Hypocrite Daily: Fed Vice Chair Yellen On Deficits and Old People
This is my all-time favorite shot of Janet Yellen. I think you know why.
I guess it is a good thing for Janet Yellen that she's got her old age pretty well taken care of as a lifetime member of the Dirty Fed Operative Collective.
Check her comments on debt and deficits to the Committee for Economic Development in New York. Nary a peep about the fact that the Fed is cleaning up on our desperate need to finance government spending.
Via the Board:
Charting a sensible course for the federal budget is an essential but formidable task for U.S. policymakers. Since the onset of the recent recession and financial crisis, the federal budget deficit has soared as the weak economy has depressed revenues and pushed up expenditures and as necessary policy actions have been taken to help ease the recession and shore up the financial system. At 9 percent of gross domestic product (GDP), the budget deficit in fiscal year 2010 was a little lower than it had been a year earlier, but it was still considerably above the average of 2 percent of GDP during the pre-crisis period from fiscal 2005 to 2007. As a result of the recent deficits, federal debt held by the public has increased to around 60 percent of GDP--a level not seen in 60 years.
For now, the budget deficit seems to have topped out. So long as the economy and financial markets continue to recover, the deficit should narrow relative to GDP over the next few years as a growing economy boosts revenues and reduces safety-net expenditures and as the policies put in place to provide economic stimulus and promote financial stability wind down. That said, the budget situation over the longer run presents some very difficult challenges, in part because the aging of the U.S. population implies a sizable and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Currently, there are about five individuals between the ages of 20 and 64 for each person aged 65 and older. This ratio is projected to decline to around three by the time most of the baby boomers have retired in 2030, and further increases in average life expectancies may push this ratio down a little more in the years after that. Moreover, the demographic pressures on the budget appear likely to be compounded by continued large increases in per capita spending on health care. Admittedly, the ability of budget analysts to forecast the trajectory of health-care spending is limited, but it is prudent to assume that federal health spending per beneficiary will continue to rise faster than per capita GDP for the foreseeable future.
The FDIC's Shiela Bair joined in on the old folks' bashing in the Washington Post last Friday, conveniently leaving out the part about Social Security being looted for years and not mentioning that her own agency is broke and has been for quite some time:
Retiring baby boomers, who will live longer on average than any previous generation, will have a major impact on government spending. This year, the combined expenditures on Social Security, Medicare and Medicaid are projected to account for 45 percent of primary federal spending, up from 27 percent in 1975. The Congressional Budget Office projects that annual entitlement spending could triple in real terms by 2035, to $4.5 trillion in today's dollars. Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity. Overly generous tax subsidies for housing and health care have contributed to rising costs and misallocation of resources.
I am not defending the federal government nor am I trying to discount its irresponsible spending practices, I am merely pointing out that certain people in certain glass houses should not throw giant boulders. 'Tis all.