as much as 4 percent, causing deficits to increase in almost every country (National Institute of Economic and Social Research).

Tweet This

#FixTheDebt now won’t fix the economy. Fix the economy with jobs first. #Letsgettowork http://t.co/D7ZOk10b

#Tellmewhy conservatives want to follow Europe’s failed austerity. Focus on rebuilding #middleclass instead http://t.co/D7ZOk10b

#FixTheDebt by taking on health care lobby, not the sick and elderly. Say no to austerity. http://t.co/D7ZOk10b

January 28, 2013

Testimony Regarding HB 1085 to Establish Single Payer Health Care in the State of Washington

Reposted from WA State--apparently you can't add stuff to your journal in groups.

Testimony Regarding HB 1085 to Establish Single Payer Health Care in the State of Washington

I currently reside in the 34th legislative district, and I advocate that the state legislature pass HB 1085/SB 5224 to implement single payer health care in Washington State.

Laws and budgets reflect our moral values as citizens. Our civic values are rooted in the traditional idea that we are all created equal, and that we institute governments to protect life, liberty and the pursuit of happiness. The very concept of for-profit health insurance flatly contradicts these values. Insuring cars is morally acceptable because cars are objects designed for human use, as is making the decision to avoid investing in collision insurance for your older car. It can never be right to treat other human beings as objects for our use—who wants to volunteer to be the human equivalent of a beater car? Yet this is what insurance companies currently do—serve as arbiters of who does and who does not deserve to be treated as a worthy human being in the area of health care.

From an economic standpoint, a comparatively small number of people use most health care dollars, just as a fairly small number of people directly use the dollars we appropriate for fire departments. (And does anyone think that competing fire departments would deliver better and cheaper fire protection?) In every age demographic, 5% of that demographic accounts for 50% of all health costs, and 15% for 85% of all costs. Insurance companies exist solely to divert money paid by the relatively healthy 85% away from paying for the health care of the sick minority. That is why in Massachusetts (after four years of the health care reform on which the Affordable Care Act was modeled) medical bankruptcies are still at 50% of all bankruptcies, albeit down from 59%. As with medical bankruptcy throughout the country, 70% or more of these families had insurance. Though overpriced underinsurance is the norm there, there is little public outcry from the healthy 85%, who have purchased the illusion that they will get health care if anything serious happens to them.

Thankfully the ACA will eliminate denial of insurance for pre-existing conditions, but unfortunately it still reinforces unacceptable moral values—namely that it is OK to divide our population into Platinum, Gold, Silver and Bronze categories. Presuming that you can even afford to be more than Bronze person, how can you know what insurance level you might need in the future? The opinions of the healthy 85% as to the potential usefulness of their health insurance are worth what their opinions about how good their fire extinguishers are—that is to say, not a lot.

And how sustainable will the insurance exchanges be? To quote a paper put out in November 2010 (attached) by the Washington State Health Care Authority, "the Exchange would need to act on behalf of a critical mass of people….at least 20 percent of the insured population that does not already receive Medicaid or Medicare. Only a pool of this size could attract serious bids from insurers. To amass such a large purchasing pool, Congress might need to require that all government employees, or all employers with fewer than 100 employees, join the pool."

It is not likely that this level of participation can be attained unless we forgo participating in the Federal Basic Health Option, provisions for which were specifically added to ACA by Senator Cantwell precisely so that WA State could use this option. Recall also that family income has been declining since 2000 and that the “new normal” level of unemployment is around 8% (a number which itself vastly underestimates actual unemployment), making many more people eligible for expanded Medicaid. In addition, retirees on Medicare are growing in number. Neither of these populations will be in the exchanges.

Very aggressive advertising will be necessary to inform people of the options in the exchange. There will be federal funding for this, to the tune of about $120 million—not a single dime of which will be used to pay for actual health care. More federal money will be used to fund operations until 2015. After that, these administrative costs will be downloaded to Washington State taxpayers through new fees assessed on the health policies sold through the exchange. Adding even more fees to overpriced underinsurance is going to be extremely unpopular.

Advocates of single payer health care are divided on the issue of whether the ACA leads toward or away from single payer. I think that it leads toward, and that the Washington State legislature should continue implementing the exchanges. For one thing, the federal subsidies, while they last, will make the exchanges temporarily viable, and that will help at least some people. For another, the experience and competence of the board members working on the exchanges can be then directly transferred to implementing single payer at the state level. This will actually be vastly easier administratively, however more difficult politically.

A final note to the inevitable whiners about a “government takeover of health care”—the government took over my health care when I turned 65, and I couldn’t be happier. I would gladly join most other Medicare enrollees in making those who would force us into a voucher program pay a very serious political price for doing that. Medicare as it is lacks the cost controls that could be achieved by global budgeting and drug price negotiations, but even so traditional Medicare still much cheaper to administer than Medicare Advantage (which is for the most part a huge rip-off of taxpayers by private insurance companies), and its costs are rising far more slowly.

Every other developed country in the world has universal health care, at a per capita cost half of what we pay here. What we get for paying twice as much is 40,000+ people per year dying because they can’t afford health care, massive levels of medical bankruptcy, and health statistics that are among the worst in the developed world. How long are we going to let a single industry parasitize all other industries (and government bodies at all levels to boot), thus unnecessarily weakening our economy? EVERYBODY IN! NOBODY OUT!

January 20, 2013

CA health insurance exchange gets $674-million federal grant


Federal officials awarded California's new health insurance exchange a $674-million grant, providing money for a crucial marketing campaign aimed at millions of uninsured consumers.

The state-run insurance exchange, Covered California, is seeking to fundamentally reshape the health insurance market by negotiating with insurers for the best rates and helping consumers choose a plan.

In addition to 'top down' advertising, Lee said, the exchange will be giving grants to religious groups and other community organizations for education at the grass-roots level.

The exchange also has the task of helping millions of Californians determine whether they qualify for an expansion of Medi-Cal, the state's Medicaid program for the poor, or federally subsidized private coverage.

In addition to marketing, Covered California will use the federal grant money to help fund operations through January 2015, when the online marketplace will rely on fees assessed on health policies sold through the exchange.

Separately Thursday, the California Endowment said it would spend $225 million over the next four years to help implement the federal healthcare law in the state.

Comment by Don McCanne of PNUP: The administrative waste in our health care system far exceeds that of any other nation. During the political process of crafting the Affordable Care Act, we warned that this model would greatly add to this administrative waste. We are now beginning to see the extent of that expanded waste.

On just California's insurance exchange alone, taxpayers are having to foot additional costs of two-thirds of a billion dollars just for administration and marketing of the exchange plans. In the future, these additional administrative costs will be downloaded to us through new fees assessed on the health policies sold through the exchange. Just think of all of the other administrative expenses for the multitude of other features of the Affordable Care Act, not just in California but throughout the nation. And not one cent of this additional administrative spending goes to health care. Sick!

Although taxpayers have already invested way too much in this wasteful program, we can still cut our losses and move on with an administratively efficient single payer system - an improved Medicare for all.
January 16, 2013

PA advocates want single payer; 'Obamacare' doesn't go far enough


But about five years ago, things changed. Goulden was diagnosed with chronic liver disease and as he watched his insurance premiums skyrocket, he said he realized why he had never before had a problem with the company - he had never been sick.

"They pushed me out," Goulden said. "I faced the possibility of losing everything I had worked for."

Now a member of the local organization, Adams Hanover Health Care 4 All PA, Goulden works to share his story with others and to push Pennsylvania past President Obama's Affordable Care Act toward what the group believes are even stronger health-care reforms.

After his diagnosis, Goulden said, he quickly recognized the need for sweeping changes. His insurance premiums rose from $300 to $3,100 a month. As the company continued to raise its prices, Goulden said, it simultaneously tried to drop his policy.

Later, he said, the insurance company demanded he submit his federal tax returns to prove that he had a legitimate business.

"The tax returns show how much money I make, so they could use that information to know how much they could charge me in order to push me out," Goulden said. " I called legislators and asked, 'How can they possibly do this?' And I found out that they can. There is no regulation about what they can require you to submit."

So before long Goulden was forced to drop his policy and go without insurance, despite his critical medical condition.
January 16, 2013

Canadian malpractice costs kept low

The structure of the maipractice system is one main reason, but the article didn't mention a second very important reason--people sue when they have bad outcomes because they face a lot of extra health care expenses. This does not happen in any other industrialized country because those countries guarantee health care as a human right.


For neurosurgeons in Miami, the annual cost of medical malpractice insurance is astronomical — $237,000, far more than the median price of a house.

In Toronto, a neurosurgeon pays about $29,200 for coverage. It's even less in Montreal ($20,600) and Vancouver ($10,650).

Instead of buying insurance from a for-profit company, as most U.S. doctors do, Canadian physicians are covered through their membership in the nonprofit Canadian Medical Protective Association.

Membership fees vary only by the type of work and region of the country. All neurosurgeons in Ontario, for example, pay the same amount regardless of how many times each may have been hit with a claim.

"We don't adjust our fees based on individual experience; it's the experience of the group,'' says Dr. John Gray, the executive director. "That's what the mutual approach is all about, and it helps keep the fees down for everyone.''

Moreover, the association provides legal counsel for doctors who are sued and pays the damages, no matter how much.

January 9, 2013

Good News for Single Payer, Bad News for Insurance Companies


This has to be good news for the future of single payer.

And bad news for insurance companies.

Anti-insurance company animus is growing in the USA — especially among young people.

A recent national poll found that fully 59 percent of respondents said they would be inclined to favor the individual in civil litigation that pitted an individual against an insurance company.

But for respondents in the youngest age category — individuals 18 to 29 — fully 71 percent said that they would be inclined to favor the individual over the insurance company.

That’s 15 percent higher than among all adults age 30 or over.
January 6, 2013

Our Absurd Fear of Fat

Our Absurd Fear of Fat
Paul Campos


To put some flesh on these statistical bones, the study found a 6 percent decrease in mortality risk among people classified as overweight and a 5 percent decrease in people classified as Grade 1 obese, the lowest level (most of the obese fall in this category). This means that average-height women — 5 feet 4 inches — who weigh between 108 and 145 pounds have a higher mortality risk than average-height women who weigh between 146 and 203 pounds. For average-height men — 5 feet 10 inches — those who weigh between 129 and 174 pounds have a higher mortality risk than those who weigh between 175 and 243 pounds.

Now, if we were to employ the logic of our public health authorities, who treat any correlation between weight and increased mortality risk as a good reason to encourage people to try to modify their weight, we ought to be telling the 75 million American adults currently occupying the government’s “healthy weight” category to put on some pounds, so they can move into the lower risk, higher-weight categories.

In reality, of course, it would be nonsensical to tell so-called normal-weight people to try to become heavier to lower their mortality risk. Such advice would ignore the fact that tiny variations in relative risk in observational studies provide no scientific basis for concluding either that those variations are causally related to the variable in question or that this risk would change if the variable were altered.

This is because observational studies merely record statistical correlations: we don’t know to what extent, if any, the slight decrease in mortality risk observed among people defined as overweight or moderately obese is caused by higher weight or by other factors. Similarly, we don’t know whether the small increase in mortality risk observed among very obese people is caused by their weight or by any number of other factors, including lower socioeconomic status, dieting and the weight cycling that accompanies it, social discrimination and stigma, or stress
January 3, 2013

Canada’s health costs for seniors rising slowly, points way to Medicare solvency


Archives of Internal Medicine article

Researchers find the U.S. could have saved more than $2.15 trillion on Medicare since 1980 had it employed cost-saving measures similar to Canada's

A study published in today’s Archives of Internal Medicine finds that per capita Medicare spending on the elderly has grown nearly three times faster in the United States than in Canada since 1980. (Canada’s program, which covers all Canadians, not just the elderly, is also called Medicare.) Costs grew more slowly in Canada despite a 1984 law banning co-payments and deductibles.

In the first study of its kind, Dr. David U. Himmelstein and Dr. Steffie Woolhandler, professors at the City University of New York’s School of Public Health, analyzed decades of detailed Medicare spending data for persons aged 65 and older in the U.S. and Canada.

Profile Information

Gender: Female
Hometown: Washington state
Home country: USA
Current location: Directly above the center of the earth
Member since: Sat Aug 16, 2003, 01:52 AM
Number of posts: 51,907

About eridani

Major policy wonk interests: health care, Social Security/Medicare/Medicaid, election integrity

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