Monday, February 18, 2013

Ezra Klein: no progressive hero, but Young-Broder-in-training

- by New Deal democrat

[Note: regular economic blogging will resume tomorrow. Today I really feel the need to get this off my chest.]

Professor Brad DeLong has lionized Ezra Klein, defending him against charges of being a Washington DC cocktail weenie circuit social climber in a series of posts in the last week here, here, here, and here.

Much as I respect the Professor's opinion, I thoroughly disagree. While Ezra Klein unearths some good economic analysis, in my opinion he has become the neoliberal "new democrat" successor to David Broder. He is the designated conduit for acceptable "liberal" DC conventional wisdom reflected back on itself, and further, he defines the acceptable limit of that opinion, with any analysis to his left being dismissed out of hand as unrealistic -- even if correct.

Nowhere is that more serious, and more enraging, than his open and repeated embrace of a bad "grand bargain" now vs. a real solution to our longer term debt problems later. The Obama Administration doesn't float its trial balloons of cuts to Social Security and Medicare benfits via Klein because of his brilliance, but rather because of his receptivity to those cuts -- even though he knows that they aren't really implicated in the problem.

Readers of this blog know that I'm all about the data. And in this case, the data is Klein's own words, on the record and in context. So I am going to quote him at length and let his own words convict him.

Back in 2009, Klein knew that "entitlement reform" was code for "Social Security and Medicare cuts." In a piece ironically subtitled "Why progressives should stop worrying and learn to love today's White House fiscal summit" he said:
Fiscal responsibility has, in this town, long been an anodyne synonym for entitlement reform. The "responsible" part signaled that you were courageous enough to cut treasured social programs in service of the national debt....

Today's "While House Fiscal Summit" .. will feature ... breakout sessions ... to work on health care, Social Security [and other items].... Notice what's not in there: Entitlement Reform.
Of course, the "White House Fiscal Summit" that Klein said progressives shouldn't fear ultimately gave birth to the Simpson-Bowles (a/k/a Catfood) Commision. While the Commission was unable to agree on any recommendations, its two Chairmen went ahead and issued their own "report." In response, Klein wrote:
What was notable about the Fiscal Commission's final report was the way it opened up the playing field on the budget. It went after tax revenues, tax expenditures, the military, Social Security, Medicare, Medicaid, domestic spending, government reform and more. Most everyone disagreed with some of the specifics in the report, but plenty of folks on both sides of the aisle were happy to see so many cows demoted from sacred status. The report itself stood little chance of passing -- it couldn't even get the required 14 of 18 votes on the commission -- but it heralded, many thought, a more open and honest budget debate, where things like entitlements and the mortgage-interest tax deduction could finally be discussed plainly.
As Dean Baker notes ad infinitum, there was no final report by the Commission! There was only a report endoresed by Simpson and Bowles pesonally, and their positions have long been known. In fact, that "report" went beyond the Commission's mandate by proposing that federal expenditures be capped at 18% of GDP -- a level that couldn't possibly sustain even scaled back expenditures. But more to the point, Klein clearly endorses "discuss[ing] plainly" "things like entitlements" -- as opposed to, you know, returning to Clinton-era tax rates that actually balanced the budget.

Indeed, in the 2009 article dsicussed abovve, Klein at one point let slip his hostility to social insurance programs:
Medicare and Medicaid ... are unsustainable. They need to be slashed.
Shortly after Simpson and Bowles released their "report," Klein openly described "entitlements" as a "problem" as to which discussion discussion was "about time:"
I was wondering when this would finally happen: "Senate Democratic leaders, seeking to break an impasse over Republican-backed spending cuts, on Tuesday proposed broadening the scope of budget negotiations into more politically volatile terrain that includes taxes, subsidies and entitlement programs." It's about time. There's not much money to begin with in non-security discretionary spending, and because it's such a popular place to search for cuts, there's not much waste, either. It's like trying to clean your house by doing more and more to organize the hallway closet. It might help the first few times, but eventually, you have to head elsewhere.

We're not going to find any real answers to our budget woes by cutting discretionary spending. That's not where the problem is. Entitlements, tax expenditures and rates, and even defense spending make more sense for a deficit-reduction deal.
In fact, if in 2009 Klein knew that "entitlement reform" was anathema to progressives, by early 2011 he fully embraced it explicitly and by name:
The GOP says it wants to work with Obama on entitlement reform, and that the budget House Republicans are writing will give specifics on how. Obama [likewise] says he wants to work with the GOP on entitlement reform . . . . So, with the president and his congressional opposition committed to the effort, entitlement reform should be a sure bet, right?

We'll see. I wouldn't be surprised if Obama has his name on a broader deficit-reduction bill at this time next year. .... [H]is administration is stocked with deficit hawks -- the same folks who actually balanced the budget under Bill Clinton. And similarly, Republicans want to deliver on the deficit-reduction promises they've made to their base. In theory, everyone's incentives and ideologies are pointing in the same direction. That's a good sign for progress.
[my emphasis]

That's not somebody else's opinion about "entitlement reform" being "progress" that Ezra is quoting. That is his own opinion, nakedly expressed.

And here he is again,
one month later:
The political incentives for the GOP are clear: tread lightly on entitlements for seniors and heavily on programs for the poor. Which isn’t to say they will: Ryan could come out with an ambitious and comprehensive set of entitlement reforms. If his budget focuses on Medicaid, however, you’ll know why.
Once again, "entitlement reform" is reflexively assumed to be a positive.

Readers may also recall that, during the health care reform debate, progressives were arguing for an extension of single-payer -- in essence, coming as close as possible to "Medicare for all." Although it appeared the measure might be able to pass the Senate with F51 votes as a budget resolution, Obama quietly worked against it, causing the much-derided "Firebagger" Jane Hamsher to wonder if Obama didn't want private-insurnace-sourced ObamaCare to replace Medicare (sorry, I can't find the link). According to Ezra Klein in June 2011, that would be a good thing:
Ironically, bringing ObamaCare to Medicare is an obvious long-term compromise on health care. If ... the Affordable Care Act’s exchanges work to control costs and improve quality, it’d be natural to eventually migrate Medicaid and Medicare into the system. Liberals would like that because it’d mean better care for Medicaid beneficiaries and less fragmentation in the health-care system. Conservatives would like it because it’d break the two largest single-payer health-care systems in America and turn their beneficiaries into consumers.... You can’t transform Medicaid and Medicare until you’ve proven that what you’re transforming them into is better. Only the Affordable Care Act has the potential to do that.

So Bachmann is perhaps right to say that the president is moving us towards a day when ObamaCare — or, to put it more neutrally, “premium support” — might come to Medicare. He’s seeing whether it works in the private health-care market first and, if it does, there’s little doubt that the political pressure to extend it to other groups will be intense.
Does Ezra Klein want to end Medicare and Medicaid and replace them with "premium support" programs? Yes he does.

He is also in favor of means-testing:
Raising the retirement age is the worst of all possible options for reforming Social Security.... Means-testing would be much better.
"Means testing" social insurance programs means that, comparing those with equivalent lifettime earnings histories, those who lived frugally during the decades of their working yeears and saved a nest-egg for retirement, have their Social Security and Medicare taken from them and given to the spendthrifts who lived the high life during and, come retirement, find that the cupboard is bare. Suckers! He reiterated his approval of means testing here.

Now, as if in direct response to support by people like Professor DeLong, Klein has found a new reason to arrive at his desired result:
“Looking solely at the federal budget, an elderly person receives close to seven federal dollars for every dollar received by a child.”
This is very close to a blunt endorsement of bait-and-switch. Why should any citizen trust any promise of deferred compensation again? Last week, Klein finally laid out barely his - and apparently Obama's - hostility to honoring lifelong commitments that workers have relied upon:
[T]he reason to worry about the deficit today — and, more to the point, the trends in government spending and taxation that drive it — is that the most worthwhile kinds of government spending are getting squeezed out.

The key insight behind this theory is that some forms of government spending rise automatically and rapidly, and are very politically difficult to cut, while other forms of government spending need congressional approval every single year and have few constituencies to protect them. In the first category are Medicare and Medicaid and Social Security, all of which are projected to consume much more of the federal budget in the coming years. In the second category are things like education funding, research and development, stimulus, infrastructure investment, and even the military. And the fear is the first category is squeezing out the second category.

.... “Growth of entitlements is crowding out programs for younger families and their kids and are likely to impair social mobility,” says Isabelle Sawhill, co-director of the Center on Children and Families and the Budgeting for National Priorities Project at Brookings.

The Obama administration agrees. They’ve spent years trying to reach a deal with Republicans in which entitlement cuts would be paired with tax increases — and investments in the future would be spared and even increased....
So there we finally have it. Far from not having to worry about "entitlement reform," Ezra Klein finally says that explicit cuts in social insurance benefits have been a goal of the Obama Administration. And one he agrees with.

The underpinnings of Klein's ideology are perhaps best expressed in this report on a July 2011 GOP debate:
The losers in tonight’s debate were anyone who wants to see the sort of compromise necessary for the political process to work, and anyone who has been convinced that they can achieve their goals simply by restating their convictions.
This is precisely the essence of High Broderism, where the myth of good faith bipartisanship is venerated as pragmatism, no matter how false the premise or how noxious the result. To Ezra Klein, "a deficit reduction deal" is a Holy Grail. If it includes cuts in social insurance programs in the mix, so be it. A bad grand bargain now is better than an actual fair plan along the line that "poll after poll" shows most Americans support, that may have to wait for a better political climate in Washington.

But I'll let him speak up in his own defense of that ideology, which he did in this post in 2011:
1) The question is “now or later”: Over the next 75 years, the Social Security shortfall is a bit less than 1 percent of GDP. That equals out to trillions of dollars, but the jaw-dropping nature of that sum says more about the size of our economy than the size of the shortfall. One percent of GDP is very manageable. And, eventually, someone is going to manage it. So the question isn’t, as some would have it, whether Social Security should be reformed. The question is whether you think now is a better or worse time than later. The argument for now is that pro-Social Security Democrats control the Senate and the White House. That might not be true in a few years, and if Social Security reform is left until then, the outcome may be worse. The argument for later is that it might be better to attempt Social Security reform at a time when people aren’t thinking about everything in terms of deficits. I can see both sides of it.

2) How important is universality? In the column, I suggest lifting the cap on payroll taxes. I’m also open to things like reducing benefits for upper-income beneficiaries, particularly if the money is used to increase the minimum benefit, which is badly needed. But some of Social Security’s friends reject that approach as they worry that it’ll reduce the program’s support from high earners and thus its political viability. I just don’t think there’s much evidence for this.... [T]hese social service programs are more popular than people give them credit for, and Social Security is so beloved, and targeted at such a sympathetic group, that I think it’s doubly true in that case.

3) .... Social Security’s defenders are unnecessarily afraid that any process of reform will lead to cuts.... Cutting Social Security benefits has been popular in Washington circles for a long time, but it doesn’t make it into policy very often. And that’s because it’s really, truly, extremely unpopular in the country itself....

To sum up, I think a lot of people agree that Social Security — and our retirement-security infrastructure more broadly — could be better designed. But I also think a lot of people see Social Security as an existing win that now needs to be defended, as opposed to a popular policy that can be perfected and even expanded. Increasingly, I’m not sure that’s the right way to look at it. Social Security is popular. The right solutions to Social Security are popular (indeed, lifting the payroll tax cap is the only popular solution). And my hunch is the right policies for expanding retirement savings will be popular, too.
To the contrary, as Dean Baker and others have argued for years, it is Medicare and Medicaid costs due to spiralling inflation, not Medicare and Medicaid beneifts that need to be slashed. As Baker has tirelessly pointed out, if you bring medical costs in the US down to European levels, the deficit and national debt problems completely disappear.

Ezra thinks that turning Social Security and Medicare into quasi-welfare programs won't be their downfall. Well, we used to have a federal welfare program. Did Ezra never hear of Clinton's 1990s "welfare reform" that severely cut it? Does he not realize that one the main reasons for the assault on public sector pensions is because private sector employees have lost theirs? Does he not think that once upper income earners get little benefit out of Social Security and Medicare, they will resent their payroll taxes, which they paid over an entire lifetime, being directed to the poor?

And in terms of the minor changes to shore up Social Security more or less forever, that can be accomplished with modest increase in payroll taxes, which has been laid out in great detail by Bruce Webb in his Northwest Plan. Indeed, recent polling shows that Americans are willing to accept an increase in taxes, including their own payroll taxes, if it keeps Social Security intact.

It's a shame, because once upon a time Ezra Klein seemed to "got it." In that same piece I quoted at the beginning of thie piece, Klein wrote:
"Where a decade ago the looming fiscal threat of entitlement spending led economists and policy wonks to wear out their policy beads, today a more subtle understanding of our fiscal future dominates.  In this telling, there's no such program as SocialSecurityandMedicareandMedicaid.  There's Social Security, which has modest long-term liabilities and needs little, if any,  help.  And then there's health-care reform....

Dean Baker ... points to ... a graphic that shows what deficits look like in every country with longer life expectancies than us and what the deficit looks like going 70 years with the same per-capita health-care costs of that country.

It's a startling image.  That orange line shooting into orbit?  That's our projected deficit.  That blue line levitating gently upward?  That's our deficit if health costs grew more slowly.  And those other lines sinking downward?  They're our deficit if we had the per-peron health costs of countries like France, Germany, and Canada.  In all cases, Social Security spending remains unchanged.
That is just as true now as it was then. Had the democrats enacted Bruce Webb's Northwest Plan in 2009 or 2010 when they had majorities in both Houses, via budget reconciliation if necessary, Social Security would already be solvent forever and could be declared off the table. There is simply no need to enter into a "grand bargain" with madmen, a grand bargain that as Professor DeLong himself has noted, won't last even two years into the next GOP Presidency.

If anything, the connections showing Ezra Klein's Internet neighborhood, look like a family tree of Beltway conventional wisdom (Paul Krugman being the crazy uncle who has to be invited). Beyond that, Ezra Klein epitomizes the callow wisdom of a 28 year old as to fairness towards his elders who have paid into a system for decades that promised them their social contract would be honored. For his willingness to throw his seniors under the bus in a vapid adoration of bipartisanship, he has earned Jim Newell's wry observation that "the only thing separating Ezra Klein from David Broder at this point is six feet of dirt."