StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



No Ezra, The Deficit Isn't A Distraction: It's A Subterfuge

28 Aug 2009
Posted by Stan Collender

Over at his own blog, Ezra Klein asks if opponents of health care reform are using the deficit as, in his words, "a distraction." He notes that many of those who are complaining about the costs of a health care reform plan (which is actually deficit neutral) have voted in the past for other major policy changes, like Medicare Part D, that weren't offset and so made the deficit situation much worse.

Ezra followed up that post with another today quoting Howard Gleckman, who asked how it was possible for the same members of Congress to be so concerned about the deficit implications of health care reform but also support the far more expensive extension of the Bush tax cuts when they expire at the end of 2010.

Ezra is being kind.  The budget deficit isn't being used as a distraction; it's being used to hide the real purpose of the accusation: defeating an Obama priority.  Neither the deficit nor health care reform are what's important here.

And Medicare Part D and the tax cuts are not the only example of members of Congress suddenly getting religion on the budget after being agnostic or atheist on the subject.

Many, perhaps even most, of those who are demanding that health care reform be defeated because of the budget situation have voted in favor of what is now close to $800 billion for activities in Iraq and Afghanistan without ever demanding that a penny of that be offset.  They also voted for big increases in spending from the highway trust fund and for agricultural price supports and for the constant patching of the alternative minimum tax without losing any sleep over the budget.

In fact, except for a very small group (such as the Concord Coalition; former Comptroller General David Walker, who's now CEO at The Peter G. Peterson Foundation; and Diane Rogers, who woks works for Concord), the budget almost never is the issue.  Instead, it's always the issue people use to oppose something they dislike for another reason that they don't have the testicular fortitude to state publicly.

After being inspired by CG&G's own Andrew Samwick, Brad DeLong has the best explanation for all this I've seen.  The money quote:

The problem is that Gingrich's "let's block everything Clinton tries to do even when it's good for the country, proclaim that he is a failure, and win the next election" move won the 1994 election. And now (the current Republican Party is) trying to repeat it.

 

Stan, It is terribly

Stan,

It is terribly misleading to refer to health "reform" as "deficit neutral". Even if the incremental spending is fully offset over a ten year period, it almost certainly will increase deficits beyond that point, (1) because the incremental spending is likely to be phased in more slowly than the offsets, and even more significantly (2) the growth rate of the new entitlement will be significantly higher than the growth rate of the offsets (see discussion at http://dmarron.com/2009/07/20/house-bill-fails-budget-tests/ and http://keithhennessey.com/2009/06/22/orszags-health-spending-gap/.

I assume you are familiar with the above points. If you disagree, I'd like to hear why. Otherwise, I would hope that you wouldn't continue to refer to these "reform" plans as "deficit neutral".

As for the motivations of opportunistic, self-serving politicians and of hyperpartisans among the public, no one should be surprised that partisanship and politics, rather than principle and patriotism, are the primary (and overwhelming) motivating factors. And as a note, Brad Delong is hardly in a position to criticize those who distort and spin for partisan purposes.


A small correction

Just for the record (and just to tease Stan a little), I don't "wok" for Concord. I occasionally "wok" for my family and in fact do Chinese food pretty darn well (I'm half Chinese after all--the other half is Korean).

I "work" for Concord, but I like my colleagues so much that I'd "wok" for them if they asked. Especially if boss Bob asked and promised to actually eat what I cooked. ;)


LOL -- or, phonetically, 엘 오

LOL -- or, phonetically, 엘 오 엘 (sound that out with your Korean half. I don't know Chinese characters)


Wok vs. Work

Diane...Forgive me.  I was posting close to dinner time.


Health Care

Apologies if it has already been cited, but this article from the current Atlantic does a great job of laying out the weird incentives of our current health payment and care systems. http://www.theatlantic.com/doc/200909/health-care
Strongly recommended.

The take-away for me is that there are many millions who could pay out-of-pocket for routine care, if they had more choices for high-deductible, true insurance for more serious care.
As for the politics, I fear those who might be seduced by the romance of "Let's Do It For Ted" as much as I do the Know Nothings who think that the current approaches are good enough. It wouldn't be hard for us to end up with higher costs and less choice.


Reform is "Deficit Neutral"

Klein and Collander seem to think the healthcare reform is "deficit neutral." To which I can only say, yeah, just like Medicare, Medicaid, the prescription drug program for seniors. It must be the Washington air.


I can't agree that opposing

I can't agree that opposing higher tax rates is equivalent to supporting the Medicare drug benefit, although they both raise the deficit.

Taxes have deadweight losses and disincentive effects. Medicare part D was just socialism.




Recent comments


Advertising


Order from Amazon


Copyright

Creative Commons LicenseThe content of CapitalGainsandGames.com is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. Need permissions beyond the scope of this license? Please submit a request here.