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Home Publications Blogs Beat the Press Frank Bruni Is Angry That the Government Pays 1000 Times as Much to Peter Peterson as It Does to the Average Kid

Frank Bruni Is Angry That the Government Pays 1000 Times as Much to Peter Peterson as It Does to the Average Kid

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Sunday, 08 June 2014 05:16

Actually he is not angry about how much money the government pays to Peter Peterson but if he were consistent in his logic he would be. Bruni wrote an apology from older generations to millennials, and one of the central themes is that we are supposed to feel bad about all the money that we get for Social Security and Medicare:

"The Urban Institute released a report in 2012 that looked at figures from 2008 for the combined local, state and federal spending that directly benefited Americans 65 and older versus spending that went to Americans under 19; the per capita discrepancy was $26,355 versus $11,822."

The vast majority of the money going seniors in the Urban Institute's calculation refers to payments for Social Security and Medicare. These are benefits that seniors paid for during their working lifetimes with designated taxes. Ignoring the fact that people paid for these benefits would be as dishonest as ignoring that the fact that a rich person like Peter Peterson could get millions of dollars a year in interest payments on government bonds because he happened to pay to buy hundreds of millions of dollars of government bonds.

Neither Bruni nor economists at the Urban Institute would ever make the mistake of talking about the interest payments to wealthy people on government bonds without noting that these people had paid to buy the bonds. Why do they forget this connection when it comes to talking about Social Security and Medicare benefits?

And these are benefits that are largely paid for. According to an analysis from the Urban Institute, the typical retiree will get slightly less back in Social Security benefits than what they paid into the program in taxes. The cost of their Medicare benefits will substantially exceed what they paid in taxes, however this is due to the fact that health care costs more than twice as much per person in the United States as the average for other wealthy countries.

This is not due to getting better care in the United States. It is due to the fact that our doctors get paid twice as much, our drug companies and medical equipment suppliers charge close to twice as much, and administrators and top management in hospitals and other health care providers get paychecks that are many times larger than their counterparts in other countries.

We may owe an apology to millennials for handing them an enormously unequal economic system, but that is not Bruni's complaint. He wants middle class seniors to apologize for getting benefits that cost lots of money because the wealthy charge so much to provide them. As a practical matter the impact of inequality will swamp any costs that might be associated with Social Security and Medicare.

If young people get their share of the economy's productivity growth their real wages will be close to 50 percent higher in 30 years according to the Social Security trustees projections. On the other hand, if the trend in inequality we have seen over the last three decades continues, their wages will be little changed from what they are today.

Of course Bruni does have a point when it comes to global warming, but here also the class dimension should not be ignored. The media highlighted economic hardships that could come from measures to slow global warming in ways that they never did in other contexts, such as increases in military spending. This has helped bolster the case of those who did not want to take action. So the people who own and control major news outlets like NPR and the NYT should perhaps be signing Bruni's letter, but the bulk of the public who had little say in the matter have less cause.

(I would have Al Gore sign the letter also since the guy could not even be bothered to pay a couple of grad students to maintain a website on his movie/book.)

 

Note: Correction made, thanks folks.

Comments (19)Add Comment
...
written by Mike B., June 08, 2014 6:02
There's a mistake in the fifth paragraph - you obviously mean Medicare, not Social Security, in this sentence:

"The cost of their Social Security benefits will substantially exceed what they paid in taxes, however this is due to the fact that health care costs more than twice as much per person in the United States as the average for other wealthy countries. "
Frank??
written by medgeek, June 08, 2014 7:01
I usually like his columns. I'm surprised he's so misguided on this.
social security
written by Jane D., June 08, 2014 7:13
In the fifth paragraph, you're talking about social securities. I think what you meant there was Medicare. If not you might need to change it, as now it's just not making sense to me.
...
written by Merijn Knibbe, June 08, 2014 7:21
Sir,

off topic - but recently the BEA published quartly growth rates of sectors of the USA economy since 2008. These show that (tabel 1, row 15, 2009-I) the USA finance and insurance industry grew with... 123,9%. Is this a Fisem effect (lower Fed interest rates) or a TARP effect? http://www.bea.gov/about/pdf/Reamer GDP Research Note 04-25-14 (1).pdf
Deeply Misguided
written by Larry Signor, June 08, 2014 8:16
Bruni is deep diving in the shallow end of the pool. Who does Bruni think raised these children, clothed them, fed them, educated them, nursed them when they were ill? There is also the inconvenient truth (for Bruni) that 29% of adults under 35 yrs. old live with mom and dad. Apologize for what?
http://www.gallup.com/poll/167...rents.aspx
...
written by skeptonomist, June 08, 2014 10:13
One thing that adults alive today are bequeathing to future generations is a greatly overpopulated planet. It is not at all certain that future generations will be able to enjoy even today's standard of living without causing complete disruption of the climate. It is entirely possible that there will be a tremendous population crash in the future, due to global warming and/or shortage of resources. One way or another the population will have to be controlled. If this is done by controlling the birth rate rather than a crash, then the ratio of old people to young will have to be much greater than in the past. The fact is that more production will have to be devoted to the elderly. As Dean has explained, this is not a problem at all as long as productivity keeps increasing and inequality is kept within bounds. The real problems involved have virtually nothing to do with the size of old-age benefits - too bad the media focus on the latter so much.
Predatory Prices Add Value to Income - Department of Laugh for Not Crying
written by Last Mover, June 08, 2014 10:34
He wants middle class seniors to apologize for getting benefits that cost lots of money because the wealthy charge so much to provide them.


This sums up nicely much of what is going on from the demand side in America for just about anything that has value as an essential economic good - price gouging by economic predators in a wide variety of creative ways designed to extract every dime of consumer surplus from willingness to pay, redirecting it to producer surplus as economic rent.

The insanity of framing these price increases as benefits rather than the brazen price extraction extortions they are with no value added, are reflected in the laugh-for-not-crying category made by a commenter on this blog a few days ago:

...

written by Larry Signor, June 02, 2014 7:39
"...every time a heart surgeon raises her fees or Pfizer raises the price of its drugs the income of the poor rises."

This would be a hilarious non-sequitur, but many people and economists believe it. Of course, the surgeons and Pfizers income must remain static since the income belongs to the poor and it is a zero sum game. Soon someone will suggest a value added tax on this windfall for the poor.

...

Is our sock puppets learning? Since higher prices make consumers better off, that explains why demand curves slope upwards and require a value added tax on the additional unearned income to prevent overconsumption by making prices even higher ...
...
written by djb, June 08, 2014 1:49
"It is due to the fact that our doctors get paid twice as much, our drug companies and medical equipment suppliers charge close to twice as much"

here we go again

doctors pay is percent of the total health care dollar per year

and this includes all the rip off specialists

since doctor have to pay for their own education and , if their parents aren't rich (don't you think all doctors should come from rich families so we can keep that aristocracy going?) ... if parents aren't rich the come out of training 200,000 to 300,000 in debt

compared to all the benefits france which nominally gets a little more than half our primary care docs and they don't have to worry about being sued, our primary care docs are not that different

hiding the real culprits ie wall street behind the docs is exactly what they want they want to drive down everyones wages
We can get foreign doctors
written by Dean, June 08, 2014 2:18
djb,

if people born in the U.S. don't think it's worth the pay to be doctors then we can have foreign-born doctors. We have foreign born farm workers, what's the problem?
@atrios at Eschatonblog writes nice "Shorter Frank Bruni" (for last mover)
written by jaaaaayceeeee, June 08, 2014 3:30

The only way to make up for screwing the millenials in their working years is to make sure to screw them in their retirement years, too.

benefits don't have to be paid for.
written by Joe, June 08, 2014 4:14
Govt is the source of all usd, it can't run out. The private sector needs to be in surplus, so by accounting identity, govt needs a deficit, on average,to keep things functioning smoothly.

The only thing the older generation needs to really apologize for is that none of them are smart enough to teach their children how money and accounting identities works. Otherwise someone like bruni wouldn't write such drivel.

You should always rephrase the old trope "monstrous debt" as "monstrous private sector net savings". Not quite so scary. I guarantee bruni has no idea where net savings come from.
......................
written by djb, June 08, 2014 5:08
"djb,

if people born in the U.S. don't think it's worth the pay to be doctors then we can have foreign-born doctors. We have foreign born farm workers, what's the problem?"

its that debt that makes it necessary to make a certain amount Dr Baker

lets get rid of the price gouging by specialist, and have our education free like france then I am all with you

I am all with you everything else anyway

thanks for your contributions
...
written by watermelonpunch, June 08, 2014 5:55
I feel odd making this suggestion here again and again... But peeps here really need to read the book...
http://www.cepr.net/index.php/...liberalism


Why do doctors need so much more protection than anyone else?
written by Dean, June 08, 2014 7:52
djb,

we just opened trade for clothes, autos, steel and everything else. We didn't make provisions that the people in the industry wouldn't be hurt in the transition. I'm sorry, I don't feel the need to baby some of the best paid workers in the country. We should devise a better system, but if some doctors get caught in the transition, all I can say is welcome to America and the free market.
......
written by djb, June 08, 2014 10:01
We're talking about people subsidized by their government competing with people who aren't....how is that the free market?
blah
written by blah, June 09, 2014 2:09
Who isn't? US doctors certainly already are. Doctors have a ton of control over all aspects of the system, some doctors are getting rich off the huge medical education costs of today.

Some of the most highly paid doctors are those with the cheapest education. The inflation of costs for doctor's education both directly enriches some doctors and provides cover for their enrichment.

It's certainly to reduce the cost to educate doctors. If you really wanted to advocate a morally responsible future for american doctors, you would be advocating steps to reduce the cost to train doctors. It's doctor's associations setting the standards, protocol and training, so the high cost of training doctors is literally no one else's fault but their own.
Cereally?
written by Jeffrey Stewart, June 09, 2014 7:51
Frank Bruni, the restaurant critic, is qualified to opine about intergenerational warfare?
We subsidize medical education too
written by Dean, June 09, 2014 10:20
djb,

we have all sorts of subsidies for medical education here also. It just costs a lot more here. And, according to trade theory, countries that do things inefficiently shouldn't do them. That's free trade.

You're welcome to advocate protectionist policies, but that is what you are doing.
Apples and oranges
written by Ken Schulz, June 09, 2014 11:25
Note another sort of numbers-without-context fallacy here: how should we interpret the raw per-capita spending totals (~26K/oldster vs. ~12k/child)? The needs are entirely different: for just one example, the infectious diseases that used to kill children have been wiped out in the developed countries by relatively inexpensive vaccines; while the elderly are likely to die from heart disease or cancer, diseases on which progress has been slow and incremental. How much to spend, and on whom, should follow from analysis of the needs.


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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.

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