FacebookTwitterGoogle+RedditEmail

The Attack on Social Security

by DEAN BAKER

The folks insisting on cuts to Social Security and Medicare have revved themselves up and are now in high gear. They see their final victory on the horizon with the possibility of a bipartisan deal involving substantial cuts to both programs. They argue that the large deficits facing the country make it imperative that we address the long-term budget problem, meaning the cost of these programs, immediately.

Before anyone prepares to surrender it is worth remembering once again how we got into the current situation. Before the downturn the budget deficits were relatively modest. Even with the cost of fighting two wars, the Bush tax cuts and a poorly designed Medicare drug benefit the deficit was just over 1.0 percent of GDP in 2007, the last year before the downturn. This was arguably bigger than desired, but a deficit of this size certainly posed no imminent danger to the economy.

Then the economy ran off the track. The reason was the collapse of an $8 trillion housing bubble. This bubble was easy to see for people who knew basic economics and third-grade arithmetic. It was also easy to see that the collapse of this bubble would derail the economy and lead to a serious downturn. That is why some of us were warning about the bubble as early as 2002.

But where were the current group of anti-deficit crusaders back in 2002-2006, when it might still have been possible to do something to stem the growth of the housing bubble before it reached such dangerous levels? Well, they were crusading against the budget deficit of course.

Peter Peterson, the Wall Street investment banker who is the patron saint and financier of much of the deficit crusade was paying for the “Fiscal Wake-Up Tour,” which was supposed to alert people to the dangers of the country’s budget deficit. This traveling road show of policy wonks and economists had nothing to say about the growing housing bubble that was about to explode and sink the economy.

Then we have the Washington Post, which is continuously setting new records for imbalance on this issue, for example by running six different columns by deficit hawks on the same day. As the bubble grew to ever more dangerous levels the Post had no room for those warning of the risks it posed. In fact, its main source for information on the housing market was David Lereah, the chief economist of the National Association of Realtors and the author of the book, “Why the Housing Boom Will Not Bust and How You Can Profit From It.”

The same story can be told about National Public Radio, the major news networks and all the politicians now leading the charge to cut Social Security and Medicare. When the country actually did face a real economic disaster, these people were nowhere in sight. They were diverting attention to other issues and dismissing those of us who tried to warn of the real danger.

Now that we are experiencing an economic disaster – 25 million people unemployed or underemployed, millions of people facing the loss of their homes, more than ten million underwater in their mortgages — as a direct result of their incompetence, these same people are telling us again about the urgent need to cut Social Security and Medicare. The deficit hawks somehow think that their case is more compelling because of the damage done by their incompetence.

It should not work this way. In most lines of work incompetence is not a credential, it should not be one in designing economic policy either. Anyone who cares to tell us about the urgent need to deal with the deficit should first be expected to tell us how they managed to overlook the growth of an $8 trillion housing bubble. They should also be expected to tell us why they have a better understanding of the economy now than they did before the collapse of the housing bubble.

Social Security and Medicare provide essential supports to tens of millions of retirees and disabled workers. The projections are clear. The financing of Social Security poses no major problem – it is projected to be fully solvent for almost 30 years with no changes whatsoever. Medicare poses a problem only because the private health care system is broken.

Honest people talk about the need to fix the health care system. Less-honest people scream about the need to reform “entitlements.” And, they think that the public somehow should listen to them because of their record of incompetence.

Supposedly responsible news organizations, like the Washington Post and National Public Radio, have gotten in the habit of telling their audiences that we have to cut Social Security and Medicare. The need for cuts in these programs is often put forward as an unquestioned fact, not just in editorials and opinion pieces, but in supposedly objective news stories.

DEAN BAKER is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.

This column was originally published by The Guardian.

 

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

More articles by:

CounterPunch Magazine

minimag-edit

August 24, 2016
John Pilger
Provoking Nuclear War by Media
Jonathan Cook
The Birth of Agro-Resistance in Palestine
Eric Draitser
Ajamu Baraka, “Uncle Tom,” and the Pathology of White Liberal Racism
Jack Rasmus
Greek Debt and the New Financial Imperialism
Robert Fisk
The Sultan’s Hit List Grows, as Turkey Prepares to Enter Syria
Abubakar N. Kasim
What Did the Olympics Really Do for Humanity?
Renee Parsons
Obamacare Supporters Oppose ColoradoCare
Alycee Lane
The Trump Campaign: a White Revolt Against ‘Neoliberal Multiculturalism’
Edward Hunt
Maintaining U.S. Dominance in the Pacific
George Wuerthner
The Big Fish Kill on the Yellowstone
Jesse Jackson
Democrats Shouldn’t Get a Blank Check From Black Voters
Kent Paterson
Saving Southern New Mexico from the Next Big Flood
Arnold August
RIP Jean-Guy Allard: A Model for Progressive Journalists Working in the Capitalist System
August 23, 2016
Diana Johnstone
Hillary and the Glass Ceilings Illusion
Bill Quigley
Race and Class Gap Widening: Katrina Pain Index 2016 by the Numbers
Ted Rall
Trump vs. Clinton: It’s All About the Debates
Eoin Higgins
Will Progressive Democrats Ever Support a Third Party Candidate?
Kenneth J. Saltman
Wall Street’s Latest Public Sector Rip-Off: Five Myths About Pay for Success
Binoy Kampmark
Labouring Hours: Sweden’s Six-Hour Working Day
John Feffer
The Globalization of Trump
Gwendolyn Mink – Felicia Kornbluh
Time to End “Welfare as We Know It”
Medea Benjamin
Congress Must Take Action to Block Weapon Sales to Saudi Arabia
Halyna Mokrushyna
Political Writer, Daughter of Ukrainian Dissident, Detained and Charged in Ukraine
Manuel E. Yepe
Tourism and Religion Go Hand-in-Hand in the Caribbean
ED ADELMAN
Belted by Trump
Thomas Knapp
War: The Islamic State and Western Politicians Against the Rest of Us
Nauman Sadiq
Shifting Alliances: Turkey, Russia and the Kurds
Rivera Sun
Active Peace: Restoring Relationships While Making Change
August 22, 2016
Eric Draitser
Hillary Clinton: The Anti-Woman ‘Feminist’
Robert Hunziker
Arctic Death Rattle
Norman Solomon
Clinton’s Transition Team: a Corporate Presidency Foretold
Ralph Nader
Hillary’s Hubris: Only Tell the Rich for $5000 a Minute!
Russell Mokhiber
Save the Patients, Cut Off the Dick!
Steven M. Druker
The Deceptions of the GE Food Venture
Elliot Sperber
Clean, Green, Class War: Bill McKibben’s Shortsighted ‘War on Climate Change’
Binoy Kampmark
Claims of Exoneration: The Case of Slobodan Milošević
Walter Brasch
The Contradictions of Donald Trump
Michael Donnelly
Body Shaming Trump: Statue of Limitations
Weekend Edition
August 19, 2016
Friday - Sunday
Carl Boggs
Hillary and the War Party
Jeffrey St. Clair
Roaming Charges: Prime Time Green
Andrew Levine
Hillary Goes With the Flow
Dave Lindorff
New York Times Shames Itself by Attacking Wikileaks’ Assange
Gary Leupp
Could a Russian-Led Coalition Defeat Hillary’s War Plans?
Conn Hallinan
Dangerous Seas: China and the USA
Joshua Frank
Richard Holbrooke and the Obama Doctrine
FacebookTwitterGoogle+RedditEmail