Alan Simpson, the foul-mouthed former senator, is back in the news. He once again launched an obscenity-laden diatribe against those who oppose his plans to cut Social Security and Medicare. Unfortunately, the focus of the media attention has been on the senator's use of obscenities, which is really beside the point. After all, a single, well-placed expletive can often do the work of a hundred G-rated words. The real issue is the senator's open contempt for the portion of the population that is either dependent on Social Security or Medicare now or will be in the future. Given that that group comprises almost everyone except the rich, Senator Simpson's diatribes are expressing contempt for just about the whole population -- in other words the 99 percent.
The contempt the senator holds for the 99 percent is probably common among those like him, the son of a senator, who grew up with great privilege and never had to fear financial insecurity. However, Sen. Simpson is unusual in showing this contempt so openly. Usually, members of the elite who enter politics are at least able to conceal the negative views they have of the less privileged.
Sen. Simpson plays the role of trying to divert the public's attention from the 1 percent's assault on the rest of us to generational issues, hence his continual push for cuts to Social Security and Medicare. He has been quite explicit in this effort, on at least one occasion urging his audience to "leave the rich alone." Of course, his generational story doesn't make much sense from the word "go." In the plan he devised with former Morgan Stanley director Erskine Bowles (as co-chairs of President Obama's deficit commission), young people would see the biggest cuts in their Social Security and Medicare benefits. This plan is not about transferring from the old to the young; it is about cutting back benefits on which the middle class and poor of all generations depend.
Sen. Simpson is fond of rattling off "facts" and then challenging his listeners to tell him where he is wrong. This can be a fun game. Let's try a few for the senator.
In its baseline scenario the Congressional Budget Office projects that Social Security will face a deficit of 1.6 percent of payroll over the next 75 years. If the Social Security tax were raised enough to fill this gap, it would be equal to just 2.9 percent of projected wage growth over the next 30 years. Even the shortfall of 2.0 percent of payroll projected in the more pessimistic alternative fiscal scenario is only 3.6 percent of projected wage growth over the next 30 years. Given these projections, what is the problem?
While workers may not be too concerned about losing 2.9 percent of their wage growth, or even 3.6 percent of their wage growth, to higher Social Security taxes, most workers are probably dubious about seeing any wage growth at all given the history of the last three decades. (These numbers fall to 2.3 percent and 2.8 percent if Simpson is right in his claim that consumer price index overstates the true rate of inflation.) Most of the gains from growth have gone to those at the top, like Sen. Simpson. If the future is like the recent past, then workers will not be seeing real wage growth, so any increase in taxes will be a burden.
This is a classic case of diverting people's attention from the real issue. The problem is not that they may at some point have to pay modestly higher taxes to support a longer retirement. The problem is that the game has been rigged so that most workers see little benefit from growth at all. In fact, most of the projected shortfall in Social Security would not even exist if there had not been such a large upward redistribution of income over the last three decades. Rather than focus on the 2.9 percent of projected wage growth that may be needed to sustain full scheduled benefits, workers might more productively focus on the 97.1 percent of their projected wage growth that is being redistributed to those at the top. But this is exactly what Sen. Simpson does not want people to see.
The same story applies to Medicare and Medicaid. The story that Simpson and others circulate regarding these programs breaking the budget is entirely a story of the broken U.S. health-care system. If per-person health-care costs in the United States were anywhere close to those in other countries, then the United States would be looking at huge budget surpluses in the long term, not deficits. In this situation we might try asking why U.S. health-care costs are so high, but this would involve challenging the money paid out to drug companies, medical supply companies, highly paid medical specialists, and insurance companies. Again, these are the rich whom Sen. Simpson wants us to leave alone.
It's also worth remembering that the large current deficits that provide the atmosphere of crisis in which attacks on Social Security and Medicare gain credence is largely the result of the deficit mongers diverting attention from those of us who were trying to warn of the housing bubble that eventually sank the economy. Back in the years before the housing bubble burst, the deficit was relatively small and projected to remain so for the foreseeable future. Then the economy collapsed, and the deficit exploded. Remarkably, instead of discrediting perpetual deficit hawks like Simpson, in the wacky world of Washington, this collapse actually increased their credibility.
But there is no point in arguing with the attack dog. The real argument is with the people who hold up Sen. Simpson as a serious apostle of fiscal prudence. What are their answers to the evidence that the deficit is really a distributional issue between the 99 percent and the rest of us? It would be nice to see some serious discussion of this issue.