The Hoax of Entitlement Reform

By Robert Reich, Robert Reich's Blog

07 January 13

t has become accepted economic wisdom, uttered with deadpan certainty by policy pundits and budget scolds on both sides of the aisle, that the only way to get control over America's looming deficits is to "reform entitlements."

But the accepted wisdom is wrong.

Start with the statistics Republicans trot out at the slightest provocation - federal budget data showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase.

And Census data showing 49 percent of Americans living in homes where at least one person is collecting a federal benefit - food stamps, unemployment insurance, worker's compensation, or subsidized housing - up from 44 percent in 2008.

But these expenditures aren't driving the federal budget deficit in future years. They're temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America's safety nets have been too small and shot through with holes. That's why the number and percentage of Americans in poverty has increased dramatically, including 22 percent of our children.

What about Social Security and Medicare (along with Medicare's poor step-child, Medicaid)?

Social Security won't contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund.

That fund has been in surplus for the better part of two decades, as boomers contributed to it during their working lives. As boomers begin to retire, those current surpluses are disappearing.

But this only means the trust fund will be collecting from the rest of the federal government the IOUs on the surpluses it lent to the rest of the government.

This still leaves a problem for the trust fund about two decades from now.

Yet the way to deal with this isn't to raise the eligibility age for receiving Social Security benefits, as many entitlement reformers are urging. That would put an unfair burden on most laboring people, whose bodies begin wearing out about the same age they did decades ago even though they live longer.

And it's not to reduce cost-of-living adjustments for inflation, as even the White House seemed ready to propose in recent months. Benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Besides, Social Security's current inflation adjustment actually understates the true impact of inflation on elderly recipients - who spend far more than anyone else on health care, the costs of which have been rising faster than overall inflation.

That leaves two possibilities that "entitlement reformers" rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered.

What's left to reform? Medicare and Medicaid costs are projected to soar. But here again, look closely and you'll see neither is really the problem.

The underlying problem is the soaring costs of health care - as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing - combined with the aging of the boomer generation.

The solution isn't to reduce Medicare benefits. It's for the nation to contain overall healthcare costs and get more for its healthcare dollars.

We're already spending nearly 18 percent of our entire economy on health care, compared to an average of 9.6 percent in all other rich countries.

Yet we're no healthier than their citizens are. In fact, our life expectancy at birth (78.2 years) is shorter than theirs (averaging 79.5 years), and our infant mortality (6.5 deaths per 1000 live births) is higher (theirs is 4.4).

Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.

For example, almost 95 percent of cases of lower back pain are best relieved by physical therapy. But American doctors and hospitals routinely do expensive MRI's, and then refer patients to orthopedic surgeons who often do even more costly surgery. There's not much money in physical therapy.

Another example: American doctors typically hospitalize people whose diabetes, asthma, or heart conditions act up. Twenty percent of these people are hospitalized again within a month. In other rich nations nurses make home visits to ensure that people with such problems are taking their medications. Nurses don't make home visits to Americans with acute conditions because hospitals aren't paid for such visits.

An estimated 30 percent of all healthcare spending in the United States is pure waste, according to the Institute of Medicine.

We keep patient records on computers that can't share data, requiring that they be continuously rewritten on pieces of paper and then reentered on different computers, resulting in costly errors.

And our balkanized healthcare system spends huge sums collecting money from different pieces of itself: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is "billing clerk." A third of nursing hours are devoted to documenting what's happened so insurers have proof.

Cutting or limiting Medicare and Medicaid costs, as entitlement reformers want to do, won't reform any of this. It would just result in less care.

In fact, we'd do better to open Medicare to everyone. Medicare's administrative costs are in the range of 3 percent.

That's well below the 5 to 10 percent costs borne by large companies that self-insure. It's even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it's way, way lower than the administrative costs of individual insurance (40 percent). It's even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

Healthcare costs would be further contained if Medicare and Medicaid could use their huge bargaining leverage over healthcare providers to shift away from a "fee-for-the-most-costly-service" system to a system focused on achieving healthy outcomes.

Medicare isn't the problem. It may be the solution.

"Entitlement reform" sounds like a noble endeavor. But it has little or nothing to do with reducing future budget deficits.

Taming future deficits requires three steps having nothing to do with entitlements: Limiting the growth of overall healthcare costs, cutting our bloated military, and ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries).

Obsessing about "entitlement reform" only serves to distract us from these more important endeavors.

Is the Constitution Still Relevant?

By Robert Parry, Consortium News

06 January 13

here are two major schools of thought about the U.S. Constitution. One from the Left argues that it's an outdated structure that should not be allowed to inhibit actions necessary to meet the needs of a modern society. And one from the Right, that only a "strict constructionist" reading of the Constitution and respect for the Framers' "original intent" should be allowed.

But the problem with these two views is that neither is logically consistent or honest. The Left, for instance, embraces important constitutional liberties, such as habeas corpus, freedom of speech, and prohibitions against "cruel and unusual punishments" and unreasonable searches and seizures -- regardless of the exigencies of the moment.

Yet, the Left disdains much of the Constitution for its anti-democratic and even immoral compromises, which enabled the new governing document to emerge from the Constitutional Convention in 1787 and narrowly win ratification in 1788. Not only did the Constitution countenance slavery, it undercut democracy by giving two senators to each state regardless of population (and originally having them appointed by state legislatures, not elected by the people).

Why, ask many on the Left, should modern American society be restricted by the judgments of a small group of propertied white men -- many of them slaveholders -- who died two centuries ago? Why should old compromises, which now seem ridiculously quaint and wrongheaded, be allowed to distort and constrain democratic judgments in 2013?

As Georgetown University constitutional law professor Louis Michael Seidman wrote in a recent New York Times op-ed, much of the fault behind today's gridlock in Washington can be traced to the "archaic, idiosyncratic and downright evil provisions" of the U.S. Constitution. He added:

"Our obsession with the Constitution has saddled us with a dysfunctional political system, kept us from debating the merits of divisive issues and inflamed our public discourse. Instead of arguing about what is to be done, we argue about what James Madison might have wanted done 225 years ago."

The Right's Distortions

While the Left tends to view the Constitution as an irretrievably flawed document (albeit with individual liberties that the Left loves), the Right has made political hay by presenting itself as the Constitution's true defenders. The Right argues for what it calls "strict construction" and "original intent."

Yet, even right-wing Supreme Court justices who wax eloquently about "originalism" will twist the Framers' words and intentions when ideologically convenient, such as when Antonin Scalia inserted restrictions in the Commerce Clause -- during his opposition to the Affordable Care Act -- although James Madison and the Framers left the congressional power to regulate interstate and national commerce unlimited.

Indeed, from a strict reading of the Constitution, Madison had a much more robust respect for the democratic decisions of the elected branches of government than does today's Right.

In oral arguments on "Obamacare" in 2012, Scalia fretted about the possibility that Congress might use the Commerce Clause to mandate compulsory broccoli purchases, but Madison seemed to understand that if Congress and the President were nutty enough to do something like that, the voters would have the commonsense to un-elect those representatives at the next opportunity.

However, rather than trusting in Madison's language giving Congress the unlimited power to regulate commerce, Scalia insisted on second-guessing the Framers by applying his own judgments about what limitations should be in the Commerce Clause.

Scalia's Constitutional re-write was accepted by his fellow right-wingers, including Chief Justice John Roberts, although -- at the last minute -- Roberts joined with four Democratic justices to deem the Affordable Care Act constitutional under the taxing power of Congress. Still, Roberts rejected the Commerce Clause as justification after he arbitrarily eliminated some 18^th Century definitions of the word "regulate."

In other words, Scalia and Roberts played games with the Constitution to make it fit with their political biases. They really didn't give a hoot about "strict construction." [For details, see Robert Parry's America's Stolen Narrative.]

Similarly, when Scalia and four other Republican justices wanted George W. Bush in the White House, they suddenly discerned in the Fourteenth Amendment's demand for "equal protection under the law" an "original intent" to ensure Bush's Florida victory in Election 2000 -- though the amendment was adopted after the Civil War to protect the rights of former black slaves, not white plutocrats.

Thus, the U.S. Constitution has become something like a secular Bible, with people using different parts to justify whatever their desired positions already are. Instead of letting the words of the Constitution guide their governance, they let their governing interests dictate how they interpret the Constitution.

But the Right -- much more than the Left -- has built a cottage industry around this practice, sending well-funded "scholars" back in time to cherry-pick (or fabricate) quotes from the Framers to support whatever the Right wants done. The Right’s commitment to “strict construction” is only a facade.

Changing Reality

That the modern American Right twists historical reality, I suppose, should not come as a shock. After all, today's Right has organized itself around propaganda regarding current events, from talk radio to Fox News to ideological think tanks. So, why should anyone expect anything different about how the Right would deal with history?

The Right also understands that national mythology is a powerful force, very effective in manipulating Americans into believing they are standing with the Founders even if the history has to be falsified to achieve that emotional response. Many Tea Partiers, it seems, will eagerly eat up a stew of bad history served by the likes of Glenn Beck.

Thus, we have key chapters of that early history effectively expunged, such as the disastrous reign of the Articles of Confederation from 1777 to 1787. The Articles declared the 13 states "sovereign" and "independent" with the central government just a "league of friendship" with little power.

Because of that original structure, the United States was lurching toward catastrophe by 1787, with a major revolt erupting in western Massachusetts (the Shays' Rebellion) and European powers plotting how to exploit divisions between the states and regions. General George Washington, in particular, worried that the hard-won independence of the new country was in jeopardy.

So, to understand what Washington, Madison and other key Framers were trying to do with the Constitution, you must first read the Articles of Confederation, i.e., what prompted the Constitutional Convention in Philadelphia in 1787. Washington and Madison were so determined to correct the flaws of the Articles that they defied their instructions, which were to propose some changes to the Articles. Instead, they threw out the old system.

The Framers replaced the Articles and the emphasis on states' rights and a weak central government with nearly the opposite, a structure that made the federal government much more powerful and its law supreme across the land. Sovereignty was transferred to "We the People" and the states were left mostly with responsibility for local matters.

At the time, opponents of the Constitution, known as the Anti-Federalists, were keenly aware of what Washington and Madison had engineered, and these skeptics fought fiercely against the federal power grab, just barely losing in several key states, such as Virginia, New York and Massachusetts.

A Revised Narrative

Yet, by recreating the Founding Narrative so it jumps from the Declaration of Independence in 1776 directly to the U.S. Constitution in 1787, the modern Right has learned that it can convince ill-informed Americans that the Constitution was devised as a states' rights document with a weak central government, when nearly the opposite was the case.

The key to the Right's false narrative is to delete (or ignore) the Articles of Confederation and thus eliminate what Washington and Madison were reacting against.

So, what the American people are now stuck with is a debate in which one side (the Left) largely dismisses the relevance of the Constitution (beyond some cherished individual rights) and the other (the Right) lies about what the document was designed to do. Thus, the nation finds itself in something between a muddle and a quandary.

The best path to firmer ground would seem to be, twofold: a serious effort to reclaim the real history of the Constitution from the charlatans on the Right and a recognition that the Constitution, as amended, creates an imperfect but still workable framework for democratic change, a rebuff to some on the Left.

The reality is that the Framers did include broad and flexible powers in the Constitution, so future elected representatives could work their will on matters important to the "general Welfare." As already noted, the Commerce Clause was not limited by the Framers; it was restricted by the current majority of right-wing ideologues who sit on the U.S. Supreme Court.

And as for the Left, it should recognize that -- with some political changes, such as the expanded use of primaries and caucuses to select Democratic and Republican candidates, filibuster reform and some more public financing of campaigns -- the Constitution allows for a reasonably vibrant, though clearly imperfect, democratic process.

Today's political crisis can more accurately be blamed on the Right's well-funded propaganda machine which has succeeded in supplanting history and science with propaganda and disinformation -- and the failure of the Left and the Center to fight as hard for the truth as the Right fights for its fallacies.