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Tuesday, Aug. 28, 2012

Lockdown on expert candor


By ROBERT J. SAMUELSON
The Washington Post

WASHINGTON — Larry Summers knows better. In a column for the Washington Post (which ran Monday in The Japan Times under the headline "The unlikely chance of shrinking government"), the Treasury secretary under President Bill Clinton and former economic adviser to President Barack Obama shows why the federal government is destined to expand, regardless of what Republican presidential challenger Mitt Romney or a re-elected Obama suggests.

So far, so good. But Summers doesn't say what should be done about this. His silence is an instructive example of a larger problem: our "public intellectuals" — opinion makers — often censor themselves to advance their ambitions.

Since 1970, federal spending has averaged about 21 percent of the economy (gross domestic product). Summers lists three pressures that will make it grow:

• An aging population will swell the number of Social Security and Medicare beneficiaries, raising federal spending by 5.6 percent of GDP, he says.

Higher interest payments on the burgeoning federal debt will boost spending by 1.5 percent of GDP.

The "complexity" of many services government buys (health care, research and development) means their costs rise faster than inflation — another 3 percent of GDP.

Do the arithmetic: Sometime in the 2020s (Summers isn't precise), these increases total more than 10 percent of GDP. Added to the historical level of federal spending — 21 percent of GDP — government expands by nearly half to 31 percent of GDP.

You can quibble with Summers' numbers, but his broad conclusions are indisputable and challenge both Republican and Democratic promises.

Romney pledges to cut federal spending to 20 percent of GDP. Doubtful. Even deep reductions would merely offset some of the expansion. Obama claims he won't raise taxes on the middle class (defined as couples with $250,000 or less of income). Fulfilling this would require either huge spending cuts or massive deficits forever.

What should the nation do?

Summers punts. Here's his column's last sentence: "How government can best prepare for the pressures that loom, and how greater revenue can be mobilized without damaging the economy, are the great economic questions for the next generation."

Wrong. They are questions for this generation. They loom now; the longer we ignore them — as we have for decades — the harder the choices.

Summers, who has returned to Harvard, is widely regarded as a brilliant economist. Well, where would he draw the line at government so large that it undermines economic growth? At 22 percent of GDP? Or 26 percent? Anywhere? What spending cuts should relieve the pressure on taxes?

Summers mentions defense (averaging 4.7 percent of GDP over the past 40 years) but notes that "in a dangerous world our military is badly stretched by sustained deployments that are far smaller than even the Persian Gulf War."

Even with major spending cuts, higher taxes will be needed to balance the budget. Are some taxes (a consumption tax, an energy tax?) kinder to economic growth than income taxes?

Could the welfare state — as I have argued — go into a death spiral?

Higher spending spawns higher deficits or taxes, which reduce economic growth and make it harder to pay promised benefits without yet higher taxes or deficits. Summers doesn't say.

(Lest I be accused of hypocrisy, this column often advocates the following: (a) elimination of wasteful or low-priority programs — Amtrak, farm subsidies, public broadcasting subsidies, among others; (b) higher eligibility ages for Social Security and Medicare, and less-generous benefits for wealthier retirees; and (c) higher taxes, preferably an energy tax, to balance the budget after spending cuts.)

One role of "public intellectuals" — the small class of scholars, "experts" in think tanks and elsewhere, public-policy advocates and some pundits — is to elevate our public debates. They can say things that public officials cannot without losing their jobs or influence. At their best, idea merchants of left and right expand what's acceptable by broaching the new, unfamiliar or unpopular.

Summers' silence on government's size and role abdicates this responsibility. To some extent, that's understandable given his personal history. Often blunt and outspoken, he has sometimes suffered the consequences: A short talk on women's capacity to become scientists ultimately led to his resignation as president of Harvard. But this may not be the whole story.

Ambition seems to have gotten the better of candor. His columns leave the impression that he's trying not to offend his political patrons. It's hard not to wonder whether he's auditioning for a job — head of the Federal Reserve? — in a second Obama term or some future Democratic administration.

If this verdict seems harsh, it is perhaps softened by the certainty that the same calculated behavior applies to many other public intellectuals.

© 2012 Washington Post Writers Group


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