Just the Facts Bernie

by Tom Licata

“Sanders stirs pot on policy, politic,” read the Burlington Free Press, March 27 headline, referring to one of his town hall meetings.  Let’s look at his “in-depth” analysis to our economic crisis:

“There really is a war being waged against the middle class by some of the wealthiest people in this country and their political operatives.”  “Their philosophy, their ideology, is an oligarchic type of society where the people on top have the money and are able to exert enormous economic and political influence, and working people, if they’re lucky, can get some kind of job which in many cases doesn’t pay a living wage.”

Sen. Sanders’ narrative is a simple and incurious one:  rich against poor; exploiter versus exploited.  If only it were that simple.  By taking this stance, Sen. Sanders has set himself up to accusations of simple-mindedness, and has set back solutions to our nation’s problems by decades.  Instead of using his considerable decades-long media platform for town hall economic-education forums, he reverts to exploitive electioneering demagoguery, fueling the public’s prejudices through the manipulation of human envy.

Where we do agree, is here:  “We’ve got a lot of problems out there, but I believe as I have always believed that when the American people learn the facts, they stand up and fight…,” so said Sen. Sanders.

“Facts,” let’s look at some, Sen. Sanders.

Charles Blahous, one of two public trustees for Social Security and Medicare, penned an interesting piece (Nobody Is Proposing to ‘Slash’ Social Security Benefits,” WSJ, Feb. 3) refuting a claim Sen. Sanders so often makes and did so at his town hall meeting:  “At a time when millions and millions of working people are struggling to get by, it makes no sense to me to make savage cuts on programs that people depend upon for life-or-death issues.  I’m going to do everything I can to oppose those cuts.”

Mr. Blahous explains that today’s medium-wage retiree receives Social Security benefits of about $18,000 per year and that because it is indexed to wages, rather than prices, this same retiree will have the purchasing power of $29,000 (in today’s dollars) in 2050.  President Obama’s Bowles/Simpson Fiscal Commission instead recommended an increase to $24,000.  This is the kind of “savage cuts” Sen. Sanders speaks of.  And while the Commission’s increase in purchasing power is $6,000 instead of $11,000, Social Security’s pay-as-you-go template doesn’t work in today’s demographic environment. Maintaining the status-quo would require a tax increase on future workers (our children) of some 33%.  Thus, the fight isn’t about “savage cuts” to Social Security but rather, its rate of real benefit growth.

More, “facts,” Sen. Sanders:

Michael Spence, a 2001 Nobel laureate in economics, penned a study titled:  “The Evolving Structure of the American Economy and the Employment Challenge.”  In this fact-filled narrative, Dr. Spence details the reasons for the changing distribution of both wealth and employment:  Globalization (defined as “the process by which markets integrate worldwide”), technological productivity and educational proficiency round out the list of “villains” that challenge our 21st century economy.

Today, the effects of these three challenges are notable:  China and 12 other developing countries have grown by more than 7 percent per year for the past 25 years while the U.S. and the other developed countries have grown some 2.5%.  As these developing countries converge toward our standard of living, this competition and other complexities have sowed the growing disparities in both wealth and jobs in our nation.  And there’s no putting this genie back in its bottle.

The question isn’t if we will have more pain but rather how and when we will experience it and, whether that pain will be more disorderly than orderly.

Our problems are structural and demand structural solutions.  Simple-minded electioneering demagoguery worked when our nation had near monopolistic economic power after WWII and up to the 1970s.  Today, we need intellectually-curious, knowledge-giving leaders who dare to invigorate the public’s intellect, rather than insult it.

Tom Licata is the President of Vermonters for Economic Health