Network News

X My Profile
View More Activity

Wonkbook: Voters don't care about the deficit; lame duck looks lame; junior Dems pushing on filibuster reform

By Ezra Klein

image (4).png

Here's the dirty little secret that Washington's politicians know but its elites want to deny: Voters don't really care about the deficit. And don't take it from me. Take it from them: A CBS News poll found that only four percent want the new Congress to put deficit reduction first. That was far behind economy/jobs (56 percent) and health care (14 percent).

This is why the Simpson-Bowles proposal is getting lots of attention from budget wonks and policy writers but few endorsements from active politicians -- even the ones who served on the commission. It's also why we're having a discussion about cutting taxes by somewhere between $3 trillion and $4 trillion without putting so much as a penny towards offsets. And think Democrats' traction against the tax cuts for the rich represent deficit concerns? I don't. It's about class resentments, particularly the feeling middle-class folks have that the wealthy have gotten too much in recent years.

That's not to say voters like the deficit. They don't. And it's not to say they wouldn't like to see it go down. They would. But at the expense of other people, not themselves. Here's Wonkbook's prediction: We've just had an election that many people will tell you was about the deficit. But over the next two years, Congress will pass legislation increasing the deficit by vastly more than it did in the last two years. Any takers?

Housekeeping: You'll notice a new section today for health care. As the politics of repeal and/or revision heat up, and so too does the work of implementation, we're going to start covering that more closely. And because both health care and domestic policy have more life in them than energy legislation does right now, they'll both come before it from here on out. Finally, many thanks to Dylan Matthews who kept Wonkbook going while I was on vacation.

Top Stories

POLL: Only 4 percent of voters want the new Congress to prioritize deficit reduction: http://bit.ly/bCTlMO

Congressional Democrats are expecting to accomplish less than they'd hoped during the lame duck session, reports Lisa Mascaro: "Democratic leaders are pressing an agenda that would extend middle-class tax cuts, fund the government and perhaps repeal the ban on openly gay men and women serving in the military...Republicans must weigh the political costs of promoting a limited lame-duck agenda that obstructs Democratic initiatives. Their preference is to focus these next few weeks on immediate fiscal matters. They intend to block what could be the last opportunity in years to repeal the 'don't ask, don't tell' ban on openly gay military personnel as well as a Democratic-led attempt to extend unemployment benefits to jobless Americans."

Junior Democrats in the Senate are pushing ahead with filibuster reform, reports J. Taylor Rushing: "Sen. Tom Udall said he will force a motion on the first day of the next Congress to have Vice President Joe Biden adopt new rules for the two-year session. Then, Udall said, he will seek consensus among senators from both parties to lower the 60-vote threshold for procedural motions. Only a simple majority of 51 votes would be necessary for such a move, and Udall said he expects support from some Republicans...Tom Udall is correct there will be some GOP support for the effort. Sen.-elect Dan Coats (Indiana), who knows the Senate well from his 10-year tenure from 1989 to 1999, said in a Fox News interview this month that he endorses filibuster reform."

Obama is prioritizing free trade deals -- but finding them harder than he'd hoped, report Jonathan Weisman and Elizabeth Williamson: "The White House is increasingly betting on a revival of U.S. exports to revive a moribund job market and might also be acknowledging tensions with business that contributed to Democrats' midterm election losses...[but] The trip was a rough one for the president. The U.S. was unable to persuade other countries to agree to measures it maintains are necessary to promote growth. Other nations slammed the U.S. Federal Reserve's decision last week to pump $600 billion into the economy. Mr. Obama didn't complete a long-stalled trade deal with South Korea, under pressure from trade antagonists led by Ford Motor Co. and U.S. trade unions."

Want Wonkbook delivered to your inbox or mobile device? Subscribe!

Got tips, additions, or comments? E-mail me.

Mid-2000s flashback interlude: Bloc Party play "Like Eating Glass" on Later with Jools Holland.

Still to come: Banks and hedge funds are investing in private lawsuits that they think will pay off; Nancy Pelosi is not interested in reforming the mortgage-interest tax deduction; Max Baucus is ready to compromise with the GOP on health-care reform; BP has now paid more than $500 million to the federal government for the Gulf cleanup; and a bricklaying machine that can "print" roads.

Economy

Banks and hedge funds are starting to invest in lawsuits, reports Binyamin Appelbaum: "Most investments are in the smaller cases that fill court dockets. Ardec Funding, a New York lender backed by a hedge fund, lent $45,000 in June to a Manhattan lawyer hired by the parents of a baby brain-damaged at birth. The lawyer hired two doctors, a physical therapist and an economist to testify at a July trial. The jury ordered the delivering doctor and hospital to pay the baby $510,000. Ardec is collecting interest at an annual rate of 24 percent, or $900 a month, until the award is paid. Total investments in lawsuits at any given time now exceed $1 billion, several industry participants estimated."

The Fed will allow banks to pay out bigger dividends: http://on.wsj.com/aIU5lT

The Bowles-Simpson deficit plan has prompted debate over the mortgage interest deduction, reports David Kocieniewski: " House Speaker Nancy Pelosi blasted the commission’s suggestions, saying it would force middle-class homeowners to subsidize tax breaks for the wealthy. Officials in the real estate and mortgage industries warned that ending the deduction could cripple an already ailing housing market...But tax policy experts say that for all its popularity, the value of the deduction in public policy is debatable. It was intended to encourage homeownership, but housing economists point out that countries like Canada and Australia, which do not allow mortgage interest deductions, have homeownership rates similar to those of the United States.”

We need a better word than "bailout", writes Robert Shiller: http://nyti.ms/a6EnvC

David Leonhardt challenges you to balance the federal budget: "By 2030, the needed deficit cut will equal about 5.5 percent of annual economic output. By comparison, domestic discretionary spending -- all of it, including Head Start, college financial aid, the F.B.I., medical research and airline safety -- will add up to about 3 percent of economic output, according to Congressional Budget Office projections. Military spending will equal about 4 percent. So the solution will have to revolve around tax increases and changes to health care and Social Security."

Play with Leonhardt's interactive deficit-reduction tool: http://nyti.ms/bLo4RF

Obama should be more aggressive in legislative battles, writes Paul Krugman: "Mr. Obama could and should be hammering Republicans for trying to hold the middle class hostage to secure tax cuts for the wealthy. He could be pointing out that making the Bush tax cuts for the wealthy permanent is a huge budget issue -- over the next 75 years it would cost as much as the entire Social Security shortfall. Instead, however, he is once again negotiating with himself, long before he actually gets to the table with the G.O.P. Here’s the thing: Mr. Obama still has immense power, if he chooses to use it."

The Fed's plan will not lead to runaway inflation, writes Alan Blinder: http://on.wsj.com/dxhPgW

Civil engineering interlude: A bricklaying machine that can "print" roads.

Health Care

Sen. Max Baucus is defending his strategy for passing health care reform, and saying he'll compromise further with Republicans going forward, reports Matt Gouras: "The high-ranking Democrat...can't escape his prediction last summer that the health care bill needed GOP votes if it was going to last the years. At the time, liberals hammered him for trying to get Republicans on board. 'And I was right,' Baucus said...Baucus told The Associated Press in an interview Friday that unpopular provisions could be on the chopping block or subject to more negotiation due to the new Congress – perhaps even the personal mandate that Baucus still believes is needed to ensure charitable care isn't shifted onto others. On Friday, he unveiled legislation to strip a tax provision in the bill small businesses complained was burdensome."

Medicare's cost control measures are hardly "Soviet", writes Uwe Reinhardt: http://nyti.ms/dsIJY7

Massachusetts' health care reform has worked at cutting hospital costs, writes Tony Dokoupil: "A new study by the National Bureau of Economic Research is the first to track hospital costs in Massachusetts, where a 2006 law became a model for national reform. It finds that 93 percent of people in the Bay State are now insured. But despite an influx of patients, total hospital costs haven’t grown more than usual. New efficiencies probably helped: thousands fewer patients now use the ER for routine care or show up because of a preventable condition. And the average length of a hospital stay is down an hour per person. But University of Pennsylvania economist John Kolstad, who coauthored the study, speculates that the real heroes could have been insurers, who bargained with hospitals."

Health-care reform is bedeviled by selfish seniors, writes James Suroweicki: "The very people who currently enjoy the benefits of a subsidized, government-run insurance system are intent on keeping others from getting the same treatment. In part, this is because seniors think of Medicare as an 'entitlement'—something that they have a right to because they paid for it, via Medicare taxes—and decry the new bill as a giveaway. This is a myth: seniors today get far more out of Medicare than they ever put in, which means that their medical care is paid for by current taxpayers. There’s nothing wrong with this: the U.S. is rich enough so that the elderly shouldn’t have to worry about having health insurance; before Medicare, roughly half of them didn’t have it. But the subsidies that seniors get aren’t fundamentally different from the ones that the Affordable Care Act will offer some thirty million Americans who don’t have insurance. Opposing the new law while reaping the benefits of Medicare is essentially saying, 'I’ve got mine—good luck getting yours.'"

Domestic Policy

Obama endorsed a Congressional earmarks ban, reports Abby Phillip: "At the conclusion of his second weekend in Asia, President Barack Obama said in his weekly address Saturday that, although opening new markets is the 'single greatest tool for getting our fiscal house in order,' members of Congress should give up wasteful earmarks. 'I agree with those Republican and Democratic members of Congress who’ve recently said that in these challenging days, we can’t afford what are called earmarks,' he said...Some, including South Carolina Sen. Jim DeMint and several tea party-backed candidates, want a complete ban on the spending, which lawmakers add to sometimes-unrelated legislation."

The GOP will vote on an earmarks ban this week: http://nyti.ms/b6fCRc

The food safety bill will get a vote in the lame duck session, reports J. Taylor Rushing: "The bill by Majority Whip Dick Durbin (D-Ill.) passed the Senate’s Health, Education, Labor and Pensions (HELP) Committee on Nov. 18, 2009, with a 16-0 bipartisan vote. It had already passed the House in July 2009 on a 283-142 vote. But it was then forced onto the Senate’s back burner while the upper chamber grappled for most of this year with healthcare reform and financial regulation reform. Now, with the midterm elections in the past, Majority Leader Harry Reid (D-Nev.) plans to bring it forward for a procedural vote on Wednesday that leaders expect will pass."

The food safety bill will be, at best, moderately effective, writes Tom Philpott: "The best we can hope for from it is a step, probably a small one, in the right direction. It won't affect the meat supply, for example, which is one of the prime sources of hazard in the food system...So in that regard, the bill seems a bit toothless. The bill would increases inspections -- if still to a too-low level -- and give the FDA authority to declare mandatory recalls, when now 'the agency can only ask nicely,' as Elanor puts it."

The new Congress threatens welfare funding, writes Monica Potts: http://bit.ly/9YOm5m

History lesson interlude: An animation of Europe's shifting borders, from 1000 onward.

Energy

BP has paid back $518 million to the federal government for the Gulf cleanup, reports Lisa Rein: "The Government Accountability Office, in a report on the spill released Friday, reviewed the financial risks facing a trust fund Congress authorized in 1990 after the Exxon Valdez incident to pay cleanup expenses incurred by federal agencies. The pot of money, called the Oil Spill Liability Trust Fund, is financed by an 8-cents-per-barrel tax on petroleum. Auditors said there was about $1.6 billion in the fund as of the end of September. But to limit the government's exposure, the law caps at $1 billion the amount agencies can draw from it for cleanup costs - even if the oil company responsible for a spill pledges to reimburse the government for all costs."

The sea level will rise about three feet this century: http://nyti.ms/ahqNMG

The International Energy Agency says peak oil occurred in 2006, reports John Collins Rudolf: "According to a projection in the agency’s latest annual report, released last week, production of conventional crude oil -- the black liquid stuff that rigs pump out of the ground -- probably topped out for good in 2006, at about 70 million barrels a day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests. The agency does not see energy doom on the horizon, however. By its estimation, after a short dip in production, crude production will reach an 'undulating plateau' of about 68 million barrels a day between 2020 and 2035."

The solar energy market is growing more competitive: http://nyti.ms/9KGrR2

Republican senators are alleging the White House tampered with an oil spill report, reports John Broder: "The senators, members of the Environment and Public Works Committee, called for hearings into the matter, contending that the White House had manipulated science for political ends, a claim Democrats frequently made about the George W. Bush administration. The Interior Department’s inspector general issued a report this week asserting that officials in the office of Carol M. Browner, the White House coordinator for energy and climate change policy, had changed some wording and moved some sentences in an agency report that ended up misrepresenting the views of the technical experts."

Climate hawks shouldn't expect much from EPA regulations, writes David Roberts: http://bit.ly/9b58Eg

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams.

By Ezra Klein  | November 15, 2010; 6:46 AM ET
Categories:  Wonkbook  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Why bipartisan health-care reform has proven impossible
Next: D.C.'s taxi drivers supported Vince Gray -- and now they want payback

Comments

The Oil Spill Liability Trust Fund

On October 18, 2010, The Donovan Law Group sent a letter to the Honorable Janet Napolitano, Secretary of the Department of Homeland Security, asking the Secretary to immediately request the Attorney General, pursuant to 33 U.S.C. § 2715, to commence an action against BP on behalf of the Oil Spill Liability Trust Fund (the “Fund”) to recover any compensation paid by the Fund to any claimant pursuant to OPA.

To read the full text of the letter, visit:

http://donovanlawgroup.wordpress.com/2010/10/29/bp-oil-spill-letter-requests-secretary-napolitano-to-take-action/

Posted by: brianjdonovan | November 15, 2010 7:41 AM | Report abuse

The Oil Spill Liability Trust Fund

On October 18, 2010, The Donovan Law Group sent a letter to the Honorable Janet Napolitano, Secretary of the Department of Homeland Security, asking the Secretary to immediately request the Attorney General, pursuant to 33 U.S.C. § 2715, to commence an action against BP on behalf of the Oil Spill Liability Trust Fund (the “Fund”) to recover any compensation paid by the Fund to any claimant pursuant to OPA.

To read the full text of the letter, visit:

http://donovanlawgroup.wordpress.com/2010/10/29/bp-oil-spill-letter-requests-secretary-napolitano-to-take-action/

Posted by: brianjdonovan | November 15, 2010 7:48 AM | Report abuse

Why do pundits always try to make the Affordable Care Act opposition from old folks a case of greediness and "I got mine"? Why not understand that so many old folks were lied to and are really afraid that the Act will deprive them of the little they do have? Our retirees are constantly lied to by Republicans, and are credulous enough to believe that their Republican representative would not lie to them. This really is a sad case of the failure of public education and a lying mainstream media. To try to turn it into a generational war is part of the overarching right wing meme factory, pitting the middle class against the poor, the young against the old, small business owners against their employees, men against women, on and on, all to the benefit of the rich.

Posted by: carolcarre | November 15, 2010 7:59 AM | Report abuse

EK:

Too much stuff for one column it's like a full Halloween candy bag.

"Only 4 percent of voters want the new Congress to prioritize deficit reduction: http://bit.ly/bCTlMO"

Based on exit night polling from 2008, only 8% of voters wanted to prioritize health care reform. You see where that got us.


"Junior Democrats in the Senate are pushing ahead with filibuster reform, reports J. Taylor Rushing"

Robert Byrd says "Over my cold dead body"


"The Bowles-Simpson deficit plan has prompted debate over the mortgage interest deduction, reports David Kocieniewski"

Among wonks maybe, the rest of us know this could never happen.

"The Fed's plan will not lead to runaway inflation, writes Alan Blinder"

and cigarettes do not cause cancer. Hopefully Alan Blinder will be having this debate with his gas station attendant while the guy is pumping $3.50 a gallon gas into Blinder's car by summer 2011. That's just the low estimate. As long as the Fed is looking at core inflation and not real inflation, get ready for double digit inflation. Need more proof? QE2 should have lowered Treasury yields which instead have risen because all the non-governmental buyers know that inlfation is coming big time.


"The solar energy market is growing more competitive:"

You picked out the wrong headline from the story. The one that matters is this:

"Asian makers own about half of the German market for solar modules, by far the world’s biggest, as they offer products at a discount of 10 percent to 20, percent compared with their European peers."

So if you thought that we are currently beholden to "foreign oil", you'll be a little confused why we have replaced one overlord with a much bigger meaner and better organized overlord!

Posted by: 54465446 | November 15, 2010 8:47 AM | Report abuse

This headline is unfathomably stupid. Just because voters don't put the deficit first on the list of things to act on right now does not mean that they don't care about deficits. I care deeply about the deficit and believe that it is the most important long-term issue, but I think jobs and the economy are the most pressing, near-term issue. Also, improving the job situation, righting the economy, and fixing a broken health care system are essential to fixing the deficit.

Also, before they raise taxes one dime I think Congress needs to fix a broken and corrupt legislative system and cut spending...then, once the public is confident that taxes are not just being poured down a rat hole, you can raise taxes to support those programs that people find worthwhile.

Posted by: wireknob | November 15, 2010 8:55 AM | Report abuse

carolcarre:

But it really IS the old versus the young.

If you are old enough to remember, in 1980 when Reagan ran for President, a huge deal was made about his age 69. If he was making that run for the Senate today, he would be only the 29th oldest Senator, and would have been the 31st but for the deaths of Kennedy and Byrd.

Try to pass any radical reform with people whose fondest childhood memories are collecting cans for scrap metal drives in WWII.

The average age of both Signers of the Declaration and the delegates to the constitutional Convention was early to mid forties.

Posted by: 54465446 | November 15, 2010 8:59 AM | Report abuse

"Here's the dirty little secret that Washington's politicians know but its elites want to deny: Voters don't really care about the deficit. And don't take it from me. Take it from them: A CBS News poll found that only four percent want the new Congress to put deficit reduction first."

Voters don't see the deficit as the most immediate problem.

I don't think you can draw the conclusion that voters don't care about the deficit from the question of what the new Congress should focus on doing 'first'. Granted the American people seem to want lots of goodies without paying for them, but I think (hope) support for deficit reduction is much higher than 4%.

"And think Democrats' traction against the tax cuts for the rich represent deficit concerns? I don't. It's about class resentments, particularly the feeling middle-class folks have that the wealthy have gotten too much in recent years."

So basically, the Democrats' attack on the Bush tax cuts is pure demagoguery.

The bailouts are surely part of the problem here, admittedly. Getting back to isonomy might do a world of good here.

http://theunbrokenwindow.com/2010/11/13/word-of-the-day/

Posted by: justin84 | November 15, 2010 9:23 AM | Report abuse

first off welcome back Ezra.

I'll start off by saying you're tagline on Mass. healthcare is more than misleading.

You wrote:


Massachusetts' health care reform has worked at cutting hospital costs, writes Tony Dokoupil:

Uh, no he didn't and no it hasn't. What the article states (also within a link to the actual study i might add is that:

But despite an influx of patients, total hospital costs haven’t grown more than usual


So basically a horrible problem hasn't gotten worse. I guess some can look at that as a positive but now everyone involved has to look to find ways to fix some of the highest healthcare costs in the country.

Posted by: visionbrkr | November 15, 2010 9:23 AM | Report abuse

"Why do pundits always try to make the Affordable Care Act opposition from old folks a case of greediness and "I got mine"? Why not understand that so many old folks were lied to and are really afraid that the Act will deprive them of the little they do have?""

Well, because it is a case of "greediness" and "I've got mine".

Opposition to ACA was high amongst the elderly, and yet the elderly strongly support their own handouts. Being unwilling to support handouts for others because of the possibility of cuts to their handouts unfortunately fits with the "greedy elderly have theirs" theme.

It would be one thing if the elderly opposed entitlement programs on principle, but no, they only oppose those which threaten their own handouts.

By the way, what is meant by "the little they do have"?

Think about programs that send lots of benefits to the elderly (from OMB FY2011 budget, 2010 estimated values):

Social Security: $721.5 billion
Veterans Affairs: $124.7 billion
Medicare: $457.2 billion
Medicaid: $335.2 billion

Assuming the elderly receive 80% of Social Security, 95% of Medicare and 25% of Medicaid, that is about $1.1 trillion. There are about 38 million elderly Americans (65+)? That's almost $29,000 per capita, or $58,000 for a married elderly couple.

I'll grant that some of the health care dollars are wasted due to fraud, so maybe the total benefits actually received is really $26,000 or $27,000 per person, but any way you slice it, the elderly receive quite a lot.

Posted by: justin84 | November 15, 2010 9:46 AM | Report abuse

"QE2 should have lowered Treasury yields which instead have risen because all the non-governmental buyers know that inlfation is coming big time."

54465446,

Only if QE2 were ineffective would it lower treasury yields. Of course, treasury yields might also rise if QE2 is ineffective.

I see four theoretical possibilities for QE2:

- QE2 adds more dollars to the economy but they are hoarded. There is no effect on inflation or economic growth, but increased demand for treasuries lowers treasury yields. The evidence suggests that this outcome did not occur.

- QE2 adds more dollars to the economy, but those dollars tend to inflate asset and commodity prices rather than increase real activity. Treasury yields rise as inflation expectations rise, and more importantly current holders of treasuries shift into the asset classes expected to benefit from inflation.

- QE2 adds more dollars to the economy, increasing total spending and shifting the demand curve to the right per an Econ 101 AD/AS diagram. Treasury yields rise due to not only higher inflation expectations and a shift into other assets, but also because an expectation of stronger economic growth lifts the wicksellian real interest rate (an increase in planned investment spending, which lifts the equilibrium real interest rate for any given supply of funds). The influx of dollars are invested in the wrong projects (Austrian style malinvestment, e.g. housing bubble), and while there is temporary propserity, there is eventually another crash. Worst outcome.

- QE2 adds more dollars to the economy, increasing total spending and shifting the demand curve to the right per an Econ 101 AD/AS diagram, the same as possibility three but we avoid a malinvestment problem (neoclassical expectation).

Clearly I hope the neoclassicals are right but honestly I have no idea whether 2, 3 or 4 is what will happen.

I think that the best option for the Fed to set a target level of NGDP. That would be effectively QE2 but it wouldn't let long-term inflation expectations ignite. Also, it would allow us to directly test several hypotheses:

1) Is monetary stimulus effective?

2) Can the Fed more or less hit its NGDP targets?

3) If the Fed can target NGDP, does a sudden surge in NGDP after a deep recession necessarily translate into a surge in RGDP?

Over a much longer time horizon:

4) Can the Fed target NGDP in such a way as to extend what is known as the great moderation indefinitely (either no recessions or occasional mild recessions)?

A major virtue of NGDP targeting is that other than setting a target for nominal expenditure, there is no discretion for the Fed.

Another virtue of NGDP targeting - if it works - would be that you could set a low positive value for the target (say 3% NGDP growth) that is so close to the RGDP growth trend that inflation is largely eliminated.

Finally, if it fails I think we can ditch the concept of stimulus altogether.

Posted by: justin84 | November 15, 2010 10:34 AM | Report abuse

"class resentment?" Well, Ezra, we have a good idea of which classes you belong to--the priviledged, the entitled, and the Very Serious People!

Posted by: kmblue | November 15, 2010 11:09 AM | Report abuse

Ezra- I agree with your prediction that Congress will pass legislation to increase the defict over the next 2 years. I am willing to bet Crown Candy Malts (from Saint Louis MO) to any of my friends.

I just need some stats and graphs now that can help me keep track of this over the next 2 years. Do you have any tips?

Posted by: philpires | November 15, 2010 11:11 AM | Report abuse

justin wrote:

"Only if QE2 were ineffective would it lower treasury yields. Of course, treasury yields might also rise if QE2 is ineffective."

Oh now don't go all economist on me at this point!

Posted by: 54465446 | November 15, 2010 11:38 AM | Report abuse

justin:

Here is the classical argument for QE2 as stated by Gregory Ip in this weekends "5 myths" column:

"The Fed is trying to stimulate spending, but not by showering people with newly minted dollars. Rather, when the Fed buys bonds, it pushes their prices up and their yields down"

As I stated in my post to him, that ONLY occurs if all other things remain the same. If non-governmental buyers leave the market, yields will go up not down, as they have done,(or QE2 will have to be followed with QE3, etc. to make up for departing buyers) because buyers are not foolish enough to believe in the fariy tale of core inflation.

Posted by: 54465446 | November 15, 2010 11:45 AM | Report abuse

Thanks for all the feedback telling me I really am a greedy geezer. Justin84's answer was an exercise on how to lie with statistics.

Average Soc Sec benefit: $1072/month, 12864 a year, out of which approx $1200 goes to pay for Medicare part D. Average Medicare benefit (these numbers are greatly inflated due to extraordinary end of life measures) $11,743. Total average benefit (once again, not really a good measure due to conflating of all medical costs into one average):
$12864-1200+11743=$23,407.

If you are trying to live on $1072 a month, EVEN IF YOUR MEDICAL BILLS ARE PARTIALLY PAID, you are living on the edge.

Once again, it isn't greedy old geezers, but frightened old geezers. And once again, the respondents prove my point: let the wealthy set generation against generation, and distract them with memes, and you CAN KEEP THEM FROM PAYING ATTENTION TO THE REAL PROBLEMS due to the growing inequality in our society. Money now can buy anything, and the persons with the most can make policymakers dance to their tune, while distracting the middle class, the small business people, and all generations from by pitting them against each other.

Posted by: carolcarre | November 15, 2010 12:01 PM | Report abuse

Ezra...

Who freaking cares how voters feel about deficit reduction. You know as well as I do that the country is on the verge of insolvency...we can not continue to charge to our children's credit card! Does the Democratic Party hate our children?

If you had any shred of dignity you would explain to your readers how dire the situation really is. How the current federal budget which spends $50,000 per year per US family is unsustainable. Explain to readers that they are unlikely to improve their standard of living by sending more money to Washington. Either give your readers the facts or explain to them what your real agenda is!

Posted by: ELF2 | November 15, 2010 12:50 PM | Report abuse

"Thanks for all the feedback telling me I really am a greedy geezer."

Maybe not you in particular - perhaps you supported the ACA. Or perhaps you don't support handouts for seniors. I was speaking in broad terms.

"Justin84's answer was an exercise on how to lie with statistics."

Lying? Yikes! Let us look further.

"Average Soc Sec benefit: $1072/month, 12864 a year, out of which approx $1200 goes to pay for Medicare part D. Average Medicare benefit (these numbers are greatly inflated due to extraordinary end of life measures) $11,743."

I would argue the average amount spent is the true worth of the program. Would you be willing to accept $11,743 each year from the government, at a cost of no access to Medicare? I doubt most seniors would.

"Total average benefit (once again, not really a good measure due to conflating of all medical costs into one average):
$12864-1200+11743=$23,407."

If you add back in the Medicaid benefits the elderly often receive (which I note that you conveniently exclude despite my prior mention of it) you get right back to where I was, a value in the high $20,000s. That's real money.

I'm not sure on what basis you claim the total average cost isn't a good measure of the benefits seniors receive. Sure, it will be lower in some years for any given senior, but in other years it will be far higher and over time it will average out.

"If you are trying to live on $1072 a month, EVEN IF YOUR MEDICAL BILLS ARE PARTIALLY PAID, you are living on the edge."

I agree you aren't livinig fantastically well, but the fact remains that you are costing your fellow citizens nearly $30,000 a year, and that cost goes up each and every year. Meanwhile, seniors were balking at providing perhaps 1/4 of what they enjoy to younger generations - often times people too young to have any significant savings - because they were afraid of losing a small slice of their own benefits.

By the way, the above comment also assumes an elderly beneficially who spent about 50 years of their life failing to generate any savings at all. With few exceptions, that would be a failure on the part of that particular person, not on the taxpayer for not providing even more.

Posted by: justin84 | November 15, 2010 2:03 PM | Report abuse

"Oh now don't go all economist on me at this point!"

54465446,

It is a different type of ineffectiveness to be sure.

Lower yields mean complete ineffectiveness - all the Fed succeeded in doing was buying bonds, with no impact on inflation or real economic activity.

QE2 might fail even if yields rise, for reasons we have both outlined (basically, money funding asset/commodity inflation and/or creating malinvestment).

However, one downside of QE2 is that by targeting a certain number of bond purchases rather than an economic variable, we can never know if it actually worked - only if it failed terribly. If GDP grows by 3.5% with 2.5% inflation, we can't really say what would have happend had QE2 not been tried. Conversely, if the Fed targets nominal GDP growth of 9% for 2011, we can see if the Fed gets anywhere near that value. Then, if we get 9% NGDP growth, we can see whether it was 6% real growth and 3% inflation, or 3% real growth and 6% inflation.

Posted by: justin84 | November 15, 2010 2:11 PM | Report abuse

Those that do mock liberals for the large deficit have no real knowledge of the deficit but yell and scream b/c right-wing blogs tell them to and Fox News fear mongers

It really is that simple

Posted by: Bious | November 15, 2010 2:31 PM | Report abuse

justin:

I'm more on the side of your 3% real growth and 6% inflation projection.

But let's not worry about that now, because the shorting Treasuries and long the dollar trade is still holding up well! LOL

Shorting Treasuries should be a lucrative trade for some time to come. I getting worried about being long the dollar because I know it's a side effect of the Irish instability, among a few others. When they broker a deal for a pre-arranged default among Greece, Ireland and perhaps Portugal. I want to be long gone by then.

The aleternative was brought up by the portugese finance minister in a Financial Times article today.

“This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely. It is not because markets consider we have similar situations. They are only similar in what concerns markets, but as I said they are very different.

“Markets look at these economies together because we are all in this together in the eurozone, but probably they could look different if we were not in the eurozone. Suppose we were not in the eurozone, the risk of the contagion could be lower.”

Geez if they break up the euro, or dump some of the countries, a lot of my research has gone down the drain.

I know your not a currency guy per se, so consider this a random thought out loud.

Posted by: 54465446 | November 15, 2010 2:57 PM | Report abuse

"I'm more on the side of your 3% real growth and 6% inflation projection."

It could well turn out that way, but I think it's worth a try.

Either monetary stimulus is effective, or we'll know with some real certainty that monetary stimulus isn't effective.

If monetary stimulus is effective, well then that's great - we can keep the economy on a stable growth trajetory, which generally leads the public to be in favor of liberal (in the classical sense) economic policy.

If monetary stimulus isn't effective, we'll have a great example to point to. Furthermore, I think the failure of new dollars created out of thin air to increase real economic activity will give any serious person who supports fiscal stimulus - which is merely the shifting of existing dollars - pause.

"I know your not a currency guy per se, so consider this a random thought out loud."

Yeah, I'm not really a currency guy. That said, I think that if the Fed targeted a nominal GDP growth path of 3%, level targeting starting from 2007Q4, the dollar would soar like a rocket. That would commit the Fed to ~8% nominal growth during each quarter of 2011, and then 3% thereafter. If this type of targeting is effective and credible, it means very low long run inflation provided long run growth holds up.

Posted by: justin84 | November 15, 2010 3:40 PM | Report abuse

justin:

What I like about you is that underneath the numbers, you're an optimist. If Bernanke can fine tune it as well as you suggest, wow.

I'm in a puzzle today The 10 year yield took off upwards again today at about 1:00. No auctions but more worries I suppose.

Even though I'm making a lot of money on this trade, it worries the hell out of me from an economic perspective. With the 10 year yield aprroaching 3.00 (2.91 as I write this), mortgage rates will start kicking the hell out of the economy soon.

Posted by: 54465446 | November 15, 2010 3:50 PM | Report abuse

"What I like about you is that underneath the numbers, you're an optimist. If Bernanke can fine tune it as well as you suggest, wow."

On the emprical side, I note that there is a very strong correlation between when a country left the gold standard (initiated inflationary monetary policy) and when the Great Depression ended. I think there is strong evidence that money isn't entirely neutral.

As for fine tuning, I don't believe Bernanke can fine tune by himself, but I think the Fed can react to expectations.

Suppose the Fed targets 8% nominal growth over the course of the year. If the first quarter of the year come in at 6% nominal growth, the market starts to doubt the Fed will hit its target, and growth expectations fall - prompting more easing until market expectations are back at 8%. If the second quarter comes in at 10%, the market might be at ease and consider the Fed to have made up for the past quarter's undershoot. If the second quarter comes in at 4%, the market strongly doubts that the Fed will hit its target, and it will take a massive amount of monetary easing in order to change the market's expectation.

Targeting the market's expectation seems to be the key to the whole enterprise. Bernanke doesn't know how much money the economy needs, but provides enough money so that the market believes the economy has enough to hit the nominal growth target.

If it works, it has the virtue of eliminating the dual mandate problem. We don't have to wonder if the Fed is fighting inflation or unemployment - the Fed is going to keep nominal spending expectations on track, always.

I have no idea if it will work. I put the odds at 50/50 for lack of any data as its never been tried. But what I do know is that if it does work, then that's great news. And if it doesn't, that's great as well (just not as great) because the precise targets allows for hypothesis testing, and we don't have to try again if it fails.

This economist has been talking about it for years and is fairly convincing, although again without a test we really won't know. Since we're doing QE2 anyway, we might as well structure it so that we can see if it really works as intended.

http://www.themoneyillusion.com/?p=4525

Posted by: justin84 | November 15, 2010 5:53 PM | Report abuse


Mortgage refinancing means re-funding the mortgage loan with better terms as well as conditions, most likely from a different lender. It is one way to save money. Search online for "123 Mortgage Refinance" they found me 3.1% refinance rate and also gave free analysis of my mortgage.

Posted by: wilsonle | November 16, 2010 2:44 AM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company