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Robert Samuelson wants us to default on the National Debt
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Scott Jones
(Endeavor) - M
Robert Samuelson wants us to default on the National Debt on 05/26/2014 00:00:13 MDT Print View

"Actually, he probably doesn't, but that would be the logic of his complaint (taken from Gene Steuerle) that "dead men" have established priorities for federal spending. After all, dead men made the decision to borrow the money that constitutes the debt, which thereby obligates the country to pay back the interest and principal.

But Samuelson's complaint is not about the interest and principal being paid back to rich people like Peter Peterson, Samuelson is upset about the money being paid out to ordinary workers (mostly retirees) for Social Security, Medicare, and Medicaid.

"In 1990, Social Security, Medicare and Medicaid (health insurance for the poor) totaled 6.7 percent of national income, or gross domestic product. By 2010, they were 10 percent of GDP. Using plausible assumptions, the Congressional Budget Office estimates this spending (including the Affordable Care Act) at 15.2 percent of GDP by 2038."

There are several immediate problems with Samuelson's complaint.

First, if we are counting the spending on the Affordable Care Act, it is hardly a story of "dead men." The folks who made this into law are almost all still alive, and the person who pushed it through Congress, Nancy Pelosi, is not a man. In other words, this spending reflects priorities of people who very recently represented public opinion.

The second problem is that including Social Security in the arithmetic simply confuses the issue. Almost all of the rise in spending over this period is due to rising payments for health care programs, not Social Security. In 1990, the government was spending 4.3 percent of GDP on Social Security (it had spent as much as 4.9 percent in the early 1980s). It is projected to spend 6.2 percentage points of GDP on Social Security in 2038.

Furthermore, taxes were raised explicitly to pay for this increase. While Samuelson may think it's reasonable to tax people for Social Security and then use the money to pay for the military or other purposes, most of the public does not share his perspective. According to Steuerle, people will be paying slightly more money in Social Security taxes than they receive in benefits, so there doesn't seem much basis for his complaint about "giveaway politics."

The real story here is health care and there is a real giveaway, but not to the folks in Samuelson's rifle scope. The United States pays more than twice as much per person for its health care than people in other wealthy countries. It has nothing to show for this additional spending in outcomes. If we spent the same amount per person as Germany, Canada, the U.K., or any other wealthy country, the government would be looking at large budget surpluses for the rest of the century.

The additional costs are due to fact that our doctors get paid twice as much as doctors elsewhere, we pay twice as much for drugs and medical equipment, and we have an insurance system that drains away almost 20 percent of spending on needless administrative costs. Unfortunately these groups are so powerful that the excessive costs they impose on the government and the country rarely even come up in public debate. (Increasing trade in physician services is not even on the agenda in current trade agreements and a main goal is increasing the cost of prescription drugs.)

In short, there is a very simple story here that Samuelson is grossly misrepresenting by including Social Security in the discussion. We are being badly ripped off by our health care system. And, the beneficiaries are so powerful they mostly prevent the ripoff from even being discussed. Instead, we get people like Samuelson who want us to beat up seniors."
----Dean Baker

Michael L
(mpl_35) - MLife

Locale: NoCo
Re: Robert Samuelson wants us to default on the National Debt on 05/26/2014 01:31:54 MDT Print View

Nice copy and paste. Do you want to add something? Or are you just providing this as a topic for discussion?

Edit to correct typo

Edited by mpl_35 on 05/26/2014 01:32:30 MDT.

Ken Helwig
(kennyhel77) - MLife

Locale: Scotts Valley CA via San Jose, CA
Re: Re: Robert Samuelson wants us to default on the National Debt on 05/26/2014 09:25:23 MDT Print View

blame the Libertarians and the extreme right wing of this country :)

Scott Jones
(Endeavor) - M
Roberts Samuelson wants us to default on the National Debt on 05/26/2014 11:16:32 MDT Print View

It is a topic obviously. Interesting that advanced wealthy nations in Europe etc who have much lower medical costs but the outcomes of the treatment are equal or better than the U.S. healthcare system. Baker points out we would being having surplus budgets instead of deficits. The reason for this is under the current private sector plan here in America, doctors get paid twice as much, drugs are twice as much, as well as medical equipment and these private insurance companies with their high administration costs add to the problem as well.

Government does a better job with healthcare. The statistics are proof of this.

Some things the private sector does better with and some things the government does better with and when it comes to quality healthcare at an affordable price than government healthcare wins.

jerry adams
(retiredjerry) - MLife

Locale: Oregon and Washington
Re: Roberts Samuelson wants us to default on the National Debt on 05/28/2014 16:32:31 MDT Print View

"Some things the private sector does better with and some things the government does better with"

Yeah, I agree other countries have varies degrees of government/private run healthcare and it's cheaper and people are happier with it, but if you just look in the U.S.:

VA government run healthcare is awful

Medicare is government paid for but privately run - over-all, people are pretty satisfied, at least they get real angry if you suggest it be taken away

Private health insurance and healthcare is pretty good except for finance related problems, like not being able to get insurance or going bankrupt if you get seriously sick, but Obamacare fixes some of that.

When you have large numbers of people doing something, sometimes they're successful, sometimes not, doesn't matter whether it's government or private

In each case, you have to decide to try something and if it doesn't work, try something different.

Like, Obamacare has Health insurance companies administering healthcare which is a conservative idea created by the Heritage Foundation. I'm a little skeptical, but let's see if it works.