December 26, 2011

Excellent column about the deficit

Robert Samuelson of the Washington Post has written an excellent column, entitled "A country in denial about its fiscal future" about the current conflict over government spending.  Samuelson notes that:
"From 1960 to 2010, the share of federal spending going for “payments to individuals” (Social Security, food stamps, Medicare and the like) climbed from 26 percent to 66 percent. Meanwhile, the tax burden barely budged. In 1960, federal taxes were 17.8 percent of national income (gross domestic product). In 2007, they were 18.5 percent of GDP."   He claims that we could achieve this because the military share of the budget declined from 52%of federal outlays in 1960 to 20% today.


Samuelson argues that while the economics of federal spending have changed, the politics haven't. "Liberals still want more spending, conservatives more tax cuts. (Although the tax burden has stayed steady, various “cuts” have offset projected increases and shifted the burden.) With a few exceptions, Democrats and Republicans haven’t embraced detailed takeaway policies to reconcile Americans’ appetite for government benefits with their distaste for taxes. President Obama has provided no leadership. Aside from Rep. Paul Ryan (Wis.), chairman of the House Budget Committee, few Republicans have."


I would argue that, while he is correct about liberals, he misstates the Republican position.  Generally, they all recognize that Social Security shouldn't be changed for current recipients or those approaching retirements, but that changes must be made for participants who are not close to retirement.  These include raising the retirement age, creating private accounts, and possible means testing.  See "Factbox: Social Security Positions of Republican Candidates" Reuters, September 26, 2011.  The same goes for Medicare and Medicaid.  See GOP Presidential Hopefuls: Where They Stand On Health Care, Kaiser Health News, December 23, 2011.  It is only if Republicans gain control of Washington that substantive changes will be made to these programs.