Wednesday, December 5, 2012
Neoliberal Spending Cutters Just Don't Get It!
As with most Neoliberal pundits, Caroline Baum of Bloomberg News doesn't get it. In her latest column, 'Look for the cuts where the money is', she beckons politicos to follow Willie Sutton's (the legendary bank robber)advice - to GO where the money is! Like banks in the case of Sutton, Caroline sees the money in "entitlements" - so hell, CUT THEM!
She is totally deluded, but this is what we must expect from Neoliberal hacks.
Reinforcing her bank robber meme, Baum quotes Joe Carson of Alliance-Bernstein in New York, who baldly asserts that if the fiscal cliff is allowed to manifest, the added revenue of $5.1 trillion will "not be able to cover the rising cost of entitlements". Baum then cites this glorified trader to the effect that "entitlement spending will reach $3.55 trillion in 2022, consuming almost two-thirds of the entire budget."
No mention made at all of the military budget which consumes twice as much as social insurance when the fact is reckoned in that the military has been allowed to use Social Security monies to cover its debts and hide the true size of the deficit. If then the $2.7 trillion already borrowed from Social Security is factored in, the "entitlement spending" Baum and Carson rave about is only $3.55 trillion - $2.7 trillion = $855 billion, most of which is easily covered over ten years by the Affordable Care Act's streamlining of Medicare costs to the extent of $716 billion. The remaining $139 billion is easily made up for and more....by the simple expedient of allowing Medicare to bargain for lowest prescription drug costs like the VA already does!
Baum also frets about 'the ratio of revenue to future entitlement costs "fluctuating between 1% and 1.1% over the past decade" and "tax revenue barely covered the part of the budget that is on automatic pilot. Even with a revenue boost from inaction on the fiscal cliff the ratio of current revenue to projected entitlement spending never exceeds 1.15% during the rest of the decade" - parroting Carson.
Of course, this problem is easily solved but not the way the Neoliberal imps want! The solution is a "front-loaded" means testing of Social Security (and Medicare) by increasing the payroll tax cap to cover ALL incomes right up past the $1 million mark. Once that is done, both Social Security and Medicare will remain viable over decades, Social Security in perpetuity and Medicare likely until 2040 at least. (Medicare can be further extended by increasing the Medicare portion of the FICA tax to the same 6.2% as Social Security).
Meanwhile, the "cuts" proposed by Baum, and the Republican rats on the Hill, are mathematically unworkable! For example, the much bandied about extension of the Medicare eligibility age from 65 to 67 is pure bollocks. What it means is that those who'd have been under Medicare will now be tossed into the individual private insurance market (especially if they are unemployed) As noted in today's USA Today piece (p. 2B) "the individual market is considered high risk and more of a nuisance than as a great business opportunity."
Thus, insurers will make the Medicare ineligible oldsters pay through the eyes, ears, and nose. To reinforce this, a Kaiser Family Foundation Study estimated that if this increase in eligibility age goes into effect by 2014 there'd be $5.7 billion in net federal savings but $11.4 billion in higher health care costs to individuals, employers and states."
I already explained why this was so in a previous blog, noting that people from 65-67 will simply ignore treatment conditions until they qualify for Medicare. By then, their health-treatment costs will explode. Thus, money isn't saved via this phantom accounting scheme but merely disguised in a three shell Monty game played with people's lives.
Apart from that, the "chained CPI" COLA solution to Social Security increases will drive elderly into raiding dumpsters within five years or so - after food-commodity prices explode and being unable to find cheaper alternatives.
The solutions to the so-called "entitlements crisis" are there and in full view. It is the Neoliberals' determined blindness that prevents them from seeing the solution and instead appealing to barbaric cuts - to make things easier on the banksters and warmongers.