NPR reported that the government has promised $45 trillion more than it can deliver for Social Security, Medicare, and other benefit programs. It also informed us that the number increased by $1 trillion over just the last year. What does this mean, how much money is this? Listeners would have no idea from NPR, they were just told that we better fix these programs. Let's think about how a news reporter might have dealt with these numbers. First, a news reporter might have tried to put this number (a really big number) into a context in which listeners could make some sense of it it, instead of just using it to try to scare listeners. Suppose the news reporter had told us what this number is -- the projected shortfall for Social Security and Medicare for current participants, under the assumption that no one else ever starts working in the United States. The $45 trillion is the discounted (using a 3 percent real interest rate) value of this projected shortfall. I don't know a single economist anywhere who thinks that the U.S. economy is going to stop having new workers. There are a lot of kids in the schools who will eventually graduate, at least some of them plan to work when they are adults. So this number does not sound very scary on its face since it has nothing to do with anything we will see in the world. How about telling listeners why the number grew by $1 trillion from 2006 to 2007, I don't recall any big boosts in SS benefits approved by Congress. The reason for the growth is that we are measuring the shortfall in 2007 dollars instead of 2006 dollars. 2007 dollars are worth about 3 percent less than 20006 dollars due to inflation. Are you scared yet? How about expressing this as a share of projected income over this period -- the share would be around 6 percent. I guess that is not as scary as $45 trillion. Finally, NPR could try to give its listeners a sense of where this shortfall is coming from. Of course, this would require that its reporters were familiar with the Congress Budget Office, which is apparently too much to ask of its busy reporters. If they went to the homepage of the website, NPR's reporters would find a little graph showing that the growth in projected spending over the next 75 years is overwhelmingly due to the government health care programs, most importantly Medicare and Medicaid. In other words, the scary stories of government deficits are in fact scary stories about health care costs being out of control. This makes NPR's tale of a $45 trillion shortfall in reality an argument for reforming health care, not a general concern for government excess. However, that is not the message that NPR gave its listeners.
--Dean Baker
