GOP Budget Ends Medicare
by TRNN
In Washington,
the World Wrestling Federation of debt debate continues.
In this corner,
President Obama. In the other corner, Representative Ryan, who
presented the Republican budget.
And we're told what some people are
calling theater is the only debate to be had about the debt crisis. Now
joining us to give his take on all of this is Dean Baker. Dean is the
co-director of the Center for Economic Policy Research in Washington.
Dean Baker: Media is failing to report how radical Republican budget is.
Dean Baker is co-director of
The Center for Economic and Policy Research (CEPR). He is the author of
several books including, The United States Since 1980; Social Security:
The Phony Crisis (with Mark Weisbrot); and The Benefits of Full
Employment (with Jared Bernstein). He appears frequently on TV and radio
programs, including CNN, CBS News, PBS NewsHour, and National Public
Radio.
PAUL JAY: Welcome to
The Real News Network. I'm Paul Jay in Washington. And in Washington,
the World Wrestling Federation of debt debate continues. In this corner,
President Obama. In the other corner, Representative Ryan, who
presented the Republican budget. And we're told what some people are
calling theater is the only debate to be had about the debt crisis. Now
joining us to give his take on all of this is Dean Baker. Dean is the
codirector of the Center for Economic Policy Research in Washington.
Thanks for joining us. DEAN BAKER: Thanks for having me on.JAY:
So what do you make--. Let's start with the Republican side, because
the media's treating this like it's sort of a coherent debate: on one
side, here's one set of policies; on the other, here's another set of
reasonable policies; and it's just a difference of opinion.
BAKER:
Well, it's very hard to see the Ryan plan as a reasonable plan. I mean,
there are massive tax cuts in there going primarily to wealthy people,
huge cuts in government spending. You have the discretionary--in fact,
you have discretionary both defense and non-defense shrinking to 3
percent of GDP by 2050.
They're about 8 percent of GDP today. And so
it's kind of incredible. But what perhaps is the most striking part of
the Ryan plan is that he wants to privatize Medicare--and the
Congressional Budget Office did an analysis of this, and there's two
issues here. One is the transferring of costs from the government to
beneficiaries. But to my mind the more important part of the story is
that the private sector is much less efficient in delivering health care
than the Medicare program. And this isn't--whether you like the private
sector or not, there's a lot of analysis of this.
JAY: Yeah? What's the evidence for that?
BAKER:
Well, we've done it. We had the Medicare+Choice plan that was put in
place by the Gingrich Congress in 1995, the Medicare Advantage plan,
which is a variation on that, put in place by President Bush in 2003,
part of his prescription--it was in with the prescription drug plan. And
in both cases, it ended up costing more, not less. The private sector's
much less efficient in holding down costs than the Medicare program.
And the Congressional Budget Office calculated that if everyone were to
buy a Medicare-equivalent policy through the private sector, it would
add more than $30 trillion--that's with a T--$30 trillion to the
cost of Medicare over its 75-year plan period. That's 6 times the
projected shortfall in social security. It's real money.
JAY:
So this is part of what I'm getting at in terms of the way the media's
treating this debate. When you dig into the Ryan plan, it's not only
it's radical; it kind of doesn't make any sense, the kind of--the sense
of what they're cutting. And it's something that is almost unimaginable
if the Republican were actually in power they would even ever do. So
what do you talk about how the debate itself is being framed?
BAKER:
Well, it is incredible. I mean, they're determined to--you know, I've
met Representative Ryan. He's a nice guy, and I'm sure he's a bright
guy. You know. But they're determined to treat this as a reasonable
proposal, and it clearly isn't. I mean, it's--you know, the idea--the
Republicans picked up a lot of seats in the last election, because they
said the Democrats want to cut your Medicare. Now, this isn't talking
about cutting Medicare; it's eliminating it. So the idea that all these
people who just voted for Republicans rather than Democrats because
President Obama wants to cut your Medicare, now they're going to go out
and support Republicans who want to eliminate your Medicare, it's very,
very hard to imagine that. But I think very few people--I'll bet you
less than 10 percent of the public understands that the Republicans in
Congress--I mean, it's a majority of the House--they just voted for a
budget that would eliminate Medicare beginning in 2022. I'll bet you
less than 10 percent of the people understand that, because the media
doesn't report it.
JAY: Now, to what extent does the
framing of the debate, the way the Republicans seem to be opening up
space for President Obama to take a position that, if he had ever said
any of this when he was campaigning to become the nominee for the
Democratic Party, he never would have won the nomination. So they've
kind of moved the framing of the debate over here. But doesn't President
Obama also participate in it by making debt the issue himself?
BAKER:
Oh, he controlled the ball. He's lost control of the ball. But, you
know, he's acting--you know, if you talk to his staffers, you know, they
act--well--you know, this is what they say to progressives; they go:
well, you know, the president can't do everything by himself. That's
true, but the idea that the president is the most powerless person in
the country doesn't make sense either, and that's more or less what they
would have us believe. He put his stimulus on the table back in 2009
when he first came into office. He knew what he got from Congress isn't
enough--his own aides were telling him that. He knew that it was way,
way too small. It seems to me that the proper way to have dealt with
this was, you know, take credit for the victory, 'cause it was good he
passed it. It meant a big thing. It--you know, millions of people have
jobs because of that who would not have, otherwise. But to say clearly
this is not going to be enough. We've got a really deep hole because of
the collapse of the housing bubble. And, you know, just to throw some
numbers there, the hole, by my calculations: about $1.2 trillion in
annual spending. The net stimulus from the public sector, taking what
the federal government was putting in, minus what the state and local
were putting out, was about $150 billion a year. You can't fill a $1.2
trillion hole with $150 billion. His aides know all this. They have all
the same numbers I do. They're not looking at different numbers.
JAY: But not talking about it.
BAKER:
No. And instead of doing that, he started talking about the green
shoots of recovery and saying, okay, now we're going to get the deficit
down. He totally gave up the game. So at that point, you can only lose.
The only question is how much do you lose.JAY: And his
debt speech of a week ago or so, I don't think he mentioned the
recession, and I'm not sure he mentioned "unemployment".BAKER: Didn't mention it. Did not mention it.JAY:
It's all about the debt. But the question is: did he lose control of
the ball? Or given, you know, the kind of political/economic forces he
represents, is this in fact what they want to pass, and the Republicans
have created space for him to do it?BAKER: Well, I don't
know exactly what--. You know, obviously they're a diverse group of
people that support Obama, but he does have a lot of support from Wall
Street. Obviously, those people are entirely happy with this agenda. You
know, he appointed--well, not [incompr.] Rahm Emanual, I was going to
say, his former chief of staff, also had Wall Street ties that made tens
of millions of dollars at a hedge fund, but his new chief, Bill Daley,
got $8 million as a going-away present from JPMorgan as he left there.
These are people with very close ties to Wall Street. They're perfectly
happy seeing cuts to social security, cuts to Medicare. I wouldn't say
they're necessarily pushing for it. Maybe they are, but they're
certainly not upset if that had happened. On the other hand, they are
upset about deficits, debt, and, you know, they're very concerned about
the prospect of higher inflation. So for them, whether this is exactly
what they want or not I can't say. Clearly they're not too upset by it. I
think they would be upset if President Obama were to say, look, we've
got to get people back to work; that's priority number one; we'll worry
about the debt tomorrow.JAY: Now, the polling that we've
seen this last week, I think there's three different polls now that say
over 70 percent of Americans say the way to pay down the debt is to tax
the rich. Is that any resonance in the Obama White House? 'Cause he
talks about the Bush tax cuts--you know, he's going to draw a line, that
he's not going to do it again. But American people seem to be saying
more than that.BAKER: Yeah. I think you could undoubtedly
politically get away with much bigger tax increases on the wealthy. But I
think their view is I'll do the Bush tax cuts, and maybe a little more
here and there. And the little bit more here and there is most
likely taking back some of the tax deductions that benefit middle class
and wealthy alike. That probably isn't going to matter that much to the
wealthy, so he may be able to do that if he can do it for the middle
class. In other words, if you were to substantially roll back the
mortgage interest deduction, you'd be rolling back for Bill Gates, too.
Bill Gates probably doesn't save that much on his mortgage interest
deduction, but, you know, he might pay someone higher taxes that way. So
what I think they envision is, again, taking back the Bush tax cuts and
doing a little bit about some of these exemptions which will affect the
wealthy but will also affect the middle class.JAY: But
not really consistent with what Americans seem to be saying. If you're
going to take on the scale of the debt, then you need something at that
scale when you're talking about taxing the rich.BAKER: You
could tax--you can have much more taxes on wealth. You could have a
financial transactions tax, financial speculation tax--clearly not on
their agenda. I've talked with his advisors. This is nowhere with them.
It's very popular with the public. It's very popular elsewhere in the
world. The European Parliament--.JAY: And I think it was
also--we mentioned--we had said in an earlier piece that it wasn't in
the Congressional Progressive Caucus budget. But I actually think it in
fact is. There is a [crosstalk]BAKER: It is now, yes, yes.
It wasn't at the time. The European Parliament, it's sort of striking
they approved it not just by a small margin. They approved a financial
speculation tax by a margin of five to one, which is kind of striking.JAY: So if people watching this say, okay, we're getting all this, what should we do about it, what should they do about it?BAKER:
Well, two things. I mean, obviously, you can't harass your members of
Congress, but harass the reporters. I mean, it's incredible. All they
talk about, like, all we should be worried about right now is how do you
get the debt down. And you'll hear stories that begin, you know, by
saying, oh, the battle in Washington over how to get the debt down.
Well, why is that the battle? The battle should be: how do you reemploy
the 25 million people unemployed, underemployed, or out of the workforce
altogether? They've somehow disappeared. It's just kind of incredible.
And they attach--the media; this is the media--they attach this urgency
to getting the debt down. It's their own invention. Who told them it was
urgent? No one--you know, is there something in the world they could
point to? It's not the bond markets. Interest rates are near record
lows. So they've invented this false sense of urgency. If President
Obama doesn't want to do what they want him to do--and the they
in that sentence is the media--they'd beat up on him for lack of
courage. You know. So he has to beat up on old people, and then he's
brave.JAY: But isn't there an issue for ordinary people of
the debt that isn't the same way that's being raised, perhaps, but
there's enormous interest that's going to wind up being paid on this
debt, and they're going to wind up taking it out of ordinary people's
taxes, certainly the way politics are now? I mean, isn't--versus going
into more debt, if you want to get people back to work, meaning
stimulus, don't you want to pay for that through taxing the rich?BAKER:
No, there's no reason at all to pay for it right now. You know, in
terms of taxing the rich, I'd say you do it when you [incompr.] the
timing of it. But there's no reason at all to pay for it right now. The
point is, right now, to boost the economy, you want to put money out
there. So there's no particular reason to be looking to pull money away
from the rich now. We also can be paying--something we can do and in
fact are doing to some extent (Japan's done it a great deal): simply
have the central bank hold the debt, because there's no reason--you
don't have to worry about inflation right now, so there's no reason the
Fed can't hold a lot of the debt that the Treasury's issuing. And it's
saying it is doing that right now. The Fed has somewhere around $2.6
trillion on its balance sheet right now.JAY: It's just not
putting it into the real economy. It's giving it--it's loaning it to
banks, the kind of money it's putting out there.BAKER:
Well, the point--no, no. The point is that the Fed is buying up the
debt. So what that means is that the Treasury doesn't accrue interest on
it. What happens is if the Fed holds the debt, then the Fed is
paying--the Treasury is paying--the Treasury's paying interest to the
Fed, rather than to, you know, a wealthy person. And then that interest
is refunded back to the Treasury at the end of the year. So then we
don't have an interest burden. So [crosstalk]
AY: So you'd like to see more of that.BAKER:
That's right. That's right. We could certainly do more of that. And
what's important is that the Fed continue to hold it. Because the
projections that show this big interest burden show that the Fed will
sell off these bonds. And instead, I'd like to just see them hold them.JAY:
And some people suggest--they use the term Ponzi scheme, that this
is--when the Fed--this is a bit of a game, that the Fed moves money from
here, from the Treasury, but there's an artificial--it's essentially an
artificial creation of money which isn't winding up, in terms of
increasing real demand in the economy--like, there's nothing happening
on the wage side; there's, in fact, so far, very little happening on the
employment side.
BAKER: Well, it's increasing demand more
so than if they didn't do it. So if we didn't have--if we didn't run big
deficits today, there would be less demand than there is today. It's
not enough. We need more. But, you know, it is the right thing to do,
and we are getting a boost to the economy, because on the one hand,
Treasury is--you know, we're running deficits, and on the other hand,
the Fed's buying this debt rather than letting--you know, forcing the
private sector to do it, which would lead to some increase in interest
rates.
JAY: Thanks for joining us.
BAKER: Thanks for having me on.
JAY: And thank you for joining us on The Real News Network.
End of TranscriptDISCLAIMER:
Please note that transcripts for The Real News Network are typed from a
recording of the program. TRNN cannot guarantee their complete
accuracy.
|
