View 671 April 18 - 24, 2011 (original) (raw)
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Tuesday, April 19, 2011
The Fundamental Debate
The Wall Street Journal today ran the intellectual defense of Obama's deficit reduction plan in today's editorial pages. It is "Paul Ryan's Reverse Robin Hood Budget " (link) by Princeton economist Alan Binder,. Ostensibly about the Ryan budget plan, it says in abstract terms about what President Obama said in his speech: we don't have a spending problem, we have a revenue problem. It does not start by listing its assumptions: apparently it is assumed that you know what they are, to wit, that Medicare and Medicaid and all the other entitlements we have now are necessary and proper, the only permissible cuts in those programs will be small and devoted to "eliminating fraud and abuse, and the only real problems we have are funding those necessary entitlements while not going broke. Nothing else matters. Fortunately we can do that: stop giving money to the rich. Don't cut taxes.
Example:
Worst things first. The plan threatens to eviscerate Medicare by privatizing it�with vouchers that, absent some sort of cost-control miracle, would fall further and further behind the rising cost of health insurance. And to make that miracle even less likely, House Republicans want to repeal every cost-containment measure enacted in last year's health-reform legislation.
Then it summarizes:
It gets worse. The House Budget Committee's own rack-up of changes from the CBO baseline displays the much-ballyhooed 5.8trillioninspendingcutsover10years.Butitalsodisplays5.8 trillion in spending cuts over 10 years. But it also displays 5.8trillioninspendingcutsover10years.Butitalsodisplays4.2 trillion less in tax revenue. How many Americans know that 72% of Mr. Ryan's claimed budget cuts would go to fund tax cuts that overwhelmingly benefit the rich?
Medicare would not die a sudden death under the Ryan plan�people over 55 are grandfathered. It would, instead, succumb slowly to a debilitating illness as the growing gap between the vouchers and the cost of private health insurance priced more and more seniors out of the market. This fate evokes conservative activist Grover Norquist's famous image: to keep on shrinking the government until it's small enough to drown in the bathtub. And who would go down the drain with it? Not prosperous Americans, whose huge tax cuts would more than compensate for their higher health-insurance bills, but middle-class people who really need Medicare.
There's another summary that lets us infer the assumptions under this:
But follow the numbers out for decades, and the Ryan plan does turn into a lion. The CBO's scorekeeping shows federal spending under the House Republican budget falling to just 14�% of GDP in 2050. (It's now 23�%.) That sounds great�until you think about it.
For openers, the last time federal spending was that small a share of the economy was 1951�before Medicare and Medicaid, before the Departments of Health and Human Services, Housing and Urban Development, Education, Energy, Transportation, Veterans Affairs, and Homeland Security. You get the idea. Somewhere, Mr. Norquist is filling his bathtub.
That, I think, states the assumptions under which Blinder and the White House operate: All that growth in the Federal government since 1951 was necessary and proper, and we are much the better off for it. Of course it was the fear of that growth that caused Bill Buckley to found National Review in 1955, and state that its mission was to stand in the way of history shouting "Stop!" This has been the fundamental debate between conservatives and progressives ever since. It is made complex by another debate: there are those who believe that government has a positive role in doing good through "progressive" means, but that these are not the job of the federal government: they are the province of the states. And that was greatly complicated by the problems of civil rights: did states rights mean the right of the states to continue segregation? Were federal civil rights laws required in order to make the law color blind? Did not the cause of civil rights demand the enormous expansion of the power of the federal government and the creation of new bureaucracies? Because once the new bureaucracies were created, they would grow. Parkinson's Law and Pournelle'sIron Law would see to that.
But are all those bureaucracies needed? Do they do good or harm? Would education in the United States be better for a continued growth in the Department of Education, or would it be bettered by abolishing that Department entirely? Do we need Energy and Transportation as separate Departments or could their necessary functions be performed by Interior and Commerce? Are we really better off for their existence? It is surely worth debating, but Professor Blinder does not see that. To him it is self evident.
It is not self evident to me. The necessity of maintaining federal spending at 20% GDP and above seems to me the essence of what we ought to be discussing.
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Regarding civil rights: when I was a young man in high school in the legally segregated South, I thought the law ought to be colorblind. I was thought a hopeless radical for thinking so. When the civil rights debates and freedom rides took place, I did not support them: I remain an advocate of states rights. The one federal law we needed was enforcement of the right to vote. That was clearly constitutional, and Congress clearly had the plain black letter law power to enforce it by appropriate legislation. In my judgment that was the proper course of events, and all the other federal interferences in state affairs like the various school takeovers were not merely needless but did great harm. I see no reason for changing that view now. But that is an aside and not a part of the current debate, which ought to be:
To how much of someone else's income and property is someone entitled by reason of existence? If you cannot see well, are you entitled to spectacles paid for by someone else? If you have no teeth, are you entitled to free dental work? If you have no kidneys, are you entitled to one from someone who has two and needs only one? If you are anemic, are you entitled to someone else's blood? If you are hungry, are you entitled to have someone buy you lunch? If you are poor and disabled, are you entitled to have someone pay you enough so that you enjoy a dignified and satisfying life? If you are poor and lazy (have ADHD) are you entitled to have someone pay you, and how much?
By entitled I mean a legal entitlement: you are owed money, and armed agents of the government will be sent to collect it for you. I do not mean some ethical or moral obligation based on religion laid against those who will pay: I mean that the public hangman threatens those who owe you if they resist paying.
Clearly these entitlements do not fall equally: some get them, and some do not. Equally clearly the obligations to pay them do not fall equally. Some have to pay, and many others do not. I am told that more than 40% of Americans do not pay any income taxes at all, and of that 40% a substantial number get "earned income credits" which is to say negative income tax: they get "refunds" from withholding taxes that were in fact not withheld. The question, then, is who takes and who pays?
This is the fundamental debate. The progressives say that the remedy to the deficit is to take more from the rich and give more to the poor. Share the wealth, and all will be well. The problem with this, as Lady Thatcher observed, is that after a while you run out of other people's money. Taking the investment wealth and distributing it results in less investment. The remedy to that is to take even more and invest some of it. See Clinton's campaign speeches for more detail. But that has been tried many times, and Central Planning does not seem to work well as a means of investment. The Five Year Plans never worked, and over time the USSR, empire and all, spiraled into insolvency even as West Germany became a great economic power.
Obama and his intellectuals have made it clear even as they try to obscure what the debate is about.
The Ryan plan has received vastly too much praise from people who should know better. For a while, it was even celebrated as "the only game in town," which it never was. It was preceded by both the Bowles-Simpson and Domenici-Rivlin plans, which are vastly superior in every respect. Within days of Mr. Ryan's announcement, President Obama chimed in with his own ideas on deficit reduction�another huge improvement over the Ryan plan. Now we await the Senate Gang of Six's entry.
No, the House Republican plan is not the only game in town. It's only the worst.
Which, on analysis, parses out to: the entitlements are necessary and proper, and cannot be cut. Since we can't cut the entitlements we must raise taxes.
The President has said we cannot continue to spend more than we take in. No one questions that. How that will be accomplished is the real debate for the 2012 election. That election is crucial: it will determine whether, finally, those who have stood in the path of history shouting Stop! since the 1950's will finally get the attention they deserve without the horrible distractions of the Cold War. It will determine the future of this republic.
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Subject: Alan Blinder's little lie
Jerry, in today's View you quote Alan Blinder as writing, in part, "For openers, the last time federal spending was that small a share of the economy was 1951�before Medicare and Medicaid, before the Departments of Health and Human Services, Housing and Urban Development, Education, Energy, Transportation, Veterans Affairs, and Homeland Security."
What Professor Blinder very carefully fails to mention is that, although there wasn't a federal Department of Veteran's Affairs, there was the Veteran's Administration, predecessor to the Department and doing exactly the same things. Clearly, he wants us to think that the current Department is something new that didn't exist in any way, shape or form back in 1951 to help explain why the Federal Government needs to spend such a high percentage of our GDP today. I think it's safe to say that his argument would have worked just as well if he'd left this false example out. This suggests to me that he's not as sure of his conclusions as he wants us to think he is, and felt the need to bolster it by slipping in this "little white lie." Of course, it could also be that he simply doesn't know his history as well as he wants us to think he does, but in either case, it casts his entire argument into question, or at least, it should.
Joe Zeff
Indeed. I went to University on the Korean GI Bill, and of course much of the great expansion of the US University system came from the GI Bill of Rights of 1945 and after. I do not know the extent of Professor Blinder's knowledge of the times, but he certainly has much of that wrong. His point seems to be that the entitlements are indispensable, and we do not have a spending problem, we have a revenue problem which must be solved by taxing the rich. That is the official line of the current administration. No cuts. More spending. And balance the budget, not by cutting back but by taxing more.
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Trumpets! If you have not heard this, go listen. You'll be glad of it!
http://www.bbc.co.uk/news/
world-middle-east-13092827
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