Dean Baker: The Biggest Myth in Obama-GOP Spending Showdown is the "Fiscal Cliff" Itself

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AMY GOODMAN: That was Timothy Geithner. Dean Baker, how important it is—is it to raise taxes on people who make over $250,000 a year? And how far is the Obama administration willing to go in taking on Medicare and Social Security, in cutting it?

DEAN BAKER: Well, the first part of the question, I think, is an easy one. Somewhere—we don’t need it this year, we don’t need it next year, but we are going to need more revenue. And if you don’t get it from the top 2 percent, you’re looking to get it from everyone else. And, you know, that just seems kind of commonsense. These have been the big winners in the economy over the last three decades, in fact the only winners pretty much in the economy over the last three decades. So it’s, to my mind, just commonsense. And this was what the election was over, you know, so there shouldn’t be much debate about it at this point.

In terms of Social Security and Medicare, you know, President Obama has indicated in the past he was willing to make cuts to these programs. To my mind, you know, you look at the data, you look at the situation of our seniors, most of them are just scraping by. Median income for someone over age 65 is about $19,800. It’s pretty hard to say that these people are living high. And the reality, you keep hearing this talk about, you know, the cost of these programs exploding. Social Security actually rises very little over the next two, three, four decades, or really the rest of the century. The whole story is Medicare, Medicaid, and that’s a healthcare story. We already pay more than twice as much per person for our healthcare as people in other wealthy countries—Germany, Canada, whoever you want to throw in that mix. We have to fix our healthcare system. If we fixed our healthcare system—and we have the data to show this—we don’t have a budget problem. So, if people want to talk about healthcare, absolutely, we have to fix the healthcare system, we have to constrain our costs. But that’s not a Medicare, Medicaid problem; that’s our private healthcare system.

AMY GOODMAN: How do you fix it?

DEAN BAKER: If that’s constrained, we’re fine.

AMY GOODMAN: How do you fix it?

DEAN BAKER: Well, you know, we had an opportunity with the Affordable Care Act. There are some cost controls. I’m hoping that those will be helpful. We’ve actually seen a sharp slowdown in healthcare cost growth the last few years. That may or may not be maintained. I mean, I would love to have seen us move towards a universal Medicare system. I mean, we have the model up in Canada, other countries as well, where they have costs that are about half ours and, by many outcome measures, they actually do better. Very hard to do politically, obviously, but, you know, the question is: How do we move from here to there? I mean, one of the things I’ve thrown out—originally as a joke, but I actually think it’s a good proposal—suppose we let our seniors, our Medicare beneficiaries, buy into the healthcare system of other countries and split the savings. You know, they could put thousands of dollars a year in their pocket, government would save thousands of dollars a year, and looks like everyone comes out ahead in that story.

JUAN GONZÁLEZ: Dean, I’d like to ask you about some of the negotiations that are going on which are rarely talked about in terms of specifics. But President Obama did say over the last few days in one interview that he is willing to consider the possibility of raising the age of eligibility for Medicare from 65 to 67. I’d like to ask you whether you think that that’s already him making a major step back in terms of defending these social programs. But I’d also like to ask you about the payroll tax. For the last two years, most Americans have only been paying 4 percent into their Social Security payroll tax, and that’s due to expire January 1. So, is there any discussion about what’s going to happen with that? Because that would mean an automatic increase of—or at least a reduction in the pay of most Americans when they go back to the 6 percent that they’ve been normally paying.