Hating Getting What You Ask For

There’s Bruce Bartlett – domestic policy advisor to Reagan and a Treasury Department economist under the first Bush (the one who didn’t pretend to be a cowboy) – Rutgers then Georgetown and then off to work for the eccentric libertarian congressman, Ron Paul. Many positions in government followed, and in 1985 he became a senior fellow at the Heritage Foundation in Washington, where he specialized in tax policy. And now he’s an analyst and historian and a columnist for Forbes. And of course he’s one of those supply-side guys – he wrote the book on it, of Reaganomics: Supply-Side Economics in Action.

You know the deal, eliminate all taxes on the wealthy and corporations, eliminate capital gains taxes, keep wages and benefits and workplace regulation at a minimum, end social services and don’t provide anything like a social safety net, get rid of the laws regulating business and trade in any way – and the economy will thrive and grow in amazing ways. People keep their own money and spend as they will. And yes, with workers living in near poverty and willing to work for next to nothing, just to have a job, demand might be repressed, as those folks cannot can buy much of anything – but it will be amazingly cheap to make things and provide services, and make big money. The idea is to free those who want to make things to make things at little cost, creating a glut of supply – lots of stuff available. We’ll be rich in that way. Demand for all that stuff will take care of itself, somehow. Bartlett makes all of that sound more reasonable, but that’s the general idea.

And he’s serious. He wrote Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy – that self-styled cowboy spent money like a madman, vastly increased the size of government and gave use Medicare Part D, where the elderly with no income didn’t have to buy their own expensive medications or die. Taxpayers got stuck with that. But Bush was supposed to reduce the size of government to the point where it did little at all for anyone, and collected next to no taxes – freeing Americans to do what they damn well pleased, the way it should be. Bush had been a bad boy.

But everyone sooner or later has a change of heart. Bartlett’s new book is The New American Economy: The Failure of Reaganomics and a New Way Forward – “The welfare state isn’t disappearing. And if Republicans continue to try to roll it back the by using tax cuts to ‘starve the beast’ or trying to privatize Social Security and Medicare, they’re history.”

He tells his cohorts to give it up. People want the government that they keep in place to make sure no one is left to die in the streets, or really, that there are some basic services everyone agrees on and agrees to chip in and pay for. And that means taxes, and probably higher taxes. One must make a concession to that reality. You can say people don’t want that stuff – or Real Americans don’t want Social Security and Medicare – but that’s nuts. They do. Just look around. And read Paul Krugman on Republicans and Medicare from Friday, February 12 – all the vows to never cut a penny from Medicare (we’re on your side) and an official position that it should be eliminated entirely (it’s an affront to freedom and no self-respecting person would want a government program to do what they would rather do for themselves). The dual message is absurd. Bartlett understood this earlier. Accept that you can’t have it both ways.

And Bartlett is at it again in his new Forbes column:

For a long time I have maintained that a significant tax increase will be necessary if we are to avoid the fate of Greece, which is in the midst of a fiscal meltdown. If the bankruptcy of a little country like that can cause world financial markets to tank, imagine what a potential U.S. bankruptcy would do to your 401(k).

Whenever I make this point people always complain that I haven’t considered the option of cutting spending. The reason I haven’t is that the magnitude of spending cuts that would be required to prevent the need for higher revenues would be politically impossible to achieve. We saw proof of this when Barack Obama proposed cutting Medicare spending by a small amount to fund health coverage for the uninsured, and the Republican Party’s official position was to oppose any cut for any reason. We saw more proof in how quickly Republican leaders distanced themselves from a detailed budget plan recently put forward by Rep. Paul Ryan of Wisconsin, ranking Republican on the House Budget Committee.

Well, that was curious. They asked the awesome Wisconsin congressman, one of their bright lights, to write their budget plan. And so he did – and then he explained it – and the Republican leadership decided to look the other way. It seems Paul Ryan took the whole supply-side thing seriously. Bartlett’s warnings meant nothing to him. You believe in this stuff or you don’t. Ryan is just like that. He has his principles. He sticks to them. And he is kind of a Tea Party guy, at least on fiscal matters.

And Bartlett explains what happened next:

Ryan unveiled the latest version of his plan on Jan. 27 and, to his credit, even got the Congressional Budget Office to score it. According to the CBO, under the Ryan plan federal debt as a share of the gross domestic product (GDP) would rise from 61% this year to 100% in the year 2045 before falling to zero in 2080. Under the CBO’s baseline budget projection, debt would equal 270% of GDP in 2045 and 716% in 2080.

Ryan achieves this result without any tax increase at all – 100% of the debt reduction comes from lower spending. It is, in short, the budgetary Holy Grail for the tea party crowd.

But Bartlett asks if they would actually support it “if they knew exactly what it would entail to abolish the federal debt solely by cutting spending.” Theory is one thing, reality another:

Many polls show that the vast majority of Americans have no idea of the true composition of federal spending. According to a recent Rasmussen survey, just 35% of Americans know that Social Security, Medicare and national defense spending constitute more than 50% of the federal budget. Polls consistently show that most people grossly overstate the percentage of foreign aid in the budget. A 2001 poll showed that half of all Americans thought foreign aid comprised at least 20% of the budget, and the average response was 25%. In fact, foreign aid is less than 1% of the budget and has been for decades.

Consequently, most people tend to think that balancing the budget is a relatively easy task just requiring political will, something that would not affect them personally. Even members of Congress often give the impression that all we have to do is eliminate earmarks and pork barrel spending and that would be enough. In fact, according to Citizens against Government Waste, a watchdog group, there was only $19.6 billion of pork in the budget last year, less than 1% of federal spending.

It seems that most of these folks live in a fantasy world as the big money is in two federal programs, Social Security and Medicare. But you never hear any of those worried sick about federal spending target these two programs for any cuts, for some really good reasons:

One reason is that Medicare alone covers about 45 million people, 22% of the voting-age population. Moreover, according to Census Bureau data, those over age 65 – virtually all of whom qualify for Medicare – vote in the highest percentages of any age group. Consequently, any effort to reduce benefits for this population is going to confront strenuous opposition, which explains Republican pandering on Medicare during the health care debate.

Therefore, it is really heroic that Rep. Ryan did not shrink away from confronting head-on the necessity of slashing entitlements for the elderly in order to achieve his goal of abolishing the federal debt without an increase in the tax-to-GDP ratio.

Ryan is just being logical – on Social Security he would reduce initial benefits for retirees by changing the benefit formula, and make sure people got less and less each year as the years rolled by, and private accounts would be established immediately for those under fifty-five that would be partially funded by payroll taxes, so they could play the stock market like everyone else, and make money while funding the large corporations that make America great.

And Medicare goes the same way:

Ryan would also raise the age to qualify for Medicare from 65 to 69 years and 6 months for people born in the year 2022. After the year 2021, the Medicare program as we know it would cease to exist. Instead of receiving health benefits through Medicare, those over age 65 would instead receive government vouchers worth $5,900. These vouchers would be adjusted for age and health status, which would put the average voucher at $11,000. Medicare beneficiaries would buy private health insurance with the vouchers.

Of course the elderly on Medicare who are well now pay far more than eleven grand a year on healthcare, but tough beans. People need to take care of themselves. And Ryan is serious about that:

Workers would also likely see a sharp reduction in their health benefits as well because Ryan would abolish the tax exclusion for health insurance. In other words, workers would have to treat whatever their employer pays for health insurance as if it were cash income. Workers would instead receive a new tax credit not to exceed $5,700 per family. It is not clear whether the credit amount would be indexed to inflation. This provision would constitute a significant tax increase for many workers.

What does it all mean?

In short, the core of Ryan’s proposal is to implement George W. Bush’s plan to privatize Social Security, which got virtually no public support even when the stock market was booming, and essentially abolish Medicare altogether while raising taxes on the health benefits of most workers.

And Bartlett points out that the Ryan plan is obviously “politically ludicrous.” It would be impossible to get Congress “to even implement one of its major provisions, let alone all of them simultaneously.” But if it’s no-new-taxes and stop spending and balance the budget – the Tea Party thing – Ryan is just pointing out the obvious. If you want that, accept what comes along with that, which leads Bartlett to say this:

That is why I think tax increases will be the default position when a Greece-like fiscal nightmare hits, which is inevitable if current tax and spending trends continue. Those that are adamantly opposed to any tax increase to deal with this inevitability must – I repeat, must – be willing to support cuts in Social Security and Medicare of the magnitude proposed by Rep. Ryan, and they must begin working to implement those cuts today.

In my opinion, support for the Ryan plan must be the minimum requirement for anyone who considers themselves members of the Tea Party brigade and any politician seeking its endorsement. If those like former Alaska governor Sarah Palin, the current darling of the tea party crowd, are unwilling to immediately and unequivocally endorse the Ryan plan or put forward something equally serious and comprehensive, then in my opinion they have no credibility on the budget and no right to oppose the sorts of tax increases that I believe are unavoidable.

I think it is irresponsible to say, as almost all tea party goers do, that they are unalterably opposed to tax increases without specifying spending cuts – large cuts in popular programs that go far beyond foreign aid, earmarks and even a budget freeze. And if they are serious they must admit that coming anywhere close to budget balance cannot be done without slashing Social Security and Medicare benefits. There’s no way around that and anyone who says so is either ignorant or a fool.

Well, there is a third possibility, that anyone who says so is a politician. But in any event, this is madness:

When I see people like Paul Ryan addressing large tea party conventions and receiving standing ovations for his budget plan, maybe I will begin to think it is possible to avoid a massive tax increase. But right now, I don’t see even the tiniest glimmer of understanding among the tea party crowd about the true nature of our budget problem and what it would take to avoid a major tax increase.

The next time I see pictures of a tea party crowd I will be looking carefully for signs that say “Abolish Medicare,” “Raise the Retirement Age” and “Support the Ryan Plan!” I won’t hold my breath waiting.

In short, Bartlett is restating the first principle of macroeconomics, its Newton’s Law – There’s No Free Lunch. That’s it. And that’s all Paul Ryan was getting at in his budget.

Of course, as Kevin Drum notes, Ryan was, whether he intended it or not, effectively calling the tea partiers’ bluff:

Bruce is right. If Axiom I is “Taxes must not go up” and Axiom II is “The budget must be balanced,” then Ryan’s plan is pretty much unavoidable. For a long time conservatives have accepted Axiom I but not Axiom II, and this has been a huge electoral winner for them. But now they all say they accept Axiom II too. Paul Ryan is calling their bluff.

But why would Ryan do that, and put the Republicans in such an awkward position?

Of course you know the answer to that, as it was that woman:

Rep. Paul Ryan’s (R-WI) determination to privatize Social Security and dismantle Medicare – what he calls a “collectivist system” – comes, at least in part, from his longstanding devotion to the works of Ayn Rand.

Rand developed the objectivist philosophy, which values the self, capitalism and laissez-faire economics. Ryan, the ranking member of the House Budget Committee, reportedly requires staffers and interns to read her opus, Atlas Shrugged, and gives out copies as gifts.

In his keynote address to CPAC last year, Ryan said Obama’s policies sound “like something right out of an Ayn Rand novel.”

Fearing political suicide, Republican leaders have tried to distance themselves from Ryan’s “roadmap” budget proposal, which calls for privatizing Social Security. But Ryan is upfront about it.

At a 2005 celebration of what would have been Rand’s 100th birthday, Ryan called for reforming the “collectivist system” of Social Security by changing it to individual savings accounts.

“If we actually accomplish this goal of personalizing Social Security, think of what we will accomplish. Every worker, every laborer in America will not only be a laborer but a capitalist. They will be an owner of society,” Ryan said at the 2005 event, according to a profile written last year in the Milwaukee Journal-Sentinel.

In interviews, he has said Republicans should frame the choice between “collectivism” and capitalism as a moral choice.

“We have an opportunity to make a choice clearly once and for all in the next two elections, and we owe it to the American people to give them a clear choice: Do you want a collectivist welfare state or do you want to get back to being a free market? We need to make a moral, not just practical or statistical, case,” he told Reason, a libertarian magazine, in December.

That woman causes no end of trouble, as Digby explains here:

In a country supposedly based upon Judeo-Christian values and Enlightenment philosophy, I wondered why so many wealthy and powerful people are now openly embracing a philosophy of pure self-interest – and acting on it. And the answer, I think, is Ayn Rand. …

Ayn Rand, muse to the millionaire, thought she was imparting philosophy, but her own philosophy of “Objectivism,” (which was essentially a personality cult) remains very marginal in society at large. But certain of her ideas seem to have greatly informed the worldview of modern free market thinkers and business leaders in ways that run far more deeply and strongly than works of “philosophy” normally do on these types of people.

Many of these leaders admit that “Atlas Shrugged” was the most important book they ever read. And “Atlas Shrugged” is a very stupid book, a turgid fantasy, tailor made for the scores of sixteen-year-olds who still read it every year (mostly because the Ayn Rand institute sends nearly half a million copies a year to Advanced Placement high school courses.) It appeals to the smart, sexually overwhelmed adolescent with its passionate relationships allegedly based purely on “reason” but which experienced adults know to be the complex work of hormones, opportunity and much more mysterious influences than the purely “cerebral.” I have little doubt that all those advanced placement geeks find that concept enthralling. (I was once one myself.)

She calls it bodice-ripping for nerds, “a fantasy of the pants far more than a philosophy of the mind.”

The young girls absorb this message of fantasy alpha male and the boys see a path to “heroism” purely by virtue of doing exactly what they want to do. What teen-ager wouldn’t be thrilled with such a philosophy? (People are rarely as self-absorbed and selfish as they are as adolescents.) Most of us grow out of it, however, when the complexity of the world and our own emotional needs manifest themselves in adulthood.

Not so with the masters of the universe whose inner lives were indelibly stamped with future the heroic model of John Galt, the man who is so spectacularly special that the world simply cannot not function properly unless he is allowed to follow his own self-interest without interference. Rand tells these people that not only is altruism inefficient … she tells them it is immoral. There can be nothing wrong with taking advantage of disasters – or even creating them -because moral actors must take advantage of the “parasites” who offer nothing of value to our system.

I don’t suggest that these Masters of the Universe literally believe this today – at least not all of them. But the combination of sexual excitement and fantasy within which these ideas were first presented, psychologically marked more people in this society than we realize. And the people most likely to have internalized this message would be those who had the ambition and drive to achieve financial success already.

And they are generally unpleasant people, self-absorbed and self-righteous, and casually sadistic, with their book and its theories to prove they’re not, or that they have to be sadistic for the greater good, which is their own good.

And now people are getting it. See the economist Larry Summers being interviewed by CNBC’s sexpot-tease financial reporter Erin Burnett:

Once a cheerleader for Wall Street immoderacy Summers decried a “system that is based on massive borrowing, intermediated through a bloated financial system, in order to support excessive consumption.”

Presented with Wall Street’s longtime goals of slashing Medicare and Social Security, Summers refused to swoop down for the deficit hawk bait thrown out by CNBC co-anchor Erin Burnett:

“In the longer term, are you willing to stand up and say, ‘Hey, America, your pensions are going to be smaller, your Medicare benefits are going to be lower, your Social Security retirement age is going to go way up and your benefits are going to go lower even if you paid in?'” Burnett asked. “Are we at the point where the government has to say, ‘These are painful facts, and we might lose re-election by telling you, but we’re going to telling you the truth?'”

“Erin,” replied Summers, “listening to you, it sounds like it’s an exercise in sadism – who can cause the most pain.”

That sums it up. And all Paul Ryan did was run the numbers, and dispassionately catalog the inevitable pain. And his party ran the other way, not wanting to deliver the unavoidable message – we’re going to hurt you, a lot, because that’s what you should want, and now you say you want.

It is?

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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1 Response to Hating Getting What You Ask For

  1. Randy says:

    I am disappointed that Reaganomics was not allowed to proceed to its logical end. Once you have eliminated all regulation and lowered labor costs by competition with and out-sourcing to third-world countries there is only one more place to cut costs. Management.
    So why not begin out-sourcing management? There are millions of MBA’s throughout the world that would gladly work for a fraction of what top executives in the US get now. They would work from home and you could eliminate the expense of office buildings.
    To me this is the logical next step of globalization. It is absurd to suggest that most of these people are not replaceable. As the old saying goes, “The graveyards are full of irreplaceable people.”

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