Newspaper article The Christian Science Monitor

Economist Rejects Budget Body's Gloom

Newspaper article The Christian Science Monitor

Economist Rejects Budget Body's Gloom

Article excerpt

ECONOMIST Robert Eisner wasn't invited to testify before the Bipartisan Commission on Entitlement and Tax Reform.

Perhaps Sen. Robert Kerrey (D) of Nebraska, chairman of the commission, had good reason for not inviting him: The Northeastern University professor is well-known for his iconoclastic views, including not seeing any need to reduce the deficit or drastically reduce entitlements such as Social Security.

"I think they were afraid of me," Mr. Eisner says.

Senator Kerrey and the vice chairman of the commission, Sen. John Danforth (R) of Missouri, proposed raising the eligibility age for Medicare and the normal retirement age at which full Social Security benefits become available, from 65 to 70. They also would chop Social Security, Medicare, unemployment insurance, and certain veterans' benefits for the well-to-do. But the 32-member body, appointed by President Clinton, couldn't agree on a detailed plan to cut the budget deficit. Instead, they voted 24 to 6 to send a letter to Mr. Clinton warning that "tough action is needed sooner rather than later."

Eisner disagrees, calling the Kerrey-Danforth plan "foolishness." In a phone interview, Eisner offered his reasons. One point, he says, is that working people always have to support those not working - children, the handicapped, and those who are retired.

"The financing is a secondary problem," he says.

In other words, the goods and services nonworkers consume are always produced and provided by those who are working. How retirees, for example, pay for goods and services they need is a separate matter. They could get their income from the government's Social Security system; or it could come from a private corporate pension or from their children.

The big fear of baby boomers is that the Social Security system will fail them when they retire because it is inadequately financed today. "That's fed to {baby boomers} by politicians and the media," Eisner says. "Their own cynicism feeds it."

To him it is a misdirected concern. When baby boomers retire 20 or 30 years from now, their working children will have to support them - either through Social Security taxes, or through paying high enough prices on goods and services to provide profitable investments for corporate pension plans. …

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