The Left and Right Can Agree That NPR Completely Misled Listeners About the Supercommittee and the Deficit

Print
Wednesday, 23 November 2011 05:06

NPR badly needs donations of paper bags, because a lot of people there need to be wearing them over their heads after this piece. The piece ostensibly tells listeners that both left and right agree that things can't keep going as they are going and that the problem is Social Security, Medicare, and Medicaid.

This is hugely wrong. First, the budget deficit first became large when the economy plunged because of the collapse of the housing bubble. The deficit in 2007 was just 1.2 percent of GDP and was projected to stay low in the next several years, even if the Bush tax cuts did not expire.

In other words, there is no short-term deficit problem. The problem was a collapse of private sector spending that made it necessary for the federal government to pick up the gap. Those who are unhappy about current deficits want higher unemployment. That is the reality, whether they know it or not.

The longer term problem is a health care story. We can say the cost of anything together with Medicare and Medicaid funding is a problem, because rising private sector health care costs, felt through these programs, is the problem. For example, we could say that funding for NPR (through the Corporation for Public Broadcasting) plus Medicare and Medicaid will rise hugely as a share of GDP over the next two decades.

Social Security is financed by its dedicated tax stream, which is projected to keep the program fully funded through the year 2038. It is misleading to imply that this is a cause of deficit problems. (Under the law, if Social Security funding is not increased, then only 81 percent of projected benefits will be paid in years after 2038. So the program would not contribute to the deficit.)

In reality, both left and right can agree that the broken U.S. health care system is the problem. The United States already pays more than twice as much per person as the average in other wealthy countries. If our per person health care costs were the same as those in Canada, Germany or any other wealthy country, we would be looking at huge budget surpluses, not deficits.