Part of ABC‘s This Week show (8/19/12) was devoted to the idea that, as host Jake Tapper put it, the U.S. economy is at a potentially defining moment:
The great debate: Can we restore the nation’s finances, or is the U.S. headed toward bankruptcy–an issue at the forefront of the presidential debate, especially since Mitt Romney’s selection of Congressman Paul Ryan.
Setting aside the notion of “bankruptcy,” it’s worth pointing out that despite Ryan’s professed interest in taming the debt, his budget plans don’t actually do much of that. The “all-star panel of experts” was going to tackle this weighty issue, but first Tapper set the stage by pointing out that the “fiscal cliff” cuts in spending of $110 billion would be “like wiping out the economy of both the Dakotas and Montana overnight. Goodbye Mount Rushmore.”
He moved on:
Over the next 75 years, Medicare will run a deficit of more than $30 trillion. That’s two times the entire size of the United States economy.
It’s true that Medicare costs are projected to increase; comparing one year of GDP to 75-year Medicare projections seems more than a little pointless. And as economist Dean Baker has pointed out several times, the Affordable Care Act (aka “Obamacare”)
reduced the projected shortfall in Medicare by two-thirds. In 2009, the shortfall was projected at 3.88 percent of covered payroll. That’s down to 1.35 percent of covered payroll in the 2012 report. Of course, that is not yet balanced, but that is more progress in controlling costs than anyone else has done.
This would be a useful thing to point out–though it might complicate the “Is America Going Broke” framing of the special.
But the most misleading part came when Tapper said this:
Social Security will run out of money in just 20 years. In short, if nothing is done, our national debt poses a clear and present danger to the United States.
Social Security is not running out of money. He is likely referring to the projected date–2033–when the Social Security system will have exhausted its multi-trillion dollar trust fund. But if no changes are made to the program whatsoever, the program will pay out 75 percent of scheduled benefits until the year 2086.
That is not at all the same thing as “running out of money.” And linking a program that needs modest changes to remain fully funded over a 75-year window to a “clear and present danger” to the country is misleading.
It’s one thing to have a debate built around the question of whether the United States will become the next Greece. (There are plenty of people who would argue the comparison is fundamentally off-base.) But it’s even more difficult to have that kind of discussion when the “facts” used to make that comparison are misleading.