If you share one thing today with your friends, share
this piece by Nobel prize winning economist
Paul Krugman:
Pundits who spent years trying to foster a sense of panic over the deficit have begun writing pieces lamenting the likelihood that there won’t be a crisis, after all. Maybe it wasn’t that significant when President Obama declared that we don’t face any “immediate” debt crisis, but it did represent a change in tone from his previous deficit-hawk rhetoric. And it was startling, indeed, when John Boehner, the speaker of the House, said exactly the same thing a few days later. What happened? Basically, the numbers refuse to cooperate: Interest rates remain stubbornly low, deficits are declining and even 10-year budget projections basically show a stable fiscal outlook rather than exploding debt.
So talk of a fiscal crisis has subsided. Yet the deficit scolds haven’t given up on their determination to bully the nation into slashing Social Security and Medicare. So they have a new line: We must bring down the deficit right away because it’s “generational warfare,” imposing a crippling burden on the next generation.
What’s wrong with this argument? For one thing, it involves a fundamental misunderstanding of what debt does to the economy.
Jump below the fold for more analysis on the day's top stories.
Search warrants of Adam Lanza's home have revealed the extent of the Newtown killer's arsenal. The Washington Post's Eugene Robinson, looking at the gun control debate, explains why Congress is cheating our children:
Given that guns are enshrined in the Constitution, there may have been no way to keep firearms out of the Lanza home. But if the federal ban on military-style assault weapons had not been allowed to expire, we might have seen less carnage in Newtown. Lanza probably wouldn’t have been able to get off so many shots in so little time. He wouldn’t have been able to fire so many rounds without pausing to reload.
Maybe just one life would have been saved. To me, that life is worth more than being in the good graces of the NRA; to members of Congress, perhaps not. [...]
“Shame on us if we’ve forgotten” the Newtown tragedy, Obama said. “Now is the time to turn that heartbreak into something real.”
Amen.
The New York Times editorial board brings attention to the Republican's "malicious obstruction" in the Senate:
There is no historical precedent for the number of cabinet-level nominees that Republicans have blocked or delayed in the Obama administration. [...] Republicans clearly have no interest in dropping their favorite pastime, but Democrats could put a stop to this malicious behavior by changing the Senate rules and prohibiting, at long last, all filibusters on nominations.
Here's an interesting piece from a "free enterprise" perspective.
Art Kellermann at
The Los Angeles Times looks at how Congress is intent on having beneficiaries bear the burden of Medicare reform while the pharmaceutical industry gets giveaways:
... Congress publicly criticizes growth of Medicare costs while privately restraining the Centers for Medicare and Medicaid Services, or CMS, from getting a better deal for Medicare patients and U.S. taxpayers.
... Genentech, another big pharmaceutical company, makes an anti-cancer drug called Avastin. It also makes Lucentis, a closely related drug that is used to treat macular degeneration. Both drugs work equally well for macular degeneration, but Lucentis, which is FDA approved for this condition, costs $2,000 a dose compared with $50 for the same amount of Avastin. The FDA can't approve Avastin for macular degeneration unless the company requests it, and Genentech has no financial interest in doing so. This leaves Medicare with no choice but to pay top dollar for Lucentis. Other than to save their patients money, doctors have no incentive to prescribe Avastin, even though they can do so "off label." The difference in price costs Medicare, and taxpayers, hundreds of millions of dollars a year.
And because Medicare beneficiaries must absorb one-fifth of the cost of each treatment, Lucentis costs the patient $400 a dose, compared with $11 for Avastin. Medicare can do nothing about it.
Meanwhile,
Thomas M. Hoenig, vice chairman of the FDIC, explains why we need to stop subsidizing Wall Street:
While some suggest that the 2010 Dodd-Frank Act removed all protections and subsidies for these largest firms, there is no evidence to support that assertion. Recently, Attorney General Eric Holder testified before the Senate that there is a reluctance to pursue legal actions against these firms for fear of destabilizing the markets. The subsidy and its effects remain entrenched and continue to distort the free market.
This form of corporate welfare allows the protected giants — those “too big to fail” — to profit when their subsidized bets pay off, while the safety net acts as a buffer when they lose, shifting much of the cost to the public. For example, the conglomerates can cover — and even double down on — their trading positions for extended periods using insured deposits or discounted loans from the Federal Reserve that come with the commercial bank charter. The subsidy often allows them to stay in the game long enough to win the bet, but it supersizes the loss if the bet should finally fall apart.