The budget deficit has been somewhat larger in recent years than it should have been but very few economists see this as a crisis. Over the long-term, the budget is projected to face serious problems but, as the Congressional Budget Office has pointed out, this is primarily due to the projected increase in health care costs. Since the government pays for approximately half of national health care costs through Medicare, Medicaid and other public sector programs, if health care costs follow the projected path, then it will lead to major fiscal problems for the federal government. Of course, if health care costs rise as projected, the increase will also have a devastating impact on the private sector. The moral of the story to any serious analyst is that the United States must get its health care costs under control; something that every other wealthy country has managed to do. Unfortunately, there is a whole army of deficit fear mongers who have tried to use the projected explosion of health care costs as a pretext for cutting important government programs like Social Security. One of the generals in this army is Peter Peterson, an incredibly rich investment banker who has garnered tens of millions of dollars of tax breaks that allowed him to pay a lower tax rate on his earnings than school teachers and firefighters pay on their earnings. Peterson was most recently in the public eye for lobbying Congress to protect the "fund manager tax subsidy." However when he is not lobbying Congress to protect the tax break that has allowed him and other very wealthy people to evade billions of dollars of taxes, Mr. Peterson is lobbying Congress to cut Social Security. He has repeatedly told audiences that "I don't need my Social Security" (after getting hundreds of millions in tax breaks, who would?), which he then uses as a justification for cutting Social Security benefits for tens of millions of workers who have paid for them. Mr. Peterson started the Concord Coalition, which has cutting Social Security as a top agenda item. He is also starting a new foundation devoted to this purpose. His track record earned him a solo appearance on Bill Moyers Journal a few years back, in which he got the opportunity to go his tirade against Social Security and other government programs without any correction from experts who understood the issues. Moyers again opened his show tonight to deficit fear mongers, again without any rebuttals from experts with knowledge of the issues. Just to note a few of the misleading comments from the piece: 1) it pointed out that we ran deficits in 31 of the last 35 years and implied that this is a serious problem. In fact, the country can run deficits every single year forever. What matters is the size of the deficits and whether the debt is rising relative to GDP. The U>S. ran deficits in almost every year from 1945 to 1980, yet its ratio of debt to GDP fell from 117.5 percent to 33.5 percent. We could have stayed on this track indefinitely. 2) The piece made a big point of telling viewers that the debt is now $9 trillion "with a 't'." It is likely that most viewers know how to spell "trillion." This is a silly scare tactic that has no place in a serious discussion. The relevant question is the size of the deficit relative to GDP, which is now almost $15 trillion, also with a "t." 3) The piece said that if we don't fix our budget situation then the government may not have enough money to pay Social Security benefits. Actually Social Security is supported by a designated tax that is projected by the Congressional Budget Office to keep the program fully funded until 2046 with no changes whatsoever. The idea of not paying Social Security benefits is presumably a favorite of the advocates that Moyers put on his show. They could have said, with at least as much accuracy, that the government would not have the money to repay the bonds held by investors. If the country ever does face a genuine fiscal crisis, this is likely to be at least as popular a fix to its problems. Of course, the wealthy would prefer a default on Social Security to a default on government bonds. Presumably Moyers is genuinely confused about the nature and causes of the country's deficit problems, but this is no reason to have such unbalanced shows. If he really believed that Peterson and his fellow deficit fear mongers are right, then they should have the opportunity to prove their case in open debate. After all, this is supposed to be public TV, not the Investment Bankers' Nightly News Hour.
--Dean Baker
