Monday, October 21, 2013

Fantasy & False Equivalence

The Journal Sentinel editorialized:
But even though Ryan and his Senate counterpart, Patty Murray (D-Wash.), have agreed that a big deal involving tax revenues and structural changes to Medicare, Medicaid and Social Security is impossible for now, those are exactly the kind of reforms that lawmakers must eventually embrace. 
Entitlement spending, fueled by an aging America, is the primary reason that long-term projections of federal debt are so dismal. 
And both parties need to confront their own cherished beliefs. 
I'll go slow so the Journal Sentinel editorial board can understand.

Medicare, Medicaid, and Social Security are not one program. The deceptive, yet often used, phrase "entitlement spending" is overly simplified and highly misleading.

Medicare and Medicaid are health care programs. Our health care cost nearly twice as much as the next highest-spending country (more often than not, with worse results). Our overly costly health care is the primary reason for distress over long-term budget projections. If our health care spending were in-line with other developed nations, the U.S. wouldn't have a long-term budget concern.

As Dean Baker details, "If the US had the health care costs of Australia, we’d see public debt in 2022 fall from a projected 90 percent of GDP to a much more manageable 60 percent. Having the same costs as Canada and Germany would make that number only slightly higher, at around 64 percent of GDP."

Social Security presently has a surplus. If our economy performs abysmally in the coming decades, then, thirty years from now, forecasters predict Social Security will only be able to pay seventy to eighty percent of current payouts. This program is neither in crisis nor should it be associated with anything "dismal." Social Security keeps a majority of America's seniors from living in poverty. Plus, Social Security Does Not Contribute To The Deficit.

The Journal bemoans, "Democrats also need to let go of their sacred mysteries. Many Democrats cling to the notion that entitlement programs cannot be fundamentally changed. Medicare, Medicaid and Social Security are liberal icons, after all, untouchable."

Actually, Democrats (along with Republicans) have made changes to these programs in the past few decades. Democrats merely don't want to gut what are important and highly-supported programs. This false equivalence - the Democrats also do it - is a fiction. Republicans no longer negotiate; they, instead, hold the country hostage.

The editorial closes with of flourish of falsities and debunked right-wing talking points.
All three need an overhaul, starting with means testing for Medicare and probably Social Security and some means to ensure, in the case of Medicare, that recipients have a little more skin in the game. 
Democrats also resist the idea of tax reform, which to them sounds like more tax breaks for the wealthy and corporations. Yes, the wealthy can afford to pay a little more. But Democrats need to reconsider their reluctance to work with companies that employ millions of Americans on tax reform. The U.S. has one of the highest corporate tax rates in the world. What sense does it make to chase off business when business does not recognize national borders? Tax reform that aims for fewer loopholes and lower rates could encourage growth — and raise more money.
As Lynn Stuart Parramore wrote, "Means-testing is a back-door strategy for taking away benefits earned by hard-working Americans. In Washington-speak, “means-testing” is a scheme to deny or reduce Medicare and Social Security benefits for people who are “too wealthy” in the name of saving money."

U.S. corporations pay an effective tax rate of 12.6%. As James O'Toole reported, "U.S. companies face the highest official corporate tax rate in the world. But there's a big difference between the rates set out by law and the cash that's actually collected." Again, it seems, the Journal is purposefully trying to mislead readers and confuse issues.

From The Big Picture, “Twenty-six big US companies paid their CEOs more last year than they paid the federal government in tax...The study, by the Institute for Policy Studies, said the companies, including AT&T, Boeing and Citigroup, paid their CEOs an average of $20.4 million last year while paying little or no federal tax on ample profits, according to regulatory filings. Astonishingly, nearly all of the the companies received a net tax refunds of up to $1billion. Others had a tax bill of $0. On average, the 26 companies generated net income of more than $1 billion in the US, the study said.”

As Paul Buchheit stated, "In the past twenty years, corporate profits have quadrupled while the corporate tax percent has dropped by half. The payroll tax, paid by workers, has doubled."

To recap: 1) the Medicare and Medicaid programs are not the's the cost of our health care, 2) Social Security is fine, and 3) corporate taxes are not high nor are they hindering hiring.

There are not two sides to every story. We need the Journal Sentinel, and like-minded misinformants, to stop peddling these fantasies. Reality just doesn't jibe with their false equivalence and doomsday scenarios.

For Further Reading:
21 graphs that show America’s health-care prices are ludicrous

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