Monday, February 14, 2011

A Plea For Plain Language on Deficits

The long term budget deficit is about one thing: medical costs. It's not about "entitlements." Social Security isn't a long run problem of any serious consequence, nor are various small programs that count as entitlements in the budget process. Long-term projections of the federal budget are very clear. It's all about health care.

Medical costs. Medical costs are going up much faster than inflation. Therefore, Medicare and Medicaid, and any other government programs affected by medical costs, will, long term, get far more expensive than any realistic level of taxation can handle.

So when budget hawks talk about "entitlements," as Andrew Sullivan did today, they're using language that in my view obscures, rather than illuminates, the situation.

Now, I'd go a bit further, as others have done. I agree with those who have argued that health care isn't really, properly speaking, a federal budget problem. It's a serious problem for the American economy. Thinking of it as a budget deficit problem misses the point; shut down Medicare completely and you solve the budget deficit part of it, but you still have an important dysfunctional situation with regard to health care.

Either way, I agree with Jonathan Chait: the way to measure a politician on federal budget deficits is really just to measure whether he or she has made medical costs a priority.

Now, and here's the part in which I give me own views of these things, I'll admit that I simply don't buy the idea that budget deficits have something to do with the future (it's not as if all those under-30s who voted for Obama are going to have to pay back the deficits when they "come due" down the line -- but they are among those who are badly hurt by a recession-level employment situation, which in my view could have been alleviated with more deficit spending over the last few years). That's a policy opinion, and others may and do disagree.

But as far as talking about budget deficits, there's really no question about it. It's health care costs. Most of the rest of what people are talking about is either stuff around the margins (important! -- government should be run properly! -- but it's not going to change the long-term deficit situation), or is about the preferred size or functions of government, not about deficits at all (well, there's the conservative position, which I interpret as pro-deficit, but that's a slightly different issue).

Getting back to my main my view, those who are upset about the long-term federal budget deficit should talk about it in terms of what it is, health care costs. Just as the phrase "weapons of mass destruction" encourages sloppy thinking (because nuclear weapons are not really similar at all to chemical and biological weapons in lots of important ways), talking about "entitlements" confuses the budget situation. I could see "Medicare and Medicaid" or, perhaps, "government health programs," but not entitlements.


  1. Um, I kind of just want to applaud this. Well said, Professor. I thought Sully's post today was ridiculously over-the-top, this is a welcome breath of fresh air.

  2. Haven't read Sully yet but I will. Sure health care is the biggest problem but no serious approach to the deficit can leave out defense spending and revenues. There should be no changes to Social Security until the top marginal tax rate goes up and the cap on payroll taxes is lifted to lets say $175 k. The Repubs just want to destroy the government and slow the economy in the short run to hurt Obama's reelection chances. That's what a precipitous drop in federal spending would do.

  3. Hear, hear.

    Great post, great comments. Anyone who's not making serious proposals to cut health care and military spending isn't serious about the deficit, or the federal debt.

  4. absolutely correct, and I hope Sullivan will respond. Commentators who babble on about "entitlements" have to be reminded, again and again, that this is what they are really talking about.

    Of course the scary thing is that no one really knows how to cut health costs, or even to restrain their growth, at least within the political system we have in the United States. There are a bunch of ideas, some plausible, some not so plausible, but the only method that has proved workable in the world is global budgeting--either in a single payer or multi-payer system. In the U.S. I think the political system would tolerate many bad things happening before it was willing tolerate global budgeting, alas.

  5. I found this very helpful. When I read Sullivan yesterday it just sounded like he was off his rocker.

    I started going through the entitlements in my head: SS - not that huge of a deal, some minor fixes will cure it. Food stamps and other "welfare" programs - too small to make that big of a difference and not really running away in terms of inflation. That left Medicaid which makes sense in that it is going to be a growing problem, but doesn't make sense within his generational warfare framework and Medicare. If he was talking about Medicare though, why not just say Medicare?

    The net result of the obfuscation was for me to just take the rant much less seriously than I would have had he focused on medical costs and Medicare specifically.

  6. I think this is about more than just sloppy language. People like Sullivan and the rest of the Beltway elite actually believe that Social Security and food stamps are bankrupting the nation. So, for them, "entitlement reform" is a perfectly accurate description of what they want to see.

    In other words, those people first need to be convinced (if that's possible) that the only way to achieve long term debt reduction is further health care reform. Then we can work on training them to use accurate language!

  7. Remember -- as Bob Somerby is wont to remind us -- health care spending is much lower in most other developed countries, at both the individual and societal levels. We may not like the policies those countries adopted to provide insurance and health services to their citizens, but they have found solutions. I happen to believe there could be substantial savings for Medicare by not paying for treatments and drugs that don't really improve people's health, but I'm not sure that's enough to bend the cost curve long term.


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