I am sort of used to the foolishness spewed by the transcribers of press releases (formerly known as "journalists) when it comes to Social Security. "The sky is falling, the sky is falling" is roughly the hysteria pouring out of their mouths. But, well, it's important to keep after them because, well, ten people still listen to Fred Hiatt at the Washington Post
Hiatt's uninformed latest tirade came yesterday as he wrings his hands about some mythical "debt crisis" which, concern troll that he is, will threaten Social Security:
Federal debt has reached 74 percent of the economy’s annual output (GDP), “a higher percentage than at any point in U.S. history except a brief period around World War II,” the CBO says, “and almost twice the percentage at the end of 2008.” With no change in policy, that percentage will hold steady or decline a bit for a couple of years and then start rising again, to a dangerous 78 percent by 2024 and an insupportable 106 percent by 2039.
And:
Meanwhile, with the population aging and costs still rising, payments for Social Security and health programs including Medicare and Obamacare also will soar, the CBO estimates. By 2039 those programs will consume 14 percent of GDP, again double the average of the past 40 years. That’s taking into account the good news that Podesta heralded in his tweet.
Put those together and the government will be spending on entitlement programs and interest alone just about what it spends today on the entire budget. Everything else — schools, pre-K, Pell grants, national parks, mass transit, housing subsidies — will get squeezed, or taxes will soar, or both.
Of course, no elite hysteria over the non-existent debt crisis is complete without bowing to the useless Simpson-Bowles Commission:
He created the Bowles-Simpson task force, which came up with recommendations to put the nation’s finances in order. But Obama and congressional Republicans couldn’t agree on the right mix of benefit cuts and revenue increases, and Bowles-Simpson was tucked on the shelf with a lot of other commission reports.
And, then, his final point:
The real choice for the Democratic Party is whether it settles in as a reactionary defender of ever-rising payments to the older generation, no matter how well off it is, or whether it will fight for a balance between protecting the elderly and boosting the next generation with the science, schools and infrastructure the country needs to be competitive.
So, I'll first let Dean Baker
eviscerate this stupidity:
It might help editorial page editor Fred Hiatt understand how the budget works. He is appalled because "reactionary defenders" of Social Security think that seniors should be able to get the benefits they paid for. (I wonder if it's reactionary to think that Peter Peterson type billionaires should be able to get the interest on the government bonds that they paid for.)
Of the debt "crisis", Dean says:
Yep, the debt is much higher today than in 2008, so what? Millions of people lost their jobs due to the collapse of the economy. The deficits of the last six years created demand that would not otherwise have been there. It led to more growth and put people back to work. To those in the real world, people losing their jobs and losing their homes, would be the big story. This means kids growing up with unemployed parents and maybe hustling from house to house or even living on the street. But hey, Fred Hiatt wants us to worry about the deficit in 2039.
Just to be clear, the gloom and doom story is all Hiatt's not CBO's, although some readers may be confused by the presentation. There is no obvious negative consequence to a debt to GDP ratio of 74 percent, although readers can get that Fred Hiatt doesn't like it. Nor is there any obvious negative consequence to a debt to GDP of 78 percent by 2024, even if Fred Hiatt calls it "dangerous."
And the assertion that a debt to GDP ratio of 106 percent is insupportable is just Fred Hiatt's invention. There are many countries that have much higher debt to GDP ratios today (Japan's is more than twice as high) and continue to pay very low interest rates on long-term debt. In other words, Fred Hiatt is just like the little kid who who is worried about the monster under his bed when the lights are turned off. Undoubtedly it is very real to him, but when you turn on the lights you can see there is nothing there.
And on Social Security's future, Dean nails it:
It's worth making a couple of other points about Hiatt's little tirade. First the scenarios assuming "no change in policy" for a quarter century are more than a little bizarre. We have never gone a quarter century or even five years with "no change in policy." We probably will want to raise taxes somewhere in the next quarter century. We don't have to do that now or even plan for it now. The country has very real problems and need not be bothered by this silliness.
As far as Social Security, if Hiatt could get a copy of the Trustees report he would see that under the law the program can only pay out benefits based on what has been paid in as taxes (this year and prior years, including interest). While this can vary in any given year (right now we are collecting more in revenue than we pay out in taxes), over the program's life it is only authorized to pay benefits if it has collected the revenue in Social Security taxes.
This means that Social Security does not affect the rest of the budget unless Hiatt thinks that we should tell people that we are taxing them for Social Security and then use the money for wars in Iraq or elsewhere. That may sound like good fiscal policy at the Washington Post, but probably won't sell well elsewhere.
The entire debt and deficit "crisis" has been entirely manufactured, as I wrote in
"It’s Not Raining, We’re Getting Peed On: The Scam Of The Deficit Crisis". But, the Hiatts of the world keep repeating a phony crisis...
There is no debt crisis. Never has been. And nothing remotely on the horizon suggests there will be.
Come to think of it, maybe it would be better to assign Hiatt to the Ebola hysteria beat--and hire Alan Simpson and Erskine Bowles to chair a useless Commission on the topic.
Hiatt's column does give me a chance to invoke the memory of Molly Ivins, who once said, of former Republican House Majority leader Dick Armey, "If ignorance ever goes to $40 a barrel, I want drillin’ rights on that man’s head."