The annual Social Security and Medicare trustees’ reports will be released today, prompting the usual scaremongering enabled by a widespread misunderstanding of how these programs operate and what deficits mean. As is always the case, it is helpful to separate out analyses of Social Security from Medicare, as they are different institutions facing very different challenges.

Turning first to Medicare, there’s no denying that Medicare is a large and growing contributor to federal budget deficits, since the dedicated premiums paid into the program don’t come close to covering costs. Nevertheless, the problem isn’t the design of Medicare itself, but rather health cost inflation. Shrinking or dismantling the program would only exacerbate Americans’ health insecurity, because Medicare does a better job of restraining costs than private insurers. This highlights a key theme in many debates about the budget deficit: reducing the deficit through any means possible should not be the goal. Instead, the goal should be to figure out how to boost Americans’ living standards. And in regards to healthcare, having the government collect taxes and pay for Medicare clearly boosts living standards relative to a scenario that sees Medicare gutted and taxes reduced.

Social Security, meanwhile, is still running a surplus, though this will change in a few years as the bulk of the Baby Boomers enter retirement. However, despite annual cash flow deficits that have appeared recently and will persist for some time, Social Security will be able to pay full benefits for much longer as it taps trust fund savings. Tapping the trust fund is not the sign of a crisis, instead it’s what’s supposed to happen. Policymakers in the early 1980s decided to build up a trust fund precisely to help smooth financing of Social Security in the face of the Baby Boomer bulge in the beneficiary population. This is analogous to the federal government running a deficit during a recession—it is not only appropriate but absolutely necessary. There is a crucial difference, however: unlike the rest of the federal government, Social Security is prohibited by law from borrowing—it can only “dissave” what it saved up in the first place. Unfortunately, many people associate running a deficit with borrowing, not spending down savings, and don’t understand that while Social Security can run annual surpluses or deficits the program cannot add to the federal debt over time.

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On June 8, the Senate Subcommittee on Immigration and the National Interest held a hearing on the H-2B temporary foreign worker program—a guestworker program that allows U.S. employers to hire workers from abroad for lesser-skilled occupations like landscaping, hospitality, seafood processing, and construction. It is a well-known fact that the program is rife with abuses, and I’ve shown how employers can legally underpay migrant workers in the program. News reports have revealed that employers use it try to avoid hiring American workers and that enforcement is lacking. (For more background, see EPI’s FAQ on the H-2B program.)

The hearing was timely because H-2B is currently a live issue on Capitol Hill. By that I mean Congress is considering provisions (also known as riders) to the omnibus appropriations bill that will fund the government for all of fiscal year 2017, which would extend riders amending the H-2B program that are currently in force during fiscal 2016. These riders deregulate the program by making it easier to exploit and underpay migrant workers while restricting the access of U.S. workers to jobs in their own communities. The riders also expand the program, allowing it to as much as quadruple in size. Members of Congress who want to grow the H-2B program, while keeping wages low for migrant workers, are again trying to hijack the appropriations process because there isn’t enough political support to pass the H-2B riders as a standalone bill.

Until now, very little has been written about the the substance of the riders and the H-2B rules they affect, or the impact they are having on the program and on the wages and working conditions of U.S. and migrant workers in the main H-2B occupations. The following is an excerpt from my congressional testimony on the H-2B program, which has been updated and edited for clarity; it explains in detail what you need to know about the H-2B riders.

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From time to time researchers have raised technical measurement issues with our research showing that the compensation of a typical worker has diverged from overall productivity. The Heritage Foundation’s James Sherk—a repeat player—has a new entry.

Last September, Josh Bivens and I published a paper that provides a comprehensive review of the measurement issues and presents our estimates showing that rising inequality, both from greater inequality of compensation and an eroding labor’s share of income, drives the productivity-pay divergence, especially in this century. It easy to get caught up in a myriad of technical issues, none of which, as Bivens ably shows in his recent analysis, actually change the overall finding that hourly productivity growth has generally far exceeded that of a typical worker’s hourly compensation since around 1973 or 1979. As Bivens points out, Sherk actually ignores that we highlight the gap between a typical (median or “bottom eighty”) worker’s compensation and productivity and not the average compensation (including that of CEOs and the top one percent), which sets aside the main driver of the gap.

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The following is a lightly edited transcription of a talk given by Josh Bivens at an AFL-CIO conference on the Implications of Globalization & Secular Stagnation for Monetary Policy.

The central question this presentation is “what are the implications of globalization and secular stagnation for monetary policy?” Let me tell you my final answer first and then I’ll work my way there.

My final answer is that globalization and secular stagnation make a sustained, coordinated fiscal expansion necessary for restoring growth to the global economy. Current politics in both the Unites States and Europe make this impossible in the short run. This means it’s likely to be a long time before we have a decent global economy, and that’s a real problem.

Let’s start out with some definitions. Secular stagnation is a chronic shortfall of aggregate demand that cannot be solved just by lowering short-term interest rates. It is obviously closely related to the problems of the zero lower bound (ZLB) on interest rates—it essentially says that this ZLB problem is not something that needs a one-time burst of policy activism to defeat, but that long-run forces (the rise of inequality, among other things) have lowered the long-term natural rate of interest that is consistent with full employment.

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James Sherk at the Heritage Foundation has written a piece claiming that there has been no gap between growth in productivity and growth in pay. It’s written largely as an attempted debunking of our work, but since there’s not actually any bunk in this work, the attempt fails.

Sherk raises many issues. Some have a bit of validity to them, some do not. I’ll discuss some of the nitpickier bits of his piece a bit later. In the end, however, the difference between his findings and ours boils down to the fact that he ignores the effect of rising inequality in driving a wedge between productivity and pay. And it’s true that if you ignore inequality, you get a much sunnier view of American wage performance in recent decades. But that’s the whole point, no?

Past all the hand-waving, the difference between Sherk’s findings and ours is completely dominated by the same single point of contention that comes up in every debate about growth in productivity and pay: the difference between average versus typical pay growth. The title of our most recent piece on this topic is: Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay. That “typical” in the title is important. We look at two measures of hourly pay that we argue are relevant for typical American workers: average pay for private-sector production and non-supervisory workers from the Current Employment Statistics (CES) and the median worker from the Current Population Survey (CPS). Production and non-supervisory workers constitute 80 percent of the private workforce. We think that seems pretty typical. The median worker in the CPS is that worker who earns higher hourly pay that half of the workforce and lower hourly pay than half. This also seems broadly representative to us.

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The system-wide budget for the University of Tennessee is more than $2 billion a year. Rep. Phil Roe (R-Tenn.) claims that the new Department of Labor overtime rule, which requires time-and-a-half overtime pay for many salaried employees earning less than $47,476 a year, will add $9 million in new costs. This is less than half of 1 percent of the annual budget, yet Rep. Roe claims this will force a 2 percent tuition increase. That does not add up.

Rep. Roe has not presented any evidence that the University of Tennessee will actually experience $9 million in new overtime costs, and given his math problems, there is reason to doubt. But to put his claims in perspective, we should note that without any new overtime or minimum wage costs, the University of Tennessee has been raising its tuition in response to falling state appropriations. As a recent University of Tennessee trustees’ report declared:

State appropriations to higher education have been stagnant or declining for several years… Higher education has responded to the decline in state appropriations by increasing tuition, providing no salary increases to faculty and staff, not filling or eliminating vacant positions, and becoming more efficient in the delivery of instruction, research, and public services.

In 2014, for example, tuition for various classes of in-state and out-of-state students increased between 2 and 6 percent, even though salaries were frozen. The drivers of rising tuition costs have nothing to do with Department of Labor regulations. But with appropriations shrinking, one can imagine that the desire of university officials to get uncompensated overtime work from its employees is increasing, and the updated DOL rules will provide significant protection from excessive overwork.

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On June 23, British voters will accept or reject a proposal that Britain leave the European Union. The latest polls show the vote in favor of the British exit, or “Brexit,” narrowly ahead.

The case for getting out has largely been driven from the political right, on the grounds that dropping out of the EU would allow Britain to close off immigration and free British businesses from rules made in Brussels that protect labor and the environment. A liberated Britain, goes the argument, would have the freedom to pursue policies that would bring it more prosperity.

But after an initial shock, the prolonged economic uncertainty following a win for Brexit would hit the U.K. economy much harder than its promoters expect. It would take at least two years to negotiate the terms of the pullout with the remaining 27 countries, which are unlikely to give Britain anywhere near its current privileged access to member countries’ customers or financial markets. It will then take even longer for the U.K. to find and negotiate trade deals for other export markets at a time of spreading deflation and rising protectionism throughout the globe. Pile on the political complications of disentangling British business regulations from rules made in Brussels, and the adjustment process could take as long as a decade.

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The Washington Post’s editorial board has been arguing for Social Security benefit cuts for years, so their negative reaction to the president’s call to expand the program should come as no surprise. Still, readers might wonder about some of the claims made in the editorial: first, that the wealthy would benefit most from across-the-board expansion plans and we should instead help the “very poorest,” second, that American seniors are better off than working-age adults and have higher incomes than their counterparts in other advanced economies, and finally, that we have better things to do with the limited tax revenues we might be able to wring from the wealthy.

Social Security is a through-the-looking-glass policy world, where progressives are constantly pushing back against conservatives who claim to want to focus on the poor. But the claim by conservatives that we should narrowly tailor Social Security to provide help to the poorest seniors sets up a destructive false choice. Social Security became the most effective antipoverty program precisely because it is social insurance and not simply a safety net program. We already have a means-tested old-age program—SSI—and it is woefully inadequate. You’ll get no argument from progressives on the need to increase SSI benefits, so ask yourself why conservatives want to make Social Security more like SSI.

Is it wasteful to expand a universal program that’s unambiguously progressive but not narrowly targeted on the poor? No. First, it’s important to understand that almost everyone, not just low earners, would better off if we expanded Social Security. Since the decline in traditional defined benefit pensions even many high earners—though maybe not those in Mitt Romney’s income class—could use more secure retirement and disability benefits. But for most people, Social Security only replaces less than half of pre-retirement earnings. It’s an efficient program with very low administrative costs. Instead of expanding it, however, we cut Social Security benefits in 1983, just as disastrous 401(k) plans came on the scene.

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