February 09, 2015
Yes, it’s Monday morning at the Washington Post and Robert Samuelson wants to raise the retirement age and cut Social Security and Medicare benefits. How else would one begin the week?
He apparently thinks he is being clever by claiming that because the government is meeting these obligations to its seniors, it is failing elsewhere. Somehow, it doesn’t occur to Samuelson that if we want to get extra money for other areas of government spending we could
1) raise taxes,
2) cut government payments for doctors, drug companies, and medical equipment suppliers in Medicare, Medicaid, and other government programs;
3) shoot for lower unemployment rates by not having the Fed choke off the recovery with higher interest rates;
4) default on the national debt.
The first point is straightforward. We have raised taxes many times in the past. If this were 1970 and we projected forward budgets for a decade with no increases in Medicare or Social Security taxes, the budget would have shown very large deficits. The same would have been true in 1980. This is what we are doing now. This is not to say that a tax increase would be politically easy, but cutting Social Security and Medicare are not exactly politically easy either. Apparently Samuelson is prepared to go after seniors, but not wealthy people who presumably would disproportionately bear the brunt of any tax increase.
The second point is straightforward also. We pay close to twice as much per person for our health care as people in other wealthy countries. This is not because we get better health care, but because our drug companies, medical equipment suppliers, and physicians get twice as much money as their counterparts in other wealthy countries. We could take steps to bring our costs into line, such as medical trade, but again Samuelson would rather hit seniors than these high income folks.
The third point is hugely important and under-appreciated. We got budget surpluses at the end of the 1990s not because of budget cuts and increased taxes; we got budget surpluses because the Fed allowed the economy to grow more and the unemployment rate to fall far lower than was thought possible by most economists.
Right now the Fed is planning to raise interest rates at some point in the not distant future for the purpose of slowing the economy and keeping people from getting jobs. This is really awful policy because people should be getting jobs. Also, lower unemployment rates will give most workers the bargaining power to get higher wages, as happened in the late 1990s. But the Fed’s actions will also matter hugely for the budget. So those who are obsessed with budget deficits, like Samuelson, might try lobbying a Fed member near you.
The point about defaulting on the debt is only partly in jest. Under the law, Social Security is a separate program with its own trust fund. If we don’t make scheduled payments when there is actually money in the trust fund, this is a form of default. Apparently Samuelson is willing to default on the money owed to our seniors. If we have this atittude towards the nation’s debts then why shouldn’t we also talk about defaulting on the government’s debts more generally?
The answer of course is that the rich, who own much of the debt, have more power than the country’s seniors. But the issue here is one of power, not morality.
There are two other points worth noting about Samuelson’s agenda, When he proposes cuts to “wealthier” seniors, he is not using that word the way it is typically used. He is talking about people with incomes in the range of $50,000 or $60,000, otherwise there is not enough money at stake to make it worth considering.
The other point is that Congress is not cutting the budget of the I.R.S. to save money. All the evidence shows that spending more money on the I.R.S. would save money since it would increase tax revenue by more than the cost. The reason for cuts to the I.R.S. budget is to make it easier to cheat on your taxes. Cutting Social Security and Medicare would not change this situation.
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