The amount of bull defecation coming from both sides of Washington's aisle continues to grow.  Time for a little thought please to be applied to one of the most frequently heard canards, indeed, one we've been hearing for quite some time.  To wit, businesses aren't expanding, jobs arent' being created and the economy is not gaining momentum because of the "uncertainty" generated by the possibility of stricter regulations and/or higher taxes.

This actually is the second generation of this canard.  In its original iteration, blame was placed simply on too many regulations and too high taxes.  That one didn't have a real long shelf life because even the doltish American public was wise to the fact that taxes (of all sorts) on business are lower now than they have been since the mid 1980's, and that regulations--running the gamut from safety requirements in the workplace to standards for food production and distribution to limitations on the gunk industry can spew into the air or leach into the ground or water supply to how devious and perverse the actions of the financial sector can be--are similarly at nearly an all-time low.

Confronted with statistics even climate change deniers and those who say tax cuts increase revenue couldn't deny, the argument shifted from "there are too many taxes and regulations" to there might soon be too many of each.

So here's a little thought on that subject.

The hindsight history provides isn't necessarily 20-20, but it's usually a pretty good standard to at least provide guidance into the future.  Going all the way back to the middle of the previous century (starting there because the second World War changed everything for the U.S.), it's impossible to find any correlation between tax rates and business health or the health of the economy in general.  If there's any trend to be found at all, it would be that the economy consistently grew or shrank on the basis of a wide variety of factors (oil prices, global and domestic politics, wars, technological innovations) that had virtually nothing to do with either taxes or regulations.

The corporate tax rate, for example, was 52% during the entire decade of the 1950's--the period of America's first great industrial and economic expansion.  In 1971, it went to 48% and stayed there through the rest of the '70's and nearly all of the '80's.  That's a period of time that included two booms and two recessions, one of them at least as bad as the most recent recession.

In 1988, it was dropped (by Reagan and George H.W. Bush) to 34%, and the economy very shortly thereafter went in the tank.  It was raised to 35% by Clinton, and the economy took off.  It has remained at 35% every year since then, during which time we had the boom years of the Clinton presidency and the bust years of the second Bush.

Really hard to see much correlation between tax rates and business health from those figures.

Regulations are obviously much more amorphous than tax rates, so a strict historical study is hard to do.  A couple of facts do stand out however.  The Scandinavian countries (Denmark, Finland, Sweden) all rank among the most heavily regulated economies in the world.  China, India and Brazil are among the least regulated.  Though there is obviously a difference in scale (Shanghai has more population than the three Scandinavian countries combined), the interesting anomaly is that they have nearly equally productive economies.  Regulation, or lack thereof, doesn't seem to be much of a factor.

Equally interesting is a study released a few months back by the World Bank ranking the world's developed nations from top to bottom in terms of "business-friendliness."  The major factors considered in the study were tax rates, number and types of regulations, the time required to start a new business and the number of business hours devoted to tax and regulation compliance.  On those bases, the United States boasts the fourth friendliest climate for business in the world (behind Singapore, Hong Kong and New Zealand).  Finishing near the bottom for business friendliness were China, Brazil, and India.

Paradoxically, China, Brazil and India are three of the fastest growing economies in the world and the U.S., at present, is one of the more stagnant.  The dynamism of the former and the stasis of the latter would not seem to be much related to regulation frequency or strictness.

The broader conclusion this all points to is that what drives economic growth is a factor that operates entirely independently of taxes and regulations--consumer/product demand.  If you look at the economic history of this country, every time there has been an economic downturn, consumer/product demand has been down.  Every time we have pulled out of an economic slump, the recovery has been driven by increased consumer/product demand.

To be sure, various factors have affected consumer/product demand.  The major recession in the 1970's was heavily influenced by the spike in oil prices, but its most noticable effect was that people suddenly had less disposable income and therefore bought less.

In fact, the one constant in our economic history has been that diminished consumer/product demand equates to slower or even no economic growth.  The big spike in inflation in the 1980's took money out of people's pockets and for several years, they stopped buying.  The economy tanked.  When inflation was deflated, buying power increased and people started buying again.

We are witnessing the same thing now.  The bursting of several bubbles in a row (tech, credit, housing) severely diminished buying power and eventually both employment and the overall economy tanked.  That is why so many economists have been braying as loudly as they know how for several months  that the two things required to start the economy moving again are aggressively addressing the foreclosure problem and creating more jobs.  Neither of those have anything to do with regulations or with taxes.  They simply require political will and the intellectual honesty to recognize that what increases the election odds for either party is not necessarily what is best for the country.

The foreclosure issue, which is the most glaring part of the broader home mortgage problem, is key because people can't buy "stuff" when everything they bring in is tied to a mortgage payment.  Nearly 20 million people have either already defaulted, meaning they've lost the single biggest asset they had, or are dealing with underwater mortgages, that is, mortgages that are higher than the value of their home.  Most economists agree that the most efficient way to (gradually) solve this problem is to require banks to write down the principle on their mortgage loans to the point that mortgage debt and home value are again in balance.  Banks of course are stubbornly opposed to this because it would hit them even harder than being forced to modify mortgage payments.

Then there's jobs.  Officially, 9% of Americans are out of work, but the real number is probably closer to 15%.  It goes even higher if you include the number of people who are currently working for half or less than they made a few years ago.

Here again, it doesn't make any difference how low you slice taxes or how many regulations you do away with; if no one is buying a company's product, the company isn't going to add new employees.  Left alone, what will inevitably result is a continuing downward spiral; fewer people buying things will result in more jobs lost, which will mean even more people unable to buy--and so on.

The fact that American business has in excess of a trillion dollars in cash reserves right now means that, in general, businesses are doing quite nicely satisfying existing demand with existing production capability.

So where will new jobs come from?  The only viable source is government--directly through investment in infrastructure and education projects, and indirectly through providing seed money for start-ups in areas like battery production and alternative power production.

Our roads, bridges, dams, canals, rail systems, airports and power grid--our infrastructure--received a grade of D by America's civil engineers a few years back.  That grade was issued, if I recall, just a few months before the overpass in Minnesota collapsed.  Things haven't improved since then, so investing in much needed improvements could hardly be called a pork project.  And the unfortunate fact is that there is not a lot of profit potential in building (or repairing) a bridge or dam or highway.  There are, however, a lot of people required to actually do those things, and that means jobs.

And when those 9-15% presently unemployed start bringing home a paycheck, they do two things--they start paying taxes instead of collecting unemployment, and they start buying things.  The former means that government revenue goes up and government spending goes down (deficit reduction?); the latter means that eventually, businesses realize they can't supply demand with existing capacity so they expand (more jobs).

That's my little thought on this subject.  I'm biased, but it seems persuasive.

some thoughts on education

Beginning in the 1950’s, largely because of the G.I. Bill, America started becoming the best educated country in the world—if you measure that rubric by the number of people with post-secondary educations.

Through out the ‘50’s and even into the ensuing decade, the vast majority of college enrollees waded into curricula that really hadn’t changed much since the 19^th century, to wit, curricula heavily slanted toward the liberal arts.  The sciences and math weren’t ignored, far from it, but they weren’t the focus either.

That began changing during the Kennedy administration when the great “race to the moon” commenced and JFK urged young Americans to get much more heavily into math and the sciences. 

Among the results of that push were a period of American dominance in hard sciences like Physics and Chemistry, and in applied sciences like Engineering, rocket science and bio-engineering that stretched through the 1970’s, 1980’s and even into the 1990’s.  American graduate programs became the envy of the world, and both the universityies that supported those programs and the country as a whole benefitted enormously from the inflow of the best young minds from Europe and Asia clamoring for admission to American universities.

Despite the high profile that science and math enjoyed however, the bulk of American university students continued to major in liberal arts areas like English, History, Political Science or Communication.  What’s interesting is that the vast majority of liberal arts graduates, from the 1950’s forward, left college and began making a living at something that had little or nothing to do with what they studied in school.  They became salesmen, merchants, public relations people, farmers, small business owners, tradespeople—or they left undergraduate life and enrolled in a professional school; they became doctors, lawyers, architects, teachers, nurses. 

By the mid-1960’s, the one constant had become that if you wanted a salaried job, you needed a college degree.  Didn’t matter much in most cases what the degree was in, but you had to have one.

What doesn’t so often get noticed when the history of  education is discussed is that, starting even before WW II and continuing in even stronger fashion after it, there were very comfortable, middle class livings to be made that didn’t require anything beyond a secondary education—in some cases, not even that.  America during that period was the manufacturing capital of the world, and, thanks largely to unions, hourly wages in most areas of manufacturing were more than adequate to support a family and even pop for an annual vacation.

The 1950’s, ‘60’s and ‘70’s were also boom times for all sorts of construction in this country—everything from roads and bridges to suburban housing.  So if you didn’t go to college, and you didn’t fancy an assembly line, you apprenticed for a few years as a mason or a carpenter or a plumber or an electrician and still made a very comfortable living for yourself and your family.

What’s the point of all this nostalgia?  Simply this.  Times have changed, and many of the things that made the 20^th century an “American Century” had, by the 1990’s, become bureaucratized, ossified, gentrified and more problem than solution.  The great push for education that started in the ‘50’s led to bloated quasi-unions like the NEA and NTA, both of which seem more concerned that no teacher be fired than that no bad teacher be retained.  It led to equally bloated Education Schools which gave theory and pedagogy greater import than knowledge of a subject and, partly to justify their existence with numbers, rapidly became populated by students who found majoring in math too difficult and so decided to learn to teach it.  By the turn of the century, it was commonplace that the bottom third of each new freshman class gravitated heavily toward schools of Education.

Put simply, America is no longer the envy of the world so far as education is concerned and one result of that is that we are also no longer the envy of the world economically either.  In my view, those two sad facts are related.  A more or less recent phenomenon has to be added to the mix.  Next year, if projections hold true, the total national debt on student loans will exceed 1 trillion dollars.  That’s with a “T.”  On average, a graduate of a four year school will owe in excess of $26,000.  If you restrict that to graduates of “elite” schools, the number frequently reaches into 6 figures and the average is nearly $50,000.

What many young people—perhaps most—are discovering is that they can’t afford to buy a car, or a new washing machine or, God forbid, a house, because their montly student loan payment squeezes those kinds of things out of the budget.  More to the point, they find that their English major really doesn’t make them all that attractive to the companies that are actually hiring today.

There are a lot of things that need to be done to fix the mess this country is in right now—most of them, unfortunately, requiring a degree of political will and sense of “country first” that just doesn’t exist. 

I’d like to propose one set of changes that wouldn’t require a lot of money and might not even run into a lot of resistance—except from the higher education establishment.  Here, in no particular order, are the changes. Note that these would apply only to public institutions of learning.  The Harvards of the world could continue doing as they please.

1. Change the emphasis in four year undergraduate programs from liberal arts to math, engineering and science, particularly computer science.  Make all the humanities (English, History, Religion, Political Science, etc) subjects that can constitute minors, not majors, and perhaps require every student to have two of them.  Majors would have to be chosen from the sciences and math.

2. Extend government paid tuition to everyone with a minimum score of 24 on the ACT or 1300 on the SAT.  Those are the folks that studies indicate most commonly do well in college and in fact graduate.  Require re-payment of whatever funds a student got from the government if the student fails to graduate.

3. Do away with Education Schools and revise the minimum qualification for teaching in a public K-12 institution  either to completion of a two year major in a humanities subject in a two year college, or completion of a degree from a four year college, plus a year paid internship in a public school.  Require a teacher certification examination, similar to what nurses, accountants, etc., do now, at the end of the internship year.

4. Create, at federal expense, a minimum of two “trade schools” in every state, wth the actual number in each state proportional to the state’s population.  These would need to be residence schools obviously.  Students would transfer to such a school after completing their second year of secondary education and would spend their final two years there.  The schools would offer students a variety of trades to specialize in and the school day would be organized the way it currently is in, for example, arts magnet schools.  Students would spend the morning hours doing traditional secondary education subjects, and the afternoon learning their trade.

5. Make teacher retention in public K-12 schools a function of annual student/peer/administration review with peer review by itself given weight equal to that of student and administration review combined.  Tenure would result from 10 consecutive years of positive reviews, but tenured faculty would be subject to quadrennial reviews that could lead to dismissal or revocation of tenure.

6. In public universities and colleges, faculty would become eligible for tenure after 6 years, but, upon receiving tenure, would be subject to quadrennial reviews that could lead to dismissal or revocation of tenure.

The most obvious effect of these proposals would be to substantially lower the number of students attending four year schools and substantially raise the number attending two year schools.  As I said, high education wouldn’t like this.  What it would accomplish however is a redirection of post-secondary education resources into those areas that are most likely to facilitate economic growth domestically and technological competitiveness globally.

It would also have the effect of significantly shrinking the student loan industry that has grown up, and more importantly, significantly reduce the number of graduates who can’t afford to become full-time consumers because they owe too much in student loans.

Just as importantly, it would make trained mechanics, machinists, dye workers, electricians and so forth once again available to American companies who have been complaining for years that they have jobs in those areas that they can’t find qualified people to fill.

And perhaps most important of all, revamping the way teachers are trained and retained would go a long way toward restoring America’s intellectual competitiveness in the global economy. 

You know, until the middle of the 19^th century or thereabouts, most of the world was agrarian and the education that was required to be successful was attuned to that reality.  When industrialization occurred, education requirements changed, and for the most part, educational resources were re-directed accordingly.  In the developed world at least, we are now moving beyond an industrial society to a science and technology economy, and it seems to me, education needs to once again change to accommodate the new reality.

a little thought please

I named this blog alittlethoughtplease because it seemed to me, in public discourse particularly, what most frequently isn't happening happening is thought that goes much beyond is this a Republican position or a Democratic one.  If anything, that tendency is more prevalent now than it was then, so I thought with this entry, I might try applying a little thought to several of the most current issues.

Let’s start with the proposal, coming now from at least some elements of both parties in Washington, that we should declare a “one time tax holiday” during which corporations could repatriate the money they currently have stashed in off shore tax havens.  A Republican bill in the house would tax that money at just 5.25%; the bill’s Senate counterpoint, sponsored by Democrat Chuck Schumer, would set the rate at 8.75%--unless the company created new jobs, in which case the rate would be 5.25%.  The “thought” behind both proposals is that the infusion of cash into the country would enable companies to create jobs.

Let’s apply a little thought to that thought.  First, we’ve gone down that road before, in 2004.  That tax holiday resulted in eye-popping executive bonuses, significantly increased dividends and large stock buy backs.  So far as anyone has been able to determine, it resulted in zero (or near zero) new jobs.  There is nothing in either of the current proposals to prevent the same thing from happening again.  Remember that famous definition of insanity?

Second, American corporations are currently sitting on over 2 trillion dollars in cash reserves, and have been since late in 2009.  Unemployment has been stuck at 9% (or higher) through all that time.  By what logic would allowing companies to exponentially increase their already bulging cash reserves induce them to start doing something they haven’t done in nearly a decade?

Finally, the congressional Joint Committee on Taxation has stated unequivocally that a tax holiday at 5.25% would increase the budget deficit by nearly 80 billion dollars over the next 10 years.  By what logic is there any fiscal responsibility in that?

Moving on, let’s take a look at the mantra, coming now from both parties, that “small businesses create jobs.”  I’m trying to remember the last time I heard any politician talk about anything remotely related to the economy that his talk didn’t include that maxim.  I’m not sure what the thought behind this notion is, unless it’s simply that championing tax cuts and deregulation for “small businesses” is more politically palatable than doing the same for Exxon Mobil.

A little thought seems appropriate to me.  First, 61% of all American businesses have four employees or fewer.  Nearly 2/3 of American businesses, in other words, would double their payroll by adding four jobs.  And since the majority of those small businesses are convenience stores, artisan shops, or trade skill companies like plumbers, roofers, electricians—all of which of necessity operate on razor thin margins, there would have to be almost unimaginable sudden increases in demand for their business before it would make sense to expand employee numbers.  In the vast majority of cases, Joe the Plumber and his two minimum wage helpers can easily handle all the work they get.

A little thought suggests that most small businesses have no reason to create jobs, and the ones that do, because they are small to begin with, aren’t going to effect unemployment numbers much.

More telling are  the numbers indicating just how much economic impact small businesses actually have.   The Treasury Department defines small businesses as ones with annual earnings between $10,000 and $10,000,000—which cuts a fairly broad swath I think we’d all agree.  Indeed, 99% of American businesses fall into that swath, but they account for only 17% of total business income, and more to the point, only 23% of them pay any wages at all.

What does create jobs is not small business, but a small subset of that we call start-ups—new businesses.  For nearly every decade since the turn of the last century, new businesses have been the largest contributors to job growth.  More specifically, new businesses that catch on and start to grow (Apple would be an example).  It’s interesting therefore to note that start-ups, in the last decade, produced less than half the number of new jobs as start-ups had created in previous decades.  The reason, most signs indicate, is something called “allocative inefficiency.”  In the last decade, most of the capital required for start-ups went to businesses creating exotic financial instruments, not businesses that actually employed people.

But, both parties take as a given, if taxes were lowered and regulations relaxed, small businesses would still grow.  We’ll come back to this notion in a moment, but for now, it’s worth noting that when the National Association of Independent Businesses conducted a survey of its members last year, “poor sales”—also known as weak demand—was much more frequently blamed for lack of growth than taxes and regulations combined.

What that suggests is that a program that put people back to work, even if it required government (hence taxpayer) money would be the best thing we could do for small businesses.

That brings us then to a third idea currently being espoused by both parties—to wit, taxes and regulations are stifling economic growth.  (To be fair, this is the holy grail of Republican economic thinking; Democrats don’t challenge its validity often, but don’t champion it as loudly.)

The thought involved here doesn’t seem to be an economic one as much as a philosophical one—the notion that government is bad and capitalism is good. 

The lack of thought here is perhaps most apparent in the clear disconnect between what people (and politicians) want in the abstract, and what they want in the real world.  In the abstract for example, a politician can rail about a government agency like OSHA, but if that politician’s son is injured or killed while doing a summer time assemply line job, that politician will be the first to scream for stricter adherence to OSHA standards.

Similarly, it’s easy to bray loudly about government regulating run amok with the Food and Drug Administration, but when an eColi  outbreak occurs, the braying is just as loud about regulations ignored or not enforced.

A little thought suggests that everyone (except maybe Ron Paul and his progeny) recognizes that without some government regulation, capitalism is an inherently destructive machine, one designed to maximize income in any way possible by minimizing expenses in any way possible.

What politicians (and big chunks of the population) do, however, is “suspend their disbelief,” to borrow a theatre term—meaning they pretend not to know what in fact they do know—and allow their natural antipathy toward government  to prompt the “taxes and regulations kill jobs” mantra.

So let’s look at that.  We can’t make definitive statements about the future because, as Aristotle famously said, “what happens is manifestly possible, else it would not happen.”  We can however make definitive statements about the past, because it has happened.  The period from 2002 till 2010 was a period of unprecedented low corporate and personal taxes.  It was also a period during which virtually no new regulations governing business were put in place, and those that were in place were, at record levels, rescinded, diminished in scope or simply not enforced. 

Those were also the years during which a trillion dollar federal budget surplus became a multi-trillion dollar deficit.  They were also the years in which economic activity was the most anemic it had been since the 1980’s.  In point of fact, what growth there was would have been even more anemic had it not been for the Halliburton’s and Blackwater’s of the world, defense companies that grew exponentially and did so almost entirely at taxpayer expense. 

And while it would not be accurate to say that employment numbers went down during that period, it would be accurate to say they didn’t grow in any significant way.  It would also be accurate to say that all the major factors that would result in the Great Recession, and the resultant unemployment numbers we now have, were put in place during those years—the housing bubble and financial sector meldown primary among those.

The odd thing here is that the Bush administration commissioned a study aimed at determining what the “economic cost” of government regulation was.  Nothing about this was included in the study’s text, but it seems safe to assume the expectation was that the study would demonstrate that regulations have a negative effect on the economy. On the contrary, it demonstrated that the economic benefits of regulations were at least double their costs.

It doesn’t take an Einstein to figure out that cleaner air means fewer people sick, that higher fuel efficiency requirements for autos means more opportunities for start-ups to develop the new technologies that will require—and so on. Similarly, you don’t need a MENSA card to understand that fighting two wars while cutting taxes is likely to run up a deficit.  What a little thought suggests is that regulations actually protect jobs (and people) and that taxes have a major positive role in this country enjoying the quality of life it has.

Can’t end this without looking at taxes—specifically taxes on the rich.  This is not a bi-partisan issue.  The idea that taxes on the rich kill jobs is pretty much owned by the Republicans. 

Let’s set aside the philosophical debate about the necessity or even the fairness of a progressive tax system.  There are a lot of arguments—and good ones—on both sides of that issue.  It doesn’t matter really which side you’re on—the fact of the matter is that we have a progressive tax system, have had it for many decades, and have a societal and governmental structure now that is irrevocably tied to it.  And one of the dictates of that system is that the wealthier one is, the higher the percentage of that wealth one should pay.

Currently, incomes under $20,000 (double if filing jointly), pay no taxes.  The next lowest rate is 15% and the percentage proceeds upward through 28% for most of what we call the middle class to about 32% for the wealthy and up to 36% for the very wealthy.  If you support a progressive system, that would seem a reasonably fair set of numbers.  A little thought however makes you start to wonder.

When you start to look at the tax code, you notice immediately that there are an awful lot of exceptions and gray areas and even areas that don’t actually seem to be covered at all. The exceptions are usually called “deductions” and many of them are very straightforward and apply pretty much equally to everyone.  If you have a mortgage you can deduct the interest on it; most taxes that you pay at the local level you can deduct from your federal liability.  Education expenses mandated by your job and paid from your pocket can be deducted; a percentage of medical expenses can be deducted.  And so on.

As you dig deeper into the code however you begin to find a lot of exceptions that really only apply to significantly higher income levels, or to incomes generated in specific ways.  For example, income generated from investment is taxed as a capital gain, the maximum on which is 15%.  The expense of flying a personal jet for business purposes is deductible, but obviously only if you’re wealthy enough to have a personal jet.

The result is that the actual tax paid by a middle class guy in the 28% bracket is going to be somewhere in the 25% or 26% range.  By contrast, the actual tax paid by someone in the 35% bracket is  closer to 20%. 

So the first canard that should be disposed of is the notion that the wealthy in the United States pay taxes at a higher rate than in other Western countries.  In most European nations, the top tax rate is actually higher than here, but even in those where it is slightly lower, the actual tax rate of America’s wealthiest is lower still. 

All that is important because when we look at the incomes of those in the highest U.S. tax bracket, the first thing we notice is that much—in many cases, most—of it isn’t taxable as regular income.  Because it’s derived from investments, it’s taxed at the same rate as Warren Buffett’s secretary—15%.  The sage from Omaha could care less if the tax rate for his income bracket were raised to 90%; it wouldn’t affect him because his income doesn’t come from wages or salaries. 

But that’s not the real point.  The real point is that the top 1% of American incomes have very little impact positively or negatively on jobs.  If the CEO of Exxon Mobil saw his tax percentage go from 36% (now) to say 40% or even higher, that would have nothing whatsoever to do with whether Exxon Mobil created more jobs.  I can’t find the exact figure right now, but something in the neighborhood of 60% of the people in that infamous top 1% derive more than 90% of their income from investments.  What income tax rate is set for them is irrelevant because they don’t have income-taxable income.  More importantly, even if we changed the rules and taxed investment income like salaries and wages, their increased rate of taxation wouldn’t effect their ability to create jobs because they don’t create any in the first place.

What about the guy who owns several convenience stores and draws an income from them of $250,000—currently the minimum income level being looked at as “wealthy.”  The "taxes are bad" folks will tell you that raising that guy’s tax would inhibit his ability to expand his business and create jobs. 

Again, a little thought please.  Let’s say that guy’s analysis indicates that opening another store, and hiring another 10 employees to do so, would net him an additional $100,000/year in taxable income.  Right now, he would owe $35,000 of that in income tax.  If his rate were increased to the 38% it was under Clinton, he would owe $38,000 in taxes.  Does it really make sense that he would turn down the opportunity to make $62,000 more than he now does because, if the government had left his tax rate alone, he would have made $65,000 more? 

It worries me a little that so much of our discourse today seems based on political agenda rather than what even rudimentary thinking indicates is the true nature of the problem or its  most practical solution.  What should matter to all of us is not whether we are Democrats or Republicans, conservatives or progressives, but what honest and objective examination of the facts tells us needs to be done.  Unfortunately, that seems to be what we do only when the situation has become so dire we have no other choice.

religion or cult

Robert Jeffress, a Baptist evangelical, caused a bit of a stir at the recent Values Summit (to which only Christian protestants were invited—presumably because only they have values worth summit-ing about) when he declared the Mormon religion a “cult.” 

When I read about that I was mildly amused and a good deal more than mildly irritated. 

What amused me is that Jeffress’ statement was a practically paradigmatic example of the pot calling the kettle black. Almost no matter which definition of the word “cult” you choose, all religions are one.

I went to the Oxford English Dictionary and found that the first definition (preferred and most generally applicable) is “a system of religious veneration and devotion directed toward a particular figure or object.” Can anyone say Baptist?  Catholic?  Jew?  Muslim?  Duh.

The second definition, probably preferred by Jeffress, is “a relatively small group of people having religious beliefs or practices regarded by others as sinister.” Sort of the way Baptists view Catholics?  The way Catholics view Jews?  The way Jews view Muslims?  By this definition, a cult is whatever religion you aren’t. 

But what about the third definition?  Maybe it’s where Jeffress was coming from.  The OED’s third definition is “a misplaced or excessive admiration for a particular person or thing.” So, Mormonism is a cult because its members have excessive admiration for Joseph Smith.  Got it.  But what about Baptists with Christ?  Ah, not the same Jeffress would no doubt say.  Smith is just a man who called himself a prophet, someone delivering the word of God; Christ is God. Really? Then why did he say was delivering the word of God?  Why didn’t he say he was delivering the word of himself? 

The point is, every religion (at least every Western religion) has been brought to us by a man.  Which goes back to my original point:  all religions are cults.  That isn’t meant to demean religion, it is simply to point out the obvious—all religions demand of their followers that they “venerate a particular figure or object” and therefore all religions are cults.

That, of course, wasn’t really Jeffress’ point or his concern.  He knew he was preaching to a room full of preachers and that referring to any cult that wasn’t their cult as a cult would be immediately understood as a way of damning that cult.  In fact, he went on to make his real point, which was that  “those of us who are born again followers of Christ should always prefer a competent Christian to a competent non-Christian like Mitt Romney.”  Here's where my irritation arises.

That Jeffress made that pronouncement in his introduction of Rick Perry to the congregations—oops, convention—is reason enough to question his intelligence (Perry is certainly Christian, but I can’t imagine a definition of “competent” that would apply to him), but that somewhat begs the larger question his statement raises.

At least the way I read the situation, Chirst didn’t tell his followers to worship him.  He told them to worship God.  Joseph Smith doesn’t entreat Mormons to worship him, but to worship God, more or less (see below) the same God Christ was talking about.  The difference between a Baptist and a Mormon isn’t the God they worship, it’s whose direction they follow in doing so.  If the savior is God, what difference does it make whose prayer book one uses to worship him?

What buggers people like Jeffress about Mormons is that Smith presumed to suggest that God’s angel had told him that Christianity had gone astray and that further “scriptures” were needed to correct what had gone wrong.  Those turned out to be largely the Book of Mormon.  To evangelicals like Jeffress, the Christian bible contains the whole of God’s revealed Word, and God stopped talking whenever the Roman church decided which gospels were actually true.  (That it took the church 3 centuries after Christ to do that doesn’t seem to bother anyone.)

Christians also don’t like the idea that, in the Book of Mormon, God the Father and God the Son are treated as actual flesh-and-blood beings, even though that beggars logic far less than the notion of an incorporeal being that can’t be experienced except through the life of a very corporal being who was also God.

I write this not to diminish the value of  religion or the authenticity of faith.  Marx referred to religion as the “opiate of the people,” and most all religions tend to hold that statement in great contempt. But if you stop and think about it, Marx had a point, and it's not even--necessarily--an irreligious point.  Religion and opium are alike in that they both dull our cognitive faculty and allow us to move through life becoming inordinately blissed by its pleasures, and largely ignoring its unpleasant realities.  In the sense that both make life easier for us to live, they aren’t all that bad.

Where religion, like drugs, becomes problematic is when it becomes extreme—when my cult looks wrathfully on all other cults, even to the extent of attempting to exterminate them.  If Jeffress finds his fundamentalist Christiantiy comforting, fine—he should luxuriate in it.  What he should not do is condemn Mitt Romney (or anyone else) for finding comfort in a different cult, and what he especially should not do is suggest that Romney’s belief in his cult disqualifies him for an occupation that, by definition, both transcends all cults and encompasses them.

who needs experts

     I'm retired, so I have a lot of time to read.  I'm also kind of an information junkie, so most of what I read is stuff about what's going on in the world.  In my last blog I talked about "motivational reasoning" and the tendency we all have to seek out the facts that support the conclusions we've already formed.

     I'm as guilty of that as the next guy, I'm sure, but in my reading, I try very hard not to be.  I'm pretty much what you might call an "equal opportunity" reader; if I see a title or headline or caption that suggests content having to do with the state of our world, I read it.  Sometimes I find the material to be conservative in its perspective, sometimes progressive.

     I mention this because there are three broad categories of subject matter that are commonly referred to in popular media as "controversial" or "hotly debated" or "politically divisive" that, when you read the literature pertinent to each subject, are in fact none of those things.  The three subjects are these: budget deficit, global climate change, and tax reduction.

     On the budget deficit, most everyone agrees that less of a deficit would be a good thing.  In the literature  of the field, one finds honest and intellectually intriguing differences of opinion as to how much less deficit should be sought, but virtually no one argues that the level of spending v. revenue imbalance the federal government experiences now is a good thing or even a sustainable thing.  That's what you find in the literature.

    When you move to the political arena, however, the "hot debate" and "controversy" centers on how the budget deficit should be lessened and what level of priority doing so should be given, and here there is a stark contrast between what is said by many in the halls of congress and what is said in the literature.

      Political conservatives say the deficit should be reduced to zero (i.e. expenditures and revenues should be exactly equal), that reduction should happen as immediately as possible, and it should be accomplished entirely by reductions in spending.  Federal revenues not only should not be increased (by raising or adding taxes), they should in fact be decreased (by reducing or eliminating taxes).

     Political progressives say the deficit should be reduced, but not necessarily to zero, that accomplishing that reduction should not be the only priority (economic stimulus should have co-equal focus), and that reduction should be accomplished by a combination of spending cuts and revenue enhancements.

     In general, the media has treated this as a legitimate debate, one in which there are solidly defensible points on both sides.  Here's where what's in the literature becomes both relevant, and, in a way, confusing.

     Let me make clear before proceeding what I mean by "the literature."  I'm not talking here about what's in Forbes or The Nation--house organs both.  I'm talking about what's in the journal articles, monographs, essays, interviews etc. put out by people who have studied economics extensively and in many cases worked in areas that influence how budget deficits occur or are influenced by the existence of budget deficits.  As a collective, these folks would be called economists.

     When you look at the literature thus defined, what you discover is that easily 90% of it says a certain level of budget deficit at the federal level is not only unavoidable, it's necessary.  The current level of deficit, these economists agree, is not sustainable and needs to be reduced.  They also agree that focussing entirely on budget reduction and ignoring economic stimulus (mostly in the form of job creation) is short-sighted.  They further agree that reducing budget deficits solely by cutting spending is intrinsically self-defeating.  The two ideas taken together (sole focus on budget reduction accomplished solely by cutting spending) is rather like cutting off one's nose to spite one's face.

     That is all pretty consonant with the progressive position in the political arena.  If you simply read the expert literature, you have to wonder why the media says there is a controversy.  More to the point, you wonder why there are politicians who take such factually unsupported positions, and wonder even more pointedly perhaps why they have constituents who allow them to.

     The same kind of dichotomy exists with respect to climate change.  If you read the literature, even that portion (small) of it that was tainted by "climategate," probably more than 90% of it makes it very clear that the climate is warming globally to degrees that can't be explained by purely natural phenomena, and that unless humanity does what it can to at least stop exacerbating the problem, very significant physical and geo-political damage is going to result.

      Again, you read the literature, you wonder why the media keeps referring to the "global warming debate."  Among 90% of the people who study climate for a living, the only real debate is what we need to do in the face of a currently on-going process and how quickly we need to do it.  Still politicians, most of them on one side of the aisle, thumb their collective noses at expert advice and garner cheers from their followers for doing so.

     Without question, the "politically divisive" issue that is the most confounding when one examines the expert literature is the notion that reducing federal taxes increases federal revenue.  Those of you old enough will remember the late '70's when an economist named Arthur Laffer began promulgating what he called the Laffer Curve--a graph that indicated how cutting taxes would stimulate economic growth and thereby grow government revenues.  Ronald Reagan adopted the Laffer Curve as dogma and used it to justify the massive tax cut he engineered in 1982.  Three years later, Reagan was forced to at least tacitly admit that the Laffer curve was indeed a laugher and raise taxes to prevent Washington from plunging into what was then regarded as too deep a budget hole.

     Economic growth declined again after George H.W. Bush cut taxes in 1989, causing him to swallow his "read my lips" pledge and raise them again.  Refusing to be guided by his father's experience, George W. Bush pushed through the major tax cut we are presently living with, and the economy tanked again.

     What again 90% of the literature makes clear is that lowering tax rates, individual or corporate, has no demonstrable effect on economic stability or growth.  It doesn't create jobs, it doesn't expand markets, it doesn't foster innovation.  It does create wealth, but only for those already in the highest income brackets.

     So you read the literature and you have to ask yourself, where's the beef?

     Well, it's mostly to be found in that other 10% of the literature.  When it first started occurring to me a year or so ago that despite my field of dreams approach to informative literature (if you write it, I will read), I was very rarely coming across material that denied (or even doubted) climate change, that argued the budget could (and should be quickly) balanced simply by cutting enough programs, or that the best way to stimulate the economy was to cut taxes.  Who were these writers, I wondered, who seemed so out of step with the vast majority of their colleagues?

     So, I started investigating.  I wasn't particularly surprised by the existence of what I found, but I was badly discouraged by the credence and the influence it seemed to generate.  What I found was that a very high percentage of those rare contrarian pieces I found were written under the auspices of the Heritage Foundation, the American Enterprise Institute or other lesser known conservative "think tanks" funded--and in some cases founded--by conservative scions like the Coors or Busch families (what is it about beer makers?) or the Koch brothers.

      I've known of the existence of these outfits for a long time of course, but when I did a little research on them, I discovered that buying "expert" opinion to support their political agenda has from the beginning been their objective.  If you come across an article denying climate change, you can pretty well take it to the bank that its author is directly or indirectly on the payroll of AEI or Heritage or one of their cousins.  These outfits aren't "think tanks" so much as "motivational reasoning" tanks.  They don't support scholarship aimed at finding truth; they support scholarship aimed at defending a particular truth.

     What's sad is that the media treats the paid for ministrations of Heritage Foundation hacks as legitimate science.  And that allows politicians to use the material the hacks churn out as justification for their particular political agenda.  And what's saddest of all is that we the public accept the notion that there is an actual  controversy among real experts over climate change, or that there is some legitimacy to the claim that lowering taxes raises revenue, or that it's even possible to balance a federal budget without increasing revenue AND lowering spending.

     This is a democracy and I wouldn't have it any other way.  But having to live in a country dominated by people and politicians who willfully ignore facts and objective scientific inquiry is a real bummer.

on thinking

            Why is it that otherwise reasonable people so frequently hold tightly to completely unreasonable conclusions on certain subjects?  Why, for example, are there Ph.D.’s who are not entirely certain Barack Obama was born in Hawaii?  Why are there doctors and lawyers and CEO’s who are fairly certain the twin towers were brought down by the CIA?  Why are there teachers of science who consider evolution apostasy?

            Why are there otherwise sober, law-abiding citizens who secretly horde weapons and ammunition in preparation for the day they have to defend themselves against U.S. Army units sent by the government to take their weapons and property from them? Why are there multitudes of presumably intelligent parents who refuse to have their kids vaccinated against childhood diseases?

            Fortunately, we have modern psychology to explain these conundrums to us.  The answer, it turns out, lies in our proclivity for engaging in what the shrinks call “motivational reasoning,”  which, like so many terms psychology gives us, chooses its words poorly.  “Motivational reasoning,” it turns out, isn’t really reasoning at all.  The more appropriate word choice would be “rationalization.” 

            The word “reasoning” infers a process whereby one obtains facts, processes them, verifies them, tests them in a real world environment where possible, then synthesizes from them a conclusion blind to everything except what the facts support.  It is, in other words, an inductive process, one in which a study of particular instances leads to a general law or conclusion.

            “Motivational reasoning” involves the diametric opposite of that process.  It involves starting with a preferred conclusion and seeking facts that will support it.  It is, in essence, a deductive process, which does not so much involve reasoning as rationalizing, finding a way to justify a conclusion one has already drawn.

            On the subject of the President’s birth, for example, we now have as part of the public record every legal or para-legal document that can exist, all saying he was born in Hawaii.  There is the Certificate of Live Birth, the co-called Long Form Birth Certificate, and the birth announcement that appeared in a Hawaiian newspaper.  There are also hospital records from the hospital identified on all those documents as the place in which Obama was born, indicating that indeed a male baby was born to his mother in that hospital.

            Reason would suggest that, on the basis of the facts, the person now holding the office of President of the United States was indeed born in Hawaii.  The “birthers,” however, motivationally reasoned for a long time that since Obama refused to produce the Long Form Birth Certificate, it was safe to conclude he wasn’t born in Hawaii.  When he did produce that document, it introduced a fact not consonant with their preferred conclusion, so they motivationally reasoned instead that the document was a forgery, part of the vast, cabalistic conspiracy that promoted Obama to office in the first place.  They deduced a fact, in other words, to support their preferred conclusion.

            It’s easy to ridicule the birthers and the climate deniers and the left wing conspiracy believers, but in truth we should do so with some trepidation.  Much as we don’t want to hear this, all of us engage in “motivational reasoning” from time to time, and indeed, our ability to do so is part of what keeps us sane.  

            We all of us like to believe that when we think about something, we do so with our brains alone and produce conclusions that are therefore completely rational, logical and objective.  That, however, is a warm and fuzzy fiction.  Some 2500 years ago, Aristotle pointed out that thoughts are influenced by feelings and that very often feelings are generated by thoughts.  If I’m already in a bad mood, discovering that my car won’t start may well become clear evidence the world is out to get me.  If I’m in a good mood when my car refuses to start, it may become an excuse to call my boss and say I can’t get to work that day.

            On the other side of the coin, if something triggers in me the thought of a camouflaged yahoo sitting in a deer stand 30 feet in the air with a high-powered rifle and a telescopic sight engaging in the “sport” of waiting for Bambi to amble innocently into range, angry feelings will well up immediately.

            The point is that much of what we think is a function of how we feel, and much of what we feel is a function of how we think.  And motivational reasoning doesn’t just happen in regard to fringe element things like the ones I’ve mentioned so far.  For example, there is no reasonable way to deny that Paul Ryan’s plan for Medicare would end “Medicate as we know it.”  Medicare as we know it is a plan where the government automatically pays about 80% of any medical bill a senior citizen accrues.  Ryan’s plan would involve the government giving seniors a subsidy with which to buy private insurance, which would then pay some percentage of their medical bills.  Two very different processes.

            Here’s where motivational reasoning comes in.  A conservative will look at that fact and see that individuals are being required to take greater responsibility for themselves and that the total cost to government is lowered.  Since those square perfectly with two important pre-disposed conclusions the conservative holds sacred, he feels good about the Ryan plan, and will hold up those two "facts" as justification for that.  A rationalization.

            A liberal looks at the same fact and sees that  private insurers will benefit greatly and seniors will be far less certain of adequate health care.  Since those square perfectly with two pre-disposed bad feelings the liberal has about anything conservative, he will conclude the Ryan plan is a bad one, and hold up his feeling induced thoughts as justification.  Another rationalization.

            Notice that in both cases, all the facts are in fact facts.  Notice as well that both the liberal and the conservative are trumpeting the facts that support their already formed conclusion or feeling, and somehow missing—or managing to reject—the ones that don’t support that conclusion or feeling.

            We’ve all heard the phrase, “my mind is made up, don’t confuse me with facts.”  It’s a phrase we always manage to convince ourselves (more motivational reasoning) applies beautifully to the way other people act but not at all to ourselves.  In point of fact, though it is probably true that some among us are more inclined to not be confused by facts than others, dismissal of inconvenient truths is something we all engage in.

            What has perhaps made motivational reasoning such an au currant topic in psychology today is that NOT engaging in it may be getting harder and harder to do.  What inclines us to engage in motivational reasoning—again, rationalization really—rather than purely cognitive reasoning is to a large extent the degree to which feelings derived from prejudices—ethnic, religious, political, economic, social, cultural, whatever the source—inform our beliefs.  And there has been, over the past 50 or 60 years, a sea change in the birth and nurturing of prejudices—or at least it seems that way from the anecdotal perspective of someone who has lived through the past 50 or 60 years.

            Until 1980, when Ted Turner launched CNN as a 24 hour news channel, national and international news were things most Americans received on TV once a day, around dinner time, and not really at all on the weekends.  Newspapers published a morning edition, and in most urban areas, an evening edition—which similarly rarely appeared on the weekends.  There was no internet, at least not in most people’s homes, let alone their telephones.

            There was not, in other words, the ominipresence of “information” with which we are bombarded now.  Until 1980, TV news came from NBC, CBS or ABC.  Now, by my count, there are something like 18 television channels (on my cable system) broadcasting some form of “news.”  And there’s the internet, where “news” comes constantly from sources that are not always even findable, much less reliable.  And talk radio.  I won’t even go there.

            Just as important, maybe more so, until the ‘80’s, the gold standard for any news organization, broadcast or print, was dissemination of verifiable information without comment or interpretation.  Just the facts, ma’am, as a popular ‘50’s TV show often said. Newspapers had their editorial pages, of course, and TV had its “commentary” shows, but even there, great care was taken not to print or broadcast any opinion that could not be thoroughly supported by facts.  Even CNN, in its early days, was more of a headline deliverer than a headline explainer.

            That approach to journalism is now so old-school as to seem almost quaint.  Today, every newspaper is expected to have a “slant,” (the New York Times is liberal, the New York Post is conservative), and while the broadcast networks have remained relatively objective in their news reporting (Fox News excepted), every cable channel has a clear philosophy.  As of course, does every internet site.  If you want a liberal spin, go to huffingtonpost.com.  If you’re conservative, try drudgereport.com. 

            The point is that prejudices, biases, pre-conceived conclusions, even bigotries, are much easier to come by and much easier to nourish than they ever were before.  Hence, motivational reasoning is a much bigger part of what all of us do every day.

            I hear pundits and ordinary people alike grouse every day about the “hyper-partisanship” that dominates our politics.  I have a solution.  Let’s turn the clock back to 1980, shut down all cable news channels, all talk radio, all internet sites with any political, social, religious, etc. content, and require that nothing appear in print or broadcast that can’t be independently verified by at least three sources.  That would probably give many of us a lot of holes to fill in our day, but it might also force us to start seeing information in its broadest rather than narrowest context and make us more willing to let facts persuade us as to truth and less willing to go cherry picking for facts that support the truth we like best.

            

Path to Prosperity?

            A couple weeks ago, the GOP rolled out its 2012 budget proposal, Paul Ryan’s “Path to Prosperity,” which did a huge favor for the Democratic Party and the increasingly diminishing number of Americans to whom facts and logic are things to be admired, not sneered at and twisted.  It put in plain black and white what the Republicans have advocated in oblique ways for 30 years—the party’s desire to see this country become a plutocracy where big money, whether corporate or individual, rules the day.

            Specifically, the GOP proposes to reduce the budget deficit dramatically by cutting 4.3 trillion dollars in spending over the next ten years.  Never mind that the actual budget deficit reduction would be more on the order of 1 billion dollars when you factor in the 4.2 trillion dollars in tax cuts—well over 90% of which would go to wealthy individuals and corporations—over the same period.

            The kicker is that fully 2/3 of the spending cuts come from programs aimed at ordinary Americans.  Those programs range from education to assistance for the poor to infrastructure renewal to job training to regulatory agencies to health care.  Among the things not cut are defense spending or corporate welfare—though, to be fair, the Ryan budget does cut ethanol subsidies.

            Not surprisingly, since virtually every Republican in Congress signed Grover Norquist’s pledge to never raise taxes, obvious deficit reduction opportunities like income taxes on the wealthy, estate taxes, capital gains taxes and corporate taxes are not anywhere to be found in the Path to Prosperity.

            Nowhere however is the disparity between the sacrifice Ryan’s budget demands from the less fortunate and what it demands from the most fortunate more apparent than in the area of health care.  The Path to Prosperity takes dead aim at health care programs for Americans at both ends of the spectrum—children and senior citizens.

            Let’s look at the senior citizen aspect first.  Here the target is Medicare.  Amazingly, to me at least, when Ryan first presented his budget proposal, even normally left-leaning media like the Washington Post and the New York Times hailed it as a “courageous” action that finally put one of the bigger elephants in the room on the table.  I can only assume that the editorial boards of both papers reacted to the fact that the words “Medicare” and “overhaul” appeared in the same sentence, wrote their headlines on that basis, then actually read  what the overhaul would comprise.

            Beginning in 2022, Medicare under Ryan’s plan would stop being an entitlement paying defined benefits.  Instead, seniors would be given what the Path to Prosperity calls “premium support” with which they could purchase private insurance.  The Congressional Budget Office has already released figures showing that a 2022 retiree would face at least $6,400 more in out of pocket payments to acquire private insurance comparable to what Medicare presently offers.

            Who benefits from this proposal?  Clearly, the federal government will be paying way less for senior citizen medical care then it does now, so the federal budget enjoys a benefit.  Clearly also the medical insurance industry will benefit enormously.  2022 will be right near the peak of “baby boomer” retirement, so millions of people will be needing the coverage they now receive from Medicare. 

            Who won’t benefit however is just as clear.  Seniors in the middle and lower income brackets, who frequently have a difficult time handling what Medicare doesn’t pay now, will have the insurance industry’s hand even further in their pockets.  And while the Republican mantra is that insurance companies will be competing so hard for the new business that the cost of insurance will be held down, a reality check would perhaps be in order.  Keep in mind that the Path to Prosperity also calls for a total repeal of the Affordable Care Act—what Tea Partiers like to call Obamacare.

            That means that insurance companies would again be able to refuse coverage, or require grossly inflated premiums, co-payments or deductibles, for “pre-existing” conditions.  Find me a 65 year old who doesn’t have something a health insurer can call a pre-existing condition.  Repealing AFA would also mean insurance companies would again be allowed to raise premiums on anyone who has the temerity to get sick and file a claim.  And, if the claim gets too big, insurance companies would again be free to simply drop you.

            So, would insurance companies compete for all this new business?  Sure, but in the gentlemanly way they do now.  They would all set their premiums at a comfortable profit level for themselves—one which wouldn’t differ more than a dollar or two per month no matter what company you looked at.  They would then all find the same reasons to require your particular insurance policy to be more expensive than the base price. They would continue to pay less or require greater co-payments if you came down with appendicitis while on vacation and had to use an “out-of-network” emergency room to keep from dying.  They would continue, in other words, doing all the things they do now to maximize their bottom line.

            And since there is nothing in the Path to Prosperity to put the brakes on medical cost increases (in fact, there are a couple of things that take the brakes off), nor anything to protect consumers from predatory insurance industry practices, it is safe to assume that out of pocket expenditure for seniors will creep up a bit every year.

            At the other end of the spectrum, the Path to Prosperity would withdraw federal funding for the S-Chip program which provides children from low income families with access to basic medical care.  It would also cut back or eliminate programs that provide pre- and post-natal care for low income women, and most importantly, substantially reduce federal support of state Medicaid programs—which are primarily responsible for what minimal level of health care children and teens from low income families receive.

            When you focus on medical care, there are some really stark differences between the Path to Prosperity and what President Obama proposed in his budget speech.  Both plans trumpet large savings over time in medical care costs to the federal budget.  Interestingly, though hardly surprisingly (see my first paragraph), Ryan proposes using those savings exclusively to reduce the budget deficit.  In fact, those savings are the single biggest item in his proposal.  Granted, there is some vague language about using part of the savings to make Medicare more solvent, but since Ryan is basically calling for the shutting down of Medicare, its solvency becomes something of a moot question.

            The Democrats, on the other hand, propose using most of the savings the Affordable Care Act realizes from Medicare reform to pay for the cost of extending insurance to the 30-odd million people, most of them low income—who don’t have it.

            The President’s proposal also calls for the federal government to provide subsidies to assist seniors in dealing with the “doughnut hole” in Medicare Part D coverage.  The Path to Prosperity ignores that substantial hardship many seniors now face.

            Finally, the President’s speech advocated authorizing Medicare to negotiate directly with drug companies over the price of prescription medicine.  The Veterans’ Administration currently has that authority, and currently pays nearly 40% less for prescription drugs than Medicare is forced to pay.  Enabling Medicare to save 40% on what it pays for drugs would seem an obvious place for budget deficit hawks like Ryan to look for savings, but, strangely, he chose to ignore that one.  Perhaps the fact that Medicare’s savings would come out of Big Pharma’s profits had something to do with it.

            I’ve alluded several times in recent blogs to my growing sense that an ever enlarging segment of the American population is no longer capable of looking at the facts of Republican and Democratic positions on issues that clearly affect them, and determining which set of facts are most beneficial to themselves.   If you are in that top 5 or even top 10 percent of incomes, perhaps what happens to Medicare or S-Chip doesn’t matter.  If you’re anywhere lower on the income scale, what happens to those programs, and what happens with medical costs generally, should very much concern you. 

           

            And the facts with respect to medical coverage are, as one sign holder at a Ryan town hall in Wisconsin put it, that the Path to Prosperity is more like a Road to Ruin.

            

on ryan and rand

            In my last blog,  I wrote a speech for President Obama that was essentially designed to draw lines in the budgetary sand that could  establish Democrat controlled parameters for future budget debates.  Last Wednesday, the President ignored my speech and gave his own. Though the cheekiness of that offends me a bit, and though his speech neglected to draw several very important lines in the sand, it did at least establish a moderate (I wouldn’t go so far as to call it liberal) position to stand in stark contrast to the John Galt vision of America that Representative Paul Ryan introduced a bit earlier and the Republicans passed in the House shortly after the President’s speech.

            If the John Galt reference doesn’t resonate for you, he is the character at the center of Ayn Rand’s novel, Atlas Shrugged, who is essentially calling on America’s financial and corporate elite to go on strike—to withdraw their services and let the nation of moochers and laggards who have been living off what the genius of their betters produces fend for themselves. 

            The novel, which took Rand 12 years to complete, was published in 1957 to generally tepid reviews, but soon developed a cult following and is today held in much the same esteem by die-hard conservatives as the Bible.  Its premise is that great minds drive business, business drives the world, and anyone or anything that stands in the way of unfettered pursuit of profit is reactionary and needs to be eliminated.

            Not surprisingly, Rep. Ryan is an Ayn Rand acolyte who credits her books (The Fountainhead is her other major work, drumming the same beat as Atlas Shrugged) for getting him interested in entering politics.  He also reportedly requires his staff to read Atlas Shrugged.

            A few numbers are perhaps a good way to start looking at Ryan’s budget proposal.  When originally introduced, it claimed over 5 trillion dollars in cuts.  Once the most glaringly incorrect numbers were pointed out, the savings claim was reduced to 4.3 trillion dollars. 

            On the revenue side, Ryan proposes cuts to individual and corporate tax rates from 35% to 25%, elimination of estate tax, near elimination of capital gains tax and the closing of unspecified deduction loopholes.  Ryan didn’t do this math in his speech unveiling the proposal, but the Congressional Budget Office did, and the total comes to 4.2 trillion dollars. 

           

            So, the Ryan (Republican) budget would lower federal expenditures by 4.3 trillion dollars (though much of this is illusory, consisting of  “cutting” funds allocated years ago but never spent—including over 400 million dollars one agency had already volunteered to give back), but it would also lower federal revenues by 4.2 trillion dollars.  The net effect on the budget deficit?  About a billion dollars, or barely one percent of the federal budget.

            It’s also worth noting that the tax rate on individuals that Ryan wants to cut is the one that the wealthiest 5% of Americans exist in.  If you earn, say, 50,000 dollars/year, cutting the tax rate from 35% to 25% will give you a whopping one percent reduction in your taxes.  If you’re making 200,000 dollars/year, the savings is 10%.

            But, Ryan’s defenders are quick to point out, cutting taxes on corporations and the wealthy will actually produce more tax revenue than the current tax structure because more jobs will be created and the economy will grow. 

            Please!

            That is the same “voodoo economics” that Reagan and his minions trumpeted in 1981 when they hammered through a giant cut for the wealthy.  The economy promptly went into a swoon and 4 years later Reagan raised taxes. 

            We went through the same idiocy again under Bush I.  Taxes were cut at the start of his administration, and even though he challenged us to read his lips, they had to be raised again to prevent a recession.

            Never one to be bothered by history, Bush II put the cuts we presently have in effect and a trillion dollar budget surplus quickly became a multi-trillion dollar budget deficit.

            That surplus was achieved in part because President Clinton and the Democrats passed a tax increase that Republicans loudly decried as poisonous to economic growth—only to watch the economy reach heights not seen before or since.

            Was it Einstein who said insanity could be defined as doing the same thing over and over and expecting a different result?  By that standard, the last 30 years worth of Republicans should be institutionalized.

            But the Randian nature of Ryan’s budget isn’t just in the windfall it directs to the wealthy and to corporations.  In both Atlas Shrugged and The Fountainhead, Rand makes it clear that the working class is a necessary evil.  Someone has to stand on the factory assembly line or behind a retail counter or keep records at the DMV, but those people should be grateful for the opportunity to do those menial things, opportunities that are created by the elite, and when they are no longer capable of standing for eight hours a day, they should hobble off somewhere and disappear.  For her, there were those intelligent and resourceful enough to rise to the top, and there were drones.  And drones were more or less equivalent to domestic livestock—their job was to serve their purpose and then die.

            In Rand’s world, what sucks society down, keeps the wealthy and successful from making it all it could be, are misguided efforts to provide for drones, to establish what we have come to call a “social safety net.”  In her world, factory workers and retail associates and file clerks don’t need an education, have no right to housing or food or medical care beyond subsistence level.  She wouldn’t have said, “Let them eat cake,” because, well, they don’t really need cake.  Flat bread is sufficient.

            As her acolyte, Ryan proposes in his budget to repeal the Affordable Care Act (that constitutes a big chunk of his supposed “savings”) and replace it with—nothing.  He does, however, have some recommendations about medical care for seniors and the poor.  For seniors, he suggests dismantling Medicare and replacing it with a $15,000 annual grant with which they could purchase private insurance.  Ryan must have nearly broken his arm patting himself on the back when he came up with that one, because it not only substantially reduces government spending on health care, it provides a huge subsidy for the insurance industry.  Two birds with one stone!

            For the poor, who are mostly covered by Medicaid, he proposes a similar block grant to states which they would be free to administer any way they wanted. 

            How Ryan came up with $15,000 as the appropriate figure for the Medicare grant is uncertain, but let’s think about that for a second.  Roughly 60% of Americans currently have some level of health insurance through their place of employment.  They don’t need Medicare (or its replacement) until they retire.  And while some folks can retire as young as 55, most of us have to work into our early to mid-60’s before that becomes possible.  If I had been forced to find a private insurance policy when I retired, I would have had to list arthritis, high blood pleasure, degenerative disk disease and hypoglycemia as existing conditions.  I would also have had to note a bout with ocular cancer 12 years ago. 

            Now keep in mind that Ryan’s budget repeals the Affordable Care Act, so, as they could prior to its passage, insurance companies would be able to deny coverage or jack up premiums and co-pays for pre-existing conditions.  It’s hardly beyond the realm of possibility that I would not be able to find insurance coverage at all under Ryan’s plan, or that, if I did, the premium along with co-pays and deductibles would be well in excess of $15,000.  And I’m more than relatively healthy for my age!  But then, I’m a drone.  I should be happy for whatever bone is tossed me.

            Ah, say Ryan’s supporters, you neglect the fact that insurance companies would be competing for your business, which would surely hold costs down.  Again, please!  Insurance companies before the Affordable Care Act were hardly knocking down the door trying to get seniors enrolled in their plans.  Seniors are not good insurance risks.  Weren’t then, aren’t now.  What incentive would insurance companies have to compete on the price level for customers they know will be filing claims—and filing them sooner rather than later.

            As for block grants to states, that is nothing more than an additional incentive for states to keep people off Medicaid rolls.  And they do a very effective job of that now.  It is also wonderfully disingenuous of Ryan and his Republican allies.  First of all, his budget proposal doesn’t say how much each state will get, or how that figure will be arrived at.  Since he’s listing that as a way of reducing the federal deficit, however, it stands to reason that he envisions the block grant being substantially less than the federal government sends to states now.  It’s cowardly not to say up front how much less.

            Second, if the federal contribution is less, states have one of three options, none of them good.  They can simply find ways to exclude people from Medicaid, they can make large cuts in other areas of their budgets in order to pay for Medicaid, or they can raise their own taxes and apply the increase to Medicaid.  The consistent thing about all three options is that they hurt people, particularly poor people.  But then, they’re drones.

           There are many other Randian elements to Ryan's budget, but dealing with them all would turn this into a book.  Suffice it to say that, measured by an standard, Ryan's budget extracts fully 2/3 of its 4.3 trillion in cuts from programs that primarily serve the middle and lower classes.  The drones.

            What worries me at the moment is that the speech Obama gave and the budget plan he unveiled, while clearly more humane (that is, less Randian) than Ryan’s, is at best a moderate, perhaps slightly left leaning proposal.  If it becomes the left pole to the Ryan budget’s right pole in the coming budget debates, the center starts off way to the right. 

            Ayn Rand is probably chuckling in hell right now, but we drones have cause for concern.