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Home Publications Blogs Beat the Press Robert Samuelson's Speeches for the Presidential Candidates

Robert Samuelson's Speeches for the Presidential Candidates

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Monday, 01 October 2012 04:56

Robert Samuelson used his column today to write speeches for President Obama and Governor Romney which are supposed to be giving us what both of them should be telling the public. (Aren't columnists cute when they do this?) In the case of President Obama the focus is on the need to increase taxes on middle income people and cut benefits:

"'Fellow Americans. For years, your leaders — including me — have misled you. Your government has made more promises than it can keep, even if the economy returns to full employment. Your taxes are going up, and your public services are going down. ...

"As you know, the great driver here is the retirement of baby boomers. Between 2011 and 2025, the number of retirees on Social Security will grow by nearly 50 percent to 66 million people; Medicare experiences a similar rise. The resulting spending surge perpetuates huge budget deficits. The Congressional Budget Office estimates that present policies would result in cumulative deficits of $10 trillion from 2013 to 2022. In 2022, the annual deficit is $1.4 trillion, or 5.5 percent of the economy, our gross domestic product. I have no credible plan to control Medicare and Social Security spending."

Actually, if the unemployment rate fell back to 4.5 percent in 2022 (the pre-recession level), rather than the 5.3 percent level assumed by the Congressional Budget Office, the budget deficit would be close to a level that was consistent with a stable debt to GDP ratio, meaning that it could be sustained indefinitely. Presumably the public would not be too bothered by measures that would get the economy back to full employment (e.g. a more expansionary monetary policy from the Federal Reserve Board). 

Of course, the major source for the projected rise in spending is the explosion of health care costs in the private sector. The focus of the truth telling speech promised by Samuelson should therefore be the need to fix the health care system, not more pain from the middle class. If the United States paid the same amount per person for health care as any other wealthy country we would be looking at large budget surpluses, not deficits. 

While Samuelson wants to scare people with the projected rise in the number of retirees, it is worth pointing out that productivity is projected to rise by almost 40 percent between 2011 and 2025. This means that if workers actually received their share of productivity growth, then they would be enjoying substantially higher living standards in 2025, even if it were necessary to pay somewhat higher taxes to sustain Social Security and Medicare. For most workers the upward redistribution of income presents a far larger threat to their living standards than any demographic issues.

 

Comments (11)Add Comment
Oblivious
written by Jeffrey Stewart, October 01, 2012 5:37
"Between 2011 and 2025, the number of retirees on Social Security will grow by nearly 50 percent to 66 million people; Medicare experiences a similar rise. The resulting spending surge perpetuates huge budget deficits." -R. Samuelson


This is why this guy is completely full of shit. He plays the entitlement con where he conflates Medicare and Social Security. Most informed people know that Social Security doesn't contribute one cent to the budget deficit.

In fact, we need a pre-election pledge by President Obama not to cut Social Security in any way, especially though a backdoor attempt to tie the COLAs to a chained CPI as in the Bowles-Simpson (BS!) recommendations.
...
written by KeithOK, October 01, 2012 6:52
Samuelson lost me when he referred to "Third Way" as a "liberal" organization.

It's a centrist, in the sense of "conservative but not totally out-of-touch with reality" centrism.
Thanks for this Dean...
written by Richard, October 01, 2012 7:47
I read Samuelson this AM and just shook my head. Of course, he conveniently forgets that the Greenspan Commission in '83 roughly doubled the amount of FICA withholding precisely to build a surplus in the system to cover the Boomers SS needs.

Nothing like using his own lies to claim that the candidates are lying.
Real drains on the economy besides healthcare
written by Robert Salzberg, October 01, 2012 7:50
Why do retailers pay 1.5%-3% for credit card transactions that cost a nickel?

Why do many Americans pay more for cable, phone and internet than they do for water, sewer, trash and electricity?

What's better than a monopoly? A virtual monopoly by a handful of companies pretending to provide competition.
productivity expected to rise?
written by bailey, October 01, 2012 10:03
It would be wonderful news, that "productivity is projected to rise by almost 40 percent between 2011 and 2025" IF just one Economist could define white collar worker productivity increases in a verifiable manner (that's sans circular math).
...
written by skeptonomist, October 01, 2012 10:37
Samuelson again hits the perennial and false claim that some kind of demographic doom awaits because of decreasing birth rate and increasing elderly population. Dean has mentioned before that this is balanced by decreasing child population, and this is shown graphically here:

http://www.skeptometrics.org/RealDemographics.html

In words, when the population ratios stabilize as projected around 2035, the percentage of people of working age will be about the same as it was in 1900 and also in the 1960's, a very prosperous time. Demographics will cause a shift in the type of expense burden from child support to elderly support, and will mean an increase in SS taxes, and in principle a decrease in taxes to support education and other child services.
"Their Share of Productivity Growth"
written by ellen1910, October 01, 2012 10:42

What is "their share"? A question I've struggled with for years.

Business owners pay for the factors (capital equipment, employee training, new technologies, etc.) which increase productivity.

Does anyone know of an article which argues that "workers' share of productivity growth" can be measured objectively -- or even morally or ethically?
The Speech Samuelson Should Have Written
written by Last Mover, October 01, 2012 11:46
Fellow Americans. For years, your leaders — including me — have misled you. Your government has made more promises than it can keep.

Corrupt campaign finance has completely displaced our one-person one-vote democracy with candidates like me whom are bought and sold by Corporate Amerika like so many pieces of bubble gum, boxes of cereal or cans of pet food.

We know this to be true because not a day goes by that some politican, corporate shill or MSM reporter like Samuelson steps up to remind us that if anything, not enough is spent on campaigns because current spending doesn't even exceed that for bubble gum, cereal or pet food.


Which proves of course that Amerikans value democracy no more than they value bubble gum, cereal or pet food.

Thank you Robert Samuelson for not misleading us like government with promises that cannot be kept, reminding us that real choices are available and we should make them: Between Obama, Romney, bubble gum, cereal and pet food.
sub-5% unemployment likely?
written by Brian Dell, October 01, 2012 12:26
An earlier comment says:
"Most informed people know that Social Security doesn't contribute one cent to the budget deficit."

This isn't currently true. For the last couple of years the SS fund has received a transfer from the general revenue account in order to make up for insufficient payroll tax revenue.

In any case, I would be surprised if sub-5% unemployment could be realized again in the United States any time soon apart from expansionary fiscal or monetary policy that cannot be sustained indefinitely. Some of the current unemployed simply aren't needed in the future economy (at least at prevailing wage and benefit rates).
...
written by liberal, October 01, 2012 12:36
ellen1910 wrote,
Business owners pay for the factors (capital equipment, employee training, new technologies, etc.) which increase productivity.


It's much more muddled than you think it is.

First, businesses pay rent for their premises. There's a reason economic rent is called "rent"---all land rent is economic rent. While it's obviously an accounting cost for business, their share of costs going to land rent isn't increasing productivity anymore than my cost for renting or owning my home is.

As far as "contributing to productivity" in the sense of improvements in technology and various arts, yes, businesses contribute to those, but so does the government.

Not to mention that many businesses are in large part "takers"---either they're pirates (seizing land rents and other government granted goodies (e.g. rents from so-called "intellectual property rights") from the rest of us), or they benefit from government-sponsored research.

And while your comment about measuring the productivity of labor is reasonable and fair, it works both ways---given that the "marginalist" theory of wage income is obviously garbage, there's no clear reason why a CEO should be paid more than a janitor. Of course, one could argue that the market set it that way, but the "market" setting a CEO's "wages" is hardly a market.
equitable share
written by David, October 01, 2012 2:26
"Their Share of Productivity Growth"
written by ellen1910, October 01, 2012 10:42

...

Does anyone know of an article which argues that "workers' share of productivity growth" can be measured objectively -- or even morally or ethically?


The first question is how wages and productivity are measured. The Heritage Foundation in 2008 argued that there is no real gap between the two http://www.heritage.org/resear...oductivity. Though, for example, they lump in benefits, which are overvalued (healthcare costs twice as much as it should, so the benefits are taxed by half for the medical side. And with that counting method, CEOs wages+benefits' growth rate swamps that of the median worker.

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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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