Snake Oil

Michael Hiltzig did his usual fine job in getting at the roots of what's really going on in Washington.  It's supposed to look like a dangerous game of chicken between the two political parties with the very future of the nation at stake.  That, however, is not what's really going on, according to Hiltzig.  I think he not only got it right, he got it in one.


He zeroes in on the GOP's contention that to avoid the fiscal cliff, entitlements (Social Security and Medicare/Medicaid) have to be cut to reduce the horrible double-plus ungood deficit.  And those cuts have to be decided on RIGHT NOW.

We're talking about projections of the cost of "entitlements" — a noxious way of referring to Medicare and Social Security, excellent programs that most workers have paid for during their careers and that have kept millions of Americans healthy and out of poverty. ...

The element of haste is a crucial element in this debate. That's because as real estate brokers and late-night TV hucksters know, pressure to Act Now! is what leads their marks to overlook that the basic premise is bogus.

Consider the prevailing assumptions about the future of Social Security and Medicare. One is that Social Security's trust fund will run dry in 2033, at which point the money coming in from payroll taxes will be enough to cover only about 75% of currently scheduled benefits. Will this happen? It might, but it might not:

The program's trustees, who are the source of the projection, don't bet the farm on it. They also project that under certain conditions of economic and employment growth — all of them perfectly plausible — it might never run dry. You don't hear much about that projection because it doesn't fit into the narrative that Social Security is "going broke."

Healthcare costs, with Medicare and Medicaid as big components, have been projected to rise to as much as 40% of gross domestic product by 2082 if not restrained. That's a fearsome prospect, but it's based on a long-outdated forecast by the Congressional Budget Office, which doesn't use the same methodology anymore. It was highly implausible, if not impossible, in the first place.

That CBO projection, like others employed by the anti-"entitlement" lobby to push for gutting the program, relied on projecting past experience into the future without adjusting for changes in behavior or policy.  [Emphasis added]

 As Hiltzig points out, it's difficult to predict what is going to happen 20+ years from now based solely on the present.  Intervening incidents can have a profound effect; incidents such as 9/11 or the birth and growth of Google changed this nation in all sorts of ways, good and bad.  And smart people, especially those in business know that.

No one — no business, no government agency — makes plans today based on a vision of the world 20 years from now. IBM doesn't do it. Google doesn't do it. The Department of Defense doesn't do it. You and I don't do it. Not even life insurance companies, which might be said to live in the future, do it.

The reason smart people and companies don't make bets on the distant future is precisely because it's unknowable.  ...

And there's a big difference between making a congressional budget and making fundamental changes in programs as complex as Social Security and Medicare. The life span of a congressional budget is two years, max, because no Congress can bind its successors. But changes in Social Security and Medicare are forever. So when you hear that we have to do it now, stat! or we're doomed, take it for the snake oil that it is.   [Emphasis added]

This is all about dismantling Social Security and Medicare/Medicaid so that our corporate overlords can make more money.  It has nothing to do with fiscal cliffs, debt ceilings, or deficits.  Hopefully, the President and the Senate Democrats have enough spine to resist this bovine excrement.