Paul Ryan â Insider Trading and Attack on Medicare
Tom Ferguson: Ryan embodies what can appear as radical change to people who are desperate, but the full story of his alleged insider trading has yet to be told - August 17, 2012
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Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow of the Roosevelt Institute. He received his Ph.D. from Princeton University and taught formerly at MIT and the University of Texas, Austin. He is the author or coauthor of several books, including Golden Rule (University of Chicago Press, 1995) and Right Turn (Hill & Wang, 1986). Most of his research focuses on how economics and politics affect institutions and vice versa. His articles have appeared in many scholarly journals, including the Quarterly Journal of Economics, International Organization, International Studies Quarterly, and the Journal of Economic History. He is a long time Contributing Editor to The Nation and a member of the editorial boards of the Journal of the Historical Society and the International Journal of Political Economy.
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.This is the beginning of a new format, a new feature on The Real News Network, Tom Ferguson's report on American political newsâin other words, Tom Ferguson this week in American politics. And now joining us for that is Tom Ferguson. Tom is a professor of political science at the University of Massachusetts Boston. He's a senior fellow at the Roosevelt Institute and an often-contributor to Real News. Thanks very much for joining us, Tom.THOMAS FERGUSON, PROF. POLITICAL SCIENCE, UMASS BOSTON: Hi there.JAY: So the big political story, obviously, this week is Romney's appointment or choice of Paul Ryan for his vice president. And it seems to me it's an interesting leap over the last decade or so. In the year 2000, or leading up to that, George Bush sits with his advisers and says, well, how do we pitch ourselves to the American people? And the answer is: well, let's call it compassionate conservatism, 'cause you can't really sell unmitigated conservatismânot that Bush ever really was that anyway. But this time Romney sits down with his advisers, and they say, well, let's pick Paul Ryan and we're going to sell unmitigated right-wing conservatism. And they seem to think they can win the presidency that way. Why do they think so?FERGUSON: I think this is pretty straightforward, Paul, and it's not hard. In a sentence, it's that the crisis in the economy is sufficiently deep that they think they can just sell a crisis remedy. You might remember that this whole business of playing on the deficit and so forth started in 1981-82 in the first Reagan budget with the confessions of David Stockman. And you remember what he confessed to William Greider at the time, that the idea was, well, they'll try to cut the budget, but they'll fail on that, and in the meantime they'll cut taxes, and eventually the budget deficit would get so large that everybody would get very scared.Now, that formula didn't work. And, in fact, it never would have worked, had it not been for the sort of post-2008 crisis and, let's face it, the weak response of the Obama administration. They did a half-size fiscal stimulus. They've never had economic growth at the rate they could have gotten. You know, I mean, Christina Romer gaveâwe all know this now from the various books that have come out. She gave Obama a program that would have put them back to pretty much full employment, or, rather, where they were just before the crash in 2008, in JanuaryÂ 2011, or, in other words, right after the congressional election in 2010. They took a half-size thing instead, and they've had to live with that ever since.Now, the persisting, colossal rates of unemployment, the fact that, you know, so many people are out of work, young people, and many just have no chance of finding a job, older folks, if they get [unintel.] you've got a real social catastrophe here. That's why you come in with anything that sounds like a remedy to that and you're going to at least get a look.JAY: But what I'm asking is why Paul Ryan. He had lots of other people he could have chosen. I mean, Paul Ryan, you would think, would freak out older people when it comes out Medicare. Why take that risk? I guess you can play on the fact that a lot of people are rather confused about why there is such a crisis. And somehowâyou know, I think you've said before it's the other guy syndrome. But why Paul Ryan? Why invite, you know, such a polarizing position and think you can get away with it?FERGUSON: Ryan? Because he incarnates the extreme solution to the crisis. You know, we've talked about this before, Paul, the way after three or four years in deep recessions, as in the Great Depression, if nothing works, people begin to sort of go a little crazy. They start lookingâI mean, then that's when the swamp creatures come out. You know, I said this to you, I know I've said this to you on camera, surely going back at least two years. Well, you're really asking me: why is the swamp creature here? And I am telling you: because the timing is right.You now have an enormous unemployment crisis. People want, effectively, a kind of round square. They are really scared about the budget. They think that is the way, cutting that might get them back to a reasonably full employment. They don't know what to think. The Obama administration does not help them on that by walking around and talking about how all it wants to do is cut the budget, and over the long run. And so here we are. The swamp creature's arrived.JAY: Let's look at the Medicare issue, because that'sâyou would think, would be such a weak point. And do you think it is? And if so, why? What will Ryan do to Medicare?FERGUSON: The Medicare thing is ridiculous if you consider it. Now, there's some shrewdness in the way this is being presented. The Republicans, Ryan in particular, tells folks, well, if you're, like, 55 now or so, you won't be affected by these changes. In other words, they phase them in. I have seen essays by people saying, well, you know, older folks, even in Florida, will think, hey, I can get mine, and we can rely onâ. I think people aren't that stupid and almost anybody can think, you know, if they cut off folks in their 50s, you know, who's going to take care of my parents as they get older, how am I going to make that up. They're not. I suspect that's a loser. But that's one element of what they're doing.The reason the thing won't work is two reasons. One, when Ryan demanded from the Congressional Budget Office that they actually score one of his programs for cutting Medicare, they came back and told him it would raise costs. They're exactly right. Why? Because the federal government is a big purchaser of medical services, and it can do both purchasing and drive down costs. If you throw the federal government out of that, your business, or push it more out of it, you're going to just raise costs.The fundamental problem with the whole medical care discussion in the United States is this: all the Republicans want to do is put some kind of a ceiling on expenses, or as they like to call it, premium support, meaning not enough premium support. And then they claim that if they make you responsible for picking care, that'll somehow control your costs.Look, it's very simple. Most of health care is some kind of monopolistic situation. It's either a direct monopoly, there's only, you know, one CAT scan in your town (although nowadays that's multiplying a bit), or there's an oligopoly. You can't keep stuffâyou can't use demand measures to control a monopoly. They just keep their prices up. You have to go on the supply side. You have got to do what the original plans for Obama's health icare really envision, which was a very aggressive assault on this fee-for-service business. That's been hugely watered down in the bill that passed. But, you know, the Republicans have nothing going on there. Monopoly power is the fundamental problem in health care.JAY: And the only way to break that is the power of government purchasing power. Individual purchasing power can't do it.FERGUSON: Well, you can do that. The other thing you can doâand a lot of countries with much better health care records than ours do thisâthey will allow private providers to compete, but they have to meet very rigorous [unintel.] specifications. They have to do packages that are set by the government. If you allow the private guys to sort of take the packages and things like that, they just sit there and they use predatory pricing and their monopoly advantages and the fact they know a lot more than you do to just clean yourâpick your pocket.JAY: The other issue this week about Ryan is accusations of insider trading. So what are those accusations and how vulnerable is he to this?FERGUSON: Well, the accusations were this. It's really a discovery. When folks looked at his stock disclosure, his financial disclosure form, actually, for 2009, which reported from 2008 many months later, there they found that he had sold three big bank stocksâJPMorgan Chase, Citigroup, and Wachoviaâand then bought Goldman Sachs not on just any old day, but September 18, 2008, the day when the congressional leadership, which included Ryan, was famously informed by Ben Bernanke and Treasury Secretary Paulson that they would have to do a big bailout or the entire financial system would collapse.Now, the response of the Romney campaign was to claim that Ryan wasn't guilty. They claimed it was really index trading, which means a sort of automatic program thing. They claimed that the meeting had occurred after the close of the markets at fourÂ o'clock, which wasâthat point was true. And then they claimed it was in a trust that wasn't under Ryan's control anyway.Now, the index trading thing, when you pull it upâthere's a nice piece in AlterNet that Lynn Parramore wrote which just shows you very straightforwardlyâI mean, I did the research and she quoted me there, where I pulled up the original report and it's plain as day the Romney campaign simply lied. It's not an index transaction. They were individual transactions. There's no other possible meaning that can be attached to those. I mean, whatâas far as I can tell, the only reason reporters would credit that is they were just in some sense to timid to look into the thing themselves. It's immediately obvious when you look. Alright?JAY: So somebody consciously decided to sell this set and buy Goldman, and that somebodyâ. Well, what about the fact that he says it's a blind trust?FERGUSON: Well, alright. I mean, blind trusts are a little bit like blind justice. My take is the invisible hand is a marvelous thing. I mean, when you look at congressional stock portfolios, many of which are claimed to be in trusts, they do much better than the market, often. And, frankly, I'm not persuaded. Was it not most amazing that the trustees somehow decided to buy Goldman Sachs on the very day that Paulson was telling them all that he was going to have to do something spectacular and he boughtâI mean, a lot of folks have pointed out to the fact that Goldman did quite well in the next few days.JAY: Rather fortuitous [snip]FERGUSON: [snip] business of when the markets closed. That's also false, too. I made some inquiries. I was able to establish that not later than threeÂ o'clock Paulson and Nancy Pelosi had talked, and Pelosi was then calling all the congressional leadership in not later than three that afternoon or so. Ryan would have known. And since he was a Republican, I suspect he found out from the White House earlier, but I can't prove that. There's no question, though, that they knew before fourÂ o'clock.And, frankly, after-hours trading happens. It's real common and it's not hard to do. And the story that this wasâinitially went round and people claimed just this couldn't be true, I'm sorry to say it not only could be true, it almost certainly is true, unless you believe, as I say, in just the wonderful preestablished harmony between the trustee and Ryan, if it is a trustee. That also needs some verification. I've read the form. It's not obvious to me it's trustee. And since the folks have plainly lied in the Romney camp on the index fund, I'd like to see some better evidence than that.Now, are the mainstream media going to let him get away with this? You know, for a day people picked it up. Then you saw all these folksâMatt Yglesias, the TPMCafe folks, they all then rush to say it was false. They were wrong. They need to retract. You know, if they don't, I think we can allâyou know, this isâwe're The Real News. We can do a job on this. I mean, you know, we couldâif we have to, you know, let'sâif these guys in the major papers don't pick it up in a week, let's just go back. I have the disclosure form. I can send it to you. We can put it up big for folks to look at. They can decide who was telling the truth about the index fund thing.JAY: Okay. Well, we're going toâwe'll do exactly that. So next week we'll follow up on this story. We'll actually show people the documents, and we'll see whether the rest of the media's actually covering this.FERGUSON: Sure. Okay.JAY: Okay. Very good. Thanks very much, Tom.FERGUSON: Okay. Thanks.JAY: And thank you for joining us on The Real News Network. And stay tuned for the next report by Tom Ferguson on American politics.
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