CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press

Beat the Press

 facebook_logo  Subscribe by E-mail  


Mitch McConnell Misrepresents the Social Security and Medicare Trustees and CQ Doesn't Notice Print
Saturday, 28 May 2011 08:13

When a powerful politician makes a serious error in discussing public policy it is known as a "gaffe." It is the sort of thing that reporters are supposed to call to the public's attention, pressing the politician to explain if he/she really doesn't understand the issue on which they were speaking.

This leaves readers wondering why the Congressional Quarterly (no link) didn't call attention to Senate Minority Leader Mitch McConnell's obvious error when it quoted him saying:

"Last week, the Social Security trustees issued a report saying Social Security and Medicare are not sustainable under their current structure."

Of course the trustees did not say that "Social Security and Medicare are not sustainable under their current structure," they said:

"Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing."

This is a crucial distinction. McConnell's statement implies that the trustees said that the programs had to be changed in some fundamental way. The trustees statement in fact means that at some point that the programs will either need more revenue or that benefits have to be cut.

This would be like driving from Chicago to Detroit and determining that at some point you will need more gas to complete the trip. That would mean stopping at a gas station and refilling your tank. By contrast, McConnell's comment implies that the car is about to breakdown and will not make the trip.

CQ should have called attention to McConnell's misrepresentation of the trustees report and pressed the Senator to determine whether he really does not understand the trustees statement or whether he is deliberately misrepresenting it for political purposes.

Hat tip to Paul Van de Water.

 
Does Joe Nocera Know Nothing About U.S. Health Care Costs? Print
Saturday, 28 May 2011 07:59

New York Times columnist Joe Nocera told the Democrats that they should take Paul Ryan's plan to privatize Medicare seriously because the country will need something like this to restrain costs. In fact, the assessment of the Congressional Budget Office was 180 degrees at odds with this view. It projections showed that the Ryan plan would increase the cost of buying Medicare equivalent policies by $34 trillion over the program's 75-year planning period.

Nocera also asserted the need for means-testing Medicare. Unless his intention is to sharply reduce benefits for people earning in the neighborhood of $60,000 a year, this route offers small savings.

The United States already pays more than twice as much per person for its health care as the average for other wealthy countries. This gap is projected to grow in the decades ahead. If the United States got its health care costs more in line with the rest of the world or allowed free trade in health care, then there would be little problem with paying for Medicare.

 
David Leonhardt Noticed the Bad Economic News, Why Didn't Anyone Else? Print
Friday, 27 May 2011 06:44

Yesterday the Labor Department reported that weekly unemployment claims were 424,000. This was the 7th consecutive week that they were above 400,000. This pace is inconsistent with healthy job growth suggesting that the May jobs numbers are likely to be very weak, with the unemployment rate likely rising further.

NYT columnist David Leonhardt noted this weakness, along with other news suggesting an inadequate rate of growth. It seems no one else is paying attention. I suppose that they are busy dealing with end of the world predictions and nonsense scare stories on the deficit.

 
The Post Helps Obama and Republicans Cover Up on Jobs Print
Friday, 27 May 2011 05:37

The headline of the Washington Post article told readers:

"Obama, GOP Turn to Job Growth."

Actually, both plans described in this article would have almost no effect on job growth as almost any economist would have told reporters. This is a cynical effort to pretend to be concerned about job growth by politicians who are not prepared to take any of the steps that actually could lead to more rapid growth.

Reporters are supposed to expose these public relations charades, not act as conduits. That is what the politicians' communications staff are supposed to do.

 
Hey Stupid Seniors! The Post Says a 9 Percent Cut In Social Security Benefits Won't Hurt Print
Friday, 27 May 2011 05:16

It's amazing what you can learn reading the Washington Post. Today it's lead editorial told readers that reducing the annual cost of living adjustment for Social Security by 0.3 percentage points won't hurt. This would come as news to most seniors who rely on Social Security for most of their income.

This 0.3 percentage point cut is cumulative. After a person has been retired for 10 years benefits would be roughly 3 percent lower than would otherwise be the case. Benefits would be almost 6 percent lower after 20 years, and almost 9 percent lower after 30 years, when most beneficiaries will be in their 90s.

The poverty rate is highest for the oldest seniors, most of whom are women living alone. Most people think cutting benefits for this group by 9 percent would hurt, thankfully we have the Washington Post to tell us otherwise.

(This is a newspaper that has run front page stories warning that raising taxes by less than 1 percent [of income] on people earning $300,000 a year would inflict real pain.)

The rationale for the benefit cut is the use of an alternative measure of inflation, the chained consumer price index, that assumes substantial substitution between consumption items in response to prices changes. The Post asserts that this index is a more accurate measure of inflation.

Actually, the Bureau of Labor Statistics has an experimental elderly index that measures the rate of change in the basket of goods and services consumed by people over age 62. This index shows that the inflation rate experienced by the elderly increases by an average of 0.3 percentage points more than the overall CPI to which Social Security benefits are indexed.

While this is an experimental index that does not track the actual purchasing patterns of the elderly (e.g. examining the specific retail outlets where they shop and the items they purchase), those who are interested in an accurate cost of living adjustment would advocate a fuller elderly index. Those who want to cut Social Security benefits advocate using the chained consumer price index, which we know will show a lower measured rate of inflation.

 
People Are Retiring Leads to Downward Pressure on Wages Print
Friday, 27 May 2011 04:52

That's what Marketplace radio told listeners this morning in reference to to Japan. It explained Japan's deflation this way:

"The underlying problem in Japan is that the country is getting older. More and more people are retiring so there's downward pressure on wages."

Let's see, retiring workers reduce supply, therefore wages fall. Hmmm, lower supply therefore lower wages. What are we missing here?

Actually, the larger point of this story, that the inflation caused by higher prices for energy and other unusual costs last month, was a good thing for Japan, also doesn't make sense. Japan will benefit from a situation in which there are broad based wage and price increases that erode the real value of debt and reduce real interest rates. Having the price of a small subset of goods rise (especially imported goods like oil) is bad news since it erodes workers' purchasing power.

 
David Brooks Calls for Improved Defenses Against Martians and Cutting Medicare Print
Friday, 27 May 2011 04:09

It's pretty brave of the NYT to routinely feature a columnist who is completely out of touch with reality. David Brooks has another tirade today in which he lays out his, "Medicare Survival Guide."

Brooks is very upset that the Democrats won the special congressional election in New York by telling people that the Republicans want to end Medicare. Apparently, Mr. Brooks has not read the Medicare plan that was put forward by Representative Ryan and approved by the House with the support of all but 4 Republicans. This plan replaced the current Medicare system with a voucher, which seniors would use to buy health care insurance. That certainly sounds like ending Medicare. It would be interesting to know what Mr. Brooks would consider ending Medicare.

According to the Congressional Budget Office's assessment of the Ryan plan, it would increase the cost of buying Medicare equivalent policies by $34 trillion (5 times the projected Social Security shortfall) over the program's 75-year planning horizon. Adding in the $5 trillion in costs shifted from the government, the Ryan plan would increase the cost to beneficiaries of buying Medicare equivalent policies by $39 trillion.

In pushing the defense plan against Martian attacks Ryan tells the Republicans:

"They need to lay out the facts showing that Medicare is unstable and on a path to collapse, as Representative Paul Ryan is doing."

Actually, this is not what the facts show. The projections in the Medicare Trustees report, as well as the CBO baseline budget, show that the program faces a relatively modest long-term shortfall. The amount of money needed to balance the program over its 75-year planning horizon is less than 0.3 percent of GDP, approximately one-fifth of the increase in the rate annual defense spending between 2000 and 2011.

There are important issues as to whether the assumptions underlying these projections will prove accurate, importantly limiting the increase in doctors' compensation under Medicare. However, this is a question of whether Congress will adhere to the current law, not a need to change the law.

The Brooks piece also contains the wonderful line:

 "Many Democrats don’t want to go down in history as the people who did nothing while bankruptcy loomed."

Actually, they already will go down in history that way. Apparently no one told Brooks about the economic downturn. (He has probably been too busy preparing the defense against Martians.)

The Democrats, like their Republican counterparts, completely ignored the run-up in the housing bubble. The collapse of this bubble is likely to cost the country more than $5 trillion in lost output. It is also the reason for the large deficits that concern Brooks so much. Unless the Democrats can ensure that people like Brooks write the story, they are destined to go down in history as people who did nothing while economic disaster (I have no idea what Brooks means by "bankruptcy" and most likely he doesn't either) loomed.


 
The Democrats Don't Have a Plan To Cover A Medicare Shortfall Arising in Just 13 Years That Is Equal to One-Fifth of the Increase in Annual Defense Spending Since 2000!!!!!!! Print
Thursday, 26 May 2011 05:04

The Wall Street Journal tells us that:

"Republicans argue that Mr. Obama and the Democrats have no plan to rescue Medicare, despite estimates that it will be unable to pay out full benefits beginning in 2024."

It then gives us the Democrats' response, making it a he said/she said. It would have been helpful to inform readers about the projected gap in Medicare funding so that readers know what it would mean to "rescue" Medicare from a shortfall that it is first expected to face 13 years in the future.

The Medicare Trustees put the projected shortfall at 0.79 percent of payroll, which is approximately 0.27 percent of GDP over the program's 75-year planning horizon. By comparison, the increase in annual spending on the military between 2000 and 2011 was more than 1.6 percentage points of GDP. This increase in spending did not cause serious harm to the economy, therefore increased spending of one-fifth this size will presumably not be a major problem.

 
Is It a Fact That the U.S. Deficit Is "Ballooning?" Print
Thursday, 26 May 2011 04:26

The Congressional Budget Office actually projects that the deficit is on a downward path, but the NYT still felt the need to tell readers that the deficit is "ballooning" in an article on the agenda for an upcoming meeting of G-8 leaders. The article also felt the need to describe the deficit as "giant."

These comments reflect the reporters or editors political views. They do not inform readers about facts in the world.

 
Bill Clinton, Who's Known for His Plan to Cut Social Security Print
Thursday, 26 May 2011 03:56

In an article reporting on how the Republicans are backing away from the Ryan plan for privatizing Medicare. the NYT quoted former President Bill Clinton on the need to cut Medicare spending. Mr. Clinton was speaking a daylong conference of the deficit sponsored by Wall Street investment banker Peter Peterson.

It would have been worth reminding readers that Clinton is a big proponent of cuts to Social Security. At the deficit conference that Peterson sponsored last year, Clinton boasted that he had wanted to cut Social Security but congressional leaders from both parties blocked him. The cuts that he wanted would have reduced benefits by approximately 1 percent a year. This means that retirees in their 70s, 80s, or 90s, would be getting almost 15 percent less in Social Security benefits today, if President Clinton had gotten his way.

His desire to cut Social Security puts Clinton far outside the mainstream in the Democratic Party. In fact, it puts him far to the right of the majority of the Republican Party. It would have been appropriate to remind readers of this fact so they could put Mr. Clinton's interest in cutting Medicare in context.

 
<< Start < Prev 291 292 293 294 295 296 297 298 299 300 Next > End >>

Page 293 of 397

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives