REICH: President has scored significant victory over extremist Republicans-But fight will continue.
Here, I fear, is where the President is likely to cave.
Hes already put on the table a way to reduce future Social Security payments by altering the way cost-of-living adjustments are made using the so-called chained consumer price index, which assumes that when prices rise people economize by switching to cheaper alternatives. This makes no sense for seniors, who already spend a disproportionate share of their income on prescription drugs, home healthcare, and medical devices the prices of which have been rising faster than inflation. Besides, Social Security isnt responsible for our budget deficits. Quite the opposite: For years its surpluses have been used to fund everything else the government does.
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The real problem is the rising costs of healthcare, coupled with the aging of the post-war boomers. The best way to deal with the former short of a single-payer system is to use Medicares bargaining power over providers to move them from fee-for-services, in which providers have every incentive to do more tests and procedures, to payments-for-healthy-outcomes, where providers would have every incentive to keep people healthy. (The best way to deal with the latter the aging of the American population is to allow more young immigrants into America.)
More generally, the President has been too eager to accept the argument that the major economic problem facing the nation is large budget deficits when, in point of fact, the deficit has been shrinking as a share of the national economy. The only reason its expected to increase in future years is, again, rising healthcare costs.
Our real economic problem continues to be a dearth of good jobs along with widening inequality. Cutting the budget deficit may make both worse, by reducing total demand for goods and services and eliminating programs that lower-income Americans depend on.
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http://robertreich.org/post/64282449366