Too Much Wishful Thinking on Middle-Class Tax Rates

From Greg Mankiw, at the New York Times, "Wishful Thinking and Middle-Class Taxes":

IN the continuing fiscal negotiations between President Obama and House Republicans, both sides have, from the very beginning, agreed on one point: Taxes on the middle class must not rise. But maybe it’s time to reconsider this premise. An unwavering commitment to keep middle-class taxes low could be one reason the political process has become so deeply dysfunctional.

Let’s start with the problem: the budget deficit. Under current policy, the federal government is spending vastly more than it is collecting in tax revenue. And that will be true for the next several decades, thanks largely to the growth in entitlement spending that will occur automatically as the population ages and health care costs increase. As a result, the ratio of government debt to the nation’s gross domestic product is projected to rise, substantially and without an end in sight.

That can happen for a while, or even a long while, but not forever. At some point, investors at home and abroad will start questioning our ability to service our debts without creating steep inflation. It’s hard to say precisely when this shift in investor sentiment will occur, and even whether it will strike in this president’s term or the next, but when it does, it won’t be pretty. The United States will find itself at the brink of an unprecedented financial crisis.

Republicans and Democrats agree on the nature of the problem, but they embrace very different solutions. My fear is that both sides are engaged in an excess of wishful thinking, with a dash of mendacity.

If Republicans had their way, they would focus the entire solution on the spending side. They say that reform of the entitlement programs can reduce their cost. The so-called premium-support plan for Medicare, from Paul D. Ryan, the 2012 Republican vice-presidential candidate, would let older Americans use their health care dollars to buy insurance from competing private plans. (Interestingly, it’s similar to the system envisioned for the nonelderly by President Obama’s Affordable Care Act.) The hope is that competition and choice would keep health care costs down without sacrificing quality.

The premium-support model may well be better than the current Medicare system, but its supporters oversell what it would be likely to accomplish. The primary driver of increasing health care costs over time is new technology, which extends and improves the quality of life, but often at high cost. Unless the pace or nature of medical innovation changes, this trend is likely to continue, regardless of structural reforms we enact for Medicare.

Democrats, meanwhile, want to preserve the social safety net pretty much as is. They balk at any attempt to reduce this spending, including even modest changes like altering the price index used to calculate Social Security benefits. They focus their attention on raising taxes on the most financially successful Americans, contending that the rich are not paying their “fair share.”

Fairness, like beauty, is in the eye of the beholder. Unfortunately, people’s judgment is often based on anecdotes that distort rather than illuminate. The story of the undertaxed Warren Buffett and his overtaxed secretary looms larger in the public’s mind than it should.

Here are some facts, so you can judge for yourself....

Even if President Obama wins all the tax increases on the rich that he is asking for, the long-term fiscal picture will still look grim. Perhaps we can stabilize the situation for a few years just by taxing the rich, but as greater numbers of baby boomers retire and start collecting Social Security and Medicare, more will need to be done.

Continue reading (via Memeorandum).

RELATED: I'm for shrinking government, so this is the bottom line for me, at The Lonely Conservative, "People Should Pay For the Government They Voted For." Raise taxes. Go over the cliff.  I guarantee you that Obama won't get off cost-free. The real cost of the election will start biting people in the ass.

Senate Leaders to Work on Agreement

At LAT, "Obama 'modestly optimistic' that 'fiscal cliff' can be avoided":

WASHINGTON – President Obama said he was “modestly optimistic” that Senate leaders could reach an agreement to avoid the so-called fiscal cliff, but he said that if the effort fails, he’ll demand a vote on his basic proposal to protect middle-class taxpayers from seeing their taxes rise.

Speaking to reporters in the White House on Friday evening, a stern Obama tried to ramp up the pressure on lawmakers as they cobble together a deal before a potentially growth-crippling combination of tax increases and spending cuts take effect in the new year.

“The hour for immediate action is here. It is now,” Obama said.

Obama spoke shortly after meeting with top congressional leaders at the White House, during which Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) agreed try to come up with a proposal before the Dec. 31 deadline.

The president called the meeting “good and constructive” and suggested there was still time to reach a compromise. But if lawmakers failed to find common ground, Obama said, he has asked Reid to bring up a vote on a scaled-back version of his original proposal.

“If members of House or the Senate want to vote no, they can,” Obama said. “But we should let everybody vote. That’s the way this is supposed to work.”

Lots more at Memeorandum.

Thanks Democrats: Sluggish Economic Growth Locked-In for 2013

At IBD, "Economy 2013: Mediocre Growth Will Be the New Good":

Next year may be when Americans stop waiting for faster economic growth to make everything better again and finally learn to accept the current modest pace as good enough now and good enough later.

Even if lawmakers reach a deal to avoid the fiscal cliff's full impact, tax rates will still go up for many Americans, and government spending will go down.

Incomes, which have seen little growth during the recovery, are unlikely to start shooting higher. Aging consumers haven't regained their lost net worth and aren't ready to load up on new debt.

"It's a very different economy than what we've seen in the last 20 to 30 years," said Steve Blitz, chief economist at ITG Investment Research.

Gross domestic product has expanded at an average rate of just over 2% a year since the recession ended, and many economists expect more of the same in 2013.

That assumes a fiscal cliff deal. But the chances of a pact before year-end are now looking increasingly bleak, and a prolonged standoff could deal another blow to the fragile economy. The U.S. could fall back into recession, the Congressional Budget Office has said.

Even without a "cliff" shock, the National Association for Business Economics, the Organization for Economic Cooperation and Development and the International Monetary Fund all see 2013 growth at or just above 2%.

ITG's Blitz also thinks the U.S. will expand by about 2%, with some positive momentum in housing but not much improvement in consumer spending.

"What the economy is not going to do is accelerate toward the trend path where we were pre-recession," he said. "We're not going to make up that lost ground."

More at that top link.

While I think both parties suck, it's definitely the Democrats who're by design seeking to hold the economy back by punishing wealthy high-achievers in the name of social justice. Even far-left hack Jamelle Bouie admits it, "Why Democrats insist on upper-income tax hikes."

Fiscal Cliff Dive Would Impose Steadily Increasing Pain and Hardship

At the New York Times, "Fiscal Cutoff Gradually Morphs Into Horizon":

Negotiations are set to resume in the coming days, following a break for Christmas, although hopes for a so-called grand bargain have faded. Instead, President Obama is pushing for a scaled-back plan that would extend the Bush-era tax cuts on incomes below $250,000, while suspending the automatic spending cuts and extending unemployment benefits.

Michelle Meyer, senior United States economist at Bank of America Merrill Lynch, said there is a 40 percent chance of what she calls a “bungee-jump over the fiscal cliff,” with Congress failing to act until after Jan. 1 but eventually averting the full package of tax increases and spending cuts by mid-January. If that were to happen, she predicts a steep sell-off on Wall Street, which would quickly force political leaders to compromise.

Over all, Ms. Meyer estimates that the economy will grow by just 1 percent in the first quarter of 2013, well below the 3.1 percent pace recorded in the third quarter of 2012.

What’s worrisome, she added, is that consumer anxiety about the fiscal impasse has begun to mount, catching up with business leaders who have been warning of economic danger since summer. “What’s been missing in this recovery has been confidence,” she said. “We’d see a healthy recovery if it weren’t for this uncertainty and the potential shock from Washington.”

Indeed, the economy has been showing signs of life recently. Unemployment in November sank to 7.7 percent, a four-year low. Consumer spending has been picking up, and the housing market has continued to recover in many parts of the country. Overseas worries like slowing growth in China and recession in Europe have also faded.

Those trends have encouraged some observers, like Steve Blitz, chief economist at ITG Investment Research. He estimates that the economy will grow by nearly 2.5 percent in the first quarter if Washington comes up with even a modest compromise. In the absence of a deal, the pace of growth would be more like 1 percent, he said.

“I don’t think that not having a deal going into the new year is all that critical,” Mr. Blitz said. “It doesn’t mean you will immediately go into a recession.”

RTWT at the link.

And that's Maria Bartiromo at the clip, mercilessly hammering the befuddled Democrat Senator Ben Cardin, via Eliana Johnson at National Review, "Maria Bartiromo Lays the Smackdown on Ben Cardin, Trading Floor Erupts in Cheers."

And see Jonathan Tobin, at Commentary, "Democrats Can’t Avoid Fiscal Cliff Blame."

Low- and Moderate-Income Taxpayers to Face Biggest Burden if U.S. Goes Over Fiscal Cliff

Here's an excellent Fox & Friends segment from over the weekend, especially the second half, "If Bush Tax Cuts Expire - What Would It Mean For Your Taxes?"

And at the Wall Street Journal, "Cliff Would Strike Low Incomes Hard":

If the U.S. goes over the "fiscal cliff," some Americans may fall harder than others.

The biggest impact in sheer dollars would land on relatively affluent households, particularly when it comes to the tax increases that make up the bulk of the cliff. But in terms of percentage of tax increases, low- and moderate-income taxpayers will face the biggest burden—an often overlooked part of the budget debate that's now getting attention as the year-end deadline nears.

Households earning $10,000 to $20,000 would see a large increase in their overall federal tax burdens, from an average of $68 to $605. The blow would be especially harsh for married couples and households with children. The fiscal cliff "clobbers low-income households with children," said Roberton Williams, a senior fellow at the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute. "It is striking how large some of the increases are."

A household that makes between $10,000 and $20,000 in income and has a child would get a $2,761 payment from the Internal Revenue Service under current rules, thanks to various tax breaks and credits. After the cliff, that would be cut by $1,324, or about half.

Married couples earning $20,000 to $30,000 today would get an average $15 payment from the IRS under current rules. In January, they would owe an average $1,408 to the IRS, because several of those breaks would be narrowed or eliminated.

Budget talks were mostly quiet Sunday, officials on both sides said, after a week when efforts between President Barack Obama and House Speaker John Boehner (R., Ohio) to cut a deal collapsed, and the House failed to pass a backup plan.

Some leaders, including Mr. Obama and Senate Majority Leader Harry Reid (D., Nev.), attended a memorial service for the late Sen. Daniel Inouye in Honolulu. Mr. Obama said he would cut his holiday vacation short and return to Washington this week to work on an agreement.

The so-called fiscal cliff comprises about $500 billion in tax-break expirations and government spending cuts that are set to take effect in early January, unless Congress acts. With little more than a week to find a solution, Democrats and Republicans are focusing on the real-world impacts of the fiscal cliff and seeking to shift blame for it.

"We're taking…this incredible mallet and [are] about to smash America," Newark's Democratic Mayor Cory Booker said Sunday on ABC's "This Week." "People are going to be cut out of programs that support the poorest Americans….This is really what bothers me right now."

Don Stewart, a spokesman for Senate GOP Leader Mitch McConnell (R., Ky.), said on Sunday: "Given the impact on all segments of the economy, it's disappointing that Democrats are so cavalier about letting the country go off the cliff."

The Obama administration contends Republicans would let much of the fiscal cliff's impact happen for moderate-income families, by allowing Obama-era breaks to expire.

If Congress misses its year-end deadline but quickly restores the expired tax breaks, the tax impact on lower-income households could be modest.

One problem, however, might be unavoidable: a delay in sending tax-refund payments that normally arrive between late January and March. The IRS already has warned lawmakers it might have to postpone the tax-filing season by several weeks, possibly for everyone.

Much of the tax debate has focused on upper-income Americans, who will likely see taxes rise in some form next year. If no budget deal is reached, households making more than $100,000 would absorb more than 50% of the total tax increase, according to an analysis by the Tax Policy Center. And those earning more than $1 million would see their taxes rise by an average 24%, from about $1.1 million to about $1.3 million.

At the other end of the income scale, the risk comes from the expiration of less-heralded parts of the Bush-era tax code, as well as Obama changes that expanded several breaks for lower- and middle-income households.

About two million people also face the prospect of losing unemployment checks starting in January, with the expiration of extended federal unemployment benefits. "For the long-term unemployed, their entire income may disappear," said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities.

See also, "How 'Cliff' Talks Hit the Wall: Behind Scenes, Boehner Failed to Sell Republicans on Taxes, While Obama's Spending Plans Rankled."

Obama's ball-busting budgeting. And I'll tell you, the Republicans aren't coming out too pretty here either. That video at top says the average tax hit for incomes over $108,000 would be more than $14,000. The liability would be enormous especially for people making over $1 million (around $100,000), but still. The bill comes due in April, as we're talking about the 2012 tax filings that will be affected, unless the IRS is able to reset the deadline. I doubt there'd be a better impetus to a new American tax revolt than going over the cliff, but perhaps an agreement will come at the 11th hour. We'll see.

Countdown to the Fiscal Cliff

I had John Hawkins' excellent post at the sidebar blog item finder, but I keep thinking about his comments as the fiscal cliff debate continues. This should be up on the front page: "5 Ways The GOP’s Poor Political Decision Making Helped Create This Fiscal Cliff Mess + Why I Would Have Voted For Boehner’s Plan B."

Bottom line for me: the GOP's all messed up and it's going to take some structural reforms at the organizational level to start turning things around. John's right: the Democrats won the public relations battle on higher taxes for the wealthy. Obama sees raising taxes as his mandate. And he correctly perceives the weakness of the Republican position and the obvious fractures within the GOP conference on the Hill.

More from Karen Tumulty, at the Washington Post, "Tax fight sends GOP into chaos."

And at the New York Times, "News Analysis: Still Bitter About Election, Republican Opposition Unwilling to Compromise with President" (via Memeorandum).

Boehner's Budget 'Plan B' Collapses

Here's the key bit from the Wall Street Journal's editorial, "Teetering on the Cliff":

The Speaker's miscalculation was that, just as in 2011, he thought he could get into a room with the President and negotiate a grand bargain. His intentions were good but he misjudged the all-or-nothing ideological nature of this Presidency. After the debacle of 2011, Mr. Obama could have treated the negotiations as the art of the bipartisan deal that could set the stage for immigration reform and other second-term achievements. Flush with victory, he could have at least made a gesture on entitlements.

Instead, he has treated the talks as an extension of the election campaign, traveling around the country at rally-style events at which he berates Republicans for not accepting his terms of surrender. Grant gave Lee more at Appomattox.

Plan B was Mr. Boehner's attempt to salvage some political dignity and a policy victory or two in return for conceding on tax rates. The bill wasn't even technically a vote to raise taxes because the rates are set to rise automatically on January 1 if Congress does nothing. The bill also kept the estate tax at 35%, rather than going up to 55% as now scheduled, and it made the tax cuts on lower incomes permanent.

With a narrow deal on taxes, Mr. Boehner figured he could live to fight another day on spending

More at that top link. And a CBS News report, "House votes on Boehner's 'Plan B'."

And at the Los Angeles Times, "Boehner cancels House vote as 'Plan B' falls short of GOP support."

Power Grab!

O'Reilly's talking points memo:

Lots more at Memeorandum.

Obama Invokes Newtown Massacre to Attack GOP on Fiscal Cliff Negotiations

From Bryan Preston, at PJ Media, "Disgraceful: Obama Invokes Newtown Massacre to Pressure Republicans to Go Along with His Tax Hikes":

This has to be one of the lowest moments of a very low presidency. Why should the Newtown killings bring any sort of “perspective” to a spending crisis that Barack Obama has created?

More at that top link, and watch Krauthammer rip into the disgusting one, at the Right Scoop, "Krauthammer: Obama invoking the massacre of children to say GOP needs to accept his terms is a SACRILEGE!"

ObamaCare Medical Device Tax Will Deal Crushing Blow to Orange County Businesses

My previous report is here, "Democrats Seek Delay of ObamaCare Medical Device Tax."

And here's this at the Orange County Register, "A prescription that kills innovation":

No state will be more adversely effected than California by the 2.3 percent tax increase on medical devices, which the Obama administration expects to raise nearly $3 billion over the next decade.

Indeed, while the United States is the world leader in medical devices and diagnostics, the Golden State is by far the nation's leader, accounting for a fifth of total U.S. sales and employment.

The threat of the federal tax hike on medical devices will be especially damaging to Orange County, which is the hub of California's medical device and diagnostics sector. The sector accounts for more than $11 billion in economic activity within the county, according to life-science association BIOCOM Southern California. The average O.C. salary for those employed in the sector is $108,799.

The Medical Device Manufacturing Association points out that the Obamacare tax hike will be levied on a company's total revenues, regardless of whether it makes a profit.

That means that many companies will owe more in taxes than they generate from their operations.

As MDMA President and CEO Mark Leahy recently told lawmakers in the Nation's Capital, "We are already seeing the negative impact this onerous policy is having on jobs and innovation, and America's med-tech innovators can't afford to find out what implementation of the device tax would bring."

That's why we urge senators Feinstein and Boxer to add their voices to those of their fellow Democratic senators to delay, if not repeal altogether, the scheduled implementation of the innovation-killing tax hike on life-saving medical devices.

Clueless freakin' progs.

California Democrats Face the Supermajority Challenge

I don't see what's the problem. It's been a Democrat state for a while now. But come January there'll be no real legislative constraints. They'll be able to do what they want, which will be finding more and more ways to levy taxes on an overburdened populace. It's going to be interesting to see if Californians hold up against the onslaught.

At the New York Times, "With a Supermajority, California Democrats Begin to Make Plans":

LOS ANGELES — The Democratic Party has controlled the California Legislature for a nearly unbroken stretch of 42 years. Yet control goes only so far: it takes two-thirds of the Legislature to enact a host of important legislation in this state, meaning that even the diminished Republican Party has been able to easily frustrate Democratic ambitions.

But with a swell of electoral victories in November, the Democratic Party has now crossed that boundary and controls two-thirds of both the Senate and the Assembly, giving it the kind of unfettered power that no party has had here for 80 years.

This does not appear to be a passing advantage. Even Republicans say that changes in electoral demographics mean that, with the exception of a few brief lapses caused by vacancies, Democrats could hold a supermajority at least through the end of the decade.

Yet in the “be careful what you wish for” department, Democrats are beginning to confront the struggles and complications that come with being in charge of the store. This authority came at least two years earlier than most Democrats had projected. And it is unleashing years of pent-up Democratic desires — to roll back spending cuts, approve a bond issue to rebuild the state’s water system, amend the state’s tax code, revamp California’s governance system — that had been largely checked by the Republican minority.

At the same time, it is stirring concerns from Democrats, among them Gov. Jerry Brown, that the situation may inspire an overreach that could make the party’s reign brief. By contrast, some Democrats argue that handled correctly, the next two years could provide an opportunity to lock in long-term control.

Continue reading.

I don't think the "restraint" forces will have much of a chance. When has restraint been the order of the day in the past? Politics come January is going to be all about ways to change the state's tax system, to find more ways to confiscate the people's money and fund a bloated, tyrannical state bureaucratic monster. Meanwhile, California will continue to lag in all the leading indicators of economic and demographic well-being. The West Coast dystopia.

IBD/TIPP Poll: Fiscal Cliff Sinks Dems' Hopes After Obama Re-Election

From Investor's Business Daily, "IBD/TIPP Poll: Fiscal Cliff Deflates Democratic Hope":

Democrats stopped basking in the afterglow of President Barack Obama's re-election victory and abruptly lowered their outlook on the economy this month, as fears of the "fiscal cliff" dominate year-end headlines, according to the latest IBD/TIPP poll released Tuesday.

The Economic Optimism Index dropped to a year low of 45.1 in December from 48.6 in November, the second straight decline, with sentiment among Democrats falling by 8.2 points to 65.6.

Republican economic sentiment, which hit a record low right after the Nov. 6 vote, dipped 1.1 points to a new low of 23.7 in December. Readings below 50 indicate pessimism.

"Consumer confidence is driven largely by party affiliation," said Raghavan Mayur, president of TechnoMetrica Market Intelli gence, which conducted the poll.

Given the wide partisan disparity, a truer indicator could be how independents feel, he added. They turned slightly gloomier too, slipping to 42.3 from 44.

An earlier run-up in sentiment was first led by Democrats in September, when the successful presidential convention boosted re-election prospects and brightened their views on the economy. The index advanced further in October as Mitt Romney's strong debate performance lifted Republican sentiment.

But the election brought the index back down. A separate survey Tuesday also found it devastated hopes among small-business owners worried about regulation and ObamaCare costs.

The National Federation of Independent Business' sentiment gauge dropped 5.6 points to 87.5 last month, the lowest since March 2010. The share of small businesses positive about the economic outlook fell from a net 2% to a deeply pessimistic -35%.

'Who's Paying Your Salary?'

I actually flipped over to MSNBC late last night and caught part of this, and it was bizarre.

At NewsBusters, "Unhinged Chris Matthews Berates Conservative Guest 13 Times: 'Who's Paying Your Salary?'"

Taxes Are Already Higher Than You Think

From Edward Prescott and Lee Ohanian, at the Wall Street Journal:

President Obama argues that the election gave him a mandate to raise taxes on high earners, and the White House indicates that he won't compromise on this issue as the so-called fiscal cliff approaches.

But tax rates are already high—much higher than is commonly understood—and increasing them will likely further depress the economy, especially by affecting the number of hours Americans work.

Taking into account all taxes on earnings and consumer spending—including federal, state and local income taxes, Social Security and Medicare payroll taxes, excise taxes, and state and local sales taxes—Edward Prescott has shown (especially in the Quarterly Review of the Federal Reserve Bank of Minneapolis, 2004) that the U.S. average marginal effective tax rate is around 40%. This means that if the average worker earns $100 from additional output, he will be able to consume only an additional $60.

Research by others (including Lee Ohanian, Andrea Raffo and Richard Rogerson in the Journal of Monetary Economics, 2008, and Edward Prescott in the American Economic Review, 2002) indicates that raising tax rates further will significantly reduce U.S. economic activity and by implication will increase tax revenues only a little.

High tax rates—on both labor income and consumption—reduce the incentive to work by making consumption more expensive relative to leisure, for example. The incentive to produce goods for the market is particularly depressed when tax revenue is returned to households either as government transfers or transfers-in-kind—such as public schooling, police and fire protection, food stamps, and health care—that substitute for private consumption.

Continue reading.

Actually, other economic research says tax rates are considerably higher than that, particularly in California. See: "Ezra Klein: Yesterday's Revenue Can't Support Tomorrow's America."

Democrats Seek Delay of ObamaCare Medical Device Tax

Hey, suck it up idiot progs.

At the Wall Street Journal, "Senate Democrats Seek Delay in Medical-Device Tax":

A group of 17 Democratic U.S. senators and senators-elect have signed a letter urging for a delay in implementing a tax on the medical-device industry that is scheduled to go into effect Jan. 1, said two people familiar with the matter.

The letter, a copy of which was obtained by Dow Jones, publisher of The Wall Street Journal, was addressed to Senate Majority Leader Harry Reid and said the “the medical device industry has received little guidance about how to comply with the tax–causing significant uncertainty and confusion for businesses.” It requested a delay be included in the bill Congress is negotiating to avoid the so-called fiscal cliff.

The Democrats’ support could give new momentum to the industry’s intense lobbying campaign to repeal or delay the 2.3% tax on device sales, which companies say will hurt profits and lead to U.S. job losses. However, they face a battle because other Democrats, as well as the White House, oppose any postponement.

And see Geoffrey Norman, at the Weekly Standard, "Special Treatment."

A Public Service Message for America's Youth

From Doug Ross, "Here's How You're Being Ripped Off."

Ezra Klein: Yesterday's Revenue Can't Support Tomorrow's America

This is a fascinating piece, from the progressive wonder boy, at the Washington Post.

Klein's statistics all seem fine and dandy. He just comes to the wrong conclusion: that taxes must expand rather than spending contract. It's always that way with lefties. The final solution is to engorge government to such levels that all private activity is snuffed out.

While Klein focuses on the degree of taxation as a percentage of GDP, he doesn't consider that the average tax incidence of the individual is already nearing unsustainable levels. We're nearly taxing individuals in blue states at the level of the most generous Scandinavian welfare states. See: "Top Marginal Tax Rate Will Exceed 50% in California, New York, and Hawaii in 2013." California, following the November election, will boast the nation's highest marginal tax rate of 51.9 percent. It's no surprise that California's been bludgeoned by a massive exodus of businesses from the once-Golden State.

In any case, the Ezra Kleins of the world will never learn, for their ideology is one of no restraints, only the never-reached goal of human equality and the perfect resolution of mankind's material needs (in "tomorrow's America"). It is, in another word, Utopianism.

See Victor Davis Hanson for the reality check, at IBD, "Spending, Not Lack of Revenue, Is Real Problem."

Raising the Medicare Eligibility Age

You know, it should come as no surprise, but it's still amazing to see how progressives turn every single domestic policy issue into a class war. Take the case of Adele Stan at the Washington Monthy, "Medicare Eligibility Age on the Table?" Life expectancy continues to rise, but according to Stan, longer life is only afforded to the 1 percent, or thereabouts:

Raise the eligibility age and PEOPLE WILL DIE.

No, that’s not an exaggeration, and the failure of certain wonks to take that into consideration speaks to their isolation from everyday people, even the everyday people who provide services to them, such as grocery-store clerks, waitresses, and construction workers in right-to-work states. These are people who cannot wait until they’re 67 for the full complement of Medicare benefits. Many of them are people who will wind up paying the individual mandate penalty in Obamacare, because even if purchased through an exchange, the monthly premium will be more than they can afford.

Not to mention the added health risks of doing physical labor into one’s golden years. Many of these people are lucky to make it to 65. As my AlterNet colleague Lynn Parramore notes, “longevity gains have gone mostly to high earners.”

Oooga boooga aaaahhhh!!! PEOPLE ARE GOING TO DIE!!!!

These people are so stupid I'm about to roll over laughing.

The elderly are the most pampered demographic constituency in history. There's a smorgasbord of social welfare programs for old people, which is why the old-age poverty rate is the lowest among all age groups, at 8.7 percent for those 65 and older in 2011. But if you're progressive, you can find any kind of perceived disparity, even among the most privileged group in the electorate, and make the case for further expanding government (and for continuing the national bankruptcy, and thus harming future generations). The Wall Street Journal had a symposium on this in September, "Should the Eligibility Age for Medicare Be Raised?" And from Maya MacGuineas:

Raising the Medicare eligibility age is partly just a reflection of the new reality. When people first began receiving Medicare benefits in 1966, the average 65-year-old old lived another 15 years; today that figure is 20 years. It's little wonder that Medicare costs have grown 14-fold, in real terms, since 1970.

One option would be to gradually increase the Medicare age to 67 from 65, as we are already doing with Social Security. If such a policy were phased in between 2014 and 2027, we estimate it would save the federal government almost $150 billion through 2022 (net of new spending to help seniors get coverage from other sources) and reduce long-term Medicare spending by 5% (net of costs related to the Affordable Care Act's new health-care exchanges). Indexing the Medicare eligibility age to longevity—in other words, allowing it to increase beyond 67 as life expectancy rises—would save the federal government even more.

Importantly, these savings would come without substantially increasing the rolls of the uninsured or hurting the most vulnerable. According to estimates from the nonpartisan CBO, 95% of those who would otherwise have been covered by Medicare will instead obtain coverage from employers, the ACA's Medicaid expansion or the health-insurance exchanges scheduled to be up and running in 2014. Many seniors making up to 400% of the poverty line would get direct government subsidies for this new coverage; those who earn more would still benefit from rules that will ban insurance companies from discriminating on the basis of pre-existing conditions and age.

And the low-income seniors we worry about most may even end up paying less overall than if they had gone on Medicare at the age of 65. According to a 2011 Kaiser Family Foundation study—which actually opposed raising the age—nearly one-third of those age 65 to 67 (and 60% of those without employer coverage) would see their out-of-pocket costs fall. Even those making up to 300% of the poverty line, about $70,000 per year for a family of four in 2014, would see a small reduction.

In addition to better targeting Medicare dollars, this plan would encourage those who can to work a bit longer. Many individuals time their retirement based on the Medicare age; by working a little longer, they would be able to save more, provide more tax revenue to the government and increase the overall size of the economy.

Not everyone would be able to work longer—and those who couldn't would be protected by Medicaid and the new health-care exchanges. But for an aging society, the best way to maintain vibrant growth is to work longer as we live longer.

See, idiot progressives, that's not so hard is it? And not that bad either.

But by the looks of the progressive angst at Memeorandum, this is practically the end of the world. Horrible, just horrible predations on the elderly!! Aaahhahh!!!

Here's poor old Libby Spencer, for example, and I do mean poor and old:

Our well fed, financially secure, very important pundits seem to be unaware, or perhaps they've simply forgotten, that there are millions of long term unemployed out there. I'm willing to bet a majority of them are between the ages of 50 and 65 years old. If anything we should be lowering the age limit to keep these people out of emergency rooms and prevent expensive medical crises that could be avoided with proper preventative care.

Meanwhile, there are some purportedly liberal contrarians of the very important pundit class who are asking what's the big deal about raising the age limit? They're finding "great" reasons to accept what would be a gross betrayal of the voters trust. They didn't re-elect Obama and give the Dems some gains to be sold out in lame duck negotiations. Which of course spawned the traditional December internet fights. If you like watching these unfold, you can probably catch up on the tick tock here.

Oh god, Libby, STFU you stupid old hag. Is that an autobiographical rant or what? Why don't you get a freakin' job and buy some insurance, you leech? It's not like moochers like you aren't covered. Hello, that's why the socialist Obama administration passed the PPACA --- to make sure everyone has health insurance.

Wake the f-k up people. Last I checked, there's still a thing called personal responsibility. Get some bloody health insurance and if you can't, pony up the few hundred dollars for the mandate tax and check into a Medicaid clinic. No one will be dying because of higher age eligibility requirements. God, what freakin' entitlement whiners. Jazz Shaw has more snarky smackdown of these dependency tools, "Oh no, Dems might not get everything they want":

The nation stands at the precipice of a tragedy. Progressive icon Paul Krugman fears that a horrifying vision of the future may come to pass. In this nightmare scenario – and I’d like you all to take a seat and quaff some sedatives here – Barack Obama may sell the liberal agenda down the river and not get everything on the Unicorn Wish List.

For sure.

It's welfare state Armageddon. We're doomed.

Obama's Fiscal Cliff: It's Nothing But a Power Play

From Charles Krauthammer, at the Washington Post":

Let’s understand President Obama’s strategy in the “fiscal cliff” negotiations. It has nothing to do with economics or real fiscal reform. This is entirely about politics. It’s Phase 2 of the 2012 campaign. The election returned him to office. The fiscal cliff negotiations are designed to break the Republican opposition and grant him political supremacy, something he thinks he earned with his landslide 2.8-point victory margin on Election Day.

This is why he sent Treasury Secretary Tim Geithner to the Republicans to convey not a negotiating offer but a demand for unconditional surrender. House Speaker John Boehner had made a peace offering of $800 billion in new revenue. Geithner pocketed Boehner’s $800 billion, doubled it to $1.6 trillion, offered risible cuts that in 2013 would actually be exceeded by new stimulus spending and then demanded that Congress turn over to the president all power over the debt ceiling.

Boehner was stunned. Mitch McConnell laughed out loud. In nobler days, they’d have offered Geithner a pistol and an early-morning appointment at Weehawken. Alas, Boehner gave again, coming back a week later with spending-cut suggestions — as demanded by Geithner — only to have them dismissed with a wave of the hand.

What’s going on here? Having taken Boehner’s sword, and then his shirt, Obama sent Geithner to demand Boehner’s trousers. Perhaps this is what Obama means by a balanced approach.

More at that top link.

Social Security Will Boost Debt by 18 Percent of GDP in Just Twenty Years

At IBD, "Social Security to Up Debt By 18% of GDP In 20 Years":

Since 2007, Social Security has gone from running an $81 billion annual cash surplus to an estimated $58 billion deficit.

Yet despite that $139 billion swing toward red ink, Democrats insist that Social Security hasn't added a penny to the deficit and, therefore, should be off the table in fiscal cliff negotiations.

In reality, Social Security's deteriorating finances explain 15% of the $900 billion-plus increase in the overall budget deficit over the past five years.

Even more striking, Social Security's cash deficit will balloon to $155 billion by 2022, the Congressional Budget Office projects. That rise amounts to more than one-third of the overall deficit increase over the coming decade if current tax and spending policies stay in place.

IOU Accounting

So how can liberals argue that Social Security doesn't cause deficits? The $2.7 trillion Social Security trust fund doesn't hold any resources to help the government afford benefits. Instead, it represents a Treasury promise to cover any cash shortfall until the trust fund's special bonds, really government IOUs, are all spent.

That makes the retirement program's cash shortfall a problem for Treasury, but not Social Security itself, liberals can argue.

Yet either way, the impact on the government's bottom line is the same.

On its current path, Social Security's cash shortfall would raise public debt by 18% of GDP through 2032 — just before the trust fund is exhausted — an IBD analysis based on the 2012 Social Security Trustees report finds.

In 20 years, if Social Security is left unreformed, its cash deficit will hit 1.4% of GDP. On top of that, the extra interest due on the debt incurred by redeeming all of Social Security's trust fund bonds would amount to another 1% of GDP.

Bottom line: Social Security alone would increase the deficit by 2.4% of GDP, making it too big to ignore.

Because health care is by far the biggest driver of long-term budget deficits, there's no reason to think that the non-Social Security part of the budget will have money to spare to cover such a big Social Security deficit.

There also are important reasons to reform Social Security beyond fiscal prudence. When President Clinton put Social Security at the top of his agenda in 1998, he told Congress that reform wasn't just about saving money but also providing more support to lift low lifetime earners and elderly widows out of poverty. Such efforts have been stymied by political stalemate.

How about adults at the halfway point of their careers who face the prospect of retiring after the Social Security trust fund is depleted?

An IBD analysis finds that an average earner (about $43,000 a year) with 20 years left until retirement would have to set aside more than 5% of wages each year to make up for a nearly 25% automatic benefit cut under current law. That assumes Treasury returns and a lifetime annuity.

The government should let these workers know if they need to do more saving before it's too late.

RTWT.