Federal Spending Is Not Trapped by the Social Safety Net

By James Galbraith
August 2, 2012 - 3:14pm ET

The nub of Bill Keller's recent essay on why Social Security, Medicare, and Medicaid must be cut is a graph – taken from a report by a group called Third Way – that compares federal “investments” with “entitlements,” showing that one is in decline and the other is on the rise. As a baby boomer, former Executive Director of the Joint Economic Committee, and an economist concerned with military matters (I chair the Board of Economists for Peace and Security), my antennae went up immediately.

Note, as Keller acknowledges, that the federal budget counts weapons systems as “investments.” Back in the 1960s, we were building nuclear bombers, submarines, missiles, and warheads; today we are downsizing that arsenal, happily unused. Does Mr. Keller really think that those “investments” had anything much to do with economic growth? If so, he's misinformed.