Ezra Klein -- who has been attracting all kinds of attention lately -- reads my column on progressives and the deficit and makes a good point, using a good graph:
To think about this more clearly, reasonable people agree that we have to use fewer fossil fuels. In the short-term, that means more efficiencies that make the fuels less necessary and more taxes that make the fuels more expensive. But in the long-term, it means a different energy source than fossil fuels, and our short-term policy is aimed at accelerating the technological advances that will make that possible.So too with the deficit. Cutting spending or raising taxes might be a stopgap measure, but the eventual answer is going to have to be changing the driver of that spending. We're going to have to get the cost of health care under control, not just by reducing our spending, but by changing the way medicine is practiced, bought, and sold. Either the health-care system eventually starts growing at five percent a year rather than nine percent a year or we go bankrupt. Those are our choices. And they mean that we're going to have to accept much more severe and intrusive reforms in the coming years.
You mean health care reform won't fix EVERYTHING? Ezra does make a good point here; health care spending growth is the bulk of the problem. However, I believe that graph is a bit outdated. The latest CBO figures suggest that the growth rate will be reduced if the final health care reform bill looks like the Senate version: "CBO expects that Medicare spending under the legislation would increase at an average annual rate of roughly 6 percent during the next two decades—well below the roughly 8 percent annual growth rate of the past two decades." But Ezra's goal is to get the whole system to grow at 5 percent, which presumably includes private cost growth as well. That means we have a way to go.
In the meantime, there is still much to be done with with both taxes and spending cuts. The real key to deficit reform is talking about everything. Yesterday, the CBPP's budget expert, Jim Horney, told me this:
You really need to look at everything. If you just look at the history of deficit reduction in this country, the times we've done successful deficit reduction it has come through balanced approaches that have both spending and revenues in the mix. ... You put everything on the table … even on the programs we care about, you look at them and say, is there a way we can do this better? Over the years, we have been among those that look at food stamps and other things that still provide the benefits, but make sure they're not being done in an inefficient way. [We ask,] how you can provide those benefits in the most efficient way?
Progressives will take warning, since those looking to hurt social programs often say they are looking for efficiencies, but at the same time so should those who care most about these programs, like the folks at CBPP. A broad spectrum approach is, I think, the right way to think about this, because we are talking about long-term deficits, not the short-term ones that are helping bring our economy out of a recession. That means a steady, incremental approach that goes after this problem from every angle.
-- Tim Fernholz
