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Home Publications Blogs Beat the Press Robert Samuelson Hasn't Heard About the Downturn

Robert Samuelson Hasn't Heard About the Downturn

Monday, 16 December 2013 05:36

You know about that recession that began six years ago following the collapse of the housing bubble? Apparently Robert Samuelson doesn't. In a column complaining about the new budget deal, Samuelson told readers:

"Recall: The central issue is the mismatch between government’s spending promises and its willingness to tax."

Those who noticed the recession might think the central issue is that the economy is still operating at a level of output that is close to 6 percent below its capacity according to the Congressional Budget Office. This corresponds to $1 trillion in wasted output each year, with total amount of needless waste now exceeding $5 trillion. It also corresponds to a level of employment that is roughly 8.5 million below trend. This implies lives being ruined as parent can't properly support their kids and face foreclosure and/or eviction.

If Congress would spend more money (i.e. increase the mismatch between spending and willingness to tax) it could bring the economy back towards potential GDP. In other words, the problem is the opposite of what Samuelson asserts.

While Samuelson goes on to complain about the long-term story with the baby boomers' retirement raising the cost of Social Security and Medicare, here also he has missed the news. Over the last five years the rate of health care cost growth has slowed sharply. The Congressional Budget Office has already lowered its projections for the cost of Medicare for 2020 by 15 percent. If the slowdown in cost growth continues then the projections will be further adjusted downward.

In other words, much of the projected long-term shortfall has already been addressed. Samuelson just missed it. In the long-term we may need some additional revenue to support an aging population, but it is difficult to believe that the public would not be willing to support higher taxes if they are needed to finance these two incredibly popular programs. However, this is a question that is still many years in the future and there is no reason that Congress needs to worry about it at a time when the country is facing a much more pressing crisis.

Comments (6)Add Comment
You Have Choices America. Make Them. Muddle Through or Transform Yourself.
written by Last Mover, December 16, 2013 5:51

The theme is "muddling through" by Samuelson, who wants you to think he understands the frustration of so many who are exasperated that politicians are paralyzed, doing little more than small "incremental" changes around the edges. Transformational changes, like the Civil Rights Act of 1964 that resulted from demonstrations, are off the table absent some kind of similar uprising.

Samuelson says with a strong hint of economic doom:
Government debt is in territory that, except for wartime debt, is unprecedented. We don’t know the consequences. Someday, we may no longer have the luxury of muddling through.

We don't know the consequences?

Of what, the debt he cites in 1946 as 122% of GDP followed by 20 years of prosperity?

Of what, the debt in 1929 as 16% of GDP followed by the Great Depression?

Samuelson is correct. America does not know the consequences of spending and debt that occurred less than a 100 years ago.

If fact, as Samuelson tells the story of "muddling through", a true transformation like the Great Depression of 1929 followed by WWII spending was not really ... a transformation was it ... just more "muddling through".

As long as Samuelson et all tells these stories, and as long as Americans continue to buy these fairy tales, Americans will continue to "muddle through" won't they.

Of course if there really was an uprising with riots in the streets over unemployment and inequality - enough to precipitate a transformational change - guess what.

Samuelson would be whining that Americans have become so addicted to debt-funded "entitlements" they have gone absolutely stark raving mad and must be subdued to maintain law and order for the 1%.

The hell with transformational change, right Samuelson?
Samuelson Is a Clown
written by Paul Mathis, December 16, 2013 8:13
In the circus that is the WaPo Samuelson puts on his big nose, floppy shoes and crazy hair then presents the most ridiculous "analysis" possible. Dean and Last Mover absolutely nailed the absurd Samuelson claptrap, but they missed Samuelson's best/worst line:

Although the Great Recession hurt, it’s not the crux of the matter.

I actually burst out laughing!
a couple good sentences
written by Peter K., December 16, 2013 10:18
"For decades, “experts” have warned of the dire consequences of unchecked deficits. Yet no great crisis has occurred."

"Expert" deficit scolds like Samuelson have been crying wolf for years.

Do Team Republican economists like Samuelson even acknwoledge the CBO's concept of an output gap?
Another normal day
written by John Q, December 16, 2013 2:33
Sun rises in east.
Samuelson gets it wrong.
Off-Topic (NYRB Rakoff article)
written by bailey, December 16, 2013 7:46
I try to read most of what you recommend, for obvious reasons. But, Rokoff lost me when he writes: "... and I, for one, have no opinion about whether criminal fraud was committed in any given instance...." Huh? How could anyone worth reading NOT have an opinion on this 5 years later?
written by watermelonpunch, December 17, 2013 12:44
bailey,... I'm not even sure what you're talking about... But I'd hardly call it "recommending" - what Dean Baker does here at Beat the Press usually.
You have me baffled about what you're on about.

Anyway, Paul Mathis probably has the scenario locked down pretty accurately, I'd have to say, after that.

From now on when Samuelson is mentioned, I'm going to think about that crazy ass clown that scared the shit out of me when I was about 4 years old... We were out in public somewhere, don't remember the details, but this clown was coming at me repeatedly with this hideous mechanical chicken head on a stick, shoving it at my face. My mother actually had to tell that bozo to back the hell off.

Someone needs to tell Samuelson to GTFO of here with his chicken head on a stick economics.

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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.