I was peeking over at the Corner to see if the National Review nitwits had commented on Bernanke’s testimony – and they did not disappoint. Lawrence Kudlow starts off with some babbling about growth and personal accounts. Ramesh Ponnuru tries his best to reign in Kudlow’s babbling:
Larry, I’m all for higher growth. But Bernanke did address that question: “To some extent, strong economic growth can help to mitigate budgetary pressures, and all else being equal, fiscal policies that are supportive of growth would be beneficial. Unfortunately, economic growth alone is unlikely to solve the nation’s impending fiscal problems. Economic growth leads to higher wages and profits and thus increases tax receipts, but higher wages also imply increased Social Security benefits, as those benefits are tied to wages.”
While Ponnuru’s quotes the relevant passage from Bernanke’s testimony, he makes the mistake of thinking Kudlow understands simple English. Check out this reply:
Does growth solve Social Security? Bernanke says it won’t. But the S.S. Trustee reports on the difference between 2 percent and 3 percent growth show otherwise. That’s the key point. And part of that key point is the productivity element. Good growth and capital formation will keep productivity strong. And that is what’s really driving the Trustees’ optimistic model that shows no bankruptcy.
What part of “economic growth can help to mitigate budgetary pressures” does Kudlow not understand? OK, higher growth might give us the Trustees’ optimistic model (the Bush crowd is likely really ticked at Kudlow for agreeing with Dean Baker) but someone tell Kudlow that Bernanke and Ponnuru were talking about the overall Federal budget. And the General Fund deficit is not going to be eliminated by 3% long-term growth.
Nice try Ramesh, but it’s hard to educate a fool who refuses to listen.