Differences of Opinion and Common Ground on Our Fiscal Situation

I want to draw your attention to a report from the Peter G. Peterson Foundation on ways and means to address the fiscal crisis we face. The report contains proposals from

• The American Enterprise Institute
• The Bipartisan Policy Center
• The Center for American Progress
• The Economic Policy Institute
• The Heritage Foundation
• The Roosevelt Institute Campus Network

quite a diverse group. The organizations participating found agreement on several points:

• Current policy is unsustainable
• Some kind of social safety net should be maintained
• We shouldn’t “subsidize the well-off the way we currently do”
• “Tax expenditures” are fertile ground for reform

The various organization have dramatically different views of acceptable levels of revenue, expense, deficit and how to accomplish them. I am skeptical that any of the proposals for controlling healthcare costs, whether the market-oriented approaches (similar to the Ryan plan) espoused by the Heritage Foundation or the AEI or the bureaucratic strategies favored by the BPC, CAP, EPI, and RICN (similar to those in the PPACA) will be effective and controlling healthcare costs is the sine qua non of fiscal reform. In my view a market-based strategy that only considers the demand side is doomed to failure while a truly free market on both demand and supply sides of the equation would have such dire public health consequences as to be intolerable. The IPAB and other cost control strategies in the PPACA have severe time inconsistency problems as has been pointed out not only by me but by the CBO and the Medicare Trust Fund actuaries.

Read it and weep. In all likelihood we won’t address even the subjects on which the various organizations have substantial agreement until the hazunga has already hit the fan.

Hat tip: Greg Mankiw