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"The young will pay more and get less." More Nonsense from Robert Samuelson

by Barkley Rosser  from Econospeak

“The young will pay more and get less.” More Nonsense from Robert Samuelson

Our old friend, Dean Baker at Beat the Press, does a good job of taking apart yet another screed by the execrable Robert J. Samuelson, faux economist for WaPo, whining about why nobody is jumping on board with cuts to “entitlements,” and particularly his old bugaboo, Social Security.  Google “Dean Baker Robert Samuelson is upset” and the first hit gives you the link (Sorry, the link title is too long for me to read it and my trying to put what I saw in just sent one to the general CEPR site, bah! (Anybody out there able to tell me how to overcome this bit when urls are too damned long too read, please?).  However, I want to pound the nails in a bit more.

So, RJS provides this line that if there is not an adjustment to SS (and Medicare), then “The young will pay more and get less.”  Dean quotes this, but does not go far enough in showing how totally ridiculous this is, even though he has pointed out recently that one reason there should be no adjustments for SS now is that the young are massively misinformed about what the not so bad fiscal situation of SS is.  Large proportions of them are fully convinced that they will receive no Social Security when they retire because it will be “bankrupt,” when in fact that condition will amount to them only getting something like 120% of current retirees’ benefits in real terms rather than more like 170% (a bit lower, actually).  They are totally out of it, and the main threat to them losing their future benefits is if they support the sort of dreck that RJS is pushing, to cut their future benefits now because otherwise they might have their future benefits cut in the future (eeeeek!).

Let me be more pointed.  RJS’s statement is simply a lie.  The proposals to cut Social Security have generally taken two forms recently: imposing a chain price index and adding another round of retirement age increases in the future beyond those that were imposed by the Greenspan Commission nearly 30 years ago and which are still coming in.  The former is estimated to reduce cost of living increases by about 0.3% per year, and this would over the next few years indeed gradually reduce what elders receive in benefits, although it is not at all clear that this will lead to any reduction in what the young will be paying, unless this is accompanied by another round of fica tax cutting, or fica is restructured to have the same revenues come in but have it paid over all income levels, thereby reducing the burden for anybody under the upper cutoff for paying it.  However, the effects of this change in the CPI used means that the cuts will get bigger and bigger as time passes, meaning that those who will be most negatively impacted will not the evil baby boomers, but the current young when they finally retire, although since they think they will get nothing, presumably they will be grateful to get even a crust of dry bread.

More egregious for RJS’s arguments, and where he really is just outright lying rather than merely stretching the truth is this matter of increasing the retirement age.  Nobody is talking about any further rounds of that happening anytime soon.  RJS poses as this defender of youth against his awful generation (he trumpets his baby boomerdom to supposedly give credibility to his regularly repeated nonsense), but in fact the baby boomers, or certainly at least the front end ones like me and him, will not be affected at all by these future increases in eligibility ages.  It will be the Gen Xers and the Millennials.  RJS is just lying through his teeth.  We old farts will not pay at all as a result of this change, but today’s youth will.

reposted from Econospeak

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Can Borrowing From Abroad Avoid The Debt Ceiling?

Barkley Rosser at Econospeak points us to a portion of the nature of debt and borrowing, federal debt, and financing:

Can Borrowing From Abroad Avoid The Debt Ceiling?

No, but Allan Sloan in the Washington Post today thinks it can, or maybe it can.  He proposes that Treasury borrow $200 billion in US government securities from China to use to continue to pay bills if we hit the ceiling, thereby supposedly overcoming dumb gridlocks that should not be happening and have led to such stupidities as the current “fiscal cliff.”  Sloan modestly calls this the “Sloan Strategem” (Ahem, rule against people naming things for themselves holds here, ahem!)
 
But the answer is no.  Treasury already has a bunch of delaying mechanisms that hold off the moment of truth for several weeks.  We saw that in 2011, when we breezed past technical bankruptcy in June only to fact it in early Augusst when the fiscal cliff got cooked up.  This device would only add some other arbitrary amount of time that would simply delay the moment of blackmail reckoning.


The answer is to abolish the debt ceiling.  People ranging from Bill Clinton through Bruce Bartlett to me and a lot of others have argued that the debt ceiling is unconstitutional on multiple grounds, quite aside from being bizarre and self-contradictory, actually incoherent.  Obama should bite the bullet when it next comes really due, and declare it unconstitutional.  I bet the markets will go up if he does so, although there will of course be a Supreme Court case on the matter.  But better to fight that fight than to be set up to constantly have to deal with these blackmail threats that the House Tea Partiers have made it clear they will continue to impose repeatedly, no matter what comes out of the current fiscal cliff negotiations, which may well be things that voters most definitely did not vote for in this recent election and should not be put into place.

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What is remembrance for?

I am just catching up with some of the news this week. Barkley Rosser at Econospeak had a timely post on 9/11 ceremonies and reminds us about what we accept as special or inevitably normal:

Things More Worthy Of Remembrance Than 9/11

Yes, what happened 11 years ago today was awful and tragic, and there is much that can be said about and it is worthy of remembrance.  However, it seems to me that it is being way overdone.  Osama bin Laden is dead, but we are allowing both political parties to continue to use this event to justfiy an everincreasing national security and surveillance state that is taking away our liberties. 

Numerous other nations have had more die than we did from terrorism on 9/11, but managed to keep some perspective and treat the matter as one of policing rather than national hysteria, which was already manipulated once to get us into the utterly stupid war in Iraq.  Even though the Bush admin officially admitted that Saddam had nothing to do with 9/11, Cheney kept on claiming that he did, and 64% of those voting for Bush 8 years ago believed that he did.

Here are some things more worthy of remembrance than 9/11, but which will not get even remotely as much attention:

1)  Monday, Sept. 17 will be the 225th anniversary of the adoption of the US constitution.
2) That same day will also be the 150th anniversary of the Battle of Antietam, the bloodiest day in US history, with over 23,000 dead on its battlefield, which inspired President Lincoln to issue the Emancipation Proclamation, which freed (most of) US slaves.  Needless to say, that is a lot more dead than on 9/11 and with a much more worthy and important outcome.
Then in terms of sheer numbers of pointless dead, with us arguably being possibly able to do something about them, if not all that likely:
3) Between 2000 and 2009, 298,000 Americans died of gunshot wounds.  Many of those were suicides, others were homicides, others were family accidents.  We have half the world’s guns and are far ahead of any other country on this matter (with some competition from a few with war happening on their soil).
4)  During the same period, 417,000 Americans died in automobile accidents.

So, let us remember 9/11, but let us keep it in perspective compared to more important things, and let us not allow it to be used for evil purposes.

(re-posted with permission from the author)

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The Cut Social Security Gang

Barkley Rosser at Econospeak opines on:

Bill Keller Joins The Cut Social Security Gang

In today’s New York Times, former editor Bill Keller has an especially obnoxious column about baby boomer entitlement. I am not going to dispute at all his listing of various selfishnesses that we baby boomers have indulged in from Gordon Gekko type follies to self-obsessing about 60s music and other such stuff. Fine. However, partway in the column morphs into yet another of these Social Security bashes by yet another of the Very Serious People, all for the purpose of reducing the deficit to save the future generations from the awful selfishness of the otherwise overly entitled baby boomers. I grant that he briefly mentions taxes and defense spending, but only to dismiss them as insufficient to solve the problem (that is, by raising the former and cutting the latter). Social Security is what must be seriously hit.

 
Now good old Dean Baker takes him to task pretty strongly today at http://www.cepr.net/index.php/blogs/beat-the-press . He focuses on how rich Bill Keller is, and how he will not be affected by cuts the way most people will be. He also brings up the point that it is health care costs that are most responsible for the dramatic upsurge in past and projected future entitlement spending, which Keller simply said nothing about, thereby really making himself look Seriously Foolish. That is a killer for Keller right there. While he did not comment on Keller I also note Bruce Webb’s latest post on angrybear in which after going through a lot of useful analysis he recites his old ditty: “If privatization is necessary, it won’t be possible. If privatizatization is possible, it won’t be necessary,” which about sums it up, at http://www.angrybearblog.com/2012/07/a-social-security-ditty-if.html#more .
 
Let me add two more points particularly to Dean’s justified screed against Keller’s pompous silliness. One is that he left out the matter of economic growth. We know how the surplus that Clinton left got turned into the current massive budget deficit. There were the tax cuts, vaguely recognized by Keller. There were those two wars, not quite fully finished, which Keller did not name but did also vaguely note defense spending. But then there was the recession, which has been the biggest souce of the problem. If this could be overcome and we could return to growth of the sort we have previously seen, this would do wonders for alleviating the deficit, and also for putting us back into the second condition noted by Bruce Webb, that we would not need a privatization fix for social security because it would easily fund itself. Of course cutting Social Security and other spending while raising taxes threatens to be the sort of growth-killing austerity we see all those Europeans dragging themselves down with, thus undercutting the effort to get growth going again.
 
The other point, which may be the key to the real tendentiousness of the hypocrisy of this column, is that he is calling for sacrifices by the baby boomers while guilt tripping the lot of us, the people who would really pay for his proposed social security changes would not be baby boomers at all, but those very young people he is supposedly standing up for against our wickedness. Everybody knows that any changes will affect neither those already on SS, which includes some front end baby boomers already along with some set that will be due to get onto it pretty soon, which will probably expand the set of the unaffected at least haflway down into the baby boomer pile, with only some of the rump end tagalongs vulnerable. No, while changing cost of living indexes may affect even current recipients, the effects will be much greater down the road for those much younger who are supposedly being protected, and of course any increases in future eligilibity ages will be borne by those much younger than baby boomers. Keller is basically selling a fraud here.
 
So, we are back to one of my favorite lines. Those seeking to convince the young on the basis of the spoiled wickedness of the baby boomers that they should support cuts in future Social Security benefits are being told in effect, “Accept definite cuts now in your future Social Security benefits, because otherwise you might have to accept some cuts in the future to your future Social Security benefits!” Gag.

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Report From Rio…Barkley Rosser

by Barkley Rosser
re-posted from Econospeak with the authors permission

Will A Thousand CEOs Save The Planet? Report From Rio

Just back from presenting paper at International Society for Ecological Economics (ISEE) conference in Rio that preceded the main UN Sustainable Development conference that has started today there, the Rio + 20 show.  What is going on there is much more than the UN part, which will probably amount to a lot of fine resolutions signifying very little.  Demos are going on; we saw a bunch of landless marching, an “Occupa” group in tents protesting an arrest in Uruguay, and in the local paper feminists marching topless and a fancily made up Indian blocking traffic with his bow and arrow.
 
But the real show is all the other stuff, not just ISEE, but 500 side conferences.  I saw a claim that 60,000 people are in Rio for all this, with 1000 of those being CEOs, yes, CEOs.  Indeed, in our hotel I saw all kinds of business people, all dressed up and going to conferences.  The weirdest were Russian oil men from Siberia.  Now that has got to lead to green capitalism!   Another guy in a suit was attending a list of alphabet soup I did not recognize, although he did say he works for International Business Phones, whoever they are.  Saw a sign for something called ISGIE (could not track down on google who they are), but they were all in suits, and there was a big sign welcoming the Thai delegation for that one.  Indeed, for the main event, supposedly there are reps from over 130 countries.
 

I suspect the vast majority of these are wannabe rent seekers, out to get government subsidies for this that or the other thing.  I do not know.  Many I am sure have little real interest in improving the environment (see Russian oil men above).  OTOH, it does occur to me that when the green movement gets real, it is when one really gets business people doing stuff about it and making money from it.  Will any of those there seeking to make money out of all this actually accomplish anything worthwhile?  I really do not know.   I suspect the vast majority will not, but maybe some of them actually will, and I suspect that they will be the participants there not making any headlines.
 
As for ISEE, it is an uber green outfit also notable for taking heterodox positions regarding economic analysis, at least its founders and leaders.  One of the plenary speakers was the Prime Minister of Bhutan, the place where they first started saying they want to emphasize happiness over GDP.  Some of the papers and sessions were simply awful, the sort of thing that I suspect is going on at many other of the 500 side events (and maybe the main one as well), people going on about meta-analysis of how to implement the format for assessing how to discuss sustainability. I am not kidding.
 
But then there were papers on very specific things going on in very specific places that gave me some hope, such as the efforts to provide credits for reforestation in developing countries through the Reducing Emissions from Deforestation and Desertification (REDD) UN project.  Unsurprisingly the bottom line often gets down to details.  Seems to be working in Kenya, mixed bag in Senegal (depends on which trees are planted), not doing so well in Nicaragua because central government grabs 3/4 of the credits, and in West Bengal the better off peasants in upper castes are doing much better out of the program than the poorer scheduled castes and scheduled tribal groups.  Messy reality out there, but worthwhile things are actually happening on the ground in some places, even if Nature journal is right that overall humanity deserves Fs on climate change, biodiversity, and income inequality since the last Rio conference 20 years ago.

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Which Spending Is Easier To Cut And By What Level Of Government?

by Professor Barkley Rosser

Reposted from Econospeak with permission from the author

Which Spending Is Easier To Cut And By What Level Of Government?

Back from his break, our former co-blogger, Dean Baker at Beat the Press, takes down WaPo ed page editor, Fred Hiatt, for his pushing yet again for cutting Social Security because it is supposedly “easy to do” in contrast to medical spending, with Hiatt pinning the blame on Dems for not supporting cutting either.  Baker notes that putting med costs in line with those in other countries would alone completely eliminate the federal budget deficit, and that Dems are not the ones opposing cuts to drug companies or “overpaid medical specialists.” CEPR   Hiatt barely nods at GOP opposition to tax increases and the possibility of cutting defense spending, even though the US is winding down some of its current active wars.
 
Dean kindly avoids noting that Hiatt is part of a group of established media mavens in Washington who long ago convinced themselves that somehow not only is Social Security “in crisis,” but that somehow it is the easiest program to cut (future) spending on politically, although that will do nearly nothing to limit near-term deficits and that there is nearly zero support among the public of both parties for such an action, and that efforts by various politicians of both parties in recent years to do this have ended up as embarrassing failures.  But this gang does not give up easily, including Hiatt, back at it yet again.


Unfortunately, the alternative appears to be a trick buried in Paul Ryan’s budget proposal: send certain social safety net programs down to the states, with the leading candidate being Medicaid, which is already partly funded by the states.  As much as any program, this is one that should be solely funded by the feds as that would help even the playing field across states, given that the states that need it the most are the states with the most poor people and thus least able to support their poor people.  But no, Ryan thinks that Medicaid should be sent fully to the states, and some movement in this direction has already happened.
 
This hypocritical trend of Grover Norquist “no higher taxes” politicians sending important programs to lower levels of government so they can claim “savings” without tax increases is going on more widely, also reflecting Norquist’s influence at even state levels.  So, in Virginia where I live, this most recent legislature, newly run fully by the GOP with our GOP governor, has in an effort to balance the state budget without raising taxes or appearing to cut programs, sent an unfunded mandate to the local governments, removing the funding but requiring that they contribute more to teacher pension funds.
 
This has led to a fairly astounding result, although the mayor or Harrisonburg, where I live, tells me that a lot of these legislators somehow convinced themselves it would not happen.  Nearly every local government in the state, including the vast majority of ones run by Republicans, has raised local taxes, mostly property taxes, but also others as well.  They have been cutting and cutting their budgets for the last several years, something manifesting itself nationally in the steady stream of layoffs at both state and local government levels.  The expectations by citizens for continuing to have basic local public services of some sort simply overrode this idiocy of no new taxes in the face of this unfunded mandate from the state, which in turn at least partly reflects the ongoing rise of Medicaid costs, exacerbated by the feds pushing even more of those down to the states.
 
As it is, here in Harrisonburg, property taxes are going up, along with a small increase in the rate on restaurant meals.  The alternative to the meals tax rise (much opposed by local restauranteurs) was to raise personal property taxes.  Around the state, different combinations of such increases have been implemented, and it will be interesting to see whether local voters punish their leaders for doing this or will figure it out that they have been pushed to this by the irresponsibility of state politicians.  This problem may well be worse for local Republican leaders than for Dems, given that in general the latter have not hobbled themselves so tightly with all these inane pledges about taxes, although so far, Grover Norquist has not gotten down to the local level guys with making them sign pledges and holding them publicly to them.  There are just too many of them for him to keep track of all of them.
Posted by Barkley Rosser at 12:40 AM

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