ECONOMY
The Class Warrior
After supporting tax cuts for the wealthy which have already blown a gaping hole in the federal budget, Federal Reserve Chairman Alan Greenspan told lawmakers that Congress should extend the cuts indefinitely – at a cost of $1.5 trillion over the next ten years – and pay for it by slashing Social Security. Greenspan's comments were particularly surprising because our current budget problems are completely unrelated to Social Security. A recent Center on Budget and Policy Priorities study reveals that, in the last three years, the nation's long-term budget projection has gone from a $5 trillion surplus to a $4.3 trillion deficit and tax cuts were the single largest factor behind that decline. The large role of tax cuts in the deficit has been confirmed by the President's own budget analysis. Social Security, meanwhile, continues to run a surplus. Greenspan's recommendation amounts to a huge transfer of wealth from future retirees to the very rich. The President, for his part, dodged a direct question yesterday about whether he believes, as Greenspan does, we should scale back Social Security to deal with the rising budget deficit, saying he needed to "see exactly what [Greenspan] said."
GREENSPAN FLASHBACK – WE NEED TAX CUTS TO REDUCE REVENUE: Yesterday, Greenspan argued that the tax cuts should be extended because allowing them to rise to their previous levels would "pose significant risks to...the revenue base." But when he argued in favor of Bush's first tax cut in January 2001, he made the opposite argument – that lowering tax rates was necessary to reduce revenue. Greenspan was worried that the government would quickly pay off the entire deficit and be awash in so much money it wouldn't have anywhere productive to spend it. The WP reported on 1/27/01 that Greenspan "justified his support of tax cuts by focusing on a problem that may not even emerge until the end of a possible second Bush term – the government being forced to buy private assets because it had paid off all the national debt and still had buckets of cash left over." Given the dramatic turnaround in the nation's fiscal health – a $9.3 trillion turnaround in just three years – Greenspan's prediction was horribly wrong.
GREENSPAN FLASHBACK – WE CAN AFFORD TAX CUTS AND SOCIAL SECURITY: When he was aggressively pushing the President's massive tax cut in 2001, Greenspan was directly questioned about its effect on Social Security. On 03/02/01, Rep. Carolyn McCarthy (D-NY) asked Greenspan, "Do I want tax cuts?...this is my problem: there's such a considerable measure of uncertainty in the projections over the course of the baby boomers' retirement that how are we going to prepare for this?" Greenspan responded that there was no reason for concern because "despite the fact that there is a very dramatic rise" in the retiring population from the Baby Boom, "the effect of [the] acceleration in productivity" will mean that revenues will be "more than adequate to meet that big surge through a goodly part of the decade subsequent to 2010."
GREENSPAN FLASHBACK – NOT EVERYONE WAS FOOLED: While Greenspan claims that his recommendations are in response to recent budget deficits, cutting Social Security was on his agenda long before deficits emerged. The WSJ has complied a litany of such comments dating back to November 1997. In 2001, when Greenspan became a champion of the President's tax cuts for the wealthy, Rep. Robert T. Matsui (D-CA) predicted Greenspan's desired outcome. On 1/27/01, Matsui told the WP: "What [Greenspan's] done is created a situation where we'll have benefit cuts in Social Security. That's inevitable if you have a $2 trillion tax cut. And maybe that was his ultimate goal."
GREENSPAN TODAY – WHITEWASHING JOB LOSS: Yesterday, Greenspan tried to whitewash the Administration's job crisis, saying "progress creating jobs has been limited." But since the Administration has taken office, the economy has shed more than 2 million jobs and, at the current pace of job creation, it would be May 2007 before the first net new private-sector job was created. Meanwhile, the WP reports, "More than 2,400 employers across the country reported laying off 50 or more workers in January, the third-highest number of so-called mass layoffs since the government began tracking them a decade ago." The Administration attempted to eliminate the statistic in 2002, until stopped by Congress.
HEALTH CARE
Where are the Free Traders?
The fight to give seniors access to lower-priced, FDA-approved prescription medicines from Canada received a boost, as Sens. John McCain (R-AZ) and Byron Dorgan (D-ND) "threatened yesterday to hold up the nomination of Mark McClellan to run the federal Medicare program because they are frustrated by his refusal as commissioner of the FDA to permit importation of lower-cost medicines from Canada." Despite the Administration's ardent free trade position in almost every other area, it continues to say seniors should not be allowed to freely import FDA-approved medicines because drugs from Canada are supposedly "unsafe." Of course, the Administration "can't name a single American who has been injured or killed by drugs bought from licensed Canadian pharmacies." McCain said McClellan has done "a great disservice" to Americans by trying to scare them with a safety red-herring. Now, with no proof to substantiate the Administration's opposition to reimportation and polls showing overwhelming public support for the concept, questions are boiling about whether federal health policy has become wholly dictated by the pharmaceutical industry.
MCCLELLAN REFUSES TO EXPLAIN HIMSELF: McCain has repeatedly asked McClellan to explain his opposition to reimportation, but McClellan "has twice refused invitations to speak on reimportation before McCain's Commerce Committee" and just yesterday, CongressDaily reported that Bush Administration health officials refused to discuss the issue with Senators, and instead went to "a meeting sponsored by reimportation opponents."
THE MONEY CONNECTION: The Administration and its allies have taken in millions in campaign contributions from the industry, reaping more than $30 million in one night in 2002. The previous Medicare Administrator, Tom Scully, is now a lobbyist for the health care industry. And McClellan's coziness with the drug companies was recently highlighted when he accepted an award from an industry front group. Meanwhile, Rep. Billy Tauzin (R-LA), the principle author of the recent Medicare bill, is reportedly negotiating a multi-million dollar contract to become the drug industry's top lobbyist. At the Medicare bill signing last fall, photographers captured a $14 million picture of those in the pockets of the industry's special interests.
STATES MOVING FORWARD: The Baltimore Sun reports, "A bipartisan group of governors and lawmakers rallied on Capitol Hill this week for liberalized prescription drug importation as a means of cutting the skyrocketing cost of medication." Governors from Illinois, Wisconsin, and Minnesota have been leading the charge against the Administration's industry-backed intransigence. Gov. Tim Pawlenty (R-MN) and Gov. Jim Doyle (D-WI) this week moved forward with websites linking to Canadian pharmacies, despite a threatening letter by the FDA warning them that the sites were somehow "unsafe." But as Pawlenty famously asked the FDA, "Show me the dead Canadians. Where are the dead Canadians?" They don't exist because, as one expert recently wrote, the safety argument is "hogwash" and a "smokescreen thrown up to conceal [the Administration's] unseemly coziness with the drug industry."
TAKING THE ISSUE TO COURT: While there are fears the FDA will take states to court in order to do the drug industry's bidding and block reimportation, seniors are going to court first. As the WP reports, "An elderly Illinois couple, saying they are unable to pay as much as $1,000 each month for prescriptions, is filing a lawsuit against the government, arguing it is unconstitutional to prevent them from purchasing life-saving drugs at a lower price in Canada."
WHERE ARE THE FREE-TRADERS?: President Bush has repeatedly touted the virtues of free trade, saying, "Free trade is important for the American citizen. The continued advance of free trade is essential to this nation's prosperity." Similarly, White House spokesman Scott McClellan (the brother of the anti-reimportation Mark McClellan) recently said, "We certainly don't want to do anything that would undermine free trade." Yet, this support for free trade is noticeably absent when that free trade would give seniors access to lower-priced prescription drugs. In fact, the Administration is actually negotiating a "free trade" deal with Australia that specifically blocks reimportation of prescription drugs into the U.S. from Australia – a move to prevent seniors' access to lower priced, FDA-approved Aussie medicines. As Rep. Gil Gutknecht (R-MN) noted in a hearing last year, if the U.S. can import tainted green onions from Mexico and feed them to more than 600 people in Western Pennsylvania, why can't Americans import highly-regulated FDA approved medicines from Canada?
'FOX IN THE CHICKEN HOUSE': The NYT reports, "Hoping to mollify its critics, the Bush administration said Wednesday that it would conduct a yearlong study of how prescription drugs might be safely imported from Canada. But it then infuriated the critics by selecting Mark McClellan to lead the study." Despite McClellan's ardent and unsubstantiated opposition to reimportation, HHS Secretary Tommy Thompson said the investigative panel would be a "balanced commission." Sen. Byron Dorgan (D-ND) said, "It's like putting the fox in charge of the chicken house," while Sen. John McCain (R-AZ) said the Administration should have chosen "a more objective person." For more on the reimportation see American Progress's recent backgrounder.
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This post thanks to Fillmore |
