• The Way Forward

    This has been a big week, with the release of the Ryan budget and today either the imminent shut down of the federal government or the last second avoidance of same. The biggest overarching public policy question facing our country is how to address the long term federal budget deficit.  That we will deal with it at some point is inevitable.  The question is how quickly do we start, and what policy route do we take?

    The debate around funding the government for the rest of 2011 and whether to cut $33 Billion or $35 Billion or $37 Billion from domestic discretionary spending is irrelevant to the long term budget deficit. Now the shut down debate apparently hinges on abortion politics. The Democratic party has only itself to blame that this debate is even possible, because for all the legislative success of the last Congress, they failed to pass a budget which is the most basic task required of Congress. The endless Continuing Resolution discussions have been a terrible distraction that have allowed the Republican party to talk a great deal about spending and the deficit while focusing on cutting what amounts to rounding errors when viewed in light of our long term fiscal situation.

    However, I agree with Aaron that for all the flaws of Paul Ryan’s budget, at least he wrote something down that didn’t claim there was a painless way out. And most importantly, Ryan provides a clear choice on how to address health care costs (the main driver of long term deficits) as compared with the Affordable Care Act.  I am not talking about the details of premium support, the Medicare eligibility age, or the rate at which subsidies are updated, but the clearly different big ideas of the two approaches:

    • The ACA says we will expand coverage while addressing health care costs
    • Ryan says we cannot afford to expand coverage but we must address health care costs

    This provides a clarifying choice.

    We have got to come up with some way of slowing the rate of health care cost inflation or the auto-pilot of our health care system will severely harm our economic future. Without a workable strategy, a balanced budget is impossible. We will never address health care costs with either a Democratic law, or a Republican law. The ACA is imperfect, and I believe we need a compromise to make it the health reform vehicle of both political parties. Once we have that, we can embark on what will likley be a 30 year struggle to muddle through attempts to slow health care costs in a culturally acceptable manner. Based on my understanding of the issues, I have written what I think a compromise could look like.  Such a deal seems politically impossible in the current political climate. So, is there any hope of anything consequential happening between now and the 2012 election?

    I think the only way is for the President to make a serious proposal on Social Security, in concert with discussions that appear to be ongoing in the Senate. There are several reasons why I think Progressives need to drive this cause, at some great political risk, in this Congress:

    • Progressives need a sustainable budget more than Conservatives given their view that government has an important role to play in modern life
    • There is a problem that needs to be fixed; now Progressives have substantial influence; they may not if the fix is done later
    • Once a fix is agreed to, Social Security reform could be put on auto-pilot and be expected to work as intended, because its benefits are cash payments
    • There may be some economic benefits of simply adopting a fix
    • Many Conservatives also want to fix Social Security, and may join in if lead by a Progressive President; they have been burned politically trying to lead on this in the past

    Who knows, if we somehow managed to agree to a bipartisan fix to Social Security, we might also manage to adopt a health reform compromise. And if not, we could fight out the future of health reform around the two clarifying big ideas noted above in the 2012 election, at least having taken one big issue off the table.




    • We might also find magical ponies, too.

      In all seriousness, there is simply no way in this political environment to pass Social Security reform, no matter what shape it takes. Even prior to retaking the House, the GOP had made it abundantly clear that they had no/zero/nada interest in working with the Democrats in Congress or the Obama administration. With the House in GOP hands there is no chance to move a Social Security reform bill in that chamber. Not to mention that with the very real specter of a teabagger fueled primary challenge, there is NO WAY you find the necessary Republican support in the Senate.

      The only way you might get any (and I am not even sure if it is sufficient) GOP support for a Social Security package is if it included at least partial privatization. And I think we all realize the flaws inherent in such a scheme. So should the administration and progressives (they are not one in the same, as Obama is far from a progressive in any reasonable definition of the term) accept that baggage/future policy consequence in exchange for increasing, or eliminating, the tax cap? That would be a horrible deal, IMHO.

    • Ryan’s PtoP does nothing to address health care costs; what it does is to shift a much larger share onto older Americans and their families. (Remember, Medicare does not provide full coverage of health care expenses for anyone now.)

      The U.S. spends far more per capita on health care than any other developed country, with mediocre results. Shifting the burden of paying for those services doesn’t reduce them or reduce the rate of increase. Controlling costs means reducing payments to hospitals, doctors, drug companies and device makers, but Ryan only addresses controlling what the federal government spends. It’s a shell game, using huge cuts in spending on Medicare and Medicaid to subsidize tax cuts for the rich.

    • @Bill N
      You are correct that Ryan budget really does only address the fed govt’s direct share of the bill, and doesn’t have a strategy to address costs overall.

    • What if charity is a religious undertaking and therefore prohibited by the First Amendment Establishment Clause? Doesn’t the redistribution of wealth through government programs buy the allegiance of the recipients who love their entitlements more than any deity?
      What America needs is one more conservative on the Supreme Court and a case brought by Constitutional scholars challenging the New Deal. Roosevelt was only able to get his socialist agenda approved by changing the make up of the Hughes Court. God knows there is enough evidence for injury to the general public from the effects. Then Washington, D.C. can go back to being a placid tourist attraction on the Potomac instead of the power center for bureaucratic edicts reaching around the world.
      It is not in the best interest for economic scholars to try to really reform government. The solution should be the work of the law schools with a new devotion to individual liberty. Get government out of health care and costs would drop like a rock thrown into that Potomac.