Finally, a liberal writer understands what it’s like to walk in a conservative’s shoes.
Ezra Klein, the often thoughtful, generally wrong left-wing whiz kid for the Washington Post wrote a editorial entitled “The best reason to worry about the deficit.” In it Klein argued that the 1990s-era argument that deficits are bad because they crowded out private borrowing is no longer a valid argument. It was an argument that simply no longer gels with monetary reality.
Instead, he argued the deficit is a concern because growing entitlement costs are crowding out the government’s ability to invest in GDP-boosting activities like education, roads and research. Klein writes:
Rather, the reason to worry about the deficit today — and, more to the point, the trends in government spending and taxation that drive it — is that the most worthwhile kinds of government spending are getting squeezed out.
The key insight behind this theory is that some forms of government spending rise automatically and rapidly, and are very politically difficult to cut, while other forms of government spending need congressional approval every single year and have few constituencies to protect them. In the first category are Medicare and Medicaid and Social Security, all of which are projected to consume much more of the federal budget in the coming years. In the second category are things like education funding, research and development, stimulus, infrastructure investment, and even the military. And the fear is the first category is squeezing out the second category.
And boy did he get ripped apart by his lefty readership. The best of the worst was an anonymous commenter who said, “So essentially, you are in favor of genocide of seniors.”
Yes, even the mere suggestion of entitlement reform puts you in a class with Hitler and Pol Pot. This is why conservatives spend many a day banging their heads against their desks. Just about any economist this side of Paul Krugman will tell you that the long-term deficit is an enormous problem in desperate need of a near-term fix. And just about everyone agrees that the main drivers of that deficit are government health care programs, namely, Medicaid, Medicare, and now, Obamacare.
When you put those two things together and suggest that maybe, just maybe, we should take a look at some subtle, commonsense changes to reduce our entitlement costs then peoples’ heads start exploding. At that point you get charged with octagenerial genocide and forcing grandma to eat cat food or pushing grandpa off a cliff. And yes, those are real and common responses.
But the facts are indisputable. The CBO, it its most recent Long Term Budget Outlook, projects that the federal debt would grow to 90 percent of GDP in 2022 – the level at which most economists agree it has serious impacts on the private economy. After that things get worse. The growing debt will cause spiraling interest payments to the point where debt as a share of GDP would approach 200 percent in 2037 – just 25 years from now.
One of the main reasons for the enormous, and growing, deficit is that the government is giving seniors a lot more in benefits than were ever paid in taxes. As Klein writes in a separate post:
According to an Urban Institute estimate, the typical retired couple paid $122,000 in lifetime Medicare taxes but can expect to receive benefits worth $387,000. Social Security is another story. There, the average retired couple paid $600,000 in lifetime taxes for $579,000 in benefits. Put together, it’s $722,000 in taxes for $966,000 in benefits. (All figures are adjusted for inflation.)
That’s bad for two reasons: (1) It’s creating the image of a “free lunch” for future generations that will inevitably have to be paid off in future generations, and (2) that’s a terrible return on investment, particularly for Social Security. If you were to simply keep the dollars you were contributing to these safety-net programs, invest them in an average-performing mutual fund, you’d have much more money than these programs would provide. And yes, that’s true even after the stocks tumbled during the recession!
But we can’t have these serious arguments. Why? Because we get shouted down as grandma-killers every time we open our mouths. Not only is that unhelpful, it’s also not true. The quicker society discovers that, the quicker we can get this problem solved.