By Robert Reich

Economic forecasters exist to make astrologers look good. Most had forecast growth of at least 3 percent (on an annualized basis) in the first quarter. But we learned just recently (in the Commerce Department’s report) it grew only 2.5 percent.

That’s better than the 2 percent growth last year and the slowdown at the end of the year. But it’s still cause for serious concern.

First, consumers won’t keep up the spending.Their savings rate fell sharply — from 4.7% in the last quarter of 2012 to 2.6% from January through March.

Add in March’s dismal employment report, the lowest percentage of working-age adults in jobs since 1979, and January’s hike in payroll taxes, and consumer spending will almost certainly drop.

Median household incomes continues to decline, adjusted for inflation. Another report out today showed consumer confidence fell in April.

Continue reading “Earth to Washington: Repeal the Sequester”

By Robert Reich

It 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)?
Continue reading “The Hoax of Entitlement Reform”

By Robert Reich

Employer outlays for workers’ health insurance slowed from a 9 percent jump last year to less than half that — 4 percent — this year, according to a new survey from the Kaiser Foundation. Good news?

Our political class believes it is. The Obama administration attributes the drop to the new Affordable Care Act, which, among other things, gives states funding to review insurance rate increases.

Republicans agree it’s good news but blame Obamacare for the fact that employer health-care costs continue to rise faster than inflation. “The new mandates contained in the health care law are significantly increasing the cost of insurance” says Wyoming senator Mike Enzi, top Republican on the Senate health committee.

But both sides ignore one big reason for the drop: Employers are shifting healthcare costs to their workers. (The survey shows workers contributing an average of $4,316 toward the cost of family health plans this year, up from $4,129 last year. Many are receiving little or no employer-provided coverage at all.)

Score another win for American corporations — whose profits continue to be robust despite the anemic recovery — and another loss for American workers.

Those profits aren’t due to a surge in sales. Exports are down (Europeans, Japanese, and Chinese are all pulling in their belts) and American consumers don’t have the dough to buy more.

Continue reading “The Wrong Way to Save Money on Health Care”

By Robert Reich

Today a majority of the Court upheld the constitutionality of the Affordable Care Act, otherwise known as Obamacare in recognition of its importance as a key initiative of the Obama administration. The big surprise, for many, was the vote by the Chief Justice of the Court, John Roberts, to join with the Court’s four liberals.

Roberts’ decision is not without precedent. Seventy-five years ago, another Justice Roberts – no relation to the current Chief Justice – made a similar switch. Justice Owen Roberts had voted with the Court’s conservative majority in a host of 5-4 decisions invalidating New Deal legislation, but in March of 1937 he suddenly switched sides and began joining with the Court’s four liberals.  In popular lore, Roberts’ switch saved the Court – not only from Franklin D. Roosevelt’s threat to pack it with justices more amenable to the New Deal but, more importantly, from the public’s increasing perception of the Court as a partisan, political branch of government.

Chief Justice John Roberts isn’t related to his namesake but the current Roberts’ move today marks a close parallel. By joining with the Court’s four liberals who have been in the minority in many important cases – including the 2010 decision, Citizen’s United vs. Federal Election Commission, which struck down constraints on corporate political spending as being in violation of the Constitution’s First Amendment guaranteeing freedom of speech – the current Justice Roberts may have, like his earlier namesake, saved the Court from a growing reputation for political partisanship.

Continue reading “SCOTUS Surprise”

By ROBERT REICH

Any day now the Supreme Court will issue its opinion on the constitutionality of the Accountable Care Act, which even the White House now calls Obamacare.

Most high-court observers think it will strike down the individual mandate in the Act that requires almost everyone to buy health insurance, as violating the Commerce Clause of the Constitution — but will leave the rest of the new healthcare law intact.

But the individual mandate is so essential to spreading the risk and cost of health care over the whole population, including younger and healthier people, that some analysts believe a Court decision that nixes the mandate will effectively spell the end of the Act anyway.

Yet it could have exactly the opposite effect. If the Court strikes down the individual mandate, health insurance company lobbyists and executives will swarm Capitol Hill seeking to have the Act amended to remove the requirement that they insure people with pre-existing medical conditions.They’ll argue that without the mandate they can’t afford to cover pre-existing conditions.

But the requirement to cover pre-existing conditions has proven to be so popular with the public that Congress will be reluctant to scrap it.

This opens the way to a political bargain. Insurers might be let off the hook, for example, only if they support allowing every American, including those with pre-existing conditions, to choose Medicare, or something very much like Medicare. In effect, what was known during the debate over the bill as the “public option.”

Continue reading “The Return of the Public Option”

Not surprisingly, yesterday’s debut Supreme Court argument over the so-called “individual mandate” requiring everyone to buy health insurance revolved around epistemological niceties such as the meaning of a “tax,” and the question of whether the issue is ripe for review.

Behind this judicial foreplay is the brute political fact that if the Court decides the individual mandate is an unconstitutional extension of federal authority, the entire law starts unraveling.

But with a bit of political jujitsu, the president could turn any such defeat into a victory for a single-payer healthcare system — Medicare for all.

Here’s how.

The dilemma at the heart of the new law is that it continues to depend on private health insurers, who have to make a profit or at least pay all their costs including marketing and advertising.

Continue reading “Health Care Jujitsu”

By Robert Reich

What kind of society, exactly, do modern Republicans want? I’ve been listening to Republican candidates in an effort to discern an overall philosophy, a broadly-shared vision, an ideal picture of America.

They say they want a smaller government but that can’t be it. Most seek a larger national defense and more muscular homeland security. Almost all want to widen the government’s powers of search and surveillance inside the United States – eradicating possible terrorists, expunging undocumented immigrants, “securing” the nation’s borders. They want stiffer criminal sentences, including broader application of the death penalty. Many also want government to intrude on the most intimate aspects of private life.

They call themselves conservatives but that’s not it, either. They don’t want to conserve what we now have. They’d rather take the country backwards – before the 1960s and 1970s, and the Environmental Protection Act, Medicare, and Medicaid; before the New Deal, and its provision for Social Security, unemployment insurance, the forty-hour workweek, laws against child labor, and official recognition of trade unions; even before the Progressive Era, and the first national income tax, antitrust laws, and Federal Reserve.

Continue reading “The Rebirth of Social Darwinism”

By ROBERT REICH

Not only is Social Security on the chopping block in order to respond to Republican extortion. So is Medicare.

But Medicare isn’t the nation’s budgetary problems. It’s the solution. The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles.

Medicare offers a means of reducing these costs — if Washington would let it.

Let me explain.

Americans spend more on health care per person than any other advanced nation and get less for our money. Yearly public and private healthcare spending is $7,538 per person. That’s almost two and a half times the average of other advanced nations.

Continue reading “Why Medicare Is the Solution — Not the Problem”

By ROBERT REICH

Republican House Budget chief Paul Ryan still doesn’t get it. He blames Tuesday’s upset victory of Democrat Kathy Hochul over Republican Jane Corwin to represent New York’s 26^th congressional district on Democratic scare tactics.

Hochul had focused like a laser on the Republican plan to turn Medicare into vouchers that would funnel the money to private health insurers. Republicans didn’t exactly take it lying down. The National Republican Congressional Committee poured over $400,000 into the race, and Karl Rove’s American Crossroads provided Corwin an additional $700,000 of support. But the money didn’t work. Even in this traditionally Republican district – represented in the past by such GOP notables as Jack Kemp and William Miller, both of whom would become vice presidential candidates – Hochul’s message hit home.

Ryan calls it “demagoguery,” accusing Hochul and her fellow Democrats of trying to “scare seniors into thinking that their current benefits are being affected.”

Scare tactics? Seniors have every right to be scared. His plan would eviscerate Medicare by privatizing it with vouchers that would fall further and further behind the rising cost of health insurance. And Ryan and the Republicans offer no means of slowing rising health-care costs. To the contrary, they want to repeal every cost-containment measure enacted in last year’s health-reform legislation. The inevitable result: More and more seniors would be priced out of the market for health care. Continue reading “Paul Ryan Still Doesn’t Get It”

By ROBERT REICH

One of my regrets in life is losing the chance to debate Mitt Romney and whip his ass.

It was the fall of 2002. Mitt had thundered into Massachusetts with enough money to grab the Republican nomination for governor. Meanwhile, I was doing my best to secure the Democratic nomination. One week before the Democratic primary I was tied in the polls with the state treasurer, according to the Boston Herald, well ahead of four other candidates. But my campaign ran out of cash. Despite pleas from my campaign manager, I didn’t want to put a second mortgage on the family home. The rest is history: The state treasurer got the nomination, I never got to debate Mitt, and Mitt won the election.

With Trump, Gingrich, Bachmann, and possibly Palin now in the race for the Republican presidential nomination, “GOP” is starting to mean Goofy, Outrageous, and Peculiar. Mitt would pose the most serious challenge to a second Obama term.

I say this not because Mitt’s mind is the sharpest of the likely contenders (Gingrich is far more nimble intellectually). Nor because his record of public service is particularly impressive (Tim Pawlenty took his governorship seriously while Mitt as governor seemed more intent on burnishing his Republican credentials outside Massachusetts). Nor because Mitt is the most experienced at running a business (Donald Trump has managed a giant company while Mitt made his money buying and selling companies.) Nor, finally, because he’s especially charismatic or entertaining (Sarah Palin can work up audiences and Mike Huckabee is genuinely funny and folksy, while Mitt delivers a speech so laboriously he seems to be driving a large truck). Continue reading “The Unbearable Lightness of Being Mitt”