By Lindsay Beyerstein, Media Consortium blogger
Meet the new global elite. They're pretty much the same as the old global elite, only richer and more smug.
Laura Flanders of GritTV interviews business reporter Chrystia Freeland about her cover story in the latest issue of the Atlantic Monthly on the new ruling class. She says that today's ultra-rich are more likely to have earned their fortunes in Silicon Valley or on Wall Street than previous generations of plutocrats, who were more likely to have inherited money or established companies.
As a result, she argues, today's global aristocracy believes itself to be the product of a meritocracy. The old sense of noblesse oblige among the ultra-rich is giving way to the attitude that if the ultra-rich could do it, everyone else should pull themselves up by their bootstraps.
Ironically, Freeland points out that many of the new elite got rich from government bailouts of their failed banks. It's unclear why this counts as earning one's fortune, or what kind of meritocracy reserves its most lavish rewards for its most spectacular failures.
Class warfare on public sector pensions
In The Nation, Eric Alterman assails the Republican-controlled Congress's decision to scrap the popular and effective Build America Bonds program as an act of little-noticed class warfare:
These bonds, which make up roughly 20 percent of all new debt sold by states and local governments because of a federal subsidy equivalent to some 35 percent of interest costs, ended on December 31, as Republicans proved unwilling even to consider renewing them. The death of the program could prove devastating to states' future borrowing.
Alterman notes that the states could face up to $130 billion shortfall next year. States can't deficit spend like the federal government, which made the Build America Bonds program a lifeline to the states.
According to Alterman, Republicans want the states to run out of money so that they will be unable to pay the pensions of public sector workers. He notes that Reps. Devin Nunes (R-CA), Darrell Issa (R-CA) and Paul Ryan (R-WI) are also co-sponsoring a bill to force state and local governments to "recalculate" their pension obligations to public sector workers.
Divide and conquer
Kari Lydersen of Working In These Times explains how conservatives use misleading statistics to pit private sector workers against their brothers and sisters in the public sector. If the public believes that teachers, firefighters, meter readers and snowplow drivers are parasites, they'll feel more comfortable yanking their pensions out from under them.
Hence the misleading statistic that public sector workers earn $11.90 more per hour than "comparable" private sector workers. However, when you take education and work experience into account, employees of state and local governments typically earn 11% to 12% less than private sector workers with comparable qualifications.
Public sector workers have better benefits plans, but only for as long as governments can afford to keep their contractual obligations.
Who's screwing whom?
Former Secretary of Labor Robert Reich is calling for a sense of perspective on public sector wages and benefits. In AlterNet he argues that the people who are really making a killing in this economy are the ultra-rich, not school teachers and garbage collectors:
Public servants are convenient scapegoats. Republicans would rather deflect attention from corporate executive pay that continues to rise as corporate profits soar, even as corporations refuse to hire more workers. They don't want stories about Wall Street bonuses, now higher than before taxpayers bailed out the Street. And they'd like to avoid a spotlight on the billions raked in by hedge-fund and private-equity managers whose income is treated as capital gains and subject to only a 15 percent tax, due to a loophole in the tax laws designed specifically for them.
Signs of hope?
The economic future looks pretty bleak these days. Yes, the unemployment rate dropped to 9.4% from 9.8% in December, but the economy added only 103,000, a far cry from the 300,000 jobs economists say the economy really needs to add to pull the country out its economic doldrums.
Andy Kroll points out in Mother Jones that it will take 20 years to replace the jobs lost in this recession, if current trends continue.
Worse yet, what looks like job growth could actually be chronic unemployment in disguise. The unemployment rate is calculated based on the number of people who are actively looking for work. Kroll worries that the apparent drop in the unemployment rate could simply reflect more people giving up their job searches.
For an counterweight to the doom and gloom, check out Tim Fernholtz's new piece in The American Prospect. He argues that the new unemployment numbers are among several hopeful signs for economic recovery in 2011. However, he stresses that his self-proclaimed rosy forecast is contingent upon avoiding several huge pitfalls, including drastic cuts in public spending.
With the GOP in Congress seemingly determined to starve the states for cash, the future might not be so rosy after all.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
The big news out of a majority of state capitols is that Obamacare’s Medicaid mandates will exacerbate state budget problems and drive many states to the brink of insolvency.
Thirty-three Republican governors and governors-elect have signed a letter to the White House and Congress making an emphatic appeal that Obamacare’s Medicaid provisions be repealed.
Medicaid pays health care and long-term care expenses for certain categories of individuals. Medicaid has many problems, but the central one is that it costs taxpayers nearly $400 billion annually without providing recipients a high quality of care.
National spending on Medicaid has more than quintupled over the past two decades, and about 16 percent of the population is currently enrolled. A recent study from the University of Virginia found that Medicaid patients have worse surgical outcomes than individuals without insurance. Despite these problems, Obamacare relies heavily on the Medicaid program to reduce the number of individuals without health insurance.
Obamacare’s Medicaid mandates include a requirement that states maintain current program eligibility along with a required Medicaid expansion that is expected to increase national enrollment by around 20 million. If a state reduces eligibility for Medicaid, it will lose all its federal support for the program, which is at least half of every state’s Medicaid spending. This means a state would lose the federal tax contributions its taxpayers send to Washington that eventually return to the state in the form of Medicaid reimbursement.
“States are unable to afford the current Medicaid program, yet our hands are tied by the maintenance of effort (MOE) requirements,” the governors wrote. “The effect of the federal requirements is unconscionable; the federal requirements force governors to cut other critical state programs, such as education, in order to fund a ‘one-size-fits-all’ approach to Medicaid. Again, we ask you to lift the MOE requirements so that states may make difficult budget decisions in ways that reflect the needs of their residents.”
Although the letter was signed by only Republicans, Medicaid is at least as much of a concern in blue states. For example, the new governor of New York, Andrew Cuomo, has proposed cutting $4 billion of projected spending on Medicaid (this savings will be split between the state and the federal government) to help close a $10 billion budget gap.
How will states reduce Medicaid spending, given that they are prevented from reducing program eligibility? There are two primary options: (1) reduce provider payment rates, and (2) cut program benefits. Almost all states have undertaken these actions over the past several years. Reducing payment rates decreases the number of providers who accept Medicaid recipients. Cuts to Medicaid benefits, which are often more generous than those offered by private insurance, have also occurred. The combination of these cuts will likely reduce quality of care and increase the number of recipients who head to emergency rooms for basic care.
Of course, states could keep their Medicaid programs in tact and take the scalpel to other budget items, such as education, transportation, or law enforcement, which are also being cut in many states. Or they could dramatically increase state taxes. How do these options sound?
The one option that should be off the table is a continuance of the federal Medicaid bailout, which was enacted as part of the February 2009 stimulus bill. This provision greatly increased the federal contribution toward state Medicaid spending and disproportionately benefited states with the most bloated programs. The country cannot afford to further increase the national deficit to fund the broken Medicaid entitlement. Instead of throwing more money at Medicaid, policymakers at the federal and state level should grapple with its structural problems.
Medicaid is desperately in need of reform at the federal and state levels, not expansion. States have different characteristics and priorities and need greater flexibility to tailor the Medicaid program to their own specifications. This is true of states with Republican and Democratic governors. This Congress should seriously consider the immediate budgetary concerns of the states as well as structural reforms that would improve care for beneficiaries and reduce taxpayer burden in the longer term. In fact, states should also demand greater flexibility from the federal government in terms of eligibility, benefits, cost sharing, and overall administration and management.
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