One Sided Deficit Debate

James Kwak laments a “one-sided deficit debate” and says there has been no left/progressive discussion of these issues, and points to his book with Simon Johnson White House Burning as offering one (that I have yet to read). I would say my book Balancing the Budget is a Progressive Priority tried to make a contribution, with the next steps on health reform being the key.

Most people who look at these issues agree that the long run spending side problem if you are interested in a balanced (or even close) federal budget is health care costs. This won’t happen before the election of course, but if President Obama wins, then the Republican dream of repealing the ACA will be gone, and both sides have plenty of incentives to achieve a deal on health reform that is part of a larger, longer term deal on the tax code in a second Obama term. The niche of my book is that it moves from this agreement that health care costs are the key spending side problem to a set of nuanced health reform proposals that I claim represent what a bipartisan health reform might look like if both sides actually negotiated based on policy. Many writers on the deficit are budget types who dip their toe into health policy. I am a health policy guy who has dipped his toe into budget stuff.

The state of the meta debate seems to be that you are either for deficit reduction or you believe we need to do more to stimulate the economy because aggregate demand is too low. The dichotomy is false, and my book notes we need more in the short term to boost, and more in the longer term to increase taxes (the percent of the economy collected in taxes) and decrease spending not really over current levels, but over the default levels over the next 30 years given the movement of the baby boomers into Medicare, Medicaid and Social Security given our tax code and other spending priorities. My book certainly focuses on the longer run issues, but you don’t have to pick between the problems to address .

Politically, the crux of my book is that if you believe government has a key role to play in modern society, you have to be able to make the “trains run on time”, and so in that sense I think progressives/liberals need a sustainable long term budget more so than do Conservatives. Without proactive action, my view is that those hurt most will be the most vulnerable members of society in Medicare, Medicaid and Social Security.

The Dems have passed a health reform plan which everyone knows will be tweaked forever (any plan would be) and they are open to tax increases, and so have a record and affinity that can plausibly lead to a sustainable budget. At this point, Republicans have no health reform plan and are opposed to tax increases, meaning they have no plausible route to get to where they say they most want to go (a balanced budget). Of course there are Republicans who know taxes will have to increase to have a sustainable budget, but they cannot own up to this until after the election, and only if President Obama is re-elected.

The Republicans have won the metaphor war (cuts, austerity language predominate the discussion in the electorate), yet they are all talk, with no way to get to a sustainable budget. I think this provides a political opening that enables the Democrats to call the bluff of Republicans and press the case that if you want a balanced budget (ever) it will take an increase in taxes and a health reform plan, including acknowledging that changes to the ACA are inevitable and such a process is good and needed and challenging the Republicans to be clear on what they are for in health reform. The polls suggest there are very few undecided voters, but I suspect this type of discussion would appeal to the few that are left.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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