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WASHINGTON — With the fact of serious ethical breaches by President Trump all but demonstrated, most elected Republicans do not seem to be struggling with their consciences over impeachment. They wrestle, instead, with a more practical challenge: continuing to support a corrupt man without appearing too corrupt themselves.

This is not the kind of political objective that encourages idealism and attracts young people to public service.

Instead, the torch has been passed to a new generation of shills and rationalizers, frightened of their own mercurial leader, intimidated by an angry base and dedicated to maintaining the blessing of presidential fundraising for their campaigns.

The main occupation of the GOP at this point in history is the defense of public corruption, which is a particularly insidious form of corruption. Those who excuse Trump’s abuses of power will not escape his taint.

And yet — at this low point of presidential character and congressional GOP courage — perhaps the most politically talented Democratic challenger to Trump in 2020, Massachusetts Sen. Elizabeth Warren, is 6 points behind the president in Michigan, even with Trump in Pennsylvania and Wisconsin, and 4 points behind Trump in Florida (according to recent surveys by The New York Times Upshot and Siena College).

This should horrify Democrats. One of the most exciting, substantive, compelling voices in their presidential field would stand a good chance of re-electing Donald Trump.

And this is not a problem that can be solved through good speeches and clever advertising. The weak points that Trump would exploit are the centerpieces of Warren’s campaign — the very reasons that Democrats are falling for her.

The health-care issue symbolizes the problem. In producing her recent funding plan for “Medicare for All,” Warren doubled down on ending private health insurance in America.

This ideological boldness is precisely what many Democrats like about her.

But now Warren has very little flexibility to make her plan seem less disruptive and frightening in a general election against Trump. “You can’t unring that bell,” says William Galston of the Brookings Institution.

This presents three difficulties. First, Warren is proposing to hugely expand the role and reach of government in our lives, and to spend an additional $20.5 trillion (or more) over 10 years, at a time when trust in government is near an all-time low.

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Her plan to socialize — there is no other word for it — the health insurance industry fights against a swift current of public skepticism.

Second, Obamacare — which Warren proposes to replace — has stabilized over time. Though it never achieved what its champions promised, it has reduced the number of uninsured Americans and provided some useful lessons for the next rounds of reform.

This argues in favor of incremental changes — of the kind former Vice President Joe Biden proposes — rather than the dramatic transformation of a system that would displace insurance arrangements for tens of millions.

Third, Warren’s contention that Medicare for All can be created without middle-class tax increases remains questionable, in spite of her recently released, 26-page funding proposal.

In Galston’s view, the Warren approach relies on optimistic cost and revenue estimates that the Urban Institute and others have sharply disputed. It doesn’t account for the likely responses of corporations and wealthy individuals to massive tax increases.

It assumes huge cuts in defense spending and the passage of comprehensive immigration reform. And it assumes that non-rural hospitals can meet their costs based on 110% (or less) of current Medicare payments.

When Biden was asked about Warren’s funding approach, he replied: “She’s making it up.” There is serious evidence to support that charge — and it will be Warren’s burden to answer it during the Nov. 20 debate.

The main question that Warren faces as a candidate is this: Can she eventually transform her public image from being a progressive populist to being a mere populist? Her health-care proposal indicates she cannot.

Trump’s charge of Socialism — more accurately, SOCIALISM! — may seem hyperbolic. But it is more likely to stick when a candidate proposes to abolish all private health insurance, put a government bureaucracy in charge, and spend an additional $2 trillion a year on her ambitions.

It is always tempting to view the weakness of a political opponent as an opportunity to gain total ideological victory. But in the case of Trump, this would be a blunder.

If the 2018 midterms are any indication, the president has shed supporters at the more moderate edges of his coalition. And they will be attracted by stability and incrementalism, not disruption and radicalism — no matter how principled and well explained.

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Michael Gerson’s email address is michaelgerson@washpost.com.

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(42) comments

PhysicsIsFun

Here is the question that needs to be asked and answered. How much do we as a nation now pay in total for the current health plan we receive? By that I mean premiums (personal and group) and cost of medicaid and other public programs? Once we know that, we need to know how much a public replacement plan would cost and how its coverage would compare. Right now we have a plan which is far more expensive than the rest of the western democracies and has worse outcomes and covers fewer citizens. I know these are difficult questions, but the rest of the world has done a better job of answering them than our country has. We can do better.

oldhomey

You are asking the same question I have been wondering about, Physics. If we are already paying twice as much for healthcare as any of the single payer systems in Europe, Canada and Japan, how is converting to a government plan going to skyrocket the costs when we eliminate the insurance middleman and impose limits on what pharmaceutical companies can charge for drugs? Something isn't tracking here. I don't think it is practical to do a sudden shift to single payer, and I don't think it is politically digestable. But that said, I still would like, like you, to see the monetary reality laid out on this.

new2Lax

Democrats have no problem with 180 million getting coverage they want and having it taken away. Look at what has happened with Social Security and Medicare with the government in charge, their broke. Now it seems they want more people in a failing system.

capedcrusader

You sir are a liar. Look at what's happened to Social Security and Medicare? YOU REPUBLICANS want to privatize or do away with two programs that have worked with a reason and a purpose for decades. They are not broke and the fix isn't really that hard. The Congressional Research Service has reported that if no changes were made beyond REMOVING the salary cap, the fiscal integrity of the entire Social Security system would be preserved over the next 75 years. In addition, the payroll tax could be immediately lowered from 12.4% to 12.12%. That is if NOTHING else is done to preserve the system. You sir better go back to school and stop living in the past.

new2Lax

I guess all the hoopla about both being insolvent is wrong. You here this constantly on every media, they must be looking at something different than you to come up with your conclusion. They are both broke, why do you think they want to make changes because it’s doing so well. Look into it a little more closely.

oldhomey

They aren't broke and they aren't broken. They are going to need some mending and infusion, and that will be done because that is what people want. This isn't the first time that changes have had to be made to keep these programs going, and it won't be the last.

capedcrusader

Again, you are lying. YOU need to look into it more. Most things need to have changes made at one time or another to keep it going well. They are not broke. That is an outright lie. If Congress takes NO action, the trust fund is projected to run out of money in 2034 but it's unlikely that Congress will do nothing to help fix things for the future. I already told you just ONE thing that could be done. We have time and Congress will act and I'm willing to bet you $100 they will.

Jobaba

That is absolutely correct Homey. Like most rebellious traitorous scum, I would love to see the whole Healthcare system upended and the insurance companies driven homeless, into the streets. But that is the fools way of doing business (drain the swamp!)

Imagine if the last few years had been spent on strengthening Obamacare? If it has so many problems, why weren't GOPers out there fixing it?

They fought it tooth and nail with the end result that about 16 million lost healthcare when they could have added people.

On nice days I like to walk down to the pasture by the creek. At times I watch the buzzards wheeling high above and I get a warm feeling that they are a symbol of the comprehensive healthcare offered by the republicans.

oldhomey

I probably part ways with my fellow liberals on these boards, because I think Gerson is largely right. I think we will have universal healthcare within the next 20 years or so, but to ask the nation to abruptly shift from the terrible but familiar system we have now is only going to scare people off needlessly. The important thing is to get Trump out of office and return sanity to the White House, along with an enlargement of the Affordable Care Act that the public hungers for. Do what is possible now, and what seems impossible will be that much closer in another election cycle. But get rid of Donald Trump. Period. Full stop.

Climatehoax

Solid American, aren’t you.?Lowest unemployment ever, stock market rising helping the retired, more jobs than people, draining the swamp, standing up to our adversaries etc, etc.

Trump is the best thing that’s ever happened to our country.

Trump 2020

oldhomey

Yes, we certainly live in a paradise under Trump. I just hate it. It's so hard to get around town these days with people out on the streets, constantly rejoicing in celebrating this great man now in the White House.

DMoney

I certainly wouldn't say "paradise", but, I also certainly don't see much difference in any form for the worse. Nothing that matters anyways.

martian2

more people without healthcare insurance is something you can't see, or probably doesn't matter to you D, but to them it does. A record number of farmers filing for bankruptcy is not something you actually see, but it matters and is real. Caging children at the borders for weeks or months is not something you see, or care about, but it matters too. Withholding military assistance money in order to pressure a foreign country to dig up dirt on a political rival you don't actually see, but it erodes our democracy and therefor it matters. Loosening pollution standards is something you may not see, but to the planet and the things that live on it, it matters a great deal.

new2Lax

So you are starting to notice it also, I guess the media gave up, the numbers just don’t lie. People with 401K’s , retirement plans etc. notice what’s been happening and I’m sure they want it to continue, people are funny that way, they always seem to put such importance on the economy and their financial condition, I guess except Democrats. The man in the WH has done in a couple of years what Obama couldn’t doin eight years and Trumps the dummy. Trumps personal life means little to most Americans, look at Bill Clinton a total loser in his personal life but did quite well with doing what he thought was right for the country. He was the worst womanizer as President, he and Hillary stole a at least 150 million dollars, committed numerous illegal acts, destroying emails under subpoena.

oldhomey

People our age, new2, who have 401Ks have been to this rodeo before. The 401K is a number on a piece of paper. Right now it looks like a big number. You and I both realize that it doesn't take much to flatten that number drastically, like in 2008. I was still working and lost half my retirement nest egg. I worked long enough and, through the good sense and calm, deliberative management of the government of Barrack Obama, we got a wave of economic growth that has not stopped since, and my money recovered. Donald Trump has us back in the same sort of volatile economy we had in 2007 when the sh*t hit the fan and blew the 401Ks away. You may be confident that the good times are going to continue to roll. I and most economists do not see it that way.

new2Lax

This is a two-fer for you, Gerson is correct on his thoughts about Warren and her plan to get rid of employer based insurance as I stated so many times. This other one is for Homey and one of his favorite sources, Paul Krugman. He likes to see how wrong he is in print;

Paul Krugman’s Predictions about “Austerity” Aren’t Aging Well

Paul Krugman’s arguments do not fare well against evidence in a new book written by economists Alberto Alesina, Carlo Favero, and Francesco Giavazzi titled, "Austerity: When It Works and When It Doesn’t."

Friday, June 7, 2019

Image Credit: Flickr-Commonwealth Club | CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/)

John Phelan

John Phelan

Economics Paul Krugman Prediction Austerity Recession

In August 2008, economist Olivier J. Blanchard published a paper titled “The State of Macro.” In it, he wrote that

For a long while after the explosion of macroeconomics in the 1970s, the field looked like a battlefield. Over time however, largely because facts do not go away, a largely shared vision both of fluctuations and of methodology has emerged.

Does Federal Spending End Recessions?

According to The National Bureau of Economic Research (NBER), which published Blanchard’s paper, the US economy was, at that time, already nine months into a recession that would last another nine months, until June 2009. The same happened elsewhere as Britain and much of the eurozone also fell into deep and prolonged recessions. As economies shrank, budget deficits soared and government debt skyrocketed. And, when recovery came, it was the slowest on record.

Blanchard’s consensus shattered in the face of these events. Economists began shouting at each other in bitter terms. Some advocated for more government spending to boost aggregate demand, saying deficits and debt were problems for another day. Others argued that these explosions of red ink were a threat to the economy, not a cure.

“Krugman was scathing about the “Austerians,” those who argued that rapidly rising government debt posed a clear and present danger to the economy.

Perhaps the most vocal proponent of the first view was Paul Krugman. In his 2012 book End This Depression Now!, he argued that “we don’t need to be suffering so much pain and destroying so many lives. Moreover, we could end this depression both more easily and more quickly than any imagines.” All we had to do, Krugman argued, was ramp up government spending. “A burst of federal spending is what ended the Great Depression,” he wrote, “and we desperately need something similar today.”

Krugman was scathing about the “Austerians,” those who argued that rapidly rising government debt posed a clear and present danger to the economy. Of the British government, which enacted “austerity” to get its deficit under control after the conservative takeover in 2010, he wrote:

The result is an economy that remains deeply depressed. As the National Institute for Economic and Social Research, a British think tank, pointed out in a startling calculation, there is a real sense in which Britain is doing worse in this slump than it did in the Great Depression: by the fourth year after the Depression began, British GDP had regained its previous peak, but this time around its still well below its level in early 2008.

And at the time of this writing, Britain seemed to be entering a new recession.

One could hardly have imagined a stronger demonstration that the Austerians had it wrong.

But economists on the other side of the battlefield kept working. A new book titled Austerity: When It Works and When It Doesn’t by economists Alberto Alesina, Carlo Favero, and Francesco Giavazzi both summarizes the subsequent research and makes new contributions of its own. Krugman’s argument does not fare well against this new evidence.

The Confidence Fairy

Krugman’s argument in favor of higher government spending to boost aggregate demand was based on the theory that fiscal multipliers were large. If a spending multiplier is greater than 1, an increase in government spending increases private expenditure so that total output rises by more than the increase in government spending. If a multiplier is smaller than 1, however, then increases in government spending are accompanied by decreases in private expenditure so that total output rises by less than the increase in government spending.

Krugman cited research on the impacts of military spending, particularly in wartime, to argue for large multipliers. “The idea that spending cuts would signal that better times lay ahead was, Krugman claimed, like believing in “the confidence fairy.”The authors of Austerity examine a much broader range of estimates and note that in “a synopsis of studies estimating multipliers for government purchases…Most of the values range between 0.6 and 1.5.”

In other words: not much GDP bang for the deficit buck.

The argument that austerity could be expansionary—that government spending cuts could be followed by increased GDP growth—was pilloried by Krugman. “[E]xpansionary austerity was highly implausible in general, and especially given the state of the world as it was in 2010 and remains two years later,” he wrote. The belief that spending cuts would signal to individuals and businesses that better, more fiscally prudent times lay ahead was, Krugman claimed, like believing in “the confidence fairy.”

Is Austerity Expansionary?

But as Austerity’s authors show, in some cases austerity was expansionary. And, in large part, it happened for exactly the reason Krugman denigrated. Where austerity is based on spending cuts rather than tax increases, “private investment rises within 2 years,” and by the third year is above the previous level. Contra Krugman, Alesina, Favero, and Giavazzi attribute this to increased business confidence.

So, if spending is less effective and deficits and debts more onerous than Krugman argued and austerity can, in some circumstances, be expansionary, should it be based on tax increases or spending cuts?

The authors of Austerity are clear on this point.

Tax-based plans lead to deep and prolonged recessions, lasting several years. Expenditure-based plans on average exhaust their very mild recessionary effect within two years after a plan is introduced…

The component of aggregate demand that mostly drives the heterogeneity between tax-based and expenditure-based austerity is private investment

That “confidence fairy,” in other words. Investment responds positively to spending cuts and wilts in the face of tax hikes.

Krugman's Prediction Was Wrong

Britain, Krugman’s “demonstration that the Austerians had it wrong,” has, in fact, shown the opposite.

The Conservative government implemented a program of budget cuts. Over a 5-year period exogenous fixed measures amounted to almost three percent of GDP, two-thirds expenditure cuts, and one-third tax hikes. It was harshly criticized by the IMF, which predicted a major recession. The latter did not materialize and the IMF later publicly apologized. The UK grew at respectable rates.

Austerity is less reader-friendly than End This Depression Now! and is unlikely ever to have “New York Times Bestseller” emblazoned across its cover. This is a shame because it is a far more meticulous bit of work. It is, simply, the best and most in-depth book on this subject.

Over time, the main subject of economic debate shifts here and there. In the early 2000s, people worried about globalization. Then it was the crash and slow recovery. Now, the focus has moved on to income and wealth inequality. But the topics covered in Austerity will be back. They were, indeed, largely retreads of the debates between Keynes and Hayek in the 1930s and between Malthus and Say a century before that. And when the subject does return to austerity, we will be able to thank Alesina, Favero, and Giavazzi for such a thorough treatment.

oldhomey

Here's new2, back out in the empty parking lot, again, staggering drunkenly, swinging out desperately with haymakers punching the empty air, convinced he is Superman, or at least Rocky Marciano. I have no idea what he was up to with this latest cut and paste. I defy anybody to care enough to read through it to find out.

PhysicsIsFun

Life is way too short to waste a second of it reading the tripe Newt pastes on here. If I wanted to read it I would go straight to Brietbart or Infowars, but I am not a right wing nutjob like Newt.

Jobaba

lol! Not me!

capedcrusader

https://www.cnn.com/2019/11/07/politics/trump-settlement-trump-foundation-new-york/index.html

capedcrusader

Try coming up with some of your own ideas instead of copy pasting someone else's all the time. You make yourself look foolish every time you do that.

Cassandra

Gerson is another wingnut who spreads misinformation in order to guaranteed income for the profiteers in the insurance industry.

Climatehoax

What misinformation? She said Medicare for all, pretty straight forward.

Jobaba

I like the idea of abolishing all private health insurance. It has become increasingly difficult to see the value that my money purchases from them.

new2Lax

You are part of a very small number of folks covered by employer based healthcare insurance. You either have a very poor plan which I’m sure there are some out there but over 90% think their plan far exceeds anything the government plan would propose. Most employer based insurance premiums paid by the employee are much lower and deductibles if there are any are much lower. According to a report today on one of the posts, it says the average spent on healthcare per year is 10,300.00 dollars. Most plans deductibles are around 7,000.00 dollars and when you add in the cost of annual premiums most plans exceed the 10,300.00 dollar limit easily, virtually making health insurance useless. This applies to the vast majority of people. The result is people not going to be treated.

Climatehoax

My employer Plan:

$500 deductible

$1750.00 max out of pocket per family member

capedcrusader

I work for a large, world wide non union company. All that krap you hear about how big companies take advantage of their employees is BS.

What company do you work for if you really believe that? If you really believe that you shouldn't be afraid to tell us because it's true. I'll wait for your answer...

capedcrusader

Still waiting...

martian2

you just made a case against private health insurance there newt. All insurance plans have a deductible, unless you talk about medicare and a supplement. I went over my Son's insurance plan with his wife and son, in which he has to pay a third of the premium. There are so many loop holes for insurance companies not to pay it is pathetic. they have different tiers of plans with different costs. The high deductible is cheaper by the month, but covers very little until the high deductible is met, around 7,000. Pretty much worthless policy. More and more of the premium is passed on to the employee. A lower deductible plan costs around 7,000 yearly just in premiums for the employee. The middle class is getting squeezed with this crazy health system we have. Still waiting for Trump's promised health care proposal. Employer based insurance is not the answer any more.

new2Lax

This does not sound like employer based health insurance with 7,000.00 dollar deductible and having to pay one third of the premium. If this is his employer based insurance, he better look for a new job. Most all of these Obama care products have very high deductibles and high premiums and are worthless. All insurance plans do not have high deductibles if supplies by an employer and the premiums are reasonable, that’s why 90% of employees want to keep their employer based health care insurance.

Climatehoax

Do you understand that insurance is high because Medicare doesn’t pay enough to keep a hospital operating? So let’s get everyone on Medicare and wipe out the whole medical system in this country, REAL SMART.

By the way my plan I described above, pays very well, never any issues and I’m not paying ANYWHERE. near your $7000.00 employee share. Your sons company needs a better negotiator. I work for a large, world wide non union company. All that krap you hear about how big companies take advantage of their employees is BS.

DOES IT SOUND LIKE IM GETTING SQUEEZED. ??

Just more anti business fake news by brainless liberals.

oldhomey

Yes, new2 and Climate, the whole nation is SO enamored of the private health insurance industry and how it has treated its customers lo these many decades. Generous and forth coming with help with loving, humane enthusiasm, always looking to cut premiums without a cut in services.

martian2

well newt, it is employer based health insurance. And its coming to an employer near you soon. Now employers attempt to make up for the high cost insurance by giving more pay to employees. but it is still terrible insurance. You just turn around and hand out more money out of your own pocket. And what my son has is becoming the norm, whether you like it or not. There is even a stipulation that if your spouse works, and rejects the health insurance plan by his/her employer so they can be on your insurance policy instead, you have to pay an extra premium for that. And on and on it goes. If you have more than two kids you also have to pay extra. Talking about squeezing the middle class, private insurance has made a science out of doing just that. And of course you have to stay in network or else your deductible triples.

PhysicsIsFun

The for profit healthcare industry takes about 20% (per the ACA) of the premium dollar out of providing healthcare and puts it into someone's pocket, either through excessive CEO salaries, stock dividends,excessive overhead etc. Public healthcare entities operate with more than 90% of the dollars going into direct healthcare costs. The great insurance I used to have (WEAIT) used to put 96% of premium dollars into healthcare. If we have public insurance such as Medicare people would get the same coverage for less cost or better coverage for the same cost. That said, I do not think that the Democrats should be focusing on upending the healthcare system in our country at this point. They should concentrate on fixing what we have. The main issue is defeating Trump and the horrible Republican agenda. Once that is done then look at healthcare.

Climatehoax

So now you don’t care about the people losing their jobs, hospitals can’t stay open on Medicare payments, you’re an idiot, get a job so you can afford GOOD insurance. I love my employer sponsored insurance, STAY THE HE// OUT OF MY HEALTH CARE, ITS NONE OF YOUR BUSINESS. Just like abortion isn’t supposed to be any of my business.

martian2

what the heck kind of stuff are you smoking there hoaxer. So who said I don't care about people losing their jobs? Good for you and your employer insurance. Most people don't have it as good as you, but who cares right hoaxer! you got yours and the heck with the rest of society. Nobody said anything about abortion either, maybe you should go have one.

Climatehoax

It’s kind of like the anti gun people, get the government involved to skrew it up for the many people who have good plans and take guns from people who haven’t committed a crime, just throw a blanket over everyone and treat them the same. you’re skrewing over a lot of people with the ‘Medicare care for everyone’ and ‘no one should have an AR 15’.

But then liberals are more violent and idiotic when it comes to having their way.

By the way, Hil Liar y STILL lost the election.

martian2

you need to go through a major detox there hoaxer dude. You must be smoking some potent stuff.

Climatehoax

I got mine the heck with the rest of society??

You darn right, I don’t hear anyone parading to my defense.

I’m paying for the illegals, the lazy, the ones who choose not to work, drug addicts, if a DemoRat gets elected I’ll be paying for other people’s college, other people’s past medical bills, loose my second amendment rights, etc,etc. So you bet, skrew everyone else like they intend to skrew me.

By the way, why aren’t welfare, and freebies ever threatened with lack of funds? But SS and Medicare, THAT I PAID FOR, are probably going to run out of money? Maybe the PAYERS should be at the top of the list rather than the liberal freeloaders.

PhysicsIsFun

ClimateDope you get weirder and more deranged with each passing day. It must stink to be you. You are such an exemplary individual and everyone else is just trying to freeload off of your hard work. Boo ho!

PhysicsIsFun

When grading a comment, one point is added to the total score for each unnecessary capital letter. The higher the score the more likely the commenter is a right wing blowhard.

martian2

when grading a comment we could easily use a scale, with hoaxer dude's at the very bottom. Those would be the worst, morally bankrupt, hate filled b.s. comments, and we have seen plenty from the likes of him. The other side of the scale would be those comments like Gerson's, well written and thought out and factual with a moral high ground. Something we all could work to achieve more of, with some needing lots of overtime work just to get past the third grade level.

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