Friday, April 19, 2002
Today, New York Times columnist Paul "Line 47" Krugman tries his hand at rhyming and an honest analysis of President Bush's tax policy. He succeeds at one of them.
[T[he Bush administration really, really dislikes sharing information with Congress. Dick Cheney refuses to release the records of his energy task force; Tom Ridge won't testify on homeland security; and last week Thomas Scully defied a subpoena from the Small Business Committee.
Well, every administration has a tendency to want to guard what it feels is its prerogative. Cheney won't release his energy records because they are part of the policy-making function of the executive branch. Some disagree, and it will be settled in court. But can you imagine a member of Congress being asked for a list of every lobbyist they've met with in the past six months and the subject and contents of each meeting and having them willingly disclose it?
As far as Tom Ridge goes, the administration contends that he is an advisor to the president much like National Security Advisor Condoleezza Rice. Rice is not required to testify to Congress. Ridge has offered to meet with Democrats in the Senate, but not under oath. Unfortunately it wouldn't be the dog-and-pony show that Democrats want, so they continue to harp for a formal hearing. This isn't a case of the administration withholding information, it's about protecting the ability of presidential advisors to advise the president without having to repeat everything to Congress under oath.
I won't address Scully's action, because I'm not completely familiar with what happened, but I can (and will) make a guess. Democratic senators want to make a spectacle and he doesn't want to be part of it. But he really doesn't have much of a choice -- if what Krugman says is true -- he shouldn't have done it.
I've just spent about 30 minutes looking for a report, any report, of Scully defying a subpoena. The most recent item I can locate about Scully testifying before Congress took place February 14, 2002. There is no transcript up, but it appears as though Scully testified. If someone can point me to a more recent committee hearing or a report of what Krugman is talking about, I'd appreciate it.
The background is the recent surge in health care expenses. During the 1990's the rise of H.M.O.'s put a squeeze on medical bills; now there is nothing left to squeeze. So H.M.O.'s are sharply increasing their payments to health-care providers, and the federal programs overseen by Mr. Scully are under pressure to follow suit. Since these programs cost more than national defense, we're talking about a lot of money here.
Still, if medical care is a priority, which it surely is for the voters, why doesn't the government simply provide the necessary resources? You already know the answer: it's hard to reconcile realistic spending increases with plans for more tax cuts.
I don't begrudge doctors making a good income. With their education and expertise, they deserve it. Krugman suggests that "there's nothing left to squeeze" -- doctors apparently aren't making enough to money to survive. However, their incomes aren't such that they're leaving the business and going into social work or teaching or journalism. Remember, even the poorest doctor is "wealthy" according to Krugman and his ilk.
Krugman's answer to every problem is to spend more money, yet Medicare loses millions each year to fraud. And the government can't spend more money if taxes are cut. Take a look at your paystub again. See that "Medi" line? That's a tax to support Medicare. Bush's tax cut didn't touch that. So much for Medicare funds going to pay for Medicare. It's all one big pot.
Last year the administration claimed that it could easily cut taxes without tapping the Social Security surplus. Those claims were false, but Sept. 11 provided cover: who cares about lockboxes when we're in pursuit of evildoers?
THERE IS NO LOCKBOX!
Got that out of my system.
The truth is that a robust economy is what will help Social Security most in the long run. Jump starting the economy will result in higher tax revenues and, in theory a longer period of solvency. Of course, in wartime all of this is secondary.
True, skeptics have raised a few questions. Given that we face a major new demand on the budget, shouldn't we reconsider a tax cut proposed in more peaceful times? (Instead, the administration wants to make the tax cut permanent.) Don't taxes normally go up in wartime, as a matter of shared sacrifice? And isn't it a little strange, given all the martial rhetoric, that the administration's recent 10-year budget proposal allocated more money to a second round of tax cuts ($665 billion) than it did to new defense spending ($625 billion)?
President George W. Bush has learned the lesson that is father didn't, you can't ignore the economy. A robust economy will provide increased tax revenues, even at lower tax rates (hasn't Krugman heard of the Laffer Curve?). These 10-year numbers are in reality meaningless, and Krugman knows it. When we attack Iraq, the numbers will change. If Saudi Arabia doesn't fall into line, the numbers will change. It's all meaningless.
But as the cartoonist Tom Tomorrow has explained, the answer to all such questions is, "Why do you hate America?" A patriotic public is in no mood to question its leader's policies.
I don't think Krugman hates America. But I've got a hunch that he probably hates Republicans in general and President Bush in particular.
The really amazing thing is that raiding the lockbox wasn't enough. In the name of fighting terrorism the administration has in effect diverted $2 trillion of Social Security surpluses, previously pledged to debt reduction, to cover the revenue losses from tax cuts. But realistic projections now show permanent deficits in the federal budget as a whole. This threatens the administration's story line, which says that now is the time for even more tax cuts.
Note the "realistic projections" comment. Projections which show deficits "as far as the eye can see." are realistic. Others are not. Those projections are also meaningless. They change from year to year. And the latest (in Krugman's opinion) unrealistic deficits show a couple of years of deficits and then back to surpluses.
So there is intense pressure within the administration to dress up the fiscal picture by underestimating future spending — health-care spending in particular. Robert Greenstein of the Center on Budget and Policy Priorities writes that the administration's budget "assumes an extraordinarily low rate of growth in Medicare costs." And since it would be hard to justify low projections of future cost growth if current costs are surging, there is also intense pressure to keep actual Medicare payments low, despite rapidly rising costs in the private sector.
And that brings us back to Mr. Scully's defiance. Any health-care professional will tell you that Medicare's payment rates are increasingly inadequate. Many physicians now turn away Medicare patients; and service providers, like the companies that do X-rays at nursing homes, are going out of business. When Mr. Scully discovered that he would have to face some of those service providers, he walked out. You can't blame him (except that he was breaking the law). After all, he's under orders to keep those numbers down.
I don't know what the answer to this problem is. I'd like to see a little more creativity than Krugman's insistence that we just throw more money at the problem.
The real lesson here is that things add up. The administration has been able to push tax cuts that mainly go to the wealthiest few percent of Americans, because the downside seems abstract; the middle class doesn't understand that those cuts will eventually starve programs that it counts on, like Medicare.
But the downside has already begun. There is a direct link between the administration's affluent-friendly tax cuts and the growing crisis of Medicare underfunding; it really is a case of their wealth versus your health.
Now we're back to the same old Krugman-rant. The wealthy got more money back in the tax cut, because they pay more money. The wealthy actually bear a higher percentage of the tax burden now than at any time in our history. The tax system is progressive.
I'm sick of this lie that the wealthy benefit more, because it's not really true. We can (and have) thrown around these numbers before. I'm glad I got my $300 back last year. The fact that somebody else (the rich) got more is a fact of life. Life isn't fair -- if it was I'd pay as much in taxes as Bill Gates. I'm happy I don't.
Oh, and a final note...Krugman did succeed in his little rhyme.