The Week Ahead: Hello, September

As summer winds down, I’m trying to get a bit more discipline into my days.  One of the things I want to do is get better at marking what’s happening each week, with an intent to, y’know, revisit the things happening.  I thought today sounded like a promising day to start, because I can really ease into it — because surprisingly little is happening, officially, this week.

Congress:
Out of session and, like me, mourning Ted Kennedy.  Most members are back home relaxing with family, friends, and the strangers they want to vote for them.  Some are holding town hall meetings this week.  If you’re in Arkansas, for instance, you can catch Democrat Senator Blanche Lincoln holding three town hall meetings this week.  She’s not been a big fan of a public option so far, and she faces re-election in 2010.  Should be an interesting show.  Check the official home pages of your senators and representative for a schedule of public events, usually listed under press releases.

Many members will also be firing up their pens — and those of their hard-working staff members — to pen “God Bless the Working Man” columns for the Sunday papers next week.  Keep an eye out — should be particularly interesting to hear from those who killed the Employee Free Choice Act this year.

The White House:
President Obama arrived home from vacation yesterday (best story about this is from The Borowitz Report: “Bush Questions Brevity of Obama’s Vacation“).  My question: Did he have to kick Joe Biden out of his chair?

The President has no public events scheduled today, and the lead story at the White House blog is Michelle Obama’s garden.  Joe Biden is meeting with General Ray Odierno today.  One does hope the president might stop by.

Expect a statement at some point on the California wildfires.

Other Events:
Massachusetts Governor Deval Patrick will hold a press conference at 3 p.m. Eastern to discuss Ted Kennedy’s vacant Senate seat.

Wildfires raging in California will likely draw comment from the Interior Secretary and, if my bet is correct, the exterior Secretary of Global Warming, Mr. Gore, about the necessity of better forestry planning and attention to the environment.

The report of outgoing commander of NATO and American forces General Stanley McChrystal will leak widely and kick up more discussion of whether a troop increase is necessary in Afghanistan.  Expect some Democrats to grab this as an issue that seems safer to take a position on than Health Care; expect many Republicans to think the same thing.

Somewhere, expect both Tim Geithner and Ben Bernanke to order an expensive bottle of wine, perhaps to share, in celebration over the New York Times’s front page story about how the bank bailouts have made us a $4 billion profit.  With that kind of money, we could’ve bought Spider-Man.

Cash for Clunkers Could Use an Upgrade

Just before dashing off for their August break, Congress today tripled the total investment in the Cash for Clunkers program, adding $2 billion to the existing $1 billion that’s already been allocated and spent.  Cash for Clunkers is the program under which car owners can trade in a qualifying vehicle — one that gets 18 miles per gallon or less — for another, more efficient vehicle.  Improve the mileage by at least 4 mpg and you get $3,500 toward your new vehicle; raise it by 10, you get $4,500.

^{Credit: Flickr/mazdamiata/ / CC BY-NC-ND 2.0}

The program has apparently been a boon to car dealers, who’ve otherwise had a rough year.  Since buying used cars with better gas mileage also counts under the program, it’s a bit more inclusive than efforts to otherwise prop up the car sales industry, as the profits aren’t exclusively being seen by company dealerships.  The benefits seem obvious.  What could be the downside?

The downside so far is that the program isn’t well-organized, and so we may be pouring good money into creating nationwide headaches for dealerships.  There’s another way to look at this, though: what if we think about Cash for Clunkers as a pilot program, instead of a discrete single-time slush fund? 

Cash for Clunkers has been wildly popular so far, and it seems like a program that could benefit quite a wide swath of the population if it continues.  People can get more fuel efficient cars, which is better for the environment and better for the country, as we start needing less fuel from overseas.  The car dealerships make some sales, which means the people at the dealerships get to keep their jobs — and get to spend their paychecks in the community.  The auto industry gets the picture, that Americans are (slowly, yes, and perhaps not permanently) getting tired of driving gas hogs, and they continue (and perhaps accelerate) their race toward greener technology.

I’m a little afraid that, in the great governmental tradition, Cash for Clunkers will become either a a permanent program, unchanged except, probably, by increasing bureaucracy and internal inefficiency, or, worse, that it will become a one-off, one-time feel-good solution to a series of much larger problems.  Congress gives Cash for Clunkers more funding and congratulates itself for helping business and the environment; consumers buy a (sometimes only slightly) better car, and feel better about their own investment; and everybody quickly forgets that this is a start, not an end.

Why not consider Cash for Clunkers a pilot program in a larger package of government involvement in improving America’s motorpool?  For instance, what of the cars — as shown and noted extensively at No Cash for Clunkers — that are, by condition if not by model, no longer as efficient as they could be?  What if instead of $3,500 a person to buy a new vehicle, the government offered 30 or 40 percent vouchers toward repairs that make a vehicle more fuel efficient (pending government inspection)?  What if they offered a flat $3,500 for turning in a car and replacing it with a bicycle?  What if they handed out bus passes for free in the city, contingent upon the tickets being used for a certain number of trips every week? 

Cash for Clunkers got quick Congressional support because it’s being billed as an auto industry rescue plan as much as (and sometimes more than) an environmental program.  Every program above, however, could be billed the same way.  In this economy, job creation and retention are the magic bullets of legislation.  Democrats and Republicans voted for C4C today.  Maybe the same coalition could be swayed to make more major steps toward environmental protection in this, well, environment, if only the White House would work on framing the issue as one of long term economic protection instead of short-term economic intervention.

Trust Fund, Baby: Paris Hilton and Social Security

Today, the Obama administration’s official Bearers of Bad News, fresh off the fun of Swine Flu and Stress Tests, announced that Social Security will deplete its trust fund by 2037, four years earlier than expected.  Scarier than that, in 2017 — just eight years from now — Medicare’s hospital insurance trust fund will run out of money.  That’s the fund that pays for inpatient hospital services, home health, skilled nursing facilities, and hospice care for those over 65.  So, not anything millions of seniors depend on or anything.

^{Glenn Francis/PacificProDigital.com}

Government trust funds are the same as “regular” trust funds.  They represent a surplus of income from one party that’s designed to support the life of another party.  So, either great-grandpa struck it rich in the hotel business, in which case you start drawing down your ~$30 million trust fund at 18, or great-grandpa paid payroll taxes every month, in which case a trust fund built from that contribution lets Social Security and Medicare provide services after age 65.

When a trust fund runs out for a big government program, it’s the same as when it runs out for a spoiled rich kid.  You aren’t instantly broke or on the street, and 2037 will likely be the end of neither Social Security nor Paris Hilton.  Money will still come in, but expenditures will be limited to income and to what other people will loan out.  So Social Security will still be getting tax income when it runs out of trust fund money, but not enough to cover the number of people expected to be drawing SS in 2037, just as a sudden depletion of available trust fundery (estimated at between $1-$4 million a year) would probably reduce the benefits available in life to Paris Hilton. 

Ms. Hilton could probably make up for the lost income by living on her AmEx Black for a while, just like Medicare and Social Security could probably live on government debt for a while — but eventually everyone reaches a limit.  Membership has only so many priviledges.

The government has the same options that Paris Hilton does to treat a shortfall: Raise revenue or reduce benefits.  Here’s the finding of the Doomsday Club:

The Medicare Report shows that the HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two. Larger changes would be required to make the program solvent beyond the 75-year horizon.

[…]

Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two. Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes because increasing longevity will result in people receiving benefits for ever longer periods of retirement.

A 53 percent cut in benefits for Medicare.  It’s much easier to say that Ms. Hilton should spend less at Hermès than it is to tell seniors that they should consider skipping six months’ worth of medications, or a necessary surgery or, you know, food.  So the government’s solution will be the same as Ms. Hilton’s, most likely: Raise revenue.  While it’d be nice if the government could make money simply by showing up at a club, right now the only way it’s going to get that money is through an increase on taxes.

Now, who is it that has to say yes to raising taxes?  Oh yeah: Congress.  If John Boehner’s late-April op-ed in the Washington Times is right, I’d say right now there’s about the same chance of a tax increase being passed by the Senate as there is of Paris Hilton being elected to the Senate.  Actually, her chances may be higher.  Stranger things have happened in California.

Really, this is an issue that has to go before Congress, and predictions are some kind of Medicare fix will hit the deck this year or next.  I can’t imagine anyone voting to cut Medicare benefits by half, but five years ago I couldn’t imagine anyone giving George W. Bush a second term.

So perhaps it’s time to look into a government reality show franchise, before all of our seniors are living very, very simple lives.