The Growing Importance of the Super Committee

The shutdown looming last week was just barely averted. The rebellious Tea Party continues to demand budget concessions whenever they can take a hostage. But the Dems are not folding anymore. Why? Maybe because of the super committee.

The super committee is charged with negotiating deficit reduction between two camps that are pretty far apart. Too many in Congress have pledged to non-negotiable positions, yet they voted themselves a loophole in the debt ceiling deal. The Congress will give the super committee recommendations an up-or-down vote, no amendments or filibusters allowed.

To many, an agreement between the members of the committee seems unlikely. Several party hardliners were appointed, including Jon Kyl, Patty Murray, Max Baucus, and Jeb Hensarling. (I don't personally know that appointees other than Jon Kyl are hardliners--I'm depending on news sources.)

I'm more optimistic. The appointees may be more partisan, but that means their compromises will have more weight with colleagues. This isn't just a warmed-over Simpson-Bowles committee or Gang of Six, that is, the same people hawking the same plan. This time, core members of the parties are doing the negotiating.

The reasons I think they will strike a deal:

• The form of the committee enhances its chance of success. Don't underestimate the ability of serious people sitting down together and talking to reach some compromises. Not all of them have to agree. Smaller groups of 2 or 3 or 4 can hammer out proposals to present to all twelve.
• Public opinion is for a deal. There is a lot of pressure on both Republican and Democratic officials to stop arguing and make some sort of deal. Republicans lost general support over the August brinkmanship. Democratic seats in the south, midwest, and west are always vulnerable when Democrats as a group drift too far left or if they are obstructionist.

So the super committee is giving tremendous cover to the rest of Congress, but only if they reach a compromise. Major pressure to do something!

I care less about the specifics of the deal than how the rest of Congress reacts to it. But I'll throw out some predictions because I always do. On spending cuts, I think they will probably come to roughly the same conclusions as Simpson-Bowles. Taxes will be harder to work through, so maybe they'll establish another super committee, maybe they won't touch it, or maybe there will be some token tax increases in this deal. The last part of this prediction covers so many possibilities that it hardly counts as a prediction.

Update 11/17/11. It now looks like the super committee will fail. Read my updated analysis.

Hollow America

I only just realized that it's terrible we've lost so much manufacturing and so many factory jobs. Of course I was aware the manufacturing was moving out of the country--I see plenty of empty factories here in Massachusetts. But I didn't see it as a problem because it seemed like people were getting new jobs. Foreign goods, like my reliable Toyota, were a great benefit, and the competition seemed good for American products. Ford cars in the 70's were crap, but they were a whole lot better by the mid-90's. So global trade looked like a win-win situation.

As for our trade imbalance, I didn't think the statistics were true. Surely we'd be having worse economical problem if we were doing that badly. I honestly thought that the metrics were missing huge software sales or other exports of intangibles like movies or financial services. Please don't roll your eyes or wonder why you should waste any more time reading my posts, but I thought that we'd be suffering like Argentina did when they'd have one of their terrible crises, and that obviously wasn't happening.

I don't know when I finally wised up and realized that the trade imbalances were THAT BAD. It's amazing that we could get away with it, and still people would loan us money and sell us oil. And they still do.

Strangely, I don't think the biggest problem is all the debt. Instead, I think it's that we no longer make enough stuff. That makes it so much harder to strengthen our finances through exports, rebuild our economy, and get people back into work. A smaller country could devalue its currency, cut way back on the imports it could no longer afford, pay its workers less, and then export the cheaper wares to other countries. We don't seem to have that option, so I don't know how we'll lift ourselves out of this hole. Suggestions, anyone? Quick, before they turn off the electricity!

Two other questions: Could we have avoided this, and how?

The dirty word in healthcare-choice

One issue that severely hampers honest debate about healthcare is acknowledgment of the tough choices to be made. To some people, choice is a loaded word because of its association with abortion. It's a word to be avoided at all costs, and sometimes it even seems that the concept is not acceptable.

For example, the controversy over Terri Schiavo's feeding tube seemed like a stand-in for something else. Most right-to-die cases don't get national attention anymore since 1990. It's normally considered a private family matter, with an established line of rightful decision-makers in case there's disagreement among the family.

No other recent case got nearly the nationwide attention that the Terri Schiavo case did. The case was superficially about a husband/guardian's fight to have his wife's wishes respected and have her feeding tube removed. But it also concerned the choice to let someone die. To pro-life/anti-abortion forces, this is not a permissible choice. So this case was a surrogate for abortion, and many of the usual pro-life forces were heavily involved (Randall Terry, the Catholic Church, the Pope, evangelical churches, and pro-life politicians in Florida and Washington DC).

 Feeding Tube

This allergy to medical choice cropped up again over the mandate in the Affordable Care Act (Obamacare) that doctors should be paid to have a discussion of end-of-life decisions with patients age 50 and over. Sarah Palin famously called these "death panels," implying that it wasn't a voluntary discussion, but a coercive decision being made by cold, calculating bureaucrats. Well, there never are any half measures by Sarah Palin.

I wonder whether conservatives truly feared that there would be such death panels, which is a bit ludicrous in a country where comatose patients are kept alive for many years. I think the real fear is the legitimacy given to choice if the government conferred payment on such end-of-life care discussions. If we can choose not to do everything always to stay alive, maybe it's because we know life isn't to be maintained at all costs, and that other considerations matter. If other considerations matter, that opens the door to choice when dealing with an unwanted pregnancy. To pro-lifers, abortion is an absolute wrong, so its distant cousins-- pulling the plug, Do-Not-Resuscitate orders, even hospice--are suspect as being steps onto the slippery slope to the total sin of abortion.

Not a dirty word everywhere

Republican Goldilocks

Not too hot, not too cold, just right.

It's so hard to find a candidate who's just right. The Republican have been trying to find and draft "President Right" since 2009. Think of all the names that have been floated: Palin, Scott Brown, Marco Rubio, Mitch Daniels, Huckabee, Trump, Cain, Bachmann, Perry. Now there's talk of drafting Christie because he maintains his bulldog demeanor in all circumstances and no one can imagine him getting flustered.

This is reminiscent of 2007 when the Republicans went through these front-runners: Fred Thompson, Guiliani, Romney, Huckabee (any others?). When they eventually decided on McCain, it was with great reluctance. I remember long-time Republicans talking about holding their noses when they voted in the primaries, and again, if less so, in the election. Just after the election, they were again complaining that McCain wasn't a real Republican, and that's why he lost. If only the Republicans knew the same sentiment is endemic among the Progressive wing of the Democratic party, and their words are practically interchangeable with the words of their prime target.

Nothing cures that longing better than giving in, going whole hog, and picking a really strong conservative candidate. So the Republicans shouldn't pick Romney. He may be more electable, but he's walking buyer's remorse. They should choose a through-and-through conservative like Perry, Cain, or Bachmann. Then they'll either win the presidential election, and they can celebrate without reserve; or there will be a rocky campaign as the candidate either flubs the message or the country rejects the extreme version of conservatism.

If the election is lost with a strong conservative at the head of the ticket, Republicans will get the lesson they need: You can nominate a candidate who is too far right. Democrats got this lesson back in 1972, and they've never forgotten. That's why Nader or Kucinich can run in the Democratic primaries, but they'll never get close to the nomination. The Democrats learned that lesson but good. No repeat needed.

In A Progressive's Dream

Update 9/29/11. You have got to watch Jon Stewart's much funnier take on the Goldilocks situation. If you watch from the beginning you'll get to enjoy some ribbing of teachers, then continue with the clips for edgier jokes about Santorum, Perry, and Brit Hume. I recommend watching the whole thing.

Update 10/24/11. I've changed my mind.  The Republicans should think long and hard, realize that they are not doctrinaire in their conservatism, and pick Romney. There is no candidate who is both "very conservative" and "intellectually coherent."  It should be possible for the Republicans to find someone who is both, just as there are people who are both kind and beautiful. But it isn't happening with the current crop of candidates. No more names are being tentatively floated. I draw the conclusion that the Republicans have gotten so extreme that they've spooked their own best and brightest. Time for some balance, guys, though it looks like it's too late for this nomination. Romney is your punishment.

The 16% Tax on Everything

You don't hear about Republican plans to roll this one back.

This is how much healthcare costs in the US, currently 16% of our GDP and on its way to becoming 20% by 2020. Compare this rate to Canada (perhaps our closest demographic match), which spends 10%, Ireland which spends 8%, and Switzerland, which is probably the Switzerland of health care, 12%.

In some ways, it's not fair to compare the US with other countries because our lifestyle is not as healthy. On the other hand, countries buying or competing with our exports don't care why we spend so much. The only thing that matters is that it makes us less competitive.

When will we start looking at trimming our healthcare costs? I can't believe it isn't time yet. The biggest impediment to reform isn't satisfaction with the current system, it's that healthcare is quite the political football.

The Republican Approach

The Republicans, who are bullish on cutting other taxes, are less sanguine on cutting medical expenditures. They have their private-sector solutions: stripping the corruption out of malpractice rewards (and taking fair higher compensation with it), letting people buy overpriced and/or fraudulent health care insurance over state lines, turning Medicaid into block grants to states, and voucherizing Medicare, so that our seniors can try to buy overpriced and/or fraudulent insurance too. Granny won't be thanking them.

The Democratic Approach

The Democrats have some plans too. One (ostrich) wing thinks Congress could  pass a single-payer system if ... er... Fox News didn't inflame the country with lies. Democratic policies have to be negotiated between near socialists like Bernie Sanders and blue-dogs like Ben Nelson. Not surprising then that the Affordable Care Act (Obamacare) is a mish-mash of what they could get through Congress before the Republicans took over the House. It's jimmied to get a good score from the Congressional Budget Office (CBO), but it'll blow up later when we're subsidizing premiums on overly-mandated health insurance and long-term care.

The Super Committee

I fear that the super committee will be skittish about cutting healthcare spending, particularly Medicare. After all, crying foul on Medicare (or death panels!) has won more elections in the last two years than it's lost. That simply means that healthcare for federal workers and Medicaid will be cut more. Considering our Congress, their staff, judges, and the executive branch use federal employee healthcare, somehow I imagine that Medicaid will suffer the most. No, I don't mean Medicaid will suffer, just those on Medicaid, those annoying free-riding poor.

By the way, we don't pay 16% for healthcare on absolutely everything. Imports from other countries don't carry same healthcare burden. But that's not especially comforting.

Establish a global budget for total federal health care costs and 

limit the growth to GDP [growth] plus 1 percent.

--One of the Simpson-Bowles debt commission's recommendations 
to reduce healthcare expenditure

Funny Moment in Class Warfare: The Jon Stewart Edition

Mitch Daniels, Republican governor of Indiana and declined Presidential candidate, was interviewed by Jon Stewart last week. Daniels generally comes off well, but he does start mouthing Republican talking points, and Jon Stewart nails him.

Mitch Daniels mentions Obama's "obsession with wealthy people," "constant bashing," and "you could confiscate all..."

Jon Stewart interrupts: "Obsession, bashing, confiscate. I can understand the language of unity, and I'm not sure that that's it... The language that you just used, and slipped into quite easily, sounded ..."

Then Daniels explains that Stewart had asked him to defend policies that weren't his own. Stewart cordially lets him off the hook, while explaining that it's hard to get a Republican like Paul Ryan on the show to answer these questions.

Jon Stewart's point, which others can use, is to show that it's not class warfare to raise taxes from a 36% rate to a 39.5% rate. But it sounded better when Jon Stewart said it. Most people would pale pretty quickly if you told them they'd have to start paying either 36% or 39.5% taxes. Democrats need a bigger plan than this.

Stuffing your money into the mattress

Probably I'm telling you something you already know, but if you put money into the stock market during most of the last 12 years, it hasn't done well. It's even worse if you bought a larger house thinking it would be a good investment and you could get some money out when you needed it.

I'm not sure how people saved for big expenses or retirement prior to the 1970's. I've heard stories of people putting money in jars and storing them in the basement.

When I started saving in the 80's, that approach seemed so antiquated. The inflation in the 70's would have cut the value of those basement dollars to less than half. In the modern, swinging 80's, you'd take your savings and buy a newfangled Certificate of Deposit (CD) or open a money market account.

Also in the 80's, it became clear that you were missing a huge opportunity if you didn't get into the stock market. The same in the 90's. The Dow soared 230% in the 80's and another 320% in the 90's.

 

Two decades is long enough to erase the old patterns of savings and entrench new ones. So everyone with some extra cash was buying stocks or mutual funds, either directly or as IRAs or 401Ks.

As the markets became less reliable after 2000, investment advisers talked about "dollar averaging," which meant that you kept investing in stocks even when you were leery, because the ups and downs would average out and the overall trend was still up. I  and many others listened to this advice. However, by dollar averaging, I probably would have done better putting my money in a mattress or in jars in the basement.

The point isn't that my money didn't grow. It's that we lost the idea of putting away enough money to tide us through. Instead, we were supposed to invest, and let our investments keep paying us back many times over.

With this mindset, we didn't need to save as much. We could spend more, we could borrow, we could buy a more expensive home and enjoy more expensive hobbies. Thrift was passe. Well, we were wrong. Now we have to relearn those old lessons of savings and thrift, as individuals, as families, and as a country. I hope we can do it.