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Posts Tagged ‘deficit’

Response to Jonathan Chait’s critique of the “Four Fiscal Fantasies”

July 3rd, 2013

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In response to Jonathan Chait’s critique of our memo on the Four Fiscal Fantasies, let’s begin with two articles from this week. The first, in The Washington Post, shows that America today is spending less to stop the spread of AIDS in Africa than we did under President Bush. The second is a piece from Elizabeth Rosenthal of The New York Times showing the outrageous prices U.S. hospitals charge to deliver babies—charges far out of line with any other country and symbolic of the epidemic of high costs throughout our health care system.

The main point in our memo is that these problems are related.

  1. We have an entitlement system that provides critical economic security and stability to Americans, but it is rife with bloated health care costs that are slowly devouring everything else that government does.
  2. The main entitlement programs for the elderly—Social Security and Medicare—are on a path to insolvency.
  3. Raising new taxes on the wealthy—though necessary—won’t solve our problems.
  4. Acting now to fix entitlements is better and easier than waiting.

Our memo lays out these cases pretty explicitly, so let’s touch on just a few things.

Read the rest of this entry »

Poll: It’s still the economy, stupid

November 30th, 2011

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This piece was originally posted in Politico.

Politics is now the enemy of problem solving. Want proof? Just look at the current gridlock in Washington.

The country is facing two big problems — the economy and the deficit. Those two issues demand conflicting solutions. Policies that could reduce the deficit are likely to make the economy worse. Policies that could jump-start the economy are likely to make the deficit worse.

The answer is to treat the economy as the more urgent problem in the short run and the deficit as a long-term problem. Why can’t we do that? Because of politics.

For the past year, Congress has been obsessed with the wrong problem. To voters, the real urgency is the economy. The deficit, not so much. Read the rest of this entry »

A Formula for Super Committee Success

October 27th, 2011

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This piece was originally published by Politico.

With less than a month before the supercommittee’s deadline, pressure is again building for a grand bargain. President Barack Obama submitted a large plan; House Speaker John Boehner is urging the supercommittee to take up tax reform and various bipartisan coalitions are calling for trillions in deficit reduction.

A $4 trillion grand bargain would be ideal — but we’ve seen this movie before. Here’s how it ends: The clock runs out; a major deal isn’t done; the blame game starts; financial markets dip; and voters lose even more confidence in government. Maybe it’s time to write a new scenario.

So here’s a plan that could snatch victory from the jaws of defeat. It’s a no-gimmicks, bipartisan, 67-line item proposal that can achieve what the supercommittee was statutorily designed to do: come up with $1.2 trillion in deficit reduction.

Think of it as sort of an emergency blueprint for the committee to keep under glass — until it becomes clear that a grand bargain is unachievable.

First, take a big-tent, bipartisan approach that brings together ideas from across the ideological spectrum. It can include items from Obama’s proposal; Sen. Tom Coburn’s Back in Black plan, a $9 trillion deficit-reduction plan with spending cuts and revenue raisers; the National Commission on Fiscal Responsibility and Reform report and proposals from outside, nonpartisan groups. This provides a common foundation for compromise.

Second, allow each side to remain faithful to its core principles — but don’t require them to cross a policy or political Rubicon. The last attempt to reach a grand bargain was ultimately felled as a result of Republicans’ ironclad allegiance to tea party activists and Grover Norquist’s no-tax pledge.

Democrats contributed to the collapse through their resistance to sweeping entitlement reform.

Our plan doesn’t ask either side to cross their major lines in the sand — rather it postpones that grand bargain until after the 2012 election. How? We don’t touch top tax rates, capital gains or make an example of millionaires and billionaires. But we do raise real revenue by scotching tax earmarks for things like timber industry tree planting and NASCAR race tracks and by restraining some tax deductions.

On entitlements, we guard the structure of programs like Medicare and Social Security but generate savings by making small changes in the way they do business.

Third, the plan includes roughly one-third revenue hikes, one-third defense and one-third mandatory cuts — so all parts of government would take their fair share. This also would include enough savings to pay for the president’s jobs proposal — or whatever common-ground package ultimately emerges from Congress. So we’re not just cutting the deficit but helping drive short-term growth.

Finally, our plan is not a political game-changer — by design. Republicans would still be able to claim that they’ve fought the Washington urge to raise taxes, and Democrats would remain dug in as the protectors of programs like Medicare and Social Security. And an agreement of this size would be a victory for the president — but not a large enough triumph to alter the 2012 landscape, which is clearly one of the calculations that Republicans are making.

We’d love to see the supercommittee come together and solve our long-term, structural budget crisis. But bridging a hardened partisan divide in just a month is a bit much to ask any committee — no matter how super.

Committee members and the leadership of both parties must be clear: Failure has consequences, and sequestration should not be the fallback. At a time of unprecedented economic instability and public distrust in government, we can’t afford another display of Washington dysfunction.

The committee needs a real fail-safe contingency plan ready.

Super Power for the Super Committee

October 13th, 2011

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This piece was originally posted by Kaiser Health News.

To succeed, the so-called ‘super committee’ will need all of its super powers, and then some. To get a deal on reducing the deficit, it must leap across the chasm between the GOP stance of spending-cuts only and Democrats’ insistence that revenue must be part of any deal in a single bound. And, to get it done by Thanksgiving, it will have to move faster than a speeding bullet. However, one issue that’s typically kryptonite in budget talks may provide the committee with a chance to save the day.

The rising cost of health care is squeezing the federal budget, making it a common enemy. For Republicans, spiraling costs have placed them in the increasingly untenable position of proposing steep Medicare cuts in order to avoid tax increases in their budget proposals. Democrats are looking at a budget where health care spending crowds out other progressive priorities such as education, housing and public investments in general. Read the rest of this entry »

Obama Enters Deficit Primary

July 8th, 2011

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This piece was originally published  in Politico.

With today’s address on deficit reduction, President Barack Obama is making a shrewd opening move for his 2012 campaign — laying claim to the political center, challenging Beltway orthodoxies and setting the stage for a possible historic agreement on the budget.

Obama reportedly is set to propose serious entitlement reforms — only three months after 200 progressive groups lobbied the White House to keep Social Security, Medicare and Medicaid off the agenda. Instead, he’s expected to reach out tonight with both hands and grab onto the “third rail” of American politics.

But rather than getting burned, Obama may emerge well positioned for his reelection.

For months, Obama has been criticized for not taking the lead on the deficit. After appointing the fiscal commission that many Republicans had voted against creating, however, he needed to wait to see what Republicans put on the table, get the 2011 budget behind him and monitor the progress of the Gang of Six — the bipartisan group of senators whose work is likely to determine whether deficit reduction is just talked about or acted on.

In his speech, the president aims to shift the debate from “who wants to solve the problem?” to “how do we solve the problem?” And looking ahead to 2012, that shift is likely to benefit him enormously.

If there is a major, bipartisan budget agreement, Republicans cannot run on fiscal responsibility. If there is not, they get the blame. He wins either way. Read the rest of this entry »

The Deficit Primary

April 13th, 2011

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This piece was originally published in Politico.

With today’s address on deficit reduction, President Barack Obama is making a shrewd opening move for his 2012 campaign — laying claim to the political center, challenging Beltway orthodoxies and setting the stage for a possible historic agreement on the budget.

Obama reportedly is set to propose serious entitlement reforms — only three months after 200 progressive groups lobbied the White House to keep Social Security, Medicare and Medicaid off the agenda. Instead, he’s expected to reach out tonight with both hands and grab onto the “third rail” of American politics.

But rather than getting burned, Obama may emerge well positioned for his reelection.

Read the rest of this entry »