Guess Who Tried to Prevent the VA Crisis — and Who Stood in Their Way!

The Three Trillion Dollar War

Linda Bilmes and Joseph Stiglitz predicted the VA scandal.

Back in 2008, the eminent researchers — one a professor at the Harvard Kennedy School, the other a Nobel laureate in economics — published a book called The Three Trillion Dollar War, where they argued that most Americans were drastically underestimating the cost of the Iraq War. They didn’t specifically describe the events that have unfolded in recent weeks, but they did point out the enormous burden that would be placed on the VA system as veterans returned from Iraq — a burden that we were not preparing for.

And that was before the surge in Afghanistan.

Upon taking the oath of office, Barack Obama tripled U.S. troop levels in Afghanistan, sending over 60,000 troops into combat. Only now, five years later, have troop levels reverted to the level they were at when he took office. So you can add 60,000 troops for five years on top of the costs projected by Bilmes and Stiglitz — projections that were verified and replicated by the Joint Economic Committee of Congress, as well as Nobel laureate Lawrence Klein, the father of modern economic forecasting.

And yet, Congress refused to boost the VA budget.

For years, discretionary funding for the VA health care system had been growing at approximately 6 percent per year, slightly less than health care costs for the average American family, making it the most cost-efficient system in the country. Meanwhile, it ranked at the top of quality rankings, better than all its private competitors, year after year. It was the best medical care system in America.

That is, until the troops came home.

“Republicans beat back a Democratic attempt to provide almost $2 billion in additional health care funding for veterans,” reported the Washington Post in 2005, “rejecting claims that Department of Veterans Affairs hospitals are in crisis.”

The following year, Bilmes told ABC News, “In 2004, the VA had a backlog of 400,000 cases. Last year it was 500,000 cases. Now the backlog is 600,000 cases. That’s just in two years. And the big wave of returning Iraqi veterans has not even hit yet.”

And yet, the VA budget kept growing by 6 percent per year, as if the war didn’t exist at all.

As if that wasn’t a big enough problem… “Proposed cuts in Department of Veterans Affairs spending on major construction and non-recurring maintenance threaten to derail efforts to update the department’s aging infrastructure,” reported the Washington Post in 2012. And so, Democratic Senator Patty Murray led the charge to boost the VA’s construction funding, only to have it beat down by Republicans.

Later that year, Paul Ryan, the Republican chair of the House Budget Committee, released the party’s annual budget proposal. Had it become law, the VA would’ve sustained billions of dollars in budget cuts, forcing smaller facilities to shut down in rural areas.

So it wasn’t surprising to Senator Murray when allegations surfaced of VA hospitals lying about the number of veterans on their waiting lists because they didn’t want the world to know that they were unable to give their patients lifesaving treatments. “In an environment where everybody is told, ‘Keep the cost down. Don’t tell me anything costs more.’ — it creates a culture out there for people to cook the books,” she said in a recent interview.

Who would’ve ever thought, after years of relentless cost-cutting in the halls of Washington, that the federal government actually spends our money on important stuff? Who would’ve thought that wars cost money, and tax cuts cost money, and maintaining our infrastructure costs money? Not the Republicans, that’s for sure. While the Bush administration plunged us into two wars and cut taxes on the rich, who were already taking a bigger piece of the pie than they had since the Roaring Twenties, Republicans in Congress were blocking every Democratic attempt to give the VA the funding they needed to give our veterans the medical care they were promised. And then, when the Obama administration tried to correct this funding crisis, Republicans responded by proposing deeper spending cuts.

Let this be a warning to every politician and every voter who thinks we can cut our way to prosperity: Those dollar figures represent real services that the government provides to real people. Every cut has a cost, and not just in money. In lives.

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This op-ed was published in today’s South Florida Sun-Sentinel and Huffington Post.

The Ryan Budget Is an Affront to Economics and American History

A few years ago, when the unemployment rate was near its peak, two Swedish economists, Stefan Eriksson and Dan-Olof Rooth, conducted an experiment. They wanted to find out just how hard it was to get a job if you’d been unemployed for a long time. They sent 8,466 fictitious job applications to employers across Sweden. They varied the number of months that each “applicant” had been unemployed. For some, it was a matter of days. For others, several months. Then they waited for the employers to call them back for interviews.

Overall, one out of every four job “applicants” received an interview. Unsurprisingly, it was higher for high-skill jobs and lower for low-skill jobs. What was more significant was the effect of unemployment on the fictitious resumes.

Eriksson and Rooth found that unemployment didn’t matter if it lasted less than six months. Applicants who had been unemployed for the past six months were just as likely to receive an interview as applicants who just quit their job yesterday. If they had been unemployed for nine months or more, however, they were 20 percent less likely to get an interview, even if they had the same work experience, education, and other qualifications as everyone else.

In the United States right now, over 3 million people have been looking for work for nine months or more — and that doesn’t include the millions more who gave up searching because they couldn’t find anything.

Eriksson and Rooth have mostly confirmed what we already knew, but their experiment adds more specific and more reliable evidence to the overwhelming conclusion that these people need our help. Fortunately, another paper, published alongside Eriksson and Rooth’s, proves that we can help them.

While Eriksson and Rooth were sending out job applications, Emi Nakamura and Jón Steinsson were reading military procurement forms.

Both economists at Columbia University, Nakamura and Steinsson were trying to figure out what effect the federal government has on the economy when it increases its spending. They found a database at the Pentagon that summed up all large military purchases in every state in the U.S. from 1966 to 2006. It wasn’t exactly an experiment, but it was close enough.

The danger in estimating the effects of government spending is that it’s hard to tell whether states had faster economic growth because they received more funding — or whether they received more funding because they happened to enjoy faster economic growth. With military purchases, Nakamura and Steinsson knew they didn’t have that problem. States don’t receive military contracts based on the state of their economy. The two are usually independent.

Nakamura and Steinsson compared military spending in each state with subsequent economic growth over the course of four decades, and they found that a 1 percent increase in government purchases resulted in a 1.5 percent increase in income per person in that state.

Then they calculated the effect on the national economy. When the Federal Reserve couldn’t lower interest rates any further — the situation we’re in now, known as the “zero lower bound” — Nakamura and Steinsson found that a 1 percent increase in government purchases resulted in at least a 1.7 percent increase in national income per person.

In other words, the federal government can stimulate the economy and create jobs, and the resulting increase in income will far exceed any cost to the taxpayers.

Budget ProposalsLike Eriksson and Rooth, Nakamura and Steinsson aren’t telling us something we don’t know, but they are giving us another valuable piece of evidence that our government is headed in the wrong direction.

At a time when the long-term unemployed need more support, our government is giving them less. The leadership of both parties have agreed to shrink the federal budget drastically over the coming decade, and now Paul Ryan, the Republican chair of the House Budget Committee, has issued a new proposal that will cut the budget even further, to the point where most programs that support the unemployed will be half the size that they were during the Reagan administration, relative to the size of the economy.

This is a cruel, counterproductive path we are on, and that is not a statement of mere opinion. It is the inescapable conclusion of data-driven, cutting-edge economic research based on real-world evidence and the accumulated lessons of American history.

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This op-ed was published in today’s South Florida Sun-Sentinel and Huffington Post.

How the Republicans Tried to Kill the Payroll Tax Cut…and Why

With the election year approaching, both parties are going to tell you that they will fight for you, the average American. Both will claim that, in the waning days of 2011, they pushed to lower your taxes, to boost the economy, to save the middle class.

Here’s how it really went down.

As part of the Democrats’ stimulus bill in 2009, the Making Work Pay credit reduced taxes by 6.2 percent, up to $400, on earnings, phased out between $75,000 and $95,000. (The numbers were double for couples.) It expired at the end of 2010.

Instead of renewing the MWP credit, Republicans insisted on replacing it with a two-percentage-point cut in employees’ payroll taxes, which reduced the average tax cut for low-income taxpayers and quadrupled the average tax cut for high-income payers — even though the poor are far more likely to spend those tax cuts and stimulate the economy.

The payroll tax cut cost almost twice as much as the MWP credit, but it didn’t affect the Social Security trust fund because the Treasury filled the hole with general revenues. In other words, they borrowed and increased the deficit. Apparently, Republicans didn’t care as much about the budget deficit as they did about tax cuts for the rich.   Continue reading “How the Republicans Tried to Kill the Payroll Tax Cut…and Why”

Fear Not: The Private Sector Will Take Care of It All

At his satirical best… — AWO

by Norman Horowitz

Sadly, those tax-and-spend, bleeding-heart liberals continue to play Robin Hood and take from the rich and give to the poor. This is certainly not the real American way.

Our country has a long and proud tradition of charity. The feds should stand aside and let the Church and other charitable institutions look after the problems of the less fortunate.

We should all be proud of the Republican House majority who defend our tax dollars from being used frivolously.   Continue reading “Fear Not: The Private Sector Will Take Care of It All”