Monday, June 14, 2010

No Crisis Needed

Ezra Klein's writing some really smart posts about the budget and deficits recently, including two today.  I have nothing to add or to argue with on his policy analysis, but I do think that his political analysis -- and in this, he's mostly reporting the consensus, not giving his own opinion -- is dead wrong:
Moreover, I've now been to enough deficit panels and workshops to know that everyone who studies this stuff thinks that the only way we'll actually make any substantial changes to our long-term policies is within the context of a crisis. 
I understand that's what people think, but I have no idea why.  Two of the last three significant deficit reductions (and Ezra Klein surely thinks that the health reform bill was, among other things, a significant deficit reduction) were partisan and outside of the "context of a crisis."  That's the ACA this year, and the Clinton budget in 1993.  What they had in common was that in both cases, the Democrats believed there were long-run policy and political reasons to reduce the deficit that were more important than the short run hits they would take for reducing the deficit.  In the first case, the Clinton administration believed that medium-run economic growth depended on lower deficits (medium run?  They were presumably thinking 1996).  Health care 2009-2010 is a bit trickier, but basically Democrats believed that a more sustainable health care system was in their political interest, and believed that reducing the hit on the federal budget was part of that.  Meanwhile, as one can see for example at the end of this Kevin Drum post, there are plenty of liberals who appear to be genuinely concerned about the deficit (although certainly not all of them). 

The classic problem of deficits is that democracies generally aren't supposed to handle short-term/long-term issues very well, and budget deficits are generally examples of short term pain, long term gain.  I do think it's true, whatever the Tea Party sympathizers might think, that the short-term politics of deficit reduction are almost always costly -- no one really values deficit reduction more than they value low taxes and high spending.  However, if it's true that long-term deficits are mostly driven by health care costs (and I tend to believe that), then the same logic that drove the ACA could easily appear again in a (Democratic-majority) future, with the Dems simply shifting their interest group alliances and hitting one of the groups (doctors, hospitals, drug manufacturers) that they cut a deal with this time around.  The logic, that is, would be that Democrats and groups allied with the Democrats actually want health care (and for that matter the government) to work, and therefore are willing to take short-term political hits to make that happen. 

Oh, and by the way, the lowest-hanging fruit remaining from the 2009-2010 health care fight is still the public option, and I still think the chances of its adoption are pretty good within the decade.  What I don't know is whether Democrats on the stump are talking about it.  Is anyone following that?


  1. I haven't heard politicians talking about it on the stump but I'm hearing friends, associates and neighbors talk about it now on a regular basis. They describe the public option without calling it that. What I hear most is people wanting a non-profit insurance option. In Ohio, small businesses and individuals are generally insured through a subsidiary of WellPoint. WellPoint recently raised rates by 29% in our state. WellPoint is actually the main actor provoking public conversation. Hope the politicians don't lag too far behind the public.

  2. When you say "healthcare" is that the costs of Medicare part D? Or ACA? Or both?

    Not all the healthcare costs are from ACA. At least an effort was made to pay for ACA. Bush put the Medicare bill on the credit card from day 1.


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