A Public Option: the Left's Waterloo?

Wednesday, August 19, AD 2009

Blackadder has had a couple very interesting posts lately arguing that a public health insurance program wouldn’t sound the death-knell to private insurance companies (and hence competition for the consumer) which many have been arguing it would.

What I find interesting is the vehemence of the left regarding a public option… consider this quote from a WaPo story today:

Continue reading...

12 Responses to A Public Option: the Left's Waterloo?

  • One wonders how many of the people now loudly insisting that a public option is essential to health care reform had even heard of the idea a year ago.

  • Chris,

    At the same time, we find in the same article indications that the GOP’s strategy is yet again merely to try to take down ObamaCare without proposing a real alternative… Sen. Kyl from Arizona and Rep. Price from Georgia both offer comments critical of the co-op proposal, but offer nothing as an alternative strategy. Perhaps this is just the WaPo reporter leaving them out, but I have my doubts.

    You’re simply repeating the left’s talking point that the Republican’s don’t offer alternative reforms. The Republicans have offered numerous times reforms which have been defeated by Democrats at every turn.

    – tort reform!
    – allowing individuals to deduct their private health care premiums
    – allowing small businesses to pool across state lines to purchase health insurance for their employees

    John McCain’s health care proposal included eliminating the employer deduction in favor of an individual tax credit, this would eliminate the majority of “previous condition” issues because people would not lose their coverage if they lose their job.

    At the current time, due to Democrat majorities in both houses the Republicans can not bring any of these proposals to the floor, and the media is not cooperating in getting them out to the public.

  • Fair enough, Matt. I guess I’d like to see a more coordinated communications strategy on the part of the GOP, then, to get their word out. If the media isn’t cooperating… go around them. It’s not impossible.

  • Chris,

    Fair enough, Matt. I guess I’d like to see a more coordinated communications strategy on the part of the GOP, then, to get their word out. If the media isn’t cooperating… go around them. It’s not impossible.

    I agree, if we don’t figure out how to do this, we will fail, regardless of unfairness.

  • Obama appears to be stuck. He wants to jettison the public option portion of his health care plan out of (legitimate) concern that it could bring down the entire bill. It appears, however, that the more left-wing Democrats won’t vote for a bill without a public option.

    I’m not really in the business of helping Obama out. However, it might be interesting to see what sort of concessions he would be willing to make in order to garner Republican support for a public plan. Suppose, for example, that the health care bill kept a public option but was altered to include some or all of the reform items Matt mentioned above. Wouldn’t such a bill be preferable to the status quo?

  • BA,

    Wouldn’t such a bill be preferable to the status quo?

    I’d still be concerned by a lot of the other interventions in the existing bill. Also, it seems like the trade-off from a “public” option would be a “co-op” option, which is funded by the government and controlled by the government as a sort of trojan horse government option.

  • As a tangent. The “Death Panels” were supposed to be a figment of the right’s imagination. I wonder how that plays given this:

    http://online.wsj.com/article/SB10001424052970204683204574358590107981718.html

  • It’s certainly interesting to see how firmly the left has latched on to the fairly anemic public option in the current plan.

    I wonder if some of this is that the second half of the 20th century wasn’t exactly kind to collectivist-minded idealogues. The ideas of Smith turned out to be a lot better at creating liveable societies than those of Marx. But health care has, to many, remained the one area in which people can convince themselves “market bad, centralized planning good”. As such, having the government provide health care has an appeal to partisan Democrats out of proportion to the amount of good that a particular program is likely to do.

  • One thing that bothers me is that all the fuss over the public option has allowed the abortion provision in the bill to go unchallenged. As Catholics are we really more concerned about the economic implications of the bill vs its deadly intent to fund infanticide?

  • Fr. Charlie,

    I thunk you’re mistaken, the outrage over the government No private or blocked number calls please takeover is multifaceted and it include opposition to taxpayer funding of abortion, and coercive euthanasia. I don’t think there’s a shortage of vocal opposition to any of these aspects.

    All of these elements are a natural extension of the government takeover. Even if hey weren’t mentioned in the law they would become enshrined in practice. That’s part of the reason Catholics should oppose any government takeover.

  • er.. think.

  • I would like to think you are right Matt, but I don’t know. While the Ins. companies need some serious regulation, I am totally opposed to a govt. run health care system. But at the end of the day, I can live with almost anything except publically-funded abortion and euthanasia. The “death-panel” campaign may have protected us on the latter, but besides the US Bishops Conf, I hear almost nothing in the public debate about abortion. What I am saying is that some of the energy needs to go into exposing what this bill will do to the unborn.

Party of God/Party of Satan?

Monday, June 22, AD 2009

I am not interested in having future fruitless arguments over whether or not the Republican or Democratic Party is pure evil or not. It is like the old canard comparing some contemporary American politician to Adolf Hitler- it is a deal-breaker. I am one who believes that truth in politics is pretty spread out among the various major and minor political parties- there are some huge moral gaps in all, so the choice of party for me is not based on trying to find the perfect Party of God here in America.

Continue reading...

12 Responses to Party of God/Party of Satan?

  • …but I also don’t believe that the mainstream Republican strategy of framing abortion rights as a state’s rights question is a legitimate pro-life solution.

    Hardly a fair assessment of the Republican strategy. The Republican platform calls for a Constitutional amendment to protect the right to life of the unborn from the moment of conception.

    Good luck with your project of bringing the Democrats around on the abortion issue, really.

  • Paul- three quick points- first thanks for the good will to wish me luck- prayers will do even better!

    Second- I am aware of the official platform, but to be honest I don’t think these platforms really drive the operations in the parties- they are nice and symbolic, and if I had seen the kind of energy from the national Republican leaders to push for such an Amendment during the 8 years of the Bush Admin, my heart might have been won over- but alas- it seems that all I hear from the actual candidates and reps during elections is that they have their personal beliefs about abortion being wrong, but really all they intend is to send it back to the states to decide- taking the Scalia/Thomas road to pro-State’s Rights, not natural law/pro-life. So, yes it is a few hairs more than the Democratic sell-out of the unborn, but it doesn’t cut it if we want to make the right to life a universal human right someday. There is sometimes a tyranny in popular opinion- and right now abortion is something that requires national leaders to take up their godly role, not pass the buck. Again, I am convinced that many of my friends who support the State’s rights approach to abortion are genuine in their position- they don’t see a way clear to what I propose without undermining the Rule of Law- I respect their reasoning, but I don’t accept it. What I propose will require a big turnaround inside the Democratic Party, which is why I am focusing my energies there. I will leave the Republican CAtholics to do the heavy lifting inside their chosen party. The big point in this submission is simply to say that there can be no debate or common ground if one is simply to assert that the Democratic or Republican parties are just pure evil and anyone associating or working within one or the other major Parties is in grave sin. That is the only point of no return for me when it comes to having a dialogue. I don’t view the parties as hopeless, just major basket cases- if I decide to break with the Dems it will be to go and try to form a Natural Law/Common Good Party- but right now that seems like a strategy that would give me pleasure, but I’m not convinced it would actually help reform American politics to help on the major issues of my discontent.

  • Great post. I agree with a good bit of it. I am really glad that certain people are not in charge of RCIA programs. One gets a sense that Republicans would have to repent in public of many supposed sins before being allowed to enter 🙂

    I am hoping the Church (in all its facets) does a better job of engaging both major parties

  • …if I had seen the kind of energy from the national Republican leaders to push for such an Amendment during the 8 years of the Bush Admin, my heart might have been won over- but alas- it seems that all I hear from the actual candidates and reps during elections is that they have their personal beliefs about abortion being wrong, but really all they intend is to send it back to the states to decide…

    Here, I wish I could contradict you, but I can’t. I share your frustration, the moreso because I am a Republican. So many missed opportunities.

    The only solution I can see is to find more pro-life candidates at every level of government; which is why I am running for the Illinois legislature.

  • I suspect the GOP would push it if the average pro-lifer in the pews would push it more.

    I mean I rarely hear about it.

  • “Good luck with your project of bringing the Democrats around on the abortion issue, really.”

    That’s precisely the problem. “Good luck with YOUR project.” Why is it only OUR project? Call me an idealist, but I thought we were in this together and I hardly see how we’re going to get that constitutional amendment, overturn Roe v. Wade, or get any federal pro-life legislation without the Democrats who are pro-life. Even with the GOP control of Congress, no pro-life legislation has ever passed without the 40 or so pro-life Democrats who get on board.

    I’m not justifying the actions or cowardliness that many pro-life Democrats have taken. But it seems that hardly any can rise because the funding isn’t there nor is the support.

    If I ran for office right now, health care and environmental lobbies won’t give me funding because I’m pro-life. Pro-life groups won’t give me funding because I’m a Democrat. In a Democratic primary, pro-choice groups and Democratic groups will back my opponent(s) and I would be outspent terribly.

    The problem for pro-life Democrats is not the general election. It seems that to me, a pro-life Democrat more often than not beats a Republican and solidly too. It is not the general that we have to worry about. We have to survive primaries and the party machine is set up in such a way that, that is an enormous, almost insurmountable task. What’s even worse is those who should be our true allies, don’t support us. And I’m not talking pseudo-pro-life Democrats — Joe Biden, Bill Clinton, Jesse Jackson etc — I’m talking the Robert Caseys who don’t quite get into the game, like Mr. Shipe here.

    I’m not all too sure if there’s ever really a second glance at a Democrats’ pro-life credentials once you see the “(D)” after his or her name. Maybe I’m wrong. I pray I am. But this “buck your party” and “then give us a call” business is beyond unfair.

    For every missed Republican opportunity, for every time the GOP machine has taken advantage of pro-lifers, or has failed on its promises, I would love to see a swarm of angry letters in the mail to Congress or a threat to not vote for them. But, oh….we can’t. If we vote against them, we get the opposition which is rabidly pro-abortion. So we’re locked in the box with no one to vote for except for the GOP…and they’re going to give this strategy up, why? For justice? I think that’s delusional. Sure, there are some sincere pro-life Republicans, but I don’t think the machine is selling the votes anytime soon.

    So if I can ask myself as a pro-life Democrat, why should I vote eagerly for the party establishment if they will not even consider my views? If the Democratic machine knew it could get my vote no matter what positions they took, they would have no reason to change it. In the same way, if the GOP does in fact take advantage of pro-life votes, if it does in fact pay “lip service” to the unborn and do minimal work to end abortion, then in fact, why sell your vote to an establishment that is at best lukewarm? I’m not saying vote for a pro-choice opponent. Vote for a different candidate in the primaries, at least abstain from voting for one (or however many) on the ballot, or at least raise awareness about that candidate. I don’t see the party getting more serious unless something is done.

    I hardly see as much energy spent at developing and maintaining real energy on abortion than I see on other issues and throwing the word “socialism” around. Like Mr. Shipe, had I seen one bill like the Right to Life Act or fetus-personhood bill, even make it off of committee for a vote I’d be in a different party. The Democrats are using the “reconciliation process” so that they ONLY need 50 votes to get a health care bill through the Senate. Why could the Republicans have not done that? I don’t see half the energy in fighting it than I do in talking about it or pointing to the failures of those on the other side. And this is hardly the point of pro-life Republican criticism.

    Again and again, we are told vote for “pro-life candidates.” Why is it then, there seems to be a distinction? It often strikes me as unspoken or perhaps unrealized. “Pro-life candidates” are Republicans. There is a distinction made for “Pro-life Democratic candidates” as if they were a whole and separate category.

    So, the project of voting for pro-life Republicans is an obligation to the unborn (one of which I am not disputing). But the possibility of crossing partylines to help gain a broader pro-life coalition across parties is not an obligation. It is a problem only for pro-life Democrats to worry about. The solidarity seems to break down here.

    How many pro-life Democrats have positions of leadership or head committees? The problem is, as long as they are the “freshman” and can’t form a meaningful coalition, the pro-abortion majority won’t see any reason to take them seriously.

    This isn’t helped by pro-life Democrats without so much as a blink voting for pro-abortion candidates. However, neither are we helped by those from the other side who wouldn’t so much as lift a finger.

    We talk about double standards a lot in politics. Is this not a double standard?

    Forgive me here, but at least I can acknowledge and blatantly point out the obvious failures of pro-life Democrats. We have some serious issues that need to be worked out. However, I sure as hell don’t think we’re the party that is going to end abortion. I don’t think Republicans will end abortion. Pro-life American people will end abortion.

    Pro-choice Americans are marching in lock-step. The pro-life house is divided against itself. Can we not find some consensus on this? Lord, Have Mercy On Us.

  • Just a few points here, Eric…

    That’s precisely the problem. “Good luck with YOUR project.” Why is it only OUR project?

    Because I’m a Republican; I have no capacity to reform the Democratic Party. I’m working on the reform of the GOP. Race you?

    It seems that to me, a pro-life Democrat more often than not beats a Republican and solidly too.

    That’s because so many people assume that the “pro-life” Democrat doesn’t really mean it. Does the name Bob Casey, Jr., ring a bell?

    I’m not all too sure if there’s ever really a second glance at a Democrats’ pro-life credentials once you see the “(D)” after his or her name. Maybe I’m wrong.

    And maybe you’re not. When I see the “D” after a name, I want to know what’s wrong with a person’s pro-life sensibilities that they would be part of the party of Barack Obama, Hillary Clinton, Nancy Pelosi, Joe Biden, Kathleen Sebelius, and the rest of the crowd who lie about abortion and about pro-lifers in order to keep abortion money coming in. My suspicion is, I think, understandable.

    But, oh….we can’t. If we vote against them, we get the opposition. So we’re locked in the box with no one to vote for except for the GOP…and they’re going to give this strategy up, why?

    And the Democratic Party is going to make a home for these disappointed pro-life voters… when?

    Both parties are becoming increasingly pro-abortion. The GOP can only abandon the pro-life issue because the Democrats did so long ago.

    But the possibility of crossing partylines to help gain a broader pro-life coalition across parties is not an obligation. It is a problem only for pro-life Democrats to worry about. The solidarity seems to break down here.

    In my area, my state rep is a pro-abort Republican. If the Democrats were to put up a pro-life opponent, I would support that candidate. But last year, they ran no one in the primary, and slated a pro-choice accountant for the general, whom the incumbent succeeding in getting removed from the ballot on a technicality.

    But let the Dems offer me a real choice, and I’ll take a good look.

    This year, with no rumors of an opponent in the (Feb. 2010) primary, I have entered the race myself, unprepared and inadequate though I may be.

    We talk about double standards a lot in politics. Is this not a double standard?

    Not that I can see. I want the best pro-life candidate I can find. After that, I want the candidate I think is best on other issues, too. A pro-life Democrat isn’t likely to get my vote over a pro-life Republican.

    I personally have never seen a ballot that had a pro-life Democrat against a pro-choice Republican. I suspect that pro-life Dems run against pro-life Republicans for purely partisan reasons. I rarely see much Democratic opposition to pro-choice Republicans.

  • Paul,

    Together, we uphold the status quo quite nicely.

    I’m a Democrat because I feel profoundly that God wants to me sitting at a table with particular sinners for a particular reason–warring that sin as an “enemy from within.”

    I never imagined it would be easy or simple. I didn’t even think it would come without suspicion from others who disagree with me. I doubt that’s avoidable in this life.

    The more I think about it, the more I think I’m meant to do it. In fact, what convinces me that it is my vocation is that it scares the daylights out of me. The media will love the election of a homosexual Catholic who opposes same-sex marriage, civil unions, domestic partnership, gay adoption, etc etc.

    So, indeed, Paul. Race you.

    I’ll continue to profoundly disagree with you on this, as on other matters (obviously).

    Good luck with your campaign. I’ll pray for you and probably, sooner rather than later, I’ll help fund it.

  • Thanks Eric, I’ll say a Hail Mary for you too.

  • One problem we have Eric is Democrats who run as pro-lifers and who then convert to the pro-abort cause after they get elected. Believe it or not, Dick Durbin, pro-abort Senator from my state, ran as a pro-lifer to win a congressional seat from Paul Findley, a Republican pro-abort. Durbin received a huge amount of support from pro-life Republicans around Illinois, and I have no doubt that Durbin would not have been elected in downstate Springfield without that support.
    http://www.illinoisfamily.org/informed/contentview.asp?c=27439

    Enough Democrats have pulled this trick to give many pro-lifers concern about the bona fides of a Democrat running as a pro-lifer. It is a shame that this impacts truly pro-life Democrats, but that is the situation.

  • If I held every single Republican politician accountable for my suspicion of a pro-life facade that I generally suspected, I wouldn’t vote for any of them and support third party candidates, or write-in candidates.

  • Eric, how many Republicans can you name that were elected as pro-lifers and then became pro-aborts?

You Mean Running Up Trillions in New Debt May Not Be Good Politics?

Tuesday, June 16, AD 2009

Obama Broke

The Washington Post reported Sunday here, hattip to Instapundit, that the White House is getting nervous about the political fallout from the unprecedented spend-and-borrow binge upon which  Obama has placed the country.

“Results from a Gallup survey released last week show that although more than six in 10 Americans approve of Obama’s overall job performance, fewer than half say they approve of how he is handling the deficit and controlling federal spending. The poll also shows a decline from the previous month in the percentage of Americans who approve of Obama’s handling of the economy, although a majority still does.”

Continue reading...

15 Responses to You Mean Running Up Trillions in New Debt May Not Be Good Politics?

  • There you go again. Donald, do you understand the difference between a cyclical and a structural deficit? Are you aware that the vast majority of the increase in the deficit right now is cyclical?

    Let me ask you: how much of the fiscal turnarond since the last surplus is due to Obama’s discretionary spending? I’m talking from 2001 to 2012, so it captures the medium-term fiscal plans of the Obama administration. Well, 37 percent is the business cycle. 33 percent is discretionary policy under Bush – chiefly tax cuts and war spending. 11 percent comes from the continuing cost of Bush era programs that Obama has kept up (there’s your war again). Obama’s stimulus bill accounts for only 7 percent, and his proposed spending health, education, and energy account for a another 3 percent. [http://vox-nova.com/2009/06/10/blame-bush-and-the-recession/]

    As fiscal expert (and hawk) Alan Auerbach notes, the worst charge you can levy against Obama is that he is not making a concerted effort to fix the sustainability problems left by the Bush administration.

    And these numbers may actually over-estimate the impact of Obama on the budget. As TNR’s Jonathan Chait points out, the Center on Budget and Policy Priorities crunched the numbers, and found that Obama’s budget would reduce the budget by $900 billion over ten years compared with keeping current policies in place [http://blogs.tnr.com/tnr/blogs/the_plank/archive/2009/06/11/the-truth-about-obama-and-the-deficit.aspx]

    But you are right about one thing, Donald– Obama is getting blamed for this because people like you (and I include most political pundits here) simply do not understand the basic fiscal math.

  • Tony, your frantic efforts to provide cover for the completely insane spending policies of the Obama administration indicates to me that the Left in this country will soon be in full melt-down mode by the Fall as the country fully awakens to the disaster of the course on which Obama has embarked the nation. As Robert Samuelson has noted:

    “Let’s see. From 2010 to 2019, Obama projects annual deficits totaling $7.1 trillion; that’s atop the $1.8 trillion deficit for 2009. By 2019, the ratio of publicly held federal debt to gross domestic product (GDP, or the economy) would reach 70 percent, up from 41 percent in 2008. That would be the highest since 1950 (80 percent). The Congressional Budget Office, using less optimistic economic forecasts, raises these estimates. The 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82 percent.

    But wait: Even these totals may be understated. By various estimates, Obama’s health plan might cost $1.2 trillion over a decade; Obama has budgeted only $635 billion. Next, the huge deficits occur despite a pronounced squeeze of defense spending. From 2008 to 2019, total federal spending would rise 75 percent, but defense spending would increase only 17 percent. Unless foreign threats recede, military spending and deficits might both grow.

    Except from crabby Republicans, these astonishing numbers have received little attention — a tribute to Obama’s Zen-like capacity to discourage serious criticism. Everyone’s fixated on the present economic crisis, which explains and justifies big deficits (lost revenue, anti-recession spending) for a few years. Hardly anyone notes that huge deficits continue indefinitely.”

    http://www.realclearmarkets.com/articles/2009/05/barack_obamas_risky_deficit_sp.html

    Contrary to your final statement, people are beginning to understand the basic fiscal math. That is Obama’s problem and yours.

  • the Center on Budget and Policy Priorities crunched the numbers

    That is a small advocacy group which is an auxilliary of the Democratic Congressional Caucus. Their number should not be cited as authoritative.

  • Donald,

    Answer this question: how much of the increase in the deficit over these years is caused by (i) the economy; (ii) the inherited legacy of the Bush years (tax cuts, war, medicare part D); (iii) new policies of the Obama administration? Tell me.

    There’s something else. One reason why the deficit look so high going out is that Obama has gotten rid of all the fiscal gimmicry that made the deficit look artificially low under Bush.

    Here’s Chait: “In recent years, Congress and the president have relied on a series of budget gimmicks to mask the size of the deficit. For instance, they would assume that certain tax breaks would expire starting a year in the future, but routinely extend them a year at a time. According to the Congressional Budget Office’s numbers, Obama’s budget–compared to continuing current policies–would make the deficit $900 billion lower over the next decade.”

    Another issue — you do understand that high deficits does not mean unsustainable deficits, right?

  • Tony, the matterhorn of new debt is all a deliberate policy choice of Obama and all completely unnecessary. He could still attempt to change course. A good start would be to repeal the stimulus package.

  • According to the Congressional Budget Office’s numbers, Obama’s budget–compared to continuing current policies–would make the deficit $900 billion lower over the next decade.”

    So the gimmick-ditching explains $90bn per year. And the rest?

    The stimulus wouldn’t have been remotely as bad had more than 20% of it actually been devoted to infrastructure improvements. Instead, it was an election lottery splurge.

    http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.html

  • IT is a scandal. THe real scandal is that both Republicans democrats did not heed Bush’s call to so something about Social Security. I think it is the height of folly not to take care of that first.

    What is driving the future deficts is not really Bush Spending that in many ways were a samll structural deficit. And it is not Medicare D. It is going to to be the other parts of medicare and such.

    Heck balming anyone for that is ort of silly unless we want to blame Johnson.

  • Not to fear, Obama’s soon to be on Rushmore. (Okay, at least near there.) So all is well.

    http://www.blackhillsportal.com/npps/story.cfm?ID=3078

  • Answer this question: how much of the increase in the deficit over these years is caused by (i) the economy; (ii) the inherited legacy of the Bush years (tax cuts, war, medicare part D); (iii) new policies of the Obama administration? Tell me.

    You may be correct on the factual point. The trouble with your discussion is that the numbers your citing are derived from projections for which the methodology employed is very much a black box. Jonathan Chait is an opinion journalist making use of the product of the Center on Budget and Policy Priorities. The Center on Budget and Policy Priorities appears to have bulked up considerably in the last 25 years (I believe they once employed about 15 people) and unlike other such agencies (e.g. The Century Foundation) does generally employ properly credentialed individuals. Have a look at their site. I think you will look in vain for a refereed academic paper or for a working paper composed in a similar format and idiom. It is a cottage manufactory of press releases and Congressional testimony. Most of their fellows have been recruited from the Democratic legislative staff either of the U.S. Congress or of one or another state legislature. Others were hired off the research staffs of public employee unions. Asking these characters who is responsible for what is very much like asking Democratic members of Congress. That does not mean that they are wrong; however, consulting this source is not an optimal use of your time (or Mr. McClarey’s).

    One problem he only alludes to tangentially and you do not allude to has been the determination of Mr. Geithner (and Mr. Paulson, and various other rogues) to socialize as much as possible the cost of righting the banking system and to effect industrial restructurings so as to serve the interests of Democratic constituency groups. The higher the ratio of public debt to domestic product the more we are in danger of a currency crisis. Given that the propensity to public expenditure tends to explode during banking crises, it is simply awful timing to be attempting to effect what will without a doubt be a notable increase in the baseline of economic activity accounted for by the government’s purchase of goods and services. However, in Washington, in Albany, and in Sacramento, our politicians seem incapable of putting aside for even eighteen months their rancid ambitions and crappy little games to address a national crisis. Joseph Nocera is right, “worst political class, ever”.

  • THe real scandal is that both Republicans democrats did not heed Bush’s call to so something about Social Security.

    Adjusting tax rates, benefit levels, and the retirement age will right Social Security. It is not that difficult; it is that they are too irresponsible and poltroonish to do it.

    More salient, given our current circumstances, is the failure of Congress to heed the recommendations of Gregory Mankiw (the Chairman of Mr. Bush’s Council of Economic Advisors) to address the dodgy accounting practices and undercapitalization of Fannie Mae and Freddie Mac. The individual most responsible for this resistance was Barney Frank.

  • A number of points:

    * There is indeed a long-term fiscal sustainbility problem, but it has nothing to do with social secuity. The beltway talking heads just don’t get this — social security is fine, nearly all of the sustainablity comes from medicare.

    * Medicare is unsustainable because of escalating costs. See Peter Orczag’s editorical in today’s Financial Times. But here’s the rub: medicare costs are out of control because healthcare costs in general are out of control. In fact, medicare does a better than of keeping costs down than its private alternatives, but it’s still not enough. A great fallacy here is that because it’s on the government balance sheet, the sky is falling, but when it’s on the household balance sheet, we don’t have to worry about it. Much of the reason for stagnating median wages is the huge rise in healthcare costs – workers are sacrificing wages for this. So this has nothing to do with Johnson and medicare specifically, it has to do with costs.

    * Yes, the governance problems that led to the undercapitalization of the GSEs was a problem, but it had nothing to do with the financial crisis, which erupted in the private securitization markets. That’s where the vast majority of the credit losses lie, and for a very good reason — subprime loans (those things that triggered the crisis) were nearly all in the private sector.

    * I actually don’t know much about the Center on Budget and Policy Priorities, but their analysis certainly raises no red flags. And if you don’t believe them, then you are at the baase-case scenario whereby Obama contributyed about 10 percent of the deficit, instead of actually reducing it on net. Jon Chait tried to delve into the differing methodologies – it’s all rather technical– one big issue is whetther the tax credits that get renewed pretty much every year, long before Obama, should get pinned on Obama.

  • Yes, the governance problems that led to the undercapitalization of the GSEs was a problem, but it had nothing to do with the financial crisis, which erupted in the private securitization markets. That’s where the vast majority of the credit losses lie, and for a very good reason — subprime loans (those things that triggered the crisis) were nearly all in the private sector.

    Rubbish. The mortgage portfolios of Fannie and Freddie constituted half of the secondary mortgage market and their bond issues constituted about two-thirds of all securitized receivables. The threat to the solvency of institutions comes not merely from subprime and alt-A loans (16% of the total) but from the prime loans of borrowers under water and out of work. It was not until August of 2008 that the national economy began to contract and a disagreeable condition in credit markets turned into a crisis precisely at the time a conservatorship had to be imposed on Fannie and Freddie. A trillion dollars worth of illiquid Fannie and Freddie issues are on the books of depository institutions in this country, and a trillion dollars worth of Fannie and Freddie issues were sold abroad, much of it ending up in the portfolios of sovereign wealth funds in the Far East. It is Fannie and Freddie issues that will (alas) be added to the national debt. It is Fannie and Freddie’s deficits that are being financed to the tune of tens of billions of dollars every quarter.

    Once more with feeling: it is a suboptimal use of your time to consult the work product of the Center on Budget and Policy Priorities, whether you believe them or not. There is so much literature out there from more credible venues, though it might not be sufficiently topical for your purposes. I cannot figure how Jonathan Chait is supposed to produce a ‘rather technical’ discussion when his source is not producing much in the way of technical discussions.

  • Much of the reason for stagnating median wages is the huge rise in healthcare costs – workers are sacrificing wages for this. So this has nothing to do with Johnson and medicare specifically, it has to do with costs.

    You mean the escalation of costs has nothing to do with the socialization of costs. Okey doke.

  • Art Deco — I’m sorry, but your analysis of the subprime crisis could not be more off. The GSEs had a major balance sheet expansion in the 1990s, but this had largely stopped during the “subprime years” of 2004-07. If you look at data from the Fed:

    More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

    Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

    Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

    (http://www.mcclatchydc.com/251/story/53802.html)

    During those years, it was the private investment banks gobbling up securitzied subprime loans, not the GSEs — the GSEs held only a quarter of subprime loans sold on the secondary market.

    Another way to look at it is to see where the bodies are buried – the GSEs account for a tiny proportion (certainly less than 10 percent) of estimated credit losses out there.

    Today, of course, it’s a different story — the private securization market is dead, and the GSEs basically are the market.

  • Subprime loans constituted about 8% of all outstanding mortgage debt as of 2007. It has been a modest part of the overall problem.