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The Economic Idiocy of Economists

With a brain trust like this, a lost decade for America looks likely – unless the citizenry can steer a different course.

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At this point, it was clear that this panel, other than Blinder, was living in a dystopian fantasy world. Next up was Rudy Penner of the Urban Institute, another former CBO director. His perspective was not much different from that of Auerbach or Holtz-Eakin. He complained about the polarisation of the political process, which prevents the two major parties from reaching an agreement. It's not partisanship, he said: House speaker Tip O'Neill and President Ronald Reagan knew how to be partisan, but they were able to reach agreement on the 1983 social security package and the 1986 tax reforms. And yada yada.

He might have added that we have had 25 years of  lying about social security since then, and even Reagan didn't dare try to privatise social security. And, of course, social security  can currently pay all promised benefits for the next 24 years without any changes.

These arguments about polarisation really pose the key issue: from the viewpoint of the 99%, it's not polarisation, but weakness in defending our interests that is the problem. President Obama compromised much more than he should have last year,  offering cuts to social security and Medicare, in exchange for a long-term budget deal. The 99% are just lucky that the Republicans were too extremist to make this kind of a "grand bargain" with Obama.

The last panelist was Alice Rivlin of the Brookings Institution, another former CBO budget director and Fed vice-chair, as well as a member of the president's (2010) National Commission on Fiscal Responsibility and Reform. She agreed with Blinder that we need more stimulus. But we can only get this if we agree to long-run spending cuts – including social security, of course. Yuck. This is a political strategy that is sure to end in disaster,  given the prevailing state of misinformation and disinformation.

During the discussion, Blinder – who identified himself as a Democrat – expressed his frustration in not being able to convince fellow Democrats to cut social security. Double yuck. The average social security check is about $1,177 a month, and a majority of senior citizens are getting most of their meager income from social security. Why these people insist on creating more poverty among the elderly, especially when the program is solvent for decades to come, is beyond me.

I got to ask the first question for the panel. I called attention to Blinder's presentation of the long-term budget problem  as almost completely a problem of the rising price of healthcare. I pointed out that you could take any country with a life expectancy greater than ours – including the other high-income countries – and put their per capita healthcare costs into our budget, and the long-term budget deficit would turn into a surplus.

My question was simple: are Americans so inherently different from other nationalities that we can't have similar healthcare costs? And if not, then why are we talking about long-term budget problems – instead of how to fix our healthcare system?

None of the panelists offered a serious answer to this question. Auerbach, the moderator, said that other countries have rising healthcare costs, too. And some of the others said or implied that healthcare costs were rising at an unsustainable pace worldwide.

But this is nonsense. The United States  pays about twice as much per person for healthcare as other high-income countries – and still leaves 50 million people uninsured. This is a result of a dysfunctional healthcare system that has had healthcare prices rising much faster than those of other high-income countries for decades.

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