Hi 27° | Lo 4°

My Turn: Budget ‘experts’ are out of touch

The Monitor’s April 23 article on the experts who met at the UNH School of Law to discuss the federal budget deficit reveals how out of touch these “high-powered” past and present officials, including Sen. Kelly Ayotte, can be.

The message from these luminaries seems to be, as David Walker, former comptroller general, put it: “We must change course. Government has grown too big, promised to do too much and needs to restructure.” According to Walker, as paraphrased by the Monitor, our goal should be to “bring a key measure, the ratio of public debt to the nation’s gross domestic product (GDP), down to a sustainable level.”

The rationale for this assertion likely comes from a 2010 paper by two Harvard economists, Carmen Reinhart and Kenneth Rogoff, which claimed to show that when a country’s ratio of debt to GDP exceeds 90 percent, its economic growth slows considerably. Advocates of reduced government spending and austerity have pointed to this paper as justification for their position.

Walker and those who think like him are behind the times. As far back as 2010, Paul Krugman and others raised questions about the Harvard authors’ use and interpretation of data. A recent paper by economists at the University of Massachusetts-Amherst found serious errors in the Reinhart-Rogoff analysis. In a New York Times column Reinhart and Rogoff acknowledged that “causality” runs both ways (in other words, high levels of debt can cause slow economic growth).

Walker and the other participants in this discussion also seem to have ignored a larger issue, namely that, as the chief economist for Goldman Sachs and others have noted, due to higher tax rates, less spending, and an improved economy, the deficit is “shrinking rapidly,” not growing. This doesn’t mean that we will never have to worry about the deficit, only that we don’t need to do so now. The real crisis we face now is unemployment, and to address this, we will have to increase spending, not reduce it.

In this light, it is difficult to understand why the panelists advocate cutting Social Security and Medicare as a solution to our economic problems. By law, Social Security cannot borrow, and it cannot add to the deficit. Social Security spending is projected to increase from 4.9 percent of GDP in 2012 to 6.4 percent in 2035, but this is not an insurmountable problem.

Medicare is a more difficult problem, but it must be viewed in terms of the larger challenges facing our health care system. In fact, for decades, Medicare has had a better record controlling costs than private insurers. Medicare spending now is growing at a historically low rate, and the Congressional Budget Office has revised downward its previous estimate of Medicare spending between now and 2022. Although the retirement of the baby boomers poses a challenge to Medicare, the implementation of the Affordable Care Act and other changes could finally put us on the path to restraining health care inflation.

Almost two-thirds of Social Security beneficiaries rely on the program for more than half their income, and half of Medicare beneficiaries had incomes under $22,000 in 2010.

Walker and the other panelists have misunderstood the real issues we face. They are not the voices we should be listening to at this critical time in our history.

(Stephen Gorin is a professor in the Social Work Department at Plymouth State University and executive director of the New Hampshire chapter of the National Association of Social Workers.)

Legacy Comments7

The message from the " luminaries" that the author frowns upon is a message that actually works

Latest Quinnipiac Poll: Economy: 53% of folks disapprove and 41% approve of the President's performance. Gun Policy: 52% disapprove and 41 approve. Immigration: 40% approve and 50% disapprove. Only a Progressive would believe this President needs to be more forceful on the bully pulpit. His arrogance, hypocrisy and disrespect for his fellow politicians is evident to everybody.

Correct Rabbit, progressives use polls when they favor their viewpoint but if not, they are not interested in polls. However, we are governed by elections not polls. Obamacare was wildly unpopular and it will turn out to be his undoing. My company last week revealed that our premiums will double over what they are now. For instance, one worker paying $49 bi-weekly now will see their insurance go up to $122. A family plan of $315 per month now will go up to $645. The plan for the entire company will triple plus they have to pay a $65,000 "tax" just for the sake of a tax. If they opt out, the penalty is double what they now pay for the entire company. The problem is that progressives tout that gun poll in NH all day long but when faced with other polls, they dismiss them. Such hypocrites.

They will not realize anything Itsa till it hits them. Same with my husband's company. Premiums have skyrocketed. Progressive have no desire to help the small business man. As far as they are concerned any thing he got, he got it by luck. They never connect the dots about how business will have to operate now. More partime employees, less places accepting medicare and medicaid, and long waits for appointments and tests. Less new diagnostic equipment with the tax on that. And businesses relocating to states that are friendly and right to work. Nobody talks about the gun companies moving out of CT or the job loses. They seem to focus on what they want, as opposed what is best for the economy, a good economy benefits all income levels.

Nice column. "Deficits don't matter", Dick Cheney said, in reference to Reagan's deficit creation. Of course, we know better now. Deficits only matter during Democratic administrations. Republicans are good at creating deficits with tax cuts that benefit the have-mores, while increasing spending and allowing crony capitalism and regulatory capture to flourish. The right likes to say that government doesn't work very well, then proceeds to prove it as soon as they get into office. Too many Democrats--including Obama-- are little better--spineless, co-opted by big money interests, and too ready to compromise. Obama's actions rarely match his rhetoric, whether the subject (for example) is austerity/budget, taxes, Gitmo, Keystone, or availability of the "morning after" pill. He needs to be much more forceful on the "bully pulpit", and stake out strong positions forcefully and repeatedly, while also scoring the right for their hypocrisy and nonsense on the issues.

Barack Obama, in 2008 told an audience that it was "unpatriotic" to take out deficits affecting our children's future in the name of the Bank of China. Yet, the Obama deficits per month are greater than the Bush deficit for the entirety of 2008. The rhetorical fallacy that Republicans somehow get together and say: "Let's create a tax break for our friends "X"" is so yesterday and is used by people who do not want to discuss the real issues. Obama has wasted a lot on crony capitalism, giving his bundler's billions which have amounted to little on green energy programs. Obama is a "bully" and he does preach like he is on the "pulpit" but honestly, he has absolutely NO idea what he is doing.

The best of Crony Capitalism is yet to come - Obama nominated Chicago business executive Penny Pritzker to become the new Secretary of Commerce.....I am willing to bet that the low information democrat voter that regularly post here dont have a clue about her

Post a Comment

You must be registered to comment on stories. Click here to register.