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Let the Adult Conversation Begin

November 11th, 2010 . by economistmom

Ronald Reagan’s budget director, David Stockman, was on CNN last night, telling it like it is about the tough choices necessary to rein in our nation’s currently-unsustainable budget deficits. (Here’s a related recent interview of him by 60 Minutes’ Lesley Stahl.)  He’s no sitting politician, nor a political hack, of course. Among those who are, we are already getting the “attack and cower” reaction to the Bowles-Simpson recommendations that came out yesterday, as described in Lori Montgomery’s story in today’s Washington Post:

[T]he reaction was harsh in some quarters, particularly among liberals who have vowed to protect retirees from any reduction in benefits. House Speaker Nancy Pelosi (D-Calif.) called the plan “simply unacceptable.”

Speaker-in-waiting John A. Boehner (R-Ohio) declined to comment, saying he would discuss the plan with his three representatives on the panel. But Republican anti-tax activist Grover Norquist was not happy and warned that Republicans who support the proposal would be breaking their pledge not to raise taxes.

The “just say no” attitude is no longer acceptable. Bowles and Simpson confronted the real tradeoffs and made their tough but specific choices. People can legitimately disagree with the particular mix of policies they propose; for example, I think revenues need to come up by more than the 21 percent of GDP they allow, so that there would be more balance between the spending cuts and the revenue increases. But if people object to the plan, they need to suggest real alternatives. (I would prefer we don’t drop marginal tax rates so much and that we consider new sources of revenue beyond the broader definition of taxable income, so that more of the added revenue is used for deficit reduction and less for lowering tax rates.)

Today the Wall Street Journal asks (emphasis added) “What should be dropped from the deficit reduction panel’s draft proposal?” But that’s not the right question to be asked of the American people or of our policymakers. The right question is: “How would you rather do it?”–i.e., what would you substitute in the proposal? (Not “how would you rather (continue to) NOT do anything?”)

And here’s Concord’s official reaction to the Bowles-Simpson recommendations.  The bottom line:

“Many people have been calling for a serious conversation about these issues. The bipartisan reports now beginning to circulate will test whether that desire is real or simply an excuse for inaction,” [Concord Coalition executive director Robert L.] Bixby said.

16 Responses to “Let the Adult Conversation Begin”

  1. comment number 1 by: AMTbuff

    I think they should have aimed the spending cuts at the root of the problem: Medicare. Enacted in the 1960s, it has a structure that forces spending to grow unsustainably. These recommendations do not solve this problem.

    Repealing Medicare and repealing Obamacare before it gets expensive would solve the problem of runaway spending. The bond market crash might also be averted, saving the remaining welfare state programs from destruction.

    I can’t really fault these guys for failing to recommend that the government declare defeat on health care benefits for the middle class: Even Ryan did not come out with that recommendation. Ryan had to hide a slow-motion repeal of Medicare in benefit caps that squeeze tighter and tighter over a period of decades.

  2. comment number 2 by: Gipper

    AMTbuff,

    The only sure fire way to solve the health care cost problem is to develop policies that give taxpayers incentives to have better eating and exercise habits.

    Tort Reform, vouchers, spending caps, nationalization, etc. are nibbles at the margin. Hospitals and doctors are needed when people get sick. Obamacare deals with sick people, and that’s too late in the process. If we want to have nanny-state policies interfering with individuals’ healtcare spending, then we have to create incentives for staying healthy.

    Easy solution: Establish a Medicare tax rate of 9%. Now offer discounts to individuals willing to subject themselves to annual examinations that measure body fat percentage, blood pressure, cholestorol, tabacco and drug usage. Have a sliding scale of discounts based on these health markers. The 50-yr. old male with 15% body fat, 110/60 blood pressure, 160 cholestorol, and tabacco and drug free might get a 6% discount. The 25 yr. old female with 35% body fat, 180/120 blood pressure, 280 cholestorol who smokes may get no discount. The 70 yr. old male with 25% body fat, 140/90 blood pressure, and 220 cholestorol, non-smoker might have higher co-pays and deductibles.

    You get the picture. Make financial incentives work to lower type 2 diabetes, cancer, heart disease, stroke, and other diseases associated with our leisurely lifestyle with bad eating habits.

  3. comment number 3 by: Jim Glass

    “Adult” conversation with Eliot Sptizer, my former governor.

    I thought you were talking about something else there for a moment.

  4. comment number 4 by: Vivian Darkbloom

    I thought it rather ironic that Spitzer, who narrowly averted a felony indictment recently, was interviewing Stockman, who also recently narrowly avoided felony indictment. Perhaps narrowly avoiding federal indictment is one road to adulthood.

  5. comment number 5 by: Mike Sanborn

    Seriosuly on the government incentivising us to stay healthy? Your argument assumes the GOVERNMENT is responsible for taking care of you when you get sick. Why is it not YOUR responsibilty to stay healthy and pay for the care needed when sick? Please first explain why the pill costs $3000/piece. Or why the MRI is $11,000. Or why the creation of doctors is monopolized? Why does the cost of healthcare continue to go up while utilization goes down? We don’t need the government to make us sick and then be responsible for getting us well.

    The principle is call Subsidiarity. It measn that a higher authority does a grave injustice when it usurps a competent lower authority. The FEDERAL government needs to stick to the very few and far between items that require centralization and allow the states/cities/counties/families manage for themselves those things that are well within their competence.

  6. comment number 6 by: OrGirl

    Where are the outright condemnations on continuing the Bush tax cuts for the wealthy? Does adding 700 Billion to the debt make any sense? Come on, get serious - this is just another way of packaging the increased burden to the middle class and low income earners, while lining the wealthy pockets. The politics of corruption cloaked in bipartisanism - preaching the illusion of shared sacrifice.

  7. comment number 7 by: SteveinCH

    You clearly don’t read this blog that much.

    As to your point on distribution, have any proof to offer?

  8. comment number 8 by: Atomik Snark

    There are few more compelling arguments against the viability of democratic forms of government than the reaction we have seen to these proposals – and any and all other proposals that, while they may differ as to particulars, attempt to deal with real problems in an adult fashion. We are a polity of children, and our politicians are charged with pandering to what is worst in us while invoking rhetoric as to what is best in us. The US has twice failed the challenge of managing to go metric, and has failed innumerable times over literally decades to deal with the serious problems. We spend nearly 20% of GDP on health care, for example, while France and Germany spend slightly over 10% of GDP – and provide better care. The bottom line here, I sincerely regret to say, is simple: Life is not a movie. In movies, at least Hollywood movies, a crisis brings out the best in people. In real life it rarely does – look around at our current state of paralysis and blame. I wager on the Chinese, who are grownups, rather than the US and its willful naivete. Who, realistically, would you bet on? Points to the reform commission(s) for trying, but they will fail. America is very, very good at failure. Sad, but true.

  9. comment number 9 by: D in Alaska

    Why reduce corporate taxes?
    Corporations are not human people.
    Corporations have way too much power and way less accountability.

    NO REDUCTION OF CORPORATE TAXES!!!

  10. comment number 10 by: Arne

    “crisis brings out the best in people”

    When it becomes personal, I think it does bring out the best. The deficit crisis is not personal for very many people.

  11. comment number 11 by: MT Man

    OrGirl: Extending the current tax structure will not add $700B to the debt. Rather, there will be $700B less that is available to the Gov’t to spend. If this recession has taught Americans anything, it should be that frugality is the key to survival. When you lose your job, you don’t go out and buy a new HD TV. You focus on ensuring you have a roof over your head and food on the table. Millions of Americans are struggling to do this every day. It is time our Gov’t exercised the same restraint: don’t spend what you don’t have. I work to support my family, and I resent the Gov’t using my tax money to fund an increasing number of hand-out programs that are creating a culture of dependency and an entitlement mentality.
    I would support an across the board 20% cut in government spending, coupled with a 10% cut in taxation. Tax me less, give the Gov’t even less to waste, and our deficit will disappear within 10 years.

  12. comment number 12 by: Atomik Snark

    @Arne: I agree. It does at times bring out the best – though even that is rare (but to be valued as a diamond is valued, in part because of its rarity).
    @MT Man: I would respectfully suggest you reacquaint yourself with the concept of the fungibility of funds. Political games (by both sides) matter less than the bottom line. The bottom line is that if you reduce government revenue, in the absence of other changes, you increase government debt (if you are considering other changes, that’s a separate question and doesn’t render the fundamental question of revenue irrelevant). Personally, while I agree that over-taxation is bad, the key problem is that it’s human nature to expect to get more than you pay for – the US has done that (both parties) for decades. The bill is coming due, and we’re attacking one another rather than genuinely grappling with what to do. As for your point about personal frugality, I agree that that’s good and we are overly consumption oriented. Still, there are clear paradoxes between what’s good for an individual and how it plays out for the group. If everyone saves and saves and no one buys, the economy comes to a halt. That’s just as bad as what was preached for so long, that if everyone just borrows and spends like crazy investment will magically happen – that was just as wrong imho.

  13. comment number 13 by: MarconiDarwin

    It’s a start.

    Now assuming that Congressional politicians want to reduce the deficit (and they don’t), they need to implement all of it that is acceptable to both sides.

    There is none.

    Every dollar in the budget today uses some 62 cents for SS, Medicare, and defense. another 6 cents goes towards interest payments.

    THIS is where the cuts need to begin. The proposal does a little to SS, but only to postpone the problem by 40-50 years. (Which is not bad, since it gives us another 40-50 years to solve the problem).

    What it does not do is cut the defense spending, and that HAS to be cut.

    Which means a lot of jobs that will be gone.

    Cutting the corporate taxes and loopholes are nice ideas, but it is like using a garden hose to fill up an artifical lake.

    I want to see a consumption tax replace the income tax. That way, everyone pays taxes, and those who consume the most, pay the most.

  14. comment number 14 by: Brad Erlwein

    Where were these guys when Bush was “spending whatever it takes” to get the”guy who tried to kill my dad” and the other charactors in his fantasy?

  15. comment number 15 by: SteveinCH

    Um, Marconi, where did you get the idea that the proposal doesn’t cut defense spending? You must have read a different proposal than I did.

  16. comment number 16 by: Brooks

    Today was first chance I had to respond to comments over on another thread, so I’m putting link here in case those involved in that conversation wish to see http://economistmom.com/2010/11/a-bipartisan-and-reality-based-way-to-cut-tax-rates-and-reduce-the-deficit-really/#comment-16438