Monday, November 14, 2011

The One Percent Turns Class War Into Generational War

The One Percent Turns Class War Into Generational War

by: Dean Baker


November 7, 2011


Major news outlets like The Washington Post and National

Public Radio constantly bombard us with news pieces on

the budget deficit. Invariably these stories focus on

the cost of "entitlements," which most of us know as

Medicare, Medicaid and Social Security. The story

pounded home in these pieces - often explicitly - is

that these programs, that primarily benefit the elderly,

are creating the basis for a generational war between

the young and the old.


The media focus both contributes to and follows the

Washington policy debate. At the moment, we have the

Congressional "supercommittee" scheming to produce a

deficit reduction plan that will almost certainly

involve large cuts to all three programs. There is a

commonly repeated view in Washington policy circles,

based on no evidence whatsoever, that there will be a

disaster if the supercommittee comes up empty handed.

This means that members of the committee are feeling

great pressure from the 1 percent to produce a package

with big cuts to Medicare, Medicaid and Social Security.


It is truly impressive how the Washington elite have

managed to make these modest protections for the

country's working population (the 99 percent) into the

greatest problem facing the country. The obsession with

cutting these programs is occurring at a time when we

have more than 25 million people unemployed,

underemployed or who have given up looking for work

altogether. One might think that Congress would convene

a supercommittee to get people back to work rather than

figuring out a way to undermine programs that people

need, but it's the 1 percent that pay for elections, not

the 25 million workers suffering from their greed and incompetence.


Since almost no one can be immune to the hysteria that

the media have created around the cost of these

programs, it is worth putting it in some context.

Starting with Social Security, the latest projections

from the Congressional Budget Office show that the

program can pay all benefits through the year 2038 with

no changes whatsoever.


Even if we never did anything, the program would be able

to pay more than 80 percent of scheduled benefits well

into the next century. Since the value of benefits is

projected to rise through time, 80 percent of the

projected benefit in 2040 is considerably higher than

the average benefit received by retirees today.

Therefore, the often repeated comment that there will be

nothing there for our children or grandchildren is a

telltale sign of ignorance or dishonesty.


The cost of making the program fully solvent for its 75-

year planning horizon is projected at 0.58 percent of

gross domestic product (GDP). By comparison, the

increase in annual spending on the military as a result

of the wars in Iraq and Afghanistan is 1.7 percent of

GDP, almost three times as much. The upward

redistribution from the rest of us to the 1 percent over

the last three decades was 6 percent of GDP or more than

ten times as much as this shortfall. But it is only the

shortfall in Social Security that the media want us to

see as a crisis.


The health care programs, Medicare and Medicaid, pose

more of a problem, but this is because the US health

care system is dysfunctional. We pay more than twice as

much per person as do people in other wealthy countries

with little, if anything, to show in the form of better

outcomes. (We rank near the bottom of wealthy countries

in life expectancy.)


If we had the same per person health care costs as

people in Germany, Canada, or any other wealthy country

we would be looking at long-term budget surpluses, not

deficits. But controlling costs involves reducing the

income and profits of the 1 percent. It means reducing

payments to insurers, drug companies, medical equipment

manufacturers and highly paid medical specialists.


Rather than control costs, the folks in Washington would

rather make people pay even more for health care. This

is why we see proposals like raising the age for

Medicare eligibility to 67 or turning the program into a

voucher system. Both plans are likely to protect the

income of health care industry, while making it even

more difficult for current or retired workers to cover

their health care costs.


The public should realize that "generational warfare" is

an agenda that was deliberately designed by the 1

percent to distract the rest of us from the class war

that they have been successfully waging over the last

three decades. Rather than have a public debate on the

policies that have redistributed so much income upward,

the 1 percent want to pit children against their parents

and grandparents, forcing them to fight over crumbs.


In this context, the only victory that the

supercommittee can hand to the 99 percent is a blank

sheet of paper. People will have enough things to worry

about this Thanksgiving without adding a Congressional

plan to slash their Social Security and Medicare.



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