Home > Fande = Fact & Evidence, The Economy > Paul Krugman bringing the Fande

Paul Krugman bringing the Fande

picture source: http://www.nytimes.com/2011/02/18/opinion/18krugman.html?partner=rssnyt&emc=rss

Realism on Defense Spending

DESCRIPTIONsource: Office of Management and Budget
EXCERPTS:

“Yes, there’s a lot of wasteful defense spending — in fact, it’s almost surely the most waste-ridden part of the federal budget, because politicians are afraid to say no to anything for fear of being called unpatriotic. And even aside from the question of the Bush wars, it has long been clear that we’re still spending a lot to head off threats that haven’t existed since the fall of the Soviet Union. Read Fred Kaplan for a sense of just how bad it is.

Then there are those wars. I was against Iraq from the beginning — and I was pretty lonely out there on the pages of major newspapers. Afghanistan made sense in 2002, but I have no idea what we’re doing there now.

But if we’re talking about fiscal issues, you have to bear the arithmetic in mind. We’re not living in the 1950s, when defense was half the federal budget. Even a drastic cut in military spending wouldn’t release enough money to offset more than a small fraction of the projected rise in health care costs.

So by all means, let’s try to crack down on the massive waste that goes on in matters military. But doing so would be of only modest help on the larger budget problem.”

source: http://www.nytimes.com/2011/02/18/opinion/18krugman.html?partner=rssnyt&emc=rss

EXCERPTS:

“The whole budget debate, then, is a sham. House Republicans, in particular, are literally stealing food from the mouths of babes — nutritional aid to pregnant women and very young children is one of the items on their cutting block — so they can pose, falsely, as deficit hawks.

What would a serious approach to our fiscal problems involve? I can summarize it in seven words: health care, health care, health care, revenue.

Notice that I said ‘health care,’ not ‘entitlements.’ People in Washington often talk as if there were a program called Socialsecuritymedicareandmedicaid, then focus on things like raising the retirement age. But that’s more anti-Willie Suttonism. Long-run projections suggest that spending on the major entitlement programs will rise sharply over the decades ahead, but the great bulk of that rise will come from the health insurance programs, not Social Security.

So anyone who is really serious about the budget should be focusing mainly on health care. And by focusing, I don’t mean writing down a number and expecting someone else to make that number happen — a dodge known in the trade as a ‘magic asterisk.’ I mean getting behind specific actions to rein in costs.

By that standard, the Simpson-Bowles deficit commission, whose work is now being treated as if it were the gold standard of fiscal seriousness, was in fact deeply unserious. Its report ‘was one big magic asterisk,’ Bob Greenstein of the Center on Budget and Policy Priorities told The Washington Post’s Ezra Klein. So is the much-hyped proposal by Paul Ryan, the G.O.P.’s supposed deep thinker du jour, to replace Medicare with vouchers whose value would systematically lag behind health care costs. What’s supposed to happen when seniors find that they can’t afford insurance?

What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president. And if his opponents were serious about those deficits, they’d be backing his actions and calling for more; instead, they’ve been screaming about death panels.

Now, even if we manage to rein in health costs, we’ll still have a long-run deficit problem — a fundamental gap between the government’s spending and the amount it collects in taxes. So what should be done?

This brings me to the seventh word of my summary of the real fiscal issues: if you’re serious about the deficit, you should be willing to consider closing at least part of this gap with higher taxes. True, higher taxes aren’t popular, but neither are cuts in government programs. So we should add to the roster of fundamentally unserious people anyone who talks about the deficit — as most of our prominent deficit scolds do — as if it were purely a spending issue.

The bottom line, then, is that while the budget is all over the news, we’re not having a real debate; it’s all sound, fury, and posturing, telling us a lot about the cynicism of politicians but signifying nothing in terms of actual deficit reduction. And we shouldn’t indulge those politicians by pretending otherwise.”

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