Media: Please don’t let policy makers use euphemisms for cuts in social insurance.

January 25th, 2017 at 11:44 am

Especially in the age of “alternative facts,” it’s really important for policy makers and especially journalists to use clear, transparent language. One area where that’s particularly germane right now is in regard to cutting Social Security and Medicare.

Though many policy makers want to cut these social insurance programs, they rarely say “cut.” Instead, because the programs are so highly valued by recipients, policy makers say “reform,” “overhaul,” “change,” “revamp,” and “fix” the program. In the vast majority of these formulations, these verbs are euphemisms for cuts, and it’s very important for journalists to call them out as such.

When NPR writes that Trump’s nominee for budget chief Mick Mulvaney “wants to overhaul these entitlement programs,” for example, do readers understand that “overhaul” means reduce promised benefits? I’m sure many do not.

There are many variants of this problem when it comes to writing about the fiscal condition of these social insurance programs. When policy makers talk about “raising the retirement age” as a way to improve solvency, which sounds pretty benign, it’s essential to make clear that this is a benefit cut, as Kathleen Romig points out here:

Raising the retirement age cuts benefits for all retirees, the cuts could be deep, and they would fall hardest on lower- and middle-income Americans — who rely heavily on their hard-earned Social Security and have not shared equally in recent life expectancy gains.

When policy makers or journalists talk about how Social Security and Medicare are “running out of money” or “going broke,” it should be pointed out that they are by no means going broke and that, even without any changes, both will be able to pay full benefits for over a decade (through 2028 for Medicare and through 2034 for Social Security) and continue to pay the vast majority of promised benefits (75 percent for Social Security and 87 percent for Medicare) thereafter.

To be clear, that is an unacceptable outcome that must be avoided, which leads me to my final point. As I’ve stressed, the implicit assumption in this debate almost always seems to be that reforming and fixing and overhauling mean cutting.

But why should that be the default? Raise your hand if you think America’s problem is that we have too much income and health care security in retirement. Anyone…anyone…Bueller??

Progressives increasingly believe that overhaul and reform should mean strengthening and expanding social insurance, and we’re not afraid to offer concrete ideas as to how to raise the needed resources to do so. (It also helps if people pay their employees’ payroll taxes.)

In the meantime, please stop the obfuscation. When policy makers are talking about cutting entitlements, call it like it is.

Woohoo! The On the Economy Podcast is Here!!

January 24th, 2017 at 5:12 pm

Fans of music, economics (and jokes about economics), and intergenerational policy discussions: I’ve got a treat for you. Today marks the release of the first episode of the On the Economy podcast, which Ben Spielberg and I will be producing a few times a month. You can access it on SoundCloud or download it via iTunes.

As I note in my introduction, we view the podcast as a timely way to counteract the misdiagnoses and false solutions offered in response to real economic problems. Our episodes will be short and sweet – twenty to thirty minutes each – and will draw on the expertise of our colleagues at the Center on Budget and Policy Priorities and many other economists and analysts working on some aspect of speaking truth to power and furthering what we think of as the reconnection agenda.

We recorded the first episode before Trump took office, but it is directly relevant to post-inauguration events, particularly Kellyanne Conway’s claim that falsehoods from Sean Spicer were actually “alternative facts.”  We discuss whether the facts are actually more on the run than usual in the age of Trump, some ideas I’ve touched on before about how to find the road back to Factville, and how those ideas can be applied in the realm of debates about trickle-down tax cuts. To this end, we got some fact-filled input from our CBPP colleague Michael Leachman re how the tax cut “experiment” is working in Kansas (answer:…listen to the podcast!).

We hope you enjoy the podcast, and please share feedback either way. In fact, if you have thoughts for Ben and me to consider in future episodes, questions you’d like us to tackle, or topics we should discuss, send us an email at

With that, check out episode 1!

As I always say, don’t conflate trade deals with trade (or the trade deficit)

January 24th, 2017 at 8:51 am

Over at the NYT.

Special for OTE readers, parts that had to be cut for space:

“Since the mid-1970s, the US has regularly imported more than we’ve exported. Net exports (exports-imports) have averaged just under -4 percent of GDP since 2000. Trade deficits are by definition a drag on growth, and that’s especially true in sectors, like manufacturing, that drive the deficit. By linking the trade deficit to manufacturing job loss, Trump made a legitimate argument that resonated with some of his core voters.

There are, of course, many moving parts in the economy, and the trade deficit’s drag on growth has often been offset by other components of GDP. In 2007, the trade deficit was -5 percent of GDP while the unemployment rate was a low 4.6 percent. But the offset in play—the housing bubble—came at a great cost (and was itself, through inflows of cheap capital, related to the trade deficit).”

The idea here is to explain why targeting the economically large and persistent US trade deficit is a reasonable policy goal.

This view is not widely accepted among economists. Everyone gets the by identity, the trade deficit is a drag on growth, but numerous arguments push back on the idea that it’s a problem.

Dean Baker and I tackle the issue here. The punchline, as suggested above, is not that the drag impact of the trade deficit never gets offset. It clearly does, at times. But when offsets are less forthcoming–the Fed’s run out of ammo; the fiscal authorities have gone all austere–the demand-reducing drag from trade imbalances is a problem.

Second, even in flush times, the trade deficit, which is exclusively in manufactured goods, affects the industrial composition of employment, and it is in this regard that Trump has been able to so effectively tap its politics. While high-ranking democrats were running around pushing the next trade deal, he was talking directly to those voters who clearly perceived themselves far more hurt than helped by globalization.

Third, the parenthetical reference above to cheap capital inflows plays a central role in my analysis. Details here and in links therein, but I find that many economists who view the trade deficit as wholly benign fail to deal with these macrodynamics.


This new Republican replacement idea for the ACA sounds a lot more reasonable than it is.

January 23rd, 2017 at 8:16 pm

The new Republican ACA replacement plan by Senators Cassidy and Collins has an interesting logic to it. The way they make it sound in the fact sheet is that blue states can keep the ACA, purple states can go with ACA lite, and red states can just say fuggetaboutit to any federal support.

The governing philosophy here is, “hey, let’s just accept that we’re super polarized, and we’ll let your personal ideology, or at least that of your governor, decide how you want to play this. All good…no harm, no foul.”

But besides the fact that this mellow approach doesn’t come close to satisfying the bloodlust of the House Republicans who a) view Obamacare as the antichrist and couldn’t care less if the heathens in New York and Cali disagree b) want to give all the taxes that support the plan to their wealthy donors, it won’t work, at least according to preliminary analysis by my very smart colleague, Sarah Lueck.

She writes (I’ve bolded my fav parts):

The Cassidy-Collins plan would likely leave many millions who now rely on ACA health coverage, especially those with low incomes and pre-existing health conditions, uninsured or going without needed care. That’s partly because the bill punts major decisions about how to respond to ACA repeal to the states but then scales back the federal support available to cover people.  

Cassidy-Collins would repeal the ACA’s marketplace subsidies, eliminate the individual and employer mandates, and drop or roll back most market reforms and consumer protections — with all changes set to take effect after one year, though the sponsors indicated they would likely extend the effective date by perhaps three or four years. The plan offers states three convoluted options:

– A state could “reimplement” the ACA, including the marketplace subsidies, the market protections for consumers, and the mandates, but with reduced funding. Cassidy-Collins would cap federal funding for marketplace subsidies at 95 percent of what it would have been under the ACA.  (Whether the capped amount would fully adjust for higher-than-expected enrollment or growth in premiums is unclear.) The plan provides less help in making coverage affordable than the ACA.

– A state could choose a new “alternative” option, or fail to choose and default to this “alternative.” With the “alternative,” the federal government would offer a tax credit to be contributed to a new type of Health Savings Account (HSA) instead of providing ACA marketplace subsidies that now help millions of people pay their premiums and out-of-pocket medical costs. But the federal funding for the HSAs would be 95 percent of the funds the ACA would have provided for subsidies.  (For states that haven’t expanded Medicaid, federal funding for HSAs would equal 95 percent of the marketplace subsidies, plus federal Medicaid funding estimated as if the state had adopted the expansion.)  This lesser amount would be spread among a much larger group of people, including individuals at higher income levels (up to $180,000 for individuals and $250,000 for couples), unless the state opted not to do that. People with access to employer-based coverage would also be eligible. The plan would leave less help for lower-income people and the uninsured who want comprehensive plans.

In states choosing this option, insurers in the individual market could again charge higher premiums to people with pre-existing conditions (if they don’t maintain continuous coverage), drop or limit coverage of essential health benefits such as maternity care and prescription drugs, and charge unlimited deductibles, co-insurance, and co-payments.

The option could particularly hurt low-income Medicaid beneficiaries.  States that have expanded Medicaid could opt out and, instead, let expansion enrollees qualify for the HSA tax credit to buy coverage in the newly de-regulated individual market.  Consequently, people who recently gained coverage through the Medicaid expansion would likely go without it because they could not afford a comprehensive plan or experience high cost-sharing and new gaps in coverage.

– Finally, a state could reject any federal assistance. Cassidy-Collins would still require insurers in these states to abide by certain ACA rules, such as a prohibition against annual and lifetime limits and a requirement to cover people up to age 26 on their parents’ plans. [And, maybe, at least as I read it, pre-existing conditions. Which is completely unworkable–JB]

Cassidy-Collins would require states to re-open their struggles over the ACA and act quickly to implement any changes, including through legislation.  But states would likely need significant time to work through the details, even in cases where governors and legislatures agree on what to do.  And the proposal doesn’t do anything to ensure that insurance companies would continue to offer plans in states’ individual markets, or keep premiums at a reasonable level, and thus prevent the market from unraveling while health care reform is in limbo.

So while Cassidy and Collins tout their plan as a way to give states choices to maintain or reject the ACA and let people keep the coverage they now have, it doesn’t appear that the plan itself would achieve those goals.

So speaketh Sarah. Sorry to “harsh their mellow,” but this convoluted hydra won’t hunt.

[Note: this post has been updated since plan details were released.]