Another reality check on spending and deficits
One of the country’s keenest economic policy observers, Dean Baker, has an excellent take down of Washington Post columnist Robert Samuelson’s latest demands that the U.S. slash social spending this morning at the Center for Economic and Policy Research website. His message: America’s obsession with near-term deficits remains utterly illogical and counterproductive:
“First, the budget is only constrained at the moment by superstition. There is no obstacle to the government borrowing more money to meet needs and put people back to work. We are not spending more money because we have superstitious people with large amounts of power who are making claims about the dangers of deficits that they cannot support with evidence. Rather than lecturing seniors, who have a median income of $20,000, on the need for lower Social Security and Medicare benefits, Obama could try to confront the people spreading superstitions about deficits….
…In fact, according to the Social Security Trustees projections, Social Security is completely funded by its designated tax through 2034 with no changes whatsoever. While Medicare is projected to face a shortfall after 2024, the size of this projected shortfall has fallen sharply in recent years. If the path of slower health care cost growth over the last five years continues, then Medicare will be largely funded throughout its 75-year projection period with few changes.
Insofar as Medicare and Medicaid do pose cost problems the issue is that we pay too much money to doctors, drug companies and other providers, not that seniors are getting too much health care. If we paid the same amount per person for health care as people in other wealthy countries we would be looking at long term budget surpluses, not deficits. But Samuelson and his friends would much rather beat up on old people than on rich doctors and powerful drug companies.”