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Robert Samuelson Tells Us About the Cowardice of the Pundit Class

Not deliberately of course, but he once again used his column to demand that Congress take steps to cut Social Security and Medicare. He denounced the politicians who don’t share his agenda of making the lives of seniors harder as “cowards.” Okay, nothing unusual here.

But let’s take a step back into reality. The economy is hugely poorer today than it would have been if in the wake of the Great Recession we had effective stimulus. (Of course, we would be even better off if the folks running in the economy in the last decade knew some economics. Then they could have taken steps to counter the growth of the housing bubble, so we never would have had the Great Recession.)

The weak stimulus meant that unemployment was higher for a longer period of time than necessary. Many people lost skills and some ended up permanently unemployed. We also saw much less investment than we would have otherwise. As a result, the economy is more than 10 percent smaller today than had been projected back in 2008, before the depth of the crisis became apparent.

This loss in output comes to more than $6,000 per person annually. People who have taken Econ 101 know that it doesn’t make a difference to a person’s take-home pay if you tax their income by 10 percent or whether we cut their before-tax income by 10 percent. Robert Samuelson and his deficit hawk friends cut workers’ before-tax income by 10 percent with their push for austerity, which helped to put a check on effective stimulus. Now, they are deriding politicians as cowards for not wanting to go along with the other half of this agenda, cutting back the Social Security and Medicare benefits that these workers are counting on in their retirement.

It is also worth noting the warped logic in Samuelson and other deficit hawks arguments. Their measure of inter-generational equity is exclusively taxes. So if we hand down a wrecked environment, decrepit infrastructure, and shut down our schools, Samuelson would still have us scoring well on inter-generational equity as long as we haven’t raised taxes.

Samuelson and his Washington Post gang also are denialists in refusing to acknowledge that taxes are not the only way the government pays for things. The government grants patent and copyright monopolies, which effectively allow their holders to apply taxes on a wide range of items like prescription drugs, medical equipment, and software. In the case of prescription drugs alone, the gap between the patent prices we pay and the free market price comes close $400 billion a year (2 percent of GDP).

Presumably, Samuelson and the other deficit hawks don’t like to talk about patent and copyright monopolies because the beneficiaries are their friends. But people who actually care about economics and society’s well-being can’t be so selective in deciding to ignore such enormously important implicit taxes.

This column originally appeared on Beat the Press.

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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.

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