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Home Publications Blogs Beat the Press Fred Hiatt's Accountability Liberals Don't Know Arithmetic

Fred Hiatt's Accountability Liberals Don't Know Arithmetic

Monday, 13 February 2012 05:50

It's always good to get a silly caricature to begin the week and Fred Hiatt at the Washington Post is happy to supply one. He presents us with the divide between "nostalgia liberals" and "accountability liberals."

The story is that nostalgia liberals are opposed to means-testing Social Security while accountability liberals say "the only way to protect benefits for the poor is to scale back expected benefits for the wealthy." Nostalgia liberals support traditional public schools, while accountability liberals support charter schools and testing. More generally, "accountability liberals put more stock in market forces and individual empowerment." Of course the picture of "nostalgia liberals" is a ridiculous caricature by someone who is a charter member of the "accountability liberals" masquerading as a neutral voice.

Starting with Social Security, those familiar with arithmetic know that almost no money can be saved by cutting benefits for the wealthy. The only way to save substantial money is by extending a means test down to people earning $30,000 a year, which does not ordinarily pass for wealthy.

Also, contrary to what Hiatt claims, Social Security is not a subsidy to middle class and wealthy people, it is a government-run insurance system. The middle class and wealthy pay for their benefits.

Hiatt also seems to think that an aging population is a new story. It isn't. Fifty years ago there were five workers per retiree, today there are three. In spite of the declining ratio of workers to retiree, we still enjoy higher living standards today than we did 50 years because of productivity growth. Productivity growth is of course continuing which is why we will have no difficulty supporting a larger population of retirees and still have rising living standards, assuming that the gains from productivity growth are shared widely.

The real problem is of course our broken health care system, as every analyst knows. If the United States paid the same amount for its health care as any other wealthy country, then we would have budget surpluses in the long-term, not deficits.

The point about schools also misrepresents reality. The accountability liberals have been calling the shots in school policy for two decades and have little to show for it. It is hard to see this drive as anything more than a glorified effort to bash teachers' unions, which is the one area where it clearly has been successful.

Contrary to Hiatt's caricature, there are plenty of ways in which some who he dubs "nostalgia liberals" would be happy to embrace market forces, such as ending too-big-to-fail banks that enjoy implicit government protection, less stringent patent protection for prescription drugs, and more open trade for highly paid professionals like doctors and lawyers. But acknowledging this fact would undermine the caricature, so Hiatt would not venture into this territory.



Comments (7)Add Comment
Exactly Wrong Accounting Trumps Approximately Right Economics, Low-rated comment [Show]
written by liberal, February 13, 2012 8:05

The first link goes to the wrong place.
Teachers and I agree
written by Don, February 13, 2012 8:34
I agree that the educational system is an enormous concern that has huge economic implications. As for the attack on Teacher's Unions, that too is correct. The problem with accountablity in education via metrics is "who is doing the observation and anyalisis" because we certainly no "who is being observed." The problem with a single standard or grading system is the disparity between schools and resources;ie, Suburban verse Inner City. Perhaps we should be taking a long hard look at the adminsatrations that puprot to manage these institutions verse the foot soldiers (teachers). I always understood that all problems start from the top on down not the bottom on up.
even easier arithmetic
written by coberly, February 13, 2012 10:52

brave try, but even you obscure the essential arithmetic: there is NO CRISIS IN SS. there isn't even a "problem."

"the only way to protect benefits for the poor..." says Hiatt is to destroy Social Security and to turn it into welfare as we knew it.

But you can protect benefits for the poor, and the middle who pay for their own benefits, by simply raising the payroll tax one half of one tenth of one percent per year... that's forty cents per week in today's terms.
no need to means test. no need to raise the retirement age. no need to cut benefits. no need to "tax the rich." just let the people continue to pay for their own benefits as they always have, with a tiny tiny raise in the "tax" to cover their own cost of living longer.
written by urban legend, February 13, 2012 11:11
I have yet to hear from Dean how subjecting professionals to the same one-way, holier-than-thou free trade that has devastated manufacturing employment will help ordinary Americans in a meaningful way. Seems more like the final surrender that will drive incomes further down for everyone. I would prefer to see the same protections -- that I believe every other country in the world uses to one degree or the other to protect their own employment -- applied more broadly.
Lower wages do get passed on in prices
written by dean, February 14, 2012 4:10
Urban Legend,

you have to read more carefully, then you would know that you have heard from me all the time about how subjecting professionals to international competition would benefit most workers. Their lower wages would translate into lower health care costs, college tuition, and prices for anything that requires the input of highly paid professionals.

Our shirts and shoes are much cheaper because they are made by low-paid workers in China. The same would be true of health care. The $290,000 a year made by the average doctor is money out of our pocket. I would rather pay the market price. If you want to pay your doctor more, give him or her a tip.
written by Randy Krehbiel, February 14, 2012 10:19
I have long maintained that the surest way to kill Social Security is means testing. Then it goes from being an insurance program to a welfare program, the wealthiest Americans are no longer psychologically (or financially) invested and a stigma is attached. Within a generation, it will be easy to eliminate or marginalize.

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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.