Social Security: Two Wise Men on Meet the Press
My only request to Santa this year was for us to see an intelligent discussion of the Social Security issue on Meet the Press. When Tom Brokaw and Ted Koppel decided to grace the show yesterday morning, I had thought for a moment that Santa had granted my wish:
MR. RUSSERT: Is there a story that you think was underreported this year?
MR. BROKAW: Yes, I do. I think a big story that was underreported within industrial foundation of America, General Motors may not survive. That has been the cornerstone of American industry, all those manufacturing jobs in Detroit, the automobile industry defined who we were. And at the secondary level of that story is “What’s going to happen with pensions in America and companies and corporations?”
MR. RUSSERT: A thousand companies…
MR. BROKAW: Yeah.
MR. RUSSERT: …have failed pensions.
MR. BROKAW: Yeah. And the arithmetic is pretty simple. We’re either all going to pay for it at great expense or a lot of people are going to get to age 65 and not have the money that they expected to have there.
But then Russert said something that had me thinking that he had too much eggnog:
MR. RUSSERT: Ted Koppel, I was reading a Government Accountability Office report. $20 trillion in government liabilities in 2000. It’s now $43 trillion in 2004 – Medicare, Social Security, pensions.
Or maybe Russert was giving another gift to Bob Somerby. Thankfully, Koppel bailed Russert out with:
But, you know, to follow up on Tom’s point. I think the medical care, which is a function of what we’re talking about – yes, we have been priding ourselves on having the best medical care in the world–and you know something? You can get the best medical care in the world, he can get the best medical care in the world, I can. Most Americans can’t.
Indeed, most of this alleged $43 trillion long-run shortfall comes from the assumption that Medicare spending has no tax base. But why not also assume that defense spending has no tax base? Defense spending is currently running at approximately 4.75% of GDP or $600 billion a year. Let’s assume a steady state model where real defense spending rises at 2.5% per year and the real interest rate 4%. By golly, the present value of these expenditures is $40 trillion.
The real problem is that this Administration dramatically reduced taxes even as it was increasing defense spending and enacting a prescription drug benefit. I guess Russert’s attempt at a point is that we can afford a low tax regime with high defense spending only if we eliminate Medicare. But we could also afford a low tax regime with the current Medicare program if we eliminate the defense department. Of course, national security concerns mandate that we maintain at least some level of defense spending, but why can’t Russert even utter the possibility that we increase the tax base? I guess viewers of Meet the Press will have to wait for a new moderator before we are granted our wish for an intelligent discussion of the Social Security issue.
Update: Tim Graham at NRO’s The Corner must have watched a different episode of Meet the Press than I did:
it was a predictable hour of liberal sermonizing. It’s a scandal that America won’t raise taxes.
No Tim – it’s a scandal that the writers at the National Review refuse to admit to their readers than massive Federal deficits are nothing more than deferred tax liabilities that our children will have to pay someday.