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Obama the Deficit Terrorist recants?

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  • Strongly Liberal Democrat
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    Dallas, TX
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    Long puff piece by Andrew Ross Sorkin on the cerebral Obama at the New York Times.

    nytimes.com/2016/05/01/magazine/preside...

    Closing paragraph quote from Obama interests me: “If we can’t puncture some of the mythology around austerity, politics or tax cuts or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit and that the recovery was because of all these massive tax cuts, as opposed to a shift in interest-rate policy — if we can’t describe that effectively, then we’re doomed to keep on making more and more mistakes.”

    This is my response:

    President Obama: "If we can’t puncture some of the mythology around austerity politics"

    You've done a pissed poor job of that, sir. You functionally became the Nation's leading Deficit Terrorist. Thank God the Tea Party's recalcitrance and extremism prevented your "Grand Bargain." Romney would have otherwise destroyed you in 2016. Still you compromised on lesser terms and the result has led to budget chaos and economic malaise. The American economy can do far better. Given the massive demand leakages, taxes remain too high for the size government and size credit expansion that we have. Yes, you've said somethings against extremist Deficit Terrorism that show a brain is still up there thinking, but you have never put the puzzle together. The horrible irony is that former President George W. Bush held and said the most PROGRESSIVE statement in modern times related to the government deficit and he was lampooned by the Press. As a consequence of Warren Mosler's counsel of White House Chief of Staff Andy Card, when asked about the government deficit in relation to his tax cut and spending proposals in the the spring of 2003, George W. Bush said in Abba Lerner like language to reporters: "I don't worry about numbers on pieces of paper, I worry about JOBS!" That's the most anti-Deficit Terrorist statement of all time by a President. Let us reflect on that for a moment. The hated George W. Bush was more Left Progressive on the government budget than the current Democratic President. Deal with it in your own time.

    "or tax cuts"

    The 2% payroll tax cut probably saved your presidency, sir. That was probably the best proposal to come out of the whole recovery response. You should say thank you to Warren Mosler for leading that charge and being the earliest to recognize the necessity of a payroll tax cut in the summer of 2008. His full payroll tax holiday proposal was eventually water-downed into the 2% cut. Taxes regulate demand, they don't give the currency issuing monopolist government its own funds to spend or lend. The funds to pay taxes and buy government securities come from government spending (or lending*).

    *You have to have government spending preceding lending or there is no one credit worthy to lend to.

    "or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit"

    Reagan was one of the greatest Keynesian presidents of all time. Spending billions on defense and doing little to cut the growth of overall spending.

    "and that the recovery"

    We the People never really recovered.

    "was because of all these massive tax cuts"

    Reagan cut taxes on rich people, but he also later raised payroll taxes on working people, and that's what killed the Reagan era expansion and dragged out an economic malaise into the Clinton years until the credit expansion in the economy restored higher total spending levels.

    "as opposed to a shift in interest-rate policy"

    What the hell are you talking about, Mr. President? Are you some sort of Monetarist crank? Reagan blew up the deficit and the economy boomed. Interest rates have marginal effects and they are not uniform in every economic state. They were not a leading cause of the Reagan era expansion. Government spending and the growth of consumer credit was, which was not led by interest rates, but deregulation of finance and technological developments.

    "— if we can’t describe that effectively,"

    Well, you have kind of screwed up the story already, sir. Hard for anyone to make sense of anything with so much confusion from the top down. Deficit Terrorism is the problem, not austerity per se. The time for austerity is when the economy is too hot and trade offs are inevitable between public purpose government spending and consumer purchasing power due to the real economic constraints. That's when fiscal conservatism applies, but it never directly has to do with the government deficit per se. If President Obama would simply invite the MMT headliners to the White House and put attention on them, we could create conditions in this country for the largest economic expansion of all time. Give the MMT'ers a chance to have a conversation with the American people.

    "then we’re doomed to keep on making more and more mistakes.”

    You are absolutely correct, Mr. President. Are you prepared to listen and begin with the man in the mirror?

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Can you entertain a gross tax cut but directed internally to have specific changes? An overall tax cut on lower incomes but targeted tax increases on specific higher incomes to penalize non productive credit into productive positions. Overall taxes could be cut but a net effect creating jobs. Recognizing money velocity is directly related to job creation.
  • Liberal Democrat
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    Colorado Springs, CO
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    Carlitos Wrote:

    Long puff piece by Andrew Ross Sorkin on the cerebral Obama at the New York Times.

    nytimes.com/2016/05/01/magazine/preside...

    Closing paragraph quote from Obama interests me: “If we can’t puncture some of the mythology around austerity, politics or tax cuts or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit and that the recovery was because of all these massive tax cuts, as opposed to a shift in interest-rate policy — if we can’t describe that effectively, then we’re doomed to keep on making more and more mistakes.”

    This is my response:

    President Obama: "If we can’t puncture some of the mythology around austerity politics"

    You've done a pissed poor job of that, sir. You functionally became the Nation's leading Deficit Terrorist. Thank God the Tea Party's recalcitrance and extremism prevented your "Grand Bargain." Romney would have otherwise destroyed you in 2016. Still you compromised on lesser terms and the result has led to budget chaos and economic malaise. The American economy can do far better. Given the massive demand leakages, taxes remain too high for the size government and size credit expansion that we have. Yes, you've said somethings against extremist Deficit Terrorism that show a brain is still up there thinking, but you have never put the puzzle together. The horrible irony is that former President George W. Bush held and said the most PROGRESSIVE statement in modern times related to the government deficit and he was lampooned by the Press. As a consequence of Warren Mosler's counsel of White House Chief of Staff Andy Card, when asked about the government deficit in relation to his tax cut and spending proposals in the the spring of 2003, George W. Bush said in Abba Lerner like language to reporters: "I don't worry about numbers on pieces of paper, I worry about JOBS!" That's the most anti-Deficit Terrorist statement of all time by a President. Let us reflect on that for a moment. The hated George W. Bush was more Left Progressive on the government budget than the current Democratic President. Deal with it in your own time.

    "or tax cuts"

    The 2% payroll tax cut probably saved your presidency, sir. That was probably the best proposal to come out of the whole recovery response. You should say thank you to Warren Mosler for leading that charge and being the earliest to recognize the necessity of a payroll tax cut in the summer of 2008. His full payroll tax holiday proposal was eventually water-downed into the 2% cut. Taxes regulate demand, they don't give the currency issuing monopolist government its own funds to spend or lend. The funds to pay taxes and buy government securities come from government spending (or lending*).

    *You have to have government spending preceding lending or there is no one credit worthy to lend to.

    "or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit"

    Reagan was one of the greatest Keynesian presidents of all time. Spending billions on defense and doing little to cut the growth of overall spending.

    "and that the recovery"

    We the People never really recovered.

    "was because of all these massive tax cuts"

    Reagan cut taxes on rich people, but he also later raised payroll taxes on working people, and that's what killed the Reagan era expansion and dragged out an economic malaise into the Clinton years until the credit expansion in the economy restored higher total spending levels.

    "as opposed to a shift in interest-rate policy"

    What the hell are you talking about, Mr. President? Are you some sort of Monetarist crank? Reagan blew up the deficit and the economy boomed. Interest rates have marginal effects and they are not uniform in every economic state. They were not a leading cause of the Reagan era expansion. Government spending and the growth of consumer credit was, which was not led by interest rates, but deregulation of finance and technological developments.

    "— if we can’t describe that effectively,"

    Well, you have kind of screwed up the story already, sir. Hard for anyone to make sense of anything with so much confusion from the top down. Deficit Terrorism is the problem, not austerity per se. The time for austerity is when the economy is too hot and trade offs are inevitable between public purpose government spending and consumer purchasing power due to the real economic constraints. That's when fiscal conservatism applies, but it never directly has to do with the government deficit per se. If President Obama would simply invite the MMT headliners to the White House and put attention on them, we could create conditions in this country for the largest economic expansion of all time. Give the MMT'ers a chance to have a conversation with the American people.

    "then we’re doomed to keep on making more and more mistakes.”

    You are absolutely correct, Mr. President. Are you prepared to listen and begin with the man in the mirror?

    Yeah...damn Obama. What we need to do is elect a liberal MMTer to the presidency and members of Congress who won't compromise on anything. We'll show those Tea Partiers who won't compromise. We'll elect a slate of liberals to Congress who will promise to ramp up spending instead of cutting spending. They will promise more spending on education, infrastructure, climate change, and a bunch of other stuff without raising taxes. And no compromises with those Tea Party "No Compromisers". Our no compromisers will out no compromise the Tea Party no compromisers. That's the kind of a king and Congress that the American people want. Throw all those damn compromising centrists out of office. We will stand firm.

    Americans like toughness...resoluteness.

  • Liberal
    Independent
    Durham, NH
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    More on this very illuminating subject -

    salon.com/2016/05/01/the_obama_eiconomy...

    I think is safe to assume as long as their is a Tea Party mentality in this country there will be NO compromise with any Liberal, much less Progressuves. Unfortunately the people that identify with the Tea Party are far more angry than the Liberal/Progressives and their anger (and fear of life in general) causes them to get out and vote, usually against their own interests, obviously, but that's why a small group of some odd 30 extremists in Congress can actually control the majority, isn't it?

    Politicians typically do what is necessary to keep their power intact, not serve their constituents. There us only one major politician running in this election that really cares about the people and people aren't intuitive or smart enough to support him so we end up with the best of the shittiest as usual.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Some day somebody will put it together with a true linearly cause and effect relationship. As it is now every good thing is spun into a credit and every bad thing was the other guys fault. A casual perusal of every major tax cut shows it is followed by a recession showing up in somebody else's administration. Taking credit of coincidence is no better illustrated than Obama noting recent drops of gasoline in his administration. Obama is opposed to low and dropping gasoline prices because of an the environmental effect.
  • Strongly Liberal Democrat
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    Pensacola, FL
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    Carlitos said "Taxes regulate demand"

    Taxes on lower incomes regulate demand. Taxes on higher incomes has no effect on demand. Taxes should be governed by their net effect. The great supply and demand theory doesn't self explain that it is controlled by discretionary money spending of incomes that have limited discretionary money. The whole economy is controlled by lower incomes. Lower incomes should pay no taxes and have tax credit refunds. Money needs to be put in the hands of people that will spend it. They control supply and demand.

  • Strongly Liberal Democrat
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    Dallas, TX
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    Schmidt Wrote:
    Carlitos Wrote:

    Long puff piece by Andrew Ross Sorkin on the cerebral Obama at the New York Times.

    nytimes.com/2016/05/01/magazine/preside...

    Closing paragraph quote from Obama interests me: “If we can’t puncture some of the mythology around austerity, politics or tax cuts or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit and that the recovery was because of all these massive tax cuts, as opposed to a shift in interest-rate policy — if we can’t describe that effectively, then we’re doomed to keep on making more and more mistakes.”

    This is my response:

    President Obama: "If we can’t puncture some of the mythology around austerity politics"

    You've done a pissed poor job of that, sir. You functionally became the Nation's leading Deficit Terrorist. Thank God the Tea Party's recalcitrance and extremism prevented your "Grand Bargain." Romney would have otherwise destroyed you in 2016. Still you compromised on lesser terms and the result has led to budget chaos and economic malaise. The American economy can do far better. Given the massive demand leakages, taxes remain too high for the size government and size credit expansion that we have. Yes, you've said somethings against extremist Deficit Terrorism that show a brain is still up there thinking, but you have never put the puzzle together. The horrible irony is that former President George W. Bush held and said the most PROGRESSIVE statement in modern times related to the government deficit and he was lampooned by the Press. As a consequence of Warren Mosler's counsel of White House Chief of Staff Andy Card, when asked about the government deficit in relation to his tax cut and spending proposals in the the spring of 2003, George W. Bush said in Abba Lerner like language to reporters: "I don't worry about numbers on pieces of paper, I worry about JOBS!" That's the most anti-Deficit Terrorist statement of all time by a President. Let us reflect on that for a moment. The hated George W. Bush was more Left Progressive on the government budget than the current Democratic President. Deal with it in your own time.

    "or tax cuts"

    The 2% payroll tax cut probably saved your presidency, sir. That was probably the best proposal to come out of the whole recovery response. You should say thank you to Warren Mosler for leading that charge and being the earliest to recognize the necessity of a payroll tax cut in the summer of 2008. His full payroll tax holiday proposal was eventually water-downed into the 2% cut. Taxes regulate demand, they don't give the currency issuing monopolist government its own funds to spend or lend. The funds to pay taxes and buy government securities come from government spending (or lending*).

    *You have to have government spending preceding lending or there is no one credit worthy to lend to.

    "or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit"

    Reagan was one of the greatest Keynesian presidents of all time. Spending billions on defense and doing little to cut the growth of overall spending.

    "and that the recovery"

    We the People never really recovered.

    "was because of all these massive tax cuts"

    Reagan cut taxes on rich people, but he also later raised payroll taxes on working people, and that's what killed the Reagan era expansion and dragged out an economic malaise into the Clinton years until the credit expansion in the economy restored higher total spending levels.

    "as opposed to a shift in interest-rate policy"

    What the hell are you talking about, Mr. President? Are you some sort of Monetarist crank? Reagan blew up the deficit and the economy boomed. Interest rates have marginal effects and they are not uniform in every economic state. They were not a leading cause of the Reagan era expansion. Government spending and the growth of consumer credit was, which was not led by interest rates, but deregulation of finance and technological developments.

    "— if we can’t describe that effectively,"

    Well, you have kind of screwed up the story already, sir. Hard for anyone to make sense of anything with so much confusion from the top down. Deficit Terrorism is the problem, not austerity per se. The time for austerity is when the economy is too hot and trade offs are inevitable between public purpose government spending and consumer purchasing power due to the real economic constraints. That's when fiscal conservatism applies, but it never directly has to do with the government deficit per se. If President Obama would simply invite the MMT headliners to the White House and put attention on them, we could create conditions in this country for the largest economic expansion of all time. Give the MMT'ers a chance to have a conversation with the American people.

    "then we’re doomed to keep on making more and more mistakes.”

    You are absolutely correct, Mr. President. Are you prepared to listen and begin with the man in the mirror?

    Yeah...damn Obama. What we need to do is elect a liberal MMTer to the presidency and members of Congress who won't compromise on anything. We'll show those Tea Partiers who won't compromise. We'll elect a slate of liberals to Congress who will promise to ramp up spending instead of cutting spending. They will promise more spending on education, infrastructure, climate change, and a bunch of other stuff without raising taxes. And no compromises with those Tea Party "No Compromisers". Our no compromisers will out no compromise the Tea Party no compromisers. That's the kind of a king and Congress that the American people want. Throw all those damn compromising centrists out of office. We will stand firm.

    Americans like toughness...resoluteness.

    Schmidt,

    Again, I have no problem with compromising to get things done. The thing is all of these centrist Democrats are absolutely terrible at it for their own political sake. And they do not have the same agenda as Progressives.

    Compromise should not be a goal in and of itself. It is a tactic. If you know you are going to have to compromise, you had better make the strongest case for your agenda at the onset and not weaken your own position going into negotiations.

    This President lacks political courage and I'm sick of the excuses trotted out to cover that up.

  • Strongly Liberal Democrat
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    Dallas, TX
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    Chet Ruminski Wrote:

    Carlitos said "Taxes regulate demand"

    Taxes on lower incomes regulate demand. Taxes on higher incomes has no effect on demand. Taxes should be governed by their net effect. The great supply and demand theory doesn't self explain that it is controlled by discretionary money spending of incomes that have limited discretionary money. The whole economy is controlled by lower incomes. Lower incomes should pay no taxes and have tax credit refunds. Money needs to be put in the hands of people that will spend it. They control supply and demand.

    Chet, I made that point to you in posts in the past. Tax cuts/increases on rich people have to be large to move the needle on their spending. That's why I advocate for a tax cut from the bottom up via removing the regressive payroll taxes.
  • Liberal Democrat
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    Colorado Springs, CO
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    Carlitos Wrote:

    You've done a pissed poor job of that, sir [referring to President Obama]. You functionally became the Nation's leading Deficit Terrorist. Thank God the Tea Party's recalcitrance and extremism prevented your "Grand Bargain." Romney would have otherwise destroyed you in 2016. Still you compromised on lesser terms and the result has led to budget chaos and economic malaise. The American economy can do far better.

    Carlitos -- You have brought up the "Grand Bargain" in the criticism of President Obama on several occasions. I have looked at what President Obama would be "giving away" in that grand bargain, and it just didn't seem like that big of a deal to me. I'll explain:

    Social Security: One of the "concessions" by President Obama was to change the annual cost of living adjustment from the CPI-W changes for 3rd quarter cost of living changes to a Chained CPI, which would cover 12 months but also incorporate "substitution" when a single product in the basket of goods became prohibitively too high. Every year in November I have been calculating the difference between the CPI-W (July-Sep) adjustment versus the 12 month adjustment of the chained CPI and reported those numbers in this website. And the numbers do not lie. If we had adopted the Chained CPI seven years ago seniors would have averaged a COLA of 1.3 percent per year with chained CPI versus the 1.2 percent with the CPI-W. That is a fact. If you like I'll send you my calculations so you can have them checked out by Mosler or anyone else.

    All these journalists that write about the bad chained CPI, reference an outdated CBO report that included a period of economic turmoil in certain commodity prices. None of them have actually done the math over the last seven years like I have.

    One of the reasons we have not seen the past fluctuations in the price of food (and substitution in the chained CPI) is because of trade deals with Chile and Mexico that ensure that agricultural products are not subject to the large climate, weather and seasonal aspects of the products. Gasoline and home heating prices are the exception...they have always gone up and down. But why should we only measure those prices changes taken from a three month set period, July - September, the hurricane season, which affects Gulf of Mexico production? A 12 month period of average prices as per the chained CPI makes more sense to me.

    I am 100 percent behind the chained CPI, whether a part of a Grand Bargain or just because it makes more sense.

    Medicare: Another of Obama's proposals was to combine the deductible of Medicare Parts A (hospital) and B (Doctors, etc) into one. As I am on Medicare and had a one week hospitalization last summer, I can certainly attest to how cumbersome it is to have two separate charges and deductibles for hospital versus doctors. Because of that most Medicare recipients have to carry an additional supplementary coverage. That's what I do as well. It's a pain in the ass and a bureaucratic mess to have to split out deductibles this way. It makes good sense to me to combine deductibles. There are real cost savings here, but maybe not for those insurance companies selling supplementary plans.

    These were the two big ticket items that Obama was "trading away" in his grand bargain. It seems to me it would have been a good trade for what he would have gotten in return. I just do not understand my fellow liberals when they say they do not trust President Obama to negotiate in good faith. It's all emotions and little critical thinking.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Shmidt, The COLA is a huge deal. You are talking about a huge segment that has no discretionary money. When their income is cut it is a direct effect on their life. If turns people into Trump supporters and fuels radical sympathizers. People like ObamA have no concept of poor. Ultimately the poor can be organized into reactionary voting. That underlines trusting Obama and it goes back to Geithner.
  • Liberal Democrat
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    Colorado Springs, CO
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    Chet -- You didn't read my post. The COLA is not a big deal, or at least the difference between CPI-W for Social Security COLA versus Chained CPI.

    I will accept that neither COLA is not representative of the way some seniors spend money, but that is a whole different argument from CPI-W versus chained CPI. That is what the big fuss was about in the Grand Bargain.

  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Schmidt Wrote:
    Carlitos Wrote:

    You've done a pissed poor job of that, sir [referring to President Obama]. You functionally became the Nation's leading Deficit Terrorist. Thank God the Tea Party's recalcitrance and extremism prevented your "Grand Bargain." Romney would have otherwise destroyed you in 2016. Still you compromised on lesser terms and the result has led to budget chaos and economic malaise. The American economy can do far better.

    Carlitos -- You have brought up the "Grand Bargain" in the criticism of President Obama on several occasions. I have looked at what President Obama would be "giving away" in that grand bargain, and it just didn't seem like that big of a deal to me. I'll explain:

    Social Security: One of the "concessions" by President Obama was to change the annual cost of living adjustment from the CPI-W changes for 3rd quarter cost of living changes to a Chained CPI, which would cover 12 months but also incorporate "substitution" when a single product in the basket of goods became prohibitively too high. Every year in November I have been calculating the difference between the CPI-W (July-Sep) adjustment versus the 12 month adjustment of the chained CPI and reported those numbers in this website. And the numbers do not lie. If we had adopted the Chained CPI seven years ago seniors would have averaged a COLA of 1.3 percent per year with chained CPI versus the 1.2 percent with the CPI-W. That is a fact. If you like I'll send you my calculations so you can have them checked out by Mosler or anyone else.

    All these journalists that write about the bad chained CPI, reference an outdated CBO report that included a period of economic turmoil in certain commodity prices. None of them have actually done the math over the last seven years like I have.

    One of the reasons we have not seen the past fluctuations in the price of food (and substitution in the chained CPI) is because of trade deals with Chile and Mexico that ensure that agricultural products are not subject to the large climate, weather and seasonal aspects of the products. Gasoline and home heating prices are the exception...they have always gone up and down. But why should we only measure those prices changes taken from a three month set period, July - September, the hurricane season, which affects Gulf of Mexico production? A 12 month period of average prices as per the chained CPI makes more sense to me.

    I am 100 percent behind the chained CPI, whether a part of a Grand Bargain or just because it makes more sense.

    Medicare: Another of Obama's proposals was to combine the deductible of Medicare Parts A (hospital) and B (Doctors, etc) into one. As I am on Medicare and had a one week hospitalization last summer, I can certainly attest to how cumbersome it is to have two separate charges and deductibles for hospital versus doctors. Because of that most Medicare recipients have to carry an additional supplementary coverage. That's what I do as well. It's a pain in the ass and a bureaucratic mess to have to split out deductibles this way. It makes good sense to me to combine deductibles. There are real cost savings here, but maybe not for those insurance companies selling supplementary plans.

    These were the two big ticket items that Obama was "trading away" in his grand bargain. It seems to me it would have been a good trade for what he would have gotten in return. I just do not understand my fellow liberals when they say they do not trust President Obama to negotiate in good faith. It's all emotions and little critical thinking.

    First off, please see Bill Black in Dec 2012:

    neweconomicperspectives.org/2012/12/let...

    Secondly, there is no reason to cut Social Security payments. If Republicans demand Social Security cuts, let them suffer at the ballot box for that; no reason for Democrats to join in them in a suicide pact.

    Thirdly, Medicare is a mess. I agree it would make sense to roll deductibles into one; but the proposal involved spending cuts; rather than passing along savings to consumers.

    Here's something from 2013 in the Atlantic about how Obama's proposals to cut Social Security and Medicare exceeded the Republicans.

    theatlantic.com/business/archive/2013/0...

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Schmidt Wrote:

    Chet -- You didn't read my post. The COLA is not a big deal, or at least the difference between CPI-W for Social Security COLA versus Chained CPI.

    I will accept that neither COLA is not representative of the way some seniors spend money, but that is a whole different argument from CPI-W versus chained CPI. That is what the big fuss was about in the Grand Bargain.

    Sorry Schmidt, I was transferring my point incorrectly thinking the zero cola this year was part of the deal when it in fact represented zero inflation.
  • Liberal Democrat
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    Colorado Springs, CO
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    The point that I had made in an earlier thread is that in negotiating with Republicans on a budget deal, there is "horse trading"...those dreaded compromises. President Obama had in his hand something that he knew that the Republicans wanted: cuts in Social Security benefits. The CBO had published what they thought was a valid analysis of the differences between the CPI-W versus the Chained CPI. Based on data from 2000 to 2010 the CBO calculated the difference as being an average of 0.25 percentage points per year higher for the CPI-W. In other words, with the higher CPI-W, the benefits accrued over time to Social Security beneficiaries would be higher...or correspondingly lower if Chained CPI is used. Extrapolate that 0.25 difference, not just a few years, but out to 75 years as some have done, and you end up with a huge difference...or as the opponents call it, "disastrous cuts to social security beneficiaries" with chained CPI.

    However, there are distortions in that calculation of the 0.25 percentage point. For one thing the period in question more or less coincided with the run up in housing costs in the housing bubble, and since housing costs are the largest component of all CPI indices, the Chained CPI, by the nature of its algorithm in its calculation resulted in lower CPI annual numbers.

    If the CBO would update their analysis now, they would find that in the fiscal year periods from 2008 to 2015 (seven years) the Chained CPI actually was tracking slightly higher at an average of 0.08 percentage points per year rather than 0.25 percentages points lower. Chained CPI from 2008 to 2015 would have resulted in a higher benefit to retirees.

    There are other factors that have, of course, influenced the numbers in the last seven years versus the earlier housing bubble period. The low inflation following the Great Recession is a factor. I had also previously mentioned commodity prices and agricultural products that are less subject to the seasonal and weather changes that you get when you use just a 3 month period of the CPI-W (July -September). NAFTA and other trade agreements can account for the evening out of many of those prices as tariff barriers and quotas have been removed.

    President Obama was willing to trade something that he knew would have had minimal impact on Social Security benefits for higher taxes on the rich. However, what he didn't count on is that liberals would not be as savvy as him. They castigated the deal. Actually, Boehner was the one who finally scuttled the deal. Did he figure out what was going on?

    The Center for Budget Policy and Analysis has also supported the use of the Chained CPI because it makes much more sense than the archaic method used to calculate the annual changes in Social Security benefits now. If there was concern, you could build in a safeguard to ensure that benefits for the poor would not be adversely affected.

    There were, of course, other trade-offs in the Grand Bargain that one might not like as they pertain to Medicare and Medicaid. The only point that I am making is that adopting the Chained CPI for calculating Social Security benefits should not be one of them. Anyone doing the calculations now would realize that it is not as big a deal...and probably can no longer be used in horse trading.

    Finally, if liberals would have voted in the 2010 midterm election, there would not have been a need to discuss a Grand Bargain at all. The leverage a President has in these budget compromises is directly related to the make-up of Congress. When liberals do not vote, Republicans have more leverage. For those on this website that want to castigate Obama for negotiating budget deals, they should look in the mirror and ask themselves...could I have directed some of my passion to get out the vote...being proactive instead of reactive? Voting is being proactive. Bitchin' when you didn't vote is being reactive.

  • Strongly Liberal Democrat
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    Dallas, TX
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    Schmidt, raising Social Security benefits is more important than raising taxes on rich people.

    Secondly, Obama and his Press Secretary went on TV a few months before the midterms and publicly bashed the base, lashing out at the "professional left". That's the dumbest way to motivate Democratic voter turnout I've ever seen.