January 03, 2013
If George Will’s New Year’s resolution was to get as many wrong assertions in his columns as possible, he is off to a good start. Today’s piece presented readers with an avalanche of inaccuracies before pounding readers with the main point: George Will says we can’t afford Social Security and Medicare.
First let’s take some choice items from the avalanche. Will tells us that America:
“has an energy surplus, the government-produced overhang of housing inventory is shrinking and the average age of Americans’ cars is an astonishing 10.8 years.”
On the first point, we are exporting some oil based products and natural gas, but that does not offset the 10 million plus barrels of oil a day that we import. The government didn’t produce the excess housing. Those were private companies that built the homes. The worst of the bubble financing came from folks like Ameriquest and Countrywide who issued junk mortgages because they were profitable. They then sold them to investment banks like Goldman Sachs and Citigroup who securitized them because it was profitable. Government regulators, first and foremost Alan Greenspan, deserve blame for not cracking down on the bubble, but it is more than a bit loose with reality to say the government “produced” the overhang.
As far as the average age of American cars, it is not clear whether we are supposed to think this is good or bad. (I hope my car will last at least 10.8 years.)
But let’s get to the fun stuff. Will tells us:
“Once, Japan bestrode the world, jauntily buying Rockefeller Center and Pebble Beach. Now Japanese buy more adult diapers than those for infants.”
Yes, Japan has the longest life expectancy of any country in the world. If they adopted a health care system like the one in the United States perhaps the Japanese would die younger so that they would then buy relatively more diapers for infants. The Japanese may not opt to follow Will’s recommendation here.
Will is also upset that the U.S. will be contributing less to global warming in the future, complaining that:
“America has its lowest birth rate since at least 1920.”
Then we get the assertion:
“Deficit spending once was largely for investments — building infrastructure, winning wars — which benefited future generations, so government borrowing appropriately shared the burden with those generations. Now, however, continuous borrowing burdens future generations in order to finance current consumption.”
Actually deficit spending right now is primarily to support the economy. As fans of arithmetic everywhere know, the reason that we have large deficits today is because the economy collapsed following the bursting of the housing bubble. If we were not running large deficits we would see less output and more unemployment.
Rather than “borrowing from the future” as Will puts it, quoting from a Hudson Institute scholar, we are keeping our children’s parents employed with government deficits. Apparently the Hudson Institute doesn’t realize that we will also pass on the government bonds issued today as assets to future generations. As a practical matter, the burden of net interest on the debt is near a post-war low.
Will then complains:
“First, there will be no significant spending restraint. Democrats — you know: the people respectful of evidence and science — even rejected a more accurate measurement of the cost of living that would slightly slow increases in myriad government benefits.”
In fact, no one knows that Will’s preferred consumer price index is a more accurate measure of the cost of living for the Social Security population. Advocates of adopting this measure have run from the idea of constructing a cost of living index specifically for the elderly — showing a contempt for evidence and science. An experimental index shows the elderly have a higher cost of living than the population as a whole primarily due to the fact that they spend more of their income on health care.
The next one is in the “huh?” category:
“He [Obama] has nothing pertinent to say about the steadily worsening fiscal imbalance that will make sluggish growth — less than 3?percent — normal.”
Actually the Congressional Budget Office says that 2.4 percent growth is normal (once we return to potential GDP) for reasons that have nothing to do with deficits. Is Will smoking something here?
Then we get Will’s pure tirade beginning with:
“Both parties flinch from cliff-related tax increases and spending decreases. But neither the increases nor decreases would have tamed the current $1 trillion-plus budget deficit nor made a discernible dent in the 87-times-larger unfunded liabilities of the entitlement state.”
Getting away from Will’s rant-land and back to the world of arithmetic, we know that Social Security is mostly funded for the indefinite future. The real story here is the one of exploding health care costs. If U.S. health care costs were comparable to those of any other wealthy country we would be looking at long-term budget surpluses, not deficits. And if our political system is too corrupt to reform our health care system then we could always go the route of trade, allowing Medicare beneficiaries to buy into the more efficient health care systems in other countries.
But hey, this is getting into arithmetic, Will is ranting about our decadence because we won’t take away Social Security checks and health care from our elderly. Let’s not confuse issues.
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