CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Would the NYT Allow Oped Columnists to Blame Global Warming on Social Security?

Would the NYT Allow Oped Columnists to Blame Global Warming on Social Security?

Print
Thursday, 08 November 2012 10:00

It is fashionable in elite circles to talk say that the aging of the population will bankrupt the country as a result of the higher costs it will impose on Social Security and Medicare (referred to as "entitlements.") It makes you seem a knowledgeable and concerned person to issue dire warnings along these lines.

Of course it is utter nonsense as everyone familiar with the projections knows. The projected rise in Social Security spending due to aging would increase the annual cost of the program by 1.2 percentage points of GDP over the next two decades, roughly two thirds of the increase in military spending associated with the wars in Afghanistan and Iraq. The aging of the population would actually have less impact on Medicare's costs, except that it is coupled with the expectation that per person health care costs will continue to rise much more rapidly than inflation. However, this means that the Medicare cost problem is a health care cost problem, not a problem due to the aging of the population.

Given this reality is difficult to see why the NYT allowed Jonathan Haidt to say in his oped column:

"we do face bankruptcy when the baby boomers retire and a shrinking percentage of workers must pay the ever growing expenses of a ballooning class of retirees. Yet the Democrats want to “protect” older Americans, students and almost everyone else from the need to sacrifice."

Haidt obviously wants to make middle class workers sacrifice more than they already have with three decades of wage stagnation, but his rationale is entirely his own invention. There are no remotely plausible projections that show the retirement of the baby boomers bankrupting the country. Insofar as there will be budget problems they are due to the costs of a broken health care system. This requires fixing the health care system, for example by paying doctors and drug companies less.

Comments (14)Add Comment
Something I read recently
written by makarov__, November 08, 2012 12:40
that I didn't know. Generation Y, also known as "Millennials", is actually larger in population than the Baby Boom Generation.

While I know the main argument about "fewer people working for each retiree" is mainly about longer average life expectancy, it's important to remember that people are still having children.
'Haidt' rhymes with 'Hate'
written by David, November 08, 2012 12:41
How this bozo got positions at supposedly superior institutions is beyond me (professor of "busniness ethics", but he's just being groomed to replace David Brooks as a ravenous rightie masquuerading as a centrist). Academia is corrupted by ideology and money too. Haidt shows that these neocons know nothing about economics or the reality of having to compete fiercely just to put food on the table and a roof over your head.
...
written by Jim, November 08, 2012 12:45
Thanks for the entry. There are a few typos here to correct.
.
written by jerry, November 08, 2012 12:46
It would be helpful to explain to Haidt that the US cannot go bankrupt.
Sacrifice??
written by matt carmody, November 08, 2012 12:59
Yet the Democrats want to “protect” older Americans, students and almost everyone else from the need to sacrifice."


And the Republicans want to shield those most equipped for sacrifice from giving back one iota to benefit the country and its people.
Paying doctors and drug companies less
written by John Kerr, November 08, 2012 1:51
Now you are talking! Of course the doctors will say they need to make enough to pay off the cost of their training which in turn forces many to practice business rather than medicine. The answer is to have the government fund the medical training costs just like they do in Europe. In fact since medical school is a graduate school why it is not funded the same way chemistry or economics Ph.D.'s are is astonishing. This is a simple fix that would take a relatively small investment of government money and then we could have doctors who are in it to help people.
sacrifice?
written by mel in oregon, November 08, 2012 1:55
the silliest argument in the corporate press is that there is a need for "shared sacrifice". nope, seize the money outsourced in the 35 odd principalities where around $23 trillion is stored. the deficit would be solved & we could move on to finishing what fdr started.
bankruptcy? what name so?
written by joe, November 08, 2012 2:38
Of course, the US can't go bankrupt, solvency is never an issue for a sovereign country that issues its own currency. It could only default on 'debt' if it chooses too. You'll catch on eventually Dean...
paying Dr's and Big Pharm less
written by Ethan, November 08, 2012 4:17
John Kerr hit one of the nails on the head. If we subsidized med schools, physicians would not need such big incomes to live an upper middle class life and play golf each Wednesday. Another idea is to promote the use of clinics with salaried physicians such as Cleveland Clinic and Mayo Clinic where service/results are excellent and costs are modest. One of the benefits of such clinics is that consultations with specialists are immediately available and basically free to the patient since the specialist is right there and doesn't need to worry about or staff for his own billing system.
Change the focus
written by Gary Fitzgerald, November 08, 2012 4:23
If the increase costs to Social Security and Medicare due to the aging of the population is a serious problem, but the increase is roughly two thirds of the increase in military spending associated with the wars in Afghanistan and Iraq, then why isn't the increase in military spending just as much a problem, if not more, than the increase costs to Social Security? Why are there no calls to cut military spending to solve the "entitlement problem?" Is military spending somehow more important than Social Security and Medicare? Personally, I don't think so.
...
written by bmz, November 08, 2012 5:02
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.
...
written by liberal, November 08, 2012 5:07
mel in oregon wrote,

nope, seize the money outsourced in the 35 odd principalities where around $23 trillion is stored.


Agreed.
...
written by JSeydl, November 08, 2012 5:56
Haidt is a business school professor. Wattaya expect? I haven't met one business school professor who doesn't believe that entitlements need to be slashed.
...
written by bakho, November 09, 2012 5:50
We should find a way to give the loan sharks less. Currently the loan sharks command a hefty chunk of doctor salary as college loans are repaid. Ultimately, the payments to loan sharks go back to the patients or the taxpayers. Loans are an inefficient way to pay for college education. There are a lot of pieces of the health care puzzle that need to be fixed.

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

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.

Archives