Tell the Truth

Why is it so difficult for our leaders to tell the truth?

Politics these days seems to be an exercise of saying as little as possible about specifics so that you don’t give your opponent, who is also not saying anything specific, something they can use to criticize you.  Since both campaigns are playing the same game, what we end up with is “fake” statements of truth followed by claims that the other guy really can’t be trusted.

Here’s an example from Romney:

“Our next president is going to face difficult choices. Among these will be the future of Social Security and Medicare. In their current form, these programs will go bankrupt. I know that, you know that, and even our friends in the other party know that. The difference is that I will be honest about strengthening and preserving them, and they won’t.”

He states the obvious regarding difficult choices and specifically difficult choices in entitlement programs, but he doesn’t say what he is going to do about it.  He only says that you can’t trust the other guys to do anything about it.

Here’s what Obama has said about Social Security

“it faces real long-term challenges in a country that is growing older… both parties should work together now to strengthen Social Security for future generations. But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities without slashing benefits for future generations”

It does seem as though he acknowledges that there is a problem, but he doesn’t say how he is going to solve the problem either.  He only says that it’s not going to include slashing benefits or putting any of the current people who depend on the system at risk.

Fortunately when it comes to financial plans,we have two budget proposals to compare.  The first is the Ryan Budget.  The other is the Obama budget.  Romney has yet to release a detailed budget, but we can look at some of the things he has said.

First up, the Ryan budget.

The whole purpose of the Ryan budget is to reduce the deficit.

The problem is that it fails at this most basic goal.  According to the Tax Policy Center, the tax cuts that are included in the Ryan budget actually add $418B to the budget deficit every year starting in 2015.

Ryan responds that he intends to close the gap between spending and revenue by eliminating some tax deductions, but he does not specify which ones he is going to reduce or eliminate.

Sound familiar?

This is more political standard procedure.  Those who share Ryan’s view that the government wastes money, are quick to agree with Ryan that there MUST be at least $418B in tax deductions that can be cut to make Ryan’s numbers balance.  In order to actually reduce the deficit, he’s going to have to find more than that.

When you actually look at the list of existing tax deductions, however, the stark reality comes into view.

The Congressional Research Service took a look at the 20 tax credits, exclusions and deductions that have the biggest impact on tax revenue. Together, they account for 90 percent of the revenue lost through tax deductions in the code.

Here they are:

Let’s just go through these from the top.

Is Ryan going to eliminate the deduction businesses who offer health insurance to their employees are able to take for their cost of providing that insurance?  Not likely when Ryan at the same time supports repeal of the healthcare reform bill because in his opinion it weakens the current employer-based system.

How about the next one?  Well this one also benefits employers who provide retirement benefits.  Unlikely that Ryan, who is attempting to privatize social security and Medicare is going to touch this one either.

The next one is the single most popular deduction in the tax code, mortgage interest.  With the home construction industry in the tank, he won’t even mention this one.

How about taxing the benefits that elderly receive through Medicare?  He is already treading on thin ice in suggesting changes to Medicare and Social Security.  Forcing seniors to pay tax on the $200,000 worth of benefits that they may have received last year would reverse the whole purpose of Medicare and drive seniors into the ranks of the Democrats faster than any other thing the Republicans could do.

Capital Gains?  Nope that’s Republican bread and butter there.  That is biting the hand that feeds you.

To save any remaining suspense, analysts for the Congressional Research Service drily concluded, “Given the barriers to eliminating or reducing most tax expenditures, it may prove difficult to gain more than $100 billion to $150 billion in additional tax revenues through base broadening.”

And if you were to make all of the changes that might be feasible, the CRS estimates, you could finance “about a one or two percentage point reduction for each (tax) bracket” through reducing or eliminating existing tax deductions.

Just as a reminder, Ryan proposes a 10-percentage-point deduction for the wealthiest of Americans.

So that leaves the basic question, “How are you going to reduce the deficit AND deliver a 10 point reduction in tax rates when tax loopholes will only get you two of those points?”

The bottom line.

It’s not going to happen.

The Ryan budget is a fiction.

It is a stalking horse which allows Republicans to continue to suggest that overly  generous social spending is driving up the deficit.

The truth is that any hope of reducing the deficit has to include economic recovery which will produce higher tax revenue.  There just aren’t enough people working and paying taxes to support the cost to run the government.  Now you can say that the government is too big, but the reality is that regardless of what the size of the government is today, a campaign to dramatically reduce the size of government in the near term is will also drive up unemployment and make the deficit and revenue problems worse.

Right now that government needs to invest in infrastructure.  Infrastructure like roads and bridges generates near term employment in the construction industry and long term benefits in terms of business growth.   And yes, these infrastructure investment WILL increase the short term deficit, but they are the only reliable way to reduce the deficit over the long term.

Next let’s see what candidate Romney has to say on the subject.

16 Responses to “Tell the Truth”

  1. keith says:

    After all these years I have worn you down oh so slightly. You now give a passing acknowledgement that BOTH sides are deceptive in what they say.

    I would be interested in you commenting on Obamas budget or lack there of in the same debt reduction light.

    I agree with you that Ryans budget does NOT cut into the debt, rather he increases it. He fails. However, according to the CBO, or at least what I thought I saw on the screen last night, Obama’s still increases debt at a much larger rate.

    I also agree with the premise of this post. NO ONE says what they believe and NO ONE says what really needs to be done. I understand that in the election cycle, though I wish it weren’t so.

    Also as an aside, I heard an iterview with Barney Frank. He advised Obama NOT TO GO AFTER healthcare as he did. Why? Sure many are not covered…..but an over whelming majority of the population is. They like their healthcare. Its one thing to ask the people to help care for others, its another thing TO MESS WITH THEIR healthcare. Tax everyone to help those who don’t have coverage but dont make us all change to cover everyone else. He also said he didn’t think the people would believe the statement of “if you like your insurence then you are free to keep it.” As you know I don’t believe that either. We will not be free to keep ours.

    I think he hit it right on the head.

  2. Jeff Beamsley says:

    Keith,

    I DO plan to review the budget proposals for Obama too.

    As far as Healthcare Reform, I’m grateful that Obama took it on even though it might cost him a second term.

    Healthcare costs are rising faster than the rate of economic growth. Rising healthcare costs are the number one concern of the small and medium size businesses who are doing most of the new hiring these days. Inability to afford healthcare insurance and the resultant costs of uninsured care are the number one reason why the working poor are unable to escape their dead end jobs.

    Rising healthcare costs are what put Medicare and Medicaid at risk even more than Baby Boomer retirement.

    Healthcare is currently 18% of the GDP. Unchecked it will grow to 25% of GDP in 2025. We are currently VASTLY noncompetitive with our international rivals when we burden our companies with these high costs. We are going to be unable to compete internationally if costs grow to projected levels.

    Healthcare reform is the first step toward bringing down these costs to a more manageable level and prevent these costs from crippling the country.

  3. keith says:

    your post was on the deceptive nature of our politications…..everything that was presented by mr obama regarding healthcare was deceptive. to this day we still don’t know whats hit us……. (Single payer is what he wanted and its what he should have gone after if he wanted to be honest. Instead he was dishonest and is trying to get there through the back door.)

    the republicans can yell REPEAL all they want and that might gain traction but the resulting years will still demand to know what they are going to do about it.

    To your comments above about Obama understandng SS has problems. HE MADE IT WORSE. the SS tax holiday has ADDED 100 billion or so to the shrot fall from a program already going bankrupot. His policy, that the republicans went along with, is speeding up the day of bankruptcy!

  4. Jeff Beamsley says:

    Keith,

    “everything that was presented by Mr. Obama regarding healthcare was deceptive”

    Sorry but this is your political bias showing.

    Here’s a link to a Politifact review of the criticisms that the Affordable Care act has received. The ONLY administration item that they viewed as questionable in the claims by both sides regarding the act was the administration’s claim that increased access to preventative care will reduce the overall cost to provide Healthcare in this country. While it seems logical, there isn’t any conclusive data to back this claim, so they rated it as false.

    This whole rant about single payor is also unsupported by the facts. Politifact rated that claim “pants on fire”

    http://www.politifact.com/tennessee/article/2012/apr/05/flood-falsehoods-about-health/

    As far as Social Security, the administration proposal included a method to pay for the extension of the tax holiday. It was the house Republicans substituted a provision which shifted more of the pension burden to federal employees rather than than accept closing some tax loopholes that benefited the rich. This didn’t cover the total cost of the bill, so the Republicans just added the rest to the deficit.

    http://www.nytimes.com/2012/02/18/us/politics/congress-acts-to-extend-payroll-tax-cut-and-aid-to-jobless.html

    Facts and the Internet are wonderful things.

  5. keith says:

    “Everything” is a very broad term and I used it intested of listing “everything.”

    here’s the resonable test……

    Jeff, do you believe the the statement that was made “If you like the healthcare coverage you currently have, you can keep it. There will be no change for you” to be true and not deceptive?

  6. keith says:

    HRe answer is simple……….
    use the bottom of the range 49%.
    You the employe will have NO CHOICE in the matter.
    Obamas overriding statement is false, and deceptive.
    Obama and the progressives want single payer. You want
    single payer. Why don’t/didn’t you all just play your card as
    you wanted???? It would be better then this FOR EVERYONE.
    Just create a tax and be done with it. That would have
    been legal also.

  7. Jeff Beamsley says:

    Keith,

    What Obama said to employees is that the law won’t force the EMPLOYEE to choose another plan.

    What the analysis said is that the small business exemption will be difficult to maintain because small businesses change their plans frequently. When those plans DO change, small businesses will have to comply with the basic requirements of the law.

    So let’s look at the reality of promise.

    For those employed by small businesses whose employers do not change their plans, the law won’t affect them. So if they like the plan they have with their employer, they won’t be forced to choose another.

    For those whose employers choose to change their plan, some of those changes will include compliance with provisions of the new law. Those provisions all favor the employee. Things like no pre-existing condition exclusions and coverage for kids up to 26. If they like the new plan, they can keep it. If they don’t they have the option of getting their own insurance rather than changing jobs.

    Finally here’s a little analysis of the number of employers who may choose to drop insurance as a result of the law.

    http://www.politifact.com/wisconsin/statements/2012/apr/08/eric-hovde/newcomer-and-wisconsin-gop-senate-candidate-eric-h/

    I agree that I think that single payor is a better solution, but that’s just my opinion. There wasn’t enough support, in the opinion of those managing the bills passage, for a single payor option.

  8. Jeff Beamsley says:

    came across this post too. It does a pretty good job of describing how Obama made his original claim more precise and how that relates to the healthcare law.

    http://www.politifact.com/truth-o-meter/statements/2011/feb/02/blake-farenthold/rep-blake-farenthold-says-health-care-law-will-for/

  9. keith says:

    Further….He is giving incentives to employers to dump their employees, who have no choice.

  10. Jeff Beamsley says:

    Keith,

    This claim originally came from a report by the conservative Heritage Foundation.

    http://www.heritage.org/research/reports/2011/01/obamacare-and-the-employer-mandate-cutting-jobs-and-wages

    I already posted a link to Politifact on this, but here’s the detail.

    PolitiFact Virginia looked at the best projections available, based on how the law is actually written, and found that they do not suggest that the law will “kill” jobs. PolitiFact Virginia also looked at evidence provided by the Chamber to support its claim, including a brief from the Heritage Foundation, a conservative think tank that has been critical of the law. When the authors were asked whether their brief supported the claim, they responded that “our paper does not provide evidence that the (health care law) would cause job loss.” So the Chamber got a False.

  11. keith says:

    What I was refering to with the comment “incentive to ‘dump employees'” was the lower cost to NOT provide insurence for the employe and instead pay the fine. The fine being less costly then the insurence. This is how single payer can be achevied.

    I was not refering to job loss.

  12. Jeff Beamsley says:

    As you might imagine, the CBO has also estimated that in their overall estimates of the impact of the Affordable Care Act. This was referenced in the Politfact link that I posted earlier.

    Bottom line is that President Obama has been more precise lately and now says that if you “already have health insurance through your job, Medicare, Medicaid or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor that you have.”

    I agree that some employers will determine that their employees will be able to get better plans from state exchanges than the employer can provide themselves. I also agree with the CBO that this will not be widespread because benefits remain an important recruiting tool that businesses are not going to give up casually.

    The ONLY thing that may significantly change this would be if the tax deduction that businesses are able to take for their costs to provide their employees healthcare benefits is eliminated.

  13. keith says:

    Did the CBO eliminate it or simply not evaluate this possiblity?
    Remember the CBO ONLY takes into account the senario mapped out for them with the assumptions given. They score what you ask them to.

    Here’s a thumbs up for the President!!! Hopefully he’ll keep his EPA in check and do what he can to MAKE it happen not all that he can to insure it WON’T.

    http://www.bloomberg.com/news/2012-05-09/obama-warms-to-energy-industry-by-supporting-natural-gas.html

    Nat gas is the best option going forward. We have all we need, its far cleaner and, today, extermely cheap. The conversion of a car, I’m told, has a 50,000 mile pay back.

  14. Jeff Beamsley says:

    “CBO and JCT continue to expect that the Affordable Care Act will lead to a small reduction in employment-based health insurance,” the report says. “In CBO and JCT’s judgment, a sharp decline in employment-based health insurance as a result of the ACA is unlikely.” And health insurance tied to jobs is already undergoing transformations that have little to do with health care reform.

    http://www.huffingtonpost.com/2012/03/15/health-care-reform-will-m_n_1348137.html

    I think that the President has struck a good balance here. We have to continue to be vigilant, but we also have to be reasonable. This new horizontal fracking takes a lot of water and may be difficult to track if the there isn’t some disclosure of the chemicals being used. It appears that there are going to be reasonable oversight for all of that.

    Burning NatGas certainly is better for the environment that virtually any other fossil fuel.

  15. keith says:

    Five or six years with you Jeff and we have something to rally around togather, Nat Gas!!!!!!!!!!!!!!!!!!!!!

Leave a Reply