The Buzzards Circle the Fiscal Cliff

Krugman is Right about Simpson-Bowles: The Buzzards Circle the Fiscal Cliff

by L. Randall Wray, New Economic Perspectives

In a powerful piece, Paul Krugman has blasted Alan Simpson as an ignoramus when it comes to federal government budgets. He rightly wonders why anyone takes this nutter seriously:

Simpson is, demonstrably, grossly ignorant on precisely the subjects on which he is treated as a guru, not understanding the finances of Social Security, the truth about life expectancy, and much more. He is also a reliably terrible forecaster, having predicted an imminent fiscal crisis — within two years — um, two years ago…. So what is it that makes Simpson the figure he is? Clearly, it’s an affinity thing: never mind his obvious lack of knowledge, his ludicrous track record, reporters trust and idolize Simpson because he’s their kind of guy.

Precisely. The nonsense that comes out of the mouths of reporters is simply amazing.

I am only disappointed that Krugman did not include Simpson’s Siamese twin, Erskine Bowles. After all, the dumb and dumber National Commission on Fiscal Responsibility and Reform created by President Obama was headed by these two (presumably hand-picked by Pete Peterson). Bowles was selected to create the patina of bipartisanship necessary to gut Social Security and Medicare (the real purpose of all the deficit hysteria). It is important for the Democrats to share the blame for this mess. Indeed, since Republicans have always opposed any spending to help ordinary folk, these programs have always relied on the goodwill of Democrats. Unfortunately, the party of FDR has abandoned all principles. They serve only Wall Street, too.

See my piece from August 2011, where I laid out the purpose of the fiscal cliff.

Simpson claims that Social Security recipients are little more than new born calves, seeking to suckle the teats (he says tits, apparently confusing his cow with his wife) of our hard working cows down on Wall Street, who’d like to destroy Social Security so they could manage and lose retirement savings in the next big bubble

Now, wait a minute. About three quarters of all Social Security recipients are retirees—those who have worked hard all their lives, contributing to American production. They gave us the living standard we now enjoy. Since 1935, government has held out the promise to all workers: work hard and long and you will enjoy a decent retirement. How can we possibly compare that to suckling the teats (or tits) of 310 million cows? The other quarter of recipients are dependents—widows, children, and people with disabilities. Is the metaphor appropriate?

Social Security, Medicare, and Medicaid—the greatest remaining New Deal and Great Society programs—together comprise our most important safety net. Indeed, Social Security has contributed more than any other government program to poverty reduction, and it is the most important source of income for the majority of American seniors. It is an intergenerational promise, our most important one: if you work hard during your working years, tomorrow’s workers will take care of you in your old age. And if you should become disabled or should die, your co-workers will take care of you or your family. And if you can survive to age 65, you finally get decent health care coverage.

To be sure, such a promise is precisely that—no more, no less. We cannot hold future generations to such a promise. But we can sure as heck protect Social Security, Medicare, and Medicaid today from those who want to dismantle it.

The countdown is nearing the fore-ordained conclusion, March 1 when the automatic cuts begin to suck $600 billion out of domestic spending plus another $600 billion out of the military. With luck, the coming cuts to air traffic control and airport security won’t lead to deadly crashes, but they sure will create havoc at the airports. From the point of view of Bowles-Simpson, the more chaos, the better. All the more fuel to the Peterson flaming of Social Security. The buzzards are readying to circle the kill.

Make no mistake. The President as well as both houses of Congress are solidly aligned to gut these programs. That is what the Rube Goldberg machinery is all about.

It is time to get out the pitchforks to destroy the doomsday machine Washington is creating for us.

Last week I gave the Steinhardt Lecture at Lewis & Clark College in Oregon. The title was: “Fiscal Cliffs, Debt Limits, and Unsustainable Deficits: Can the US Really Run Out of Dollars?” I think you already know the answer to the question posed in the title!  The video of the lecture and follow-along slides are available here.