But on the realistic side, he explains on Social Security, "Social Security’s imbalance could be fixed by raising the ceiling for wages subject to the payroll tax." He doesn't even mention the proposal to cut benefits for existing and future retirees by tying inflation adjustments to the "chained CPI" measure.
The piece in both print and online is accompanied by an illustration by Ana Benaroya that works well in spoofing the excessive hype around the "fiscal cliff" and the potential harm that could come from addressing it in bad ways:
But I also have to wonder about the "Don't Feed the Animals" sign it features. Among the more enthusiastically segregationist-minded, a meme became popular this past year comparing ordinary people receiving some sort of government assistance to wild animals who shouldn't be fed by people. Although I'm more inclined to read this use of it as a spoof of segregtationist and conservative attitudes.
Coy also gives us a non-crazy description of the real issue around projected Medicare and Medicaid cost issues (although he doesn't mention more recent projections that suggest the problem may be less severe than often thought):
The knottier problems are Medicare and Medicaid, whose costs have been driven up by extraordinarily inefficient health-care spending. The U.S. spends 53 percent more on health care per capita than No. 2 Norway while getting worse results. (Norwegians’ life expectancy at birth is a year and a half longer.)The per capita cost and value-per-amount-spent are two areas in which the United States really does have an argument that we're "exceptional."
And he connects the costs of health care to federally-funded research, or lack thereof:
Making benefits less generous is the no-brainer way to close the gap [on Medicare and Medicaid]. The forward-thinking way is to conquer diseases that sap America’s human and economic potential, as Jonas Salk’s vaccine did for polio in the 1950s. Medicare and Medicaid alone spend $140 billion a year on dementia care, the Alzheimer’s Association estimates, yet the U.S. spends only about half a billion dollars a year researching cures. George Vradenburg, chairman of USAgainstAlzheimer’s, argues that the disease could be mostly eliminated by 2020 with Manhattan Project-size funding; cuts to research could make the problem worse. "This disease could very well become the financial and social sinkhole of the 21st century," says gerontologist Ken Dychtwald, chief executive officer of the consulting firm Age Wave.Coy might have added that cutting benefits on Medicare and Medicaid, as President Obama proposed in 2011 in the debt-ceiling negotiations, is not only a "no-brainer" but a no-heart-er approach. But in the context, "no-brainer" would not only mean an approach that requires no thought but one that doesn't make good sense.
He makes an obvious and accurate Keynesian point that contradicts Republican economic dogma, "What’s limiting business investment and hiring today isn’t the prospect of slightly higher tax rates but the fear that there won't be enough customers."
And he explains how protracted depression can produce major long-term damage to the economy:
Weak, uncertain demand is the lasting legacy of the Great Recession and the slow rebound since. In manufacturing, mining, and utilities, depreciation has outpaced fresh investment since the start of the recession in December 2007, leaving the sector with a decline in productive capacity, according to Federal Reserve data. Recessions have lasting consequences: Eroding capacity, they limit the economy’s ability to grow—and generate tax revenue—in the future.Coy also talks about the importance of engaging in public research for "education, scientific research, and infrastructure." But I'm getting more and more indifferent to those vague formulations that are often found in close company with neoliberal assurances that the Great God Free Market will take care of everything as long as we have fewer unions and less protection for workers ("labor market flexibility" in the jargon) and also fewer government services, lower or nonexistent pensions, and restricted access to health care for all but the One Percent ("enhancing national competitive" in the neoliberal mantra). Coy does point out an important aspect of infrastructure investment, though:
Physical capital is underfunded as well. In 2009 the American Society of Civil Engineers gave the U.S. a grade of D for infrastructure. It’s doubtful that things are much better now; only about $100 billion of the Obama administration’s nearly $800 billion stimulus program went toward roads, bridges, and other needs. Infrastructure investment would make the U.S. more competitive in the long run while creating jobs in the short run, and since the U.S. can borrow for next to nothing, the financing would be cheap. But Boehner is opposing Obama’s debt proposal—which includes $50 billion in infrastructure spending—because it doesn’t cut spending enough. That's unfortunate.And he even says that holding back necessary spending right now "by spending cap or sequester would be as dumb as discarding coffee filters to lighten one’s backpack." He also notes, perhaps with an ironic twist, "The U.S. spends more on its military than the next 13 countries combined; that would suggest potential for some nips and tucks." Yeah, "nips and tucks."
Coy's article is nevertheless framed in the context of making responses to the "fiscal cliff" pseudo-crisis less damaging than they might be.
And that's part of the more general problem. Both Democratic and Republican leaders are focusing their emphasis on reducing the deficit in the middle of a depression, not on the immediate need for strong stimulus spending. Vague magic formulas about the need to spend more on "education, scientific research, and infrastructure" don't count.
Tags: austerity economics, fiscal cliff, grand bargain, medicaid, medicare, social security