We Should Have Expected This

… “this” being Democratic acquiescence to major cuts to Medicaid.

David Dayen of FDL:

Well, here we go. The debt limit deal is rounding around to entitlement cuts, and to the surprise of absolutely no one, Medicaid has become the target.

The Medicaid program for the poor is facing significant cuts in an emerging bipartisan budget deal as Republicans seek to shrink entitlements and Democrats protect other priorities […]

There are signs of bipartisan support among lawmakers for less drastic changes, such as legislation to give states more flexibility to cut the number of people who can use the program.

What could happen is a loosening of “maintenance of effort” requirements. States have certain obligations on enrollment and benefits that they have to maintain or they risk losing federal funding, and under these new laws, those requirements will be removed, allowing states “flexibility,” which is a euphemism for throwing people off Medicaid. When 41 Senate Democrats vowed never to block grant Medicaid by capping federal expenditures, they pointedly did not talk about maintenance of effort. Any flim-flam about how block granting is unacceptable but MOE is fine should not be considered credible.

This would be brutal for the poor, particularly in Republican states, but even in blue ones. Governors are champing at the bit to cut enrollment and increase cost sharing. State budgets are still strained, and Medicaid is among the highest expenditures. Much of Medicaid spending goes to keep poor seniors in nursing homes, so a lot of the cuts would get targeted there. Which means that you can call this the “Force Your Mother-in-Law to Move In With You Act.”

As usual these days, the poor, who presumably provide no campaign funding for congressional candidates, have no advocates in Congress, either Democratic or Republican. They are nobody’s Americans. And once again, the Democratic Party has betrayed the principles of the base that put it in office. I do not believe that this was unavoidable. But in these obscenely greed-driven times it certainly was predictable.

Just call it “why I am no longer a Democrat, reason #1,248,624.”

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  • Bryan  On Saturday June 18, 2011 at 11:41 pm

    The nursing home operators must be delinquent with their bribes … sorry, campaign contributions, so they will get screwed.

    Without Medicaid there are no nursing homes or hospices, so the states are going to have to figure out what to do with a lot of dying elders.

    These people cannot think beyond the current month.

  • Steve  On Sunday June 19, 2011 at 10:14 pm

    “These people cannot think beyond the current month.”

    Bryan, I tend to think of Washington pols, especially but not only GOPers, as heartless. But perhaps you are right, and they’re really brainless.

  • Bev  On Tuesday June 21, 2011 at 12:11 pm

    (Ed. note… this is an exceedingly long comment, made up mostly of extended quotes from various sources. Bev is a regular reader from the old days, and I am allowing this manifesto on that basis. But I have to make it clear that I do not claim the content of this comment. – SB)

    Hey again.

    from Michael Hudson:


    Instead of losing on their bad bets, bad loans, toxic mortgages and outright fraudulent claims, the financial institutions cleaned up, at public expense. They collected enough to create a new century’s power elite to lord it over “taxpayers” in industry, agriculture and commerce who will be charged to pay off this debt.

If there was a silver lining to all this, it has been to demonstrate that if the Treasury and Federal Reserve can create $13 trillion of public obligations – money – electronically on computer keyboards, there really is no Social Security problem at all, no Medicare shortfall, no inability of the American government to rebuild the nation’s infrastructure.

    The bailout of Wall Street showed how central banks can create money, as Modern Money Theory (MMT) explains. But rather than explaining how this phenomenon worked, the bailout was rammed through Congress under emergency conditions. Bankers threatened economic Armageddon if the government did not create the credit to save them from taking losses.

    Even more remarkable is the attempt to convince the population that new money and debt creation to bail out Wall Street – and vest a new century of financial billionaires at public subsidy – cannot be mobilized just as readily to save labor and industry in the “real” economy. The Republicans and Obama administration appointees held over from the Bush and Clinton administration have joined to conjure up scare stories that Social Security and Medicare debts cannot be paid, although the government can quickly and with little debate take responsibility for paying trillions of dollars of bipartisan Finance-Care for the rich and their heirs.

    from: Byron Dale


    Best Political Quote in Over 100 years!


“If men can create electronic bookkeeping entries representing debt and loan them into circulation, men can surely create electronic bookkeeping entries as a payment and spend them into circulation with no debt. Which do you prefer?”
- Gregory K. Soderberg, Rep. Candidate MN. Lt. Gov., 2010

    Our Debt Monetary System means ALL MONEY is created as DEBT from LOANS-personal, business, government. Money for the Interest payment on a loan is NOT created. Interest piles up over time so money is mostly interest which there is no money to pay. Paying off just a small fraction of our Debts leaves NO MONEY CIRCULATING IN THE SOCIETY while still having large Debts with even larger Interest payments with NO WAY TO PAY.


    from Ellen Brown’s site The Web of Debt

    The Global Debt Crisis: How We Got in It and How to Get Out

    Countries everywhere are facing debt crises today, precipitated by the credit collapse of 2008. Public services are being slashed and public assets are being sold off, in a futile attempt to balance budgets that can’t be balanced because the money supply itself has shrunk. Governments usually get the blame for excessive spending, but governments did not initiate the crisis. The collapse was in the banking system, and in the credit that it is responsible for creating and sustaining.

    Contrary to popular belief, most of our money today is not created by governments. It is created by private banks as loans. The private system of money creation has grown so powerful over the centuries that it has come to dominate governments globally. But the system contains the seeds of its own destruction. The source of its power is also a fatal design flaw.

    The flaw is that banks advance “bank credit” that must be paid back with interest, while having no obligation to spend the interest they collect so that borrowers can earn it again and again, as they must in order to retire the debt. Instead, this money is invested in various casinos beyond the borrowers’ reach. This leads to a continual systemic need for more new bank credit money, more debt with more interest attached, to prevent widespread defaults and deflationary collapse.


    The Way Out:

    Return the Money Power to Public Control

    To escape the debt trap of the global bankers, the power to create the national money supply needs to be restored to national governments. Alternatives include:

    Legal tender issued directly by national treasuries and spent on national budgets.

    Publicly-owned central banks empowered to advance the nation’s credit and lend it to the government interest-free.

    Nationalization of bankrupt banks considered “too big to fail” (after expunging or writing down bad debts on inflated bubble assets).

    These banks could then issue credit to the public and serve the public’s banking needs, with the profits recycling back to the government, defraying the tax burden on the people.

    Publicly-owned local banks (state, provincial, or municipal).

Publicly-owned banks have been successfully established and operated in many countries, including Australia, New Zealand, Canada, Germany, Switzerland, India, China, Japan, Korea, and Malaysia. 
In the United States there is currently only one state-owned bank, the Bank of North Dakota. The model, however, has proven to be highly successful. North Dakota is the only U.S. state to have escaped the credit crisis unscathed. In 2009, while other states floundered, North Dakota had its largest budget surplus ever. In 2008, the Bank of North Dakota (BND) had a return on equity of 25%. North Dakota has the lowest unemployment rate in the country and the lowest default rate on loans. It also has the most local banks per capita.

    North Dakota has had its own bank since 1919, when farmers were losing their farms to the Wall Street bankers. They organized, won an election, and passed legislation. The state is required by law to deposit all its revenues in the BND. Like with the sustainable model of the bank of colonial Pennsylvania, interest and profits are returned to the government and to the local economy.

    A growing movement is afoot in the United States to copy this public banking model in other states. Fourteen U.S. state legislatures have now initiated bills for state-owned banks.



    from Byron Dale:

    It’s obvious most politicians don’t understand.

    The bankers know full well and they are counting on YOU not understanding, too.

    There Is One Way That New Money Is Created or “Born”.

    One Way.

    A Loan.

    That means:

    1. When a loan is made, only the principal is created.

    2. If only the principal is created, then no money is created to pay the interest on the loan.

    3. Therefore there is always more debt than money to pay it.


    If all money is created as a loan, then taxes are paid with loan principal (borrowed money).

    Increasing taxes WILL MAKE THINGS WORSE!

    Why? If taxes are to be paid in money, and all new money is loaned into existence, then somewhere the money collected as taxes had to be borrowed. You cannot borrow your way out of debt. Increasing taxes will place a two-fold burden on the economy (less money to grow the private sector, and an increase in private sector debt) and you will worsen the depression.

    Expect more lay-offs, more inner city decay, decreased revenue as fewer people can find work.

    Oh, and expect voters to blame you.


    If the principal on a loan payment gets extinguished at the time of payment, then “balancing the budget” WILL MAKE THINGS WORSE!

    Why? If the only source of new money coming into the economy is new loans (government, business or personal) and you slow the new borrowing, while at the same time loan payments are being made (mortgages payments made, car payments made, credit card payments made, government bonds paid, Treasury securities redeemed, student loan payments made) and that principal amount is extinguished from circulation, you will worsen the depression. Study this illustration.

    Increasing taxes will make things worse.

    “Cutting spending” (they should say borrowing) will make things worse.

    Your ONLY remedy is a wealth based monetary system.

    With a wealth based money system, you could turn this economy around in a flat hurry, launch a full scale, value added infrastructure rebuild, pay off our debts, build a thousand ship ocean clean-up fleet (for oil, toxic chemicals and plastics), bring desalination plants online, rebuild the electric grid, provide jobs, jobs, jobs, and heal the world of this economic cancer called debt money.

    Or, do as you have been doing and rearrange the deck chairs some more, as this debt money system begins to groan in earnest, rivets popping and our nation taking on water faster then we can bail it out. It will sink. It’s math – you can’t outrun it, no matter how many knobs you turn or switches you flip – you cannot borrow yourself out of debt!

    If the GWP (Gross World Product) is just over $70 Trillion, and the U.S. owes over $250 Trillion, how will raising taxes fix that balance sheet? How will cutting spending fix this when the gross production OF THE ENTIRE WORLD cannot pay what we owe?

    You cannot fix it with the same thinking as created this debt cancer. You need a cure.







    Demand a wealth money system, before it’s too late.


    Bill Still whose book and video, “The Secret of Oz”, shows that we have won this same battle (Money controlled by government–a Debt Free Monetary system, which several times was backed by silver)…we have won this same battle six times in the past, fought successfully by the likes of George Washington, Abe Lincoln and John F. Kennedy among other Presidents who were then warred against, assassinated, or attempted to be assassinated.
So, we need to win again for the 7th time, and strongly support all our politicians who support us by turning this economy around fast with a Debt Free Money System, accomplished by making an accounting change.

    Ellen Brown


    • Steve  On Tuesday June 21, 2011 at 1:05 pm

      Bev, I’m afraid I didn’t make it all the way through that manifesto-length comment. I think you need a blog of your own. They’re free, and they’re very therapeutic. I recommend that you create one!

  • Bev  On Tuesday June 21, 2011 at 1:55 pm

    Thanks Steve. I could have just said, as cities, states and nations have less and less money and more and more debt, just like their citizens and companies, these governments ought to look at a quick solution for everyone’s sake:

    from Ellen Brown’s Web of Debt site
    A growing movement is afoot in the United States to copy this public banking model in other states. Fourteen U.S. state legislatures have now initiated bills for state-owned banks.


    • Steve  On Tuesday June 21, 2011 at 5:05 pm

      Bev, the good thing about having your own blog is that you can write extended and even complex posts which people will bookmark and revisit. Few of us have the time or mental focus to spare to read “the long version” of anything on a comment thread, especially if it is mixed in with other shorter, lighter posts. Blogs really are different. They belong to their authors; they become her or his signature by the issues they address and how they address them. People visit a blog specifically to see what that blogger has to say. S/He thus has a great advantage with the reader. It’s a way of being taken more seriously.

      Start a blog and I’ll blogroll you. You have to begin somewhere!

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