However, it is now time to return to the subject of the deficit, the last part of which was posted on July 30. I suggest that you re-read it and if you can possibly find the time read all its parts. You can find the last post here and that post will give you links to all the others.
At the end of my last post on this subject I said:
Next time: What can and should we do about the deficit and the imminent insolvency of Social Security, Medicare, and Medicaid? Where can we and should we cut?
I will address this here, but before I do so let me return to the subject of this series, namely The Deficit – One Big Hoax. I called it a hoax, not because I don’t think that it is a serious problem, I believe that it is, but because the Republican Party is using it as a hoax to justify its primary aim, which is to destroy all that we have built over the last half century and even before. To not only repeal the Presidents greatest achievement in passing Health Insurance Reform, but to repeal Social Security, Medicare, Medicaid, and even to destroy the agencies that safeguard our health and our well being, including the minimum wage and occupational safety, and I kid thee not, if they can get away with it, our system of free public education.
Their lack of concern with the deficit can easily be seen in that not one of their proposed “reforms” decreases the deficit. The Ryan plan, which has passed the House with almost unanimous Republican support (four Republicans voted against it and no Democrats voted for it) would, according to Representative Paul Ryan himself, add $6 trillion to the national debt over ten years as reported by the Economist, hardly a left wing source, and as far as I can find nowhere else in the media.
The same goes for all the proposals for “tax reform” touted by the Republican Presidential candidates. Whether we are talking about the famous (or infamous) 9/9/9 plan or the newly touted flat tax plan of Rick Perry, each one would increase the deficit that they are so ostensibly worried about that they threatened to put the country into default. Yet the media, not even the so-called liberal media, has bothered to point this out. E. J. Dionne Jr. writing in the Washington Post said:
What struck me about Rick Perry’s unveiling of his flat tax proposal is how little attention most of the coverage paid to the massive increase in the deficit it would cause – or the enormous cuts it would require… But the will-o’-the-wisp quality of the Washington conversation is underscored by the fact that when anyone proposed new and temporary spending to boost job growth a couple of months ago the avatars of the conventional wisdom kept asking, “But what about the deficit?” But when Perry proposes his big tax cuts, such questions are nowhere to be heard – except in the 10th paragraph of some news stories. (And that includes Dionne’s own Washington Post’s news reports.)
It is in that sense that it is a hoax, but one that our media fails to call attention to.
But as I have said, while the deficit in the short run, is of secondary importance, while job creation and our infrastructure are of immediate concern, and the two are related, we cannot afford to have only a short-term outlook. The long-term economic future of this country depends on our having the infrastructure to compete. As just one example that has not been discussed, but that is of vital importance is the enlargement of our ports, particularly the port of New Orleans. The Panama Canal is being enlarged to accommodate the larger vessels of the future, but the Port of New Orleans, and our other ports, do not have the capacity to accommodate such vessels. The sooner we address such problems, the better for the future of our economy, and the deficit, which ultimately will be controlled by a robust economy.
But at the same time there is enormous wasteful spending by our government. To the extent that we address such spending, we will reduce our deficit and free up money to do the things that need to be done.
We keep being told that the elephant in the room is entitlement spending and this is true, but in my view this should be addressed, not as a budget issue, but as a sustainability issue.
According to the Social Security Administration (I urge the reader to read this report in full.):
Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative modifications if disruptive consequences for beneficiaries and taxpayers are to be avoided. The long-run financial challenges facing Social Security and Medicare should be addressed soon. If action is taken sooner rather than later, more options and more time will be available to phase in changes so that those affected have adequate time to prepare. Earlier action will also afford elected officials with a greater opportunity to minimize adverse impacts on vulnerable populations, including lower-income workers and those who are already substantially dependent on program benefits.
Both Social Security and Medicare, the two largest federal programs, face substantial cost growth in the upcoming decades due to factors that include population aging as well as the growth in expenditures per beneficiary. Through the mid-2030s, due to the large baby-boom generation entering retirement and lower-birth-rate generations entering employment, population aging is the largest single factor contributing to cost growth in the two programs. Thereafter, the continued rapid growth in health care cost per beneficiary becomes the larger factor.
I intend to discuss this vital issue at length at a future time but allow me to here at least begin a discussion of wasteful spending and I will not attempt to address this in the order of importance, but rather as issues come to my mind. Following this model I address first the so-called Drug War.
I can think of no area where we have done more damage to our economy and to our society than in this area.
The incredible thing is that it should have been obvious from our experience with prohibition. While I am sure that differences between them can be found, the results in the two cases are so parallel that it is an inescapable comparison.
In addition, there is an incredible agreement across the political spectrum on its wrong-headedness. The people who have spoken out against it include: Milton Friedman, the supply side economist, Walter Cronkite, the beloved journalist, George Shultz, Secretary of State in the Reagan Administration, Walter F. Buckley, Jr. founder of the Right Wing National Review, and Jimmy Carter the 39th President of the United States. For the exact quotes from these people, see below. To enlarge for legibility click on it.
Once again, in order to limit the post to a reasonable length, I will defer further discussion to the next post.
Comments on this and other posts are invited and should be sent to es628@columbia.edu.
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