SteveG

House Republicans Consider Reneging On Budget Deal To Force Even Deeper Cuts

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Think Progress has the article headlined House Republicans Consider Reneging On Budget Deal To Force Even Deeper Cuts.  The article quotes from the Politico story, John Boehner tries to cut deeper on 2012 funds:

In a surprising bit of hardball, House Republicans confirmed that they had been actively considering a plan to tamper with the August budget agreement by cutting even more from 2012 spending in order to put pressure on Senate Democrats to come to terms faster on domestic bills for the coming fiscal year.

Surprisingly, the Think Progress link to the Poltico story points to page 2 of the Politico article which starts with the following:

Even Majority Leader Eric Cantor (R-Va.) was skeptical about cutting the CR funding levels, and having backed the idea, Boehner’s office appeared to be stepping away, saying that $1.043 trillion is the more likely final number.

“We did reach an agreement …and I am supportive of the CR being written at that level,” Cantor said. “I think we would try always to go below it, but I think that the risk of bringing back brinksmanship or another potential shutdown is not something right now that we need.”

Now, this doesn’t sound quite as bad as the scare headline and the quote that is used by Think Progress.   Of course, if you wonder what a CR is, and even if you figure out that it is a Continuing Resolution, you might still wonder how Politico can use the abbreviation without explanation.  That is when you go back to page 1 of the story and find that Think Progress has accurately quoted from the first paragraph of the story. You also find that Politico does explain that a CR is a Continuing Resolution.

I post this story only for the people who think that you can negotiate new concessions from the Republicans when they haven’t really bought into their 2% concession and your 98% concession that they agreed to on the last issue.

72 Percent Disagree With Perry That Social Security Is A ‘Monstrous Lie’ |

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The brief item 72 Percent Disagree With Perry That Social Security Is A ‘Monstrous Lie’ was on the Think Progress web site.  Of course, polls are not real news, but the result taken from the CNN poll:

The Social Security system has been described as a “monstrous lie” and as a failure. Do you think those phrases are an accurate description of the Social Security system, or don’t you think so?

Sept. 9-11
2011
Accurate 27%
Not accurate 72%
No opinion 1%

is a nice complement to my post, Why a Pay-As-You-Go System (Social Security) is not like a Ponzi scheme.  It shows that the vast majority of those polled believe that what Tea Partiers like to hear is recognizing as a lie filled sack of something.  Of course that does not mean that they will refrain from voting for a politician who says these things.

The other thing I take from this is that if we keep pounding the message that this is pack of lies at least as often as any politician repeats the lie, then there is hope that the voters are listening.  The moment we stop countering the lies, people will start believing them.  The politicians who spout these lies know that  they have a short half-life, so they know they have to keep repeating them.  Unfortunately the truth has just as short if not a shorter half-life as the lies.

Why a Pay-As-You-Go System (Social Security) is not like a Ponzi scheme

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The following excerpt comes from Mark Thoma’s post SSA Historical Research Note #25: Ponzi Schemes vs. Social Security:

The Logic of Pay-As-You-Go Systems In contrast to a Ponzi scheme, dependent upon an unsustainable progression, a common financial arrangement is the so-called “pay-as-you-go” system. Some private pension systems, as well as Social Security, have used this design. A pay-as-you-go system can be visualized as a pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.

There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends. A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.

So we could image that at any given time there might be, say, 40 million people receiving benefits at the back end of the pipeline; and as long as we had 40 million people paying taxes in the front end of the pipe, the program could be sustained forever. It does not require a doubling of participants every time a payment is made to a current beneficiary, or a geometric increase in the number of participants. (There does not have to be precisely the same number of workers and beneficiaries at a given time–there just needs to be a fairly stable relationship between the two.) As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme…

I originally saw the excerpt on Brad DeLong’s blog in the article Social Security as a Non-Ponzi Scheme.  It is hard to identify who is writing and who is editorializing on things that come from Brad DeLong’s blog, so I post the trail here for those readers to whom it might make a difference.

To me the hallmarks of a Ponzi scheme are:

  1. Offering unbelievably high returns on an investment.
  2. Requiring a clearly impossible, perpetual, geometric increase in the number of new investors to sustain the unbelievable payouts to the earlier investors.

Given the claims of the detractors of Social Security that the retiree could get a better return by investing privately than by putting money into Social Security, Social Security is not offering unbelievably high returns. It is actually offering lower returns.  If allowed by the politicians to be run like a private pension system (not individual accounts invested at retail by the beneficiary),  Social Security could pay higher returns than it does now.

The number of new investors compared to earlier investors is known to rise and fall over the lifetime of Social Security, but there is no perpetual geometric increase (I just said sometimes it decreases), and yet the system is able to maintain stability for the foreseeable future.

So neither of these two major hallmarks of Ponzi schemes is present in the Social Security system.  These facts are clear even to the people who claim that Social Security is a Ponzi scheme.  What does that tell you about the people who make such claims?

If the detractors were clear (I can’t say “honest”) about their claims, they would be saying,

“Social Security is not a Ponzi scheme because it offers a substandard return on your investment. If that doesn’t make you want to opt out of Social Security, then you should know that Social Security is a Ponzi scheme.”

Then the judgment on their veracity would be easier to make.

Economist Robert Reich explains ‘big lies’ about the economy

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You can read the brief introduction to this video on Raw Story, where I find many of these good items.

The video below is of Robert Reich’s Keynote Address at the Summit For A Fair Economy.



There is one thing I want to emphasize. It is about the coming battle over Obama’s jobs plan. The opposition is going to say they can accept a lot of things in the program, but the one thing they will not accept is raising taxes on the rich. This speech by Robert Reich should make it clear that, if nothing else, the one thing we absolutely must have out of Obama’s jobs bill is the raising of the taxes on the rich.


In the above video Robert Reich mentions some brief videos posted on his web site.  Please take a look.


    

    
                                    

                                
                                                            
                                                                    
                                
                                                            
                                                                    
                                
                                                            
                                                                    
                                
                                                            
                                                                    

                                        
    

              

          
President Obama Misunderstands The Psychology of Politics
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In order to have a successful negotiation, each side needs to come away from the deal having had their needs satisfied.


What the President does not seem to understand is that the Republican politicians need to be able to tell their supporters that they came away from the deal making a huge cutback in what President Obama originally wanted.


If the President starts out proposing what the Republicans will accept, he robs them of being able to satisfy one of their primary needs from any negotiation.


Knowing what the President wants for a bottom line, he has to propose enough extra so that the Republicans can satisfy their need to cut it back.


This is not arcane psychology at all.  On a much smaller scale we have all probably been involved in a similar situation on a much smaller scale.  When you try to sell a valuable used item such as a car or a house, you need to take into consideration the need of the buyer to feel that they were tough negotiators and successfully got the price down to somewhat lower than what you asked.  (New car salesman understand this very well.)


You may say, “I am not going to play that game, I’ll just set the price low enough that it is fair and it will sell quickly.”  No matter what you do, the buyers are always going to assume that you have padded the price to put in some negotiating room. If you set the price at your bottom line, the potential buyers are going to be very unhappy that they can’t get any concessions from you.  You may fail to sell the house at your reasonable asking price.  If you had taken the psychology of buying and selling into account, you would have asked enough above your bottom line to make the buyer go away happy that he or she knocked a sufficient amount off your initial price.  You could have walked away with a sale that made the buyer and the seller very happy if you had only understood the needs of the other side.


If the President cannot see this, then he is doomed to never make the sale.  Or if he does make the sale, he will have to lower his price far below where he wanted it to end up.  In any case, he won’t arrive at a negotiation where both sides go away happy.