Bush is trying to change the cold class war into a hot class war with his budget.
President Bush's budget will propose slashing grants to local law enforcement agencies and cutting spending for environmental protection, American Indian schools and home-heating aid for the poor, The Associated Press learned Saturday.
Bush molded the roughly $2.5 trillion spending plan for 2006 as a response to a string of record federal deficits, and is sends it to Congress on Monday.
As Bush travels the country selling his privatization scheme, someone should ask him why he wants seniors to have to choose between heat and food:
The $2.2 billion program that provides low-income people - in large part the elderly - with home-heating aid would be cut to $2 billion. Sen. Charles Schumer, D-N.Y., said the reduction would be "wrong-headed and inappropriate," especially with this season's jump in oil prices.
Update, 11:20 PM EST: Robert Pear of the New York Times reported Friday:
Facing the prospect of record deficits, Bush administration officials laid out proposals on Thursday for deep cuts in spending on housing and community development.
At the same time, the nation's top health official fleshed out proposals to cut $60 billion from the projected growth of Medicaid, the federal-state health program for low-income people, in the next decade.
In another article, Pear looks at Bush's proposed cuts in the national health care system:
President Bush's budget for 2006 cuts spending for a wide range of public health programs, including several to protect the nation against bioterrorist attacks and to respond to medical emergencies, budget documents show.
Faced with constraints on spending caused by record budget deficits and the demands of the war in Iraq, administration officials said on Friday that they had increased the budget for some health programs but cut many others, including some that address urgent health care needs.
President Bush will seek deep cuts in farm and commodity programs in his new budget and in a major policy shift will propose overall limits on subsidy payments to farmers, administration officials said Saturday.
Such limits would help reduce the federal budget deficit and would inject market forces into the farm economy, the officials said.
If not a "monument gambit," this is actually something commendable.
Edwin Chen and Richard Simon of the LA Times catch this tidbit from Bush's appearance in Tampa:
Now, the president insisted, must be "a moment where people of both parties come together." He urged all who disagree with his proposals to offer their own ideas. "I promise you there won't be political retribution for doing so," Bush said.
Note the disembodied passive tense. Five bucks says his fingers were crossed.
"I talked about Social Security in the State of the Union. Now that should signal that we've got a problem," Bush said. "Otherwise most presidents have shied away from talking about Social Security except to make the benefits better. I see a problem."
Peter Slevin in the Post provides an on-the-ground look at Bush's trip to Nebraska, home of Ben Nelson, the sole Democratic Senator not on the record opposing Bush's privatization scheme.
Nelson's spokesperson, David DiMartino, explains that Nelson is "refusing to take any position until the president offered a plan."
"Until you have an entire plan, you have people debating empty boxes," said Senator Ben Nelson of Nebraska... [NYT]
Nelson's hesitance is actually a potential strategic advantage to the Democrats. First, having a single holdout on the Democratic side highlights the uniformity of Democratic opinion and emphasizes the weaknesses of Bush's efforts to reach across the aisle. Second, Nelson's fence-sitting highlights the imaginary details of Bush's plan, where unanswered questions abound. He's going to spend the next 8 weeks carrying around a fancy platter of lacquered turkey, hoping to make the American people salivate. Nelson's holdout ensures that people realize they have't tasted anything yet.
Slevin also highlights the extraordinary cohesion of the liberal coalition fighting to prevent privatization. Campaign for America's future sent organizers to the field, who worked with labor, the Alliance for Reitred Americans, the Fair Taxes Coalition, and Moveon to assemble an effective counter-demonstration. It's a tribute to our side's unity.
Bush's appearance in Omaha had many of the trappings of last year's presidential campaign. As usual, the backdrop was festooned with slogans, positioned so that the TV cameras would catch them as they focused on Bush. On Friday, facsimiles of giant Social Security cards with the words “Strengthening Social Security for the 21st century” were used.
And as usual, most of those inside the arena were supporters, although in a departure from his re-election events, the White House gave some tickets to a Democrat — Nelson — to distribute.
David Stout's NYT coverage emphasizes Ben Nelson's precarious political position ("Senator Nelson won by only 51 to 49 percent in 2000...").
The Boston Globe notes the dim prospects for privatizing Social Security, highlighting that Bush's "campaign-style" barn storming tour has failed to sway any Congressional leaders. Even Nebraska's Ben Nelson is backing away from the table, the menu prices too high, the restaurant too riddled with vermin, and the food nowhere to be seen.
Senator Ben Nelson, of Nebraska, who has signaled more willingness to support Bush's ideas than any other Senate Democrat, said he needs more details before he can sign on to any reform plan.
Nelson noted that Bush has not yet said who would be allowed to establish the accounts, how deeply benefits would have to be cut for younger workers, or how he would manage the increased debt his plan would incur, which the White House estimates at $750 billion over the next decade.
Bush yesterday offered no new details of how his plan would be financed, but neither did he show signs of letting up in his attempts to lobby a skeptical public and skittish lawmakers on the need for major changes. He visited Nebraska, Arkansas, and Florida, capping a two-day campaign-style tour that took him to five states he carried in November -- each of which has at least one Democratic senator whom Bush is trying to win over.
"I'm going to spend a lot of time traveling our country talking about the problem, because I fully understand that in the halls of Congress, if people do not believe we have a problem, nothing is going to happen," Bush said in Omaha. "The debate should really shift to those who've got the most at stake in inaction. The status quo is unacceptable to younger workers, and younger workers understand that in America."
Bush's approach is to ratchet up the disingenuousness. If he doesn't convince the people of an untruth, his double-plus good agenda will fail. Democrats aren't buying:
"Democrats recognize that the Social Security system faces long-term challenges but are not going to lurch into a crisis where none exists," said Jim Manley, a spokesman for Senate Democratic leader Harry Reid of Nevada.
Bush said he would combat misconceptions surrounding his plan, and work with Congress to fashion a fair solution to the long-term problems in Social Security.
"I know you have all these wild estimates of costs -- Bush wants to spend this, that, and the other," the president said. "On personal accounts -- admittedly, new concept, hard for some to understand. And it's just going to take a while for people to hear the debate and get used to the concept."
Bush's plan doesn't start phasing in until 2009 - four years from now. Only the first six years of the plan, which phases in slowly over time, is included in the $750 million cost estimate produced by the White House. The "wild estimate" of $2 trillion over the first ten years of the program, also known as "accurate," will be difficult to dislodge from the public consciousness. Bush will try, of course.
"We believe liberalism is more than intellectual capacity - intellectual liberalism must be buttressed with an understanding of people and a love of them that goes far beyond texts or documents. For if you can't cry a little bit in politics, the only other thing you'll have is hate.
The real contest in this world is not a military one; our real competition with the Soviet Union is not an economic one. Our struggle with totalitarianism and communism goes far beyond economics, science, education. It's a conflict over a system of values...It may be necessary for a moment of history to let other systems have their claim on areas - but it's another thing to accept it. We have to live with it - not accept it. This is a struggle between good and evil, between tolerance and intolerance, over the very nature of man; and we come from a civilization that believes as an article of faith that man is created in the image of his maker, of a spiritual heritage in which human dignity can never be debased or abused by sheer power. No man has the right to govern another without his consent, and unless people understand this real moral value they can be duped. All of history is a constant struggle for emancipation from fears, from tyranny, from ignorance. And we are the emancipators, that's what this is all about, even if we don't recognize it. What we're trying to do is get people to think about their own role in government, their own role in history.
To elect a President it's more important that he be good of heart, good of spirit, than that he be slick, or clever, or statesman-like-looking. To be a leader means a willingness to risk - and a willingness to love. Has the leader given you something directly from his heart?- or has it all been planned in advance, all been scheduled? Is it efficient? If you want efficiency in politics, you can go to the communists or totalitarians. I believe politics is simply to deal with people and to be human. Every now and then I read in the paper how disorderly Hubert Humphrey's campaign is and I say THANK GOD...
Thank God we are people, just people. Maybe we aren't efficient. But you can read the Declaration of Independence and the Constitution and the Gettysburg Address, and you won't find even once in them the word 'efficiency.' And you can read all of Marx, all of Engels, all of Stalin, all of Lenin and you won't find even once in them the word 'love.'"
T.H. White, The Making of the President, 109-110 (HHH before the Milwaukee Jewish Community Center). The difference between authentic politics and the perverted politics of the present.
In reading Dan Bartlett's pre-SOTU briefing, I am struck by an undernoticed emphasis: that Social Security needs a "permanent" fix. Frankly, Bartlett's right. There are crises confronting Social Security, though nothing real on the financial side.
There is a political crisis. The GOP and George W. Bush want to dismantle the program. They want to cut benefits by almost half, mire the budget in red ink that even Moses couldn't part, and default on the trust fund, breaking the promise America made to workers, families, widows and the disabled two decades ago. We need to ensure that this can't happen, and part of it should entail a "permanent," or legally enforceable, change to the system. The 1983 promise is a covenant that should be left in the hands of the GOP. The American people understand that the crisis is political, not financial. The AFL-CIO polling that has served as the baseline for much of liberal efforts to protect social security prove this overwhelmingly.
How do you give workers that have paid into the trust fund an enforceable claim on their excess payroll taxes? I can't think of an easy solution, but I'm merely an unemployed blogger. My best guess would be the replacement of the special bonds issued to the Trust Fund with a enforceable bond issued to workers that can only be redeemed through annuitization upon retirement. The annuity would be rolled into the scheduled social security benefit, ensuring its financial solvency. Workers should have the choice to forgive social security benefits, not the GOP and its minions.
There is a credibility crisis. The administration has reached new depths in its willingness to mislead the American people. The resevoir of trust that the American people place in the executive branch's administration of foreign affairs seems limitless, but social security is a much shallower well. This is our future, our retirements, the retirements of our mothers and fathers, grandmothers and grandfathers, children and grandchildren. It's a pocketbook issue, and the administration is playing the role of the huckster. Americans don't like hucksters.
There is a moral crisis. The administration and the GOP believe that Social Security is an immoral program, welfare for the elderly. They believe that it is wrong to take care of seniors, families, widows, and the disabled. Instead, they want each to take care of his own, those we care about be damned or be undignified roommates. The Wehner email makes this clear:
For the first time in six decades, the Social Security battle is one we can win -- and in doing so, we can help transform the political and philosophical landscape of the country. We have it within our grasp to move away from dependency on government and toward giving greater power and responsibility to individuals.
The most interesting part of the NYT's reporting, though, is the commnetary by Richard Land, of the Southern Baptist Convention, who "argued that Mr. Wallis misunderstood conservative evangelical voters because he conflated the moral issue of alleviating poverty with the practical issue of whether Democratic policies are the way to do it," claiming "that the debate is over, based on the 30-year experiment, about whether big government or free markets work better at producing wealth for everybody."
There should be no doubt that the moral position in this debate is to ensure care for everyone, not just those with trust funds and platinum parachutes. Roosevelt believed, in his heart, that government has a moral obligation to serve the people. We control it - we aren't slaves to it.
I put up the There Is No CrisisSocial Security banner, but I believe that it is overbroad. There are crises, just no financial crisis. We we'll have to fix them, hopefully permanently.
Update, 6:06 PM EST: Nowhere are the moral stakes made more clear than in Warren Veith's Los Angeles Times article.
If private accounts wouldn't fix Social Security's finances, why bother? The answer, for Bush, appears to be partly economic and partly political. But at its core is an unwavering ideological commitment to personal ownership as an alternative to government assistance, his advisors say.
"People ought to be encouraged to own something in America," Bush said at Friday's second stop in Little Rock, Ark. "You'll be owning a part of your retirement account. It's actually your money to begin with. It's not the government's money. You're paying it in."
According to several administration allies and adversaries, Bush's bedrock belief in individual ownership as an antidote to collective dependence transcends for him any argument over the severity of Social Security's financial shortfall or the merits of other potential fixes.
"There is a tyranny of the Great Society that afflicts a lot of Americans," said Michael Franc, vice president of the conservative Heritage Foundation and an informal administration advisor. "The solution that is coming from Bush's conservative ideology is to give people some personal ownership and control. He is looking at this as a pivotal moment in what we do with all the promises that were made in the '60s and '70s. We can no longer keep those promises."
If weaning Americans from government assistance improves Social Security's finances and pays big political dividends, all the better, Bush allies say.
"The president just believes personal accounts are good policy in terms of giving people more control, more choice, the ability to pass money on to their kids," said Jeffrey Brown, a University of Illinois finance professor who is advising the administration on Social Security. "The issue of ownership and control would be important even if we were starting off with a system that was relatively balanced, which we're not."
If you clean up the fancy Luntz-provided focus group palaver, you get down to the "tyranny" of social security. My grandmother who gets to enjoy her retirement thanks to social security somehow manages to bear the boot of guaranteed benefits.
"The Social Security crisis is not that the system is bankrupt in 2042," said Grover Norquist, president of Americans for Tax Reform and an administration confidant. "The crisis is that 25-year-olds get less than a 1% rate of return on their payroll taxes. That crisis is now."
Norquist acknowledged that for some conservative activists, including himself, the ultimate objective was to eventually replace traditional Social Security benefits with a system of individually owned accounts.
"If the left views the purpose of the New Deal as making older people dependent on politicians, then this will in fact undo the New Deal," Norquist said. "But if you view the New Deal as trying to give older people independence and dignity in retirement, then the president's reform provides that."
Some also see personal accounts as a way to constrain government growth. Bush's initiative would require Washington to come up with as much as $2 trillion over several decades to replace the payroll tax revenue diverted into private accounts. Although those "transition costs" eventually would be offset by benefit reductions, the initial effect would be to tighten the government purse strings.
"There is within the current Republican coalition a group of starve-the-beasters who believe that by keeping revenues low and keeping pressure on the budget, one can steadily reduce the size of government," said Henry Aaron, senior fellow at the centrist Brookings Institution.
Conservatives also cite a potential political benefit. Research suggests that support for Republican candidates and policies is higher among the roughly half of American households that own stock. Allowing younger workers to open private investment accounts in Social Security would further expand the pool of shareholders.
"If you can move from a nation where 50% of Americans own stock to a nation where 75% to 80% own stock, you could change political attitudes and the political culture in a way that's more conservative and more pro-Republican," said Stephen Moore, former president of the Club for Growth, who recently founded the advocacy group Free Enterprise Fund.
Update, 10:51 PM EST: Steven Thomma of Knight Ridder has summaries of the 1980 Ferrera/Cato memo and the 1983 Butler and Germanis/Cato memo. It provides some historical context for the underhanded Leninist efforts to undermine Social Security.
Army Lt. Gen. David Petraeus, briefing reporters at the Pentagon from Baghdad, said commanders planned to shift some U.S. troops from fighting insurgents to training new Iraqi security forces, but did not say how many.
The Bush administration says it will only withdraw U.S. troops from Iraq once an Iraqi force has been established that can provide security in the country, still gripped by a bloody insurgency 22 months after the U.S.-led invasion. There are now about 150,000 U.S. troops in Iraq.
Petraeus said the formation of Iraqi security forces was "behind a bit in raw numbers, but, again, not all that much" and put the number of trained and equipped forces at 136,000.
Deputy Defense Secretary Paul Wolfowitz told a Senate committee on Thursday that Iraqi regular army units had absentee rates of about 40 percent.
Air Force Gen. Richard Myers, chairman of the Joint Chiefs of Staff, told the same hearing that about 40,000 of the 136,000 Iraqi security personnel were able to "go anywhere in the country and take on almost any threat."
Petraeus noted that Iraqi soldiers and police provided security at 5,200 polling sites around Iraq for last Sunday's elections and said there has been "no shortage of volunteers."
Petraeus declined to specify the desertion rate for the Iraqi security forces.
"There clearly was a huge challenge, particularly in the Sunni areas and in the area of Nineveh province, to a couple of regular army battalions," Petraeus said.
"This is an area where the insurgents were actually cutting the heads off soldiers as they were trying to come back from leave and so forth. Major challenge, retention in those units," he added, but said "we've turned the corner with that."
The disclosures at the hearing appeared to support the contentions of Democrats who have accused the Pentagon of playing fast and loose with the number of Iraqis who can tackle the toughest missions in Iraq.
"We should stop exaggerating the number of Iraqi forces that have already been fully trained and capable, and willing to take on the insurgency," said Senator Carl Levin of Michigan, the panel's ranking Democrat.
Asked about the numbers debate at a Pentagon briefing later in the day, Defense Secretary Donald H. Rumsfeld denied that Pentagon had been misleading, and warned against relying too heavily on the figures themselves - which he and other administration officials have regularly cited - and focus instead on the Iraqi units' duties and improvement.
"It is flat wrong to say that anyone is misleading anyone, because they are not," Mr. Rumsfeld said. "We are providing the best data anyone has in the world to the Congress on a regular basis every week." But Pentagon officials conceded that they had done a poor job of explaining to Congress and the public a confusing accounting of Iraqi troops that reflected a wide array of training and experience among more than six classes of security forces, from capable commandos to less skilled guards.
There are two glaring absences in this reporting. One, it is crucial that we know the ethnic breakdown of the trained Iraqi forces. If the 40,000 troops that Gen. Richard B. Myers says "can go anywhere in the country and take on almost any threat" are all Kurdish peshmerga, then we have effectively accomplished little. The Kurdish troops were already dependable and well trained. And actually sending them "anywhere" is as likely to exacerbate tensions and violence than placate. Two, we neeed to ensure that the accelerated training mentioned by the DoD meets certain standards - everytime I hear about it, I wonder if part of that training includes the "Salvador option," of training death squads and special forces that are more likely to create a civil war than prevent one. The Iraqi forces need to be competent, professional, and national - not merely trained ethnic militia.
Update, 2/6/05: Joe Biden tries to lay out the facts in an editorial in the Washington Post.
After more than a year of drift, the administration took a critical step in the right direction: It put Gen. David Petraeus in charge of the security training. He has added counterinsurgency to the police curriculum, emphasized leadership skills and building cohesive units, and developed special forces with much longer training times. As a result some Iraqis are starting to get the equipment, training and leadership skills they need to fight the insurgency. They include police commandos (about 5,000), special intervention forces (about 9,000), SWAT teams and other specialized forces (about 4,000). These forces total some 18,000 men.
But that is far short of the administration's 136,000 estimate. And of those 18,000, many are rookies with little experience. Indeed, in testimony Thursday before the Senate Armed Services Committee, senior administration officials couldn't say how many Iraqi forces can operate independently against the insurgency. That's why I believe the number of Iraqis prepared to take on the insurgency is somewhere between 4,000 and 18,000.
The Pew Forum on Religion & Public Life has just published two important pieces on the role of religion in the 2004 elections. I strongly recommend that people read both, particularly if one wants to pontificate about the need for Democrats to find religion. I realize that facts tend to dampen the vigor of both hand-wringing recrimination and maniacal gloating, but they nonetheless tend to improve the utility of discussions.
I realize that the liberal online community has effectively beat down the idea that there is a looming Social Security financial crisis. It's still nice to see good reporting on the issue, though, like this Miami Herald article. It provides a good analysis of the pessimistic economic assumptions, questionable immigration assumptions, and inherent uncertainty that combine in a perfect storm to produce poor projections. And even the bad projections are nowhere near a "crisis." Unfortunately, the Herald still gives "the other hand" to Michael Tanner of Cato, who tries to use obvious, and accounted for, arguments about demographics to gin up some hysteria. It's simply not credible.
This book looks interesting. Unfortunately, this review is painfully stupid.
First, lets drop the Moynihan inspired canard that Democrats ceded the "Party of Ideas" mantle to the GOP or neocons at any point, ever. The only ideas ever produced by the GOP have been bad solutions to false problems. Welfare reform, social security privatization, the invasion of Iraq - these are "solutions" that would and have generated the very problems they were supposed to prevent or solve. Preemptive war should now be discredited, "broken windows" policing has been recognized as a failure by most criminoligists.
Second, the idea that Democrats are opposed to ideological diversity, to a clash of ideas, is absurd. Our Party currently represents every credible position on every issue - there is no need to listen to crackpot conservative ideas when legitimate conservative ideas are well presented by factions within the Democratic Party itself. We fight and bicker among ourselves because our tent is so fucking big.
Third, both the idea that liberals are Europe worshippers and that "Old Europe" is a cesspool of cultural stagnation are figments of the neoconservative imagination. I hate people who wear scarves around their necks, and proudly calledd myself a "mysofranc" back when I had to deal with the exchange students (most now conservatives) at Louisville who held their pointy noses in the air at us uncultured hicks. Nonetheless, French and German politics are as dynamic and fascinating now as ours have been since the sixties, with the struggles to assimilate new immigrants and deal with the relics of their colonial pasts.
This is just retread triumphalism, a failure to use the hindsight so generously bestowed upon us by our creator. Democrats suffer a marketing deficit, a PR problem. We'll fix that eventually. Pseudoconservatives will always be ignorant, paranoid hacks.
Via Max, Elliot Abrams is one of Steve Hadley's new deputy NSAs:
Washington Post: Elliott Abrams, who pleaded guilty in 1991 to withholding information from Congress in the Iran-contra affair, was promoted to deputy national security adviser to President Bush.
Abrams, who previously was in charge of Middle East affairs, will be responsible for pushing Bush's strategy for advancing democracy.
For information on Abram's political rebirth, check out this May 2003 Washington Post article.
For Abrams, fighting communism and promoting human rights were one and the same. Although he criticized the right-wing Augusto Pinochet regime in Chile, he played down or ignored human rights violations by pro-American governments in Central America, where the struggle for geopolitical influence with the Soviet Union was most intense. In an exchange with the human rights activist Aryeh Neier on ABC's "Nightline" in 1984, Abrams insisted that widely reported massacres by right-wing death squads in El Salvador "never happened."
"Elliott was willing to distort and misrepresent the truth in order to promote the policy adopted by the administration," Neier said. "His approach was that the ends justified the means." Abrams has replied to past criticism by Neier by describing his human rights work as "garbage" and "completely politicized."
David Corn has more background in his 2001 Nation article.
Hadley probably got to know Abrams while serving as counsel to the Tower Commission investigating Iran Contra in 1986 and 1987. He goes into this with eyes wide open. They may have bonded in their numerous first term trips to Israel, where they, along with Burns, muddled the security fence issue.
In other news, Hannibal Lecter's name keeps surfacing for a new post to combat international hunger.
Dexter Filkins of the NYT notes that Arab Sunni turnout was in fact quite low. Still no numbers, though.
Low Voting Rate Risks Isolation for Sunni Iraqis As poll workers tally the ballots from Sunday's election, Iraqi and Western officials say, it is increasingly clear that the country's once powerful Sunni minority largely boycotted the voting, confirming the group's political isolation.
While Shiites and Kurds, who make up more than 80 percent of the population, turned out to vote in great numbers, a Western diplomat said Monday, the turnout in Sunni areas appeared to be "quite low."
The thin turnout means the Sunnis, many of whom already feel deeply alienated from the American-backed enterprise here, could be vastly underrepresented in the national assembly. The 275-member parliament will oversee the drafting of a constitution, which is to be put before Iraqi voters later this year.
Update 2/3/05, 4:08 PM EST: Greg Mitchell of Editor and Publisher provides a much needed dose of reality on the turnout numbers. We have very little idea of what percentage of Iraqis voted.
Just received in my inbox, a press advisory from the GAO:
The U.S. Government Accountability Office today is releasing a report from a forum of experts that sought to address ways to improve public understanding of the nation's growing fiscal imbalance. The report is available on the GAO website at www.gao.gov/cgi-bin/getrpt?GAO-05-282SP.
The forum, convened by Comptroller General David M. Walker on December 2, 2004, included 63 representatives of think tanks, government agencies, key private sector players, the media, and public opinion experts. Under the ground rules of the forum, individual speakers are not identified in the report unless they made a formal presentation before the group, but the report reflects the discussion during the day-long gathering.
Commenting on the report, Walker states: "Simply put, our nation's fiscal policy is on an unsustainable course. As long-term budget simulations by GAO, the Congressional Budget Office (CBO), and others show, over the long term we face a large and growing structural deficit due primarily to known demographic trends, rising health care costs, and relatively low levels of federal revenues as a percent of GDP.
Continuing on our present path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. It will also increasingly constrain our ability to address emerging and unexpected budgetary needs.
"Regardless of the assumptions used, all reasonable simulations indicate that the problem is too big to be solved by economic growth alone or by making modest changes to existing spending and tax policies. Nothing less than a fundamental reexamination of all major federal spending and tax policies and priorities is needed. This reexamination should also involve a national discussion about what Americans want from their government and how much they are willing to pay for those things. This discussion will not be easy, but it must take place because time is
working against us.
"As with any major public policy challenge, effective and sustained leadership will be critical. But leadership cannot succeed without public understanding and support."
Walker also will address the impact of the government's fiscal imbalance on Wednesday, February 2, at a conference for state and local government officials at the National Press Club. Walker is the keynote speaker at lunch; the conference is sponsored by Governing magazine and the NCSL Foundation.
For more information, contact Paul Anderson, GAO managing director of public affairs, at 202-512-4800.
There is a crisis, and it's George W. Bush's misplaced priorities, fiscal mismanagement, expensive wars, and tax cuts for the rich. Bush will talk tomorrow night about how he's on track to halve the deficit - but it's lies, smoke and mirrors.
Below I've excerpted highlights from the GAO report [PDF], and reorganized them a bit. The report is really just a brainstorming session, with a number of contributors from academia, the financial community, think tanks, and government. My quick count indicated a pretty strong conservative bias, but it was a bias toward Concord Coalition conservatives, rather than complete idiots.
"In fiscal year 2004, the federal budget deficit increased and the long-term outlook worsened significantly. The unified deficit was $413 billion, or about 3.6 percent of the economy. This deficit includes $151 billion in Social Security surpluses, without which the deficit would have been that much larger.7 Indeed, the on-budget deficit for fiscal year 2004 was $568 billion, or 4.9 percent of gross domestic product (GDP). Fiscal year 2004’s deficit followed upon several years of increasingly negative federal fiscal outcomes.
In addition, as the Fiscal Year 2004 Consolidated Financial Statements of the U.S. Government show, in fiscal year 2004 the federal government added $13 trillion in new liabilities, unfunded commitments, and other obligations, principally due to the new Medicare prescription drug program. The federal government’s net liabilities, unfunded commitments, and other obligations now amount to more than $43 trillion, or about $350,000 for every full-time worker, and these unfunded commitments are growing larger every day. [Page 6-7]
"If we assume that all tax cuts remain in effect rather than expire as scheduled under current law, and if we further assume that for the first 10 years discretionary spending grows with the economy rather than at the rate of inflation, a dramatically different picture emerges. This simulation is called “Discretionary Spending Grows with the Economy and All Expiring Tax Provisions are Extended.” (See fig. 2.) Under this alternative simulation, by 2040 the government would have only enough money to pay interest on the federal debt!" [Page 8]
Deficits are not necessarily bad. It depends on what use the borrowed money is put to. Defense Spending is an inefficient investment; interest payments are worse; policy that actually hurts the country, the worst. Education is generally a good investment, as is most infrastructure.
"Health care is a bigger problem than Social Security. Participants acknowledged the need for Social Security reform but emphasized that Social Security is a relatively small part of the long-term fiscal challenge when compared to spending on health care. One participant noted that the estimated Social Security shortfall is about one-third the estimated cost of recent tax cuts if made permanent. Several participants observed that few members of the public are aware of this. Rather, the general public impression is that solving Social Security would solve most of the longterm fiscal challenge, and this is not correct. Indeed, one forum participant stated that it was only by attending this forum that he had learned that health care spending was a much more important, and potentially far more difficult, component of the long-term fiscal challenge than Social Security.
Participants expressed the view that in characterizing the long-term fiscal outlook, several key distinctions needed to be made between Social Security and the largest federal health programs, Medicare and Medicaid. Participants observed that the public was largely unaware that health spending accounted for a much larger share of the long-term fiscal problem than did Social Security.
In addition, many approaches to reforming Social Security have been articulated and were well known. For example, approaches included raising the retirement age, changing the indexation of initial benefits from a wage-based index to an inflation-based index, modifying the tax base, and so on. Many specific proposed solutions had been under discussion for some years. In contrast, many participants expressed the view that approaches to slowing the growth of health care spending remain elusive. [Page 12]"
Public Ignorance of Fiscal Mismanagement.
"Research on public opinion, however, shows that while the public is aware of the long-term fiscal challenge, it does not have a good handle on the size and implications of this challenge. In addition, the public consistently ranks our long-term fiscal challenge as low priority relative to other issues, such as the current state of the economy. This gap in public understanding of the nature and magnitude of the longterm fiscal challenge—and how to bridge it—was the subject of GAO’s December 2, 2004, forum on the long-term fiscal challenge." [Pages 2]
"Comptroller General [Walker] noted that describing the problem to the public presents numerous challenges. For example, estimates of future federal spending and deficits are so large—current longterm federal liabilities, unfunded commitments, and other obligations are estimated at more than $43 trillion1—that the numbers are beyond what most people can comprehend or relate to. Translating these numbers into a more human scale—such as “burden per capita”—might be helpful in communicating the magnitude of the challenge. In addition, how we measure the magnitude of the long-term fiscal challenge is complex. For example, tax preferences, such as the exclusion of employer-provided health benefits from individuals’ income, are usually not discussed although in some years their value may equal or exceed that of total discretionary spending (e.g., defense, homeland security, transportation, judicial system, education, environment etc.)." [Page 4]
In general, polling data suggests that the public is “worried but not that worried” about deficits, Ms. Belden said. Although aware of the long-term fiscal challenge and concerned about it, the public rates the federal budget deficit as of lower priority relative to other issues. In addition, a majority of those polled supported additional spending for highly valued programs over balancing the budget.
The public’s attitude toward federal budget deficits in general is complex. About two-thirds of those polled would prefer balancing the budget to cutting taxes, and about half of those polled expect today’s deficits to worsen in years to come. At the same time, the deficit is seen as far less prominent than many other issues. These higher-ranked issues include the economy, terrorism, jobs, education, and Iraq. In particular, over half of those polled indicated concern about the future of the economy. Only 4 percent, however, listed the deficit as their biggest concern." [Page 14]
Nowhere does the report discuss the obvious reason for public misinformation on the nation's fiscal health: the administration's deception and accounting trickery. They tell the American people that the deficits are nothing to worry about. The American people can still remember how painlessly Clinton was able to pull us out of deficits, and believe that we can do it again.
"Some media representatives suggested that there may be a sense in some editorial circles that deficits are especially “boring” for younger people, who increasingly tend to get their news from nonprint sources, such as Internet “blogs”—Web logs, or diaries—and television. Journalists and opinion writers may feel pressure to choose different material more likely to attract younger readers, who are crucial to the future of their publications.
Media representatives and other forum participants suggested that these nonprint media should be explored as ways to get the message to younger people, who will be most affected if the long-term fiscal challenge is not effectively addressed. Television programs that satirize current events and public television were also cited as venues for reaching out to younger people who do not regularly read print media.
Forum participants offered many specific suggestions for how to talk about the long-term fiscal challenge in media presentations. The main message of these suggestions was that presentations need to resonate with ordinary people; otherwise, nothing will change."
The report includes this piece of general information on Federal Trust Funds:
"Many forum participants noted that federal trust fund accounting is confusing and misleading, creating serious transparency and integrity issues in connection with financial reporting and budget matters. For example, the amount the federal government owes a trust fund is not considered a liability of the federal government under current federal accounting standards because it is a claim of one part of the government against another.
Unlike a private trust fund manager, the federal government both owns the assets of most trust funds and can, through legislation, raise or lower fund collections or payments, or alter the purposes of the trust fund. Also unlike a private trust fund, which can set aside money for the future, federal trust funds are simply budget and accounting mechanisms for the budget as a whole. They record receipts and expenditures earmarked for specific purposes.
When a federal trust fund such as the Old-Age and Survivors Disability Insurance (OASDI) trust funds for Social Security or the Medicare HI trust fund runs a surplus of payroll tax revenues over benefit payments, that surplus is invested in special, nonmarketable U.S. Treasury securities that are guaranteed for principal and interest by the full faith and credit of the U.S. government, and the cash is used to meet current needs of the government. When a federal trust fund runs a cash deficit, as the HI trust fund did between 1992 and 1998 and again in 2004, it redeems these securities to pay benefit costs that exceed current payroll tax receipts. However, in order to redeem these securities, the government as a whole must come up with cash by increasing taxes, lower spending, increased borrowing from the public, retiring less debt (if the total unified budget is in surplus), or some combination thereof.
While the special Treasury securities in a trust fund do not have any current effect on the economy, they do have legal implications for the trust fund’s capacity to pay benefits. Projections of trust fund exhaustion may receive media attention because projected trust fund exhaustion has historically been perceived as the primary action-forcing event. An exclusive focus on these projections, however, misses the point. From a macro perspective, the critical question is not how much a trust fund has in assets but whether the government as a whole has the economic capacity to finance the trust fund’s claims to pay benefits both now and in the future and at what cost as it relates to other competing claims for scarce resources.
While projections of trust fund balances provide information on program solvency, they do not provide information on sustainability, that is, the capacity of the budget and the economy to pay benefits. In some cases trust funds may provide a vital signal of imbalances in the long term. A shortfall between the long-term projected fund balance and projected costs can signal that the fund, either by design or because of changes in circumstances, is collecting insufficient monies to finance future payments. This signaling device can eventually prompt policymakers to action. Trust funds for payroll tax-funded programs such as Social Security and Medicare HI can serve as a signal to policymakers in this way.
In other cases, the trust fund mechanism may provide no warning signals. For example, unlike the OASDI and HI trust funds, Medicare’s SMI trust fund is financed not by payroll tax revenues but by a combination of beneficiary premiums and general revenue. Under the legislative formulas governing SMI financing, the SMI trust fund can never be exhausted because general revenue will always fill the gap between payments and premium revenues.
As a result, there is no signal or “speed bump” provided by the trust fund mechanism for SMI. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 included a provision that focuses on monitoring the share of total Medicare spending financed by general revenues. Under certain circumstances, the Medicare Trustees are required to warn the President and Congress if the general revenue share is projected to be above a certain level. Where this is the case, the President is required to make a legislative proposal to address “excess general revenue” in Medicare, and Congress must consider the proposal." [Page 34]
In Kentucky, 22% of adults receive Social Security benefits, including 24% of women and 20% of men. About 380,000 women, 297,000 men and 59,000 children rely on Social Security benefits in the state. (Social Security Administration and U.S. Census Bureau)
Women represent 59% of all people 65 and older in Kentucky who rely on Social Securitybenefits. (Social Security Administration)
Social Security is important for the economic security of elderly women.
Without Social Security, 57% of elderly women in Kentucky would be poor. (Center on Budget and Policy Priorities)
Social Security is more than a worker retirement program.
Many Social Security recipients in Kentucky are not retired workers. They receive benefits either as the widow or widower, spouse or child of a worker, or as a disabled worker. The overwhelming majority of these 360,000 beneficiaries are women and children. (Social Security Administration)
Widows would experience enormous cuts under the leading privatization proposal.
The typical recipient of a Social Security widow’s benefit in Kentucky receives $780 per month ($9,360 per year). According to the Congressional Budget Office, under Plan 2 of the President’s Commission to Strengthen Social Security, today’s kindergarteners are projected to receive 45% less than they are promised under current law, even when the proceeds from their private accounts are included in the total. If such a benefit cut were to take effect currently, the typical widow in Kentucky would receive only $429 per month ($5,148 per year), an amount equal to only 60% of the poverty line. (Social Security Administration and Congressional Budget Office)
The Kentucky economy will lose a significant amount if Social Security benefits are cut.
In 2002, $6.9 billion flowed into the Kentucky economy through Social Security benefits. If the cuts expected under Plan 2 for today’s kindergarteners were to take effect currently, Kentucky would lose $3.1 billion per year, even including the proceeds from private accounts. This amount is equivalent to 18% of state government expenditures in fiscal year 2002 (state government expenditures include money generated from state funds, federal funds, and the sale of state bonds). (Social Security Administration, Congressional Budget Office, National Association of State Budget Officers)
How does the Post manage to turn an editorial titled No Social Security 'Crisis' into an uninformed list of problems confronting social security? For instance, the argument that it's "undeniable that it's far easier to fix things now than later" assumes that something like a Trust Fund will be honored. If we were to raise payroll taxes now, the GOP would maliciously use that working class money to subsidize tax cuts for the rich. Any effort to fix the problem now will be sabotaged by the Republicans.
The argument that "Social Security's fundamental difficulty is a demographic one," where the number of workers per retiree is slowly shrinking, assumes that this is a problem that we haven't been solving for 70 years. Everyone has foreseen the inevitable reduction in that ratio - hence the Greenspan/Reagan compromise, where workers agreed to pay more now to build up a reserve for the future. The Republicans desperately want to reneg on the consideration for that promise - decent benefits.
An advocacy group, USAction, said on Monday that four television networks had turned down its request to run an advertisement opposing President Bush's effort to clamp down on medical malpractice lawsuits.
The group wanted to run the spots just before Mr. Bush's State of the Union address on Wednesday. But networks said the advertisement violated their standards for advertising on controversial issues.
The NBC Universal Television Network, owned by General Electric, told the group, 'We are sorry that we cannot accept your ad based on our network policy regarding controversial issue advertising.'
As a general rule, the policy says, 'time will not be sold on NBC Network facilities for the presentation of views on controversial issues.' The policy does not apply to candidates for public office in election years.
ABC, CBS and the Fox Broadcasting Company said they had also turned down the advertisement.
But CNN plans to run the advertisement.
These policies are absurd and need to change. Halliburton advertises about how it's saving the troops with no problem; Walmart advertises about its great treatment of employees with no problems. Political speech deserves more access to the airwaves, not less. It's worth watching to see if the Chamber and NAM get more favorable treatment.
USAction, in coordination with Campaign for America's Future and AFSCME, is also directing an effort to counter Bush's privatization barnstorming tour.
The triumphalism over the Iraq vote seems premature. There are no reliable numbers, either hard or soft, on Sunni turnout. Anecdotal evidence is not reassuring.
The Associated Press reports that "preliminary results from Iraq's historic election could come as early as Monday, Iraqi officials said Sunday. But final results and an accurate estimate of turnout could take up to 10 days." The AP also reports that a "U.S. diplomat, speaking on condition of anonymity, said Sunni participation was considerably lower than other groups, especially in areas that have seen a great deal of violence, raising fears that the group that drives the insurgency could grow ever more alienated. Exact figures were not available, however." CBS News expands on the AP's anonymous diplomat: "A U.S. diplomat, briefing reporters on condition of anonymity, said 'good anecdotal information' indicated that 'Sunni participation was considerably lower than participation by the other groups, especially in areas which have seen a great deal of violence.'"
On the other hand, the BBC reports that "the UN's senior election official [Carlos Valenzuela] said turnout in Sunni areas - hotbed of the insurgency - was higher than expected," though "voting among Sunnis...was nonetheless low." Al Jazeerah had more from Valenzuela: "If the results are confirmed -- and the only reason to be cautious is the lack of a complete picture -- then it is very good news...The challenge is for the results to be accepted by the Sunni (Arab) minority."
The only figures out are piecemeal preliminary results. Reuters reports on Samarra: "According to preliminary figures provided by a joint U.S. and Iraqi taskforce who safeguarded Sunday's vote, fewer than 1,400 people cast ballots in the city of 200,000. The figure includes votes from soldiers and police, most of whom were recruited from the Shi'ite south." The Los Angeles Times reports on Al Anbar: "Unofficial figures from the province showed that only about 17,000 of as many as 250,000 eligible voters in Al Anbar participated in the first national election since a U.S.-led coalition deposed Saddam Hussein. The mostly Sunni province is home to the restive cities of Ramadi and Fallouja....Unofficial figures showed that 1,700 people voted in Ramadi, a city of nearly 400,000 residents; 8,000 in Fallouja, half the size of Ramadi; and about 5,000 in neighboring Nassar Wa Alsalaam, a mostly agricultural community. The remaining votes came from smaller towns in the vast province, which stretches from west of Baghdad to the border with Syria, Jordan and Saudi Arabia."
Update, 8:18 PM EST: More anecdotal evidence, this from the Washington Post:
In Sunni-populated regions of central and northern Iraq, where the insurgency has been most fierce, Sunday's turnout was far lower than elsewhere, a sign of the guerrillas' strength in those areas and their ability to intimidate.
Despite rumors that food rations would be taken away if residents failed to vote, few defied threats by insurgents to, in the words of one leaflet, "wash the streets" with the blood of voters.
In Ramadi, a western city of roughly 200,000 people along the Euphrates River, residents said only six people voted at one polling station: the provincial governor, three of his deputies, the representative of the Communist Party and the police chief. In Dhuluyah, a town north of Baghdad along the Tigris, the eight polling stations never opened, residents said, and in other towns in the region, voters usually numbered in the dozens as others ignored appeals broadcast by patrolling U.S. soldiers to vote.
But both the violence and the Sunni turnout proved to be the wild cards. After a slow start, growing numbers voted in heavily Sunni districts of the capital, including Khadra, Tunis and parts of Adhamiyah, residents said. Crowds in Baqubah, a mixed Sunni-Shiite town northeast of Baghdad, gathered with their children before polls opened and waited for tardy election workers as mortar shells detonated in the distance.
In the northern city of Mosul, scene of some of the fiercest fighting in recent months, turnout grew among both Sunni Arabs and ethnic Kurds as intense attacks failed to materialize. In the two weeks before the elections, the United States had increased its troop strength in Mosul by 50 percent, from 8,000 to 12,000, and brought in an additional 4,500 Iraqi security forces.
Update, 2/1/05, 2:41 AM EST: The New York Times has more turnout stories, though nothing dispositive:
Although there were at least nine separate suicide bombing incidents in Baghdad, and insurgent attacks elsewhere across the country that killed at least 50 people, the rebel plans to torpedo the vote by frightening people into staying home appeared to have failed, even in areas where the rebels have been strongest, in the Sunni-dominated region of Babil Province, south of Baghdad, across Anbar Province to the west, and in Saladin, Diyala and Nineveh provinces to the east and north.
But as more details emerged of the pattern of voting, it remained uncertain how widespread Sunni voting in those areas had been. Both Mr. Valenzuela and Mr. Ayar, the election commission chief, spoke of higher-than-expected turnouts in Babil, Anbar, Diyala and Nineveh, and described lines at polling stations in cities that have seen major insurgent violence, including Falluja, Baquba and Mosul.
But other reports said that polling centers in Samarra, another trouble center north of Baghdad, as well as in Tikrit, Saddam Hussein's hometown, had been largely deserted, and that the turnout in Baquba, with a mixed Sunni and Shiite population, had been about 30 percent. Still, Mr. Ayar said, "there were no cities with no votes."
But he cautioned against the notion that the Sunni turnout in the troubled areas had been that high. "Everyone says it was better than what we expected," he said. "However, the expectations were very low. So it really doesn't mean very much, does it?"