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tv   After Words with Joseph Stiglitz  CSPAN  August 28, 2015 12:52am-1:51am EDT

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tell i am 99 but if you are a coal miner to raise it as 72 that is a big deal. also every age and income level and african-americans to live this long and you already have one out of three black men who paid taxes but die before they collect benefits how much you want to increase that? is mitt is not as easy to raise that age as policymakers think. >> host: is certainly for those who cannot work longer or until 67. >> guest: but then you have what they have been directed different retirement age for every class teachers, a truck drivers, farmers, year after fights between the differing
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groups and it gets to be very complicated then the special interest lower the retirement age. increase they have -- hear drastic -- hairdressers can retire at the age of 55 because their work with hazardous chemicals. [laughter] >> host: how to readdress those problems we made more promises than revenue? garett social security is running a small deficit but that will increase every year. it never goes away. >> host: in the payroll taxes used to be more than enough but now more are coming out. >> boring -- paying out more and you don't have a lot of choices. overall the future unfunded liabilities runs like $25 billion so it is real
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money we will have to find i don't thank you can bring in enough new money without seriously hurting the economy and not be fair to the young people. we will have to face the future not today's retirees but the future once with less every promised you could raise the retirement age, the best way has to do with how you calculate benefits. right now use the 35 highest years of wages 30 years are adjusted i hate that should be adjusted to inflation. >> host: explain that. >> where they calculate your first set of benefits than the cost-of-living increase a very intricate formula
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that is semi read distributed so lower income get a greater proportion of their money back but that formula, it takes 35 years highest wages. the money you earned then it is worth a different amount so you have to adjust what they were 35 years ago. traditionally that is inflation adjusted and they grow faster than inflation so you get a higher than inflation benefit for those that are adjusted to that meighen's every year they retire they get a higher after inflation benefit than
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the year before them and that seems to be a little unfair and it is costly if you change it to an inflation-adjusted you could bring the system into balance over 30 years. >> host: are there other things that to augment savings? >> we are telling young people is essentially every get a certain level and they are not we will give them less than their promised so we should give them a chance to eat there ice-cream every force them spinach. they should take some of their current payroll tax to invested on their own. that doesn't increase the short-term deficit.
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>> there is the bigger hole in the short term but long term does save us money and moves us forward i often look that people talk that -- as a transition costs if you have $100 a say give me $50 today we will call it even we don't call it a transition cost you are better off if you don't then you have a problem and we have a federal deficit right now. sova will be difficult to make that transition. >> host: it isn't in easy time. >> that's right. three days the same problems of the overall program to cut spending in other areas which is my solution or borrow that money spread out over time but that
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eventually you have to face those three the matter what you do. >> host: let's talk about medicare spending people worry a lot with social security but medicare is in worse shape. >> host: explain that to. >> medicare is the program for the elderly by and large designed for those who are 65 and older with health insurance in their senior years. there are issues the more sick you get the less it pays and phases out covers up front but doesn't take care of long-term care. but essentially a health care program for the elderly a but medicaid is tricky.
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it provides a health insurance benefit to the port but the reality is a lot of money is spent for medicaid is back on the elderly because you don't have that long term care component somebody who goes into a nursing home takes money from the medicaid program to pay for that. >> host: they are a little more interrelated. >> guest: people think of medicaid as the core program but there is another one for the elderly. >> host: talk about medicare problems. >> is also facing the same demographic problems as social security more people aging and living longer and collecting more health care plus the elderly tend to be expensive with health care
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that is where a lot of expenses go. the net result is we spend a lot of money but not a lot is taken into pay for it. for a couple over the course of their lifetime they will pay one had to $50,000 of medicare and medicaid taxes in premiums at 65. >> host: how does it pay out? direct line is the individual payroll taxes 2.9% but is is up at the replay date percent tax for people earning over $200,000 per year. also then you pay a premium. that is only a small portion
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of medicare. with regular taxes than they pay for the shortfall. but that person in that couple would pay when a defect thousand dollars in premiums over a lifetime that sounds like a lot but the same family will collect $400,000 in benefits out of the program. >> host: they take significantly more out than what they paid into it. >> people don't know that they think they get out what they paid into which. >> that's right a fig decade but the vast majority. >> host: they are it just isn't enough. >> guest: but it is a combination more people collecting and a cost of health care going up lose money on every transaction we tried to make it up on volume.
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>> host: that costs are going up faster than the rest of the economy even though growth has slowed is one of the fastest growing areas of the budget. >> we have seen the rise of cost slow over the decade predating that affordable care act we saw a slide and we don't with the recession readjustment through and to spend less money on health care. we don't know what will happen in the future and/or if that cost will go back up. if it does then medicare could really balloon. >> host: what do we do? >> interestingly both sides seem to have the same target
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for all the debate in washington president obama and paul ryan have the exact same future growth target which is 1% faster but i think it is too fast but they just want to get there by different directions. the president wants to push it. >> host: the fact that they can even agree. >> and they both want to destroy a medicare and they have the same numbers we all admit you can the unfunded liabilities are $380 trillion and everybody thinks you can do that so they come to this same point of where they want to go. the president wants to push down from the top with various ways to relent blood dash reduce reimbursements
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to pay less hoping that in some devices and to give less health care if we didn't cover procedures then doctors wouldn't do as many tests. often all of that would help to reduce the overall cost but paul ryan wants to do a from the bottom up with their premium support system he would give people a certain amount of money but it is a voucher that will pay for a certain amount and if you want more than and that will bring down health care costs. but just to those decisions need to be made?
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>> cry a general the favor consumer directed health care because they can make individual choices. people talk about rationing health care and the reality is we do. every system in the world does. no such thing as a system that gets everybody all the health care they want whether europe for the united states if they to get receipts he brings human no country will do that so had you make a decision? some countries there is simply say you do not
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qualify whenever qualifications rehab. they say you have the ct scan city may have to wait six months in the united states we ration by price it cost about $1,000 you can pay for it if you don't you don't get one. the difference is maybe if you have brain cancer the chances are small but maybe your father died we be with sleep better at night to know that you didn't have is a that is worth $1,000 so for you to make that choice is the best to answer but most people will not choose to pay $1,000 to have one. >> host: is more consumer choice part of this edition? it is part of all goods air services. when i first came to
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washington a computer with the size of a house costing half a million know i have it in my cellphone and i get it for free. not because of government price controls but consumers demanded better quality at a lower price setting the same would happen with health care. >> host: switch to medicaid. it is complicated because it goes through the states so there's so many programs but do your best to explain how that works. >> guest: it is funded at a general tax revenue but only partially funded by the federal government the rest is funded by the state and it is a complex formula purpose of this supposed to be based corestates get more money than rich states but in reality those with congressional delegations had to get more money but
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the federal government sets broad guidelines and can make determinations are the types of procedures of who is eligible. >> but the problem is the state that it is the fastest growing if not this thing go line-item more the imprisons or roads and bridges. that is the big problem. >> the ada to have half for typing can return back to the states because really
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tell have but medicare doctors miriam who moves were bad news friday en deprenyl regency vroom floor trade route. what about the elderly and to. >> we're on the unsustainable course. i would say we have day dysfunctional congress we have some big challenges.
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>> guest: we can learn what is going on in europe about what not to do with huge unsustainable of occasions that between a rock and a hard place but old meadow know what they're going to do. but if they want to the
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institute goes to those that raised taxes if force is the interest-rate and they're spending along the way. also of the baltic nations which we responded very differently they did a lot of cutbacks in spending especially governmental. they made the recession worse this been the killer
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not offend the stimulus spending then what should we do? >> stimulus spending did not generate long-term growth. but what it did was make the trough not as deep separate
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then they take february. silicon those overseeing consequences s and the to do a good. >> happened for pro racing to much pressure to break sometime this cero debt to
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lift a rule but i am also like the idea is to burn yourself. spec you also of talk about paul krugman? >> the chip in many ways the deficit program producing a tour ray r.. the keynesian stimulus and argues me to run big deficits to they every spend that money will ultimately that lead to greater productivity tomorrow. we talked about that but but the reality of this evening in with this stimulus will
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put to find with the big take away some read the problem isn't always the way but politicians are kerry have the jury tour the depositions because that involves a certain amount of pain. so they can pay for that for a few years to say that this committee else's problem they're happy to do that. >> we worry about the crisis of the day but not enough at
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the long-term problems in this country. there is some of my and the baby boom collects medicare and social security will be very, very painful. something can go on forever eventually stops. we cannot go on the course we are of right now either
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if we make it in dash you basket does a soft landing. good luck with your book. >> guest: my pleasure
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>> host: in grover. we are looking at your new
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book it is a fascinating reading and abroad this week being focused with parts that range from a history of the united states and tune advise "the reader". so there will be a real wide range of topics but i want to start with the title. y 81 to end the irs? and n your materialized tree road with the flat tax on consumed income somebody is inter just collects seeing -- collecting tax revenues. >> this is a sweep of history going from one or 2 percent prior to the
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american revolution. in london never paying 20 percent that is the expense we were paying one or two with a long and tremendous things happened but over time the series of things that happened as they get more complex and more competitive and the economy slowed and the relative strength slowed and reversed. we moved away from a policy that worked how do we get back there? and do think we could look forward to a tie when he did not have income-tax also of doing things that the state of full debt is of model at
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that is powerful and important and transparency and school choice like a number of issues. >> and another tender actively moving to phase out to arizona and wisconsin north carolina and kansas has pulled the trigger, the mississippi the house just voted to follow the kansas model additional money will pay down the income tax and what happens if the states don't have that additional money comes in and grab it
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and suspended all but to never think through what happens to show up magically >> host: you would want a similar model at the federal level? >> as we go state-by-state with right to work laws him to think about altering those. nine states with no income tax and to save we thought we had to have an income-tax do we need one that the federal level? and we just keep moving in that direction. >> the every talked about
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how the irs targeted groups and is that part of what drove your title choice? >> eight pages into the book we discuss what is possibly a decision by ap iras and bureaucrats to go after the
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the teapartier started 2009 prepare a couple months and to the obama the administration would have told year at the time it could that happen progress had been working in improvement from a long time and i knew the american people will rise up against a tax increase like proposition other teen so light that we would have to wait until he spends a lot of money. then as soon as taxes raised by the american people could
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sense that all the spending with the two massive tax increases and did not wait for the tax hikes the first anti-spending movement but there is a wonderful study but what was the difference of voter turnout in the campaign's? >> there were estimating between three and six additional million votes
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otherwise we would have expected. the left is always doing rallies. that is because they don't have jobs. [laughter] but you need people at a rally to say i am part of a movement. you need friends or local friends and was organized by the people billionaires' and i think that variation.
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>> host: i got calls from grown-ups to say you have something to do with this? [laughter] they thought i a organized it. the tender 15% that raise their hand and they have never done this. because it was wiped out ted the teapartier blood ashley tea party was out but i wish at that point senators and the president were screaming something has to be done. and lois lerner gave a speech of my birthday 2010
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and she said they are all telling me i have to do something. people that our lucky florida at and the but there was something terribly wrong that needs to be stopped. but nobody should be but said to have the group that would grow. we didn't have the state teapartier groups we did the taxpayer revolts groups to this day that have big accounts and an office in their major players in
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massachusetts and california and other states. obama succeeded to recap the teapartier movement so it could not replicate it in 12 flooded did intend and had they the election may have turned out of there was a similar upsurge of republican votes. >> be coz romney did not outperform by that much. >> obama was down 3 million romney was up over 1 million before we saw the surge if that had continued, it should have built on a self self, there is a serious argument it may have been the factor of obama as reelection. you cannot have part of the government playing politics against the american people and we have that with the irs.
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they said they didn't do enough but they were trying. >> it is obviously unforgivable. but one reason they can do that because many of the peoples of identify as liberals. why h using that is sort conservatives if in control had such a hard time to invade? >> with the american revolution the sons of liberty and up against friends of government. and the british government broaden army for them to win
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the fight. with the government is not his servant but the participant and hits that activists to subsidize organized labor to give them hundreds of millions of dollars you tilt the playing field to not go work for the government. it is very static there is no such staying says i will make twice as much as the guy next to me but when nixon said give me a tax
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returns the people i don't like the answer was year they are. what bothers me is in just lois lerner she is a employee hack but there was no whistle-blowers' now we know people are still using their own image e-mail account hundreds are maybe thousands of people sloppy with our data. and ordered to attack them. >> i would be much happier to say this is not happening but you are right in basie
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the seoul says loyal to the state to serve the interest of bigger government. >> and i get the sense you would like to change that? soho parts of your book is how to get there how do you think that it it -- that bears fruit? >> a lot of people say there is problems. or you can say here is the problem is not only doing
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your project but that doesn't work. dozens and dozens of things you can do today to introduce legislation at the state level to do take effect. >> the big part of the book is. >> we ought to be moving toward taxing in, one time at one rate to. that could be a fair tax or flat rate and to raise taxes
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is other places such as where we were. maybe you don't go there. and in how they dealt with it and things could be moved to the state level. so there are lots of things we need to do to move in the right direction with trillions of dollars. >> but that they don't have more bipartisan support? they're not the voice of the extreme right out of line of western countries have a
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sell off why isn't there broader support? >> and here is the problem we got into. it is a simple sentence commitment by an elected official i put into writing as long as citizens to save you bring their rates down your broaden the base what did they leave their rates high?
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and then they would vote against any effort to raise rates you now have the majority in the house it in the senate floor those running for president today jeb bush cited as governors but they to be because they have run for president before. and bush has not raise taxes when he was governor but he has his father's decision in then with the last election he threw a perfect a good presidency.
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you never would have banned the nominee if he did not make that commitment. he was 14 points down to dukakis. >> that is when he broke it to be trusted on anything to be reelected. that you discuss senator hatch initiative with ethanol? >> the pledge became the
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great wall of china as long as they had that governorship of presidency from 94 through 2009 no tax increase only when they were all democrats in 1993 then in 2009 that period as soon as republicans got control there is a tax increase again you say that to force a discussion about spending reform and prioritizing. of the things we have been doing and did just keeps the
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key mediating barnacles there is never enough to decide if someone's in the spending cap. because of that those who cared bin to save $85 million in five years with 170 billion in 10 years for which you need to get to the sequester numbers. but you never have these discussions there is a war going on. and rolled toward to they
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set up the entire appropriations committee and also a to add unnecessary spending one of the recommendations is senator roberts has put together legislation to that effect i hope we can get that enacted. >> host: there is one way
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for example, with the tax reform plan but on a individual side they raise rates they call that a tax cut that is definitely spending. with tax deductions and tax credits they radically reduce the cost of capital gains and dividends.
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>> host: a drastic move. >> from senator the of utah to supercharge the economy day spent of lot of tax credits with the tax rates to supercharge the economy. lot of governors like president obama but they will have to make the case out there different and can compete.
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i think this is a very healthy cited the did regrets have hillary then what? and then the former governor was so unpopular that his lieutenant governor lost. by a big margin to suggest those republicans now that is very troubling for the democratic party they have lost so many governorships
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so much control of statehouses. >> one resend day experiment at the street -- the state level is only good ideas can flourish at the state level if you want to of a minimum wage of 50,000 per year nationally there would be bad for the economy. they would say what is that? but in vermont everybody knows what happened because they passed a government run health care under dukakis telos then they repealed because it bad the damage the economy now they could only do obamacare nationally it could not be state-by-state you would be to devastating.
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vermont said no at the state level. free market limited government republicans and libertarians school choice when one state does it the argument that the world cents if you give parents parental choice or right to work or no government unions it actually works better you can check that then you run for president on that now we have more than 30 republican governors in 24 states republican house and republican senate with half of the country's population democrats have seven states they run completely california is one of them. vendor is hawaiian delaware and connecticut and organic
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there is the challenge for this democrats they don't have control of the state bodies that republicans do. >> you cannot shower and a more. [laughter] >> their policies don't work they are achieving the blue states moving to the red states. >> that is where governor perry is central. >> yes he does have a strong narrative. >> host: going back to your policy prescription. there is a lot of money so how lahood did you make a case federal lands should be sold? the environmental movement movement, how do see that
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future? >> holds a the pledge. as long as tax increases are off the table then the spending that needs to occur in a free and open society national defence, right now the highway system. send that to the states you see this happen in state-by-state people want to build more roads or spend more money but we're not raising taxes would use it just? go find a spending reduction somewhere else you can have your roads with the government will not get bigger or we will aghast tax increase but the income-tax teston come down a large
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amount you turn that into your ally to reform government that is particularly true with assets. the pentagon homes of lot of the airways spectrum. they're position is if to make it free they have to reorganize. but i am in favor of of there are tens are made the hands of millions of dollars available. you restructure and it goes into the pentagon budget beyond what sequester allows.
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>> then all of a sudden deaths and they really need it can lead to sell rather have the shiny new platelets soul that off. based on restructuring that they came up with in the '80s that the pentagon says there are a series of bases we don't need it is bipartisan they pick 30 to save these can be closed the ones that the pentagon does not want any more. then the senate in the house votes to overturn they can be restructu


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