A Looming Crisis in Social Security, Medicare, Medicaid? The "Fiscal Cliff" is a Scam Pt2

  December 2, 2012

A Looming Crisis in Social Security, Medicare, Medicaid? The "Fiscal Cliff" is a Scam Pt2

James Galbraith: It's been known since the 1950's that there would be more demands on social security; If there was political will health care costs could be controlled, it's not a problem of Medicare
Members don't see ads. If you are a member, and you're seeing this appeal, click here


Share to Facebook Share to Twitter

The reason I continue to support TRNN is, not only is it real, it is also the most truthful. - Dick S
Log in and tell us why you support TRNN


James K. Galbraith teaches at the LBJ School of Public Affairs, The University of Texas at Austin. He is a Senior Scholar of the Levy Economics Institute and the Chair of the Board of Economists for Peace and Security. The son of a renowned economist, the late John Kenneth Galbraith, he writes occasional commentary for many publications, including Mother Jones, The Texas Observer, The American Prospect, and The Nation. He directs the University of Texas Inequality Project, an informal research group based at the LBJ School, and is President this year of the Association for Evolutionary Economics.


A Looming Crisis in Social Security, Medicare, Medicaid? The PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore. And this is the second part of our series with Professor James Galbraith, who thinks the fiscal cliff is a scam. And he's written an article with six reasons why he thinks so, and this is reason number two. Thanks for joining us, James.


JAY: So, once again, Professor Galbraith teaches at the LBJ School of Public Affairs at the University of Texas Austin. He's the author of The Predator State and Inequality and Instability: A Study of the World Economy Just Before the Great Crisis.

So part two of your article, you ask the question, is there a looming crisis in Social Security, Medicare, Medicaid. So is there? That's my question to you.

GALBRAITH: No, of course there's not. Let's take them separately.

Social Security is projected to rise very gently as a share of total output, total expenditure in the economy over the first half of this century. Why is that going to happen? Because the share of the population that will be receiving Social Security benefits is going to go up. That is in no sense a crisis. It's something which has been known since the 1950s, since the baby boomers came into existence. It's certainly not a secret to the United States census. It's something which was taken care of in Social Security's finances in the early 1980s.

But it constantly gets raised by people who want to curtail the extent of Social Security benefits. And there are all kinds of devices that are routinely surfaced to achieve that goal—raising the retirement age on the pretext that people are living longer and therefore they should work longer. But the reality is that two-thirds of Americans who take Social Security take it at age 62, at the early retirement—when early retirement becomes available.

Now, why is that? They—some of them are already unemployed. They don't have a job they can stay in, and therefore they need the money. Others have been working for, let's say, 40 years in tough jobs, jobs that require them to stand all day, jobs that require them to move heavy objects, jobs that require them to sit behind the steering wheel of a vehicle. And they're ready to leave the labor force at that point, and so they take the early retirement deal.

When you raise the so-called retirement age, which would have no effect on, you know, someone with a comfortable position like you and me, what you're doing to those people is you're cutting their benefits. They're taking their early retirement anyway, and they'll have to take it at a deeper discount. That's a benefit cut.

Similarly, if you change the basis in which on—of cost-of-living adjustment on Social Security (this is also something that gets trotted out and discussed in these matters), then what happens is that over time, older and older retirees find that they're living on less and less money. And the way this works, if you introduced what was called index-linked price adjustments, is that as people with less money give up certain items of consumption—let's say, fresh vegetables—then what happens is that that disappears from the consumption basket, and there you get only the price of canned or frozen vegetables brought in. And so the quality of life continues to deteriorate as time goes on.

And this is a way of—you know, ultimately, people reaching their '90s will be consuming cat food, and only cat food will be in their consumption basket—not a very fair or reasonable thing to do. In fact, it's one of the most damaging, socially destructive, really cruel measures that's available out there. This is what people who want to fold Social Security into a grand bargain are aiming to achieve.

I think they won't achieve it. They won't achieve it in the next three weeks, and I hope they won't achieve it next year, either. I hope they won't achieve it in—you know, basically hope that Social Security's left where it is. It's perfectly sustainable as it is, and it does a pretty good job of keeping the elderly population out of poverty.

Okay. So Medicare, Medicaid. We can have a discussion about health care costs, but the thing about health care costs is that they apply to the whole health care system. And there's the cost of providing particular procedures, whether you're old or young, poor or not poor, in a public insurance system or a private insurance system. Targeting Medicare and Medicaid just because they happen to be the public insurance systems, and therefore on the federal budget, means that you're targeting the elderly and you're targeting the poor. It's not a reasonable way to deal with health care.

And I think the president has basically said this numerous times, but the problem of health care costs is a problem of health care costs. It can be dealt with, but not by arbitrarily cutting back Medicare and Medicaid. If, for example, [incompr.] suggestion which has been in the news, you raise the eligibility age for Medicare, then what you're doing is privatizing it in part. What you're saying is that people who have employer-based insurance or other forms of private insurance have to hang on to that when they're 66 and into, say, 67 [incompr.] they hit the age when they can shrug it off and get onto Medicare. That's privatization. That's what it is. And I think that should also be off the table. It certainly should not be something that is folded into a deal intended to avoid, as I said earlier, the very artificial short-term effects of the so-called fiscal cliff in the early weeks of next year.

JAY: Right, 'cause if the real issue was cutting costs, then number one, they wouldn't have made a deal with the pharmaceutical sector not really to touch their price structure, which is one of the biggest savings you get, for example, in places like Canada with single-payer, where they can negotiate far lower pharmaceutical costs, and then if—again, if the issue really is costs, then one would address that, as you're suggesting, not trying to privatize or change the age [crosstalk]

GALBRAITH: Absolutely. Every country in the world that has a publicly administered health care system has a cost control mechanism. It basically imposes limits on what can be charged for certain procedures. We're very elastic about that in this country, and we allow our medical sector to be a [incompr.] of GDP. If we want it to be a smaller share of GDP, the right way to do that is not to reduce its size but to be a little bit more or maybe even substantially more rigorous about what can be charged for particular things.

JAY: But this would take on very powerful sectors of the economy in terms of their political lobbying clout, and nobody wants to do that.

GALBRAITH: Sure, sure it would. And, you know, if you ask me do I consider this to be the most important issue that we face, I really don't. It's an internal distributive issue. But if you ask me, would I rather have overpaid doctors and nicely, you know, overbuilt hospitals, or aircraft carriers that we don't need or jet fighters that can never actually be flown, I'll say I'll take the doctors and the hospitals. I can see working on this issue, but it's not going to be the end of American civilization if we continue to have a very large health care sector. In fact, quite the contrary. A very great economist, Paul Samuelson [inaud.] 15 percent of GDP, but it's the best 15 percent of GDP. And I think there's something to that.

JAY: Okay. In the next segment of our series, we're going to talk about military expenditure. So please join us for the next segment of our series of interviews with James Galbraith, who says the fiscal cliff is a scam, on The Real News Network.

Don't forget we're in our year-end fundraising campaign. Every dollar you donate gets matched if you click on that—up to $100,000, I should add—click on the Donate button over here. If you don't click on it, we can't do this.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

latest stories

Jihan Hafiz Reports on the Brutal Police Crackdown at Standing Rock
Venezuelan Opposition Seeks Legislative Coup
Police Violently Clearing Dakota Access Pipeline Protesters
The Frustrating History of Police Reform Efforts in Maryland
TRIPS: The Story of How Intellectual Property Became Linked to Trade (5/7)
A Public Option is the Solution to the Un-Affordable Care Premium Jumps
People's Tribunal to Examine Legacy of Iraq War
The Empire Files: Meet the Socialist Woman Running for President
Is the US Headed Towards War in Syria?
Peaceful Prayer Against Pipeline Met with Police Violence and Mass Arrests
TRIPS: The Story of How Intellectual Property Became Linked to Trade (4/7)
Breaking Through Power: Ralph Nader and Kim O'Neil on The Citizen Library
EU-Canada Trade Doomed to Fail After Walloon Parliament Rejects CETA
Amnesty For FARC Rebels and Land Restitution Will Determine Fate of Colombian Peace Process
War Vet: Reenlistment Bonuses a Pittance Compared to the Billions Wasted in Iraq
The Story of How Intellectual Property Became Linked to Trade (3/7)
TRNN REPLAY: The Real News Town Hall Pt. 2: Should the Community Control the Police?
Breaking Through Power: Mitch Rofsky on the Responsibility of Business for Civil Engagement
President Maduro Calls on the Pope to Help Resolve Conflict with Opposition
Broken Treaties Central to the Injustice of the Dakota Access Pipeline
The Industrial Agricultural System is Limiting Food Access and Driving Climate Change
TRNN REPLAY: The Real News Town Hall: Should the Community Control the Police? Pt.1
Breaking Through Power: Wendy Fields on Movement Building
How Washington's Money-Machine Stays Ahead of Democracy
Tribes Reclaim Unceded Territories to Block Dakota Access Pipeline
Obama Holding Further Military Involvement in Syria, But Will the Next President?
TRIPS: The Story of How Intellectual Property Became Linked to Trade (2/7)
A Just Transition for Fossil Fuels Workers is Possible
Breaking Through Power: Jordan Estevao on Training for Change
The Right to Housing in Baltimore - TRNN Grand Opening

TheRealNewsNetwork.com, RealNewsNetwork.com, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Linux VPS Hosting by Star Dot Hosting