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Obama, the Economy, and Those Free Trade Agreements

Jobs and the economy are Obama’s Achilles heel.  And he has no one to blame but himself.  Way back in 2009, I tried to warn him:

Actually, I feel like Obama’s the one getting punked. But it’s mostly his doing. Ask the many independents who voted for him. They wanted, and still want, Obama to focus like a laser on the economy. There are encouraging signs that we are beginning to turn this thing around, but we would have been much further along if that had been his primary focus. And if he had taken ownership of the stimulus bill and made sure damn near everything was stimulus and not just Congress’ pet spending projects.

Had he done that, Congressional Dems would have been golden for 2010. He could have used the remainder of his term to push for real healthcare reform. Many previously skeptical folks would have said, hey, this man proved with the economy that he knows how to focus and execute. So let’s give him a shot with healthcare.

That would have set up 2012 beautifully. After which point he could have pushed for major entitlement reform. The kind that addresses structural deficit and puts us back on path to long-term prosperity.

That’s what could have been. Instead, we have reform fatigue. We’re still digesting the economic reforms, and he’s ladling in healthcare. It’s all too much at one time. The result is that he’s going to get some healthcare reform, but it will be weak because there is insufficient political goodwill for anything more. And don’t even talk about entitlement reform.

So my issue with Obama is he has the right instincts for reform. But the way he’s going at about it — everything at once — makes it virtually impossible for his reforms to succeed. I hope I’m wrong.

(From a comment at http://www.taylormarsh.com.)  But the White House didn’t want to waste a “crisis.”  And so here we are, with Obama waiting for solutions from his Jobs Council.  Problems with this are three fold:

  • You don’t outsource job creation – it’s too important.
  • A 26-person (!) committee is only going to come up with pablum.  Encourage more SBA lending?  Make buildings more energy-efficient?  Streamline the federal permit process?  Heaven save us.
  • Composition of the council.  GE?  Amex? Intel? Citibank?  My goodness.  If you’ve read Clayton Christensen’s many writings on “Market Disruption” – and if you haven’t, you owe it to yourself to remedy that right away – you know that these companies are likely to be the disruptees rather than the disruptors.  Take Intel.  Its relentless focus on its core customers – desktops and workstations requiring high-powered chips – made it oblivious to the threats posed to it manufacturers of low-powered chips used in cell phones and now tablets.  Now Intel has to fight a two-front battle: try to gain a foothold in the low-powered market, AND fend against low-powered chipmakers moving upmarket.  I would have gone in a different direction, looking at companies like Nucor, Hyundai and Xerox (the focus on an article in today’s WSJ showing how it has reinvented itself).  These and other companies have innovation hardwired in their DNA, whereas most of the companies represented on the council strike me as moribund, staid, and completely orthodox.  (Sheryl Sandberg of Facebook is a conspicuous exception.)

But here’s the irony of the thing.  The one silver lining in this crappy economy is the weak dollar.  Sucks for imports and international tourism, but is like the Balm of Gilead for export markets.  More exports means more hiring, right?  So why aren’t we moving on the trade agreements?  Oh right – because organized labor doesn’t like them.  But here’s the problem.  We are not dealing in a binary world any more, where we either do the deal or don’t.  Now we compete with other countries for the same trade benefits.  And while we’ve dithered, other countries have rushed in to complete their own deals with Colombia, South Korea etc.

This state of affairs needs to be corrected, asap.  We don’t need no stinking pablum from a bunch of overpaid titans.  We need to sell our wares, and that means export markets.  So STMFTAA! (That means “Sign the Mut*a Fu*king Trade Agreements Already” – shout out to Dan Savage)  And I don’t want to hear any caterwauling from those liberals who insist that Obama must do something RIGHT NOW about jobs – but shriek like banshees when it comes to signing the free trade agreements.  Their arguments, such as they are, are easily accommodated.  So, as these guys so aptly put it, “it’s time for liberals to stop making excuses and let the deal get done.”

So, Mr. President, if you’re listening – Get ‘Er Done.

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Why Bill Clinton is Right on Medicare

Written By Ogenec

Another politician falls victim to the “hot mike.”  This time it’s good ol’ Bill.  Caught, as it were, in fragrante delicto with Paul Ryan.  As all good liberals and progressives know, Paul Ryan is the bete noire of all that is decent in the world, because he had the temerity to put forward a plan to reform Medicare.  Democrats ran on that in NY-26, turning a ho-hum special election in a Republican bastion into a referendum on the Ryan plan.  And the Democrat won!  For the first time in a long time, Democrats have Republicans on the run.  Visions of retaking Congress are dancing around in Democrats’ minds.  Hence the dispatch with which Senate Democrats forced a vote on the Ryan plan.  To the Dems’ delight, all the Republicans voted for it except for the self-avowed centrists and Rand Paul (whose beef is that the Ryan plan is insufficiently draconian).  So why, cry Democrats in anguish, would Bill Clinton choose now to play footsie with the enemy?

Here’s why.  It may be the case that the Ryan plan is a bad idea, on both political and policy grounds.  But that does not negate the fact that Medicare is a serious, and growing, problem.  The NY-26 lesson should not be to abandon efforts to reform Medicare.  Yet that is precisely the lesson Democrats seem intent upon drawing.  They will enjoy a short-term political boost as a result.  But in the medium- to long-term, they — and we — will suffer greatly for the abdication of leadership.

It’s difficult to discern the severity of the problem when one talks about Medicare in abstract terms, as I just have.  So let’s talk numbers.  Fortunately, I have the 2011 Medicare Trustee’s Report, published just this month. It’s a 273-page report, but you don’t have to read all of it. Virtually all the bad news is right up front in the Overview section:

  • The hospital insurance part of Medicare (Part A) is projected to go bankrupt in 13 years (2024).  That’s a full five years earlier than projected last year(!)
  • Part A has not met the Trustees’ test for short-term financial adequacy since 2003.  In 2010, $32.3 billion of trust assets were redeemed to cover the expenditure shortfall.
  • “The difference between Medicare’s total outlays and its ‘dedicated financing sources’ is estimated to reach 45 percent of outlays in fiscal year 2011, the first year of the projection.”  In plain English, Medicare is borrowing from the Federal Government nearly 50% of what it pays out.
  • As dire as the projections detailed above are, the reality is much, much worse.  That’s because the projections assume that the cuts in Medicare spending embodied in current law apply.  But, as everyone should know, the cuts are virtually certain not to apply.  Back in 1997, as part of the Balanced Budget Act, the Clinton White House and Congress agreed on “sustainable growth rate” triggers that would restrict Medicare reimbursements to doctors.  Medicare costs quickly outstripped growth projections in the Act, so the SGR cuts should have kicked in, right?  Well, no.  Each year since 2003, Congress has postponed implementing the cuts, even as the Trust Fund is required to assume that they will come into effect.  The cumulative effect of all the postponements is that in 2012, Medicare reimbursements would have to decline by 29.2% to comply with the Balanced Budget Act.  Never gonna happen.  Which is why the Medicare trustees take a dim view on whether the cost-containment measures contained in the Affordable Care Act will ever materialize.  Given the SGR experience, the Trustees — masters of understatement, they — call the prospect of ACA cost savings “debatable.”
  • If you are not scared by now, this last statistic should leave you slobbering in abject horror: The present value of the Medicare deficit through 2085 is $33.8 TRILLION.  That’s trillion with a T.  And that’s the present value of the deficit, not the aggregate amount in nominal terms.  Moreover, the $33.8 trillion merely represents the difference between Medicare assets and estimated outlays.  In 2085, Medicare assets would be zero.  Lastly, the $33.8 trillion number is based on the same optimistic scenarios discussed above, the same ones the Trustees concede are unlikely to materialize.  As a result, to quote the Trustees again, “actual long-range present values for HI expenditures and SMI expenditures and revenues are likely to exceed the amounts shown in table V.D2 by a substantial margin.”

Ladies and gentlemen, these are the cold, hard, incontrovertible facts.  We need to come up with at least $33.8 trillion in today’s dollars – and probably much more – just to keep Medicare going through 2085.  After which time the Medicare fund will have exactly zip, zero, nada, left.  This is the reality that Bill Clinton is reacting to.  And that is why he is cautioning Democrats not to sacrifice courage on the altar of political expediency.  Yes, the Ryan plan is a bridge too far.  But there is a wide gulf between Ryan’s proposal and doing nothing.  Democrats must do something.  It’s a moral imperative.

The other thing the $33.8 Trillion number points out is that the “solutions” proferred by liberals and progressives are anything but.  A surtax on the rich won’t generate anything near the kind of revenue required.  Sen. Sanders has advocated a 5.4% surtax on incomes above $1 million, which he estimates would generate approximately $50 billion in annual revenue.  That’s a mere pittance, given the enormity of the Medicare deficit.  Plus, it’s unlikely to pass.  Sen. Conrad has proposed a far more modest 3% surtax, which would cut nearly in half the expected revenue.  Most importantly, as James Kwak notes at Baseline Scenario, Medicare taxes already are progressive:

In some abstract sense, I would prefer to raise taxes on the rich instead. But I think we should look other places rather than Medicare to make the tax system more progressive. Medicare, like Social Security, is a progressive system even though its taxes on their own are not. Because everyone gets the same benefit, there’s already a large amount of redistribution going on; in addition, that benefit is worth more to poor people, because they are less likely to have other sources of insurance.

Neither will using Medicare to leverage lower drug prices — in fact, the drug portion of Medicare already is indexed to costs.  Per the Trustee’s report:

The SMI trust fund is adequately financed over the next 10 years and beyond because premium and general revenue income forParts B and D are reset each year to match expected costs.

Which makes the solution rather obvious, no?  Increase the payroll tax to reflect the rise in Medicare spending.  And let’s undertake a real effort to reduce healthcare costs.  And by that I mean real reductions, not artificial measures that don’t address costs at the source, but merely shift the increases in healthcare costs to others.  That’s what Congress tried with the SGR, and that’s why it doesn’t work.  And, as a certain someone predicted in 2009, that’s why the ACA putative cost savings won’t materialize either.

So Bill is right on Medicare.  There are any number of compelling reasons for Democrats not to demagogue this issue.  33.8 trillion on them, as it happens.

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California Throws Education Under the Bus

Written by: BlueDog89

California Gov. Jerry Brown recently proposed to cut more than $1 billion from higher education. Photo courtesy Associated Press.

Student activists and teachers unions in California are organizing statewide protests in opposition to Gov. Jerry Brown’s proposal to cut $1.4 billion from public colleges and universities.

Protesters at a demonstration at Modesto Junior College. Photo courtesy Turlock Journal.

California’s public education system is racked by threats of spending cuts due to the state’s fiscal crises, which include a deficit that has ballooned to more than $25 billion.

The California State University System is facing possible budget cuts of $500 million. The University of California would also face a $500 million cut under Brown’s budget proposal.

Brown has proposed cutting $400 million from the state’s community colleges, and raising tuition by 38 percent.

Modesto Junior College (MJC) administrators recently informed faculty members that jobs may be cut as the college attempts to shed $8 million from its budget.

MJC President Gaither Loewenstein answered questions about the budget cuts in a Q&A forum with students last week. He confirmed that the entire communications department, including majors in journalism, television and radio, would be cut in his budget reduction proposal.

Modesto Junior College President Gaither Loewensteinaddresses concerns over $8 million budget cut proposal. Photo courtesy Turlock Journal.

Other programs to end are culinary arts, communication graphics, architecture, engineering, industrial technology, dental assisting and all foreign languages, except Spanish and sign language.

The MJC West Campus library would close and be used as a learning resource center. Coach stipends would end, but competitive sports would continue.

Additional faculty and management employees would lose their jobs under Loewenstein’s budget proposal. Those layoffs would be effective June 30.
Reductions in salary or benefits for employees are not included in the proposal, which have yet to be negotiated.

Many students fear losing their favorite instructors, like anthropology professor James Todd. According to anthropology major and campus President of the Anthropology Club Priscilla Peralta, the department will be crippled with the layoff of Professor Todd. “Anthropology is a much needed discipline and should continue to be offered to the fullest extent,” said Peralta.

Loewenstein said that the decision to target specific programs rather than split the cuts across the board was intended to leave the college with fewer strong programs instead of making the entire college mediocre.

Californians need to step up, get involved with their schools, and reach out to school administrators and congressional representatives about this issue.

Ms. Peralta urges those who support her cause to send a personal message to Modesto Junior College President Gaither Loewenstein via email at loewensteing@mjc.edu.

In addition to getting personally involved with the schools in your community, education advocates encourage citizens to express their concerns to Gov. Brown. He may be reached via phone at 916.445.2841 or log on to his website to post a comment http://gov.ca.gov/m_contact.php.

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5, 4, 3, 2, 1… The Obama Family Lights The National Christmas Tree

Posted by: Audiegrl
Written by Kori Schulman

President Barack Obama, with mother-in-law Marian Robinson, daughters Sasha and Malia, and First Lady Michelle Obama, react as they push the button to light the National Christmas Tree during a ceremony on the Ellipse in Washington, D.C., Dec. 9, 2010. (Official White House Photo by Chuck Kennedy)

Ed. Note: Watch the full National Christmas Tree Lighting ceremony and show with musical performances by B.B. King, Sara Bareilles, Common, Maroon 5 and more at www.thenationaltree.org.

Last night, the First Family continued a proud holiday tradition – lighting the National Christmas Tree for the 88th time. View photos from the event and watch a video of the President’s remarks, the tree lighting ceremony, and a reading of “Twas the Night Before Christmas” by the First Lady.

President Barack Obama addresses the crowd as he and the First Family attend the National Christmas Tree Lighting ceremony on the Ellipse in Washington, D.C., Dec. 9, 2010. (Official White House Photo by Chuck Kennedy)

President Barack Obama and First Family listen to the program at the National Christmas Tree Lighting ceremony on the Ellipse in Washington, D.C., Dec. 9, 2010. (Official White House Photo by Pete Souza)

BB King performs Merry Christmas Baby at the National Christmas Tree Lighting ceremony on the Ellipse in Washington, D.C., Dec. 9, 2010. (Official White House Photo by Pete Souza)

The National Christmas Tree shines bright during the lighting ceremony on the Ellipse in Washington, Dec. 9, 2010. (Official White House Photo by Lawrence Jackson)

“Snow or shine, in good times and in periods of hardship, folks like you have gathered with Presidents to light our national tree,” said President Obama, “Now, it hasn’t always gone off without a hitch. On one occasion, two sheep left the safety of the Nativity scene and wandered into rush-hour traffic. That caused some commotion.”

He continued, touching on the history of the ceremony and taking a moment to honor the men and women that are serving in uniform overseas this holiday season:

Often, the ceremony itself has reflected the pain and sacrifice of the times. There were years during the Second World War when no lights were hung, in order to save electricity. In the days following Pearl Harbor, Winston Churchill joined President Roosevelt to wish our nation a Happy Christmas even in such perilous days.

But without fail, each year, we have gathered here. Each year we’ve come together to celebrate a story that has endured for two millennia. It’s a story that’s dear to Michelle and me as Christians, but it’s a message that’s universal: A child was born far from home to spread a simple message of love and redemption to every human being around the world.

It’s a message that says no matter who we are or where we are from, no matter the pain we endure or the wrongs we face, we are called to love one another as brothers and as sisters.

And so during a time in which we try our hardest to live with a spirit of charity and goodwill, we remember our brothers and sisters who have lost a job or are struggling to make ends meet. We pray for the men and women in uniform serving in Afghanistan and Iraq and in faraway places who can’t be home this holiday season. And we thank their families, who will mark this Christmas with an empty seat at the dinner table.

On behalf of Malia, Sasha, Michelle, Marian — who’s our grandmother-in-chief — (laughter) -– and Bo — don’t forget Bo — (applause) — I wish all of you a merry Christmas and a blessed holiday season.

And now I’m going to invite the entire Obama crew up here to help me light this Christmas tree. (Applause.)

All right, everybody, we’re going to count from five — five, four, three, two, one.

(The tree is lit.) (Applause.)

Merry Christmas, everybody!

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West Wing Week ~ It’s Alive! ~ December 3 – December 10, 2010

Posted by: Audiegrl

President Barack Obama gets a hug as he shakes hands with the U.S. troops at Bagram Air Field in Afghanistan, Dec. 3, 2010. (Official White House Photo by Pete Souza)

Welcome to the West Wing Week, your guide to everything that’s happening at 1600 Pennsylvania Ave. Walk step by step with the President as he visits Afghanistan to celebrate the holidays with our men and women in uniform, announces a free trade agreement with South Korea, attends a series of meetings at the White House and holds a press conference to answer questions about the tax cut compromise, signs the Claims Resolution Act of 2010, and more…

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West Wing Week ~ Sharp Elbows ~ November 26 – December 3, 2010

Posted by: Audiegrl

First Lady Michelle Obama and White House Pastry Chef Bill Yosses laugh as young visitor tastes her decorated cookie during a holiday craft demonstration with the children of military personnel in the State Dining Room of the White House, Dec. 1, 2010. (Official White House Photo by Lawrence Jackson)

Welcome to the West Wing Week, your guide to everything that’s happening at 1600 Pennsylvania Ave. Walk step by step with the President as he holds a meeting with bipartisan members of the Congressional Leadership at the White House, greets the American 2010 Nobel Laureates in the Oval Office, meets with General Colin Powell, makes a joint statement about the importance of ratifying the START treaty with Russia, and more…

President Barack Obama is reflected in a mirror as he meets with newly-elected governors at Blair House, Dec. 2, 2010. (Official White House Photo by Lawrence Jackson)

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