Subject: Share the View -- on Debt & Taxes and Bilking Medicare
From: "Bloomberg View -- Tobin Harshaw" <[email-masked]>
To: <[email-masked]>
Date: Mon, 12 Mar 2012 06:58:17 -0400

_Share the View_
   _Bloomberg View _

A Quick Look at Bloomberg News's Opinion Section for March 12,  2012

   The good news is that Americans and the government are doing something about
   the debt morass. The bad news, says op-ed contributor Carmen M. Reinhart, is
   the way they are going about it. "As they have before in the aftermath of
   financial crises or wars, governments and central banks are increasingly
   resorting to a form of 'taxation' that helps liquidate the huge overhang of
   public and private debt and eases the burden of servicing that debt,"
   Reinhart explains. "Such policies, known as financial repression, usually
   involve a strong connection between the government, the central bank and the
   financial sector. In the U.S., as in Europe, at present, this means
   consistent negative real interest rates (yielding less than the rate of
   inflation) that are equivalent to a tax on bondholders and, more generally,
   savers."[2] Link.
     Links:
       2. http://bloom.bg/zRorPK

   In another op-ed piece, Roger Lowenstein notes that companies, too, are
   looking to cut down on debts -- to the detriment of workers depending on
   their pensions. "Big employers want Congress to give them a break on pension
   funding," he writes. "Business lobbies such as the U.S. Chamber of Commerce
   and the National Association of Manufacturers have managed to get a pension
   sweetener attached to a Senate highway bill that, potentially, would reduce
   required contributions by billions of dollars. This is the same sort of
   short-term thinking that got companies such as United Airlines, Bethlehem
   Steel Corp.  and Delphi -- or, to be more exact, their workers -- in
   trouble. From the shelter of bankruptcy, these employers terminated their
   pension plans, leaving inadequate funds to pay retirees. The government-run
   Pension Benefit Guaranty Corp. pays $458 million every month to more than
   800,000 retired workers of about 4,300 failed companies. In many cases,
   insurance didn’t cover the full amount and workers got stiffed." [3]Link.
     Links:
       3. http://bloom.bg/wNyK83

   Well, even if pensions are in doubt, at least retirees will be able to
   depend on health-care benefits. Actually, the View editors point out,
   Medicare has its own burgeoning problems: "For more than two decades, the
   U.S. Government Accountability Office has designated Medicare a 'high-risk
   program' because of its 'susceptibility to mismanagement and improper
   payments.' Criminal charges filed last month in Dallas in a $375 million
   Medicare fraud case suggest the program won’t be losing its 'high-risk'
   designation anytime soon. It’s difficult to understand how a criminal
   enterprise can bilk Medicare of a sum like $375 million (or $295 million, to
   take another recent example). At least part of the answer is that Medicare
   is where the money is -- lots of it." [4]Link.
     Links:
       4. http://bloom.bg/wnC5nh

   Of course, there's a simpler way to get rid of debt: just don't pay up, at
   least not in full. "Greece has taken a big step toward getting the debt
   relief it needs to fix its economy and stay in the euro area," write the
   View editors. "Now the question is whether other strapped countries that use
   the single currency should follow its lead ... To some extent, it is in
   Europe’s best interests to encourage such managed defaults by governments
   that can’t afford their debts. The primary uncertainty weighing on the
   region’s markets and economy is the extent to which governments will
   ultimately need to renege on their debts, and how much banks will lose as a
   result. Emergency financing from the European Central Bank is no more than a
   temporary solution. Postponing the final reckoning will only increase the
   economic pain and the cost of the inevitable bailouts." Next in the batting
   order: Portugal. [5]Link.
     Links:
       5. http://bloom.bg/wHOKDm

   "Apparently, it is reckless to think that India could bring about a
   rapprochement between Iran and the U.S.," writes View columnist Pankaj
   Mishra, who's been keeping on top of his fan mail. "That, at least, is the
   view of some readers of my last column on India’s lenient attitude toward
   Iran’s nuclear program. They reprimanded me for being naive. For Iran, run
   by Islamic fundamentalists committed to the destruction of Israel, desires
   no such reconciliation with the country Ayatollah Ruhollah Khomeini
   indelibly called the 'Great Satan.' Alas, such a view, which sees fixed
   essences where there is movement and change, will always grievously misread
   geopolitical situations."[6] Link.
     Links:
       6. http://bloom.bg/xf5rvO

   Also, op-ed contributor Megan Greene thinks its time for Greece to bid the
   EU yassou;  columnist Al Hunt looks at Hillary Clinton's future; and, as
   always, the editors' breaking views at the Ticker blog.

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