Boehner, House GOP About To Take A Huge Risk On Entitlement Reform?

Republicans are about to take a walk along the third-rail of American politics.

The Wall Street Journal reports today that John Boehner and the House GOP are planning to make a move toward entitlement reform when they present their budget in the Spring:

WASHINGTON—House Speaker John Boehner said Thursday that he’s determined to offer a budget this spring that curbs Social Security and Medicare, despite the political risks, and that Republicans will try to persuade voters that sacrifices are needed.

In an interview with The Wall Street Journal, Mr. Boehner said House Republicans would offer a budget for the next fiscal year that sets goals for bringing the programs’ costs under control. But he acknowledged that Americans aren’t yet ready to embrace far-reaching changes to Social Security and Medicare because they aren’t aware of the magnitude of the financial problems.

“People in Washington assume that Americans understand how big the problem is, but most Americans don’t have a clue,” Mr. Boehner said, speaking in his Capitol office. “I think it’s incumbent on us, if we are serious about dealing with the big challenges, that we go out and help Americans understand how big the problem is that faces us.”

He added, “Once they understand how big the problem is, I think people will be more receptive to what the possible solutions may be.”

It makes economic sense. Medicare and Social Security comprise some 60% of the Federal Budget and both programs will run out of money within 25 years if nothing is done. However, as usual, Americans are adopting an ‘if it isn’t broken at this very moment, let’s pretend we don’t have to fix it’ attitude when it comes to so-called “entitlements.” When Alan Simpson and Erskine Bowles proposed relatively modest entitlement reforms as part of their proposal to the President’s Commission On The National Debt, the plan was roundly denounced by both left and right. In fact, that plan has now pretty much disappeared from the public arena to be filed among along with other much-ballyhooed but ultimately pointless commission reports.

Most recently, of course, there was the NBC News/Wall Street Journal that came out this week that showed the usual public reluctance toward “entitlement” cuts of any kind:

Less than a quarter of Americans support making significant cuts to Social Security or Medicare to tackle the country’s mounting deficit, according to a new Wall Street Journal/NBC News poll, illustrating the challenge facing lawmakers who want voter buy-in to alter entitlement programs.

In the poll, Americans across all age groups and ideologies said by large margins that it was “unacceptable” to make significant cuts in entitlement programs in order to reduce the federal deficit. Even tea party supporters, by a nearly 2-to-1 margin, declared significant cuts to Social Security “unacceptable.”

(…)

Asked directly if they thought cuts to Medicare were necessary to “significantly reduce” the deficit, 18% of respondents said yes, while 54% said no; the rest were not sure or had no opinion. On Social Security, 22% said cuts would be needed, while 49% said they weren’t.

The results cannot be compared easily to prior polling, but they suggest durability to the support for entitlement programs. In 1995, when Congress was considering cuts to Medicare, 36% said in a Journal/NBC poll that they supported a plan to cut Medicare spending and devote the money to deficit reduction. Some 52% called for maintaining Medicare at its existing level.

The results aren’t all bad, though, because that same poll showed that a sold majority supported reducing Social Security benefits for wealthier recipients and gradually increasing the age at which retirees are eligible for benefits to 69. While those two reforms wouldn’t solve all our problems, and would do nothing to solve the problems with Medicare, they’d certainly be a start. Nonetheless, this poll, along with others that have been conducted in the wake of the Simpson-Bowles report show that there isn’t a lot of public support for entitlement reform when that “reform” is characterized as benefits cuts. That’s what makes even the GOP’s limited plan to emphasize entitlement reform politically risky.

Reading the interview, Boehber seems to think that Republicans will be able to educate the public on the need to address the problems with Social Security and Medicare now rather than waiting a decade or two when we’ve got no choice in the matter, but past experience suggests otherwise. When President Bush put forward the idea of reforming Social Security by allowing people to having private accounts, the plan was immediately denounced by Democrats. There was no discussion or debate, there was only American politics as usual. Because, as the polls indicate, the public has its head in the sand on this issue. It will be much easier to demagogue the issue and set up the 2012 race than to engage in an honest discussion over a problem that needs to be dealt with sooner rather than later. That, sadly, is what American politics has come to.

So, I wish the Republicans luck in their efforts but, just as President Bush abandoned his Social Security reform proposal as soon as it came under serious criticism, I have little confidence that they’ll be able to withstand the fire to come.

FILED UNDER: Congress, Deficit and Debt, Social Security, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. wr says:

    “It may be easier to demagogue.”

    Or, in English, Americans overwhelmingly want to keep these vital programs, but they don’t fit my ideology, so all those people who depend on them for their lives are being childish.

  2. Alex Knapp says:

    I am happy that the GOP will look at entitlement reform. However, I suspect their approach will be as penny wise and pound foolish as the rest of their budget cutting approaches.

    Additionally, I am happy that we did not privatize Social Security in 2005, as that would have pretty much devastated the entire system.

    That said, had we privatized SS according to Bush’s logic, there wouldn’t be a coherent conservative argument against the individual mandate in the PPACA….

  3. EJ says:

    not wr, these have to get fixed in some shape or form – its mathematical reality – but instead of actually laying out a plan to do so, most politicians just attack their opponents.

    If the democrats are unwilling to make any substantial cuts to the entitlments (and sounds like you arent willing either), I am still waiting for them to present their mathematically viable plan based around large tax increases. When they go ahead and do that then we can say they are not going to just demagogue.

  4. Alex Knapp says:

    @EJ –

    If the democrats are unwilling to make any substantial cuts to the entitlments (and sounds like you arent willing either),

    In order to fund the PPACA, the Democrats cut over $500 billion from Medicare.

    In the 2010 elections, the GOP attacked the Democrats for cutting Medicare.

  5. Lack of support for entitlement reform is a myth.

    In the very few polls that have been done where tell people what will happen if they don’t trim spending, you get majorities in support of cuts.

    You can’t ask a flat yes or no question to whether people want to cut social security and medicare… if someone asked me that I’d say no too. The questions isn’t whether we want to or not, as most polls ask, but rather would we rather raise taxes 50%, see deficits continue to skyrocket, and face much worse cuts down the line, or make cuts now. People get this.

  6. Steve says:

    I am probably closer to Social Security & Medicare than “wr,” unless he is already getting them. Medicare is a bad deal. How would you like to have health insurance that doctors don’t want to take and many doctors refuse to take medicare patients? The liberals think we are stupid when we say “no government health care and leave my medicare alone!” What we mean is “you have us stuck with bad health insurance and we don’t want you to make it worse by cutting payments to doctors or by telling us that we are too old for treatment.” Social Security will eventually be a welfare program – there won’t be enough money for everyone, so it will be “means tested.” People who saved and invested will get nothing and people who wasted their money on “consumer goodies” will end up with government hand outs. You can call it “supplemental retirement income” if it is means tested.

  7. EJ says:

    Alex,

    1. Drop the partisan hackary. Why is it that your immediate response to a critisism of one party is not to repond to it, but rather say in a childish manner reply “well they did it too”? I am not defending republicans here – they are political hacks too.

    2. Most of those medicare cuts are not actually cuts – with the exception of the medicare advantage gutting, they did not cut benifits, but rather just pormised to cut reimbursment rates to providers in the future without any regard to the actual cost of supplying the service. All this is is a price control – not a cut. And considering we keep passing a doc patch every year, because anyone who understands anything about economics realizes that price controls cause waiting lines and shortages, I’m willing to bet a lot that these “cuts” will not occur either.

    If you yourself would like to outline a plan for getting the entitelments on a sound fiscal footing without making signifigant reductions in benifits, I’m ready to hear it.

  8. Steve says:

    Mr. Knapp,

    We are not stupid. Those “savings” are not real. Don’t take my word for it – take the Obama administration’s word for it:

    http://dailycaller.com/2011/03/04/hhs-secretary-sebelius-admits-to-double-counting-in-obamacare-budget/#ixzz1FeW5Bx6y

  9. “Or, in English, Americans overwhelmingly want to keep these vital programs, but they don’t fit my ideology, so all those people who depend on them for their lives are being childish.”

    Is anyone out there suggesting we actually get rid of these programs? Besides really wingnutter types?

    Doing nothing is the same as saying you want to cut them drastically. If we don’t lower their costs now, we will (not might, WILL) see something on the level of Greece a lot sooner than people want to admit. This will speed up considerably next year when our country’s credit rating will go down if we don’t address these things.

    This is classic demagoguery. The cuts people are suggesting are not to cut people from what they need, they are to slow the growth of them, pay less to people who don’t need them as much, raise the age a bit over long stretches of time, etc. Doing nothing is the only thing on the table that will accomplish what wr fears.

  10. EJ says:

    What Solomon said.

  11. Franklin says:

    Hmmm, Republicans are considering getting votes again from people like me. I’ll believe it when I see it.

  12. Alex Knapp says:

    EJ,

    Two immediate reforms that would have an immediate fiscal impact:

    1) Allow Medicare to negotiate the price of prescription drugs with pharmaceutical companies.
    2) Put an enforcement mechanism in place so that when a doctor or hospital defrauds Medicare, there are actual consequences. (Medicare has lost close to $100 billion in fraudulent claims over the past few years, because the law hamstrings its auditing and enforcement.)

    Two reforms with medium/long-term fiscal impact:

    1) Increase the number of doctors through incentives such as relaxed restrictions on immigrant doctors who are licensed in their home countries, more student loans at reduced interest rates for med students, and grants for med students who are willing to serve as GP’s in underserved areas. Right now, the United States has 2.2 doctors per 1,000 people. In most European countries (where health care is cheaper), the rate is 3-4 doctors per 1,000 people. More supply = lower prices.

    2) Decrease the demand for doctors by allowing Nurses and Nurse Practioners to provide more types of care without requring a doctor’s examination. Decreased demand = lower prices.

    One reform with both short and long term impact:

    1) An excise tax on all forms of sugar, the revenues from which are earmarked for Federal health programs. In the short term, the revenues will help balance the budget. In the long term, decreased consumption of sugar will lead to decrased incidences of diabetes, which is THE number one driver of heath care costs. The cost for care of diabetes, the bulk of which is paid for by the government, is close to $200 billion PER YEAR. The number of Americans with diabetes is expected to double by 2050. By reducing the incidence of diabetes, we will not only save the costs of care for diabetes, we will also free up health care resources to care for other matters — which will ALSO lower costs.

    There — that’s my Medicare plan in a nutshell.

  13. Pete says:

    Why should we believe what people in Washington say? We have been doing that for several decades and look where we are. Read the following and ask yourself if his scenario is possible. If it is possible, it can happen. Hope it doesn’t, but since we can’t trust either party in DC and if even a small version of his scenario materializes, what have we got?
    http://www.kitco.com/ind/Wieg_cor/roger_mar042011.html

  14. An Interested Party says:

    If Medicare is so terribly horrible, I’d be curious to know what anyone would propose to replace it…and that dirty term “price control”…is there any way to do something substantial about the explosion of health care costs without some element of price control?

  15. wr says:

    EJ — Here’s my fix for Social Security: Get rid of the cap on earnings subject to SS tax. Not only will you have a huge SS surplus, paid for by people who can well afford it, but you’ll fund a lot of Medicare, too.

    Oh, and if you’re in a giving mood, stop taxing the hundreds of millions earned by investment bankers — and that’s each, not total — at half the rate of what a teacher pays.

    Wow, that was easy.

  16. Steven Plunk says:

    What ever fixes the Republicans might propose it will be a shame to have Democrats attack them for political advantage. We already see some of that here.

    Solomon, I believe, is correct. There are many of us post boomers who would rather see the system saved in some form than see continued abdication of responsibility by our elected leaders. The vanity and self centered nature of the baby boomers has been replaced with an attitude of cleaning things up the right way. My generation has spent nearly a lifetime feeling the adverse effects of boomer mentality so this is no different.

    It’s time for fixes that don’t rely on the same old formula of raising taxes while just spending more. 50 years of that nonsense is enough.

  17. Alex Knapp says:

    It’s time for fixes that don’t rely on the same old formula of raising taxes while just spending more. 50 years of that nonsense is enough.

    In the past 50 years, when taxes have gone up, spending has gone down. When taxes have gone down, spending has gone up.

    Taxes are, right now, at their lowest level in 60 years.

  18. EJ says:

    Wr,

    that does not raise nearly enough revenue to close the unfunded liabity gap of SS never mind Medicare as well. If you were planning to close the gap by just raising taxes on the top two brackets, that would require at 86% tax rate. And even if youa re ok with outright theft of all income for higher earning people, you wouldnt end up raising nearly as much as the simple arithmetic suggests because at 90% plus (including state taxes) income tax rates there are very large laffer curve implications at that point.

    So try again. If you are unwilling to make substantial cuts to future benifits then it will require massive tax increases which which will have to land on pretty much everyone.

    Alex,

    Though there are some problems with some of these ideas ( ie “negotiating persription drugs” is just a price control that shifts costs over to private insurance”) you do have some modest ides here. But the problem is none of these really address cost rate growth problems. You could get a fixed amount cleaned out be gettig rid of fraud, but after that, the rate just keepps growing again.

    The other things dealing with supply of services can be done, but most of those have to do with current state law restrictions.

    But ultimitally heres the thing. The onyl thing you are willing to cut are opperational inefficiencies. Though getting rid of these isnt bad, you arent offering anywhere where you are actually willing to cut a benifit. And that is what is going to have to be required – its just math.

    For all the talk about “shared repsonsibility”, you want the entire burden of this mess to paid for by a few high earners who already fund the bulk of the government.

    If there is to be some kind grand compromise in fixing this mess, democrats are going to have to offer something on the table that they are actually willing to cut. From a bargining perspective, your refusal to cut anything is really no different than republicans refusal to raise any level of taxes.

    And noen of this adresses SS either.

  19. EJ says:

    “Taxes are, right now, at their lowest level in 60 years.”

    But thats only because of the recession. The baseline projection of current rates going forward will leave the federal government with the highest level of tax revenue as a percent of GDP that has ever occured by 2017. With bracket creep, over time, effective tax rates automatically go up. And still with this, we are looking at trillion plus annual deficits at this point.

  20. If Medicare is so terribly horrible, I’d be curious to know what anyone would propose to replace it…and that dirty term “price control”…is there any way to do something substantial about the explosion of health care costs without some element of price control?

    Is this a prank comment? I skimmed all these comments and didn’t find a single person who said Medicare is terrible. We’re just saying we need to make it solvent.

  21. Scott says:

    “both programs will run out of money within 25 years if nothing is done”

    Maybe the ongoing annual budget deficits are a bit more pressing?

  22. wr says:

    EJ — Apparently you chose to read what your ideological blinders let through, rather than what I wrote. I didn’t say raise income taxes. I said lift the cap on income that is subject to SS tax. That is more than enough by a huge amount to guarantee the program’s stability.

    But I’m not sure why I’m wasting my time with you. You give away your whole game with that phrase “outright theft of income for higher earning people.”

    Clearly you’re one of those great denizens of Galt’s Gulch who believes that taxation is theft, and that the rich are rich because they’re better than everyone else.

    So let me end this before it gets tiresome: I find the Randian “philosophy” to be a loathesome and childish view of the world and the people who preach it despicable. As you can probably tell, we’re not going to find common ground. Have fun in the Gulch.

  23. Ernieyeball says:

    Pete asks: “Why should we believe what people in Washington say?”

    I dunno Pete why should we? We all know that they can’t predict the future! But then who can?
    Your Kitco link sure could be the real thing though! Finally a door to tomorrow that we can trust!
    I just wonder if these Swamis have a track record?
    Look it’s Howard Ruff! He wrote “How to Prosper During the Coming Bad Years” (1979)
    Anyone who took Ruff’s advice in 1979 would have bought gold just as it began a nearly 20-year uninterrupted trend downward and sold stocks as they embarked on an 18-year bull run with the S&P 500 rising nearly tenfold.
    Damn!! Just can’t trust anyone for a decent prophesy these days!

  24. Gustopher says:

    I am so looking forward to protesting at the town hall meetings and shouting down everyone with claims of Death Panels and abandoning our elderly. Should I bring a gun? Should it be loaded?

    The Republicans poisoned the well. Let them drink the water (and then try to call poison control, and discover they defunded it)

  25. michael reynolds says:

    Reading the interview, Boehber seems to think that Republicans will be able to educate the public on the need to address the problems with Social Security and Medicare now rather than waiting a decade or two when we’ve got no choice in the matter, but past experience suggests otherwise.

    He’s wrong. No one listens to what a congressman has to say about anything. Particularly Boehner who doesn’t even carry any weight with his own caucus. Adding more GOP congressmen would just compound the problem since, let’s face it, most of them are not ready for prime time.

    When President Bush put forward the idea of reforming Social Security by allowing people to having private accounts, the plan was immediately denounced by Democrats. There was no discussion or debate, there was only American politics as usual.

    Bull. It was discussed. It’s just that it was so obviously stupid an idea that consensus was very quickly reached. Subsequent events have proven just how stupid it was.

    Because, as the polls indicate, the public has its head in the sand on this issue.

    Of course they do. 30 years of Republican magical thinking with gimmicks and trickles and Laffer curves and off-budget wars have conditioned the people to believe in fairies and unicorns.

    Between delusional libertarian Republicans who haven’t progressed intellectually since their sophomore year, “Hey, man, it’s like, my money, right?” dorm bull sessions, and mainline Republicans who just don’t give a good damn what happens to the country so long as rich people get richer, we haven’t done a very good job of talking sense to the people.

    Now, suddenly, we’re to believe the GOP really wants to fix government. Riiiiight.

    It will be much easier to demagogue the issue and set up the 2012 race than to engage in an honest discussion over a problem that needs to be dealt with sooner rather than later. That, sadly, is what American politics has come to.

    If the GOP comes up with a rational proposal, Obama will negotiate it with them. Period, full stop. I can just about guarantee it.

    And if Boehner is serious about actually doing something to help the country he’ll need Obama because as I mentioned above, no one is buying anything off Boehner.

    But I doubt Boehner has it in him, or in his caucus. Libertarian nincompoops, Money Republicans and Jesus Republicans are not the groups I’d expect to come up with some rational plan. I’d love to be surprised. And if we are surprised, we’ll work to find a compromise.

  26. tom p says:

    Doug, my comment got caught by your spam filter.

    Shorter version: How naive are you?

  27. “both programs will run out of money within 25 years if nothing is done”

    The trust fund is a myth. Social Security is already losing money. The IOUs are just numbers on paper.

  28. Of course they do. 30 years of Republican magical thinking with gimmicks and trickles and Laffer curves and off-budget wars have conditioned the people to believe in fairies and unicorns.

    Christ… I think this is my favorite quote about republicans all week. Only thing that would have made it better is if it were followed up with a similar comment about dems. Their unique insanity is the idea that we can just tax our way out of the problem, without any cuts what so ever.

  29. EJ says:

    wr,

    is raising the cap not increasing taxes on those people?

    And its not high nough at all. I dont know where you get your math but another 7% tax on income over 108k or so is not anywhere close to enough to close the gap.

    My outright theft is in refference to a 90% tax rate. If you dont raise taxes on anyone other than the top two brakets, and you dont cut current benifit schedules, it would require an 86% tax rate on the top two brackets to close the gap over the next couple decades. Thats where that comes from. Raising it 7% (increasinng the cap, it not nearly enough).

    And yes, im willing to say that a tax rate of over 90% is indeed theft and most people whould agree who arent john galt. That is essentially slavery where you work only for the state. But regardless im glad that you used that as an excuse to ignore any argument actually made. You have presented yourslef as unwilling to talk about this as an adult and this is eactly why we are screwed as a county and will not likely fix this problem until we are in a Greek-style debt crisis.

  30. Gustopher says:

    “The trust fund is a myth. Social Security is already losing money. The IOUs are just numbers on paper.”

    No, they are treasury notes, backed with the full faith and credit of the United States. Why are Republicans so eager to default on treasury notes?

  31. michael reynolds says:

    Solomon:

    Actually I’ve made almost exactly that statement before and hereby renew it. I think what I said was that the Dem delusion is that only the rich will have to be taxed.

  32. An Interested Party says:

    Umm, could my comments be rescued from the spam filter? Thank you…

  33. ThoseWhoServe says:

    Subject: Share the Sacrifice; I Think Not

    We now have Speaker Boehner telling us “… that Republicans will try to persuade voters that sacrifices are needed.” Mr. Boehner also said “”People in Washington assume that Americans understand how big the problem is, but most Americans don’t have a clue.”

    I believe Mr. Boehner is wrong on both counts. Sacrifices may be needed, but not from the employees, employers, and retirees to ensure the viability and solvency of Social Security. Regarding Mr. Boehner’s second comment; I would suggest that Americans understand how big the problem is, but most politicians don’t have a clue (not one that they would be willing to share).

    Politicians, corporations, and pundits love to talk about reducing the Federal deficit by “sharing the pain”. What we should be doing is demanding responsibility for their misdeeds from the people, business entities, and political entities that were directly responsible for most government deficit problems including local, state, and federal levels.

    Before any “sharing” begins, American voters should demand that the people who started the fire of near financial collapse bear the burden of repairing the damage they wrought.

    When a politician continues to parrot the business community and high income earner demands, she or he is saying that the middle class should assume both the costs and the pain of the problems that were primarily caused by others. Those “others” remain blissfully standing on the political sidelines while they count their profits and bonuses. Then on the run-up to the next election, they come out of the shadows to throw money (campaign contributions) at their political allies.

    During years in the military and civilian life, having paid local, state, and federal taxes, earlier generations were able to pay enough taxes to keep government services available and government programs functioning. I do not appreciate why some people believe that political comments supporting a refusal to pay up for what you got from government now equates to some specious “voter revolution.” There is a group of politicians who scream loudly about their taxpayer revolution that would eliminate taxes and deficits. Their plans would make the United States another banana republic.

    To feed their incessant greed, the wheelers and dealers and power brokers released their so-called “best and brightest” in finance, politics, and punditry in the mid-90’s to without conscience pillage the jobs, earnings, savings, and retirement of hundreds of millions of working and retired Americans.

    Not happy with wiping out pension plans and reducing employee and retirement benefits, they then pour more gasoline on the fire by deliberately driving corporate and personal income tax revenues down to levels they knew could not, and would not, sustain government operations at the local, state, or Federal levels.

    Now they are looking at the Social Security Trust Fund with scavengers’ eyes. The approximately $2.7 Trillion Dollars of assets is their next target. They well know that the trust fund consists of the accumulated Social Security payroll taxes of hundreds of millions of taxpayers and retirees and million of employers. China and Saudi Arabia are welcomed to redeem their U.S. Treasury securities (including earnings). However, meantime, the minions of greed try to slam the door on redemptions of both contributions to and earnings on identical bonds purchased by Social Security.

    I do not accept the socialization of the costs and damages of the problems created by the ethically challenged on the backs of the middle class while the pillagers continue to enjoy the accumulated excessive and unearned wealth.

    It is a fact that Social Security retirement can pay current levels of benefits into the indefinite future with changes that do not affect benefit levels or retirement age.

    Under President Reagan, Social Security payroll taxes were levied on approximately 90% of all earned income in America. Payroll tax is now levied on approximately 83% of the earned income. Restoring the amount taxable to 90% accompanied with an increase in the Social Security payroll tax from the current 13.6% level would ensure that the Trust Fund would never run out of money. There is no need to change the current retirement age for receiving Social Security benefits.

    Too many politicians are not interested in taking the mathematical, actuarial, and ethical steps available to them because their real end goal is to simplemindedly steal the $2.7 Trillion Dollars sitting in the Social Security Trust Fund. This they would accomplish by means testing, increasing the retirement age, and reducing retirement, disability, and death benefits. Instead, they should be frank with taxpayers in saying that a small increase in the payroll tax would effectively provide enough funding to keep Social Security solvent forever.

    Let’s be optimistic for a minute. Let’s hope that the level of derision and disrespect shown by Gov. John Kasich of Ohio is not typical. He referred in a speech to a police officer, who was doing his job, as “an idiot.” There are two possibilities here: either Kasich thinks that such a comment makes him seem like the “Average Joe” (wrong); or Kasich is not in control of what he says (whenever a pol does this, the next day a vague, most likely insincere apology is issued). Either situation is hard to swallow and just another insult to the intelligence of his constituents. Kasich’s self-described passion would preferably appropriately be applied to solving his state’s problems without politically picking and choosing which constituents will be financially punished.

    Constituents should let their representatives and senators and other government officials, and their staffs, know that they that they expect respect that is demonstrated on the level of civility given to “the boss.”

    After all, regardless of political affiliation or non-affiliation, whether or not they vote, and regardless of immigration status, the mass of people is the boss in any government.

    Politicians have taken the practice of making simplistic and false promises in every campaign to a level that has become ludicrous and reprehensible, and that’s why so many people do not vote. Therefore, putting the blame for bad results on constituents cannot fly. Where is full disclosure for the politician?

    It’s time that politicians are told that they cannot abrogate trust with hundreds of millions of employers, employees (including illegal alien contributions), and retirees who have been paying Social Security payroll taxes since 1937. In contrast, the Republicans are terrified at the prospect of refusing to redeem the U.S. Treasury securities held by China and Saudi Arabia.

    For the American people, this is a case in which a return to some past expectations and values seems to be in order. By that I mean that the politicians should not be allowed to follow legendary scam artist-bank robber Willy Sutton’s business model. He was asked why he robbed banks and replied “because that’s where the money is.” Nevertheless, he went to jail.

    Some politicians say they want to rob Social Security because the $2.7 trillion dollars of U.S Treasury securities (paid for by workers and held by the Social Security trust fund) is equivalent in numbers to approximately 19% of the current federal debt.

    Does anybody really believe that the money will go to anything or anyone other than the interests of the large contributors to their campaigns?

    If so, I have several bridges (with only minor repairs required) to sell you.

  34. “The trust fund is a myth. Social Security is already losing money. The IOUs are just numbers on paper.”

    No, they are treasury notes, backed with the full faith and credit of the United States. Why are Republicans so eager to default on treasury notes?

    I’m not a Republican. Your assumption is telling though.

    I’m about as centrist as they come, and if you try to make some stupid stereotypical joke about that, you can shove it where the sun don’t shine.

    Those notes are not the same as a bond. They’re agreements from one part of the government, to another part, not a contract from some lender to an external investor. Both come out of the same pot of money… the general budget.

    Its all been spent. The trust fund is a myth because people act like it is money in a bank account, when all it is is a promise… numbers on paper.

    So when people say social security is solvent, all they’re doing is shifting money around, when in reality, its losing money already, and will continue losing money. The money that was supposed to be saved was already spent. Calling it a treasury note doesn’t change the fact that to pay it requires more borrowing, and more borrowing is going to bankrupt the country.

    Solomon Kleinsmith
    Rise of the Center

  35. tom p says:

    Just finished the “Greatest Trade Ever”… In the process of the reading I can find no fault with anything JP did (well, maybe one exception) BUT….

    At the end of the book, I found myself asking, “What did he contribute to America?”

    The answer was: “Not a damn thing.”

    I find no fault with John Paulson, I find fault with a system that enables a man to execute a $12 billion trade that contributes ZERO to the greater good.

    Until we fix that greater moral conundrum,…. the rest is a waste.

  36. Hey, what if we let everyone be free and responsible for themselves.

    Nah, it’s not like it made America great to begin with or anything.

  37. G.A.Phillips says:

    I find no fault with John Paulson, I find fault with a system that enables a man to execute a $12 billion trade that contributes ZERO to the greater good.

    lol, Tom, have you ever seen Hot Fuzz?

  38. anjin-san says:

    > Hey, what if we let everyone be free and responsible for themselves.

    Cool. When the elderly, sick, handicapped and mentally ill are dying in the streets, are you going to step up and help with burial details? I realize it might cut into your freedom, but it will need to be done…

  39. anjin-san says:

    > Their unique insanity is the idea that we can just tax our way out of the problem, without any cuts what so ever.

    Can you show us who is saying that? Because it is no one I know. Cuts have to be made. Big ones. I just don’t want them to start with folks who are in wheelchairs, which is what is going on in California right now.

  40. Actually it is the kind of irresponsibility you advocate that leads to cuts coming in wheelchairs first.

    See, it’s easy to play this pissy little game where accusations are used as arguments in bad faith.

  41. anjin-san says:

    Great Charles. So what’s your plan to deal with our problems? Post slogans on blogs and pat yourself on the back for your deep love of freedom?

    Democrats have their faults, that is certain. But we want to try to find realistic answers to our problems, and we don’t want to start by telling the people in our society who are least able to look out for themselves to bend over and take their medicine.

  42. […] Boehner, House GOP About To Take A Huge Risk On Entitlement Reform? (outsidethebeltway.com) […]

  43. wr says:

    EJ — I’m not sure why you’re so desperate to convince me when I’ve told you I have nothing but contempt for you political philosopy. But if you want to play, here goes:

    No one is calling for a 90% tax rate, nor is it even a question for SS,which will be in mild trouble a quarter century from now if we do nothing. Medicare is another problem, but the fact that you insist on conflating them merely proves you are not serious about anything other than your ideological fervor for tax cuts for the rich.

    All that said, I will be the only person in the nation to come out for a 90% tax rate on anything over thirty million dollars a year. If you think it’s confiscatory, you’re right. But if the marginal value of anything over 30 mil is essentially zero, then people who are only interested in racking up the bucks will stop looting our country.

  44. ratufa says:

    The trust fund is a myth. Social Security is already losing money. The IOUs are just numbers on paper.

    The Social Security trust fund is included as part of the $14+ trillion national debt. It is classified as “intra-governmental” debt when breaking down the national debt into its parts, Whether you want to call the pieces of paper in the trust fund “IOUs” or “Government Account Series Securities” (which is how the Treasury refers to them) usually depends on what sort of political point one is trying to make.

    Any bond is basically “numbers on paper” and the value of that paper depends on the issuer’s ability (and willingness) to pay. One difference between the “bonds” in the trust fund and bonds sold to external investors is that the treasury can renege on the bonds in the trust fund without dire consequences in the financial markets (the domestic political consequences are another story).

    Other than that, though, most of the things that people say about the trust fund, for example, that “the money has all been spent”, is true of any money that has been given to the government in exchange for a bond.

  45. anjin-san says:

    BTW Charles, I have a relative in a wheelchair, my wife just spent the evening with her. She lives in an all-handicapped complex, and we have become quite fond of some of her wheelchair bound neighbors. I see how terrified these helpless, blameless people are of benefit cuts. Kinda hard to pull yourself up by your bootstraps if you have no legs.

    I can assure you my “faith” on this matter is quite earnest and genuine.

  46. ponce says:

    WSJ poll says 81% of Americans support raising taxes on the rich to bring down the deficit.

    How long can our politicians ignore that fact?

    Or, more to the point, how much money will the rich have to pay them to ignore it?

  47. anjin-san says:

    > Medicare is a bad deal.

    Well, my mother is already eligible for Medicare. After her recent successful treatment for breast cancer, her comment was “thank God for Medicare”.

    But I guess you know more than she does. She is just a cancer survivor. You watch Fox and Friends.

  48. sam says:

    @Steve

    “Medicare is a bad deal. How would you like to have health insurance that doctors don’t want to take and many doctors refuse to take medicare patients? ”

    Consider the following:

    Total Income for Households Age 65 and Older in the U.S.

    Under $5,000 (2.4 percent)
    $5,000 to $9,999 (7.7 percent)
    $10,000 to $14,999 (13.3 percent)
    $15,000 to $19,999 (11.4 percent)
    $20,000 to $24,999 (9.3 percent)
    $25,000 to $34,999 (15 percent)
    $35,000 to $49,999 (13.7 percent)
    $50,000 to $74,999 (11.9 percent)
    $75,000 to $99,999 (6 percent)
    $100,000 and over (9.3 percent)

    Source: Census Bureau, 2007

    Three quarters of SS recipients have a yearly income less than $50, 000 (and that includes SS payments). Supposing insurance companies would be willing to insure those 65 or over, what do you think the cost of such a policy would be? To answer that question, we have to understand that an insurance company is not in the business of paying claims — it’s in the business of collecting premiums. So, in order to make a profit, it has to collect more in premiums than it pays in claims. The elderly, as a class, are the chief consumers of health care. (Being elderly is a pre-existing condition, as insurance companies well know.) Given the high cost of medical care, and the resultant high cost of claims, do you think the three quarters of the elderly cite above could afford the premiums the insurance companies would have to charge to make the elderly policies profitable?

  49. just me says:

    There reason there is a cap is because medicare and social security were designed and created as “insurance” programs not entitlement programs.

    Personally I have no trouble with raising the cap amount for high end earners and means testing. I would personally rather see means testing for social security than see the raise at which one qualifies raised. While a guy who works in an office may be able to work 40 hours or more a week until he is 69, there are many labor intensive jobs where a person is just trying to make it to 65 so they can qualify.

    I also wouldn’t have a huge issue with means testing medicare in that higher income/wealthier people pay more towards a premium.

    But if we make these changes we have to admit that the programs are no longer insurance programs but wealth redistribution programs where those with more money pay a larger share. Personally I do not want to see 70 year old grandmothers having to work or having to worry about their next meal or whether their medical needs are going to be covered. Those people deserve to have some security in that.

    But changing the cap amount and means testing does change the design of the original program.

  50. superdestroyer says:

    Increasing taxes just leads to increased spending and increased entitlements. Anyone who believes that tax increases leads to better government needs to looks at the states of Illinois, NY, and California. All high tax states that are having huge budget problems due to the inability to plan for the future and due to the inability to stand up to the special interest that are funded by government money.

    As long as the government has minority set aside contracts, funds upscale artists and gives women to major in American studies, there is more than enough money. The government just refuses to make cuts when raising taxes (on others) is easier.

    Is the U.S. really going to become a country of Paul who want to spend all of the efforts in robbing Peter?

  51. wr says:

    No one gave me a woman to major in American studies. If they had I might have switched from comp lit.

  52. matt says:

    Superdestroyer : California is hobbled and unable to increase taxes on a state level which is causing their current problems so I have NO idea why you believe it’s a valid example of a state increasing taxes.. Then again I’m not sure where you get a lot of the crap you come up with…

  53. john personna says:

    “House Speaker John Boehner said Thursday that he’s determined to offer a budget this spring that curbs Social Security and Medicare, despite the political risks, and that Republicans will try to persuade voters that sacrifices are needed.”

    Well, that’s a good thing, and congratulations Speaker Boehner.

    (It’s easy to say what could go wrong, but it’s kind of fundamental that raising the issue is a necessary precursor to actually dealing with it. And so, one step taken.)

  54. john personna says:

    Superdestroyer might be saying “increases” while referring to the higher current level.

    According to this page, California ranks 6th in average state/local tax burden:

    http://www.taxfoundation.org/taxdata/show/336.html

    Huh, on that page Wisconsin is higher … go figure.

  55. matt says:

    That cracks me up even more because Illinois is only .2% over the average and ranked 13th so there are several states he left out that are either higher or equal to Illinois.. THe more I look at this list the less sense his comments make…

  56. matt says:

    Thanks JP 😛

    I noticed the Wisconsin thing but I always noticed he only mentioned one of the 5 states higher then California.. I was rather shocked at Connecticut being up there..

  57. matt says:

    ARGH spell correct also not always argh..

  58. superdestroyer says:

    Matt,

    Illinois just raised taxes in the middle of a recession. The Democrats in Illinois sent a clear message what they think about the private sector: that it is a cash cow to be milked for all it is worth.

  59. Steve Plunk says:

    superdestroyer,

    Oregon raised taxes as well. States controlled by liberal governments certainly look to milk the private sector to maintain the status quo for themselves. Unfortunately for them there are limits before the parasite damages the host.

    California is bad and getting worse. Public pension obligations will soon consume huge resources if reform is not enacted. While the government class enjoys it’s easy retirement schools and the poor will suffer. Other states are not far behind.

    If SS is going to be reformed then public pensions must be as well. Contracts will be broken but if they are not the system will collapse.

  60. matt says:

    Well 1 out of 3 aint bad I guess.. Yeah they raised personal income rate from 3-5%..

  61. matt b says:

    If SS is going to be reformed then public pensions must be as well. Contracts will be broken but if they are not the system will collapse.

    Steve, Just curious… what should be the recourse for people who will suffer from the break of that contract? This is a serious question. Do we have some sort of social obligation to protect/take care of those who we have to harm for the good over the system/solvency of the country?

  62. Scott says:

    Steve, I live in Oregon. What the hell are you talking about? This, passed by voters, a year ago?

    http://www.oregonlive.com/politics/index.ssf/2010/01/voters_pass_tax_measures_by_bi.html

  63. An Interested Party says:

    Is this a prank comment? I skimmed all these comments and didn’t find a single person who said Medicare is terrible. We’re just saying we need to make it solvent.

    Steve says:
    Friday, March 4, 2011 at 15:35
    I am probably closer to Social Security & Medicare than “wr,” unless he is already getting them. Medicare is a bad deal. How would you like to have health insurance that doctors don’t want to take and many doctors refuse to take medicare patients? The liberals think we are stupid when we say “no government health care and leave my medicare alone!” What we mean is “you have us stuck with bad health insurance and we don’t want you to make it worse by cutting payments to doctors or by telling us that we are too old for treatment.”

    As far as Social Security is concerned, there are plenty of ways to fix it, as well as plenty of plans out there to do just that, but I guess I understand why those with a political agenda against it would try to paint as dire a picture of it as possible…

  64. wr says:

    Plunk — I thought contracts were more sacred than the Baby Jeebus. Certainly when the conversation turns to people walking away from crooked mortgages they couldn’t afford, they were moral scum because they even considered not living up to their sacred bond. But when it comes to screwing people who have been working all their lives based on a contractual guarantee of pension, you say “sure, contracts will be broken.”

    So let me guess — contracts are sacred for the little people. Those with power can break them at will.

  65. sam says:

    @superdestroyer

    Anyone who believes that tax increases leads to better government needs to looks at the states of Illinois, NY, and California. All high tax states that are having huge budget problems due to the inability to plan for the future and due to the inability to stand up to the special interest that are funded by government money.

    Explain Texas, then.

  66. anjin-san says:

    > So let me guess — contracts are sacred for the little people. Those with power can break them at will.

    good guess.

    If pensions are unsustainable, and I suspect a lot are, public pensions are out of control, let’s identify where the problems are and sit down and negotiate with the parties in question in good faith.

    Let’s start with folks like now retired SFPD police chief Heather Fong, who is pulling down a cool 229k a year after stepping down from an undistinguished stint as chief. Let’s not start with teachers, and let’s not use reform as a smokescreen for union busting.

  67. john personna says:

    FWIW I have a mild, philosophical opposition, to public employees unions. The looting, wherever it occurs, is certainly a pressing and concrete example of what can go wrong.

  68. wr says:

    On the one hand we have millions of hard working teachers, cops and firefighters who have seen their lives improved through their coming together to bargain collectively.

    On the other hand, we have JP’s “mild, philosophical opposition.”

    I know which side actually has something valid to say on the subject.

  69. john personna says:

    wr, I just found this via Dave’s site:

    Is it “looting” when a biology teacher (grades 9-12) makes $180,759 in total compensation?

    Or is she just defending the middle class?

  70. john personna says:
  71. john personna says:

    BTW, $160K teaching driver education … that’s good work if you can get it.

  72. wr says:

    Ye, JP, because a couple of anecdotes, whether or not they turn out to be true, serve to prove that all teachers should have their pay slashed, their health care ruined, and their pensions eliminated.

    Of course, when CEOs and bankers commit criminal acts tanking the economy, that’s just a few bad apples. Because guilt by association only applies to the little people.

  73. john personna says:

    Did you follow the link, wr?

  74. wr says:

    Yes. I saw numbers. No explanations, just numbers.

    I’d like a little more information before using this as an excuse to throw millions of teachers into poverty.

    You know, if something is wrong with a system, you can fix it. You don’t have to abolish it.

    Another rule that applies to the rich and powerful and not to the poor and middle class.

  75. john personna says:

    Such a sad, shifting, retreat!

    You know, conservatives have gone similarly nuts. When they (including here) wanted to privatization social security, they didn’t care what the facts were. It was all about their emotional connection to private accounts. (In that case the facts are that most people average low returns and save too little.)

    So you clearly have an emotional connection to unions, a connection so strong that you cannot look at a salary survey for what it is.

    We’ve got government driving instructors (more than one in that study) making $150K in total compensation (something no private driving instructor does) and you can’t even face it.

    Instead you talk about pushing families into poverty.

    Irrational. Emotional.

  76. wr says:

    It’s not irrational to look at a set of numbers and ask what the story is behind them. Why is this person getting paid so much? I have no idea, and neither do you.

    And I talk about pushing families into poverty becuase your are using these numbers to justify eliminating collective bargaining — which will be the first step towards pushing public employees into poverty.

    When you make a point and then cite what you claim is an example, you don’t get to be all huffy if I choose to respond to your point instead of what you claim is your evidence.

  77. matt says:

    Total compensation is a wonderful number that allows you to inflate even a fry cook’s salary at Mcdonalds into a semi impressive looking number…

  78. anjin-san says:

    JP,

    Interesting, but hardly information to end an argument. What is the average public teacher salary in WI? What are starting salaries? Are the numbers we are looking at (admittedly high ones) outliers?

    It is also worth noting that “champion news” appears to be a partisan group, and not rally a news organization at all.

  79. john personna says:

    Matt, total compensation matters. Ask anyone teaching driving without health, without tenure, without retirement.

    anjin, I hope you are not making the argument that since looting is not universal, looting is not a problem? I mean, seriously, I explained last week that I oppose public unions because they attempt two forms of representation, that they try for both sides of the bargaining table. That is, they contribute to and support politicians who will become their bosses, and then collectively negotiate with those bosses. You acknowledge that this has led to abuse.

    But what, anjin, why exactly do you want to keep that special deal? Do you think it is seriously necessary to keep teachers out of poverty? I don’t think we have teacher poverty in states with only single representation (political influence but not collective bargaining).

  80. john personna says:

    BTW, as an aside, note that when you say “What is ..” “What are ..” this is an “argument from missing data.”

    You imply that the missing data would support your case, but you don’t actually have any data that does that.

    Basically we should either go get the data, or not make the implication.

  81. anjin-san says:

    > anjin, I hope you are not making the argument that since looting is not universal, looting is not a problem?

    Not at all. The city manager of the next town over from me (pop 50K) makes more than the Gov. of California. The city attorney makes more than the state AG. The city attorney in the tiny town I lived in for 20 years made $400 hr. to sit in the back row at town council meetings and read the paper. Meanwhile we were being told there was no money to fix potholes and a bond measure was needed.

    This is a real problem. What Walker is doing is not about reform. It is a power play and an attempt to dry up an important source of funding for Democrats. It is also about him making his bones on the right.

    We badly need reform of public pay/total compensation. So let’s get serious, and work on reform.

  82. anjin-san says:

    JP,

    What pay cuts have GOP legislators and their staffs taken to help out in this time of crisis? Have they given up state paid cars and free lunches? (I am making an assumption that that sort of thing is out of control there, as it is in CA) Why are cops and firefighters exempt?

  83. reid says:

    And to follow up on anjin-san’s post, didn’t Walker in particular seek raises for people on his staff? I haven’t done the research, but I have seen that claim. If so, it’d be outrageous and what should be another torpedo in the SS Walker. That’s in addition to the other claim that he immediately cut taxes to corporations, which precipitated the budget crisis.

    I’m not claiming that jp would be in favor of any of that, of course. I think we all agree that government employees’ salaries should be reasonable. I don’t understand how city managers make $800K without some illegalities. At least there was justice in the case of that town in California last year.

  84. john personna says:

    I don’t particularly like or worry about Walker, I have a more general dislike of public employee unions, for reasons stated.

  85. reid says:

    jp: I think you’ve made that clear. I AM worried about Walker, because he’s a cog in what seems to be many such efforts to squash unions and government in general. He seems to be the wrong guy in the wrong place, fortunately, and is doing more harm than good in that effort.

  86. anjin-san says:

    So JP are you saying you don’t mind a little looting in the public sector when executives are doing it, you just don’t like unions? Is the goal here to reform a systemic problem with public sector compensation or just to crush a group you do not care for?

    As for the 800k city manager from Bell, CA, they were apparently into crooked, illegal stuff, and will hopefully do long prison sentences.

  87. john personna says:

    Anjin, have you gone that nuts?

    I have made a case against public employee unions that in no way depends on “other guys do it too” and I certainly defend no other looting because public employees sometimes do.

    Actually you guys come closest to “everybody does it” and that’s really sad because that is how civilizations fall … everybody loots because everyone else does.

  88. reid says:

    jp: To some of us (maybe I should speak only for myself…), there appears to be a systematic, ideologically-driven effort to attack unions, liberals, Democrats, and the institution of government itself. Even if you’re right about public unions, it’s hard to go along with this one piece of their bigger plan because it wouldn’t stop there, and there would certainly be no compromise from the other side regarding similar reductions in corporate influence now or in the future. They would just cackle with glee at the victory and move on to the next target.

  89. john personna says:

    reid, that is the dynamic that have helped some public employee union members to prosper beyond, say, the private union employees they serve.

  90. anjin-san says:

    > Anjin, have you gone that nuts?

    You are the one that keeps going on about unions. I object to any excessive compensation. It is a systemic problem. You only seem to be focused on one subset of the overall issue.

    I am also a bit curious about your stance on “Looting” (a nice Randism) in the private sector. Say when the CEO of WAMU encourages unsound and predatory lending because of the large margins, then walks away scot free with millions while thousands of families lose their homes and investors lose their shirts…

  91. anjin-san says:

    Sorry, mistyped. Meant to say you only seem to be concerned about “looting” in the public sector…

  92. anjin-san says:

    reid – well said. I agree with your premise. The macro problem is we are at a point in our culture where “getting yours” is the end game. Walk away with a pile of cash, and the rest is just insignificant detail. This applies across the public and private sectors.

    The failure of vision on the right is driven by ideology – a black and white mindset that equates to government is always bad, business is always good. So if a teacher is making over 100k it is looting, and if the CEO of a failing corporation is making 10 million, well, that is capitalism, and if you question it you are some kind of commie.

  93. reid says:

    jp: I don’t know that your response changes anything. Are public employees prospering more than their private industry counterparts because the rightwing attack machine has been more successful in tearing private unions down? If so, I can’t get too upset. And even if the public unions are doing better than they ought to by some objective measure, this showdown in Wisconsin is bringing a lot of attention to the entire issue, which is good.

    anjin-san, thanks. Greed is good, don’t forget. We’ve been taught that since Reagan. It is amazing to me how the Wall St. meltdown and resulting deep recession, CEOs raking in huge salaries/bonuses, outsourcing of jobs, tax breaks for the wealthy, etc., all get converted into hate for unions, liberals, Obama, government, and gays. They’re good at what they do….

  94. wr says:

    Greed is good. While I was at the gym on Saturday, I saw the Fox news financial show, which was devoted to repeated complaints that Michael Moore is fat. But one of their commentators actually said that rich people should pay a lower tax rate than poor people, because they actulaly produce wealth.

  95. reid says:

    Michael Moore gave a good speech in Wisconsin over the weekend. Granted, his being fat canceled the content out and made me just hate him.

    Maybe we should be paying the wealthy for blessing us with their presence and financial trickles. Without proper obeisance, they may get hurt and leave us. I’m not sure where the tax rate should go negative, though; $1M? $10M?