The Terrible, Horrible, No Good, Very Bad “Grand Bargain” Idea

According to latte-sippers Ezra Klein and Jonathan Chait, the shape of a Grand Bargain to avoid the “fiscal cliff” is: Republicans agree to a measly rise in the top marginal tax rate to 37% and Democrats give them a two year rise in eligibility for Medicare in return.

Economists Paul Krugman and Mark Thoma agree that this is a terrible economic bargain, because it imposes more than a dollar of  costs on the private sector for every dollar it saves in federal spending.

Dave Dayen writes, in a scathing rebuttal of Chait:

Once again, Ezra, who sits at a desk for a living, can join Jon on a conference call with 65 and 66 year-olds to tell them why it’s so tolerable for them to wait two years – out of a life expectancy of another 15-20 – for Medicare benefits they paid into all their lives.  I don’t know, 10-15% reductions in the benefit sounds like a lot to me, especially when you consider that poorer people, with a lower life expectancy, lose more of the benefit.  When you add in that this only saves a meager amount of money for canceling 10-15% of the lifetime benefit, it makes it all the more horrible a trade.  And you can’t phase this in slowly if you want to save any money with it.

As for this idea that most of the pain will be blunted by the Affordable Care Act, well, the Affordable Care Act does not yet exist in tangible terms, an entire political party remains dedicated to its destruction, we have not yet begun to figure out who will fall through its cracks and why, and in at least 9 states and as many as 33, there will be no Medicaid expansion, creating a pool of uninsured poor people living under the poverty line who cannot get subsidies at all and are likely to have major health needs.  Telling them they have to wait two years for Medicare, with no other options, sounds like a great way to get them on the side of the government’s new structure for the health care system.  “But we raised taxes on people making over $250,000 a year so you could be denied health care” isn’t exactly going to thrill them as a justification.  And this is not a small percentage, new Census data points out that 15.1% of seniors live in poverty.

Karoli at Crooks and Liars:

I don’t know how old Jonathan Chait is, but I’m already screwed on my Social Security eligibility date and don’t much care for the notion of being screwed on my Medicare eligibility date, which is eleven years yonder right now.

…This is the dirty little elephant in the middle of the room that no one talks about. Because of the high demand for jobs right now, older employees are being shoved phased out earlier. Beginning at around age 50 to 55, jobs become scarce for older workers, leaving them with a 10-15 year gap before they become eligible for Social Security and Medicare. That means they’re living on their savings, home equity, or odd jobs just to scratch their way to the social safety net. Moving that football means leaving them on the hook for 2 extra years, not only for living expenses, but also covering their health insurance, whether or not subsidized.


the most offensive part of Chait’s argument was the one in which he says that throwing people in their 60s out of Medicare would be a good way to build support for Obamacare — as if such a cruel political strategy was terribly clever, when it actually well .. kills people.
These are real human beings we’re talking about. I’m one of them. Health care wonks who know what they’re talking about understand that there are plenty of people at my age who are already getting killed in health care premiums which the calculators show aren’t going to be helped all that much by the Obamacare subsidies. I’ve just been praying I could make it to 65. I really don’t want to have to hold on any longer and tons of people in ill health are in even worse shape than I am.

Krugman writes “All that effort to reelect Obama, and the first thing he does is give away two years of Medicare?” as if it were news that Obama is good at promising his base progressive policies but then delivering the same old neoliberal crapola instead. he and others like Frank Moraes at The Reaction wonder how Dems will manage to get their base to turn out if this grand betrayal goes through. Haven’t they heard yet? The 2014 midterms are to be the “most important elections EVAH!” and yet again Dems will turn out on the basis that their own clots are not quite as thick as the other party’s clots.

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Steve Hynd

Most recently I was Editor in Chief of The Agonist from Feb 2012 to Feb 2013. My blogging began at Newshoggers and I’ve had the immense pleasure of working with some great writers there and around the web ever since, including at Crooks & Liars. I'm a late 40′s, Scottish ex-pat, now married to a wonderful Texan, with Honours in Philosophy from Univ. of Stirling, UK 1986. I worked most of life in business insurance industry (fire, accident, liability) including 12 years as a broker/underwriter/correspondent at Lloyd’s of London. Being from the other side of the pond, my political interests tend to focus on how US foreign policy affects the rest of the planet. Other interests include early and dark-ages British history, literature and cognitive philosophy/science.

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