Sunday, December 2, 2012

The man who helped write Obamacare is back with a new agenda for the President's 2nd term. Step one may be filibuster reform.

Obamacare Co-Author's Policy Paper: Increase Deficit, Weaken Filibuster


The man who helped write Obamacare is back with a new agenda for the President's 2nd term. Step one may be filibuster reform.

Jacob Hacker (pictured) runs a political policy center at Yale University. He's best known as one of the authors of Obamacare, though the version that squeaked through Congress is not quite the one he wanted. Now with Obamacare safely on a glide path to implementation, Hacker is turning his attention to a set of new priorities for Obama's 2nd term.
Hacker's new plan is outlined in an 84 page paper titled "Prosperity Economics." You can find it at this glossy website featuring lots of stock photo images of smiling people. Prosperity economics is essentially new branding for the kind of public sector spending Democrats dream about. Hacker contrasts this vision of big government and big unions with the villain he calls "austerity economics" which often sounds a lot like the low-tax, free market ideas of Republicans.
The idea that this is essentially a progressive-union policy pitch for more public resources is confirmed when you look at the list of supporters. Presently, it includes the AFL-CIO, SEIU, La Raza, and several of Van Jones' organizations.
Agenda item one for prosperity economics is $1.5 trillion in new stimulus spent over six years. As with the first stimulus, the stated goal is to "rebuild the nation's deteriorating infrastructure." This would essentially be a massive government works project for not-so shovel ready jobs.
Hacker also recommends spending an addition $75 billion over two years to rehire teachers and police who have been laid off during the recession. This is probably as good a place as any to point out some of the essential dishonesty in Hacker's report. Here's what he says about rehiring teachers:
The painfully slow pace of our current recovery is driven not so much by anemic growth in private-sector jobs relative to past recoveries as by continuing declines in state and local jobs—most of them in education and police and fire protection. This “hidden” austerity program has led to an unprecedented loss of middle-class jobs at the state and local level and likely adds around one point to our unemployment rate today, through its direct effects (fewer jobs) and indirect effects (reduced income to be spent by teachers and first responders).
What Hacker doesn't say is that the reason states have been forced to lay off so many unionized state employees is that they are broke. Why are they broke? In almost every case the answer is union pensions and health care costs. Isn't this relevant?
Take Illinois as an example. Decades of poor leadership has led it to the point where its unfunded pension obligations are "not fiscally sustainable," according to a report issued last month. Or consider San Bernardino, CA, which filed for bankruptcy in July because of—you guessed it—public pensions and outsized public worker salaries.
This summer, San Jose and San Diego voted to cut pension benefits to city workers in an attempt to keep these obligations from squeezing everything else out of the budget. Pensions already account for 20 percent of San Diego's budget. In San Jose, cops and firefighters can retire in their mid fifties with $100k pensions. It's not sustainable and even liberal enclaves are aware something needs to be done.
What Hacker suggests with regard to rehiring teachers is to pour billions more into unsustainable systems rather than dealing with the problems they created. This is only prosperity economics if you happen to be a state worker and even then it's only going to last as long as the government money holds out. That won't be long with out of balance spending of this magnitude.
This is only the beginning of Hacker's Christmas list which goes on for dozens of pages. It includes government funded pre-school, a 50 percent increase in government R&D spending, more teacher training, $15 billion a year in perpetuity for green energy, increased spending on affordable housing, an increase in the minimum wage for all workers, greater federal financing of Medicaid, mandating paid family leave, additional federal funding for child care, continuing federal unemployment benefits, $5 billion for "eco-innovation," a carbon pricing scheme, a plan to urbanize new development and many more line items with unspecified costs.
The orgy of government spending is to be paid for by raising taxes on the wealthy, with new brackets for those making over a million a year starting at 45 percent. Hacker also wants to raise the capital gains tax, raise the effective corporate income tax, restore the estate tax, add a new financial transaction tax and, of course, cut military spending.
Given his role in producing Obamacare, it's not surprising that Hacker wants to restore it to what he intended it to be all along, i.e. a gradual transition to single-payer. The mechanism for accomplishing this was the so-called public option which was stripped out during the long process of getting the ACA through Congress. Now Hacker proposes restoring it.
Buried at the tail end of the report under the heading "Strengthening of Our Democracy" is a proposal to reform the filibuster:
The Senate was designed to operate under majority rule, like the House, but today minorities can obstruct critical measures. The Senate should explore ways of reliminating [sic] or reducing what has become a 60-vote barrier to the passage of legislation.
It's no coincidence that Hacker wants to "reliminate" the filibuster at a moment when the Senate is controlled by Democrats and opposition is from Republicans. TPM reports that unions and progressive groups are aligning to publicly push for this reform which would give them increased control of one chamber of Congress. The math for Senate Democrats will be tough in 2014, so if they're going to get something done, they need to move now.
Hacker isn't shy about what he's proposing. His report's appendix states clearly, "The current moment calls for substantial deficit-funded outlays to spur economic recovery." The outlines are fairly simple: $2 trillion of new spending over 10 years offset by $500 billion of extremely vague savings from health care and Medicare, $600 billion in defense cuts and $1.1 trillion in new taxes. That may sound like it balances out, but don't forget our current spending is creating trillion-dollar annual deficits. New taxes and spending that maintain the status quo are not a long-term solution.

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