I don’t have the time to give this the attention it really deserves but I wanted to do a quick drive-by. In response to Paul Ryan’s draconian proposal for balancing the budget, which relies heavily on privatizing Medicare and Medicaid, Ezra Klein notes:
You can argue whether this cost control is better or worse than other forms of cost control. But it’s a blunt object of a proposal, swung with incredible force at a vulnerable target. Consider the fury that Republicans turned on Democrats for the insignificant cuts to Medicare that were contained in the health-care reform bill, or the way Bill Clinton gutted Newt Gingrich for proposing far smaller cuts to the program’s spending. This proposal would take Medicare from costing an expected 14.3 percent of GDP in 2080 to less than 4 percent. That’s trillions of dollars that’s not going to health care for seniors. The audacity is breathtaking.
But it is also impressive. I wouldn’t balance the budget in anything like the way Ryan proposes. His solution works by making care less affordable for seniors. I’d prefer to aggressively reform the system itself so the care becomes cheaper, even if that causes significant pain to providers. I also wouldn’t waste money by moving to a private system when the public system is cheaper. But his proposal is among the few I’ve seen that’s willing to propose solutions in proportion to the problem. Whether or not you like his answer, you have to give him credit for stepping up to the chalkboard.
That beats Matt Yglesias’s response which is that we should eliminate the deficit by cutting defense spending:
So if even Democrats won’t raise taxes and even Republicans won’t cut Medicare, what’s left? Perhaps defense. The problem here is that while targeting defense waste always has some support, there are few politicians willing to question the real driver of Pentagon cost—the American military’s global mission. The presence of a huge number of American military assets in Japan isn’t waste. But it’s hardly vital to the security of the American people, either. In this regard, it’s typical of our military expenditures, which are neither about waste nor about “defending our freedoms,” but about projecting power. In particular, we choose to be key players in East Asian security rather than leaving it to the Chinese and Japanese and Koreans to sort out for themselves.
To bring fiscal sanity cutting healthcare spending is really the only game in town. Increasing taxes won’t do it. There is no reasonably foreseeable level of taxation that will accomplish the task.
We can’t do it solely by cutting defense spending. Eliminating the defense budget in toto won’t eliminate deficits expected to run at $1.5 trillion or more for the foreseeable future. By anybody’s reckoning total defense spending is half or less that.
I think it’s possible to cut the deficit largely by eliminating the federal government’s spending on healthcare. I don’t think it’s possible to do that in a manner that’s consistent with good public health or public policy. I’ve already expressed my preferences on cutting healthcare spending: means-testing, taxing employer healthcare plans, measures to increase the supply of healthcare. It may be that a new program could be carved out of Medicare to subsidize the healthcare of the elder poor. Their situation really is different from that of 20 year olds without a job.
I may as well express my preferences for cutting the deficit as well: reduce healthcare spending (along the lines suggested above), cut military spending by reducing our military commitments in Iraq, Afghanistan, Europe, and East Asia and reduce the size of the Army, means-test Social Security, modernize the providing of services by the federal government and cut the federal payroll, eliminate pensions for elected officials, reduce federal employee’s pension plans, eliminate agricultural subsidies, start phasing out the building of new interstate highways or the expansion of old ones, reserve capital spending by the federal government for things that really are for the general welfare rather than for particular welfare. I support a carbon tax.
I’m under no illusions about my preferences: I doubt that any of my preferences will ever see the light of day. But there are really hard choices ahead, the president’s fiscal 2011 budget fails to make them, neither of the two major political parties want to make them, and the time of reckoning is very, very near.