• How big a departure from history is Simpson-Bowles?

    Charles Roehrig answers the question using his illuminating triangle of painful choices. In brief, Simplson-Bowles is a heap o’ pain.

    The final chart locates Simpson-Bowles on my Triangle of Painful Choices. The triangle portrays the tradeoffs between tax revenues, federal spending on items other than health, and the resulting rate of increase in health spending that would be sustainable (consistent with a balanced budget in 2035). I label the smaller brown triangle the Region of Tri-Shared Pain because all points in it correspond to:

    Historically high tax revenues; and

    Historically low spending on defense and other non-health items; and

    Historically low rates of growth in health spending.

    That is, within this smaller triangle, the outcome would be outside of (in a painful way!) historical precedence along all three dimensions. With tax revenues at 21 percent, and defense and other non-health spending at 6.5 percent, the sustainable rate of growth in health spending is somewhat less than PGDP+1, thus Simpson-Bowles is in this triply painful region.

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