Tuesday, November 16, 2010

Things They Say Are Difficult But Really Aren't

The deficit problem has gotten quite a bit of attention recently, what with the Bowles-Simpson plan and now the New York Times “fix the budget deficit” interactive tool, which is somewhat fun but ultimately very misguided, as both a technical and conceptual matter. In design, the “fix the budget deficit” tool seems to define the deficit problem, such as it is, as a primarily conceptual problem, redolent with the macho rhetoric about “hard choices” and the like. This is wrong. Actually, cutting the deficit is very easy. As a conceptual matter.

Chances are, if you’re a relatively sentient human being who pays attention to politics at all, you don’t like some or many of the things government is doing, irrespective of your actual political commitments. Between ideological opposition and sheer governmental bloat/excess, everyone in this group thinks there’s a ton of stuff to be cut from the government that they’d want gone irrespective of the budget situation. I want to withdraw troops from Iraq, Afghanistan and Germany for its own sake; that this would save roughly $200 billion in 2030 is something like a bonus. I want to change the tax code around because I’d like to change the tax code to remove the bad subsidies, etc., etc. anyway, not just to raise money. And so on, through my entire solution (which you can see here.)

If anything, as a conceptual matter, the Times’s calculator doesn’t go far enough. I want an option at a higher carbon tax! I want a Tobin tax on financial transactions! I want to reduce highway subsidies! I want to legalize marijuana and tax it! (and so, so much more). Then there’s the big one: the problem with the Bowles-Simpson deficit plan (and, somewhat implicitly, with the Times’s budget calculator) is that it assumes health care spending will only go up GDP + 1% without actually proposing how (taxing employer-provided health insurance—which I’ve helpfully checked—would do some work in reducing costs, but I doubt that much), is kind of funny. For people who like to talk about tough choices, they sure have looked away from the gore that results from arbitrarily capping Medicare’s cost growth. Such a policy would be fiat government at its finest, and would probably result in the kind of rationing/death panels that the conservatives were screaming on about. But if Simpson-Bowles are allowed to assume magic exists in this world, and the Times is allowed to put such a checkbox in, I wonder why they didn’t put the “move healthcare to a higher quality and lower cost equilibrium” option on there, for that surely would be the most positive news the economy and deficit specifically could receive. Unfortunately, the process there is uncertain; but very necessary.

No, concept isn’t the problem; execution is. Any set of cuts, in health care or otherwise, endangers some interest group’s favored subsidy or program and hence provokes a fight. That’s democracy as The Federalist Papers envisioned it. Seeing as the Times didn’t release its “you wrangle legislators” interactive game, it’s something that goes underrepresented in this discussion and hence contributes to the illusion that it’s the specific feckless personalities of the people in charge rather than the institutional incentives that goad them to act that way that is the problem. That’s something that could use a bit of discussion.

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