Monday, December 27, 2010

Robert Samuelson: Mouthpiece for the Neoliberal Elites

Well, we know the Neoliberal elites have to have someone to bloviate their nonsense for them. You know: the deficits are too high, we have to cut benefits for Social Security and Medicare recipients NOW - or our grandkids will end up on the streets without a bone to call their own. Blah blah blah.

As usual, Washington Post economics columnist Robert Samuelson has to toss in his two cents to further feed and fuel the deficit cutting frenzy due to arrive in January with the Tea Bagger Brigade. (We know they are intent on not approving an increase in the debt ceiling, unless massive spending cuts upwards of $100 billion are made). But hey, that train already left the station - with full finality once the Obama-Repub tax cut package was passed at a cost of $858 billion added to the big D- showing that they really don't matter in the scheme of things. They're merely a convenient political football for one side or the other to use against the spenders - whether war and defense spenders, or social benefits spenders.

Anyway, in his recent WaPo column, Samuelson informs us he just received his Medicare card

"recognizing my 65th birthday - and making me one of America's biggest problems. By this I mean the burden the baby boom generation will impose on its children and the nation's future".

Well, not in the case of Samuelson! See, with an income in the vicinity of $290k a year, he has the luxury to accept that Medicare card and use it, or not! He has the means (as he wrote me in one e-mail a year or so ago, in reply to my criticism of his 'baby boomers are bad for the economy' bilge) and investments that he doesn't need it - he can afford to pay for his own private care. But most of us can't. Without the insurance Medicare provides, we'd have nothing - nor would most insurance companies take many of us - even if we could afford it. In other words, minus Medicare our lives would end up being shorter, nasty and brutish - as they were for many of the elderly in the 1930s, 40s.

But in his column, Samuelson makes no distinctions -though granted he does make a passing reference to "means-testing" for the more well to do (which combined with any reduction in the FICA taxes - renders both Medicare and Social Security expendable welfare programs which can be subject to the budget axe).

As he goes on, referencing the enormous deficits created and the need to reduce them, he scribbles:

"The trouble is that hardly anyone admits accomplishing these goals will include making cuts in Social Security and Medicare. If we don't we'll be condemned to some combination of inferior policies. We can raise taxes sharply to cover expanding old age subsidies and existing government programs. Or we can accept permanently huge budget deficits."

Let's take his first big "if" and consequences. In fact taxes don't need to be increased sharply - this is a common myth. A simple extension of the FICA threshold to cover the first $500,000 of income would be more than adequate to cover Social Security through 2075 with full benefits, and Medicare through 2033. Extending the limits to $1m would improve those dates of diminishing returns by 20 and 15 years, respectively. So, it is a matter of political will- also not doing anything stupid like reducing the FICA payroll taxes which help pay for those programs - or raising the monies from Social Security for general revenue spending. Such as funding the continued farce in Afghanistan.

In terms of the second, about accepting permanently high deficits - maybe this isn't the buzz saw killer the Neolibs make it out to be. After all, wasn't it Cheney who said "Deficits don't matter!". And with the passage of this mammoth tax cut extension to all parties, maybe they don't!

Another aspect seldom considered in all this is that national governments-nations don't strictly operate like family households. Specifically, the former runs surpluses or deficits as part of natural business cycles and as one way to moderate such cycles. For example, as in the case of the recent credit meltdown triggering the 2007-09 recession - the demand side of the economy basically dried up and no one in the private sector could or would help. That left Keynesian government -originated stimulus spending as the last resort. Without that, we'd have gone into a Depression with almost 99% probability. No one thinks of that when they start screaming about Obama's "stimulus spending"!

More importantly, according to analyses by the Economic Policy Institute, debt does not constrain future growth. Indeed, even before the recession the U.S. productivity was the highest in the industrial world - and is now higher than ever with many fewer employees left to do more! Technically, even if U.S. debt were to rise to 70% or 80% of GDP in 2020 (which it likely will if we remain in Afghanistan til 2014, and the Dems and Obama punt again on the Bush tax cut extensions in 2012 - and either make them permanent or extend them 2-3 yrs) it will remain relatively moderate compared to many rich nations including Japan - which last year had a debt equal to 160% of GDP.

Bottom line here: The Neolibs are using this deficit harping and hysteria to try to fuel a frenzy to cut "entitlements".

In his column, Samuelson has the audacity to claim "little has changed" since he's been writing his columns (at least 20 years now) and adds: "Medicare premiums have increased modestly affecting about 5% of recipients"

But this is egregious. Medicare premiums have increased so much for those seniors within incomes from $40,000- 50,000 (not exactly "rich" by any standards in this country) that financial advisors are now telling those thinking of retirement (at 65) not to even remotely do it unless they have at least $245,000 set aside to cover the additional expenses not covered under any part of Medicare.

Think about THAT! Almost a quarter of a million dollars merely to cover medical expenses Medicare won't!

How many people have that kind of money saved? I warrant not one in 100. (We'd be looking at a total necessary savings of at least a half million, minimum). And now Samuelson and his Neolib pals want to exact more cuts?

In this sense, he's correct that it's "unfair" to introduce this because many might already have made financial plans for their retirement based on existing benefits and getting the money to cover those cuts. If then future cuts are made and the out of pocket costs soar to $350,000, what then? Beg, borrow or whatnot from in-laws? He says it's either do that or saddle our grandkids with endless debt and hardship.

Well, would he rather the grandkids take care of Grand dad and Grammy the rest of their days? Or would he prefer (in his Neoliberal, free market -ruled world) they just be tossed into the first convenient ditch as outliving their usefulness?

He states "we must be unfair to someone" and "to admit this is to demolish the moral case for leaving the baby boomers alone."

Well, personally, I believe it demolishes the "moral case" for leaving the wealthiest alone, including awarding them with an extra $140 billion in tax cuts the next two years to blow on designer drugs, yachts, blood diamonds and Ferrari collections.

Deal with that, Mr. S., and I might take you more seriously! Else, put a sock in it and that computer of yours too!

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