On his 2 August 2010 blog in The Daily Beast, James K. Galbraith Champions the Beast Manifesto. Not only does he reiterate the frequently-made arguments for why “Jobs are Priority One,” but he also makes a strong case for expanding entitlement programs, now and in the future so that older Americans will not be forced to stay in jobs longer than they wish thereby making room for the younger unemployed to enter the work world. This will also ease the worries and financial burdens of children regarding the care of their elderly parents.

So what are the real effects of cutting Social Security and Medicare?

Medicare pays doctors’ bills for the old. It pays out at lower rates than does private insurance for working people. Cutting Medicare would mean two things: less health care for the elderly, and therefore more financial stress on their families. And more health care costs overall, as people substitute with private insurance for the public cuts. Both of these are very bad ideas.

Social Security pays to keep working people (and their dependents and survivors) out of poverty when they are old. It spreads its benefits to all who have worked, whether they have children who would otherwise support them or not. The payroll tax spreads the burden to all working people, whether they would otherwise be supporting elderly parents or not. Both of these transfers are fair, modest, and sustainable. Cutting Social Security would simply create more poor elderly—those who could not turn to their children—and more stressed working families—those with parents in need. Both of these are very also bad ideas.

In fact, the right response to the crisis is to expand, not cut, both Social Security and Medicare.

The reality is, we are never going to make up good new jobs for everyone who has been hit. (I’d love to be the next Harry-Hopkins-and-Harold-Ickes-combined, but I’m not going to get the job.) So let’s face reality, and make some tough decisions about who we want to be jobless: the relatively old or the very young. Seen this way, it’s an easy choice.

There are many older workers who’ve already worked hard jobs for many years. They would love to retire. But they don’t, because early retirement on Social Security is very costly: you lose benefits every month over your entire future life, unless you hang on to the regular retirement age. We should give these people a break, and lower, not raise, the full-benefit Social Security retirement age—say, to 62 for the next three years. This would give millions a chance to get out, if they want to.

Similarly for Medicare. There are many older workers who have health needs, and who work on only because they can’t afford to lose their employer-based insurance. Let them out! In the crisis, I proposed cutting the Medicare-eligibility age to 55 (and the Senate almost included this in the health care reform bill). It’s still a good idea, but something more moderate, such as opening a three-year window for early exits, would be better than nothing.

Encouraging early retirements would mean that young people—just out of school, with fresh skills, good health, and high energy—would get the jobs they need now. They would not be stuck waiting, or spinning their wheels in school, for years and years. Meanwhile, the retirees, supported by Social Security and Medicare, would provide a continuing stable support to total demand, creating jobs for others as they get older.

This is the way the economy should work. When we have older people, we must care for them, and the best way to do that is to give them the resources to support themselves. There is no “burden problem” as our economy is plenty productive for the working population to support the elderly in modest comfort, particularly if we include some of our truly wealthy in the tax base.

-RichardH

In the 9 August 2010 issue of The New Yorker Magazine, George Packer writes a very long, comprehensive, illuminating, and depressing portrait of the current state of the U.S. Senate. The Empty Chamber.

I hope you will take the time to read the whole article.

Please note that some articles in the New Yorker disappear behind a subscriber firewall after as little as one week.  If you intend to read the article but don’t have time right now, I suggest you download it for future, more leisurely perusal.

-RichardH

In the 3 August 2010 issue of the NY Times, Jane Brody writes, Be Sure Exercise Is All You Get at the Gym.

When you go to the gym, do you wash your hands before and after using the equipment? Bring your own regularly cleaned mat for floor exercises? Shower with antibacterial soap and put on clean clothes immediately after your workout? Use only your own towels, razors, bar soap, water bottles? If you answered “no” to any of the above, you could wind up with one of the many skin infections that can spread like wildfire in athletic settings.

Read on. Ick!

-RichardH

In 29 July 2010 issue, the Boston Globe Editorial Writer(s) decried the Expertise lost at crucial time when Governor Deval Patrick failed to reappoint Tom Fortmann and Sandra Stotsky to the Massachusetts Board of Education.

GOVERNOR PATRICK has purged the state Board of Elementary and Secondary Education of the two members who held the deepest suspicions of the newly-adopted national Common Core standards in math and English. On a number of other issues, Sandra Stotsky and Thomas Fortmann were the two board members who posed the most challenging questions — in public — to state education officials. In declining to reappoint the two, Patrick sacrificed a diversity of opinion that has served the board well.

The education bureaucracy rolls unimpeded without Stotsky, a prickly expert on English language arts, and Fortmann, an exacting math consultant. Board meetings will be more collegial. But enormous subject expertise has been lost. And it’s the kind of expertise that will be needed as the state aligns the curriculum with the new national standards and seeks to lead national efforts to create new tests.

Patrick’s appointment of Clark University’s James McDermott is sensible, in that he played a key role in developing the state’s English standards in 1993. His classroom experience includes five years at the innovative University Park Campus School in Worcester. Unknown is whether he’ll make his presence felt or simply be absorbed into the board’s low-key operation. The loss of Fortmann, the math expert, may be more damaging. A new member with a deep background in raising academic achievement among non-native English speakers would at least have filled a different niche. But new appointee Vanessa Calderón-Rosado runs a nonprofit focused mainly on low-cost housing — not education — for Latino residents.

The Board of Education recently took a big leap of faith when its members voted to replace the state’s highly respected standards with the national Common Core. The board and state education department made reasonable arguments that the new standards would do a better job at getting Massachusetts students ready for college and careers. While the new standards should lead to great advancements, Patrick has jettisoned the two members most likely to raise a cry at the first sign of retreat.

-RichardH

Paul Krugman, in his 24 July 2010 blog post, Keynes in Asia, points out that Asia (specifically, China and South Korea) during the current financial crisis aggressively followed a policy of Keynesian fiscal stimulus (more than any western nation)… to great (even spectacular) success.

With the Republican Party of No applying its boot to the brake, the US couldn’t apply enough fiscal stimulus to get the economy on its historical growth path.

-RichardH

Adam Liptak writes in the 25 July 2010 NY Times, Court Under Roberts Is Most Conservative in Decades.

-RichardH

If you do not watch Charlie Rose and if you have not read or seen Samuel Beckett plays, DO NOT click, ‘Charlie Rose’ by Samuel Beckett’.

-RichardH

The 21st Century Grid (by Joel Achenbach, National Geographic, July 2010).

Discussion of the Grid, a bit of its history, need for significant improvement, and power storage.

Regarding storage, the following is interesting:

Actually the U.S. can already store around 2 percent of its summer power output—and Europe even more—behind hydroelectric dams. At night, when electricity is cheaper, some utilities use it to pump water back uphill into their reservoirs, essentially storing electricity for the next day. A small power plant in Alabama does something similar; it pumps air into an underground cavern at night, compressing it to more than a thousand pounds per square inch. During the day the compressed air comes rushing out and spins a turbine. In the past year the Department of Energy has awarded stimulus money to several utilities for compressed-air projects. One project in Iowa would use wind energy to compress the air.

Another way to store electricity, of course, is in batteries. For the moment, it makes sense on a large scale only in extreme situations. For example, the remote city of Fairbanks, Alaska, relies on a huge nickel-cadmium, emergency-backup battery. It’s the size of a football field.

Lithium-ion batteries have more long-term potential—especially the ones in electric or plug-in-hybrid cars. PJM is already paying researchers at the University of Delaware $200 a month to store juice in three electric Toyotas as a test of the idea. The cars draw energy from the grid when they’re charging, but when PJM needs electricity to keep its frequency stable, the cars are plugged in to give some back. Many thousands of cars, the researchers say, could someday function as a kind of collective battery for the entire grid. They would draw electricity when wind and solar plants are generating, and then feed some back when the wind dies down or night falls or the sun goes behind clouds. The Boulder smart grid is designed to allow such two-way flow.

-RichardH

In his 7 July 2010 blog post, Why Isn’t Investment Higher?, Paul Krugman writes:

Truly, we live in a time of mass delusion — or maybe make that elite delusion — where there are lots of things that everyone believes, without a shred of evidence to back that belief. Here’s one more: everywhere you go, you encounter the claim that businesses aren’t investing, they’re just sitting on piles of cash, because they’re worried about future government policies.

There is, of course, a much more prosaic alternative: businesses aren’t investing because they have lots of excess capacity. Why build new structures and buy new machines when you’re not using the ones you already have?

So is there anything in the data suggesting that we need to invoke fear of government to explain low investment? Not a bit.

[Krugman shows a graph of output gap {difference between actual and potential GDP} and investment to make his point.]

What we see, first of all, is that business investment fluctuates with the state of the economy (duh). It’s actually a surprisingly tight relationship.

Second, we see that investment has, if anything, fallen LESS than you might have expected given the plunge in the economy. We’re much further from potential output than in 2002, yet the share of investment in GDP is only slightly lower.

In short, there’s no puzzle about business investment — and not a hint that we have to invoke some kind of oh-god-Obama’s-a-socialist story to explain low spending. It’s the economy, stupid.

Krugman follows up on 9 July 2010 with Pity the Poor C.E.O.’s.

All the buzz lately is that the Obama administration is “antibusiness.” And there are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery.

How much truth is there to these claims? None. Business spending is indeed low, but no lower than one would have expected given widespread overcapacity and weak consumer spending. Business leaders are feeling unloved, but giving them a group hug won’t cure what ails the economy.

Ask the Obama-is-scaring-business crowd for some actual evidence supporting their claim, and they’ll tell you that business spending on plant and equipment is at its lowest level, as a share of G.D.P., in 40 years. What they don’t mention is the fact that business investment always falls sharply when the economy is depressed. After all, why should businesses expand their production capacity when they’re not selling enough to use the capacity they already have? And in case you haven’t noticed, we still have a deeply depressed economy.

On 9 July 2010, Mark Thoma (U of Oregon), commenting on Krugman, says:

Why are businesses so reluctant to invest? Is it because of an antibusiness climate? Yes, but the climate wasn’t created by the Obama administration. The people who directly or indirectly blew up the financial system — something that happened before Obama took office — are the ones responsible for the discouraging climate that is making firms so unwilling to expand their operations. There is a political attempt to place the blame for the lack of investment on the administration, but there’s nothing of substance to support — and plenty to refute — the claims being made by the lobbyists behind this effort.

So let’s hear some support for another stimulus package and get the economy moving.

-RichardH

In the July/August 2010 issue of Washington Monthly, James Verini writes Show Him The Money, about how Tom Donahue and the US Chamber of Commerce raises (from corporations and Republicans, through scare techniques) and spends its huge lobbying dollars.

The “ask” works. In 2009 the Chamber doled out somewhere in the area of $120 million on lobbying alone, five times what its nearest cohort, Exxon Mobil, spent. Much of that money went to an advertising and grassroots blitz attacking the congressional health care legislation, making the Chamber very likely the biggest spender in the debate. In the weeks leading up to health care’s passage in March, it was spending $800,000 a day trying to defeat the Democratic legislation. Livid that the law went through, the Chamber has now pledged to funnel $50 million—more than twice as much as the entire cash holdings of the Republican National Committee and the National Republican Congressional Committee put together (as of late May)—into an estimated forty House races and ten Senate races this fall. About eight of every ten dollars of Chamber political donations go to Republicans.

With such torrents of Chamber money raining down on the political process, it’s rather ironic that many Americans believe the U.S. Chamber of Commerce to be part of the government. But, in a way, it’s also fitting. With its legions of lobbyists, policy analysts, economists, and attorneys, its own rapid-response media center and law firm, its hundreds of international chapters and steady stream of officials, legislators, and foreign potentates flowing through its immense bronze-relief doors on H Street, the Chamber does act like a federal agency—or like a third political party on permanent campaign. “The Chamber views itself as a shadow-government policymaking body,” a former Chamber economist, Lawrence Hunter, said.

Such policy, of late, has consisted of mounting major battles against regulatory initiatives emanating from the Obama White House. In addition to doing its best to block health care legislation, the Chamber also tried desperately to fend off the financial reform bill passed by the Senate on May 21. Meanwhile, its campaign to influence environmental legislation has relied in part on casting doubt on the exigency, even the existence, of climate change. …

I asked Donohue what, exactly, the Chamber does. “Two fundamental things,” he replied. “We’re advocates. Sure we do studies, sure we do events, sure we do meetings, sure we have all kinds of stuff, but we’re advocates.” And then he surprised me again with his candor. “The second thing we do is really more interesting,” he said. “We’re the reinsurance industry for individual industry associations and state chambers of commerce and people of that nature.” An example, said Donohue, was when Wall Street found itself on the defensive in opposing new banking regulations. “They can’t move forward, they can’t move back, or maybe they’re being overrun, and they’ll come to us and say, ‘Can we collect our reinsurance?’” he explained. “And then we build coalitions and go out and help them.”

-RichardH