Friday, March 15, 2013

The Budget is Not an Appropriate Place to Try and Solve All the Country's Problems

The Washington Post's coverage of the budget, the debt, and the deficit has been overall pretty terrible, once you exclude Wonkblog at any rate.

A couple of posts today particularly stood out for for their awfulness.

First of all, the editorial board posted an editorial that hits some good points but really falls down hard in a couple of places.

The real doozy was this:

It is on the issue of entitlements that the Democrats’ document really disappoints. There is literally nothing — not a word — suggestive of trimming Social Security, whether through greater means-testing, a more realistic inflation adjustment or reforming disability benefits. The document’s fuzzy call for $275 billion in “health savings” is $125 billion less than the number President Obama has floated.

Does anyone recall that just a few years ago we spent a rather large amount of legislative time on health care reform? Does anyone really think that Social Security reform should use less time? Isn't it just as sensitive of a topic? Why in the world should this be done in a budget? Sure, Ryan's budget tries to do this, but that seems evidence against this approach rather than for. And nevermind that most economists seem to think that Social Security is basically in balance with only some minor adjustments needed. While minor, given how important this program is it deserves its own debate. As for health care, same thing. Remember PPACA? If we're going to fix health spending that was just the tip of the iceberg. The Democrats deserve points for separating this from the general budget, they shouldn't be berated for exercising common sense.

Michael Gerson's column, however, is a train wreck.

First of all:

Ryan’s budget proposal is similar to his previous two in both strengths and failures. It deserves everlasting fiduciary fame for proposing a plausible Medicare reform plan, essential to the future of the program and the long-term stability of the federal budget.
This is nonsense. All Ryan does is pass the hard work onto states, the diverse set of interests in the health care industry, and individual patients. This is buck passing, not a plausible Medicare reform plan. There's no coherent logic that would say that passing the buck from the Federal government to other stakeholders would solve diddly squat.


Congressional Democrats, in turn, have emerged from nearly four years of budgetary silence with their own ideological caricature — a proposal combining heavy taxes, budgetary gimmicks, a net increase in spending and a strident refusal to consider meaningful entitlement reform. The silence was more responsible. 

Again, why is meaningful entitlement reform part of the budget process? Don't the biggest programs in America deserve their own separate hearings? I can see some reason for a grand bargain as a start to these discussion but the next step would be working on each independently to get a final result. Trying to fix the whole thing at start would be like trying to build a manned mission to Alpha Centauri tomorrow without bothering with all the annoying steps in between. It's silly. I wonder what he would think of the House Progressive's Budget?


But the broad contrast in approaches is instructive. The Republican argument: Given demographic and fiscal trends, if you want to provide income and health-insurance support to the elderly and poor, and preserve a meaningful American role in the world, government will need to become less of an all-purpose service provider and to refocus key programs, such as Medicare, on helping those in the greatest need. The Democratic argument: We can do it all — as long as you don’t look beyond the 10-year budget window. Republicans get the better of this disagreement.

Huh? Why can't we do it all? We always knew that it was impossible for health care costs to follow the trends we saw through most of last decade, there's growing evidence that the curve has already been bent. Since growing health care costs were the bulk of the problem, the changed demographics only being a minor part, if these projections hold we probably can do it all within historic levels of taxation. And we can probably do an awful lot more if we raise taxes a percent or two of GDP to pay for something more ambitious, like the House Progressive Budget. Gerson is badly wrong on the choices the data points towards us facing.

Gerson then concludes with:

A serious budget, of course, lies somewhere in the vast gap between the Ryan and Murray budget proposals. And much about the Republican future will depend on taking the part of the budget document that many conservatives regard as boilerplate and turning it into a governing agenda, demonstrating a concern for the common good.
This is the sort of nonsense that comes from journalists who rely on simply listening to experts who regurgitate party line nonsense without understanding what is actually being said or the facts behind the debate. This is silly. If you're going to do this "balanced" kind of journalism at least say "a serious budget, of course, lies somewhere in the vast gap between the Ryan and House Progressive budget proposals." That statement could lead to some real interesting proposals and analysis of trade-offs between radically different ideological starting points. But the Murray budget is far from a partisan fantasy, it's really a yawn and not at all ambitious.

I don't believe that Ryan's budget bears any relationship to an actual empirical analysis of our country or its prospective problems. But even if you disagree you have to admit that Gerson's positioning moves the goalposts very far to the right. If you want to be centrist, it is the House Progressive budget you need to use to reach the middle, not the Murray budget.

These sort of distortionary assumptions need to be pointed out more frequently. Why can't the Post see the shallowness of their editorial line? They have a lot of folks smarter than this at Wonkblog, use them.

[Edit: fixed a mistake ]

Cross posted at Angry Bear.


  1. For the same reason people hire personal trainers: they need to think they're forced to do it or else they won't. But you're right, and I hadn't noticed it: you could scarcely think of a worse situation to negotiate entitlement reform than under duress to produce an operating budget... in this atmosphere!

    Weren't they trying for large-scale tax reform in the 2011 debt ceiling leadup? And now they're stabbing at third rails. The most optimistic you could be is that this will spur them to take up both of these issues during the normal legislative season.

    1. If they manage to take these issues up seriously it may be a good thing.

      On the other hand though, the problem is basically health care and between the PPACA and the slow down in cost growth this seems like a bad time to tackle it. These changes/trends need some time to play out before we can make an educated attempt at designing good reforms.

      This leaves the military budget and Social Security. The military budget doesn't look like a likely place to compromise and most conversations about SS involve far more drastic changes than are necessary.

      I'd like to see tax reform but we still seem a few years out from getting the GOP to accept that US taxes are too low for our level of economic development and demographics.

      At this point, I think the ideal solution is that people wise up and the deficit drops off the radar. After all, once inflation picks up we'll be able to reduce our debt rather substantially at a constant interest rate burden simply by refinancing at higher rates and longer terms. If we really wanted to reduce the headline number we could even introduce permanent debt,* which is a great way to reduce interest rate burdens and nominal debt.

      *Lovely idea introduced by the British a few centuries ago. Sadly fallen largely into abeyance.