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January 27, 2011

Samuelson schools the pols [Fritzworth]

Robert Samuelson is my favorite economics commentator, mostly because he doesn't appear to have any particular ideological axe to grind. Instead, he reminds me of a patient but implacable science teacher explaining for the tenth time that it does not matter how much faith or how many magic feathers you have, if you step off that cliff, you will plummet and die.

In his op-ed in today's WaPo, Samuelson regrets -- but is not surprised by -- Pres. Obama's failure to use the SOTU speech to "dispel some common budgetary myths":

Myth: The problem is the deficit. The real issue isn't the deficit. It's the exploding spending on the elderly - for Social Security, Medicare and Medicaid - which automatically expands the size of government. If we ended deficits with tax increases, we would simply exchange one problem (high deficits) for another (high taxes). Either would weaken the economy, and sharply higher taxes would represent an undesirable transfer to retirees from younger taxpayers.

Myth: Eliminating wasteful or ineffective programs will close deficits. The Republican Study Committee - 176 House members - recently proposed $2.5 trillion of cuts over a decade in non-defense, non-elderly programs. . . . But this budget category covers only a sixth of federal spending, and squeezing it harshly would penalize many vital government functions (research, transportation, the FBI). The Republicans' cuts are huge, about 35 percent. Even so, they would reduce projected deficits by at most a third. . . .

Myth: The elderly have "earned" their Social Security and Medicare by their lifelong payroll taxes, which were put aside for their retirement. Not so. Both programs are pay-as-you-go. Today's taxes pay today's benefits; little is "saved." Even if all were saved, most retirees receive benefits that far exceed their payroll taxes.


As the saying goes, read the whole thing. The only hope I have in all this is that the ballooning deficit will cause a reverse Cloward-Pivin -- that is, the Administration, Congress, and the states will all finally have to make painful across-the-board cuts in everything, including Defense and all the sacrosanct entitlement programs, to stave off financial collapse.

In the meantime, being a good Mormon (or, at least, a believing one), I continue to work on my emergency preparedness checklist. ..fritz..


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posted by Open Blogger at 11:00 AM

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