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Home Publications Blogs Beat the Press Post in Hyper Drive on Effort to Cut Social Security and Medicare

Post in Hyper Drive on Effort to Cut Social Security and Medicare

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Monday, 12 November 2012 05:19

The Washington Post is throwing all journalistic norms aside in its drive to cut Social Security and Medicare. It continues to hype the budget standoff as an ominous "fiscal cliff" and tells readers on the front page of its web site that it could provide a "magic moment" in which Social Security and Medicare can be cut. The piece begins by telling readers:

"Two years ago this month, the leaders of a presidential commission rolled out a startling plan to dig the nation out of debt. After decades of stagnating incomes, they said, Washington must tell people to work longer, pay higher taxes and expect less in retirement."

Okay I tricked you, this is the Washington Post which doesn't acknowledge economic realities like stagnating income. The piece actually began:

"Two years ago this month, the leaders of a presidential commission rolled out a startling plan to dig the nation out of debt. After decades of profligacy, they said, Washington must tell people to work longer, pay higher taxes and expect less in retirement (emphasis added)."

This departure from reality gives you the gist of the story. The piece continues:

"Lawmakers recoiled from the blunt prescriptions of Democrat Erskine Bowles and Republican Alan K. Simpson. But their plan has since been heralded by both parties as a model of clear-eyed sacrifice, and policymakers say the moment has come to live up to its promise."

Well, yes people have praised their plan. They have also ridiculed it. For example it proposes immediate cuts in Social Security benefits that would be a larger share of the income of the typical beneficiary than President Obama's proposed tax increases on the top 2 percent would be for most of the affected taxpayers. It also proposes increasing the age for Medicare eligibility, even though this would add tens of billions to the country's health care costs over the next decade. And, it proposed a minimum Social Security benefit for low wage earners that few low wage earners would actually qualify for due to the number of working years required to qualify.

There were many other carefully detailed criticisms from people who did not find the plan "startling" nor saw the need to "dig the nation" out of a debt that was almost entirely due to the economic plunge caused by the collapse of the housing bubble. As all budget wonks know the deficits were just over 1.0 percent of GDP prior to the economic collapse and were projected to stay low for the near future, until the collapse of the housing bubble sank the economy.

deficits-per-GDP-10-2012 Source: Congressional Budget Office.

These people focused on the need to get the economy going again and to get people back to work, which would eliminate the bulk of the deficit all by itself. But, just as the Post ignored all the people warning of the housing bubble before it burst, it continues to ignore those who try to put the large budget deficits in the economic context in which they arose.

The piece continues to shamelessly push its agenda:

"In the past, policymakers have handled such moments by delaying the pain and giving themselves new deadlines for getting the budget under control. Now, however, the national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period after World War II — and it’s rising rapidly. Avoiding hard decisions could have grave consequences, analysts say, potentially undermining the U.S. economic recovery and the world’s confidence in American leadership."

A more serious newspaper might point out that the ratio of interest payments to GDP is near a post-war low.

interest-per-gdp-10-2012

Source: Congressional Budget Office.

The piece includes the Post's usual collection of terms and phrases that would ordinarily be reserved for the opinion pages of a newspaper; for example telling us that a budget deal was "tantalizingly" close back in 2011 and telling us about efforts at "taming" the debt, as opposed to reducing it. And it tries to conceal plans to cut Social Security benefits, referring to Republican demands for:

"applying a stingier measure of inflation to Social Security."

It is unlikely that most readers would understand that this would mean reducing benefits for current retirees by 0.3 percent annually from scheduled levels. This would accumulate to a cut of 3 percent for someone who had been retired 10 years, 6 percent after 20 years and 9 percent after 30 years.

Anyhow, we will no doubt see many more pieces pushing the Post agenda for cutting Social Security and Medicare littered throughout the paper's news section in the weeks ahead.

Comments (5)Add Comment
...
written by Jeffrey Stewart, November 12, 2012 5:43
The government's priority should be JOBS, not deficits.
...
written by Bart, November 12, 2012 6:50

At least Lori M. has dropped the word "report" when referring to the Bowels - Simpson plan.
Buyer complicity in the housing bubble
written by Seth B, November 12, 2012 7:51
I've been viewing the housing bubble largely as a scam inflicted on buyers thanks to the endless demand in the bundled mortgage trade. But I wondered how so many households could succumb to the ARMs and other sucker offers. I think wage stagnation has a lot to do with buyers' participation. Desperate for some way to improve their financial situation and knowing that it wasn't going to happen in their paychecks, Americans turned to real estate as their only hope besides the lottery. If wages had been rising with the economy, would the real estate bubble have happened at all?
WaPo is Cheerleading for Starve the Beast
written by Robert Salzberg, November 12, 2012 7:57
Grover Norquist is famous for 2 things.

1. His comment that he'd like to shrink the federal government down to a size that we could "drown it in a bathtub."

2. His 'No New Taxes Pledge' which is the tool to "starve the beast" of government to force radical cutting of the social safety net.

Congressional Republicans have overwhelming signed and faithfully followed Norquist's pledge and in doing so have effectively gotten federal, state and local governments to put off 2 trillion dollars worth of needed infrastructure projects and have vastly increased the federal deficit due to record low tax rates.

At a time when the Baby Boomers should have been taxed at above average rates to pay for their coming Social Security and Medicare benefits, Republicans assured that they would pay below historical rates.

If today, we eliminated the cap on wages subject to the Social Security Tax, Social Security would be fully funded till 2082.

Regular or even infrequent readers of BTP know that by far the largest driver of our federal debt is health care costs. America pays around 18% of GDP for health care while no other country in the world pays more than 11% and every other industrialized nation provides health care for all it's citizens, not just some.

The 'fiscal cliff', which is really just a rather steep slope, is a golden opportunity to clear out the most offensive injustices in our tax code.

President Obama has identified the corporate jet subsidy, subsidies for oil and gas companies, the carried interest loophole and the fact that as your income goes up, so does the value of your tax deductions.

President Obama's list is a good start that coupled with allowing the Bush tax cuts to expire on the wealthiest Americans, would save over 1 trillion dollars over the next ten years.

These savings could be used to extend tax cuts the Bush tax cuts for 2 years along with significant spending for infrastructure and aid to the States.
which budget?
written by Arne, November 13, 2012 3:52
"As all budget wonks know the deficits were just over 1.0 percent of GDP prior to the economic collapse and were projected to stay low for the near future"

If you are trying to show that the deficits were sustainable, why would you include the Social Security surplus as an income item?

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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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