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Home Publications Blogs Beat the Press Thomas Friedman Thinks the Heritage Foundation Is a Left-Wing Outfit

Thomas Friedman Thinks the Heritage Foundation Is a Left-Wing Outfit

Sunday, 04 November 2012 08:39

That's what readers of his column today would inevitably conclude. After all, Friedman called President Obama's support of the health care reform plan pushed by the Heritage Foundation in the mid-90s a "leftward initiative."

Clearly Friedman is very confused about the shape of the American political spectrum. He repeatedly refers to the plan put forward by Morgan Stanley director Erskine Bowles and former Senator Alan Simpson to cut Social Security and Medicare for middle class retirees "centrist." In fact, polls consistently show that the vast majority of people across the political spectrum strongly oppose cuts to these programs. The Bowles -Simpson cuts only seem to enjoy support from a small group of elites in political and financial circles. That does not make them centrist.

On a non-economic point, Friedman argues that if the Republicans lose a second election to Obama then it will force the party to change, pointing to the change in the Democratic Party after it lost consecutive elections to Ronald Reagan. In fact, the Democrats lost three consecutive elections, with George H.W. Bush defeating Michael Dukakis in 1988.

Comments (8)Add Comment
written by bmz, November 04, 2012 10:04
No true Democrat could support cutting Social Security and Medicare.
The Social Security trust fund, together with payroll taxes, is sufficient to cover program benefits for more than the next 20 years. Moreover, assuming no additional funding, currently scheduled payroll taxes can provide benefits equal to those now provided, even adjusted for inflation, for the indefinite future. Given all the real economic problems we truly must address now, there is no legitimate argument for even considering Social Security modifications until the economy is fully back on its feet and long-term costs and revenues can be more accurately projected.

The Medicare trust fund was actually “going broke” when Pres. Obama took office, due in large to changes pushed through by the Bush administration. At that time, the trust fund was projected to be exhausted by 2016. However, the ACA (“Obamacare”), rather than taking the much vaunted $716 billion out of Medicare, actually added that amount to the Medicare trust fund; which is now projected to last until 2024. In one fell swoop, two thirds of the Medicare shortfall was eliminated. Eliminating the remaining one third could be even easier; for example, now that the ACA will protect older working Americans, we can in good conscience synchronize Medicare eligibility dates with those for Social Security. The relative ease of these Medicare fixes, and the fact that the small Social Security issues remaining are far beyond our legitimate planning horizon, why then all the hysteria about entitlements eating our children and grandchildren? In a word—TAXES.

Everyone knows that Ronald Reagan reduced income taxes (more than one half for the wealthy); what is less commonly understood is that he extensively offset this by raising payroll taxes(more than double for most self-employed). Today, most American families pay more in payroll taxes than they do in income taxes. Between 1946 and 1981, income taxes averaged 12(+/-1)% of normalized GDP. Reagan reduced income taxes to near 9%. Clinton increased them back to 12%; and Bush/Obama reduced them again to 9 %( and below). However, on budget expenses (which exclude Medicare and Social Security) have remained 12(+/-1)% of normalized GDP throughout. The deficit in income taxes has been financed by borrowing, largely from the Social Security and Medicare trust funds. When Clinton raised income taxes back to 12%, this eliminated the on budget deficit. The CBO projected that this, plus the Social Security and Medicare surpluses, was enough to pay off the entire US debt before the Social Security/Medicare trust funds would have to be amortized for beneficiary payments, all without having to raise any taxes to pay for the amortization of those trust funds. Like Reagan before him, Bush took those excess payroll tax receipts and gave them “back” as income tax reductions, heavily weighted to the wealthy–who didn’t create those surpluses in the first place. By doing this, Bush guaranteed that income taxes would have to be raised in order to amortize the trust funds. Although the Republicans like to talk about those “47%” who in large part pay only payroll taxes as being supported and subsidized by those who pay income taxes, the truth is the opposite; ever since Reagan, income taxes have been subsidized by payroll taxes; and the failure to raise income taxes to pay back that subsidy, is to steal the money that middle-class workers have had taken out of their income to pay for their retirement.

Hence, the only problem we have with entitlements is paying back the money that we borrowed from the Social Security and Medicare trust funds. This requires that we raise income taxes in the short term to 12% to cover normal on budget expenses. And, as soon as the economy recovers, we must raise taxes above 12% to pay back the trust funds. This is why the Republicans refuse to discuss raising income taxes; they would much prefer to steal workers retirement funds, and reduce the entitlements paid for by them. We do not have an entitlement problem, we have a Republican problem.
"Excess income to doctors, nurses, hospitals and [big pharma]....Either we pay all these people less..."
written by Rachel, November 04, 2012 10:19

..."or our healthcare costs are always going to be sky-high."

That's a slightly truncated quote from KDrum at Mother Jones, 24Aug12. Drum complains the Paul Ryan has not had the courage to mention it. But who, beside the very few usual suspects, has had the courage? Or the erudition? Or the disinterestedness? I saw precious little of this, little of courage, still less of disinterestedness or erudition, in the health insurance reform plan. Some problems were ameliorated, but others have been exacerbated, and the fundamental injustices are left quite intact.
Maybe Friedman is onto something?
written by Stephen Stein, November 04, 2012 11:09
If we could transport the early-90's Heritage foundation to the present day, to today's Republican party it might appear to be "left-wing".
Completely off topic
written by matthew carmody, November 04, 2012 1:13
I found a great book that my library was selling. "The Party That Lost Its Head" by George Gilder and Bruce Chapman was published in 1966. Great tale about how the far right took over the GOP beginning in earnest in 1954.
What "entitlements"?
written by Ethan, November 04, 2012 2:31
My social security and medicare are "entitlements" only to the same extent that my salary was an "entitlement" while I worked. Yes I was "entitled" to part of my employer's gross revenues, but only because my work helped produce those revenues.
When I go to the grocery store and pay for my groceries do you say I am "entitled" to take my groceries home? Similarly, I paid my social security and medicare taxes while I worked, and I still pay my medicare premium. So you can call them "entitlements" if you want to, but remember, I am entitled to them because I EARNED and PAID FOR them.
Centrist report
written by John Q, November 04, 2012 11:43
There was a centrist report from a member of the B-S commission. As there was no commission report, all we have are reports from individual members. Funny how the more reasonable report gets no mention in the press, isn't it?
the election
written by mel in oregon, November 05, 2012 7:06
friedman's logic falls apart. when romney loses to obama, the republicans won't move to the left. they are controlled by the tea party, & have been moving to the far right since the time of reagan. the democrats are a "me too" party that has moved to the right since the time of carter. we have about half of america that is scared out of their wits by the increasing amount of the population being minority. that's why so many older white people would like to return to the 50s when minorities knew their place. so we have a corpratocracy that controls everything, & all the rubes think we still live in a democracy. oh well...only in america.
The New Middle
written by FoonTheElder, November 06, 2012 12:14
Fox News and big corporate media have skewed the scale so far to the right that they accuse anyone to the normal side of Michelle Bachmann of being a liberal.

Even the supposed liberals in Washington vote for items that a real liberal would never vote for. Expanded military, health care cuts, more big corporate welfare, etc.

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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.