February 17, 2025 • 40 mins
Elon Musk has been making global headlines as he oversees the Department of Government Efficiency and hunts for wasteful government spending. With the U.S. recently surpassing $36 trillion in debt, will DOGE’s efforts even make a dent? Joining Dan to discuss was Jeffrey Miron, Senior Lecturer and Dir. of Undergraduate Studies in the Department of Economics at Harvard University.
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Speaker 1 (00:00):
And very cold Tonight lows ten to fifteen ACUA the
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sunny and very cold to I, I have twenty five
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Tomorrow night clear to part the cloudy lows near ten
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(00:21):
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Speaker 2 (00:36):
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Speaker 3 (01:06):
The Four Nations Face Off tournament underway now in Boston
at the TD Garden this afternoon, Canada beating Finland five
to three. Canada will play for the championship Thursday night
at the Garden against Team USA, who have already qualified
for that big game. USA, though still has a preliminary
game to play tonight against Sweden. After one period of play,
(01:30):
USA ahead one to nothing. NBA has been on its
All Star break, but now teams getting ready to begin
the stretch run leading up to the playoffs. Celtics getting
back to work on Thursday night when they traveled to
Philly to play the seventy six ers. WBZ News time
is nine oh seven. Back now to Dan Ray and Nightside.
I'm Al Griffith.
Speaker 4 (01:51):
It's Night Side with Danray on WBZ Costin's News Radio.
Speaker 5 (01:58):
Welcome back everyone, Thanks you very much.
Speaker 6 (02:00):
Al.
Speaker 5 (02:01):
We have heard a lot of talk recently about, certainly
in the last month, cuts in Washington, DOGE, the Department
of Government Deficiency, Elon musk As the head of that,
and I think it's time for us to sort of
take a couple of steps back and talk to someone
who knows a lot more about the status of our
(02:21):
federal debt than any of us. Someone who I have
had on this program on several occasions, want to welcome
back Professor Jeffrey Myron of Harvard University. Professor Myron, how
are you tonight?
Speaker 6 (02:34):
Fine? Thank you, nice to be here.
Speaker 5 (02:36):
Great to have you back. You're at Harvard. You are
a senior lecturer and director of undergraduate studies in Harvard's
Economics department. You also are you have a position with
the Cato Institute, which many of my many of my
listeners are familiar with. And it's this is a very
(03:00):
difficult issue for people to get their arms around, and
I would like to just to try to start from
from this perspective. To get to one billion, you need
to have a thousand million. That gets you to one billion.
Then to get to one trillion, you need a thousand billion.
(03:25):
And we're at about thirty six trillion in debt. Are
we well? I think technically we're underwater. But is that
a debt that that we need to be as concerned
about to me, it's it's one of them. It's one
of the most one of the things that worries me most.
(03:47):
Not for my generation I'm a baby boomer, but for
subsequent generations. Am I a war reward?
Speaker 6 (03:55):
You know? I think you're right to be worried. I
would emphasize that it's not just the level of the debt.
Of course, the level of debt is a relevant thing
to know, but it's that it's likely to be growing
at a fast rate, at a much faster rate than
the economy is likely to grow, and so it's going
to get worse and worse and worse. So debt per
se is not necessarily bad. Billions of people are in
(04:18):
debt because they all on their mortgages, but they have
enough expectation of future income they think they'll be able
to pay it back. The US is in a position
where we in effect have such a huge mortgage in
terms of commitments to future programs like storal security, medicare,
that we're never going to be able to pay for them.
Speaker 5 (04:35):
Okay, so let's go to the end of the road.
If we get to that point where the debt now
again trillion dollars trillion, here trillion. There it's thirty six
point two trillion zero, getting towards thirty seven. Our national
domestic product, our GDP gross national product is about twenty
seven trillion, So our debt dwarfs the the amount of
(05:00):
economic activity that we have in the United States in
an entire year. It would be as if someone was
making one hundred thousand dollars and their debt now was
one hundred and fifty thousand dollars. Is that too simplistic
a way to look at it? Is it? Or is
it even worse than that?
Speaker 6 (05:22):
I think it's worse than that. I mean, we can
easily imagine someone who has the expect a has a
job as an expectation the job will continue, and say
is going to earn one hundred thousand dollars a year
just to take a nice simple round number and purchase
as a house worth a million by taking out an
eight hundred thousand dollars mortgage. Well, that's a case where
(05:43):
the debt is way greater than the rate of income
for that individual. But assuming this person doesn't spend a
whole hundred thousand each year, say some each year pays
off the mortgage over twenty thirty years, everything will be
totally fine. The problem is not just the leafe levels,
it's the growth rates. It's the projections, which of course
(06:03):
will never be perfect. But if anything are being too optimistic,
it's projections that expenditure, especially on Medicare and Social Security,
are going to keep growing faster than GDP, and so
that makes our ability to service that debt at some
point impossible.
Speaker 5 (06:19):
Okay, so you focus on Medicare and Social Security, which
are I guess, the pillars of the retirement couch. For
most baby boomers, they have a little social Security coming in,
they have Medicare available. What is the problem, as you
(06:40):
see it, with those the exponential growth of those two programs,
I guess is what you're saying to me. Explain it
so everybody understands it.
Speaker 6 (06:49):
It's that we have promised to make payments to say,
support a level of retirement income that is not affordable
given the size of our economy and the likely growth
rate of our economy. Same thing, we've committed to paying
more and more for healthcare for the elderly under Medicare,
(07:11):
at to a degree that we can't possibly afford because
there just won't be enough tax revenue to possibly pay
all of those expenditures. Now, to be clear, we do
not need to eliminate these programs. Nobody is talking about
eliminating those programs, but they need to be growing at
non surely slower rates than they're currently growing, and unfortunately,
(07:35):
no politicians are talking about even doing that, even making
modest tweaks to those programs so that they're not bankrupt
f in the economy at nearly the same rate.
Speaker 5 (07:43):
Now, are these programs Medicare and soci security? Are they
what is referred to as unfunded liabilities?
Speaker 6 (07:52):
Yes, they can certainly be preferred that also often referred
to as entitlements. There's roughly two kinds of programs with
the federal government runs under those which are renewed every
single year. The Defense budget is are authorized every year,
the Department of Transportation, Housing most of the things that
we think about, but source security, Medicare, Medicaid, Obamacare. They
(08:14):
have been created in a way that they keep spending
money every single year at higher, higher rates, even if
Congress does nothing at all. So Congress has to actively
step in to adjust the rate that they're spending money.
So far, Congress seems to have zero appetite for doing
that because, of course for all the people getting them
and people expecting to getting them in the near future.
(08:35):
These programs are super popular, but at some point they're
going to be gone.
Speaker 5 (08:40):
Okay, So at some point right after this break, we're
going to talk about these programs, going to talk about
what is being undertaken by the newly inaugurated Trump administration.
They are coming up on their one month anniversary later
this week, so they've been in business now for four weeks,
(09:01):
actually four weeks this very day. The Trump administration has
been in office. They're getting tremendous criticism from their efforts
to ask federal employees to resign except severance packages. We
know a little bit about all of this. You know
(09:21):
a lot about all of this. We'll talk about this.
We'll talk about what can be done.
Speaker 6 (09:27):
Now.
Speaker 4 (09:28):
Back to Dan Ray live from the Window World of
Legs sist Year. I'm doing BSY News Radio.
Speaker 5 (09:35):
Talking with Professor Jeff Myron of Harvard Universities and an
economist and someone who this is what he lives when
we talk about one thing which I think a lot
of people get confused, Professor, and this is such an
elementary question for you. I'm almost hesitant to ask it.
The difference between the federal deficit and the federal debt.
(09:58):
Many people use those those terms interchangeably. Just a quick clarification,
difference between deficit and debt.
Speaker 6 (10:08):
Sure, the deficit is what's happening in this period, say
this year. So this year the government had some revenue,
it had some expenditure, and the difference is the deficit. Okay,
The debt is adding together all the past deficits. So
in one year, if you had a deficit of one
(10:28):
hundred billion dollars, that at the end of that year,
your debt would also be one hundred billion. But the
next year you have another deficit of another one hundred billion,
your debt is two hundred billion dollars, because it's the
past deficit plus any new deficit that you've accumulated going
forward a year, and you just keep adding that up.
So the debt is the sum of all of our
(10:48):
past deficits and surpluses. And the fact that we have
such a large debt relative to GDP means that on
the whole, we've almost always had deficits, and increasingly, in
the last sort of ten years, bigger and bigger deficits.
So that the death is just going to keep getting
bigger and bigger.
Speaker 5 (11:04):
Yeah, it's growing exponentially. So again, these are just some
figures that I know figures are tough on radio, but
just your comment on these. Nineteen seventy that's obviously long
time ago, that's fifty years ago, but it's within the
memory of many people in my audience. Our federal debt
was about a third three hundred and seventy one billion dollars.
(11:27):
It was the third of the trillion dollars. Now our
debt has ballooned to thirty six point two trillion dollars
as of last month, and it just seems to grow.
In two thousand, it was up to five trillion. In
twenty ten, more than double it was two. It was
thirteen trillion twenty twenty. Another ten years, it was twenty
(11:49):
six trillion two thousand and twenty four. Obviously COVID had
a big part to do with this. It really exploded
to thirty five, which is what we're concerned about. How
we get out of this. We talked earlier today, and
you have kind of a dystopian view that that even
what what Elon Musk is attempting to do is not
(12:14):
going to make a huge difference.
Speaker 6 (12:15):
Correct, Correct, I don't think it's just my view. I
think of that majority of that.
Speaker 5 (12:22):
I'm not just contributing it to you. I apologize.
Speaker 6 (12:25):
I mean, and it's pretty simple arithmetic. If you take
the salaries of all federal employees, all of them, for
every possible department, divisions, agency, and get something like four
hundred billion dollars, but the government expenditure is something close
(12:46):
to seven trillion dollars. So you could cut every single employee,
eliminate their salaries, eliminate their pensions, and you still would
make a very very small dent in the amount that
we're spending per year because of very large percentage of
what we spend is medicare, another large percentage of so security,
another large percent is the interest on the debt that
we've already accumulated, plus government spending, and then all the
(13:09):
other stuff that Dooze is worrying about, some of which
should absolutely go. I'm not that's a different question, but
in terms of balancing the budget, it's going to make
it most a tiny difference.
Speaker 5 (13:21):
So if we're spending seven trillion, we're only taking in
how many trillion are we taking in in all taxes,
what for maybe four trillion, five trillion.
Speaker 6 (13:31):
And I think it's a little higher than that, but
I don't think we're out quite deficits of two trip.
But yes, in that ballpark. I mean, so we have
that it's trillions of dollars per year each year we're
coming short in terms of having expenditure that's greater than
revenue by several trillion. That starts to add up at
a really fast rate.
Speaker 5 (13:49):
Okay, So if if Elon Musk came to you that said,
what can I do to really have an impact? I mean,
he's got people marching in the streets right now because
they're asking for people to take a severance package. There's
a lot of people out there would like a severance
package who are ready to retire. And you mentioned that
(14:09):
some of the people who have taken the severage package
were prepared to retire within a couple of months and
now they're going to be get a severance to September.
What you're saying is something's going to be done with
soci security, something's going to be done with medicare. What
can be done with social security realistically or unrealistically, take
whichever you want.
Speaker 6 (14:30):
Well, at some level. Almost everything sounds unrealistic because it's
put all the changes that would go in the right
direction are politically unpopular, but things that one can imagine
would be slowly, not all at once, but gradually phasing
in slightly higher ages of eligibility for people to start
collecting Social Security paths its. First of all, that happened
(14:51):
once in the United States, in nineteen eighty six, we
passed the law that has been over the past roughly
forty years, phasing in higher and higher ages. Roughly, it
used to be everybody's got it at sixty five. Now
people's age of full benefits is postponed to sixty seven,
sixty eight, et cetera. So that goes in the right direction.
You could have the rate at which benefits go up
(15:14):
not be quite as big, a slightly less generous formula
than has been the case in the past.
Speaker 5 (15:23):
As a cost a living increase. Right.
Speaker 6 (15:25):
Other two pieces, Once you start collecting benefits, the benefits
you get per year goes up with the consumer price index,
but the amount that we pay the new beneficiaries goes
up with the rate of growth of wages, which is
typically sort of one to two percent higher than the
rate of growth of prices, So you could imagine cutting
that back a little bit. And the point is that
(15:46):
would be have a very very small effect on people
retiring in the next you know, three to five years.
They have a slightly bigger effect on people retiring pay
ten years from now. So it would not be crushing anyone.
It would not be yanking the rug out from under
in a major way. It would be spreading the adjustment
over decades and decades over generation. And you could do
(16:07):
analogous things with medicare. Instead of everybody getting in sixty five,
people who are say sixty or younger don't get it
till there's sixty five and a half. They not ideal,
obviously from the perspective of those people, but not catastrophic.
And then people who are fifty five and younger face
a little bit longer delay and things like that. So
these are things which you know, economists think are sort
(16:30):
of natural, but they don't pull well. No politicians seems
to want to endorse them. So it's hard to figure
out what sucks are going to happen until we just
get to some crisis so huge that we end up
kind of defaulting on the debt and that's a form
of a huge tax levee. But it's not. It's a
painful way to do it. There will be a lot
(16:50):
of chaos and a lot of waste resources that go
along if we do it that way.
Speaker 5 (16:53):
Okay, let's assume that we wrote we increase taxes, and
we taxed literally at the rate of ninety of of
you know, an immense number of people. Or let's say
we taxed everybody at one hundred percent. That would have
(17:14):
an impact, but not going to have a great impact
besides destroying the economy. Correct.
Speaker 6 (17:19):
I think that would have a very counter productive impact.
Because if you have tax rates that are above some range,
it's probably not much different than the current range. People
start evading and avoiding, moving to Canada, moving to Europe,
finding Swiss back. They will do all manner of things
to avoid having to pay those super high tax rates.
So you will have made the economy less productive, you
(17:39):
won't collect any extra tax revenue. You will be on
the wrong side of the Laffer curve if you increase
rates by those sort of amounts. And so that's not
a sensible thing to do that because a it won't work.
It's just it's it's incredibly counterproductive.
Speaker 5 (17:56):
So we're in a conundrum here from which politically there's
going to be You won't have enough members of the
four hundred and thirty five members of the House or
the one have been members of the Senate who would
bite the bullet in maybe maybe right the end of
their political career. Is that's really the problem, as I
(18:19):
see you outlining it.
Speaker 6 (18:20):
That is exactly the problem. And sometimes weird things happen.
Maybe when people start to get really scared, there will
be some grand bargain that will address the issue, but
in a way that doesn't kick in for ten or
twenty years, so it's not so relevant or the current
members of Congress. But we haven't seen that many countries
ever do that. We've seen a lot of countries have
(18:43):
fiscal meltdowns where they did default on their debt. They
did have huge disruptions to their economy because they kept
kicking the can down the road until all of a
sudden there was nowhere left to kicket.
Speaker 5 (18:55):
And when there's nowhere left to kick it, the currency
is devalued. Is that not the to move?
Speaker 6 (19:01):
So I mean it is in one level of solution.
If the government starts printing more and more money that
creates higher inflation. That inflation reduces the value of the
debt we owe, and so it's a form of a
tax increase, but it does likely lead to such high
rates of inflation that it's incredibly disruptive of the economy.
(19:24):
So you'll not only have this tax increase, but you'll
have all sorts of counterproductive behavior going on as people
try to avoid this inflation. Dex will be like Argentina was,
and lots of other countries have been that ended up
in hyperinflations. So that's not an ideal way to address
the issue, either, doing something like slowing the growth of
expenditure in a gradual way that doesn't throw people out
(19:45):
on the street, but that still over decades, does get
the growth rate down. I think that's the least bad
thing to do given where we.
Speaker 5 (19:54):
Are, and it's still there's still time, but time in
that hourglass is quickly slipping away. According to what I
hear from you and from what I know, you firmly
believe yes.
Speaker 6 (20:07):
And I think what bothers a lot of economists is
that it's been hard to predict in past episodes in
various countries when the hour glass is going to run out,
and you can sort of see it coming, and yet
things are going along okay, and they keep seem to
go along okay, and then people start to say, gee,
you've been crying wolf for years now and everything's okay,
(20:29):
and so you keep going. But then boom, out of nowhere,
something pushes you over the edge. And that has happened
to lots of economies over the centuries.
Speaker 5 (20:38):
My guest, my extraordinary guest, is my friend, Professor Jeffrey
Myron of Harvard University. Now he's the senior lecturer, director
of Undergraduate Studies at Harvard's Economic Department. We will take
questions for the callers right after the break. Professor, thank
you so much for your time tonight, and I'm going
to try to prevail upon you to stick with us
until the end of the hour. I know, I I
(21:00):
assume classers are back tomorrow, so I'm probably.
Speaker 6 (21:03):
Probably have I'm happy, happy to stay well.
Speaker 5 (21:06):
I'll tell you you're reaching a lot of people, and
these are people who are hearing what you say. You
explained it so clearly. It is truly a gift that
you have. But it's a gift that my audience now
can enjoy. We'll get to phone calls. The only line
that is, I only have one line six one, seven, nine, three, one,
ten thirty. All the other lines are full up. I'll
(21:27):
let you know when they open up, but right now
six one, seven, nine, three, one, ten thirty and again,
questions not speeches, please everyone coming back on Nightside.
Speaker 4 (21:36):
It's night Side with Dan Ray on w B Boston's
news radio.
Speaker 5 (21:42):
My guest, Professor Jeffrey Meran of Harvard University. We'll go
to phone calls. Here we go. We're going to start
off with Andrea in Newton, Massachusetts. Andrea, welcome to Nightside.
You're on with jeff Myron of Harvard University.
Speaker 7 (21:54):
Go ahead, Andrea, Hi, good evening, Thank you for taking
my call. CAN certainly stand what you're saying. My house
budget doesn't work if I work in a deficit. I
understand that. But what I don't understand is why part
of the conversation on my question is part of the
conversation isn't that all these boomers that are responsible for
(22:18):
this raging increase have been paying into this involuntary government
investment account for forty five years in the understanding that
they would have so security and medicare at the end
of it. Why wouldn't it be a subject of a
class action suit for having taken all this money from
(22:41):
these taxpayers and psycho payers for all these years and
not find it at the end when they were expecting
to get it.
Speaker 5 (22:49):
Well, that's the cause of action. There is sort of
a contract argument, Professor. At the same time that our
government doesn't have very deep pockets. I don't know how
you're going to get any more, honey, how you going
to get blood out of a stone. I understand Andrew's question,
and I think it's a great question. Andrew. I'm a
baby boomer like you are. We paid in all of
these years. It would have been great if we could
(23:10):
have voluntarily taken that money that went to Social Security
invested in the stock market. I think we would have
had a better rate of return. Jeff Myron going Professor.
Speaker 6 (23:18):
Myron, So, I completely understand the question, and it's completely reasonable. Unfortunately,
despite the hype, despite the way that politicians have tried
to portray Source Security, it is not an investment vehicle.
It is not a savings mechanism. The money that people
(23:39):
are paying in in their taxes in the years that
they're working, is flowing out more or less instantly within
months or year to people who are already retired collecting benefits.
So it is the lingo in economics is it's a
pay go system. Pay as you go. We take money
from the working and transfer it, not invest it, not
(23:59):
say that we train answer it to people who are
eligible to collect benefits. And so the frustration of people
as anders is completely reasonable and understandable, But I don't
think they have any legal course of action because that's
not the structure of the system. It's the hype that
politicians have perpetuated to make people think that they're investing
(24:21):
their money. But they have quick comment.
Speaker 5 (24:24):
When Social Security began in the nineteen thirties, how many
workers were supporting how many pensioners? And what is that
correlation today?
Speaker 6 (24:33):
Oh, the ratio of people working to receiving was much
much much higher. Was I don't remember exactly, but ten
or twenty to one. That's because initially very few people
were eligible, but everybody was initially subjected to the taxes.
Now I think it's down to something like two to one,
and it just keeps getting worse because on average, COVID
(24:54):
is disruption aside, we are living longer, so there are
more people who are above the age of eligibility, and
rates are low, so there are fewer and fewer people
in the working age population relative to the total number
who are eligible. So the demographics definitely made it worse
and worse over time.
Speaker 5 (25:09):
Andrew, you asked a great question. I hope you realize
the answer is totally accurate in terms of what our
options are.
Speaker 7 (25:19):
I do understand what you're essentially saying. Is that not
an investment but in fact an additional tax Closer to
where you said, it's an untenable tax rate.
Speaker 6 (25:32):
It's a transfer program. It's transferring funny from the working
age population to the retired age population. And that may
be good or bad for various reasons, but that's the
structure of the existing program.
Speaker 5 (25:44):
You know, Andrew, you've heard the phrase living is the
best revenge. The baby boomers a living, and some would
argue it was a Ponzi scheme. I don't know if
Jeff Myron would go that far, but.
Speaker 6 (25:59):
I don't think I would haul at that. I'm not
sure that helps illuminate, but it has been missold. So
I would simply say politicians wanted people to think of
it as saving and investing because that sounded better than
the reality. But the reality is, unfortunately, it's just taxing
and transferring.
Speaker 5 (26:18):
Well, we remember when al Gore in two thousand referred
to social security was in a lock box, but no
one could find the locked box. I would reply, if
it wasn't so, I would laugh if it wasn't so sad.
Great questions.
Speaker 7 (26:37):
Thanks Andrea, Thank you.
Speaker 5 (26:39):
You're welcome. Let me go next to Dina in Boston. Dina,
you are next one. Nice. I have a professor Jeff Myron
of Harvard University.
Speaker 8 (26:46):
Go ahead, Dina, thank you for hacking my call. If sorry,
I have a question, when what do we learned to
the previous call. I am on social Security and on Medicare.
But the tax taxing our social security, and when we
get our social Security check, we have to pay a
(27:08):
certain amount of Medicare, so in we're like almost contributing
to what we're getting.
Speaker 5 (27:17):
To get you and going is what you're saying, Dane,
go right ahead, professor.
Speaker 6 (27:22):
I mean what you said is certainly is correct. The
unfortunate is that to some degree people are not being
taxed enough and or are getting not being asked to
pay big enough premiums to make the system solvent, to
make it, you know, to make it balance out over time. Now,
(27:42):
there's specific ways in which economists would suggest adjusting the
cause and benefits that you get from being in, say
the Medicare program. So not necessarily raising the premiums you
have to pay, but we're increasing the copays and deductibles.
And the reason for that is that if people face
(28:03):
big copais and deductibles, then for initial levels of expenditure,
it's out of pocket and they will think a bit
harder about do I really need this or not. That
means less expenditure under the program, and maybe also somewhat
better choices about whether people should get all the medical
care that's being pushed on them by the healthcare system.
(28:24):
But that's still negative for the people who's the beneficiary,
there's no question. But that's the reality. We can't afford
what we've promised ourselves, and so somebody has to bear
that that cut.
Speaker 8 (28:36):
It's just funny because when I've turned sixty five, I
got comments from the previous you know, the next generation saying, well,
now you have free insurance, so.
Speaker 6 (28:50):
Absolutely it is not free.
Speaker 8 (28:53):
I mean it's supplemental or they'll fign you for the rest.
Speaker 6 (28:57):
Of your life. Yes, I means to provide it does
provide a benefit. You're getting more, you're getting something which
you wouldn't get if you had no insurance. But instead
calling it free is absolutely not right. That's right if
I could just.
Speaker 5 (29:11):
Jump in being it for one question, for one quick
question for Professor Myron, and that is that I know
that this question might sound a little off the wall,
but I remember talking to a heart surgeon in New
York who told me that there were people who arrive
(29:31):
in New York, maybe not every day, but with some frequency,
who are well into their seventies or eighties and who
are in need of heart surgery. They've never lived in
this country before, they appear at the airport, they collapse
when they come off the plane, and they are taken
to some of the best heart surgeons in the world.
I mean, we do have a lot of people who
(29:52):
come here at an advanced age and they have never
contributed to any of these programs, and I'm not mistaken
they still benefit from them.
Speaker 6 (30:03):
That Professor I did not think one was eligible for
Medicare unless one had been a resident and participating in
the social security system for some number of years. I
might be wrong about that, but I think.
Speaker 8 (30:18):
Well security, so security free care, right free care, free care.
Speaker 5 (30:25):
And now again some would say, well, this is anecdotal,
And I used to criticize John Sober for using anecdotal evidence.
Now that i'm his age, I will use this. But
I have a friend of mine, as a Heartschurger in
New York, has told me that that people have arrived,
and he's told me the countries. I'm not even going
to mention the countries, but they come here and it's
like they they collapse, and they know before they got
(30:47):
here that they have serious heart problems and maybe even
have some Clark gunderies. We're not going to let him
die at the airport, is what We're a generous exactly,
Professor Iron on this, Professor.
Speaker 6 (30:58):
I just I just looked at up okay, and so
I'll tell you. And this is from the government's website,
the Centers for Medicare and Medicaid Services. Just to be
eligible for Medicare, you must be sixty five or older,
be a US resident, and either a US citizen or
an alien who has been lawfully admitted for permit residence
and been residing in the United States for five continuous
(31:20):
years prior to the month of filing an application for Medicare.
So there is some residency requirement if you're not a
US resident, US citizen. So now there may well be
hospitals that choose to donate their services to people coming
conversities for whatever reason, but that's a separate question.
Speaker 5 (31:42):
And they donate services that yeah, okay, so they donate
this services and decided to do pro bono, arguably they're
not going to be compensated for it. Okay, right, okay, okay, thank.
Speaker 8 (31:54):
You, thank you, Okay, thank you, Yes, thank you very much.
Speaker 5 (31:58):
Tonight, take a quick break. My guess is Professor Jeff Myron.
He looks things up. I'm thank you, professor. I have
been I've had been corrected here many times in my program,
but never as quickly or as thoroughly as I just
was corrected. Thanks so much. Back at nights Side with
Professor Jeff Myron of Harvard University right after this.
Speaker 4 (32:20):
Now back to Dan ray Mine from the Window World
Night Side Studios on.
Speaker 5 (32:25):
W b Z News Radio. My guest Professor Jeff Myron
of Harvard University Professor. One little comment that I like
to make is that in the US, it is my
understanding hospital emergency rooms are required to provide treatment regardless
of insurance or ability to pay. And I think that
is the loophole by which a lot of people do
(32:46):
receive medical care, whether it's Medicare or are not Medicare
in America.
Speaker 6 (32:53):
So I think that's right, but I think it doesn't
necessarily apply it all possible care. It applies to emergency, right.
Speaker 5 (33:01):
So if you get off play in New York and
you and you have a couple of arteries blocked, you
might you might be as for open heart surgery. Is
what that doctor had told me. So anyway, but but
I thank you for that, for that correction. Let me
get real quickly, Heather in Arlington a lot of women callers,
which is always great here on nightside, Heather, you run
(33:22):
with Professor Jeff Myron.
Speaker 8 (33:24):
Oh, hi, how are you?
Speaker 9 (33:25):
And Dan? I know what you're thinking of. So if
somebody does go into the er and they are having,
like say, needed open heart surgery, they the hospital will
look and see do you qualify for free care? What
do you qualify for? Do you do you need math
health to do a math health application, then if it's
(33:47):
math health, which is like Medicaid, then you can back
build to the date of when the application was done.
Speaker 5 (33:55):
Gotcha, Thank you. What's your question for Professor Myron?
Speaker 9 (33:58):
So my question is what I wanted to ask, is
you know how they Trump has his tax break that
he's going to be giving to the wealthier to corporation.
So if that if you tax corporations, say the same
(34:19):
that where tax like regular medical Middle America, would that
help with the deficit or what would that look like?
Speaker 6 (34:30):
So moderate tax increases relative to where we are will
certainly tend to help the deficit. They'll be more revenue
coming in. If you try to reduce the deficit a
substantial amount and therefore over time reduce the debt by
substantial amount with tax increases, you'd find that it ended
up being counterproductive because much higher tax rates will induce
(34:53):
more evasion and avoidance, people moving to other countries, people
hiding their activities, and he's going underground, and so on.
In terms of corporations, economists don't make as big a
distinction between corporations versus people because corporations are owned by people,
and they employ people, and they sell their goods to people.
So if we try to raise tax revenue by taxing corporations,
(35:16):
the impact the incidents of that will be on several
different groups, partially on the shareholders of the corporation, but
also on these other groups like the employees and the
people who buy the product. In the extreme case, to
take one example, if you had a very very high
corporate income tax rate, a lot of corporations are going
to move overseas. They're going to stop employing US workers
(35:40):
and employ people in Ireland or Thailand or whatever. So
that might have a distributional consequence which people wouldn't like.
So that's not an obvious way. I mean, I'm not
saying the current rate is exactly the right rate or not. Actually,
I think in my view, ideally the corporate tax rate
should be zero and we should be that they were
(36:00):
always taxing people and tax them directly, and you can
still have a very progressive system that tax is hiring
the people more heavily, but do it by directly taxing people.
Speaker 5 (36:11):
Great question, Heather, great question, Thank you. We've had three
great callers. Great questions. Thanks Heather. Let me get Joe
and Bellmont here. Joe, you got to be quick for
me getting tight on time.
Speaker 10 (36:21):
Go right ahead, Dan, It is better to light a
candle than to curse the doc.
Speaker 5 (36:26):
Now, do me a favor. Just ask whatever question you
want Joe with Professor Myron.
Speaker 10 (36:30):
Okay, I just wanted to take fifteen seconds to give
you more encouragement than three things you're very good at
patriotism number one, do.
Speaker 5 (36:41):
Me a Joe. Save that for another night. I don't
want to waste Professor's time. All with all deference to you,
I appreciate you have a question for the professors.
Speaker 10 (36:49):
The question is, doctor, uh, do you if printing of
money is causing the depth? Why does the government meant
print more money? And what are for other ten reasons
for the thirty six trillion?
Speaker 5 (37:08):
Okay, good, gotcha, professor. Why are we continuing to print money?
I guess we I guess the government feels it's necessary.
Speaker 6 (37:15):
Printing money is one way a government can raise revenue,
because when the government prints the money, it owns the money,
so that then it can go and buy stuff that
would otherwise have to pay for it by having raised
other kinds of taxes. The question with any tax is
how high should it be and how should it be
balanced against other kinds of taxes, and the experience for
a long long time is you print tons of money,
(37:36):
you get inflation that's out of control and that's very
disruptive for e comedies.
Speaker 5 (37:41):
Thanks Joe for the question. Appreciated. Let me go to
Jay in Boston. J got about less than a two minutes.
Go right ahead. You're on, Professor Jeff Myron.
Speaker 11 (37:50):
I'll make it real quick, Dan, I'll make it real quick.
Speaker 6 (37:53):
Thank you.
Speaker 11 (37:54):
So I was looking at up twenty two percent of
the federal budgets going toward Social Security right now. So
my question is forty six and they've been talking for
years there. You know, by the time you reach retirement age,
you're not going to have Social Security. So I mean
just a ballpark, I mean estimate, going the route we're
going right now with social Security? How long do you
(38:14):
think we have left? I mean because I always thought
it was self funded. I didn't realize that the government
actually borrowed from it back in like nineteen eighty two.
So I'm just curious, like what your thoughts are, like
they did they ever pay back that money? And how
long we have left to Social Security?
Speaker 5 (38:31):
Like what do you what do you think to give
is he needs some time to answer the question. I
believe that right now that sociecurity runs out in a
few years.
Speaker 6 (38:39):
Yeah, and about ten years. So under the current rules,
if there's no change in any of the parameters, we
will start having deficits in the Social Security Trust Fund
approximately twenty thirty three thirty four. And at that point,
the rule says that all benefit payments have to be
cut so that the ratio of revenue coming in to
(39:02):
payments going out is not exceeded. And that number looks
like it'll be about seventy five percent. So benefits starting
in about ten years are going to be cut about
twenty five percent for everyone already retired and to be
retired later. So that's not nothing. Seventy five percent is
more than zero, but it's a noticeable cut.
Speaker 5 (39:23):
Jay, great question, Thank you, Dain.
Speaker 11 (39:26):
Always a pleasure, guys, thank you so much. Great show,
Thank you, thank you.
Speaker 5 (39:30):
Absolutely great, great hour with a great guest. To the
callers in the line, I apologize you got a call earlier,
Professor Jeff Myrone. There's no way I can thank you
for the clarity of the and the accuracy of the
information you have once again provided for us and thank
you so much. There's nothing more I can say other
(39:50):
than I owe you greatly.
Speaker 6 (39:53):
My pleasure to be here. I really enjoyed it.
Speaker 5 (39:56):
Thank you so much. We'll talk again. I'd love to
get you on at some point, maybe a few months
from now, and see how this administration is doing, if
they're if they're being successful or not. Professor, By the way,
do you have a recent book that we could mention,
because what can I help you?
Speaker 6 (40:15):
You could mention my substack that's called libertarian Land and
that discusses these and all sorts of other.
Speaker 5 (40:21):
Interesting issues on sub stack Liberty. Yes, okay, thank you
so much, appreciate it very much. All right, and we
get back. We're going to talk about the weather, a
little simpler topic to deal with and one that all
of us can relate to. Although Jeff Meyern did a
great job, and I really believe me when I say
these one of my favorite guests. We're going to be
(40:43):
talking with Isaac Longley of ACU Weather. How long is
this going to last? And I don't remember February ever
being this cold, and I've been around this part for
a long time. Back on Night Side, right after the
ten o'clock news,
And very cold Tonight lows ten to fifteen ACUA the
real field scepter falling below zero with those strong winds
that it's still going to be windy through Tomorrow, mostly
sunny and very cold to I, I have twenty five
real fields and the single digits plustery and bitterly cold.
Tomorrow night clear to part the cloudy lows near ten
sun will be followed by increasing cloud's Wednesday a high
twenty nine and then mainley cloudy. Thursday will be cold
(00:21):
at the period of snow likely which could accumulate one
to three inches, especially near and south of Boston. Storm
track even farther south could even mean less snow for
the area and then not as cold into Friday. I'm
accuate with the Vida realogist Brian Hopson WBZ, Boston's News Radio.
Speaker 2 (00:36):
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(00:57):
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Speaker 3 (01:06):
The Four Nations Face Off tournament underway now in Boston
at the TD Garden this afternoon, Canada beating Finland five
to three. Canada will play for the championship Thursday night
at the Garden against Team USA, who have already qualified
for that big game. USA, though still has a preliminary
game to play tonight against Sweden. After one period of play,
(01:30):
USA ahead one to nothing. NBA has been on its
All Star break, but now teams getting ready to begin
the stretch run leading up to the playoffs. Celtics getting
back to work on Thursday night when they traveled to
Philly to play the seventy six ers. WBZ News time
is nine oh seven. Back now to Dan Ray and Nightside.
I'm Al Griffith.
Speaker 4 (01:51):
It's Night Side with Danray on WBZ Costin's News Radio.
Speaker 5 (01:58):
Welcome back everyone, Thanks you very much.
Speaker 6 (02:00):
Al.
Speaker 5 (02:01):
We have heard a lot of talk recently about, certainly
in the last month, cuts in Washington, DOGE, the Department
of Government Deficiency, Elon musk As the head of that,
and I think it's time for us to sort of
take a couple of steps back and talk to someone
who knows a lot more about the status of our
(02:21):
federal debt than any of us. Someone who I have
had on this program on several occasions, want to welcome
back Professor Jeffrey Myron of Harvard University. Professor Myron, how
are you tonight?
Speaker 6 (02:34):
Fine? Thank you, nice to be here.
Speaker 5 (02:36):
Great to have you back. You're at Harvard. You are
a senior lecturer and director of undergraduate studies in Harvard's
Economics department. You also are you have a position with
the Cato Institute, which many of my many of my
listeners are familiar with. And it's this is a very
(03:00):
difficult issue for people to get their arms around, and
I would like to just to try to start from
from this perspective. To get to one billion, you need
to have a thousand million. That gets you to one billion.
Then to get to one trillion, you need a thousand billion.
(03:25):
And we're at about thirty six trillion in debt. Are
we well? I think technically we're underwater. But is that
a debt that that we need to be as concerned
about to me, it's it's one of them. It's one
of the most one of the things that worries me most.
(03:47):
Not for my generation I'm a baby boomer, but for
subsequent generations. Am I a war reward?
Speaker 6 (03:55):
You know? I think you're right to be worried. I
would emphasize that it's not just the level of the debt.
Of course, the level of debt is a relevant thing
to know, but it's that it's likely to be growing
at a fast rate, at a much faster rate than
the economy is likely to grow, and so it's going
to get worse and worse and worse. So debt per
se is not necessarily bad. Billions of people are in
(04:18):
debt because they all on their mortgages, but they have
enough expectation of future income they think they'll be able
to pay it back. The US is in a position
where we in effect have such a huge mortgage in
terms of commitments to future programs like storal security, medicare,
that we're never going to be able to pay for them.
Speaker 5 (04:35):
Okay, so let's go to the end of the road.
If we get to that point where the debt now
again trillion dollars trillion, here trillion. There it's thirty six
point two trillion zero, getting towards thirty seven. Our national
domestic product, our GDP gross national product is about twenty
seven trillion, So our debt dwarfs the the amount of
(05:00):
economic activity that we have in the United States in
an entire year. It would be as if someone was
making one hundred thousand dollars and their debt now was
one hundred and fifty thousand dollars. Is that too simplistic
a way to look at it? Is it? Or is
it even worse than that?
Speaker 6 (05:22):
I think it's worse than that. I mean, we can
easily imagine someone who has the expect a has a
job as an expectation the job will continue, and say
is going to earn one hundred thousand dollars a year
just to take a nice simple round number and purchase
as a house worth a million by taking out an
eight hundred thousand dollars mortgage. Well, that's a case where
(05:43):
the debt is way greater than the rate of income
for that individual. But assuming this person doesn't spend a
whole hundred thousand each year, say some each year pays
off the mortgage over twenty thirty years, everything will be
totally fine. The problem is not just the leafe levels,
it's the growth rates. It's the projections, which of course
(06:03):
will never be perfect. But if anything are being too optimistic,
it's projections that expenditure, especially on Medicare and Social Security,
are going to keep growing faster than GDP, and so
that makes our ability to service that debt at some
point impossible.
Speaker 5 (06:19):
Okay, so you focus on Medicare and Social Security, which
are I guess, the pillars of the retirement couch. For
most baby boomers, they have a little social Security coming in,
they have Medicare available. What is the problem, as you
(06:40):
see it, with those the exponential growth of those two programs,
I guess is what you're saying to me. Explain it
so everybody understands it.
Speaker 6 (06:49):
It's that we have promised to make payments to say,
support a level of retirement income that is not affordable
given the size of our economy and the likely growth
rate of our economy. Same thing, we've committed to paying
more and more for healthcare for the elderly under Medicare,
(07:11):
at to a degree that we can't possibly afford because
there just won't be enough tax revenue to possibly pay
all of those expenditures. Now, to be clear, we do
not need to eliminate these programs. Nobody is talking about
eliminating those programs, but they need to be growing at
non surely slower rates than they're currently growing, and unfortunately,
(07:35):
no politicians are talking about even doing that, even making
modest tweaks to those programs so that they're not bankrupt
f in the economy at nearly the same rate.
Speaker 5 (07:43):
Now, are these programs Medicare and soci security? Are they
what is referred to as unfunded liabilities?
Speaker 6 (07:52):
Yes, they can certainly be preferred that also often referred
to as entitlements. There's roughly two kinds of programs with
the federal government runs under those which are renewed every
single year. The Defense budget is are authorized every year,
the Department of Transportation, Housing most of the things that
we think about, but source security, Medicare, Medicaid, Obamacare. They
(08:14):
have been created in a way that they keep spending
money every single year at higher, higher rates, even if
Congress does nothing at all. So Congress has to actively
step in to adjust the rate that they're spending money.
So far, Congress seems to have zero appetite for doing
that because, of course for all the people getting them
and people expecting to getting them in the near future.
(08:35):
These programs are super popular, but at some point they're
going to be gone.
Speaker 5 (08:40):
Okay, So at some point right after this break, we're
going to talk about these programs, going to talk about
what is being undertaken by the newly inaugurated Trump administration.
They are coming up on their one month anniversary later
this week, so they've been in business now for four weeks,
(09:01):
actually four weeks this very day. The Trump administration has
been in office. They're getting tremendous criticism from their efforts
to ask federal employees to resign except severance packages. We
know a little bit about all of this. You know
(09:21):
a lot about all of this. We'll talk about this.
We'll talk about what can be done.
Speaker 6 (09:27):
Now.
Speaker 4 (09:28):
Back to Dan Ray live from the Window World of
Legs sist Year. I'm doing BSY News Radio.
Speaker 5 (09:35):
Talking with Professor Jeff Myron of Harvard Universities and an
economist and someone who this is what he lives when
we talk about one thing which I think a lot
of people get confused, Professor, and this is such an
elementary question for you. I'm almost hesitant to ask it.
The difference between the federal deficit and the federal debt.
(09:58):
Many people use those those terms interchangeably. Just a quick clarification,
difference between deficit and debt.
Speaker 6 (10:08):
Sure, the deficit is what's happening in this period, say
this year. So this year the government had some revenue,
it had some expenditure, and the difference is the deficit. Okay,
The debt is adding together all the past deficits. So
in one year, if you had a deficit of one
(10:28):
hundred billion dollars, that at the end of that year,
your debt would also be one hundred billion. But the
next year you have another deficit of another one hundred billion,
your debt is two hundred billion dollars, because it's the
past deficit plus any new deficit that you've accumulated going
forward a year, and you just keep adding that up.
So the debt is the sum of all of our
(10:48):
past deficits and surpluses. And the fact that we have
such a large debt relative to GDP means that on
the whole, we've almost always had deficits, and increasingly, in
the last sort of ten years, bigger and bigger deficits.
So that the death is just going to keep getting
bigger and bigger.
Speaker 5 (11:04):
Yeah, it's growing exponentially. So again, these are just some
figures that I know figures are tough on radio, but
just your comment on these. Nineteen seventy that's obviously long
time ago, that's fifty years ago, but it's within the
memory of many people in my audience. Our federal debt
was about a third three hundred and seventy one billion dollars.
(11:27):
It was the third of the trillion dollars. Now our
debt has ballooned to thirty six point two trillion dollars
as of last month, and it just seems to grow.
In two thousand, it was up to five trillion. In
twenty ten, more than double it was two. It was
thirteen trillion twenty twenty. Another ten years, it was twenty
(11:49):
six trillion two thousand and twenty four. Obviously COVID had
a big part to do with this. It really exploded
to thirty five, which is what we're concerned about. How
we get out of this. We talked earlier today, and
you have kind of a dystopian view that that even
what what Elon Musk is attempting to do is not
(12:14):
going to make a huge difference.
Speaker 6 (12:15):
Correct, Correct, I don't think it's just my view. I
think of that majority of that.
Speaker 5 (12:22):
I'm not just contributing it to you. I apologize.
Speaker 6 (12:25):
I mean, and it's pretty simple arithmetic. If you take
the salaries of all federal employees, all of them, for
every possible department, divisions, agency, and get something like four
hundred billion dollars, but the government expenditure is something close
(12:46):
to seven trillion dollars. So you could cut every single employee,
eliminate their salaries, eliminate their pensions, and you still would
make a very very small dent in the amount that
we're spending per year because of very large percentage of
what we spend is medicare, another large percentage of so security,
another large percent is the interest on the debt that
we've already accumulated, plus government spending, and then all the
(13:09):
other stuff that Dooze is worrying about, some of which
should absolutely go. I'm not that's a different question, but
in terms of balancing the budget, it's going to make
it most a tiny difference.
Speaker 5 (13:21):
So if we're spending seven trillion, we're only taking in
how many trillion are we taking in in all taxes,
what for maybe four trillion, five trillion.
Speaker 6 (13:31):
And I think it's a little higher than that, but
I don't think we're out quite deficits of two trip.
But yes, in that ballpark. I mean, so we have
that it's trillions of dollars per year each year we're
coming short in terms of having expenditure that's greater than
revenue by several trillion. That starts to add up at
a really fast rate.
Speaker 5 (13:49):
Okay, So if if Elon Musk came to you that said,
what can I do to really have an impact? I mean,
he's got people marching in the streets right now because
they're asking for people to take a severance package. There's
a lot of people out there would like a severance
package who are ready to retire. And you mentioned that
(14:09):
some of the people who have taken the severage package
were prepared to retire within a couple of months and
now they're going to be get a severance to September.
What you're saying is something's going to be done with
soci security, something's going to be done with medicare. What
can be done with social security realistically or unrealistically, take
whichever you want.
Speaker 6 (14:30):
Well, at some level. Almost everything sounds unrealistic because it's
put all the changes that would go in the right
direction are politically unpopular, but things that one can imagine
would be slowly, not all at once, but gradually phasing
in slightly higher ages of eligibility for people to start
collecting Social Security paths its. First of all, that happened
(14:51):
once in the United States, in nineteen eighty six, we
passed the law that has been over the past roughly
forty years, phasing in higher and higher ages. Roughly, it
used to be everybody's got it at sixty five. Now
people's age of full benefits is postponed to sixty seven,
sixty eight, et cetera. So that goes in the right direction.
You could have the rate at which benefits go up
(15:14):
not be quite as big, a slightly less generous formula
than has been the case in the past.
Speaker 5 (15:23):
As a cost a living increase. Right.
Speaker 6 (15:25):
Other two pieces, Once you start collecting benefits, the benefits
you get per year goes up with the consumer price index,
but the amount that we pay the new beneficiaries goes
up with the rate of growth of wages, which is
typically sort of one to two percent higher than the
rate of growth of prices, So you could imagine cutting
that back a little bit. And the point is that
(15:46):
would be have a very very small effect on people
retiring in the next you know, three to five years.
They have a slightly bigger effect on people retiring pay
ten years from now. So it would not be crushing anyone.
It would not be yanking the rug out from under
in a major way. It would be spreading the adjustment
over decades and decades over generation. And you could do
(16:07):
analogous things with medicare. Instead of everybody getting in sixty five,
people who are say sixty or younger don't get it
till there's sixty five and a half. They not ideal,
obviously from the perspective of those people, but not catastrophic.
And then people who are fifty five and younger face
a little bit longer delay and things like that. So
these are things which you know, economists think are sort
(16:30):
of natural, but they don't pull well. No politicians seems
to want to endorse them. So it's hard to figure
out what sucks are going to happen until we just
get to some crisis so huge that we end up
kind of defaulting on the debt and that's a form
of a huge tax levee. But it's not. It's a
painful way to do it. There will be a lot
(16:50):
of chaos and a lot of waste resources that go
along if we do it that way.
Speaker 5 (16:53):
Okay, let's assume that we wrote we increase taxes, and
we taxed literally at the rate of ninety of of
you know, an immense number of people. Or let's say
we taxed everybody at one hundred percent. That would have
(17:14):
an impact, but not going to have a great impact
besides destroying the economy. Correct.
Speaker 6 (17:19):
I think that would have a very counter productive impact.
Because if you have tax rates that are above some range,
it's probably not much different than the current range. People
start evading and avoiding, moving to Canada, moving to Europe,
finding Swiss back. They will do all manner of things
to avoid having to pay those super high tax rates.
So you will have made the economy less productive, you
(17:39):
won't collect any extra tax revenue. You will be on
the wrong side of the Laffer curve if you increase
rates by those sort of amounts. And so that's not
a sensible thing to do that because a it won't work.
It's just it's it's incredibly counterproductive.
Speaker 5 (17:56):
So we're in a conundrum here from which politically there's
going to be You won't have enough members of the
four hundred and thirty five members of the House or
the one have been members of the Senate who would
bite the bullet in maybe maybe right the end of
their political career. Is that's really the problem, as I
(18:19):
see you outlining it.
Speaker 6 (18:20):
That is exactly the problem. And sometimes weird things happen.
Maybe when people start to get really scared, there will
be some grand bargain that will address the issue, but
in a way that doesn't kick in for ten or
twenty years, so it's not so relevant or the current
members of Congress. But we haven't seen that many countries
ever do that. We've seen a lot of countries have
(18:43):
fiscal meltdowns where they did default on their debt. They
did have huge disruptions to their economy because they kept
kicking the can down the road until all of a
sudden there was nowhere left to kicket.
Speaker 5 (18:55):
And when there's nowhere left to kick it, the currency
is devalued. Is that not the to move?
Speaker 6 (19:01):
So I mean it is in one level of solution.
If the government starts printing more and more money that
creates higher inflation. That inflation reduces the value of the
debt we owe, and so it's a form of a
tax increase, but it does likely lead to such high
rates of inflation that it's incredibly disruptive of the economy.
(19:24):
So you'll not only have this tax increase, but you'll
have all sorts of counterproductive behavior going on as people
try to avoid this inflation. Dex will be like Argentina was,
and lots of other countries have been that ended up
in hyperinflations. So that's not an ideal way to address
the issue, either, doing something like slowing the growth of
expenditure in a gradual way that doesn't throw people out
(19:45):
on the street, but that still over decades, does get
the growth rate down. I think that's the least bad
thing to do given where we.
Speaker 5 (19:54):
Are, and it's still there's still time, but time in
that hourglass is quickly slipping away. According to what I
hear from you and from what I know, you firmly
believe yes.
Speaker 6 (20:07):
And I think what bothers a lot of economists is
that it's been hard to predict in past episodes in
various countries when the hour glass is going to run out,
and you can sort of see it coming, and yet
things are going along okay, and they keep seem to
go along okay, and then people start to say, gee,
you've been crying wolf for years now and everything's okay,
(20:29):
and so you keep going. But then boom, out of nowhere,
something pushes you over the edge. And that has happened
to lots of economies over the centuries.
Speaker 5 (20:38):
My guest, my extraordinary guest, is my friend, Professor Jeffrey
Myron of Harvard University. Now he's the senior lecturer, director
of Undergraduate Studies at Harvard's Economic Department. We will take
questions for the callers right after the break. Professor, thank
you so much for your time tonight, and I'm going
to try to prevail upon you to stick with us
until the end of the hour. I know, I I
(21:00):
assume classers are back tomorrow, so I'm probably.
Speaker 6 (21:03):
Probably have I'm happy, happy to stay well.
Speaker 5 (21:06):
I'll tell you you're reaching a lot of people, and
these are people who are hearing what you say. You
explained it so clearly. It is truly a gift that
you have. But it's a gift that my audience now
can enjoy. We'll get to phone calls. The only line
that is, I only have one line six one, seven, nine, three, one,
ten thirty. All the other lines are full up. I'll
(21:27):
let you know when they open up, but right now
six one, seven, nine, three, one, ten thirty and again,
questions not speeches, please everyone coming back on Nightside.
Speaker 4 (21:36):
It's night Side with Dan Ray on w B Boston's
news radio.
Speaker 5 (21:42):
My guest, Professor Jeffrey Meran of Harvard University. We'll go
to phone calls. Here we go. We're going to start
off with Andrea in Newton, Massachusetts. Andrea, welcome to Nightside.
You're on with jeff Myron of Harvard University.
Speaker 7 (21:54):
Go ahead, Andrea, Hi, good evening, Thank you for taking
my call. CAN certainly stand what you're saying. My house
budget doesn't work if I work in a deficit. I
understand that. But what I don't understand is why part
of the conversation on my question is part of the
conversation isn't that all these boomers that are responsible for
(22:18):
this raging increase have been paying into this involuntary government
investment account for forty five years in the understanding that
they would have so security and medicare at the end
of it. Why wouldn't it be a subject of a
class action suit for having taken all this money from
(22:41):
these taxpayers and psycho payers for all these years and
not find it at the end when they were expecting
to get it.
Speaker 5 (22:49):
Well, that's the cause of action. There is sort of
a contract argument, Professor. At the same time that our
government doesn't have very deep pockets. I don't know how
you're going to get any more, honey, how you going
to get blood out of a stone. I understand Andrew's question,
and I think it's a great question. Andrew. I'm a
baby boomer like you are. We paid in all of
these years. It would have been great if we could
(23:10):
have voluntarily taken that money that went to Social Security
invested in the stock market. I think we would have
had a better rate of return. Jeff Myron going Professor.
Speaker 6 (23:18):
Myron, So, I completely understand the question, and it's completely reasonable. Unfortunately,
despite the hype, despite the way that politicians have tried
to portray Source Security, it is not an investment vehicle.
It is not a savings mechanism. The money that people
(23:39):
are paying in in their taxes in the years that
they're working, is flowing out more or less instantly within
months or year to people who are already retired collecting benefits.
So it is the lingo in economics is it's a
pay go system. Pay as you go. We take money
from the working and transfer it, not invest it, not
(23:59):
say that we train answer it to people who are
eligible to collect benefits. And so the frustration of people
as anders is completely reasonable and understandable, But I don't
think they have any legal course of action because that's
not the structure of the system. It's the hype that
politicians have perpetuated to make people think that they're investing
(24:21):
their money. But they have quick comment.
Speaker 5 (24:24):
When Social Security began in the nineteen thirties, how many
workers were supporting how many pensioners? And what is that
correlation today?
Speaker 6 (24:33):
Oh, the ratio of people working to receiving was much
much much higher. Was I don't remember exactly, but ten
or twenty to one. That's because initially very few people
were eligible, but everybody was initially subjected to the taxes.
Now I think it's down to something like two to one,
and it just keeps getting worse because on average, COVID
(24:54):
is disruption aside, we are living longer, so there are
more people who are above the age of eligibility, and
rates are low, so there are fewer and fewer people
in the working age population relative to the total number
who are eligible. So the demographics definitely made it worse
and worse over time.
Speaker 5 (25:09):
Andrew, you asked a great question. I hope you realize
the answer is totally accurate in terms of what our
options are.
Speaker 7 (25:19):
I do understand what you're essentially saying. Is that not
an investment but in fact an additional tax Closer to
where you said, it's an untenable tax rate.
Speaker 6 (25:32):
It's a transfer program. It's transferring funny from the working
age population to the retired age population. And that may
be good or bad for various reasons, but that's the
structure of the existing program.
Speaker 5 (25:44):
You know, Andrew, you've heard the phrase living is the
best revenge. The baby boomers a living, and some would
argue it was a Ponzi scheme. I don't know if
Jeff Myron would go that far, but.
Speaker 6 (25:59):
I don't think I would haul at that. I'm not
sure that helps illuminate, but it has been missold. So
I would simply say politicians wanted people to think of
it as saving and investing because that sounded better than
the reality. But the reality is, unfortunately, it's just taxing
and transferring.
Speaker 5 (26:18):
Well, we remember when al Gore in two thousand referred
to social security was in a lock box, but no
one could find the locked box. I would reply, if
it wasn't so, I would laugh if it wasn't so sad.
Great questions.
Speaker 7 (26:37):
Thanks Andrea, Thank you.
Speaker 5 (26:39):
You're welcome. Let me go next to Dina in Boston. Dina,
you are next one. Nice. I have a professor Jeff Myron
of Harvard University.
Speaker 8 (26:46):
Go ahead, Dina, thank you for hacking my call. If sorry,
I have a question, when what do we learned to
the previous call. I am on social Security and on Medicare.
But the tax taxing our social security, and when we
get our social Security check, we have to pay a
(27:08):
certain amount of Medicare, so in we're like almost contributing
to what we're getting.
Speaker 5 (27:17):
To get you and going is what you're saying, Dane,
go right ahead, professor.
Speaker 6 (27:22):
I mean what you said is certainly is correct. The
unfortunate is that to some degree people are not being
taxed enough and or are getting not being asked to
pay big enough premiums to make the system solvent, to
make it, you know, to make it balance out over time. Now,
(27:42):
there's specific ways in which economists would suggest adjusting the
cause and benefits that you get from being in, say
the Medicare program. So not necessarily raising the premiums you
have to pay, but we're increasing the copays and deductibles.
And the reason for that is that if people face
(28:03):
big copais and deductibles, then for initial levels of expenditure,
it's out of pocket and they will think a bit
harder about do I really need this or not. That
means less expenditure under the program, and maybe also somewhat
better choices about whether people should get all the medical
care that's being pushed on them by the healthcare system.
(28:24):
But that's still negative for the people who's the beneficiary,
there's no question. But that's the reality. We can't afford
what we've promised ourselves, and so somebody has to bear
that that cut.
Speaker 8 (28:36):
It's just funny because when I've turned sixty five, I
got comments from the previous you know, the next generation saying, well,
now you have free insurance, so.
Speaker 6 (28:50):
Absolutely it is not free.
Speaker 8 (28:53):
I mean it's supplemental or they'll fign you for the rest.
Speaker 6 (28:57):
Of your life. Yes, I means to provide it does
provide a benefit. You're getting more, you're getting something which
you wouldn't get if you had no insurance. But instead
calling it free is absolutely not right. That's right if
I could just.
Speaker 5 (29:11):
Jump in being it for one question, for one quick
question for Professor Myron, and that is that I know
that this question might sound a little off the wall,
but I remember talking to a heart surgeon in New
York who told me that there were people who arrive
(29:31):
in New York, maybe not every day, but with some frequency,
who are well into their seventies or eighties and who
are in need of heart surgery. They've never lived in
this country before, they appear at the airport, they collapse
when they come off the plane, and they are taken
to some of the best heart surgeons in the world.
I mean, we do have a lot of people who
(29:52):
come here at an advanced age and they have never
contributed to any of these programs, and I'm not mistaken
they still benefit from them.
Speaker 6 (30:03):
That Professor I did not think one was eligible for
Medicare unless one had been a resident and participating in
the social security system for some number of years. I
might be wrong about that, but I think.
Speaker 8 (30:18):
Well security, so security free care, right free care, free care.
Speaker 5 (30:25):
And now again some would say, well, this is anecdotal,
And I used to criticize John Sober for using anecdotal evidence.
Now that i'm his age, I will use this. But
I have a friend of mine, as a Heartschurger in
New York, has told me that that people have arrived,
and he's told me the countries. I'm not even going
to mention the countries, but they come here and it's
like they they collapse, and they know before they got
(30:47):
here that they have serious heart problems and maybe even
have some Clark gunderies. We're not going to let him
die at the airport, is what We're a generous exactly,
Professor Iron on this, Professor.
Speaker 6 (30:58):
I just I just looked at up okay, and so
I'll tell you. And this is from the government's website,
the Centers for Medicare and Medicaid Services. Just to be
eligible for Medicare, you must be sixty five or older,
be a US resident, and either a US citizen or
an alien who has been lawfully admitted for permit residence
and been residing in the United States for five continuous
(31:20):
years prior to the month of filing an application for Medicare.
So there is some residency requirement if you're not a
US resident, US citizen. So now there may well be
hospitals that choose to donate their services to people coming
conversities for whatever reason, but that's a separate question.
Speaker 5 (31:42):
And they donate services that yeah, okay, so they donate
this services and decided to do pro bono, arguably they're
not going to be compensated for it. Okay, right, okay, okay, thank.
Speaker 8 (31:54):
You, thank you, Okay, thank you, Yes, thank you very much.
Speaker 5 (31:58):
Tonight, take a quick break. My guess is Professor Jeff Myron.
He looks things up. I'm thank you, professor. I have
been I've had been corrected here many times in my program,
but never as quickly or as thoroughly as I just
was corrected. Thanks so much. Back at nights Side with
Professor Jeff Myron of Harvard University right after this.
Speaker 4 (32:20):
Now back to Dan ray Mine from the Window World
Night Side Studios on.
Speaker 5 (32:25):
W b Z News Radio. My guest Professor Jeff Myron
of Harvard University Professor. One little comment that I like
to make is that in the US, it is my
understanding hospital emergency rooms are required to provide treatment regardless
of insurance or ability to pay. And I think that
is the loophole by which a lot of people do
(32:46):
receive medical care, whether it's Medicare or are not Medicare
in America.
Speaker 6 (32:53):
So I think that's right, but I think it doesn't
necessarily apply it all possible care. It applies to emergency, right.
Speaker 5 (33:01):
So if you get off play in New York and
you and you have a couple of arteries blocked, you
might you might be as for open heart surgery. Is
what that doctor had told me. So anyway, but but
I thank you for that, for that correction. Let me
get real quickly, Heather in Arlington a lot of women callers,
which is always great here on nightside, Heather, you run
(33:22):
with Professor Jeff Myron.
Speaker 8 (33:24):
Oh, hi, how are you?
Speaker 9 (33:25):
And Dan? I know what you're thinking of. So if
somebody does go into the er and they are having,
like say, needed open heart surgery, they the hospital will
look and see do you qualify for free care? What
do you qualify for? Do you do you need math
health to do a math health application, then if it's
(33:47):
math health, which is like Medicaid, then you can back
build to the date of when the application was done.
Speaker 5 (33:55):
Gotcha, Thank you. What's your question for Professor Myron?
Speaker 9 (33:58):
So my question is what I wanted to ask, is
you know how they Trump has his tax break that
he's going to be giving to the wealthier to corporation.
So if that if you tax corporations, say the same
(34:19):
that where tax like regular medical Middle America, would that
help with the deficit or what would that look like?
Speaker 6 (34:30):
So moderate tax increases relative to where we are will
certainly tend to help the deficit. They'll be more revenue
coming in. If you try to reduce the deficit a
substantial amount and therefore over time reduce the debt by
substantial amount with tax increases, you'd find that it ended
up being counterproductive because much higher tax rates will induce
(34:53):
more evasion and avoidance, people moving to other countries, people
hiding their activities, and he's going underground, and so on.
In terms of corporations, economists don't make as big a
distinction between corporations versus people because corporations are owned by people,
and they employ people, and they sell their goods to people.
So if we try to raise tax revenue by taxing corporations,
(35:16):
the impact the incidents of that will be on several
different groups, partially on the shareholders of the corporation, but
also on these other groups like the employees and the
people who buy the product. In the extreme case, to
take one example, if you had a very very high
corporate income tax rate, a lot of corporations are going
to move overseas. They're going to stop employing US workers
(35:40):
and employ people in Ireland or Thailand or whatever. So
that might have a distributional consequence which people wouldn't like.
So that's not an obvious way. I mean, I'm not
saying the current rate is exactly the right rate or not. Actually,
I think in my view, ideally the corporate tax rate
should be zero and we should be that they were
(36:00):
always taxing people and tax them directly, and you can
still have a very progressive system that tax is hiring
the people more heavily, but do it by directly taxing people.
Speaker 5 (36:11):
Great question, Heather, great question, Thank you. We've had three
great callers. Great questions. Thanks Heather. Let me get Joe
and Bellmont here. Joe, you got to be quick for
me getting tight on time.
Speaker 10 (36:21):
Go right ahead, Dan, It is better to light a
candle than to curse the doc.
Speaker 5 (36:26):
Now, do me a favor. Just ask whatever question you
want Joe with Professor Myron.
Speaker 10 (36:30):
Okay, I just wanted to take fifteen seconds to give
you more encouragement than three things you're very good at
patriotism number one, do.
Speaker 5 (36:41):
Me a Joe. Save that for another night. I don't
want to waste Professor's time. All with all deference to you,
I appreciate you have a question for the professors.
Speaker 10 (36:49):
The question is, doctor, uh, do you if printing of
money is causing the depth? Why does the government meant
print more money? And what are for other ten reasons
for the thirty six trillion?
Speaker 5 (37:08):
Okay, good, gotcha, professor. Why are we continuing to print money?
I guess we I guess the government feels it's necessary.
Speaker 6 (37:15):
Printing money is one way a government can raise revenue,
because when the government prints the money, it owns the money,
so that then it can go and buy stuff that
would otherwise have to pay for it by having raised
other kinds of taxes. The question with any tax is
how high should it be and how should it be
balanced against other kinds of taxes, and the experience for
a long long time is you print tons of money,
(37:36):
you get inflation that's out of control and that's very
disruptive for e comedies.
Speaker 5 (37:41):
Thanks Joe for the question. Appreciated. Let me go to
Jay in Boston. J got about less than a two minutes.
Go right ahead. You're on, Professor Jeff Myron.
Speaker 11 (37:50):
I'll make it real quick, Dan, I'll make it real quick.
Speaker 6 (37:53):
Thank you.
Speaker 11 (37:54):
So I was looking at up twenty two percent of
the federal budgets going toward Social Security right now. So
my question is forty six and they've been talking for
years there. You know, by the time you reach retirement age,
you're not going to have Social Security. So I mean
just a ballpark, I mean estimate, going the route we're
going right now with social Security? How long do you
(38:14):
think we have left? I mean because I always thought
it was self funded. I didn't realize that the government
actually borrowed from it back in like nineteen eighty two.
So I'm just curious, like what your thoughts are, like
they did they ever pay back that money? And how
long we have left to Social Security?
Speaker 5 (38:31):
Like what do you what do you think to give
is he needs some time to answer the question. I
believe that right now that sociecurity runs out in a
few years.
Speaker 6 (38:39):
Yeah, and about ten years. So under the current rules,
if there's no change in any of the parameters, we
will start having deficits in the Social Security Trust Fund
approximately twenty thirty three thirty four. And at that point,
the rule says that all benefit payments have to be
cut so that the ratio of revenue coming in to
(39:02):
payments going out is not exceeded. And that number looks
like it'll be about seventy five percent. So benefits starting
in about ten years are going to be cut about
twenty five percent for everyone already retired and to be
retired later. So that's not nothing. Seventy five percent is
more than zero, but it's a noticeable cut.
Speaker 5 (39:23):
Jay, great question, Thank you, Dain.
Speaker 11 (39:26):
Always a pleasure, guys, thank you so much. Great show,
Thank you, thank you.
Speaker 5 (39:30):
Absolutely great, great hour with a great guest. To the
callers in the line, I apologize you got a call earlier,
Professor Jeff Myrone. There's no way I can thank you
for the clarity of the and the accuracy of the
information you have once again provided for us and thank
you so much. There's nothing more I can say other
(39:50):
than I owe you greatly.
Speaker 6 (39:53):
My pleasure to be here. I really enjoyed it.
Speaker 5 (39:56):
Thank you so much. We'll talk again. I'd love to
get you on at some point, maybe a few months
from now, and see how this administration is doing, if
they're if they're being successful or not. Professor, By the way,
do you have a recent book that we could mention,
because what can I help you?
Speaker 6 (40:15):
You could mention my substack that's called libertarian Land and
that discusses these and all sorts of other.
Speaker 5 (40:21):
Interesting issues on sub stack Liberty. Yes, okay, thank you
so much, appreciate it very much. All right, and we
get back. We're going to talk about the weather, a
little simpler topic to deal with and one that all
of us can relate to. Although Jeff Meyern did a
great job, and I really believe me when I say
these one of my favorite guests. We're going to be
(40:43):
talking with Isaac Longley of ACU Weather. How long is
this going to last? And I don't remember February ever
being this cold, and I've been around this part for
a long time. Back on Night Side, right after the
ten o'clock news,
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