f Klein were honest with his readers, he would point out that the main causes of federal deficits in the last generation have been the Reagan and Bush tax cuts, plus the fiscal aftereffects of the Great Recession, in the form of falling tax revenues and increased spending on unemployment insurance and stimulus programs. But that would distract from the false impression that Klein is seeking to convey.
So far in this classic of polemical literature, “The Welfare State Is Destroying America,” Philip Klein has relied solely on rhetoric. In the next few paragraphs he uses a few numbers, all of which have been cherry-picked to paint a picture of imminent national economic collapse, and all of which are misleading.
Here is misleading argument No. 1:
Spending on Social Security, Medicare, Medicaid and Obamacare alone currently account for 46 percent — or nearly half of — federal spending, excluding interest payments. Over the next 25 years, that percentage will explode to 66 percent, or close to two-thirds, according to the Congressional Budget Office.
Ooh, scary! These numbers may frighten readers, but they are meaningless. The only number that conceivably would matter would be the overall federal-state-local spending as a share of GDP, which in the U.S. is well below the average for industrial democracies that are just as competitive and prosperous. Saying that the share of federal spending that is devoted to Social Security and healthcare spending will grow over 25 years from 46 to 66 percent does not support Klein’s case that the welfare state will “destroy” America. These are just irrelevant numbers, thrown out to impress the ignorant reader of the Washington Examiner.
Misleading argument No. 2 follows:
Numbers associated with the nation’s debt crisis are almost too staggering to comprehend. Last month, total U.S. debt surpassed $15 trillion. But a recent analysis by Boston University economics professor Laurence Kotlikoff found that when long-term entitlement obligations are considered, the true fiscal gap is $211 trillion.
What Klein fails to point out is that Kotlikoff’s calculation for unfunded entitlement obligations is for the period between now and infinity. Even if Kotlikoff and Klein used the briefer time span of, say, 2012-2100, there would be no cause for alarm, because nobody is going to present the federal government with a check for advance payment of all projected entitlement payments in the remainder of the 21st century, due tomorrow. In other words, saying the U.S. has a “fiscal gap” is like saying that you are in danger of bankruptcy from a “personal fiscal gap,” because you could not pay off the entire house or car mortgage today. As long as you can make the installment payments at a reasonable interest rate, you, like the nation, are fine.
The abstract “fiscal gap” arises almost entirely from the minor projected shortfall of payroll tax funding for Social Security and, more important, from the estimated out-of-control growth of healthcare costs in decades to come. Change the variables, by means of new taxes for Social Security, benefit cuts or control of excessive costs in the U.S. medical industry, and the Big Scary Fiscal Gap disappears or shrinks dramatically, depriving right-wing hacks and left-wing deficit hawks of a club used to beat Social Security and Medicare.
Does Klein tell his readers this? Of course not. He’s just throwing out scary-sounding statistics to stampede the yahoos.
On to misleading argument No. 3:
Greece, with an economy 1/50th the size of the U.S., is threatening the economic standing of the rest of Europe because of its growing debt burden, which hit 143 percent of its gross domestic product in 2010.