Obama Gets Real

December 5, 2013

By PAUL KRUGMAN

Much of the media commentary on President Obama’s big inequality speech was cynical. You know the drill: it’s yet another “reboot” that will go nowhere; none of it will have any effect on policy, and so on. But before we talk about the speech’s possible political impact or lack thereof, shouldn’t we look at the substance? Was what the president said true? Was it new? If the answer to these questions is yes — and it is — then what he said deserves a serious hearing.

And once you realize that, you also realize that the speech may matter a lot more than the cynics imagine.

First, about those truths: Mr. Obama laid out a disturbing — and, unfortunately, all too accurate — vision of an America losing touch with its own ideals, an erstwhile land of opportunity becoming a class-ridden society. Not only do we have an ever-growing gap between a wealthy minority and the rest of the nation; we also, he declared, have declining mobility, as it becomes harder and harder for the poor and even the middle class to move up the economic ladder. And he linked rising inequality with falling mobility, asserting that Horatio Alger stories are becoming rare precisely because the rich and the rest are now so far apart.

This isn’t entirely new terrain for Mr. Obama. What struck me about this speech, however, was what he had to say about the sources of rising inequality. Much of our political and pundit class remains devoted to the notion that rising inequality, to the extent that it’s an issue at all, is all about workers lacking the right skills and education. But the president now seems to accept progressive arguments that education is at best one of a number of concerns, that America’s growing class inequality largely reflects political choices, like the failure to raise the minimum wage along with inflation and productivity.

And because the president was willing to assign much of the blame for rising inequality to bad policy, he was also more forthcoming than in the past about ways to change the nation’s trajectory, including a rise in the minimum wage, restoring labor’s bargaining power, and strengthening, not weakening, the safety net.

And there was this: “When it comes to our budget, we should not be stuck in a stale debate from two years ago or three years ago.  A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.” Finally! Our political class has spent years obsessed with a fake problem — worrying about debt and deficits that never posed any threat to the nation’s future — while showing no interest in unemployment and stagnating wages. Mr. Obama, I’m sorry to say, bought into that diversion. Now, however, he’s moving on.

Still, does any of this matter? The conventional pundit wisdom of the moment is that Mr. Obama’s presidency has run aground, even that he has become irrelevant. But this is silly. In fact, it’s silly in at least three ways.

First, much of the current conventional wisdom involves extrapolating from Obamacare’s shambolic start, and assuming that things will be like that for the next three years. They won’t. HealthCare.gov is working much better, people are signing up in growing numbers, and the whole mess is already receding in the rear-view mirror.

Second, Mr. Obama isn’t running for re-election. At this point, he needs to be measured not by his poll numbers but by his achievements, and his health reform, which represents a major strengthening of America’s social safety net, is a huge achievement. He’ll be considered one of our most important presidents as long as he can defend that achievement and fend off attempts to tear down other parts of the safety net, like food stamps. And by making a powerful, cogent case that we need a stronger safety net to preserve opportunity in an age of soaring inequality, he’s setting himself up for exactly such a defense.

Finally, ideas matter, even if they can’t be turned into legislation overnight. The wrong turn we’ve taken in economic policy — our obsession with debt and “entitlements,” when we should have been focused on jobs and opportunity — was, of course, driven in part by the power of wealthy vested interests. But it wasn’t just raw power. The fiscal scolds also benefited from a sort of ideological monopoly: for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.

Now, however, we have the president of the United States breaking ranks, finally sounding like the progressive many of his supporters thought they were backing in 2008. This is going to change the discourse — and, eventually, I believe, actual policy.

So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.

The Crazy Party

September 19, 2013

By PAUL KRUGMAN

Early this year, Bobby Jindal, the governor of Louisiana, made headlines by telling his fellow Republicans that they needed to stop being the “stupid party.” Unfortunately, Mr. Jindal failed to offer any constructive suggestions about how they might do that. And, in the months that followed, he himself proceeded to say and do a number of things that were, shall we say, not especially smart.

Nonetheless, Republicans did follow his advice. In recent months, the G.O.P. seems to have transitioned from being the stupid party to being the crazy party.

I know, I’m being shrill. But as it grows increasingly hard to see how, in the face of Republican hysteria over health reform, we can avoid a government shutdown — and maybe the even more frightening prospect of a debt default — the time for euphemism is past.

It helps, I think, to understand just how unprecedented today’s political climate really is.

Divided government in itself isn’t unusual and is, in fact, more common than not. Since World War II, there have been 35 Congresses, and in only 13 of those cases did the president’s party fully control the legislature.

Nonetheless, the United States government continued to function. Most of the time divided government led to compromise; sometimes to stalemate. Nobody even considered the possibility that a party might try to achieve its agenda, not through the constitutional process, but through blackmail — by threatening to bring the federal government, and maybe the whole economy, to its knees unless its demands were met.

True, there was the government shutdown of 1995. But this was widely recognized after the fact as both an outrage and a mistake. And that confrontation came just after a sweeping Republican victory in the midterm elections, allowing the G.O.P. to make the case that it had a popular mandate to challenge what it imagined to be a crippled, lame-duck president.

Today, by contrast, Republicans are coming off an election in which they failed to retake the presidency despite a weak economy, failed to retake the Senate even though far more Democratic than Republican seats were at risk, and held the House only through a combination of gerrymandering and the vagaries of districting. Democrats actually won the popular ballot for the House by 1.4 million votes. This is not a party that, by any conceivable standard of legitimacy, has the right to make extreme demands on the president.

Yet, at the moment, it seems highly likely that the Republican Party will refuse to fund the government, forcing a shutdown at the beginning of next month, unless President Obama dismantles the health reform that is the signature achievement of his presidency. Republican leaders realize that this is a bad idea, but, until recently, their notion of preaching moderation was to urge party radicals not to hold America hostage over the federal budget so they could wait a few weeks and hold it hostage over the debt ceiling instead. Now they’ve given up even on that delaying tactic. The latest news is that John Boehner, the speaker of the House, has abandoned his efforts to craft a face-saving climbdown on the budget, which means that we’re all set for shutdown, possibly followed by debt crisis.

How did we get here?

Some pundits insist, even now, that this is somehow Mr. Obama’s fault. Why can’t he sit down with Mr. Boehner the way Ronald Reagan used to sit down with Tip O’Neill? But O’Neill didn’t lead a party whose base demanded that he shut down the government unless Reagan revoked his tax cuts, and O’Neill didn’t face a caucus prepared to depose him as speaker at the first hint of compromise.

No, this story is all about the G.O.P. First came the southern strategy, in which the Republican elite cynically exploited racial backlash to promote economic goals, mainly low taxes for rich people and deregulation. Over time, this gradually morphed into what we might call the crazy strategy, in which the elite turned to exploiting the paranoia that has always been a factor in American politics — Hillary killed Vince Foster! Obama was born in Kenya! Death panels! — to promote the same goals.

But now we’re in a third stage, where the elite has lost control of the Frankenstein-like monster it created.

So now we get to witness the hilarious spectacle of Karl Rove in The Wall Street Journal, pleading with Republicans to recognize the reality that Obamacare can’t be defunded. Why hilarious? Because Mr. Rove and his colleagues have spent decades trying to ensure that the Republican base lives in an alternate reality defined by Rush Limbaugh and Fox News. Can we say “hoist with their own petard”?

Of course, the coming confrontations are likely to damage America as a whole, not just the Republican brand. But, you know, this political moment of truth was going to happen sooner or later. We might as well have it now.

The Wonk Gap

September 8, 2013

By PAUL KRUGMAN

On Saturday, Senator John Barrasso of Wyoming delivered the weekly Republican address. He ignored Syria, presumably because his party is deeply conflicted on the issue. (For the record, so am I.) Instead, he demanded repeal of the Affordable Care Act. “The health care law,” he declared, “has proven to be unpopular, unworkable and unaffordable,” and he predicted “sticker shock” in the months ahead.

So, another week, another denunciation of Obamacare. Who cares? But Mr. Barrasso’s remarks were actually interesting, although not in the way he intended. You see, all the recent news on health costs has been good. So Mr. Barrasso is predicting sticker shock precisely when serious fears of such a shock are fading fast. Why would he do that?

Well, one likely answer is that he hasn’t heard any of the good news. Think about it: Who would tell him?

My guess, in other words, was that Mr. Barrasso was inadvertently illustrating the widening “wonk gap” — the G.O.P.’s near-complete lack of expertise on anything substantive. Health care is the most prominent example, but the dumbing down extends across the spectrum, from budget issues to national security to poll analysis. Remember, Mitt Romney and much of his party went into Election Day expecting victory.

About health reform: Mr. Barrasso was wrong about everything, even the “unpopular” bit, as I’ll explain in a minute. Mainly, however, he was completely missing the story on affordability.

For the truth is that the good news on costs just keeps coming in. There has been a striking slowdown in overall health costs since the Affordable Care Act was enacted, with many experts giving the law at least partial credit. And we now have a good idea what insurance premiums will be once the law goes fully into effect; a comprehensive survey by the Kaiser Family Foundation finds that on average premiums will be significantly lower than those predicted by the Congressional Budget Office when the law was passed.

But do Republican politicians know any of this? Not if they’re listening to conservative “experts,” who have been offering a steady stream of misinformation. All those claims about sticker shock, for example, come from obviously misleading comparisons. For example, supposed experts compare average insurance rates under the new system, which will cover everyone, with the rates currently paid by a handful of young, healthy people for bare-bones insurance. And they conveniently ignore the subsidies many Americans will receive.

At the same time, in an echo of the Romney camp’s polling fantasies, other conservative “experts” are creating false impressions about public opinion. Just after Kaiser released a poll showing a strong majority — 57 percent — opposed to the idea of defunding health reform, the Heritage Foundation put out a poster claiming that 57 percent of Americans want reform defunded. Did the experts at Heritage simply read the numbers upside down? No, they claimed, they were referring to some other poll. Whatever really happened, the practical effect was to delude the right-wing faithful.

And the point is that episodes like this have become the rule, not the exception, on the right. How many Republicans know, for example, that government employment has declined, not risen, under President Obama? Certainly Senator Rand Paul was incredulous when I pointed this out to him on TV last fall. On the contrary, he insisted, “the size of growth of government is enormous under President Obama” — which was completely untrue but was presumably what his sources had told him, knowing that it was what he wanted to hear.

For that, surely, is what the wonk gap is all about. Political conservatism and serious policy analysis can coexist, and there was a time when they did. Back in the 1980s, after all, health experts at Heritage made a good-faith effort to devise a plan for universal health coverage — and what they came up with was the system now known as Obamacare.

But that was then. Modern conservatism has become a sort of cult, very much given to conspiracy theorizing when confronted with inconvenient facts. Liberal policies were supposed to cause hyperinflation, so low measured inflation must reflect statistical fraud; the threat of climate change implies the need for public action, so global warming must be a gigantic scientific hoax. Oh, and Mitt Romney would have won if only he had been a real conservative.

It’s all kind of funny, in a way. Unfortunately, however, this runaway cult controls the House, which gives it immense destructive power — the power, for example, to wreak havoc on the economy by refusing to raise the debt ceiling. And it’s disturbing to realize that this power rests in the hands of men who, thanks to the wonk gap, quite literally have no idea what they’re doing.

Phony Fear Factor

August 8, 2013

By PAUL KRUGMAN

We live in a golden age of economic debunkery; fallacious doctrines have been dropping like flies. No, monetary expansion needn’t cause hyperinflation. No, budget deficits in a depressed economy don’t cause soaring interest rates. No, slashing spending doesn’t create jobs. No, economic growth doesn’t collapse when debt exceeds 90 percent of G.D.P.

And now the latest myth bites the dust: No, “economic policy uncertainty” — created, it goes without saying, by That Man in the White House — isn’t holding back the recovery.

I’ll get to the doctrine and its refutation in a minute. First, however, I want to recommend a very old essay that explains a great deal about the times we live in.

The Polish economist Michal Kalecki published “Political Aspects of Full Employment” 70 years ago. Keynesian ideas were riding high; a “solid majority” of economists believed that full employment could be secured by government spending. Yet Kalecki predicted that such spending would, nonetheless, face fierce opposition from business and the wealthy, even in times of depression. Why?

The answer, he suggested, was the role of “confidence” as a tool of intimidation. If the government can’t boost employment directly, it must promote private spending instead — and anything that might hurt the privileged, such as higher tax rates or financial regulation, can be denounced as job-killing because it undermines confidence, and hence investment. But if the government can create jobs, confidence becomes less important — and vested interests lose their veto power.

Kalecki argued that “captains of industry” understand this point, and that they oppose job-creating policies precisely because such policies would undermine their political influence. “Hence budget deficits necessary to carry out government intervention must be regarded as perilous.”

When I first read this essay, I thought it was over the top. Kalecki was, after all, a declared Marxist (although I don’t see much of Marx in his writings). But, if you haven’t been radicalized by recent events, you haven’t been paying attention; and policy discourse since 2008 has run exactly along the lines Kalecki predicted.

First came the “pivot” — the sudden switch to the view that budget deficits, not mass unemployment, were the crucial policy issue. Then came the Great Whine — the declaration by one leading business figure after another that President Obama was undermining confidence by saying mean things about businesspeople and doing outrageous things like helping the uninsured. Finally, just as happened with the claims that slashing spending is actually expansionary and terrible things happen if government debt rises, the usual suspects found an academic research paper to adopt as mascot: in this case, a paper by economists at Stanford and Chicago purportedly showing that rising levels of “economic policy uncertainty” were holding the economy back.

But, as I said, we live in a golden age of economic debunkery. The doctrine of expansionary austerity collapsed as evidence on the actual effects of austerity came in, with officials at the International Monetary Fund even admitting that they had severely underestimated the harm austerity does. The debt-scare doctrine collapsed once independent economists reviewed the data. And now the policy-uncertainty claim has gone the same way.

Actually, this happened in two stages. Soon after it became famous, the proposed measure of uncertainty was shown to be almost comically flawed; for example, it relied in part on press mentions of “economic policy uncertainty,” which meant that the index automatically surged once that phrase became a Republican talking point. Then the index itself plunged, back to levels not seen since 2008, but the economy didn’t take off. It turns out that uncertainty wasn’t the problem.

The truth is that we understand perfectly well why recovery has been slow, and confidence has nothing to do with it. What we’re looking at, instead, is the normal aftermath of a debt-fueled asset bubble; the sluggish U.S. recovery since 2009 is more or less in line with many historical examples, running all the way back to the Panic of 1893. Furthermore, the recovery has been hobbled by spending cuts — cuts that were motivated by what we now know was completely wrongheaded deficit panic.

And the policy moral is clear: We need to stop talking about spending cuts and start talking about job-creating spending increases instead. Yes, I know that the politics of doing the right thing will be very hard. But, as far as the economics goes, the only thing we have to fear is fear-mongering itself.

•

Correction: In my column on Monday, I somehow misstated the Republican plan on food stamps, which was for a doubling of planned cuts — a significant cut but not, as I said, a halving of benefits.

Hunger Games, U.S.A.

July 14, 2013

By PAUL KRUGMAN

Something terrible has happened to the soul of the Republican Party. We’ve gone beyond bad economic doctrine. We’ve even gone beyond selfishness and special interests. At this point we’re talking about a state of mind that takes positive glee in inflicting further suffering on the already miserable.

The occasion for these observations is, as you may have guessed, the monstrous farm bill the House passed last week.

For decades, farm bills have had two major pieces. One piece offers subsidies to farmers; the other offers nutritional aid to Americans in distress, mainly in the form of food stamps (these days officially known as the Supplemental Nutrition Assistance Program, or SNAP).

Long ago, when subsidies helped many poor farmers, you could defend the whole package as a form of support for those in need. Over the years, however, the two pieces diverged. Farm subsidies became a fraud-ridden program that mainly benefits corporations and wealthy individuals. Meanwhile food stamps became a crucial part of the social safety net.

So House Republicans voted to maintain farm subsidies — at a higher level than either the Senate or the White House proposed — while completely eliminating food stamps from the bill.

To fully appreciate what just went down, listen to the rhetoric conservatives often use to justify eliminating safety-net programs. It goes something like this: “You’re personally free to help the poor. But the government has no right to take people’s money” — frequently, at this point, they add the words “at the point of a gun” — “and force them to give it to the poor.”

It is, however, apparently perfectly O.K. to take people’s money at the point of a gun and force them to give it to agribusinesses and the wealthy.

Now, some enemies of food stamps don’t quote libertarian philosophy; they quote the Bible instead. Representative Stephen Fincher of Tennessee, for example, cited the New Testament: “The one who is unwilling to work shall not eat.” Sure enough, it turns out that Mr. Fincher has personally received millions in farm subsidies.

Given this awesome double standard — I don’t think the word “hypocrisy” does it justice — it seems almost anti-climactic to talk about facts and figures. But I guess we must.

So: Food stamp usage has indeed soared in recent years, with the percentage of the population receiving stamps rising from 8.7 in 2007 to 15.2 in the most recent data. There is, however, no mystery here. SNAP is supposed to help families in distress, and lately a lot of families have been in distress.

In fact, SNAP usage tends to track broad measures of unemployment, like U6, which includes the underemployed and workers who have temporarily given up active job search. And U6 more than doubled in the crisis, from about 8 percent before the Great Recession to 17 percent in early 2010. It’s true that broad unemployment has since declined slightly, while food stamp numbers have continued to rise — but there’s normally some lag in the relationship, and it’s probably also true that some families have been forced to take food stamps by sharp cuts in unemployment benefits.

What about the theory, common on the right, that it’s the other way around — that we have so much unemployment thanks to government programs that, in effect, pay people not to work? (Soup kitchens caused the Great Depression!) The basic answer is, you have to be kidding. Do you really believe that Americans are living lives of leisure on $134 a month, the average SNAP benefit?

Still, let’s pretend to take this seriously. If employment is down because government aid is inducing people to stay home, reducing the labor force, then the law of supply and demand should apply: withdrawing all those workers should be causing labor shortages and rising wages, especially among the low-paid workers most likely to receive aid. In reality, of course, wages are stagnant or declining — and that’s especially true for the groups that benefit most from food stamps.

So what’s going on here? Is it just racism? No doubt the old racist canards — like Ronald Reagan’s image of the “strapping young buck” using food stamps to buy a T-bone steak — still have some traction. But these days almost half of food stamp recipients are non-Hispanic whites; in Tennessee, home of the Bible-quoting Mr. Fincher, the number is 63 percent. So it’s not all about race.

What is it about, then? Somehow, one of our nation’s two great parties has become infected by an almost pathological meanspiritedness, a contempt for what CNBC’s Rick Santelli, in the famous rant that launched the Tea Party, called “losers.” If you’re an American, and you’re down on your luck, these people don’t want to help; they want to give you an extra kick. I don’t fully understand it, but it’s a terrible thing to behold.

The Spite Club

June 6, 2013

By PAUL KRUGMAN

House Republicans have voted 37 times to repeal ObamaRomneyCare — the Affordable Care Act, which creates a national health insurance system similar to the one Massachusetts has had since 2006. Nonetheless, almost all of the act will go fully into effect at the beginning of next year.

There is, however, one form of obstruction still available to the G.O.P. Last year’s Supreme Court decision upholding the law’s constitutionality also gave states the right to opt out of one piece of the plan, a federally financed expansion of Medicaid. Sure enough, a number of Republican-dominated states seem set to reject Medicaid expansion, at least at first.

And why would they do this? They won’t save money. On the contrary, they will hurt their own budgets and damage their own economies. Nor will Medicaid rejectionism serve any clear political purpose. As I’ll explain later, it will probably hurt Republicans for years to come.

No, the only way to understand the refusal to expand Medicaid is as an act of sheer spite. And the cost of that spite won’t just come in the form of lost dollars; it will also come in the form of gratuitous hardship for some of our most vulnerable citizens.

Some background: Obamacare rests on three pillars. First, insurers must offer the same coverage to everyone regardless of medical history. Second, everyone must purchase coverage — the famous “mandate” — so that the young and healthy don’t opt out until they get older and/or sicker. Third, premiums will be subsidized, so as to make insurance affordable for everyone. And this system is going into effect next year, whether Republicans like it or not.

Under this system, by the way, a few people — basically young, healthy individuals who don’t already get insurance from their employers, and whose incomes are high enough that they won’t benefit from subsidies — will end up paying more for insurance than they do now. Right-wingers are hyping this observation as if it were some kind of shocking surprise, when it was, in fact, well-known to everyone from the beginning of the debate. And, as far as anyone can tell, we’re talking about a small number of people who are, by definition, relatively well off.

Back to the Medicaid expansion. Obamacare, as I’ve just explained, relies on subsidies to make insurance affordable for lower-income Americans. But we already have a program, Medicaid, providing health coverage to very-low-income Americans, at a cost private insurers can’t match. So the Affordable Care Act, sensibly, relies on an expansion of Medicaid rather than the mandate-plus-subsidy arrangement to guarantee care to the poor and near-poor.

But Medicaid is a joint federal-state program, and the Supreme Court made it possible for states to opt out of the expansion. And it appears that a number of states will take advantage of that “opportunity.” What will that mean?

A new study from the RAND Corporation, a nonpartisan research institution, examines the consequences if 14 states whose governors have declared their opposition to Medicaid expansion do, in fact, reject the expansion. The result, the study concluded, would be a huge financial hit: the rejectionist states would lose more than $8 billion a year in federal aid, and would also find themselves on the hook for roughly $1 billion more to cover the losses hospitals incur when treating the uninsured.

Meanwhile, Medicaid rejectionism will deny health coverage to roughly 3.6 million Americans, with essentially all of the victims living near or below the poverty line. And since past experience shows that Medicaid expansion is associated with significant declines in mortality, this would mean a lot of avoidable deaths: about 19,000 a year, the study estimated.

Just think about this for a minute. It’s one thing when politicians refuse to spend money helping the poor and vulnerable; that’s just business as usual. But here we have a case in which politicians are, in effect, spending large sums, in the form of rejected aid, not to help the poor but to hurt them.

And as I said, it doesn’t even make sense as cynical politics. If Obamacare works (which it will), millions of middle-income voters — the kind of people who might support either party in future elections — will see major benefits, even in rejectionist states. So rejectionism won’t discredit health reform. What it might do, however, is drive home to lower-income voters — many of them nonwhite — just how little the G.O.P. cares about their well-being, and reinforce the already strong Democratic advantage among Latinos, in particular.

Rationally, in other words, Republicans should accept defeat on health care, at least for now, and move on. Instead, however, their spitefulness appears to override all other considerations. And millions of Americans will pay the price.

The Geezers Are All Right

June 2, 2013

By PAUL KRUGMAN

Last month the Congressional Budget Office released its much-anticipated projections for debt and deficits, and there were cries of lamentation from the deficit scolds who have had so much influence on our policy discourse. The problem, you see, was that the budget office numbers looked, well, O.K.: deficits are falling fast, and the ratio of debt to gross domestic product is projected to remain roughly stable over the next decade. Obviously it would be nice, eventually, to actually reduce debt. But if you’ve built your career around proclamations of imminent fiscal doom, this definitely wasn’t the report you wanted to see.

Still, we can always count on the baby boomers to deliver disaster, can’t we? Doesn’t the rising tide of retirees mean that Social Security and Medicare are doomed unless we radically change those programs now now now?

Maybe not.

To be fair, the reports of the Social Security and Medicare trustees released Friday do suggest that America’s retirement system needs some significant work. The ratio of Americans over 65 to those of working age will rise inexorably over the decades ahead, and this will translate into rising spending on Social Security and Medicare as a share of national income.

But the numbers aren’t nearly as overwhelming as you might have imagined, given the usual rhetoric. And if you look under the hood, the data suggest that we can, if we choose, maintain social insurance as we know it with only modest adjustments.

Start with Social Security. The retirement program’s trustees do foresee rising spending as the population ages, with total payments rising from 5.1 percent of G.D.P. now to 6.2 percent in 2035, at which point they stabilize. This means, by the way, that all the talk of Social Security going “bankrupt” is nonsense; even if nothing at all is done, the system will be able to pay most of its scheduled benefits as far as the eye can see.

Still, it does look as if there will eventually be a shortfall, and the usual suspects insist that we must move right now to reduce scheduled benefits. But I’ve never understood the logic of this demand. The risk is that we might, at some point in the future, have to cut benefits; to avoid this risk of future benefit cuts, we are supposed to act pre-emptively by...cutting future benefits. What problem, exactly, are we solving here?

What about Medicare? For years, many people — myself included — have warned that Medicare is a much bigger problem than Social Security, and the latest report from the program’s trustees still shows spending rising from 3.6 percent of G.D.P. now to 5.6 percent in 2035. But that’s a smaller rise than in previous projections. Why?

The answer is that the long-term upward trend in health care costs — a trend that has affected private insurance as well as Medicare — seems to have flattened out significantly over the past few years. Nobody is quite sure why, but there are indications that some of the cost-reducing measures contained in the Affordable Care Act, a k a Obamacare, are actually starting to “bend the curve,” just as they were supposed to. And because there are a number of cost-reducing measures in the law that have not yet kicked in, there’s every reason to believe that this favorable trend will continue.

Furthermore, there’s plenty of room for more savings, if only because recent research confirms that Americans pay far more for health procedures than citizens of other advanced countries pay; that the price premium can and should be brought down, and when it is, Medicare’s financial outlook will improve further.

So what are we looking at here? The latest projections show the combined cost of Social Security and Medicare rising by a bit more than 3 percent of G.D.P. between now and 2035, and that number could easily come down with more effort on the health care front. Now, 3 percent of G.D.P. is a big number, but it’s not an economy-crushing number. The United States could, for example, close that gap entirely through tax increases, with no reduction in benefits at all, and still have one of the lowest overall tax rates in the advanced world.

But haven’t all the great and the good been telling us that Social Security and Medicare as we know them are unsustainable, that they must be totally revamped — and made much less generous? Why yes, they have; they’ve also been telling us that we must slash spending right away or we’ll face a Greek-style fiscal crisis. They were wrong about that, and they’re wrong about the longer run, too.

The truth is that the long-term outlook for Social Security and Medicare, while not great, actually isn’t all that bad. It’s time to stop obsessing about how we’ll pay benefits to retirees in 2035 and focus instead on how we’re going to provide jobs to unemployed Americans in the here and now.