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Tuesday, December 13, 2011

Opt Out with a Public Option: Possible Green Republican Coalition Covenant on Entitlements

I continue to think about how to make this coalition work. It's not in the DNA of hard core libertarian and progressives to make deals. "Compromise" is a dirty word for many because the compromise that comes out of  Washington tends to be watered down legislation of the lowest common denominator. It's like trying to fire a bullet from a shotgun. There may very well be an explosion but any striking of the actual target is purely accidental.

To get us beyond this impasse we need legislation that embraces the real and perceived best of both worlds. I have been trying to persuade someone in Ron Paul's campaign that the opt out will never make it out of congress and to President Paul's desk for signature. This outcome being all too likely, the surplus which is designated to subsidize the opt out ought to go unconditionally to the states for use as they choose.

I would prefer that we find ways to lower the Social Security portion of the payroll tax rate permanently for both businesses and individuals and pay for it by removing the cap. I would also like to see the funding for Medicare/Medicaid come from a value added tax or from increased tariffs on products from China and other dictatorial regimes. I think that private health insurance should be supplementary and catastrophic in a system of Medicare for all, giving insurance companies expanded opportunities to sell other insurance products as is done in the German system.

I know very well such a system is not going to be put into place in my life time, and so I voted for Obama, believing that he was serious about the public option and that such an option would be available to all US citizens and residents. I still believe that proposal is doable, given sufficient political will. Alas... such gumption and courage is unlikely to be summoned in Obama II. (When will big name progressives wake up to this obvious reality which is applicable to so many other policy choices in Obama II?!!!)

So... what if we made the following deal?:  Allow every person 25 years and under to opt out of the Social Security and Medicare system and at the same time allow anyone to pay double on their Medicare payroll taxes in order to be eligible for all Medicare benefits prior to retirement. Dependent children of those who agreed to this option would be fully vested immediately.

Crunching numbers to see if this is doable, of course, could reveal that such a proposal would not fully fund current or future retirees' Medicare benefits. This is complicated by the reality that certainly there would have to be a provision for how those who have opted out may pay to opt back in. If, however, the balance sheets would work out, the surplus funds of Ron Paul's 50/50 transition plan could still be block-granted to the states.

Would you support such a covenant or is it a compromise too far? Love to hear your thoughts.


  1. I'm not sure I understand how putting tariffs on cheap goods imported from other countries will in any way benefit the poor and those who are struggling in the current economy. Such a policy will force cash-strapped individuals to either pay more or to forgo the desired good altogether. In fact this seems to contradict the progressive agenda entirely.

  2. Peaches,
    Thanks for your comments. If Chinese imports are more costly, Americans will be able to produce more competitive products and with Americans producing more and selling more of what they produce, more jobs with better wages will emerge on American soil.

    Isn't it better for the poor to gain ground through work than to lose ground by spending.
    I would advocate lower tariffs for countries who have comparable environmental, labor and consumer laws and regulations and who govern democratically.

    Any new tariffs ought to be phased in, and when a nation complies, those tariffs need to be removed within a year or less.

    If you do not believe that economic nationalism works to produce more jobs with better wages and better buying power nationally and internationally, look at South Korea.

    If a democratic nation with comparable labor, environmental and consumer laws and regulations can produce and sell goods and services to us cheaply, by all means do not impose tariffs on them.

    So called free trade deals, when they are first worked out, do benefit both parties because of the excitement in capital markets but then as that excitement wears off we see a race to the bottom. Cheaper products leads eventually to cost cutting to compete which means lower wages and fewer jobs. That's where we are now. It's a game of economic musical chairs that eventually makes everyone lose.

    And besides all this "free trade" (if we can ignore how oxymoronic that sounds), is only open to investors. Labor cannot come and go as it wishes across national boundaries. Nor can anybody just jump on a plane and buy up a big load of products and come back into the country without any of it being confiscated and a heavy fee levied against it.

    And what of the reality that other nations are already imposing tariffs or disincentives on our products? Economic Darwinism in international trade is not a good deal and can only lead to making us all third world countries.

  3. Cornelius,

    If something can be cheaply made overseas, what sense does it make to try and produce that same good here in the US when it is impossible to create the same good at a similar cost? I agree with you that production of goods is necessary for the health of the US economy. However, the belief that imposing tariffs alone will lead to competitive production of cheap goods in the US is flawed. Tariffs are simply a tax on the people. Donald Trump has proposed a 25% tariff on all Chinese goods. Trump! Anyone who takes him seriously needs to have their head examined!

    The assumption that tariffs would actually be removed when the pre-determined criteria are met is also flawed. You and I both know that special interest groups hold far too much sway with Congress, and corporations that benefit from tariffs will fight tooth-and-nail to ensure that their special privileges remain in place.

    I'm not sure what you mean when you say 'cheaper products leads to cost-cutting.' Do you mean that the goal of producing cheaper goods leads to cost-cutting? If you could point me in the direction of the information that you've read about South Korea, I'd be interested in looking at it.

  4. I'm a California Progressive leader (registered as a Democrat), and I support Ron Paul in the Republican presidential primary.