From Kevin Drum's blog:
I've been trying to figure out whether I have anything to say about the "chairman's mark" of the deficit commission report that was released today. In a sense, I don't. This is not a piece of legislation, after all. Or a proposed piece of legislation. Or even a report from the deficit commission itself. It's just a draft presentation put together by two guys. Do you know how many deficit reduction proposals are out there that have the backing of two guys? Thousands. Another one just doesn't matter.
But the iron law of the news business is that if people are talking about it, then it matters. So this report matters, even though it's really nothing more than the opinion of Alan Simpson and Erskine Bowles. So here's what I think of it, all contained in one handy chart from the Congressional Budget Office:
Here's what the chart means:
- Discretionary spending (the light blue bottom chunk) isn't a long-term deficit problem. It takes up about 10% of GDP forever. What's more, pretending that it can be capped is just game playing: anything one Congress can do, another can undo. So if you want to recommend a few discretionary cuts, that's fine. Beyond that, though, the discretionary budget should be left to Congress since it can be cut or expanded easily via the ordinary political process. That's why it's called "discretionary."
- Social Security (the dark blue middle chunk) isn't a long-term deficit problem. It goes up very slightly between now and 2030 and then flattens out forever. If Republicans were willing to get serious and knock off their puerile anti-tax jihad, it could be fixed easily with a combination of tiny tax increases and tiny benefit cuts phased in over 20 years that the public would barely notice. It deserves about a week of deliberation.
- Medicare, and healthcare in general, is a huge problem. It is, in fact, our only real long-term spending problem.
To put this more succinctly: any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn't maintain approximately that ratio shouldn't be considered serious. The Simpson-Bowles plan, conversely, goes into loving detail about cuts to the discretionary budget and Social Security but turns suddenly vague and cramped when it gets to Medicare. That's not serious.
3 comments:
Very good explanation
Yes, good comment. Dean Baker (among others) has been saying this for a long time - if health care costs are brought under control, there is no long-term fiscal problem. People who want to cut SS often lump it with Medicare, because it gives scarier numbers - but it's the Medicare part that is the problem, and that's because health care costs in general are high and growing. But real health care reform is going to hurt the profits of some corporations, and so is politically difficult.
I have wondered , too, why so much attention has been focused on Social Security and not Medicare, whose liabilities are vastly more underfunded.
The problem with both trust funds is they do not represent a store of wealth.
The trust funds, in and of themselves, do not make it any easier to pay benefits.
The same can be said of the federal retirees pension plan.
I have excerpts from a reliable governmental source which state that the pension plan for federal employees is NOT a pension plan.
When the fund is tapped to pay benefits, it is the same exercise as paying for battleships. The benefits are paid from current revenues and additional debt, it is pay-as-you--go.
I can provide the excerpts and links for those who are interested.
Don Levit
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