Speaker 1: And very cold Tonight lows ten to fifteen ACUA the
Speaker 1: real field scepter falling below zero with those strong winds
Speaker 1: that it's still going to be windy through Tomorrow, mostly
Speaker 1: sunny and very cold to I, I have twenty five
Speaker 1: real fields and the single digits plustery and bitterly cold.
Speaker 1: Tomorrow night clear to part the cloudy lows near ten
Speaker 1: sun will be followed by increasing cloud's Wednesday a high
Speaker 1: twenty nine and then mainley cloudy. Thursday will be cold
Speaker 1: at the period of snow likely which could accumulate one
Speaker 1: to three inches, especially near and south of Boston. Storm
Speaker 1: track even farther south could even mean less snow for
Speaker 1: the area and then not as cold into Friday. I'm
Speaker 1: accuate with the Vida realogist Brian Hopson WBZ, Boston's News Radio.
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Speaker 3: The Four Nations Face Off tournament underway now in Boston
Speaker 3: at the TD Garden this afternoon, Canada beating Finland five
Speaker 3: to three. Canada will play for the championship Thursday night
Speaker 3: at the Garden against Team USA, who have already qualified
Speaker 3: for that big game. USA, though still has a preliminary
Speaker 3: game to play tonight against Sweden. After one period of play,
Speaker 3: USA ahead one to nothing. NBA has been on its
Speaker 3: All Star break, but now teams getting ready to begin
Speaker 3: the stretch run leading up to the playoffs. Celtics getting
Speaker 3: back to work on Thursday night when they traveled to
Speaker 3: Philly to play the seventy six ers. WBZ News time
Speaker 3: is nine oh seven. Back now to Dan Ray and Nightside.
Speaker 3: I'm Al Griffith.
Speaker 4: It's Night Side with Danray on WBZ Costin's News Radio.
Speaker 5: Welcome back everyone, Thanks you very much.
Speaker 6: Al.
Speaker 5: We have heard a lot of talk recently about, certainly
Speaker 5: in the last month, cuts in Washington, DOGE, the Department
Speaker 5: of Government Deficiency, Elon musk As the head of that,
Speaker 5: and I think it's time for us to sort of
Speaker 5: take a couple of steps back and talk to someone
Speaker 5: who knows a lot more about the status of our
Speaker 5: federal debt than any of us. Someone who I have
Speaker 5: had on this program on several occasions, want to welcome
Speaker 5: back Professor Jeffrey Myron of Harvard University. Professor Myron, how
Speaker 5: are you tonight?
Speaker 6: Fine? Thank you, nice to be here.
Speaker 5: Great to have you back. You're at Harvard. You are
Speaker 5: a senior lecturer and director of undergraduate studies in Harvard's
Speaker 5: Economics department. You also are you have a position with
Speaker 5: the Cato Institute, which many of my many of my
Speaker 5: listeners are familiar with. And it's this is a very
Speaker 5: difficult issue for people to get their arms around, and
Speaker 5: I would like to just to try to start from
Speaker 5: from this perspective. To get to one billion, you need
Speaker 5: to have a thousand million. That gets you to one billion.
Speaker 5: Then to get to one trillion, you need a thousand billion.
Speaker 5: And we're at about thirty six trillion in debt. Are
Speaker 5: we well? I think technically we're underwater. But is that
Speaker 5: a debt that that we need to be as concerned
Speaker 5: about to me, it's it's one of them. It's one
Speaker 5: of the most one of the things that worries me most.
Speaker 5: Not for my generation I'm a baby boomer, but for
Speaker 5: subsequent generations. Am I a war reward?
Speaker 6: You know? I think you're right to be worried. I
Speaker 6: would emphasize that it's not just the level of the debt.
Speaker 6: Of course, the level of debt is a relevant thing
Speaker 6: to know, but it's that it's likely to be growing
Speaker 6: at a fast rate, at a much faster rate than
Speaker 6: the economy is likely to grow, and so it's going
Speaker 6: to get worse and worse and worse. So debt per
Speaker 6: se is not necessarily bad. Billions of people are in
Speaker 6: debt because they all on their mortgages, but they have
Speaker 6: enough expectation of future income they think they'll be able
Speaker 6: to pay it back. The US is in a position
Speaker 6: where we in effect have such a huge mortgage in
Speaker 6: terms of commitments to future programs like storal security, medicare,
Speaker 6: that we're never going to be able to pay for them.
Speaker 5: Okay, so let's go to the end of the road.
Speaker 5: If we get to that point where the debt now
Speaker 5: again trillion dollars trillion, here trillion. There it's thirty six
Speaker 5: point two trillion zero, getting towards thirty seven. Our national
Speaker 5: domestic product, our GDP gross national product is about twenty
Speaker 5: seven trillion, So our debt dwarfs the the amount of
Speaker 5: economic activity that we have in the United States in
Speaker 5: an entire year. It would be as if someone was
Speaker 5: making one hundred thousand dollars and their debt now was
Speaker 5: one hundred and fifty thousand dollars. Is that too simplistic
Speaker 5: a way to look at it? Is it? Or is
Speaker 5: it even worse than that?
Speaker 6: I think it's worse than that. I mean, we can
Speaker 6: easily imagine someone who has the expect a has a
Speaker 6: job as an expectation the job will continue, and say
Speaker 6: is going to earn one hundred thousand dollars a year
Speaker 6: just to take a nice simple round number and purchase
Speaker 6: as a house worth a million by taking out an
Speaker 6: eight hundred thousand dollars mortgage. Well, that's a case where
Speaker 6: the debt is way greater than the rate of income
Speaker 6: for that individual. But assuming this person doesn't spend a
Speaker 6: whole hundred thousand each year, say some each year pays
Speaker 6: off the mortgage over twenty thirty years, everything will be
Speaker 6: totally fine. The problem is not just the leafe levels,
Speaker 6: it's the growth rates. It's the projections, which of course
Speaker 6: will never be perfect. But if anything are being too optimistic,
Speaker 6: it's projections that expenditure, especially on Medicare and Social Security,
Speaker 6: are going to keep growing faster than GDP, and so
Speaker 6: that makes our ability to service that debt at some
Speaker 6: point impossible.
Speaker 5: Okay, so you focus on Medicare and Social Security, which
Speaker 5: are I guess, the pillars of the retirement couch. For
Speaker 5: most baby boomers, they have a little social Security coming in,
Speaker 5: they have Medicare available. What is the problem, as you
Speaker 5: see it, with those the exponential growth of those two programs,
Speaker 5: I guess is what you're saying to me. Explain it
Speaker 5: so everybody understands it.
Speaker 6: It's that we have promised to make payments to say,
Speaker 6: support a level of retirement income that is not affordable
Speaker 6: given the size of our economy and the likely growth
Speaker 6: rate of our economy. Same thing, we've committed to paying
Speaker 6: more and more for healthcare for the elderly under Medicare,
Speaker 6: at to a degree that we can't possibly afford because
Speaker 6: there just won't be enough tax revenue to possibly pay
Speaker 6: all of those expenditures. Now, to be clear, we do
Speaker 6: not need to eliminate these programs. Nobody is talking about
Speaker 6: eliminating those programs, but they need to be growing at
Speaker 6: non surely slower rates than they're currently growing, and unfortunately,
Speaker 6: no politicians are talking about even doing that, even making
Speaker 6: modest tweaks to those programs so that they're not bankrupt
Speaker 6: f in the economy at nearly the same rate.
Speaker 5: Now, are these programs Medicare and soci security? Are they
Speaker 5: what is referred to as unfunded liabilities?
Speaker 6: Yes, they can certainly be preferred that also often referred
Speaker 6: to as entitlements. There's roughly two kinds of programs with
Speaker 6: the federal government runs under those which are renewed every
Speaker 6: single year. The Defense budget is are authorized every year,
Speaker 6: the Department of Transportation, Housing most of the things that
Speaker 6: we think about, but source security, Medicare, Medicaid, Obamacare. They
Speaker 6: have been created in a way that they keep spending
Speaker 6: money every single year at higher, higher rates, even if
Speaker 6: Congress does nothing at all. So Congress has to actively
Speaker 6: step in to adjust the rate that they're spending money.
Speaker 6: So far, Congress seems to have zero appetite for doing
Speaker 6: that because, of course for all the people getting them
Speaker 6: and people expecting to getting them in the near future.
Speaker 6: These programs are super popular, but at some point they're
Speaker 6: going to be gone.
Speaker 5: Okay, So at some point right after this break, we're
Speaker 5: going to talk about these programs, going to talk about
Speaker 5: what is being undertaken by the newly inaugurated Trump administration.
Speaker 5: They are coming up on their one month anniversary later
Speaker 5: this week, so they've been in business now for four weeks,
Speaker 5: actually four weeks this very day. The Trump administration has
Speaker 5: been in office. They're getting tremendous criticism from their efforts
Speaker 5: to ask federal employees to resign except severance packages. We
Speaker 5: know a little bit about all of this. You know
Speaker 5: a lot about all of this. We'll talk about this.
Speaker 5: We'll talk about what can be done.
Speaker 6: Now.
Speaker 4: Back to Dan Ray live from the Window World of
Speaker 4: Legs sist Year. I'm doing BSY News Radio.
Speaker 5: Talking with Professor Jeff Myron of Harvard Universities and an
Speaker 5: economist and someone who this is what he lives when
Speaker 5: we talk about one thing which I think a lot
Speaker 5: of people get confused, Professor, and this is such an
Speaker 5: elementary question for you. I'm almost hesitant to ask it.
Speaker 5: The difference between the federal deficit and the federal debt.
Speaker 5: Many people use those those terms interchangeably. Just a quick clarification,
Speaker 5: difference between deficit and debt.
Speaker 6: Sure, the deficit is what's happening in this period, say
Speaker 6: this year. So this year the government had some revenue,
Speaker 6: it had some expenditure, and the difference is the deficit. Okay,
Speaker 6: The debt is adding together all the past deficits. So
Speaker 6: in one year, if you had a deficit of one
Speaker 6: hundred billion dollars, that at the end of that year,
Speaker 6: your debt would also be one hundred billion. But the
Speaker 6: next year you have another deficit of another one hundred billion,
Speaker 6: your debt is two hundred billion dollars, because it's the
Speaker 6: past deficit plus any new deficit that you've accumulated going
Speaker 6: forward a year, and you just keep adding that up.
Speaker 6: So the debt is the sum of all of our
Speaker 6: past deficits and surpluses. And the fact that we have
Speaker 6: such a large debt relative to GDP means that on
Speaker 6: the whole, we've almost always had deficits, and increasingly, in
Speaker 6: the last sort of ten years, bigger and bigger deficits.
Speaker 6: So that the death is just going to keep getting
Speaker 6: bigger and bigger.
Speaker 5: Yeah, it's growing exponentially. So again, these are just some
Speaker 5: figures that I know figures are tough on radio, but
Speaker 5: just your comment on these. Nineteen seventy that's obviously long
Speaker 5: time ago, that's fifty years ago, but it's within the
Speaker 5: memory of many people in my audience. Our federal debt
Speaker 5: was about a third three hundred and seventy one billion dollars.
Speaker 5: It was the third of the trillion dollars. Now our
Speaker 5: debt has ballooned to thirty six point two trillion dollars
Speaker 5: as of last month, and it just seems to grow.
Speaker 5: In two thousand, it was up to five trillion. In
Speaker 5: twenty ten, more than double it was two. It was
Speaker 5: thirteen trillion twenty twenty. Another ten years, it was twenty
Speaker 5: six trillion two thousand and twenty four. Obviously COVID had
Speaker 5: a big part to do with this. It really exploded
Speaker 5: to thirty five, which is what we're concerned about. How
Speaker 5: we get out of this. We talked earlier today, and
Speaker 5: you have kind of a dystopian view that that even
Speaker 5: what what Elon Musk is attempting to do is not
Speaker 5: going to make a huge difference.
Speaker 6: Correct, Correct, I don't think it's just my view. I
Speaker 6: think of that majority of that.
Speaker 5: I'm not just contributing it to you. I apologize.
Speaker 6: I mean, and it's pretty simple arithmetic. If you take
Speaker 6: the salaries of all federal employees, all of them, for
Speaker 6: every possible department, divisions, agency, and get something like four
Speaker 6: hundred billion dollars, but the government expenditure is something close
Speaker 6: to seven trillion dollars. So you could cut every single employee,
Speaker 6: eliminate their salaries, eliminate their pensions, and you still would
Speaker 6: make a very very small dent in the amount that
Speaker 6: we're spending per year because of very large percentage of
Speaker 6: what we spend is medicare, another large percentage of so security,
Speaker 6: another large percent is the interest on the debt that
Speaker 6: we've already accumulated, plus government spending, and then all the
Speaker 6: other stuff that Dooze is worrying about, some of which
Speaker 6: should absolutely go. I'm not that's a different question, but
Speaker 6: in terms of balancing the budget, it's going to make
Speaker 6: it most a tiny difference.
Speaker 5: So if we're spending seven trillion, we're only taking in
Speaker 5: how many trillion are we taking in in all taxes,
Speaker 5: what for maybe four trillion, five trillion.
Speaker 6: And I think it's a little higher than that, but
Speaker 6: I don't think we're out quite deficits of two trip.
Speaker 6: But yes, in that ballpark. I mean, so we have
Speaker 6: that it's trillions of dollars per year each year we're
Speaker 6: coming short in terms of having expenditure that's greater than
Speaker 6: revenue by several trillion. That starts to add up at
Speaker 6: a really fast rate.
Speaker 5: Okay, So if if Elon Musk came to you that said,
Speaker 5: what can I do to really have an impact? I mean,
Speaker 5: he's got people marching in the streets right now because
Speaker 5: they're asking for people to take a severance package. There's
Speaker 5: a lot of people out there would like a severance
Speaker 5: package who are ready to retire. And you mentioned that
Speaker 5: some of the people who have taken the severage package
Speaker 5: were prepared to retire within a couple of months and
Speaker 5: now they're going to be get a severance to September.
Speaker 5: What you're saying is something's going to be done with
Speaker 5: soci security, something's going to be done with medicare. What
Speaker 5: can be done with social security realistically or unrealistically, take
Speaker 5: whichever you want.
Speaker 6: Well, at some level. Almost everything sounds unrealistic because it's
Speaker 6: put all the changes that would go in the right
Speaker 6: direction are politically unpopular, but things that one can imagine
Speaker 6: would be slowly, not all at once, but gradually phasing
Speaker 6: in slightly higher ages of eligibility for people to start
Speaker 6: collecting Social Security paths its. First of all, that happened
Speaker 6: once in the United States, in nineteen eighty six, we
Speaker 6: passed the law that has been over the past roughly
Speaker 6: forty years, phasing in higher and higher ages. Roughly, it
Speaker 6: used to be everybody's got it at sixty five. Now
Speaker 6: people's age of full benefits is postponed to sixty seven,
Speaker 6: sixty eight, et cetera. So that goes in the right direction.
Speaker 6: You could have the rate at which benefits go up
Speaker 6: not be quite as big, a slightly less generous formula
Speaker 6: than has been the case in the past.
Speaker 5: As a cost a living increase. Right.
Speaker 6: Other two pieces, Once you start collecting benefits, the benefits
Speaker 6: you get per year goes up with the consumer price index,
Speaker 6: but the amount that we pay the new beneficiaries goes
Speaker 6: up with the rate of growth of wages, which is
Speaker 6: typically sort of one to two percent higher than the
Speaker 6: rate of growth of prices, So you could imagine cutting
Speaker 6: that back a little bit. And the point is that
Speaker 6: would be have a very very small effect on people
Speaker 6: retiring in the next you know, three to five years.
Speaker 6: They have a slightly bigger effect on people retiring pay
Speaker 6: ten years from now. So it would not be crushing anyone.
Speaker 6: It would not be yanking the rug out from under
Speaker 6: in a major way. It would be spreading the adjustment
Speaker 6: over decades and decades over generation. And you could do
Speaker 6: analogous things with medicare. Instead of everybody getting in sixty five,
Speaker 6: people who are say sixty or younger don't get it
Speaker 6: till there's sixty five and a half. They not ideal,
Speaker 6: obviously from the perspective of those people, but not catastrophic.
Speaker 6: And then people who are fifty five and younger face
Speaker 6: a little bit longer delay and things like that. So
Speaker 6: these are things which you know, economists think are sort
Speaker 6: of natural, but they don't pull well. No politicians seems
Speaker 6: to want to endorse them. So it's hard to figure
Speaker 6: out what sucks are going to happen until we just
Speaker 6: get to some crisis so huge that we end up
Speaker 6: kind of defaulting on the debt and that's a form
Speaker 6: of a huge tax levee. But it's not. It's a
Speaker 6: painful way to do it. There will be a lot
Speaker 6: of chaos and a lot of waste resources that go
Speaker 6: along if we do it that way.
Speaker 5: Okay, let's assume that we wrote we increase taxes, and
Speaker 5: we taxed literally at the rate of ninety of of
Speaker 5: you know, an immense number of people. Or let's say
Speaker 5: we taxed everybody at one hundred percent. That would have
Speaker 5: an impact, but not going to have a great impact
Speaker 5: besides destroying the economy. Correct.
Speaker 6: I think that would have a very counter productive impact.
Speaker 6: Because if you have tax rates that are above some range,
Speaker 6: it's probably not much different than the current range. People
Speaker 6: start evading and avoiding, moving to Canada, moving to Europe,
Speaker 6: finding Swiss back. They will do all manner of things
Speaker 6: to avoid having to pay those super high tax rates.
Speaker 6: So you will have made the economy less productive, you
Speaker 6: won't collect any extra tax revenue. You will be on
Speaker 6: the wrong side of the Laffer curve if you increase
Speaker 6: rates by those sort of amounts. And so that's not
Speaker 6: a sensible thing to do that because a it won't work.
Speaker 6: It's just it's it's incredibly counterproductive.
Speaker 5: So we're in a conundrum here from which politically there's
Speaker 5: going to be You won't have enough members of the
Speaker 5: four hundred and thirty five members of the House or
Speaker 5: the one have been members of the Senate who would
Speaker 5: bite the bullet in maybe maybe right the end of
Speaker 5: their political career. Is that's really the problem, as I
Speaker 5: see you outlining it.
Speaker 6: That is exactly the problem. And sometimes weird things happen.
Speaker 6: Maybe when people start to get really scared, there will
Speaker 6: be some grand bargain that will address the issue, but
Speaker 6: in a way that doesn't kick in for ten or
Speaker 6: twenty years, so it's not so relevant or the current
Speaker 6: members of Congress. But we haven't seen that many countries
Speaker 6: ever do that. We've seen a lot of countries have
Speaker 6: fiscal meltdowns where they did default on their debt. They
Speaker 6: did have huge disruptions to their economy because they kept
Speaker 6: kicking the can down the road until all of a
Speaker 6: sudden there was nowhere left to kicket.
Speaker 5: And when there's nowhere left to kick it, the currency
Speaker 5: is devalued. Is that not the to move?
Speaker 6: So I mean it is in one level of solution.
Speaker 6: If the government starts printing more and more money that
Speaker 6: creates higher inflation. That inflation reduces the value of the
Speaker 6: debt we owe, and so it's a form of a
Speaker 6: tax increase, but it does likely lead to such high
Speaker 6: rates of inflation that it's incredibly disruptive of the economy.
Speaker 6: So you'll not only have this tax increase, but you'll
Speaker 6: have all sorts of counterproductive behavior going on as people
Speaker 6: try to avoid this inflation. Dex will be like Argentina was,
Speaker 6: and lots of other countries have been that ended up
Speaker 6: in hyperinflations. So that's not an ideal way to address
Speaker 6: the issue, either, doing something like slowing the growth of
Speaker 6: expenditure in a gradual way that doesn't throw people out
Speaker 6: on the street, but that still over decades, does get
Speaker 6: the growth rate down. I think that's the least bad
Speaker 6: thing to do given where we.
Speaker 5: Are, and it's still there's still time, but time in
Speaker 5: that hourglass is quickly slipping away. According to what I
Speaker 5: hear from you and from what I know, you firmly
Speaker 5: believe yes.
Speaker 6: And I think what bothers a lot of economists is
Speaker 6: that it's been hard to predict in past episodes in
Speaker 6: various countries when the hour glass is going to run out,
Speaker 6: and you can sort of see it coming, and yet
Speaker 6: things are going along okay, and they keep seem to
Speaker 6: go along okay, and then people start to say, gee,
Speaker 6: you've been crying wolf for years now and everything's okay,
Speaker 6: and so you keep going. But then boom, out of nowhere,
Speaker 6: something pushes you over the edge. And that has happened
Speaker 6: to lots of economies over the centuries.
Speaker 5: My guest, my extraordinary guest, is my friend, Professor Jeffrey
Speaker 5: Myron of Harvard University. Now he's the senior lecturer, director
Speaker 5: of Undergraduate Studies at Harvard's Economic Department. We will take
Speaker 5: questions for the callers right after the break. Professor, thank
Speaker 5: you so much for your time tonight, and I'm going
Speaker 5: to try to prevail upon you to stick with us
Speaker 5: until the end of the hour. I know, I I
Speaker 5: assume classers are back tomorrow, so I'm probably.
Speaker 6: Probably have I'm happy, happy to stay well.
Speaker 5: I'll tell you you're reaching a lot of people, and
Speaker 5: these are people who are hearing what you say. You
Speaker 5: explained it so clearly. It is truly a gift that
Speaker 5: you have. But it's a gift that my audience now
Speaker 5: can enjoy. We'll get to phone calls. The only line
Speaker 5: that is, I only have one line six one, seven, nine, three, one,
Speaker 5: ten thirty. All the other lines are full up. I'll
Speaker 5: let you know when they open up, but right now
Speaker 5: six one, seven, nine, three, one, ten thirty and again,
Speaker 5: questions not speeches, please everyone coming back on Nightside.
Speaker 4: It's night Side with Dan Ray on w B Boston's
Speaker 4: news radio.
Speaker 5: My guest, Professor Jeffrey Meran of Harvard University. We'll go
Speaker 5: to phone calls. Here we go. We're going to start
Speaker 5: off with Andrea in Newton, Massachusetts. Andrea, welcome to Nightside.
Speaker 5: You're on with jeff Myron of Harvard University.
Speaker 7: Go ahead, Andrea, Hi, good evening, Thank you for taking
Speaker 7: my call. CAN certainly stand what you're saying. My house
Speaker 7: budget doesn't work if I work in a deficit. I
Speaker 7: understand that. But what I don't understand is why part
Speaker 7: of the conversation on my question is part of the
Speaker 7: conversation isn't that all these boomers that are responsible for
Speaker 7: this raging increase have been paying into this involuntary government
Speaker 7: investment account for forty five years in the understanding that
Speaker 7: they would have so security and medicare at the end
Speaker 7: of it. Why wouldn't it be a subject of a
Speaker 7: class action suit for having taken all this money from
Speaker 7: these taxpayers and psycho payers for all these years and
Speaker 7: not find it at the end when they were expecting
Speaker 7: to get it.
Speaker 5: Well, that's the cause of action. There is sort of
Speaker 5: a contract argument, Professor. At the same time that our
Speaker 5: government doesn't have very deep pockets. I don't know how
Speaker 5: you're going to get any more, honey, how you going
Speaker 5: to get blood out of a stone. I understand Andrew's question,
Speaker 5: and I think it's a great question. Andrew. I'm a
Speaker 5: baby boomer like you are. We paid in all of
Speaker 5: these years. It would have been great if we could
Speaker 5: have voluntarily taken that money that went to Social Security
Speaker 5: invested in the stock market. I think we would have
Speaker 5: had a better rate of return. Jeff Myron going Professor.
Speaker 6: Myron, So, I completely understand the question, and it's completely reasonable. Unfortunately,
Speaker 6: despite the hype, despite the way that politicians have tried
Speaker 6: to portray Source Security, it is not an investment vehicle.
Speaker 6: It is not a savings mechanism. The money that people
Speaker 6: are paying in in their taxes in the years that
Speaker 6: they're working, is flowing out more or less instantly within
Speaker 6: months or year to people who are already retired collecting benefits.
Speaker 6: So it is the lingo in economics is it's a
Speaker 6: pay go system. Pay as you go. We take money
Speaker 6: from the working and transfer it, not invest it, not
Speaker 6: say that we train answer it to people who are
Speaker 6: eligible to collect benefits. And so the frustration of people
Speaker 6: as anders is completely reasonable and understandable, But I don't
Speaker 6: think they have any legal course of action because that's
Speaker 6: not the structure of the system. It's the hype that
Speaker 6: politicians have perpetuated to make people think that they're investing
Speaker 6: their money. But they have quick comment.
Speaker 5: When Social Security began in the nineteen thirties, how many
Speaker 5: workers were supporting how many pensioners? And what is that
Speaker 5: correlation today?
Speaker 6: Oh, the ratio of people working to receiving was much
Speaker 6: much much higher. Was I don't remember exactly, but ten
Speaker 6: or twenty to one. That's because initially very few people
Speaker 6: were eligible, but everybody was initially subjected to the taxes.
Speaker 6: Now I think it's down to something like two to one,
Speaker 6: and it just keeps getting worse because on average, COVID
Speaker 6: is disruption aside, we are living longer, so there are
Speaker 6: more people who are above the age of eligibility, and
Speaker 6: rates are low, so there are fewer and fewer people
Speaker 6: in the working age population relative to the total number
Speaker 6: who are eligible. So the demographics definitely made it worse
Speaker 6: and worse over time.
Speaker 5: Andrew, you asked a great question. I hope you realize
Speaker 5: the answer is totally accurate in terms of what our
Speaker 5: options are.
Speaker 7: I do understand what you're essentially saying. Is that not
Speaker 7: an investment but in fact an additional tax Closer to
Speaker 7: where you said, it's an untenable tax rate.
Speaker 6: It's a transfer program. It's transferring funny from the working
Speaker 6: age population to the retired age population. And that may
Speaker 6: be good or bad for various reasons, but that's the
Speaker 6: structure of the existing program.
Speaker 5: You know, Andrew, you've heard the phrase living is the
Speaker 5: best revenge. The baby boomers a living, and some would
Speaker 5: argue it was a Ponzi scheme. I don't know if
Speaker 5: Jeff Myron would go that far, but.
Speaker 6: I don't think I would haul at that. I'm not
Speaker 6: sure that helps illuminate, but it has been missold. So
Speaker 6: I would simply say politicians wanted people to think of
Speaker 6: it as saving and investing because that sounded better than
Speaker 6: the reality. But the reality is, unfortunately, it's just taxing
Speaker 6: and transferring.
Speaker 5: Well, we remember when al Gore in two thousand referred
Speaker 5: to social security was in a lock box, but no
Speaker 5: one could find the locked box. I would reply, if
Speaker 5: it wasn't so, I would laugh if it wasn't so sad.
Speaker 5: Great questions.
Speaker 7: Thanks Andrea, Thank you.
Speaker 5: You're welcome. Let me go next to Dina in Boston. Dina,
Speaker 5: you are next one. Nice. I have a professor Jeff Myron
Speaker 5: of Harvard University.
Speaker 8: Go ahead, Dina, thank you for hacking my call. If sorry,
Speaker 8: I have a question, when what do we learned to
Speaker 8: the previous call. I am on social Security and on Medicare.
Speaker 8: But the tax taxing our social security, and when we
Speaker 8: get our social Security check, we have to pay a
Speaker 8: certain amount of Medicare, so in we're like almost contributing
Speaker 8: to what we're getting.
Speaker 5: To get you and going is what you're saying, Dane,
Speaker 5: go right ahead, professor.
Speaker 6: I mean what you said is certainly is correct. The
Speaker 6: unfortunate is that to some degree people are not being
Speaker 6: taxed enough and or are getting not being asked to
Speaker 6: pay big enough premiums to make the system solvent, to
Speaker 6: make it, you know, to make it balance out over time. Now,
Speaker 6: there's specific ways in which economists would suggest adjusting the
Speaker 6: cause and benefits that you get from being in, say
Speaker 6: the Medicare program. So not necessarily raising the premiums you
Speaker 6: have to pay, but we're increasing the copays and deductibles.
Speaker 6: And the reason for that is that if people face
Speaker 6: big copais and deductibles, then for initial levels of expenditure,
Speaker 6: it's out of pocket and they will think a bit
Speaker 6: harder about do I really need this or not. That
Speaker 6: means less expenditure under the program, and maybe also somewhat
Speaker 6: better choices about whether people should get all the medical
Speaker 6: care that's being pushed on them by the healthcare system.
Speaker 6: But that's still negative for the people who's the beneficiary,
Speaker 6: there's no question. But that's the reality. We can't afford
Speaker 6: what we've promised ourselves, and so somebody has to bear
Speaker 6: that that cut.
Speaker 8: It's just funny because when I've turned sixty five, I
Speaker 8: got comments from the previous you know, the next generation saying, well,
Speaker 8: now you have free insurance, so.
Speaker 6: Absolutely it is not free.
Speaker 8: I mean it's supplemental or they'll fign you for the rest.
Speaker 6: Of your life. Yes, I means to provide it does
Speaker 6: provide a benefit. You're getting more, you're getting something which
Speaker 6: you wouldn't get if you had no insurance. But instead
Speaker 6: calling it free is absolutely not right. That's right if
Speaker 6: I could just.
Speaker 5: Jump in being it for one question, for one quick
Speaker 5: question for Professor Myron, and that is that I know
Speaker 5: that this question might sound a little off the wall,
Speaker 5: but I remember talking to a heart surgeon in New
Speaker 5: York who told me that there were people who arrive
Speaker 5: in New York, maybe not every day, but with some frequency,
Speaker 5: who are well into their seventies or eighties and who
Speaker 5: are in need of heart surgery. They've never lived in
Speaker 5: this country before, they appear at the airport, they collapse
Speaker 5: when they come off the plane, and they are taken
Speaker 5: to some of the best heart surgeons in the world.
Speaker 5: I mean, we do have a lot of people who
Speaker 5: come here at an advanced age and they have never
Speaker 5: contributed to any of these programs, and I'm not mistaken
Speaker 5: they still benefit from them.
Speaker 6: That Professor I did not think one was eligible for
Speaker 6: Medicare unless one had been a resident and participating in
Speaker 6: the social security system for some number of years. I
Speaker 6: might be wrong about that, but I think.
Speaker 8: Well security, so security free care, right free care, free care.
Speaker 5: And now again some would say, well, this is anecdotal,
Speaker 5: And I used to criticize John Sober for using anecdotal evidence.
Speaker 5: Now that i'm his age, I will use this. But
Speaker 5: I have a friend of mine, as a Heartschurger in
Speaker 5: New York, has told me that that people have arrived,
Speaker 5: and he's told me the countries. I'm not even going
Speaker 5: to mention the countries, but they come here and it's
Speaker 5: like they they collapse, and they know before they got
Speaker 5: here that they have serious heart problems and maybe even
Speaker 5: have some Clark gunderies. We're not going to let him
Speaker 5: die at the airport, is what We're a generous exactly,
Speaker 5: Professor Iron on this, Professor.
Speaker 6: I just I just looked at up okay, and so
Speaker 6: I'll tell you. And this is from the government's website,
Speaker 6: the Centers for Medicare and Medicaid Services. Just to be
Speaker 6: eligible for Medicare, you must be sixty five or older,
Speaker 6: be a US resident, and either a US citizen or
Speaker 6: an alien who has been lawfully admitted for permit residence
Speaker 6: and been residing in the United States for five continuous
Speaker 6: years prior to the month of filing an application for Medicare.
Speaker 6: So there is some residency requirement if you're not a
Speaker 6: US resident, US citizen. So now there may well be
Speaker 6: hospitals that choose to donate their services to people coming
Speaker 6: conversities for whatever reason, but that's a separate question.
Speaker 5: And they donate services that yeah, okay, so they donate
Speaker 5: this services and decided to do pro bono, arguably they're
Speaker 5: not going to be compensated for it. Okay, right, okay, okay, thank.
Speaker 8: You, thank you, Okay, thank you, Yes, thank you very much.
Speaker 5: Tonight, take a quick break. My guess is Professor Jeff Myron.
Speaker 5: He looks things up. I'm thank you, professor. I have
Speaker 5: been I've had been corrected here many times in my program,
Speaker 5: but never as quickly or as thoroughly as I just
Speaker 5: was corrected. Thanks so much. Back at nights Side with
Speaker 5: Professor Jeff Myron of Harvard University right after this.
Speaker 4: Now back to Dan ray Mine from the Window World
Speaker 4: Night Side Studios on.
Speaker 5: W b Z News Radio. My guest Professor Jeff Myron
Speaker 5: of Harvard University Professor. One little comment that I like
Speaker 5: to make is that in the US, it is my
Speaker 5: understanding hospital emergency rooms are required to provide treatment regardless
Speaker 5: of insurance or ability to pay. And I think that
Speaker 5: is the loophole by which a lot of people do
Speaker 5: receive medical care, whether it's Medicare or are not Medicare
Speaker 5: in America.
Speaker 6: So I think that's right, but I think it doesn't
Speaker 6: necessarily apply it all possible care. It applies to emergency, right.
Speaker 5: So if you get off play in New York and
Speaker 5: you and you have a couple of arteries blocked, you
Speaker 5: might you might be as for open heart surgery. Is
Speaker 5: what that doctor had told me. So anyway, but but
Speaker 5: I thank you for that, for that correction. Let me
Speaker 5: get real quickly, Heather in Arlington a lot of women callers,
Speaker 5: which is always great here on nightside, Heather, you run
Speaker 5: with Professor Jeff Myron.
Speaker 8: Oh, hi, how are you?
Speaker 9: And Dan? I know what you're thinking of. So if
Speaker 9: somebody does go into the er and they are having,
Speaker 9: like say, needed open heart surgery, they the hospital will
Speaker 9: look and see do you qualify for free care? What
Speaker 9: do you qualify for? Do you do you need math
Speaker 9: health to do a math health application, then if it's
Speaker 9: math health, which is like Medicaid, then you can back
Speaker 9: build to the date of when the application was done.
Speaker 5: Gotcha, Thank you. What's your question for Professor Myron?
Speaker 9: So my question is what I wanted to ask, is
Speaker 9: you know how they Trump has his tax break that
Speaker 9: he's going to be giving to the wealthier to corporation.
Speaker 9: So if that if you tax corporations, say the same
Speaker 9: that where tax like regular medical Middle America, would that
Speaker 9: help with the deficit or what would that look like?
Speaker 6: So moderate tax increases relative to where we are will
Speaker 6: certainly tend to help the deficit. They'll be more revenue
Speaker 6: coming in. If you try to reduce the deficit a
Speaker 6: substantial amount and therefore over time reduce the debt by
Speaker 6: substantial amount with tax increases, you'd find that it ended
Speaker 6: up being counterproductive because much higher tax rates will induce
Speaker 6: more evasion and avoidance, people moving to other countries, people
Speaker 6: hiding their activities, and he's going underground, and so on.
Speaker 6: In terms of corporations, economists don't make as big a
Speaker 6: distinction between corporations versus people because corporations are owned by people,
Speaker 6: and they employ people, and they sell their goods to people.
Speaker 6: So if we try to raise tax revenue by taxing corporations,
Speaker 6: the impact the incidents of that will be on several
Speaker 6: different groups, partially on the shareholders of the corporation, but
Speaker 6: also on these other groups like the employees and the
Speaker 6: people who buy the product. In the extreme case, to
Speaker 6: take one example, if you had a very very high
Speaker 6: corporate income tax rate, a lot of corporations are going
Speaker 6: to move overseas. They're going to stop employing US workers
Speaker 6: and employ people in Ireland or Thailand or whatever. So
Speaker 6: that might have a distributional consequence which people wouldn't like.
Speaker 6: So that's not an obvious way. I mean, I'm not
Speaker 6: saying the current rate is exactly the right rate or not. Actually,
Speaker 6: I think in my view, ideally the corporate tax rate
Speaker 6: should be zero and we should be that they were
Speaker 6: always taxing people and tax them directly, and you can
Speaker 6: still have a very progressive system that tax is hiring
Speaker 6: the people more heavily, but do it by directly taxing people.
Speaker 5: Great question, Heather, great question, Thank you. We've had three
Speaker 5: great callers. Great questions. Thanks Heather. Let me get Joe
Speaker 5: and Bellmont here. Joe, you got to be quick for
Speaker 5: me getting tight on time.
Speaker 10: Go right ahead, Dan, It is better to light a
Speaker 10: candle than to curse the doc.
Speaker 5: Now, do me a favor. Just ask whatever question you
Speaker 5: want Joe with Professor Myron.
Speaker 10: Okay, I just wanted to take fifteen seconds to give
Speaker 10: you more encouragement than three things you're very good at
Speaker 10: patriotism number one, do.
Speaker 5: Me a Joe. Save that for another night. I don't
Speaker 5: want to waste Professor's time. All with all deference to you,
Speaker 5: I appreciate you have a question for the professors.
Speaker 10: The question is, doctor, uh, do you if printing of
Speaker 10: money is causing the depth? Why does the government meant
Speaker 10: print more money? And what are for other ten reasons
Speaker 10: for the thirty six trillion?
Speaker 5: Okay, good, gotcha, professor. Why are we continuing to print money?
Speaker 5: I guess we I guess the government feels it's necessary.
Speaker 6: Printing money is one way a government can raise revenue,
Speaker 6: because when the government prints the money, it owns the money,
Speaker 6: so that then it can go and buy stuff that
Speaker 6: would otherwise have to pay for it by having raised
Speaker 6: other kinds of taxes. The question with any tax is
Speaker 6: how high should it be and how should it be
Speaker 6: balanced against other kinds of taxes, and the experience for
Speaker 6: a long long time is you print tons of money,
Speaker 6: you get inflation that's out of control and that's very
Speaker 6: disruptive for e comedies.
Speaker 5: Thanks Joe for the question. Appreciated. Let me go to
Speaker 5: Jay in Boston. J got about less than a two minutes.
Speaker 5: Go right ahead. You're on, Professor Jeff Myron.
Speaker 11: I'll make it real quick, Dan, I'll make it real quick.
Speaker 6: Thank you.
Speaker 11: So I was looking at up twenty two percent of
Speaker 11: the federal budgets going toward Social Security right now. So
Speaker 11: my question is forty six and they've been talking for
Speaker 11: years there. You know, by the time you reach retirement age,
Speaker 11: you're not going to have Social Security. So I mean
Speaker 11: just a ballpark, I mean estimate, going the route we're
Speaker 11: going right now with social Security? How long do you
Speaker 11: think we have left? I mean because I always thought
Speaker 11: it was self funded. I didn't realize that the government
Speaker 11: actually borrowed from it back in like nineteen eighty two.
Speaker 11: So I'm just curious, like what your thoughts are, like
Speaker 11: they did they ever pay back that money? And how
Speaker 11: long we have left to Social Security?
Speaker 5: Like what do you what do you think to give
Speaker 5: is he needs some time to answer the question. I
Speaker 5: believe that right now that sociecurity runs out in a
Speaker 5: few years.
Speaker 6: Yeah, and about ten years. So under the current rules,
Speaker 6: if there's no change in any of the parameters, we
Speaker 6: will start having deficits in the Social Security Trust Fund
Speaker 6: approximately twenty thirty three thirty four. And at that point,
Speaker 6: the rule says that all benefit payments have to be
Speaker 6: cut so that the ratio of revenue coming in to
Speaker 6: payments going out is not exceeded. And that number looks
Speaker 6: like it'll be about seventy five percent. So benefits starting
Speaker 6: in about ten years are going to be cut about
Speaker 6: twenty five percent for everyone already retired and to be
Speaker 6: retired later. So that's not nothing. Seventy five percent is
Speaker 6: more than zero, but it's a noticeable cut.
Speaker 5: Jay, great question, Thank you, Dain.
Speaker 11: Always a pleasure, guys, thank you so much. Great show,
Speaker 11: Thank you, thank you.
Speaker 5: Absolutely great, great hour with a great guest. To the
Speaker 5: callers in the line, I apologize you got a call earlier,
Speaker 5: Professor Jeff Myrone. There's no way I can thank you
Speaker 5: for the clarity of the and the accuracy of the
Speaker 5: information you have once again provided for us and thank
Speaker 5: you so much. There's nothing more I can say other
Speaker 5: than I owe you greatly.
Speaker 6: My pleasure to be here. I really enjoyed it.
Speaker 5: Thank you so much. We'll talk again. I'd love to
Speaker 5: get you on at some point, maybe a few months
Speaker 5: from now, and see how this administration is doing, if
Speaker 5: they're if they're being successful or not. Professor, By the way,
Speaker 5: do you have a recent book that we could mention,
Speaker 5: because what can I help you?
Speaker 6: You could mention my substack that's called libertarian Land and
Speaker 6: that discusses these and all sorts of other.
Speaker 5: Interesting issues on sub stack Liberty. Yes, okay, thank you
Speaker 5: so much, appreciate it very much. All right, and we
Speaker 5: get back. We're going to talk about the weather, a
Speaker 5: little simpler topic to deal with and one that all
Speaker 5: of us can relate to. Although Jeff Meyern did a
Speaker 5: great job, and I really believe me when I say
Speaker 5: these one of my favorite guests. We're going to be
Speaker 5: talking with Isaac Longley of ACU Weather. How long is
Speaker 5: this going to last? And I don't remember February ever
Speaker 5: being this cold, and I've been around this part for
Speaker 5: a long time. Back on Night Side, right after the
Speaker 5: ten o'clock news,