A Deficit of Creative Thinking

Washington is fully engaged in deficit mania, and the hawks have been in the ascendency. The consensus in Washington — as detailed by the Washington Post and the New York Times — is that we need to share the pain, though pain in Washington-speak really means cutting Social Security and Medicare.

The New York Times, for instance, in an editorial in the days immediately following the release of the report from the president’s deficit reduction commission, that it said the report offered “no-nonsense talk that the country needs,” saying “what almost nobody in Washington is daring to say.”

The Post, for its part, said the commission’s contribution “has been to hammer home the inescapable point that there is no realistic way to attain fiscal solvency without a combination of spending cuts and tax increases.”

Both specifically mentioned Social Security and Medicare, entitlement programs that have been in both papers’ crosshairs for quite some time.

Failure to come to consensus is a failure of politics, an unwillingness on the part of both political parties to risk short-term pain for long-term fiscal gain that can only damage the country’s prospects in the future. Or so goes the argument being made by the papers and the new breed of deficit hawks.

But it is not the politics that is the issue. Rather, the inability to win consensus reflects deep philosophical differences - and, on the part of the left, a legitimate opposition to a set of proposals that are skewed against the middle class and poor and favor those with the cash.

Mainstream Washington might be fixated on the deficit (at a time of high unemployment, a fact that boggles the mind), but there are economists willing to challenge the capital consensus. Dean Baker, at the Center for Economic and Policy Research, a populist liberal economist, questions the basic assumptions on which the battle to beat the deficit is built:

“The fundamental premise of the commission is that the country suffers from serious deficit problems that Congress is unable to address through its normal processes,” he said. “This view does not correspond with the facts as can be easily shown.”

Baker cites Congressional Budget Office numbers — a 1.3 point increase in spending as a percentage of Gross Domestic Product over 40 years — that demonstrate that there “has been no explosion of spending whatsoever” and nothing more than “an invention of those with their own agenda.”

More to the point, he adds, “the rise in the deficit in the downturn has been essential for sustaining demand in the economy” and “projections of longer-term budget problems are almost entirely due to a projected explosion in health care costs.”

Slashing Medicare — as the deficit hawks insist — will not address the problem. Instead, that will just push healthcare costs back onto American seniors. The fact is that the United States “pays more than twice as much per person for its health care as other wealthy countries with the same or longer life expectancies,” Baker says. “This ratio is projected to rise to three and four to one in the decades ahead.”

And that does not take into account other medical outcomes - on which the United States ranks far lower than one might expect.

The Obama health reforms may offer some minor assistance at the margins of the American healthcare labyrinth, but it will not measurably control costs. Only a single-payer, Medicare-for-all system will do that, by taking profit out of the system and expanding the coverage pool.

The way to attack the deficit is to fix health care and to put Americans to work in good-paying jobs, which would generate far more in new revenue than could be save by shortsighted cuts of unnecessary tax reform. But that’s not on the agenda in Washington.

Hank Kalet is a regional editor with in New Jersey. E-mail

From The Progressive Populist, January 1-15, 2011

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