Monday, July 14, 2008

Fiscal Shamity

Due to the advertising you see on the left, EconoSpeak has a karmic debt to repay concerning the Peterson Institute. In that light, please deplore with me the free pass given to Peterson’s fear mongering in today’s NY Times. All the usual obfuscations were served up: bogus projections of Social Security, the lumping together of Social Security and Medicare, the specter of a supposedly-unprecedented increase in the percentage of retirees in the population. The headline reflects the tone of the article: swallow the gunk without asking any questions.

As for the present, a fiscal deficit of 4% of GDP (first quarter 2008) is entirely reasonable for an economy sinking into a recession. (Spending priorities are bonkers, but that’s another matter.) Long term, Social Security doesn’t need to be fixed; health care does, but this is not primarily a fiscal issue. And the real monster in the closet is the current account deficit, which goes completely unmentioned by either Peterson or his interviewer.

A billion dollar PR budget can’t turn this sludge into syrup.

9 comments: said...

All I got was ads when I tried to link to the story, but are we talking about the Peterson Institute of International Economics in Washington? Who there is putting out such a report rattling on about a combined "old age entitlements crisis." Is this an institute tied to former Commerce Secretary Peterson? I remember that he was an old fiscal hawk and could imagine folks associated with him putting some such nonsense out.

And what is that "karmic debt" you owe whoever these people are, Peter?

Bruce Webb said...

Barkley I think it is a reference to '30 pieces of silver'.

Of course Econospeak will take the money, in a minor way it just serves to defund the Right, but it still serves to soil the soul.

Om mani padme hum. (Repeat as necessary)

And yep it is the same Concord Coalition founding Commerce Secretary Peterson, currently to be found beating the drum of Social Security 'Crisis'

Anonymous said...

Referring to Pete Peterson as he former Commerce Secty without noting that he is a founder of the Blackstone Group, the very politically connected private investment bank, is nearly as missleading as the NY Times article
tends to be. What is also left unsaid is that Peterson is not an economist. His academic training is in the field of marketing, having earned an MBA at the Univ of Chicago. He is a multi billionaire with early tie to some of the wealthiest people in the country.

How such a background supports a suggested expertise in issues of retirement is the first question.
How the man's professional career and professional associations might be indicative of a genuine interest in the best interests of the general working public defies explanation.

Robert D Feinman said...

OK, Bruce you have your work cut out for you. Peterson didn't just get some free PR in the Times today, the piece was to announce his billion dollar misinformation campaign that is going to feature his "documentary" playing in 400 cities.

Warren Buffet is right, there is class warfare and his class is winning. How is the left supposed to counter a billion dollar propaganda campaign? said...

Ah, so it is the Blackstone Peterson and not the International Institute for Economics, which has long been a major home base for the Washington Consensus, but which generally shies away from domestic policy issues, leaving that to Brookings, which is located across the street on Massachusetts Avenue near Dupont Circle in Washington.

Bruce Webb said...


Well that is why unlike Barkley and Coberly I don't stress over the fact that the message isn't getting out fast enough. Because ultimately you can't pass legislation without numbers and the privatizers simply don't have them.

Most people would scratch their heads looking at the equation 75% of 160% = 120% and even more would not grasp the implications of that changing over a one year period to 78% of 160% = 125%. But social security defender Barkley knows what they mean and privatizer Biggs knows what they mean and more importantly Biggs knows I know what they mean.

Peterson can spend a billion dollars if we wishes. But that is not going to make the numbers go away. Year after year the Social Security Reports are simply grinding down 'crisis'. All you have to do is to look at the data tables. Admittedly few people actual do emerse themselves in the joys of Tables V.B1 and VI.B7, which doesn't mean the clear story they tell can forever be repressed.

Absent some catastrophe we should have a solid Democratic majority in Congress and in all likelyhood occupation of the White House which means at worst we will have some tinkering in the form of cap increases which while unneccessary in the short run do serve to take even more pressure out of perceived 'crisis'.

Prior to the current fuel/food/housing/credit crisis I thought 2008 would be the year that everyone would be forced to admit the bogosity of the SS crisis narrative. It now looks like that date might need to get pushed back to 2010 or perhaps 2012. But I can't see it extending past that point, the projected economic numbers for 2012 and after under Intermediate Cost are all so bleak that Social Security would be the least of our problems should they occur. Sometime during the next Presidential term some very red-faced individuals are going to have to fess up. (Unless of course all hell breaks loose in the form of panic and financial depression, my model didn't have $145 barrel oil and Fannie Mae bailouts built in. But then neither did the privatizers models.)

Certainly I am still fully prepared to bet on 2.0% average productivity and 2.6% average GDP going forward. And ultimately that is all we need to take trust fund depletion out for decades (yes, assuming other measures track).

Bruce Webb said...

Barkley our pal Pete Peterson has his fingers in many pies:
"Peter G. Peterson is senior chairman and co-founder of The Blackstone Group. He is founding chairman of the Institute for International Economics, chairman of the Council on Foreign Relations, and founding president of The Concord Coalition. Mr. Peterson was the co-chair of The Conference Board Commission on Public Trust and Private Enterprises (co-chaired by John Snow, former secretary of the treasury). He was also chairman of the Federal Reserve Bank of New York from (2000–04), chairman and CEO of Lehman Brothers (1973–77), later chairman and CEO of Lehman Brothers, Kuhn, Loeb Inc. (1977–84), and chairman and CEO of Bell and Howell Corporation (1963–71). "

At least I assume that is the same organization you reference.

Robert D Feinman said...

Bruce, I'm afraid that I'm not as sanguine as you are about the evil that Peterson continues to do.

It's not the focus on Social Security, itself, that is important, it is that he and his fellow libertarians at Cato, Heritage, etc. foster the idea that government programs in general are untrustworthy.

I think my two 20 something nephews are typical in that they tend to think that SS will not be around for them when they retire. This type of thinking makes them much more open to general ideas of privatization and disdain for communal social services.

Peterson is a spokesman for the YOYO (you're own your own) belief system that is much too prevalent these days. Without the lack of government oversight and the sweetheart deals given to the finance and banking sectors since Nixon, Peterson would not have the money to throw around undermining democracy and shared values.

The libertarians pretend that one man's riches didn't come at the expense of all those who were overcharged in some fashion so that he ended up with the bundle.

Conservative apologists are now making the rounds claiming that their ideas of less government, fewer taxes, free trade, fewer social services, etc. were not implemented properly by Bush.

In fact these conservative ideas can never be implemented. Capitalism demands that firms seek special favors from government just so that they can gain an advantage over their competitors. This leads to crony capitalism, corruption, debasement of public infrastructure and wars of plunder.

Gingrich and Norquist got exactly what they aimed for. Their wealthy clients cleaned up while everyone else has suffered.

We really need to smack down this libertarian nonsense once and for all, but I still don't see how to counter Scaife, Koch, and the other members of the "vast rightwing conspiracy" who fund these misinformation campaigns. said...

Regarding Peterson, yes it is him on the masthead. However, it is completely inaccurate to call him "founding" anything. It has existed for a long time and did not bear his name. Sometime within the last decade he dropped a large wad of money on them and got his name put there.

In any case, maybe he has gotten them to somehow sign off on this nonsense, but in general they stick to their globalizing knitting.