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James K. Galbraith teaches at the LBJ School of Public Affairs, The University of Texas at Austin. He is a Senior Scholar of the Levy Economics Institute and the Chair of the Board of Economists for Peace and Security. The son of a renowned economist, the late John Kenneth Galbraith, he writes occasional commentary for many publications, including Mother Jones, The Texas Observer, The American Prospect, and The Nation. He directs the University of Texas Inequality Project, an informal research group based at the LBJ School, and is President this year of the Association for Evolutionary Economics.
Part 1
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Transcript
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I?m Paul Jay in Baltimore.
The fiscal cliff is a scam—so says Professor James K. Galbraith. And he?s written an article which goes through the six reasons he thinks it is such a scam. And we?re going to start, as we speak, a six-part series where we go through each of his reasons. And he now joins us. Professor James K. Galbraith teaches at the LBJ School of Public Affairs at the University of Texas at Austin. He?s the author of The Predator State, and the latest among his many publications is Inequality and Instability: A Study of the World Economy Just Before the Great Crisis. Thanks for joining us, James.
JAMES K. GALBRAITH, LBJ SCHOOL OF PUBLIC AFFAIRS, UT AUSTIN: My pleasure, as always.
JAY: So just before we start with reason number one, just give us sort of the overall headline why you think the fiscal cliff is a scam. Certainly the media is stampeding us with fear about what?s going to happen. GALBRAITH: Well, what I wrote was that it is a crisis that was contrived a year ago as a deal, part of the deal to permit lifting of the debt ceiling. And these deadlines which were set up for the end of this year were established so as to create a climate of crisis in the period after the election, when things could be done that would no longer be immediately subject to the kind of public debate that you get before the election. And so we?re now in this period.
It was clear from election day that a massive wave of public relations was being brought to bear on this. You can read the op-eds that appeared in The Wall Street Journal and The New York Times on election day on that point. And now we?re in the middle of it. And the claim being made is that if there isn?t a decision taken by the end of this year—which effectively means, really, in the next three weeks or so—that very bad things will happen to the economy.
And, of course, it isn?t true. The reality is that while there will be changes that—in tax rates, for example, that will take effect on January 1, the impact of those changes on economic activity will be very slow, very gradual. And the Congress coming in in January will have plenty of opportunity to mitigate, eliminate those effects if it chooses to do that. And it can set the whole business back retroactively to the first of the year. So if there isn?t a—if the crisis, so-called crisis simply passes with no legislative action this year, nothing very serious will happen that can?t be fixed in the first six weeks or so of next year.
Read the rest of the transcript at� . Part 2 More at The Real News James Galbraith: It?s been known since the 1950?s that there would be more demands on social security; If there was political will health care costs could be controlled, it?s not a problem of Medicare
Transcript
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I?m Paul Jay in Baltimore. And this is the second part of our series with Professor James Galbraith, who thinks the fiscal cliff is a scam. And he?s written an article with six reasons why he thinks so, and this is reason number two. Thanks for joining us, James.
PROF. JAMES K. GALBRAITH, LBJ SCHOOL OF PUBLIC AFFAIRS, UT AUSTIN: A pleasure.
JAY: So, once again, Professor Galbraith teaches at the LBJ School of Public Affairs at the University of Texas Austin. He?s the author of� The Predator State� and� Inequality and Instability: A Study of the World Economy Just Before the Great Crisis.
So part two of your article, you ask the question, is there a looming crisis in Social Security, Medicare, Medicaid. So is there? That?s my question to you.
GALBRAITH: No, of course there?s not. Let?s take them separately.
Social Security is projected to rise very gently as a share of total output, total expenditure in the economy over the first half of this century. Why is that going to happen? Because the share of the population that will be receiving Social Security benefits is going to go up. That is in no sense a crisis. It?s something which has been known since the 1950s, since the baby boomers came into existence. It?s certainly not a secret to the United States census. It?s something which was taken care of in Social Security?s finances in the early 1980s.
But it constantly gets raised by people who want to curtail the extent of Social Security benefits. And there are all kinds of devices that are routinely surfaced to achieve that goal—raising the retirement age on the pretext that people are living longer and therefore they should work longer. But the reality is that two-thirds of Americans who take Social Security take it at age 62, at the early retirement—when early retirement becomes available.
Now, why is that? They—some of them are already unemployed. They don?t have a job they can stay in, and therefore they need the money. Others have been working for, let?s say, 40 years in tough jobs, jobs that require them to stand all day, jobs that require them to move heavy objects, jobs that require them to sit behind the steering wheel of a vehicle. And they?re ready to leave the labor force at that point, and so they take the early retirement deal.
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