Blog entry

Hey Media! Giant Health Care News! In Front Of Yer Face!

Bill Scher — Thu, 11 Dec 2008 17:35:24 -0500

Today, President-Elect Barack Obama formally nominated former Senate Majority Leader Tom Daschle to be Secretary of Health and Human Services and Director of the new White House Office of Health Reform, with Dr. Jeanne Lambrew.as his deputy.

In his announcement, Obama made this major declaration:

The time has come this year. in this new administration, to modernize our health care system for the 21st century, to reduce costs for families and businesses, and to finally provide affordable, accessible health care for every single American.

In other words, he's planning to enact health care for all in 2009.

Not delaying it for later. Not going to be satisfied with incremental changes in his term and wait until a second term to take on a big fight. Now.

That's pretty big news.

But the first three (out of a total of four) questions Obama received from reporters were about the Blagojevich scandal. The fourth was simply how Obama would pay for health care reform. Nothing about what Obama and Daschle envision for legislation.

And of course, cable news all day long largely ignored the major news made today, and harped on the minor news Obama made about the scandal: he wants the Governor to resign and he directed his staff to release details of all contacts with the governor's office.

Granted, the Blagojevich scandal is major news too, but it's patently clear Obama had nothing to do with it. Why let it suffocate the news from Obama's press conference that will have a far greater impact on most Americans?

Selling Insurance Against Their Own Bad Practices

Monica Sanchez — Wed, 10 Dec 2008 15:09:52 -0500

Denying individuals coverage because they have a medical problem (‘pre-existing condition’) is one of the health insurance practices that most angers people. So what is UnitedHealth, the country’s second largest health insurance company, doing about it? Selling insurance to guarantee the individual has the ability to buy health insurance regardless of pre-existing conditions in the future.

The New York Times reports that this is a “first of its kind” product:

“Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own. They may expect to retire early, for example, before they qualify for Medicare. Or they are worried about the possibility of losing their job and their health coverage. People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future...”

Paying a monthly premium to receive no services but just get a guarantee that the company will sell you their product in the future? That is a truly deafening alarm that health care reform is needed NOW!

But that is exactly what UnitedHealth is betting won’t happen. NPR quotes Robert Laszewski, a health insurance industry consultant, who says:

“The product also assumes that efforts to overhaul the nation's health care system—including promises made by President-elect Barack Obama to ban the use of pre-existing condition exclusions in health insurance—will not come to pass.”

Let’s make sure they lose that bet. Tell us which side you are on! Are you with us for a guarantee of quality affordable health care for all? Or are you for leaving us on our own to buy private health insurance under insurance company rules?

Think Health Reform Should Be Put Off Because of the Economic Crisis? Think Again!

Monica Sanchez — Mon, 17 Nov 2008 11:31:18 -0500

Many have speculated that the health care reform promised during the election will have to be put off in the face of our severe economic crisis. Others warned that comprehensive reform will be impossible given the budget gaps and believe piece-meal reform is the most we can hope for. Still others believe the new president will not be able to tackle comprehensive health care reform in his first year for political reasons.

Many others believe, however, that the economic crisis makes health care reform all the more pressing. They believe it would help businesses and individuals.

Paul Krugman, the Nobel Prize winning economist, is on the side of taking action now:

"[S]tandard textbook economics says that it's O.K., in fact appropriate, to run temporary deficits in the face of a depressed economy. Meanwhile, one or two years of red ink, while it would add modestly to future federal interest expenses, shouldn't stand in the way of a health care plan that, even if quickly enacted into law, probably wouldn't take effect until 2011."

Former U.S. Treasury Secretary and advisor to Barack Obama, Lawrence Summers, has said the nation must tackle a variety of challenges that go beyond responding to the current financial crisis, including health care. He called for comprehensive health care reform to reduce the explosion of health care costs in the federal budget and to advance American competitiveness.

Gene Sperling, a Senior Fellow at the Campaign for American Progress Action Fund, testified before the House Energy and Commerce Committee Subcommittee on Health on the benefits of addressing health care in a second economic stimulus package:

"We should be looking for win/wins: places where investments can both have a strong stimulative impact and be an important down payment on major long-term priorities. We should be looking for sweet spots that can both jumpstart jobs and jumpstart the future... Health care initiatives can be a triple benefit in this context."

The New America Foundation recently released a report highlighting "The Cost of Doing Nothing” on health reform:

“Our economy loses hundreds of billions of dollars every year because of the diminished health and shorter lifespan of the uninsured. Rising health care costs undermine the ability of U.S. firms to compete internationally, threaten the stability of American jobs, and place increasing strain on local, state, and federal budgets. As health care costs continue to rise faster than wages, health insurance becomes more and more unaffordable for more and more American families every day….

“We must reform our struggling health system not in spite of our economic crisis, but rather because of the impact health care has on the American economy. The economic and social impact of inaction is high and it will only rise over time.” [Emphasis added]

The data is on the side of those pushing for action on health care reform now.

Another report has come out showing people's lives are in jeopardy because health care is too expensive. The Commonwealth Fund released survey results that reveal more than half of chronically ill adults in the United States skip needed care because they can't afford it. The survey also reports U.S. patients face more medical errors and inefficient, poorly organized care than patients in seven other industrialized countries.

Karen Davis of the Commonwealth Fund told the Washington Post: "We cannot afford not to reform our health-care system. Investment in our health-care system will pay dividends in terms of a healthy workforce and economically secure families."

The need for immediate reform of our health care system is made even more starkly apparent by the projected costs of annual family health insurance premiums put out by Jennifer E. DeVoe, a physician and researcher at the Oregon Health and Science University. DeVoe estimates that health care premiums will top $80,000 by 2025, which will be higher than the projected average household income for the same year.

DeVoe based her projections on the most recent census figures and medical expenditure survey data. She added that factoring in the reality of high deductibles and co-payments, the average health care premium and out-of-pocket costs could exceed the average income before 2025.

Paying $80,000 a year for health insurance! THAT is an economic crisis!

A Progressive Plan for Health Care

Roger Hickey — Tue, 30 Sep 2008 14:21:30 -0400

Long before anyone had been nominated or elected, the voters of 2008 had gotten one message across loud and clear: Fix our dysfunctional health care system! For obvious reasons (and big reasons that aren't so obvious), the leaders of 2009 must heed that call.

America's health care system is in meltdown. More than 45.7 million of us have no health insurance. But even those with good insurance face rising costs and a growing risk of losing the protection they have. Every year, tens of millions of Americans go uninsured for long periods — when a layoff, a divorce, or illness itself disrupts their ability to get or pay for coverage. (Forty-one percent of working-age Americans making $20,000 to $40,000 per year lacked insurance for at least part of 2007.) Still more millions are seriously under-insured, though many don't realize it since insurance companies tend to be secretive about the conditions and procedures they refuse to cover — until we actually need the care.

Excerpted from New Progressive Voices: Values and Policies for the 21st Century, by the Progressive Ideas Network. Read the full chapter or download the PDF here.

In an economy that's gone bad and getting worse, countless American families — insured and uninsured alike — live in dread of being plunged into poverty or destitution by a major health problem. In fact, more than half of all individual and family bankruptcies are triggered by medical bills.

Health care is a momentous problem in its own right. It's also hugely important as part of the broader breakdown of economic security in our country, and as a symbol of political gridlock and unresponsive government. For all these reasons, it's an issue to be addressed boldly, decisively, and, at the same time, with an extra measure of care.

If we were starting from scratch, "single payer" might be the way to go. With one public insurance plan covering everyone, Americans could potentially realize hundreds of billions of dollars a year in savings on pointless bureaucracy and profits — more than enough to cover the uninsured and improve coverage for tens of millions of under-insured.

But we are not starting from scratch. During World War II, U.S. employers began providing health insurance as a way to attract scarce workers at a time of strict wage-price controls. Tax laws went on to codify our employer-based system, which even now provides health care for 160 million Americans — a majority of those not on Medicare. Their support was the critical missing piece in 1993. That's when the Clinton administration set out confidently down the path of health care reform — only to see its proposal cut to shreds by insurer-sponsored TV spots in which a middle-class couple called "Harry and Louise" warned of a sinister plot to "force us to pick from a few health care plans designed by government bureaucrats."

The good news is that Americans are much more suspicious of the insurance industry now than they were then. Many people have wised up to the way insurers compete by cherry-picking younger, healthier workers and employing armies of agents to deny claims — sometimes even when it means condemning someone to premature death or a lifetime of chronic illness. Of all the world's nations, the United States spends by far the most money on health care per capita and in total. Our health care system is enormously wasteful and chaotically organized — and Americans know it. About two-thirds of all voters are prepared to see taxes increase in order to provide high-quality health insurance for everyone. Even a majority of those who are satisfied with their coverage now grasp the need for major reform.

The sticking point for many, however, is the ability to keep the insurance they have. The answer is to guarantee that option, building it into a plan that also lets people choose from a menu of private insurance alternatives (with regulated benefits and costs) or sign up for a Medicare-like public plan, which can act as a benchmark for its private competitors. That's the concept behind Health Care for America, a proposal put together by the political scientist Jacob Hacker with the support of the Economic Policy Institute.

Health Care for America is simple and flexible enough to appeal to a majority of Americans, but bold enough to do the job of covering everyone and controlling health price inflation. And it holds the promise of becoming better over time, as more and more Americans shift over to the public plan, lured by its higher efficiency and more generous benefits.

Leon Panetta

Rick Perlstein — Mon, 05 Jan 2009 17:12:55 -0500

Folks have been praising the novelty of a director-designate of the CIA who has unequivocally denounced torture. Good to remember, too, how the name "Leon Panetta" first came to national prominence, in 1969, when he resigne from the Nixon administration in protest against the Southern Strategy. From NIXONLAND:

The Fifth Circuit had ordered thirty-three Mississippi school districts integrated before the opening of the school year. The districts filed the court-mandated plans; HEW approved them. Then Nixon ordered HEW Secretary Finch to send the judge a letter with language dictated by Mississippi senator John Stennis: the September deadline would bring "chaos, confusion, and catastrophic educational setback" for children "black and white alike." The judge moved back the deadline to December; whence, perhaps, it would be moved back some more. The NAACP Legal Defense Fund took out a full page ad in the New York Times: "On August 25, 1969, the United States Government broke its promise to the children of Mississippi. The promise was made in 1954. By the highest court in the land." Roy Wilkins accused the Administration of actively helping the South prolong segregation, and said that if Nixon was serious about civil rights he'd fire John Mitchell. HEW's civil rights chief, Leon Panetta, a 31-year-old former aid to Thomas Kuchel, did what he thought was his job: he piped up that Nixon was serious about civil rights, just like he'd said at his inauguration.

Panetta immediately got a call from Ehrlichman: "Cool it, Leon!"

Silly Leon. HEW general counsel Robert Mardian, a top operative in Barry Goldwater's presidential campaign, marveled: "Doesn't he understand Nixon promised the Southern delegates he would stop enforcing the Civil Rights and Voting Rights Acts?"

That was in 1969. By 1970,

In the Administration, a bureaucratic mutiny took shape.

On January 19, 1970 President Nixon announced his next Supreme Court nominee, G. Harrold Carswell, a good ol' boy from South Georgia. An ad that Carswell had taken out advertising his run for state legislature in 1948 was discovered: "I Am A Southerner By Ancestry, Birth, Training, Inclination, Belief, And Practices. I Believe That Segregation Of The Races Is The Proper And the ONLY Practical And Correct Way Of Life In Our States." Staffers in the civil rights division of the Department of Housing, Education, and Welfare took in the situation with disgust, and watched their boss for a response.

Nixon made it at a press conference on January 30, asked if he still would have nominated Carswell if he'd known. "Yes, I would," the President responded. "I am not concerned about what Judge Carswell said twenty-two years ago when he was a candidate for state legislature. I am very much concerned about his record...as a federal district judge."

The Post reported on that record the next day: two-thirds of his decisions had been overturned by higher courts. Then it came out that in 1956 Carswell had schemed to make a public golf course private to keep blacks out. Two weeks later Leon Panetta picked up the Washington Daily News and read an article about himself: "Nixon Seeks To Fire HEW's Rights Chief for Liberal Views." He dutifully submitted his resignation that Tuesday. Then he delivered a speech to the National Education Association: "The cause of justice is being destroyed not by direct challenge but by indirection, by confusion, by disunity, and by a lack of leadership and commitment to a truly equal society." Six of Panetta's subordinates resigned in solidarity.

Minnesota Dreaming

Rick Perlstein — Mon, 05 Jan 2009 15:49:54 -0500

Digby's done great work on the Republican National Lawyers Association, basically an organized election-stealing conspiracy. Here's what they're up to in Minnesota:

To grasp just how dishonest this project is, see here.

The Trillion Dollar Solution

Bill Scher — Mon, 05 Jan 2009 12:30:32 -0500

Much of today's chatter centers on unofficial word from the Obama-Biden transition team that its economic recovery plan will include $300 billion in tax cuts. As the incoming administration is estimating the size of its plan between $675 billion and $775 billion (though perhaps with an expectation that Congress will increase the size), dedicating such a large percentage to tax cuts restrains how much will be invested in infrastructure, clean energy, health care, education, state government aid and anti-poverty measures.

The stated political reason for jacking up the size of the tax cuts is to relieve pressure from the conservative minority, entice Senate Republicans to come on board and achieve the symbolic victory of a bipartisan supermajority. (A dubious goal, as noted by Paul Krugman, David Sirota and Hilzoy.)

But that''s not the only pressure on the incoming administration.

While media reports indicate President-Elect Barack Obama wants to keep the overall size of the plan below $1 trillion for "psychological" reasons, calls are growing for a plan of just that size.

On Friday, the governors of Massachusetts, New Jersey, New York, Ohio and Wisconsin deemed a $1 trillion package necessary to meet the crisis, or else it would fail to positively impact the economy and force states to make economically damaging budget cuts. The W. Post reported:

The governors recommended that the stimulus plan include $350 billion for infrastructure, including transportation, wastewater and broadband projects; $250 billion for anti-poverty programs such as Medicaid, unemployment insurance, food stamps and child care; $250 billion in flexible education spending to maintain funding for programs from pre-kindergarten to higher education; and middle-class tax cuts...

...The proposal the Democratic governors discussed Friday is not only larger than others under discussion but presents a new emphasis on education, they said. The recession is causing about 25 states to make or consider making cuts in education, [MA Gov. Deval] Patrick said.

Ohio Gov. Ted Strickland said he applauds the idea of responding to the economic crisis with infrastructure jobs. But he also said that if the states do not get significant help to offset their own cuts, they will be working at cross-purposes with this aid and harming their economies in the long term.

"We may be putting people to work while at the same time we are laying off teachers, allowing college tuition to explode and failing to provide adequate Medicaid resources to the most needy," Strickland said.

Wisconsin Gov. Jim Doyle said, "We will see quality fall off in our schools," adding: "We will see a great restriction of university education, or such soaring tuition that ordinary hard-working families will be unable to afford it."

"I think often during these days about my parents, who grew up during the Great Depression and went to public schools . . . and went to a great state university," Doyle said. "Those people educated in the '30s went on to win a world war and bring this country into the '60s and '70s."

Similarly, the Congressional Progressive Caucus has proposed a $1 trillion recovery plan. As described by The Nation's Katrina vanden Heuvel:

In addition to much needed investments which have already been laid out--like the extension of unemployment insurance while joblessness soars, increasing food stamps, and assisting cash-strapped states with Medicaid--the CPC plan goes a step further. It takes a holistic approach to economic recovery and the needs of ordinary Americans by addressing infrastructure, human capital, keeping people in their homes, job creation, fiscal relief for state, local and tribal governments, education and job training and tax relief for lower-income families.

That adds to Nobel economic prize-winning voices such as Joseph Stiglitz, who said back in November that "at least $600 billion to $1 trillion over two years" is needed, and Paul Krugman, who said of the $775B estimate: "I'd like to see it bigger ... the risks of being too small are much bigger than the risks of being too big."

The Institute for America's Future Main Street Recovery Plan established $900 billion as "the floor, not the ceiling, of what needs to be done." That plan included $145B for middle-class tax cuts, and $755B in public investment for traditional infrastructure, clean energy, energy-efficiency, education, health care, state government aid and anti-poverty measures.

If the overall size of Obama's plan doesn't move, and he insists on $300 billion in tax cuts, that would constrict public investment, and dilute the impact of the plan. (Public investment is far more likely to stimulate the economy in the short-run than tax cuts, especially business tax cuts, not to mention the long-term infrastructure needs we have to address after years of neglect.)

However, if the incoming Obama administration recognizes that the economic facts point to $1 trillion as a number to embrace and not resist, $300 billion in tax cuts would not prevent us from investing $755 billion in our economic foundation: our infrastructure, our state services and our people.

Excessive tax cuts may not be the best way to get our economy back on track. But more important is to make sure we invest enough in America's future, our roads, rail, energy, education and health.

If we put the right pressure on the Obama administration, we can do right by our economy. If all the pressure comes from the Right, our economy will pay the price.

A Final Report Card on the Reagan Years?

Sam Pizzigati — Mon, 05 Jan 2009 08:59:53 -0500

Our current economic meltdown may finally have ended the era that began when Ronald Reagan became President. Now a new study — from the Congressional Budget Office — helps us understand the inequality that has us melting.

Two days before Christmas, with hardly anyone at all paying much attention, the nonpartisan Congressional Budget Office delivered up a final report card on the Reagan era. The highest grades? They went, almost exclusively, to the super rich.

You won't, to be sure, find any As, Bs, and Fs in this new Congressional Budget Office report card. And the CBO's researchers certainly didn't set out to grade America on the years since Ronald Reagan became President a generation ago. But they've done just that. On taxes and income distribution, their new report makes vividly clear, the United States desperately "needs improvement."

That may or may not be the message Senate Finance Committee chair Max Baucus from Montana had in mind, last year, when he asked the Congressional Budget Office to dig a little deeper into the data on taxes and income than the CBO had dug in a report released late in 2007.

The CBO's December 2007 study, Historical Effective Tax Rates, 1979 to 2005, had looked at the federal taxes Americans at different income levels have been paying since the year before Ronald Reagan's election. But the report had a hole. Nothing in it indicated how the really rich have fared in the near three decades that the basic principles of Reaganomics — tax rate cuts, deregulation, and privatization — have set the public policy pace.

Senate Finance Committee chair Baucus asked the CBO to fill that hole — by focusing on the richest of the rich. The CBO's new report meets that request, with dramatic results.

Americans in the overall top 1 percent, the 2007 CBO data showed, did quite well in the Reagan era's first quarter-century. Their average incomes, after taking inflation into account, essentially tripled, rising 201 percent.

But these top 1 percent stats, the new CBO data help us understand, hardly tell the full story. The truly stunning income increases over recent decades have gone to the tippy-top of the U.S. income distribution, not the top 1 percent, but the top tenth — and top hundredth — of that top 1 percent.

The higher up you go on the income ladder, in other words, the sweeter the Reagan era.

Between 1979 and 2005, the bottom half of the top 1 percent saw their average incomes only double, after inflation. These incomes increased 105 percent. The next highest four-tenths of the top 1 percent somewhat raised the income bar. Their average incomes, after inflation, rose 161 percent.

That brings us to the top 0.1 percent of Americans. Their incomes, from 1979 to 2005, rose a staggering 294 percent after taking inflation into account. Not bad at all. But the top 0.01 percent did even better. The 11,000 households in this rarified air took home an average $35.5 million in 2005, a 384 percent increase over average top 0.01 percent incomes in 1979.

Need some perspective here? Let's compare Americans at the top to Americans in the middle. Between 1979 and 2005, the average income of America’s statistical middle class — the 20 percent of Americans in the exact middle of the U.S. income distribution — rose, according to the CBO figures, a mere 15 percent. That's less than 1 percent a year.

But many average Americans never actually saw that less than 1 percent. That's because the CBO takes a kitchen-sink approach to defining income. CBO researchers include in their “comprehensive income” calculations all the standard household revenue streams — wages, dividends, interest, and the like — and lots more, too, from food stamps and Social Security to employer-paid health benefits.

All these add-ins tend to inflate average household “incomes.” If your employer’s health insurance company jacks up prices, for instance, the extra dollars in premiums that your employer has to pay count as income to you, at least in the CBO calculations.

The CBO actually has a good reason to take this "kitchen-sink" approach to defining income. Conservative cheerleaders for the Reagan era have been arguing for years that the United States isn't growing that much more unequal, not when you calculate in the various benefits that poor and average Americans get from government and their employers.

But the CBO figures, by adding in all those benefits, neatly expose the flim-flam behind this cheerleading. The United States definitely has become substantially more unequal. Overall, after taxes, the very rich — the top 0.01 percent — have nearly quadrupled their share of the nation's income since 1979.

These super-rich Americans in the top 0.01 percent, even more amazingly, now pay a lower share of their incomes in federal tax than the merely rich.

The overall top 1 percent paid federal income tax at an average 19.4 percent rate in 2005. The top 0.01 percent paid at just a 17 percent rate, mainly because the richest of the rich get nearly half their income from capital gains — and capital gains enjoy preferential tax treatment.

Under George W. Bush, the tax rate on capital gains income — income from the sale of stocks, bonds, and other assets — dropped to 15 percent, less than half the current top 35 percent tax rate on “ordinary” income from paychecks.

And that brings us to about the only hopeful news we can take, of late, from the Congressional Budget Office. No one on Capitol Hill has spoken out more clearly on the noxious consequences of preferential treatment for capital gains income than Peter Orszag, the CBO director until last month.

Taxing capital gains at a lower rate than other forms of income, as Orszag has testified to Congress, “creates opportunities for tax avoidance and complicates the tax system.”

As CBO director, Orszag couldn’t do much about capital gains tax breaks for mega millionaires. Now he can. President-Elect Barack Obama last month named Orszag his choice to direct the Office of Management and Budget, the federal government’s most powerful fiscal agency.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality.

Progressive Breakfast: Tax Cut Redux?

Bill Scher — Mon, 05 Jan 2009 08:40:44 -0500

Progressive Breakfast is the morning roundup of what progressive movement members need to know to start the day.

Obama May Expand Tax Cut Piece of Econ Plan

W. Post: "Obama officials are advocating that Congress direct about $300 billion of the stimulus package, or about 40 percent, toward tax breaks. Under these provisions, most workers would get a $500 payroll tax credit, as Obama advocated on the campaign trail, and many businesses would receive incentives to create jobs and make equipment purchases more affordable. Along with their potential for short-term impact, the business measures are intended to entice Republicans to vote for the package; most of the provisions received strong GOP support when instituted as temporary measures in 2002."

CONTRAST with our $900B Main Street Recovery Program, endorsed by more than 200 economists, labor leaders and progressive organizations:

Middle-class tax cut: $145B (16%)

Infrastructure (inc. green investment, R&D, education and health care): $490B (54%)

Unemployment and anti-poverty aid: $140B (16%)

State government aid: $125B (14%)

QUESTION: Will more in tax cuts mean an unbalanced package with insufficient investment in critical areas?

The higher tax cut number comes from added business provisions. WSJ carried the Obama argument:

...a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. Obama aides note that businesses would have been able to claim most of the tax write-offs on future tax returns, and the proposal simply accelerates those write-offs to make them available in the current tax season, when a lack of available credit is leaving many companies short of cash.

A second provision would entice firms to plow that money back into new investment. The write-offs would be retroactive to expenditures made as of Jan. 1, 2009, to ensure that companies don't sit on their money until after Congress passes the measure.

Another element would offer a one-year tax credit for companies that make new hires or forgo layoffs, which could be worth $40 billion to $50 billion. And the Obama plan also would allow small businesses to write off a broad range expenditures worth up to $250,000 in 2009 and 2010. Currently, the limit is $175,000.

Politico on the political argument: "Obama strategists say he wants to get 80 or more votes in the 100-member Senate, and the emphasis on tax cuts is a way to defuse conservative criticism and enlist Republican support."

CAF's David Sirota criticizes the economic argument, citing EPI and Republican economist Mark Zandi's conclusions that public investment stimulates better than tax cuts, particularly business tax cuts.

And Sirota questions the political argument: "are we really expected to believe that under these circumstances, a new president can't use pressure to get 3 or 4 Republican senators to back a robustly progressive spending package and that instead, he has to substantially weaken that package?"

Tim Duy of Economist's View worries of imbalance:

...40% of the total is massive tax relief nonetheless. To think that many of us were voting for change…looks like we are getting more of the same.

To be fair, what the Obama team is likely quickly realizing is that while talk of infrastructure spending is great, actual implementation is slow – there are not enough shovel ready projects. Some, yes, but not enough to fill the gap the Administration is trying to fill. Other initiatives, while, worthy, have a similar problem. Fostering productivity enhancing innovations, such as education and green energy, are long-fuse policies – they take time to work. For instance, when I think about education, I think about what is necessary to do for the kindergartner today so they will develop the human capital for the workforce 15 years from now. That is a long time horizon. Too much time for an incoming Administration that has promised 3 million jobs. Hence, tax cuts are necessary to move money into the economy quickly, and an easy way to build favor among Republicans early on. Moreover, the Obama team appears to be hoping that, unlike last summer’s package, these are permanent tax cuts that will be largely spent rather than saved. Given the public’s current predilection toward deleveraging household balance sheets, this may be a pipe dream...

...I am hard pressed to deny a role for tax cuts; I think that it should be part of the package to provide an immediate boost. My concern is that 40% is too much, and there is a nontrivial chance it will not give sufficient longer-term bang for the buck. ... Thoughtful, sustainable policy needs be in place for the long haul to help activity transition away from bubble-dependence. I worry that massive tax cutting now is neither thoughtful nor sustainable.

Washington Monthly's Hilzoy on appeasing conservatives: "screw them. Their economic philosophy got us into this mess; we should not let them force us to use ineffective means to get out of it. If the Democrats can't keep enough of their Senators in line to get this passed, and corral a couple of Republicans, then we're in worse shape than I imagine"

Naked Capitalism frets: "As always, the devil lies in the details, which we will see in due course. But on a first pass, this looks like a pretty big ticket way to co-opt opposition."

Conservative Michelle Malkin rips Senate Minority Leader Mitch McConnell for entertaining compromise: "Here I was, gearing up this week for a united conservative front against the Obama boondoggle, and Mitch McConnell opens his mouth."

EFCA Update

House Majority Leader Steny Hoyer, on Fox News Sunday, raised expectations for early consideration of the Employee Free Choice Act: " I think it will be early. I think it will be early in the year, certainly in the early spring."

DailyKos' Trapper John on the critical importance of EFCA: "federal law is suppposed to preserve the free choice of employees to choose unions, but in practice it does no such thing. And that's why we need the Employee Free Choice Act -- to restore the right of workers to choose whether to unionize, and in so doing, to restore a real, secure middle class."

In These Times' Art Levine reviews Bush's sorry labor legacy to further make the case: "...the Labor Department that was supposed to protect workers’ lives and paychecks did practically nothing to stop 6,000 workers from being killed on the job each year and having an estimated $19 billion stolen through corporate wage theft of pay for overtime and minimum wage."

Breakfast Sides

Stateline reviews the weakened social safety net, and how to mend it:

...welfare reform instituted in the 1990s has made it nearly impossible for people without a job or prospects of one to receive public assistance. Welfare, or cash assistance — typically the first thing people think of when they hit hard times — now represents less than 2 percent of the nation’s safety net, and the money available does not increase as the poverty rate climbs.

Instead of cash, state welfare workers can offer families in financial trouble a complex array of targeted aid programs such as children’s health insurance, nutrition programs for women and infants, work training and job placement services, subsidized child care, housing vouchers, substance abuse and mental health care, and home energy assistance — but many of these programs require reams of applications that can take weeks or months to process.

La Vida Locavore sizes up expectations on Obama's food policy

Democracy Arsenal finds great diversity of opinion in the American Jewish community about the Gaza conflict, while Mondoweiss praises J Street for refusing to cave on its call for a cease-fire.

The New Yorker's Jeffrey Toobin profiles Rep. Barney Frank, and concludes: "Frank’s prescience on the housing crisis should not be overstated..."

Should We Devote 40% of the Stimulus to Tax Cuts?

David Sirota — Mon, 05 Jan 2009 01:48:04 -0500

The Wall Street Journal reports this morning that President-elect Barack Obama is planning to devote roughly 40 percent of any new economic stimulus package to tax cuts. Arguing for the idea in the face of failed Bush tax cuts over the last eight years, his spokeswoman is quoted invoking the tired "pragmatic" meme, saying: "We're working with Congress to develop a tax-cut package based on a simple principle: What will have the biggest and most immediate impact on creating private-sector jobs and strengthening the middle class? We're guided by what works, not by any ideology or special interests."

Of course, tax cuts are a strange way to pursue "what works," because as CAF's Isaiah Poole long ago noted, evidence suggests spending - not tax cuts - is clearly "what will have the biggest and most immediate impact" in fixing the economy. Indeed, the Economic Policy Institute reports:

"Most of the money from the recent tax rebate was saved rather than spent, thus blunting its stimulative benefit. By comparison, other options—such as infrastructure spending, aid to states, food stamps, and unemployment insurance (UI) benefits—are much more cost-effective because they target the needs most likely to channel money back into the economy."

Likewise, Economy.com's Mark Zandi (himself a Republican) recently estimated that each dollar dollar of refundable tax rebates only boosts GDP by about $1.26, while each dollar of infrastructure spending could provide a $1.59 boost. Here's his chart on "what works":

The Wall Street Journal's subheadline suggests what's really going on with Obama's tax cut move: It's not pragmatic policy, it's political pandering "aimed at winning GOP support," and such pandering isn't even politically "pragmatic" because lots of Republican votes aren't even needed. After all, Democrats' vast congressional majorities, Obama's election mandate and the economic crisis should guarantee passage of whatever economic rescue package Democrats push. I mean, c'mon - are we really expected to believe that under these circumstances, a new president can't use pressure to get 3 or 4 Republican senators to back a robustly progressive spending package and that instead, he has to substantially weaken that package? Puh-leeeze.

So, then, why weaken good policy (ie. infrastructure spending) with bad policy in order to attract votes the new president shouldn't need? That's the enduring power of the right-wing's tax frame.

For 30+ years, the conservative movement has insisted that tax cuts are always better economic policy than public spending. And despite the fact that such rigid ideology has proven bankrupt over and over and over again, it still confines American politics, as evidenced by a new Democratic president already appearing to embrace the right's basic tax fallacies.

Breaking apart this tax paradigm is going to take a long time. As I showed in my latest book, progressives are making headway in reframing the tax debate in some of the toughest political territory in the country. But as I also showed in a recent newspaper column, in other places like New York and Washington, D.C., the anti-tax frame remains a powerful force.

Sure, it's good news that the stimulus will likely include a decent amount of public spending. And sure Obama seems intent on making some of his tax cuts progressive by targeting them down the income ladder. But again, he seems to be embracing the right's overall tax frame - and that's a problem.