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Don’t Talk About Offsets on the Campaign Trail: Part 2

August 15th, 2012 . by economistmom
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The Daily Show segment above and Ruth Marcus’ column in today’s Washington Post emphasize that, gee, the Romney-Ryan Medicare reform approach–no matter that the GOP team is still trying to define/refine it–is not that different from “Obamacare.”  As Ruth explains:

The Republican National Committee chairman says President Obama has “blood on [his] hands” for cutting Medicare. Mitt Romney blasts the president for having “robbed” the program of $700 billion.

Vice President Biden accuses Romney and running mate Paul Ryan of “gutting” Medicare. And, inevitably, President Obama warned that Romney-Ryan would “end Medicare as we know it.”

Aren’t you glad we’re having a sober policy discussion about how to rein in entitlement spending?

Such hyperbole was inevitable. The laws of political gravity drag every debate from the lofty realm of ideas to the grungy plain of invective. The more complex and weighty the issue, the more it is at risk of being distilled — distorted — into a 30-second caricature.

Let’s pause for a bit of fact-checking.

The cheeky response to the critique of Obama’s Medicare cuts is that Ryan assumes those very cuts in his budget — the one passed by the House and endorsed as “marvelous” by Romney. So there are robbers galore and blood to spread around.

The slightly less cheeky response is to say: Aren’t these the people who have been screaming about Medicare bankrupting the country? Shouldn’t they be praising cuts, not denouncing them?

The on-the-merits response is that the cuts — more accurately, reductions in the rate of growth — involve lower reimbursements to hospitals and nursing homes, reduced payments to insurers, higher premiums for better-off beneficiaries, and savings from reforms such as lower hospital readmissions.

In other words, Grandma might lose her free eyeglasses, but her basic benefits remain untouched.

So what are the candidates blaming each other about?  In essence, it’s the exact same part of their largely-the-same overall proposals: the part that saves money. The Democrats demonstrate this by showing Grandma being pushed off a cliff by the Republicans.  The Republicans characterize this as the Democrats throwing the $700 billion off the cliff–”robbing” it from the Medicare program (and the very same Grandma!) and “wasting” that money.

It’s part 2 of “don’t talk about saving money” lesson on the campaign trail–part 1 being the lesson I’m afraid Romney got on his tax reform approach once the implied details of a base-broadening offset were spelled out by the Tax Policy Center.  My point on that lesson (summarized best in my Concord version of the blog post) was that the lesson for Romney should have been for him to pare back his tax-cutting plans and make any offsets more progressive–rather than for him to rethink paying for the policy at all.

But any policy talk that honors the inevitable budget constraints–that there’s no such thing as a free tax cut or spending program–paints an easy target for a candidate.  The offset or “pay for” always involves a spending cut or a revenue (tax) increase, at least relative to a not-paid-for baseline, and instead of leading to a healthy debate about the different ways to reform our tax and spending programs in fiscally responsible ways, it leads to attacks on the other side for even suggesting their version of the “fiscally responsible” part–no matter how similar it actually is to one’s own fiscally responsible part!

This is how it’s going to go through the November election.  Expect the candidates to get looser and looser about the “fiscally responsible” pieces of their policy proposals.  Expect them to spell out only the goodies, not how they would pay for the goodies.  For voters to be able to see past the rhetoric and understand the real substance of the differences between the two presidential candidates’ policy positions, we’re going to need constant translations from people like Ruth and Jon Stewart, I guess.

79 Responses to “Don’t Talk About Offsets on the Campaign Trail: Part 2”

  1. comment number 1 by: Brooks / Gordon

    ok, I have a (probably) dumb question: Leaving aside the dollar amount of the voucher, how is Ryan’s proposed voucher system different than the current system, given that the latter has the option of either traditional Medicare or a selection from many other plans under Medicare Advantage, I think with some requiring some/additional premium payments from the beneficiary?

  2. comment number 2 by: SteveinCH

    Brooks,

    I’ll give you my understanding of it (which may be imperfect). Unfortunately, the answer is “it depends.” If you look at earlier versions of the Ryan budget, traditional Medicare disappeared so unlikely today, there was no “floor” policy. In other words, in the future, you would get only a voucher whereas today you get traditional Medicare no matter what.

    Now the Wyden/Ryan plan that they put forward earlier this year is pretty close to today in that you can choose a voucher or traditional Medicare. But the left (including Wyden these days) doesn’t want to talk about this proposal because it fits the narrative less well.

    That’s the way i understand it

  3. comment number 3 by: SteveinCH

    Diane,

    You and Ruth Marcus, in my view, have some ’splainin’ to do.

    Let’s assume for the moment that the Ryan budget (rather than the Romney proposal, which includes no Medicare cuts at all) is the right baseline. Do you, of all people, really see no difference between using the savings for extending the life of Medicare and/or deficit reduction (in the end they are the same thing) and using the same savings to finance a new program? I find that, coming from you with your focus on fiscal matters, more than a wee bit shocking.

  4. comment number 4 by: Vivian Darkbloom

    The basic premise of this post is correct: Both sides are reluctant to spell out details of their plans for fear that they the difficult choices will not be accepted by the electorate. In this environment, the best one can hope for is that the candidates spell out which direction they will go and then extrapolate from that.

    I blame the media for much of the reticence. I especially blame the TPC and Economist Mom for punishing Ryan for having the courage to at least put out some detail. This double standard is making the public debate worse—not better. Ryan has been excoriated for the plan he has put forward precisely because he has dared to spell out more details than the others, particularly Team Obama that has been given a free ride in the press for having basically no plan at all.

    I have a suggestion for some future posts by the TPC and Economist Mom, who purport to be non-partisan players: Fill in the details for us on how deep Obama would need to go to raise taxes on the middle, and even lower-middle class taxpayers if they wish to have no cuts at all to Medicare or Social Security and pay for Obama Care and still have some meaningful reduction in future deficits. If you are going to fill in the blanks on Romney’s proposal, why not do the same for the other side?

    BTW, the Romney proposal does appear to involve cuts to Medicare (what rational plan would not?). His proposal is to replace Medicare with a premium support system with higher support going to lower income persons. In essence, he’s talking about more means testing and his plan sounds a lot like Ryan/Wyden. Yes, there is a lack of detal, but given the public beating given Ryan’s less “lncomplete proposal” , why would he spell out any more?

    http://www.mittromney.com/issues/medicare

  5. comment number 5 by: SteveinCH

    Thanks for that update VD. I didn’t know Romney had gone that far. To me, the premium support plan is probably the best way to means test Medicare, something that is sorely needed if the program is going to survive another generation.

    I’d still love an answer from Diane as to how she can call equivalence between a plan that uses savings for deficit reduction and one that uses the same savings for a new program.

    As to the “Obama plan” for Medicare, there clearly isn’t one. All of the relatively easy Medicare savings (e.g., stopping subsidies for MA) are used to fund the ACA as well as any savings IPAB can gin up. So there’s not a whole lot left.

    My own request is that every long term analysis of a Ryan proposal also include the CBO alternative scenario long range forecast so that we all understand that the status quo is a US default or hyperinflation.

  6. comment number 6 by: Patrick R. Sullivan

    There’s hardly a shortage of Paul Ryan videos that explain his ideas, say;

    http://www.youtube.com/watch?v=8Bib7kKBhqs&NR=1&feature=fvwp

  7. comment number 7 by: AMTbuff

    It will be sad if neither candidate tells the voters that major pain is unavoidable. Voters need to hear that message and accept it. Otherwise the winner is certain not to have a mandate for painful change of any sort.

    I agree with Vivian that TPC needs to spell out the consequences of maintaining payment of promised benefits. Those consequences include huge tax increases on the middle class followed by economic collapse either before or after a default on government bonds. It’s getting very late in the game of chicken. TPC needs to stand up for fiscal sanity rather than being an enabler of default. Same for Concord.

    The public needs to support painful change. For that to happen, the public must be informed that painful change is required. TPC and Concord have only 2 months to accomplish this, and they haven’t even made a serious start. That’s depressing.

  8. comment number 8 by: SteveinCH

    I cut TPC some slack because, largely speaking, they only focus on tax issues and they have been pretty consistent in arguing (incorrectly in my view) that deficit reduction requires tax increases.

    But I will tell you, I think the larger issue is our inability to talk about taxes or spending without regard to baselines. In my own blogging, it’s what I spend a lot of time on since I’ve come to the conclusion that until we get off of baseline bingo, we can’t possibly reach any alignment. If we could discuss the principles by which we want to manage spending and taxes, as opposed to the numbers, we’d be a lot closer to maybe getting some consensus.

    We should decide how we want to do things and then see what the numbers say as opposed to doing it the other way round.

  9. comment number 9 by: Brooks / Gordon

    Steve,

    How would you discuss policy options without reference (implicit or explicit) to baselines?

    If someone wants to know what will happen if we don’t make changes, how would you answer without first addressing whether or not you are talking about “making changes” vs. current policy or vs. current law?

    Moreover, if you advocated some particular fiscal policy or set of policies, when someone (naturally and inevitably) wants to know how that changes what we’ll do and how it will change the fiscal outlook, how do you answer without referencing some basline(s)?

    Don’t you think people seeking to get a sense of whether or not they like some proposed fiscal policy or set of policies are at least as interested in how that changes things (how much we’ll spend on each thing, and how much we’ll tax whom and for what) and on how that changes the outlook for our fiscal imbalance as they are interested in absolute numbers devoid of any reference point other than current or historical spending and current or historical debt and deficit levels?

  10. comment number 10 by: AMTbuff

    B/G, the baseline game is appropriate when there is at least one fiscally sane baseline. I haven’t seen one. Have you?

    If you had asked a Titanic passenger to compare freezing in a lifeboat or freezing in the water to staying in his heated cabin, what would he have said? Wouldn’t you agree that the heated cabin baseline is completely useless, no matter how traditional or familiar it may be? That iceberg needs to be in the baseline.

    If the voters choose to stay in their cabins, I want it to be an informed choice. Ryan’s presence in the campaign will help, but TPC and Concord and the pundits need to pitch in.

    Ideally Obama will soon present his own plan to handle boomer retirement. Then the voters will be able to choose either candidate with reasonable assurance that default will be avoided.

  11. comment number 11 by: SteveinCH

    Brooks,

    My point is the discussion should start on principles and end on impact. As it stands, we miss the principles discussion and get lost in a web of baselines.

    To give you an example, here’s my take of how to think about spending. The only “baseline” used is what we are spending today.

    http://uspoliticaleconomics.blogspot.com/2012/06/principled-spending.html

    http://uspoliticaleconomics.blogspot.com/2012/07/principled-spending-numbers.html

    My broader point relates to your last paragraph. In it, you confuse changes from current and absolutes. How much we’ll spend and whom we will tax are absolutes?

    In other words, there is a presupposition that the baseline is feasible in the use of the baseline. The current policy baseline is not feasible, yet it is the one that most in DC want to use.

    Anyway, that’s just my opinion. I’d rather hear a first principle discussion rather than a relative to this or that baseline discussion

  12. comment number 12 by: Brooks / Gordon

    Steve,

    First, I don’t see why you think I confused changes and absolutes. Indeed, as I pointed out, measuring or even getting a sense of “changes” begs the question of “change vs. what?”, meaning we have to be referencing either some current or historical data point or some projection for the future — i.e., some baseline. When I refer to absolute numbers, I mean saying $100 billion spending on some program, or a tax rate of 25% for a given tax bracket, without reference to any differential (any change) vs. something that represents a “no change” scenario (be that current policy, or current law, or perhaps some other baseline based on assumptions that one deems more plausible than either current policy or current law).

    I took a quick scan of your posts at those links. Ironically, in the second one, you show your projection vs. Obama’s budget — which is a baseline. Why did you do that, if you think that getting away from baselines is a critical first step in getting to a useful discussion and consensus on some viable fiscal policy? That’s not a rhetorical question. I’m really asking: why did you reference a baseline?

    Moreover, the point I’m making is that, as we communicate and consider alternatives that will move us to/toward viable fiscal policy, people will naturally and sensibly want to get a sense of who would gain/lose how much of what, and on what basis, and getting a sense of that requires reference to something they can relate to as a “status quo”. This could be the policy status quo if one is, say, wondering if Medicare benefits will be similar in the future to what they are now (not in terms of cost, but in terms of coverage, provider availability, whatever). It could be the current law status quo if people are coming at it from another perspective, such as long-term budget deal that was reached and that one has accepted as future policy (e.g., planned increases in the retirement age). Or again, some other baseline, depending on the objective of that part of a discussion or analysis. But to just say, for example, as you do, that ” Government spending should grow no faster than the historical rate of inflation plus “relevant population growth”, leaves one wondering, for example, if that (or that plus your other guidelines) would mean substantially less spending on Medicare than what is currently projected (per some baseline) to provide the same benefits to the projected number of beneficiaries. If it would mean that, the next question is how that would be achieved, and how that would/may adversely affect healthcare quality, availability, coverage, premiums/contributions, etc. But to even know to ask the question, one would need to compare such a policy or set of policies with some relevant baseline representing the status quo (and by “status quo” I’m including current law as well as current policy, or perhaps some other baseline).

    As for “a first principles discussion”, I think that can be useful, but I don’t think it makes sense to think of it as “either/or” with a discussion of how a plan based on those “principles” would affect people vs. some baseline. It’s kind of like (just to use a simplified example, not a straw man) if someone had the principle that total spending on seniors’ benefits programs should rise with the CPI (COLA), but no more than that, ignoring the expected rise in the number of seniors and thus the rise in eligible people. That could mean the program would have to exclude some people who otherwise (per current policy or current law) would be eligible, or reduce spending on some or all beneficiaries (which in turn could be done in various ways, with different effects). But just saying that growth in spending on those programs will be held to the CPI doesn’t tell me that any such change is indicated, let alone provide me any sense of magnitude, let alone lead to a discussion of who would be adversely affected in what ways to what degrees per potential policies to adhere to that growth rate.

    It just seems to me that there is no way to give people a meaningful sense of what a fiscal plan means without reference to some baseline.

    It’s unfortunate that so often those speaking of changes don’t clarify which baseline they are references, and unfortunate that baselines are used misleadingly in political rhetoric, but baselines seem to me an indispensable concept for discussion, consideration and comparison of fiscal plans.

  13. comment number 13 by: Brooks / Gordon

    AMT,

    B/G, the baseline game is appropriate when there is at least one fiscally sane baseline. I haven’t seen one. Have you?

    I have not seen one. IIRC, I used to think Ryan had produced one, but his more recent version was based on a magic asterisk on the revenue side (”loopholes” without any indication of what they’d be, let alone how much of each “loophole” would be reduced), so Ryan lost a good chunk of credit in my book (although he still has guts on the spending side for taking on Medicare, regardless of whether one likes his ideas or not).

    I disagree with you that “the baseline game is appropriate when there is at least one fiscally sane baseline.” We need to move from unsustainable fiscal policy toward sustainable fiscal policy, and as we consider the trade-off of imposing sacrifices (from spending cuts and/or tax increases) for the benefit of making progress toward sustainable fiscal policy, we need to consider the magnitudes of those costs and benefits to make rational choices (e.g., if we cause people to wait X more years to be eligible for Social Security, how much will that improve our ratio of publicly-held debt to GDP?)

    If you had asked a Titanic passenger to compare freezing in a lifeboat or freezing in the water to staying in his heated cabin, what would he have said? Wouldn’t you agree that the heated cabin baseline is completely useless, no matter how traditional or familiar it may be? That iceberg needs to be in the baseline.

    I’m not sure I understand your analogy or point, but again, I’d rather crawl as a stepping stone to walking (forgive the mixed metaphor) than to just remain in one place. It’s like if we compared getting in a lifeboat vs. just jumping in the freezing water. Getting in the lifeboat won’t prevent someone from freezing to death, but it will allow more time before that may occur, and in that time perhaps some other development would make the difference between freezing to death or surviving (unlike those who jumped in the water). Not a perfect analogy, but perhaps you see what I mean.

  14. comment number 14 by: Brooks / Gordon

    Re: my question upthread at http://economistmom.com/2012/08/dont-talk-about-offsets-on-the-campaign-trail-part-2/#comment-86085

    Thanks, Steve, for your reply.

    Can anyone add to that, or does anyone have a different understanding?

  15. comment number 15 by: SteveinCH

    My point to you Brooks is that the baseline is generated by a set of assumptions and said assumptions may or may not be good.

    To take a simple example, let’s say I used the last 2 years of growth in health care spending to set the baseline for what is necessary for the future. In that case, I’d arrive at a very different conclusion about the baseline than if I used the last 5 years or the last 10. The simple answer is that nobody knows what is required to meet future needs.

    You are positing that the answer is knowable and that one can therefore compare policy options to that knowable baseline.

    In point of fact, what is doable is often a function of what is available. To create a simple example. If I cut Medicare spending next year by 10% do you think that 10% fewer people would be covered or that the number covered would decline by less than 10%? My very strong hypothesis is that the latter is true. And the reason is that necessity is the mother of invention.

    We operate a government that, because of baselines, largely operates without meaningful budget constraints and, when constraints arise (like the sequester), the powers that be move quickly to set them aside. What we need is an agreement that spending should, in normal times, grow only at a certain rate, linked to the need for services or transfers.

    But thanks for your thoughtful comment and for reading what I had posted.

  16. comment number 16 by: Brooks / Gordon

    Steve,

    You are positing that the answer is knowable and that one can therefore compare policy options to that knowable baseline.

    I am only positing that (1) one can put forth his best educated guess at what things will cost (and what revenues will be generated) under a given set of assumptions about what policies will be in place (e.g., current policies or policies per current law or something else) and other assumptions, some of which are quite prone to error (e.g., forecasting GDP growth; forecasting healthcare inflation under given policy assumptions; etc.), and (2) without having such best guesses (i.e., baselines) as a reference point, we are left with little ability to put policy alternatives in perspective, so although baselines are quite far from perfect, they are necessary for analysis, consideration, discussion and rational decision-making regarding policy alternatives. It’s kind of like if Albert is told that he is heading toward getting so obese that he’s projected to have a heart attack several years from now if his caloric consumption is as expected and his level of exercise is as expected.

    In point of fact, what is doable is often a function of what is available. To create a simple example. If I cut Medicare spending next year by 10% do you think that 10% fewer people would be covered or that the number covered would decline by less than 10%? My very strong hypothesis is that the latter is true. And the reason is that necessity is the mother of invention.

    Sure. But that is one reason why baselines are necessary. Surely there is a difference in feasibility or degree of sacrifice and/or desirability of cutting Medicare spending by 40% vs. cutting it by 5%, but how severe (or not) the effects of each could depend on what the 40% cut (or the 5% cut) is a cut from — i.e., what baseline, reflecting what assumptions. Even if you try to avoid referencing a (projection) baseline and simply say a cut vs. this year’s or last year’s spending or some other historical metric, the spending figure that results is still some change relative to what would have otherwise happened, and if that means X% or Y% less spending than otherwise would have occurred, that difference may reflect some sacrifices or improvements or something that would need to be (or preferably) be actively changed or anticipated. The point is, without knowing how your planned spending levels relate to some reference point, you can’t start the analysis of how much of what kind of changes might/should actively occur, what effects are likely to occur, what is the ideal amount to cut, how best to change policy (and on what scale) to avoid adverse effects that are not worth the savings, etc., etc., etc.

    What we need is an agreement that spending should, in normal times, grow only at a certain rate.

    I disagree. Again, to just choose some formula for a growth rate of a program (or the overall budget) without considering how the resulting spending (and taxation and debt and deficit) levels compare to the status quo projection, and then to consider what effects the calculated spending levels (etc.) would have on people, seems irrational to me. Yes, households can set a budget, but that is most rationally done with consideration of costs and benefits (including the fiscal outlook of alternatives — i.e., ability to save money for later spending), NOT just based on first choosing some formulas and then saying “This is how much we will earn and this is how much we’ll spend in total and how much for each major category of spending. ok, now that that’s settled, now let’s think about our desires/needs and priorities, but we cannot deviate from our formulas.”

    I think it’s an iterative process, but the starting point is to look at status quo projections (which could include already planned “policy” changes, such as a kid going off to college in the future) and then assessing the “fiscal” outlook, and then consider what changes seem optimal, including what trade-offs to make re: overall income, overall spending, and debt and deficit levels, as well as changes across spending categories and income categories.

  17. comment number 17 by: Steveinch

    Well Brooks I understand your point of view but I disagree. The approach you describe has yielded the current mess. The purported changes are virtually meaningless given the number of assumptions that undergird both the baseline and the suggested policy. In my view, it is literally possible to get any outcome you like thus rendering the entire discussion nearly pointless

  18. comment number 18 by: Brooks / Gordon

    Steve,

    The approach you describe has yielded the current mess.

    No, irresponsibility has yielded the current mess. Taking a rational, rather than irrational, approach to fiscal policy decisions by considering baselines can only be blamed insofar as politicians have used language implicitly referencing baselines to mislead people (and sometimes when they are accused of doing so it is not so clear cut that they are being misleading — e.g., describing a cut in the projected growth of spending on something as a “cut” can arguably reflect the impact of such a move — see (again) my illustration of “cut” at http://economistmom.com/2011/11/my-two-cents-but-worth-trillions/#comment-61956 )

    But to say that we should take an irrational approach by arbitrarily picking some percentages of this or that for growth in spending overall and for categories of spending, and for taxation, as a substitute for a rational approach seems odd to me as well as seeming like something unworkable, given that people quite naturally want to have some sense of trade-offs — e.g., “What does X% growth rate in this program I like mean in terms of the nature and magnitude of effects vs. not adopting that policy? How do I know if that’s anywhere close to an optimal mix of trade-offs if I have no idea how to put any of it in perspective?”

    The purported changes are virtually meaningless given the number of assumptions that undergird both the baseline and the suggested policy.

    I consider that hyperbole. We are better off with our best guesses than without a necessary tool for rational consideration and discussion of trade-offs associated with policy alternatives.

    In my view, it is literally possible to get any outcome you like thus rendering the entire discussion nearly pointless

    Well, obviously one could contrive a baseline to serve policy preferences. Presumably that’s why the baselines most often used come from CBO, which, although (like every other entity) limited in ability to model and predict everything, at least is thought not to engage in gross political manipulation via bad-faith development of baselines.

  19. comment number 19 by: SteveinCH

    I’ll just deal with this last point, because it is, in my view, the central issue.

    Presumably that’s why most baselines come from the CBO…[which] is thought not to engage in gross political manipulation…

    So here’s a few things for you to consider.

    1. The CBO now produces two baselines and furthermore changes the definition of the second baseline year to year based on its estimate of the political climate. The creation of the “alternative” baseline has given politicians license to obfuscate.

    2. The CBO is forced (by law) to make unrealistic assumptions. The current example is the Medicare changes in the ACA. The CMS has estimated that the IPAB changes could lead to as many as 15% of US hospitals to close, yet, those costs are still in “the baseline.” Thus, the baseline is almost certainly wrong (e.g., the government is not going to force 15% of hospitals to close) but, since that is what is in the law, that is what is in the baseline.

    3. The classification scheme in the baseline is confusing and unhelpful. As an example, go to the CBO baseline and show me the “baseline” costs for the Affordable care act. Turns out you cannot. The costs are, for the most part, buried in the Medicaid line. So post the ACA, baseline expenses for Medicaid went up, for Medicare went down despite the fact that there was no major change in either program per se.

    4. This is before you get to the plethora of other baselines or revised baselines. For example, the TPC analysis that Diane quoted in her last post does not use any of the CBO baselines but creates a custom baseline. The President’s last budget submission was based off a custom baseline as was the “grand bargain” negotiation between Boehner and Obama last year.

    I guess this is a long way of saying that while you might be correct in a theoretical sense, the practical realities make the approach far less useful than you describe and furthermore, they pressupose that the assumptions made in the baseline (e.g., lack of efficiency) are good assumptions that would be supported by policy makers and the polity.

  20. comment number 20 by: Brooks / Gordon

    Steve,

    I agree that baselines can be unclear (in terms of the set of assumptions) and can be misused (by political partisans/candidates/etc.), and that any given baseline can contain some unrealistic assumptions (by design, for an arguably legitimate reason), etc., but all those complexities and challenges and problems associated with use of baselines don’t imply that we should just state some arbitrary rule about spending growth or revenue level, devoid of meaningful perspective, and then, if we can someone get political consensus around arbitrary rules without any perspective on the trade-offs that would result from them or be necessitated by them (i.e., get people to come together in taking an arbitrary, irrational approach), just abide by those rules.

    Going back to a simplified example, it’s like someone saying that growth of total Social Security spending should be the inflation rate (CPI), ignoring the projected growth in the number of people eligible (per either current policy or current law, the latter including scheduled increases in the retirement age). Well, a rational person would ask what effects such a plan would/could be for seniors. It means fewer eligible people (vs. current law or current policy) and/or a lower benefit per beneficiary (vs. current law or policy). Some seniors would be worse off than under the status quo. Which ones would/could be worse off by how much on what basis, based on how we would achieve that change in total spending? Is the level of savings great enough to be worth imposing that level of sacrifice on some/all seniors? Is it not only worth it, but should we spend even less on this program to reduce debt even more? None of these questions arise if you don’t first see that spending has changed vs. some projection representing some status quo re: policies.

  21. comment number 21 by: SteveinCH

    Brooks,

    But you’re willing to use nuance in one case and not in the other. If someone said that SS should grow at the rate of inflation and the eligible population, would that be an unreasonable assumption. I rather think not.

    As for a rational person asking about the implications sure but the implications depend entirely on what is done with the money.

    Take Medicare, if one grew Medicare at medical inflation plus relevant population growth minus one percentage point, why would you assume there would be any implications? The “no implications” baseline is itself made up, largely by a captive audience that wants the baseline to be as high as possible.

    Using a program that delivers benefits as opposed to one that purely transfers money makes the example different.

    But, I’ll not argue it further with you since I’ve learned the futility of that approach.

  22. comment number 22 by: Brooks / Gordon

    Steve,

    But you’re willing to use nuance in one case and not in the other. If someone said that SS should grow at the rate of inflation and the eligible population, would that be an unreasonable assumption. I rather think not.

    First, I have no idea what you mean re: my supposedly selective use of nuance.

    In any case, you’re missing my point.

    I used perhaps the most simplified example available to illustrate that picking an arbitrary rule can leave one without a clue as to what type and magnitude of change has taken place, and thus how people will or may or could be affected. You then added another component to the rule and said essentially “Ahah, now the rule is fine, is it not?” But that misses the point. Again, this was a simplified example. The fact that your adding one more component happens to address the one and only key factor neglected by the rule in such a simplified example doesn’t prove much, if anything. Moreover, by adding that factor, you are demonstrating my point: You can start with some arbitrary rule, but then, as you start to consider what it would mean, you then add another component (growth in the eligible population) when you realize that your rule is devoid of perspective on how people would be affected, and with a more complex matter (e.g., Medicare), you would (if approaching the matter rationally) end up referencing some baseline (some status quo projection) with a set of assumptions underlying the projected spending.

    Take Medicare, if one grew Medicare at medical inflation plus relevant population growth minus one percentage point, why would you assume there would be any implications?

    Are you serious? I don’t know what the implications would be, but surely there would be implications in terms of how much is spent on whom on what basis with what potential/likely effects, as well as on deficits and the debt vs. if we continue with current policy or current law or some other set of policy assumptions underlying some baseline.

    I’ll not argue it further with you since I’ve learned the futility of that approach.

    I agree this conversation with you is not worth continuing.

  23. comment number 23 by: AMTbuff

    Presumably that’s why most baselines come from the CBO…[which] is thought not to engage in gross political manipulation…

    It’s not the CBO that manipulated the current law baseline. Congress did. Results-oriented leaders of both parties filibuster bills and game the baseline to get the result they want. The Bush tax cuts and ObamaCare are the largest examples.

    History demonstrates that if there is a baseline, results-oriented partisans will abuse that baseline. That’s why we need to forget baselines and look at each year’s budget in isolation.

    If you discuss the degree of change with a game-able baseline (anything except population, inflation, and GDP) you are handing the ball to the partisans. They will roll over you like Lebron vs. an intramural point guard. Don’t give them that ball!

  24. comment number 24 by: Brooks / Gordon

    AMT,

    we need to forget baselines and look at each year’s budget in isolation.

    Not sure exactly what you mean, but as I’ve tried to explain, for a plan to have a chance at being meaningful to people (i.e., for people to have a sense of the trade-offs involved and the impacts on people), there needs to be some sort of perspective, some reference point, some way for people to get a sense of how that future will be different from something they are familiar with and/or that they are expecting. And that’s what baselines are made from. That’s the main reason why, for example, Social Security spending growth (even in real terms) exceeds total population growth — because total population growth is not the same as the growth in the number of eligible people, either per current policy (current eligibility age for full benefits) or per current law (with scheduled increases in the eligibility age), meaning that (leaving aside the matter of indexing initial benefit amount, or hypothetically if that were based on CPI) the baseline holds the benefit amount (for a given person, based on SS taxes paid) constant in real terms for everyone who will be eligible per current (or planned) eligibility rules (i.e., age), and spending less than that indicates that someone will get less than they would under one of those (or some other) scenario, which then (usefully) begs the question of whether or not we want anyone to get less, and if so, who will/should get less on what basis via what policies, etc. And as I’ve said, none of those important questions arises unless we see that the proposal implies some change vs. what we have or what we are expecting (per law or some other basis), and that means measuring vs. some baseline with associated assumptions.

    And again, that Social Security example is a very simple one. Something like Medicare is, of course, more complicated, but the idea is the same: baselines are based on some set of assumptions to represent some version of the status quo — some version of a status quo projection that implies that deviation from it means something would change vs. what we have and/or that we expect to have or could have at least theoretically per current law.

  25. comment number 25 by: Patrick R. Sullivan

    The Medicare Trustees report is pretty clear, Medicare as we knew it is over;

    http://www.healthreformgps.org/wp-content/uploads/tr2012.pdf

    ————quote———
    The financial projections shown for the Medicare program in this report reflect substantial, but very uncertain, cost savings deriving from provisions of the Affordable Care Act [aka, Obamacare]. It is important to note, however, that the improved results for [Medicare] HI and SMI Part B depend in part on the long-range feasibility of the various cost-saving measures in the Affordable Care Act—in particular, the lower increases in Medicare payment rates to most categories of health care providers. Without fundamental change in the current delivery system, these adjustments would probably not be viable indefinitely.

    ….It is possible that health care providers could improve their productivity, reduce wasteful expenditures, and take other steps to keep their cost growth within the bounds imposed by the Medicare price limitations. For such efforts to be successful in the long range, however, providers would have to generate and sustain unprecedented levels of productivity gains—a very challenging and uncertain prospect.

    ….Hopes for success are high, but at this time there is insufficient evidence to support an assumption that improvements in efficiency can occur of the magnitude needed to align with the statutory Medicare price updates.
    —————endquote————

    Which report is signed by Tim Geithner, Kathleen Sebelius, and Hilda Solis.

  26. comment number 26 by: AMTbuff

    B/G as I said you lose the game immediately when you use current promises as a baseline. On the Titanic people wanted a cabin upgrade and would be unhappy with a cabin downgrade. You offer them a seat on a lifeboat and you expect to include cabin features in your sales pitch? I think not.

    The baseline is that the government survives without financial default and the dollar survives without hyperinflation. That’s the baseline, and it won’t be easy to achieve. The new reality is so far from the old reality that your sales pitch has to focus on what is saved rather than what is lost.

    Baseliners argue that Ryan’s plan is too harsh. In reality avoiding default will require much more pain that Ryan proposed.

    Another analogy: A train is rolling down the tracks toward a head-on collision, the fiscal train wreck. Baseliners debate whether the train should slow down 10 mph or speed up 10 mph. You need to persuade people to jump from the moving train rather than be killed in a collision. Does it help to include loss of their reserved first-class seat in this discussion? No. The correct perspective is simple: You don’t die.

  27. comment number 27 by: Brooks / Gordon

    AMT,

    I’m not sure I get your point, but it seems you’re not getting my point that, to take a rational approach to policy choices — and thus to choose among trade-offs — people need to have some sense of what a proposal means in terms of how it changes something people currently have or expect per current law or some other set of assumptions. Otherwise, you say something like “Hold Social Security spending to X% growth” or something similar for Medicare, or for that matter something on the revenue side, and people naturally ask “Well…what does that mean? Will the people affected end up with more or less, and how much? What policies are you proposing to hit those spending or revenue levels, and how does that change things I can relate to (e.g., current policy)? And for that sacrifice, how much closer does that get us to fiscal sustainability (e.g., some target debt/GDP) vs. some status quo? etc. etc. etc. Again, none of these questions even arise unless there is some sort of reference to some baseline and assessment of a differential between the proposal and that baseline.

    That said, I agree that, if a baseline is clearly a fiction because it doesn’t reflect the debt spiral at some point in the future blowing up the model, that baseline is not useful for that full time horizon. But even that baseline — e.g., the current policy baseline — is useful for considering and communicating the changes that a proposal would bring, and again, getting a sense of what a plan changes (and the adverse effects as well as the improvement of fiscal outlook) requires reference to some baseline. I would just say that, if at some point some baseline’s spending on some program, for example, is clearly impossible or darn close to impossible (because of economic/financial collapse due to a debt spiral), then that baseline should end prior to that future year or its figures beyond that point should not be used, because the baseline spending levels beyond that point are impossible or nearly impossible.

    Also, I think I was wrong earlier (in responding to your question) when I said I don’t know of a sustainable baseline. I should have checked then, as I’ve done now, and it seems that CBO’s Extended Baseline scenario is sustainable, or at least buys us a few decades (per all its assumptions, of course) http://cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf. Now, I assume you (sensibly) regard that baseline as unrealistic politically, but that doesn’t mean it can’t be useful.

    And just for the heck of it, if it is possible to stop the train or slow it enough that the collision is not massively deadly, and one option is to slam on the breaks and stop the train as abruptly as possible, which will cause some severe passenger injuries, and another option is to slow the train 10mph and another is to slow it 40mph, with associated degrees of passenger injury, yeah, the cost-benefit of the options matters, and the baseline over time should be “no injuries, no injuries, no injuries, massive injuries and deaths”. The fact that continuing without slowing down at all over that horizon and avoiding any injuries is impossible doesn’t mean that people wouldn’t want to understand (if they had time to consider it and all take a vote) how and to what degree the alternative “policies” would benefit and/or cost them . I could go on trying to deal with this and other analogies (all of which seem hard to relate well to the plethora of options in the case of fiscal policy), but I’d rather not, and it doesn’t seem necessary as far as I can tell.

    Oh, and as just a note, I don’t go by the silliness of Medicare or SS “going bankrupt” or “becoming insolvent”. They are just part of our overall spending. How much or how little we choose to spend on them isn’t bound by the intra-governmental bookkeeping related to those programs.

  28. comment number 28 by: Vivian Darkbloom

    I agree conceptually with AMT and Steve. It is first important to know where one is going before one decides how to get there. When I take a trip, I would first want to know whether we are going to Chicago or New Orleans. Then we should discuss the best route to get there. This might be just another way of expressing the Titanic metaphor, as I understand it.

    As far as baselines are concerned, I don’t see why the discussion should not first start with the destination. A good destination baseline might be, for example, a balanced budget. That is a fairly fixed target, and one that is not so easily subject to manipulation. One can then judge how far a particular plan is from that fixed point and whether that deviation is advisable.

    In creating baselines as a point of departure (rather than a point of destination) one tends to favor the specific over the general. Each side tends to choose which road they think is the most scenic one even though it might end up just East of East St Louis (to borrow a nice metaphor from Mr. Waits). By specific, I mean that the focus is immediately and inevitably on immediate distributional issues rather than broad macro (or even micro) economic issues. The latter should really be the departing point for economists; but it almost always is not. Economists, particularly those on the left, want to start the discussion with a non-economic framework: how are taxes and spending allocated among the various income cohorts in the short run? So, rather than start with valid economic issues such as 1) does the government operate in the longer-term at greater capacity and higher employment with large deficits, low sustainable deficits or with no deficits at all (or, dare I pose the question of whether the economy might be better if government actually ran a surplus and opened a sovereign investment fund with the proceeds?). Then, the issue might turn to what type of tax structure (and spending policy) will produce the greatest incentives across the board to maximize output and employment. One should then turn to the question of distribution and whatever concept of “equity” one deems, in one’s subjective view of reality, to be desirable.

    The last point (the distributional/political) is almost always the point of departure, especially for progressive economists . But the last point is almost wholly a political consideration—not an economic one. (this is why, in my view at least, ”progressives” tend to be less credible *as economists* than their counterparts on the right). What is euphemistically called “normative economics” is actually politics. We might decide in this political phase of the discussion that one must sacrifice economic principles and outcomes to equitable ones. Here, progressives have valid points on equity, but this is often at the expense of pure economics. It is important that the general public know what the tradeoffs are and it is important for economists to be clear as to when their economics end and their politics begin.

    Naturally, the general populace is always going to ask first: what is in this for me? That is the function of the current law baseline or a current policy baseline. People want to know whose ox will be gored. Thus, I also agree with Brooks: you cannot avoid using baselines for this purpose. I disagree, however, that some historical baseline, which is almost always manipulated for political advantage, should be the point of departure among policy experts, particularly economists. And, I would generally prefer, particularly in the current context, a “current policy baseline” to a “current law baseline”. In the current context, how many people under the age of, say, 30, have any idea of a “current law baseline”. Their reality is the taxes they are subject to today, not the tax rates that might prevail if nothing happens six months from now. For the rest of the population, much the same applies. Their reality is the level of taxes they have paid for nearly 10 years and not taxes they might pay, say, with the ACA increases, to take effect six months from now.

    Again, while use of a current policy baseline might be most appropriate for the general populace to understand what will befall them, I don’t think it is the correct starting point for economists or public policy experts such as the Tax Policy Center, the Concord Coalition, the Tax Foundation, or whomever. Their role, as public policy economists should primarily be to define what the optimum outcome, as a matter of economics, should be and then possible means to get there. The politics should be left to the politicians and to the electorate. Don’t worry, that aspect will be adequately covered without economists confusing their economic “science” with their liberal consciences. Everyone has a conscience, but not everyone has a PhD in economics.

    So, in essence, I agree with Steve, AMT and Brooks; however, the question is not “either this or that”. Rather, the question is which point of reference should be given priority, when and by whom. Here, I think AMT and Steve share the more appropriate emphasis.

  29. comment number 29 by: SteveinCH

    Nice post Vivian. I will restate my point of view because I agree that it’s not an either/or choice.

    The best analogy I can come up with is (in the realm of statistics) clustering versus profiling. Some variables are used to determine the solution, others are used to explain the solution. To me, baselines are used for profiling, not for clustering.

    If your not a stats geek, I’m sure the analogy is opaque but it’s the best one I can think of.

  30. comment number 30 by: Brooks / Gordon

    Vivian,

    I see you agree that we cannot avoid using baselines for consideration and communication of policy alternatives for improving our fiscal outlook, because it’s hard/impossible for people to have a sense of costs-benefits of a given proposal without knowing, as you put it “what’s in this for me?” and “whose ox will be gored”. That’s pretty much my only point here. Steve and AMT seem to be saying we can and should just dispense with with any reference to any sort of status quo baseline as we consider and discuss alternatives for fiscal policy, as if some proposal to grow spending overall and some categories of spending per some very simple formula, and to do the same for targeted tax revenue levels, can be considered and discussed in a vacuum, devoid of any reference point re: policies people can relate to, and how a plan would mean changes to that reference point and resulting likely/potential effects on people. (Update: Steve seems to have switched and now agrees with me that we can’t leave baselines out of it. I guess what you said was more understandable/persuasive to him than what I said, and/or perhaps the source made the difference in his view or in what he was willing to say.)

    I think it’s quite sensible to start with scenarios of sustainable fiscal policy, such as keeping long-term debt/GDP from exceeding, say 100%, or 80% or 60%, but then we can’t escape the need (or at least the desirability) of taking a rational approach — that is, asking what policy alternatives could get us there, and what all the costs and benefits are under each debt/GDP scenario and under the policy alternative scenarios within them, and then considering how that changes policies that people can relate to, meaning some version of a status quo — e.g., Does that plan’s growth rate for Social Security spending mean less overall spending than per current policy? If so, how much? How does the plan change policy to achieve that? Who is worse off (vs. current policy or some other baseline assumption re: policy), and on what basis? How much does that reduce debt/GDP vs. current policy (or other baseline)? Does the cost-benefit of that policy look good to me or not? etc. etc. Or on the revenue side, how do those revenues compare to projected revenues based on current tax policy? If it’s much higher, how will that revenue be generated — increasing some particular tax rates? reducing some tax deductions/credits? All of this necessitates comparison to some baseline to have meaning for people in terms of the effects on people, so they can have some sense of cost-benefit. That’s all I’m saying.

    I just don’t see we can consider, communicate and choose among policy alternatives — all with associated trade-offs (costs & benefits) — without relating it to something people (us included) can relate to. I’d like to see how such a discussion would proceed — how one would make a case for his fiscal plan, explaining why the benefits exceed the costs and why his plan is better than alternatives, without indicating how anything will change in terms of tax policy, spending policies (particularly for entitlements), allocations (for discretionary spending), macroeconomic effects, and what all those things will affect people. Is the 60% debt/GDP plan better for America than the 70% debt/GDP plan? Is holding Social Security spending growth to X% better than holding it to Y%? People need a reference point — policies they can relate to — to have some chance of having a sense of the costs-benefits and to rationally get some sense of their answers to such questions re: policy preferences.

    Perhaps the problem here is that Steve and AMT are making some different point, not really disputing what I’m saying above (Update: it seems Steve no longer disagrees with me), or perhaps wishing to throw the baby out with the bathwater even though the baby is essential to a rational approach to all this.

  31. comment number 31 by: Brooks / Gordon

    Vivian,

    I forgot to ask, when you write:
    I think AMT and Steve share the more appropriate emphasis.

    What “emphasis” are you attributing to me (and to them)?

  32. comment number 32 by: SteveinCH

    Brooks,

    I am suggesting that we end with baselines rather than start with them and that the baseline should, to AMTs point, be based on easily verifiable and forecastable macroeconomic variables. A simply derived, consistently applied, and potentially not entirely accurate baseline is better than a more complex, inconsistently applied and easily gamed one.

    My point is that there is no definitive answer to how much are we going to spend in the future? or to how much to we need to spend in the future to maintain current service levels?

    In such a world, baselines should only be used to profile policy changes as opposed to describing them.

  33. comment number 33 by: Vivian Darkbloom

    “I see you agree that we cannot avoid using baselines for consideration and communication of policy alternatives for improving our fiscal outlook, because it’s hard/impossible for people to have a sense of costs-benefits of a given proposal without knowing, as you put it “what’s in this for me?” and “whose ox will be gored”. That’s pretty much my only point here.”

    Brooks,

    From the outset you seem to be misinterpreting what I wrote. “What is in it for me” has absolutely nothing to do wth “improving our fiscal outlook”.

    My point was (is) simple: Improving our fiscal outlook (and, I would add macro economic outlook) should be the primary consideration, particularly for economists. For this, how far we depart from a historical baseline is irrelevant. What is relevant is where we need (want) to go, not how much a particular cohort needs to pay to get there
    or how far from an arbitary point we will move.

    I also noted that historical baselines (my preference is a policy baseline, particularly in the current context) is unavoidable for an entirely different purpose: to demonstrate to the populace what will change for them. That is politics, not economics.

    I say that Steve and AMT have the more appropriate emphasis because I think their approach(es) (as I understand them) more appropriately reflect the economic as opposed to the political aspects of the issue. It is a question of ordering and priority, not a question of “either a or b”. My argument is that economics should come first and politics second, at least, or especially, among those who pretend to be economists or public policy experts. It makes no sense to me to argue first how far we move from a particular baseline (which is largely a politically maniipulated construct, anyway) without regard to what the economic consequences that rather selfish and pedestrian viewpoint may bring the economy.

    So, with respect to emphasis, what I am arguing is where we end up is more important than how far we move from a rather artificial starting point; however, I have conceded that the latter is relevant and unavoidably so from a political standpoint, but only *after* the more relvant issue of where we want to go is addressed.

  34. comment number 34 by: AMTbuff

    We should never answer the question “Who is worse off” relative to a fiscally impossible baseline. The hidden premise of the question is nonsense. The question deserves no answer.

    Imagine a Titanic passenger asking you “Will I be better off in your lifeboat than in my cabin, assuming that we aren’t about to hit that iceberg?” The assumption is counter-factual and must not be allowed to stand.

    This is not a trivial point. It’s the central question of the current campaign. Will one party (or both) get away with pretending that impossible government promises are a legitimate starting point for discussion? As Vivian says, it’s the ending point, fiscal balance, that is the correct starting point for discussion.

    Imagine a Madoff investor saying “I invested $100,000 2 years before you and my fraudulent account statement shows $3 million. You invested $100,000 1 year ago and your fraudulent account statement only shows $1 million. Therefore I’m entitled to triple the recovery you got.” That’s what it is to use impossible promises as your baseline.

    Fraudulent promises are void. The Madoff bankruptcy judge correctly works backwards instead, distributing the available resources as fairly as possible based on what people actually put into the scheme. Fiscal rationalization is a bankruptcy reorganization. It needs to proceed similarly.

  35. comment number 35 by: Brooks / Gordon

    Vivian,

    From the outset you seem to be misinterpreting what I wrote. “What is in it for me” has absolutely nothing to do wth “improving our fiscal outlook”.

    I don’t see what I misinterpreted. The objective of improving our fiscal outlook isn’t the only context in which my point applies — my point being that we can’t dispense with references to baselines as we consider policy alternatives — but it happens to be the context for our discussion here, so I assumed you had that in mind, but even if not, it doesn’t change my point or my observation that you are agreeing with my point. All I was saying is that references to some status quo baseline is needed for people to get a sense of how some plan would affect people, because people need to have a sense of the ways in which and degrees to which implementing that plan would affect various people positively or adversely, and to do that they need a sense of change vs. something they can relate to (e.g., current tax rates, or current eligibility and benefit levels for entitlements). I really don’t see what misinterpretation you see, or at least what supposed misinterpretation you consider noteworthy.

    My point was (is) simple: Improving our fiscal outlook (and, I would add macro economic outlook) should be the primary consideration, particularly for economists.

    Not sure what you mean, but certainly economists should inform us about the need to improve our fiscal outlook, and if your point is that they shouldn’t let their personal political preferences get in the way of that role, of course I agree.

    I also noted that historical baselines (my preference is a policy baseline, particularly in the current context) is unavoidable for an entirely different purpose: to demonstrate to the populace what will change for them. That is politics, not economics.

    Yeah, and it’s not just politics in the pejorative sense, but in the appropriate sense of people weighing trade-offs associated with policy alternatives. Should we implement a plan that includes raising this or that tax rate, and that reduces the benefit level for beneficiaries of some entitlement, to hit a given debt/GDP target? Well, the “raising” and “reducing” is vs. some reference point representing some version of a status quo, i.e., a baseline. I think you are agreeing with me, but I want to be clear that we are talking about “politics” including in the rational sense of evaluating the cost-benefit of alternatives, not just “politics” in some non-substantive or irrational sense or in the sense of partisans do to mislead people for political gain.

    Regarding your last two paragraphs, I really have no idea what you are talking about. In what way and for what reason do you see anything I’ve said (and that they’ve said) as indicating that I put any less emphasis on economics (as opposed to politics) than they do. I really don’t even know what you are saying. Of course I think it is imperative that America recognizes that we have to make major changes and sacrifices via fiscal policy to achieve sustainability. Do you really think I’ve said anything that in any way indicates that I emphasize “how far we move from [some baseline” more than the need to “end up” with a much-improved fiscal outlook, or that they put more relative emphasis on the latter than I do? I mean, what the heck are you talking about?

    You guys seem to have a tendency to take a simple narrow point I make and to somehow morph it into some contrived, much broader argument that strays well away from the point I actually made, and then comment with some or total disareement with the straw man you’ve erected.

    I just made a very simple point. It’s really just common sense. You seem to agree and to see it as common sense as well. I really don’t know what the heck you mean re: the supposed differences in “emphasis”, unless it’s just that you think economists should focus on the macroeconomics more than on personal preferences on how to deliver a given fiscal and macroeconomic result, in which case that has nothing to do with me or my point.

    I probably won’t devote much/any more time to this topic (at least on this thread) because it seems like, at best, much ado about nothing, with some confusion and straw men mixed in.

    I made a simple point, which I’ve stated numerous times very clearly on this thread. Steve and AMT disagreed, arguing we should dispense with any reference to any (status quo projection) baselines. Steve later switched and agreed with me, whether he realizes it (or will admit it) or not. You apparently agreed with me, and seem to agree that it is simply common sense. That’s it. And there is no difference in “emphasis” vs. Steve or AMT evident in anything I’ve said, notwithstanding whatever you are imagining and baselessly attributing to me. Yeesh.

  36. comment number 36 by: Vivian Darkbloom

    Brooks,

    I agree. You obviously have no idea what I am talking about. I apologize for my inability to express myself more clearly.

  37. comment number 37 by: Brooks / Gordon

    I wasn’t planning on commenting further on this threat (and I don’t know if anyone will see this comment), but I just read something that reminded me of a point I forgot to make — yet another reason why it’s absurd to think it would or could be sensible to dispense with baselines in our discussion of our fiscal future and alternative policies and paths.

    From post yesterday on Politico by Judd Gregg and Ed Rendell:
    Without significant, fundamental and comprehensive reforms, the debt will reach 90 percent of the economy within 10 years and exceed 250 percent by the early 2040s.
    http://www.politico.com/news/stories/0812/79858.html#ixzz247×3fH00

    Well, how would one even contend that we are on an unsustainable (or even just very undesirable) fiscal course without referencing some baseline, as they (implicitly) do above?

  38. comment number 38 by: Brooks / Gordon

    And a longer quote makes my point even clearer:

    Without significant, fundamental and comprehensive reforms, the debt will reach 90 percent of the economy within 10 years and exceed 250 percent by the early 2040s. These crippling levels of debt threaten the strength of our economy, our standard of living, and the next generations’ access to the hope and opportunity we have come to accept as an American birthright. We can fix this problem, but we need to act now.

    So I ask someone who thinks we can and should just dispense with any references to baselines, how would you make the above point, or anything like it, without refering to some projection representing a status quo scenario — no baseline?

  39. comment number 39 by: AMTbuff

    Yes, any projection requires a scenario, even the status quo scenario.

    A baseline is more than a scenario. A baseline is by definition a preferred frame of reference for comparison. I claim than an unsustainable scenario should never be given that role. The preferred frame of reference should be (a) sustainable and (b) locked into metrics which are difficult to manipulate: GDP, population, and inflation rate.

  40. comment number 40 by: Brooks / Gordon

    AMT,

    So are you agreeing that we need some status quo scenario baseline to make the point that unless we change course in some way, we are heading toward very negative economic consequences?

    If yes, then by the same token, isn’t that status quo scenario baseline and indispensable tool for getting a sense of how much we need to get the numbers to change to get to some better fiscal future, and in turn, economic future, and to then turn to alternative types and magnitudes of changes vs. this “status quo” (e.g., some “current policy” baseline) that, collectively and cumulatively, could get us to a particular, lower debt/GDP (or whatever metric(s) one wishes to focus on) ?

    I mean, without reference to some status quo scenario projection (i.e., baseline), how do you diagnose the problem, gauge the severity of the problem, and discuss the merits of alternative plans that would impose various sacrifices to produce (per projections) a given degree of improvement in the fiscal imbalance and thus macroeconomic (and other) benefits?

    And how do you consider whether or not some plan with a seemingly arbitrary set of targets and/or formulas (e.g., hold growth of X type of spending to GDP growth, or whatever) is optimal — that is, it provides the greatest excess of benefits over “costs” (harms) — without considering how policies and allocations would have to change and how those changes would affect people? And how do you consider the degree and nature of those “changes” (and their effects on people), without referencing a differential vs. some status quo policy & allocation scenario that we can relate to, as in “keeping Social Security spending to X% of GDP would mean such and such people losing eligibility via this plan of means testing and/or Y% less in benefits per beneficiary vs. what they’d get per current policy”, just for example ?

    I just don’t know how one can evaluate alternative policies rationally and in a way people can relate to — i.e., having some sense of how to balance positive and adverse effects — without referencing stuff people can relate to, meaning some concept of the status quo.

    Now, as I said, if some baseline gets to a point at which it is clearly a fiction — i.e., the figures would be impossible, and the model would show this if it included all the right feedback effects, in particular the debt spiral — then I’d agree that it would be wrong to use that baseline beyond that point. For example (just to pick an extreme), if a baseline showed spending at some point exceeding GDP amid an already massive debt/GDP, and if it is implausible to think that the nation, in that fiscal condition, America could borrow the difference in that year (let alone beyond), then that spending scenario is a fiction and that baseline at that point in the projected future should not be referenced.

    But the above would hardly a reason to say we should not use a status quo baseline for a frame of reference simply because, several decades out, it becomes literally unsustainable, or even if it becomes politically very unlikely in a couple of decades.

  41. comment number 41 by: AMTbuff

    Once you have constructed a scenario that achieves long-run balance, you can compare its tax rates and deductions to 2011 tax rates and policy. You can compare its spending on programs X, Y, and Z to 2011 spending plus inflation plus growth in the recipient populations. You can compare promised benefits to the empty promises made earlier.

    All that is possible. But it’s counterproductive to privilege any current trajectory as a baseline when the current trajectory includes Ponzi components. If a Madoff client insisted on measuring his loss by referring to his fictitious account statements, even in their early years, you would say that the client is out of touch with reality.

    Any baseline worthy of the designation must be grounded in fiscal reality. You want to wait until, as Paul Ryan says, the empty promises become broken promises. I disagree. Empty promises cannot be part of any baseline.

  42. comment number 42 by: Brooks / Gordon

    AMT,

    Again, you seem to be confusing a legitimate view that we shouldn’t refer to figures projected in the distant future per some baseline that simply cannot happen (see my illustration in my immediately prior comment) with the (as far as I can tell) nonsensical view that we could and should not reference some status quo scenario baseline as a frame of reference for considering and discussing the adverse consequences of NOT changing course and for considering and discussing the merits of alternative ways to change course (in terms of policies and allocations) to produce different projected fiscal results. There is no reason to discard any reference to any status quo baseline (even if it were possible to have a sensible conversation of some “no change” fiscal outlook and of potential policy changes to yield different fiscal outlooks) that contains figures that ARE possible for the next decade or two or three or more, simply because some decades out the figures become fiction and therefore should not be referenced.

    And again, I really don’t see how one even has a sensible conversation about any of this without using such a reference, and nothing you (or Steve) have said provides any indication of how such a conversation would take place. Sure, one could simply state a set of formulas/rules/goals (e.g., hold total spending to X% of GDP and growth in spending on Program Y to Y% of GDP or to population growth or whatever), but ultimately rational analysis means considering trade-offs, and such formulas/rules/goals are largely arbitrary unless and until they can be related to how that would change things that we can relate to, most notably some concept of “current policy”, but in any case some concept of a status quo that we’d be changing from, for the most part imposing sacrifices, for the benefit of an improved overall fiscal outlook and economy.

    It seems we’re at a dead end on this, and I assume neither of us wants to engage in further repetition, so unless you have something new — and by the way, I’d love to see an illustration of how you have the aforementioned conversation without referencing some status quo baseline — I guess we should drop it.

  43. comment number 43 by: AMTbuff

    As I said, it’s OK to compare to the status quo. My point is merely that you need not and should not call the status quo a baseline.

    People use the term baseline precisely because that term implicitly assigns higher validity to the scenario deemed “baseline”. I reject that semantic sleight of hand.

    As we discussed with “tax expenditures”, people with an agenda employ loaded terminology that favorably frames their preferred policy. Baseline selection works exactly the same way. Refusing to deem any scenario a “baseline” is the best defense against such trickery.

  44. comment number 44 by: Brooks / Gordon

    AMT,

    I’m not sure I get your point. I think “baseline” is just meant to refer to some version of a status quo scenario, as in “if we don’t change course”. I see this as a neutral concept. Are you saying that your whole point is that the term “baseline” and/or how people use that term implies that sticking to it (or closer to it) is somehow better than deviating from it (or more from it)?

  45. comment number 45 by: AMTbuff

    Yes, exactly.

    I realize that you see the term baseline as value-neutral, just as you see the term tax expenditure. IMHO your perspective is atypical.

  46. comment number 46 by: Brooks / Gordon

    AMT,

    I don’t see the term “tax expenditure” as neutral at all. It implies that a provision is similar in nature to spending (or at least closer in nature to spending than to a tax rate cut).

    Anyway, as for baselines, so it seems that you just object to how people use baselines, not that you are saying we should or could really avoid referencing them and somehow still have a sensible, productive conversation about where we are heading (our fiscal outlook) or the merits of alternative policies to improve that fiscal outlook.

    Although I agree that baselines are subject to that abuse, again, I just don’t see how we have a sensible conversation without one/them, as I’ve explained. It seems you aren’t actually disagreeing with me on that point.

  47. comment number 47 by: Brooks / Gordon

    I should say “…you just object to how some/many people use baselines…”

  48. comment number 48 by: AMTbuff

    The term scenario does not confer legitimacy. The term baseline does. That’s where the abuse of language occurs.

    You can take a 2011 policy scenario and project it into the future. I have no disagreement other than about whether it’s legitimate to deem that scenario a baseline. Yes, it’s just a minuend and a subtrahend, but terminology affects perception.

    If you substitute scenario for baseline in your posts, I would agree with them. This is a debate about framing. Framing is important.

    Where the subtle message of legitimacy is unearned it must be eschewed. No baselines.

  49. comment number 49 by: Brooks / Gordon

    AMT,

    Not sure I’m getting you.

    “Legitimacy” meaning that, for example, a “current policy” baseline is indeed a/the/the most valid reflection of a continuation of current (2011 or 2012) policies?

    So you’re ok with calling a projection a “‘continuation of current policy’ scenario projection”, but you strongly object to calling that same projection a “current policy baseline”?

    I don’t get what you are reading into the term “baseline”. Help me out here. Spell out for me what you see “baseline” as conveying (and don’t just say “legitimacy” — please explain to me what you mean).

  50. comment number 50 by: AMTbuff

    So you’re ok with calling a projection a “‘continuation of current policy’ scenario projection”, but you strongly object to calling that same projection a “current policy baseline”?
    That’s about right. You and I are able to read “baseline” without seeing it as some sort of preferred choice. Casual readers not familiar with the jargon will be misled by the term into considering the baseline as the preferred scenario. Many who use the term count on that fact.

    But as I think I already said, there’s a more important reason to avoid the term baseline: budget gaming.

    I don’t want to see ANY politician say “We’re going to cut spending by X” (which implies some usually unstated and always misleading baseline). I want them to say “We’re going to balance the budget by changing promised benefits”. The former presentation is much preferred by politicians because it can be gamed to the point of meaninglessness. The latter presentation cannot be gamed. When you accept a baseline that does not meet my stated criteria for legitimacy, you are helpless against political gaming.

  51. comment number 51 by: Brooks / Gordon

    AMT,

    Are you ok with a politician saying “We’re going to cut projected spending (projected per current policies) by X”?

    I certainly understand the problem of ambiguity re: “cuts” when the “cuts” are vs. a current policy scenario projection (i.e., a baseline by another name). I don’t think one side of the argument re: the term “cuts” is right and the other wrong; it depends on what perspective is being taken. A “cut” vs. a current policy baseline could best represent effects on, say, projected beneficiaries of Social Security, whereas, if one is considering how America allocates it’s resources, certainly it could be misleading to call growth in actual spending (adjusted for inflation and even for GDP, and even as a % of total spending) a “cut”.

    I do think politicians should say “cut projected spending” and be clear they’re talking about “cuts” vs. projected spending based on a continuation of current policies rather than just say “cut”. And I agree that those that don’t, typically make that choice for political advantage (to mislead some people to some extent).

    But in any case, politicians don’t typically state the term “baseline” out loud. They say something like your example (”cut”), an implicit reference to a baseline. So I don’t see why your focus is on the term “baseline”, when the same exact projection built on the same assumptions to represent the same thing for the same purpose would be ok with you if it were called something like “‘continuation of current policy scenario’ projection”. Either way, the politician is still using the same words and is still referring to the same thing and making the same point.

    And if they say “We’re going to balance the budget by changing promised benefits”, that just begs the question “How much are you going to change promised benefits, to produce how much deficit reduction”, both of which relate right back to the concept of a baseline, whatever you wish to call it.

    As for your “standard of legitimacy”, if you mean the sustainability standard, I’ve already made my point regarding why I think that’s not a sensible reason to dispense with baselines, but then again I don’t understand why, given your apparent perspective re: legitimacy, you’d be ok with using the same unsustainable projection as a point of reference as long as it weren’t labeled as a “baseline”.

    And as for folks who are at least a bit more wonky than average and who do read/hear/use the term “baseline”, given that everyone agrees that the most common “current policy” baseline (and other “current policy” baselines) all spell ultimate disaster, I don’t see why you think such folks “see it as some sort of preferred choice.”

    I really can’t see any real point in what you’re saying other than a complaint that politicians sometimes mislead people (deliberately or perhaps sometimes inadvertently) by referring to reductions in projected spending as “cuts”. Maybe I’m not getting you because there’s nothing to get beyond that complaint.

    If there actually is some there there in what you’re saying, I’m either at or very close to the point of giving up on finding/figuring out what it is.

  52. comment number 52 by: AMTbuff

    Are you ok with a politician saying “We’re going to cut projected spending (projected per current policies) by X”?
    No, for the same reasons Marge Simpson would not accept from Homer Simpson “I’m going to cut my projected spending at Moe’s Tavern by X”.

    You are treating these baseline comparisons as being made in good faith. I regard them as intentionally misleading in virtually all cases. It’s harder to mislead with comparisons when one of the options is not implicitly or explicitly preferred.

    I would love to take this tool of deception away from all politicians and policy analysts. Why in the world would you trust them not to abuse it?

  53. comment number 53 by: Brooks / Gordon

    AMT,

    Despite my best efforts, I just don’t see a clear point from you, nor any sensible position or argument other than the aforementioned complaint (which is a legitimate complaint and one I share and I occasionally express), and no, I don’t “trust” politicians or partisan policy analysts not to abuse the concept, but so what? And why would that mean we should or even could “take this tool of deception away” from them and still have some sort of sensible discussion of the fiscal problem and alternative potential solutions? And how do you address my questions in my immediately prior comment re: what (as far as I can tell) are arguments of yours that don’t seem to fit together or make sense?

    Feel free to treat the above questions as rhetorical (i.e., don’t feel obligated by etiquette to answer if you’d rather not). I think I’ve exhausted my effort to try to find out / figure out if there is some actual, logical, sensible point you’re making beyond just that (legitimate) complaint.

    But hey, another “tool” that politicans and partisan analysts use in advocating their preferred fiscal policies is math, so why not try to take that “tool of deception” away from them? Well, because it’s an essential tool for rational, sensible analysis and discussion, that’s why. But perhaps you’re ok with their using math as long as they call it “arithmetic” rather than “math” (even though, as I pointed out, the label in the case of “baseline” is moot, given that the politicians misleading the general public usually DON’T use the term “baseline”).

    I really should stop here.

  54. comment number 54 by: AMTbuff

    Like Vivian, I am apparently incapable of expressing myself coherently. If I had studied semantics in college I might be better at this.

    I think I’ll head over to Moe’s Tavern now.

  55. comment number 55 by: Brooks / Gordon

    Or neither of you actually had any objection to anything I said, and so it’s not surprising that you can’t clearly explain a point that doesn’t exist.

    And in your case (in this instance), I think there’s a decent chance you just don’t have a clear, sensible point other than the aforementioned complaint that politicians and others often mislead people via baselines (sometimes deliberately, sometimes perhaps not). If that’s all there is to your point, you should just say so instead of leading my on a wild goose chase for some phantom point.

    I realize I haven’t been tactful, but seems to me you shouldn’t feel that I’ve been unreasonable given that you haven’t addressed what I’ve pointed out as numerous aspects of what you said that seem to either not fit together or not make sense if thought through at all.

    FWIW, if I thought you were incapable of expressing yourself clearly, I would have been more tactful despite my frustration. It’s because I think you can do so (albeit in some cases only after intense effort on my part to get clarity from you) that I seriously wonder if you don’t really have anything resembling a clear, sensible idea in your own head, and that’s why you aren’t being coherent in your arguments or substantively responsive to my questions and points. So take my lack of tact here as a compliment of sorts, albeit along with criticism on a different dimension (not that I think you care much either way, but FWIW, if anything).

  56. comment number 56 by: Brooks / Gordon

    And AMT,

    It’s beyond even if you were arguing for throwing out the baby with the bathwater. It’s like you’re saying:

    We must throw out the baby, but keeping the infant is fine as long as we call it an “infant” and not a “baby”, even though it’s (he’s/she’s) the same thing by whatever label, because the awful problem is that politicians mislead people by using the word “baby”, even though they rarely actually use the word “baby”, and even though the same exact misleading things they say implicitly referencing the “baby” they would say implicitly referencing the “infant” (because both refer to the same, unnamed, thing), oh and by the way, I have no way of explaining how it’s possible to even have a sensible discussion of the topic without using this thing, by whatever name, as a point of reference.

    And the above is even leaving out the seemingly nonsensical notion that we should not use (and that we can avoid using) such projections at all if, at some point in the distant future, the path they exhibit becomes unsustainable.

    And there’s more, but I”ll stop.

  57. comment number 57 by: SteveinCH

    I don’t know why I’m doing this but let me try one more time.

    Brooks, the issue here, as for me at least it often is, is that you are having a conceptual debate with people who are focused on the practical realities.

    Let me try it a different way. In a world that has multiple baselines, of what practical value is a baseline. I think what I hear AMT saying is that he has no objection to a baseline as long as it is expressed in simple mathematical terms where the underlying assumptions are clear and understandable.

    Today, we have the current law baseline, the current policy baseline, the Concord baseline, the OMB baseline and any other baseline that anyone wants to create at any point in time. The issue is that all of those baselines are wrong. Not a one of them represents what is going to happen in the future. As an example, CBO did an assessment of their baseline in 2001 and concluded that they misforecast by $11 trillion or so in aggregate (on the deficit) and that nearly $3 trillion of that was from faulty economic assumptions as opposed to policy changes. So the “baseline” is inherently not a factual thing and politicians have figured out that the best way to make yourself look reasonable is to use an inflated baseline.

    To take a simple example, the CBO baseline assumes that spending on overseas contingency operations will go up even though we have withdrawal timetables in place in both Iraq and AfPak. Is that reasonable?

    I think the point is simple. If you wanted to take as a baseline, for example, the notion that spending grows with inflation plus population or inflation plus population plus 1 or 2 percent, that would be a fine thing to do. It’s simple and understandable. Sure it doesn’t reflect some people’s view of what reality will be but we know that their view of what reality will be is both wrong and influenced by their view of what they want to use the baseline for.

    So let me try it this way. In a world run by academicians, it might in fact be reasonable to use a baseline as a starting point for policy discussions where the baseline represents a 50/50 forecast of the “do nothing” scenario. But, in a world run by politicians, this makes no sense at all because baselines will multiply and politicians will put their thumbs on the baseline scale to make their policies look good. In such a world, the only baseline that makes sense is a “dumb” baseline; where the math and assumptions are so straightforward that they are beyond gaming by the political class.

    You can take that as agreeing or disagreeing with you; I don’t care either way but I think that’s what people are trying to say here.

    Your penchant for intellectual purity for me collides with political reality, at least as I experience it.

    I’ll close with one more example. What should the “baseline” spending for Medicare be? I could argue that a good starting point would be medical inflation plus eligible population growth. But that assumes no returns to scale in the program and no opportunities for efficiency. A good debate would be “how much efficiency or inefficiency beyond the ‘dumb baseline’ of zero real per cap growth do we want?” It really doesn’t matter what the baseline is in that conversation since the baseline involves a massive set of assumptions that are inherently unprovable.

  58. comment number 58 by: Brooks / Gordon

    Steve,

    Thanks for laying out your thoughts, but…

    Brooks, the issue here, as for me at least it often is, is that you are having a conceptual debate with people who are focused on the practical realities.

    You’ve given me that kind of line in the past, and it was equally misplaced then as it is now. I fully acknowledge that there is substantial subjectivity and/or variability in the assumptions of baselines. I fully acknowledge that people are misled by politicians (usually implicit) use of baselines, often per the deliberate intent of the politicians, and I lament that as you guys do.

    But my only point here is that is simply doesn’t make sense to think we can analyze, consider, discuss, and make rational choices regarding our policy alternatives and associated projected fiscal paths without implicitly referencing some projection representative of some version of the status quo, and that, by any other name, is a baseline.

    Still to this point, neither you nor AMT have illustrated in any way how such a sensible, meaningful discussion can even take place without such a point of reference. And I don’t think it’s possible, for the reasons I’ve stated repeatedly throughout this thread, but wish I don’t wish to repeat yet again.

    Again, I do appreciate your taking a shot at explaining to me something you thought I wasn’t getting, despite my belief that you were mistaken and you are missing the point.

  59. comment number 59 by: SteveinCH

    Brooks,

    What I’m arguing for is a “dumb” point of reference rather than an “accurate” one. The dumb point of reference doesn’t claim to represent reality but just represents a starting point for the discussion.

    The fallacy is that there is some “baseline” that accurately represents future reality.

    So it’s not the comparison that is the problem but the notion that there is some accurate point from which to start the comparison.

    In the end, it would be better to compare alternatives to each other as opposed to comparing each to a baseline.

  60. comment number 60 by: Brooks / Gordon

    Steve,

    I agree that those implicitly referencing baselines often mislead people (deliberately or not) into thinking that their frame of reference is objective and the only/most valid representation of a status quo projection. And that bothers me as it does you (and AMT).

    But we can’t just “compare alternatives to each other” and have some decent sense of the trade-offs involved without, in some way, getting a sense of what will change vs. some status quo to which people can relate — e.g., eligibility rules for Medicare, and what types of healthcare services are covered by Medicare to what extent, and even some sense of the availability and quality of providers for Medicare, or what income tax rates are currently and what tax deductions/credits/exclusions are currently available.

    someone tells Joe to go on Diet A and someone else recommends Diet B, one thing Joe will want to know is how much less he can consume in each case vs. what he is accustomed to, as well as what changes in the types of food he eats vs. what he is accustomed to.

    Plus, to even make the point that he needs to go on a diet, and how severe the diet should be to yield the optimal balance of costs and benefits based on Joe’s priorities, we need to start with some version of a projection of the status quo (no change in his diet) to show him some usable projection (even if open to some subjective assumptions) representing his future weight on his current path, and discuss the costs associated with continuing on that path, and then we can discuss the trade-offs (benefits and costs) associated with one magnitude of caloric reduction with a greater/lesser magnitude.

    There is just no escaping it, as far as I can tell, and again, neither you nor AMT have provided any illustration as to how such a discussion can take place in a sensible way without implicitly referencing some status quo baseline.

  61. comment number 61 by: SteveinCH

    Brooks,

    Your Joe example is a perfect illustration of the difference. It presupposes that Joe knows how much food he will eat in the future. He does not. He only knows how much food he will eat today.

    Perhaps its just a different approach. In my view, Joe should evaluate his diet choices irrespective of his current diet. If someone proposes he continue his current diet, it is a relevant choice. If not, it is not.

    So, if a politician wants to propose that we continue current policies and describe what she thinks that will cost, fine. In the absences of that, we should be comparing alternative proposals to each other rather than to an arbitrary third point.

  62. comment number 62 by: SteveinCH

    Or if we must have an arbitrary third point, make it simple and non-debatable as opposed to having a debate over which arbitrary third point best represents reality.

  63. comment number 63 by: Brooks / Gordon

    …and by the way, I’m the one here who is considering “the practical realities”, while you and AMT are the ones lost in impractical conceptual stuff. I’m actually considering how people can have a decent chance at getting a sense of the size and nature of the problem (the medium/long-term fiscal imbalance), the benefits of changing the fiscal outlook to varying degrees via policy changes, and the relative merits of various plans put forth as solutions, all of which require some frame of reference to which people can relate — some status quo scenario regarding taxation and what people get via government spending — i.e., a baseline.

    By contrast, you and AMT seem to think you can just throw out there either arbitrary metrics as goals and/or arbitrary forumulas, or even full alternative plans with policies spelled out, and that people can get a sense of the relative merits of each plan without the frame of reference of any sort of status quo to relate to. People will, very naturally and understandably and sensibly, view any presentation of that sort as too much of an abstraction, just as Joe in my example above probably can’t have a good sense of whether he should go with Diet A or Diet B or just continue with his current dietary policy without getting a sense of how A or B will change a diet to which he can relate, and in turn, the relative benefits (gains) and costs (pains). If Diet A is 1 meal a day and Diet B is 2 meals a day, he will want to think about how much hungrier he’ll be than he is with his current 3 meals a day, and consider the gain and pain of A, B, or no change with that helpful frame of reference.

  64. comment number 64 by: SteveinCH

    Brooks,

    I know you cannot simply agree to disagree but I think that’s the point we’re at in the conversation. Once you want to assert that “the baseline” is an accurate reflection of the future on the “as is” world, the practical debate is over because politicians will game that and compare their policies to that and let ill-informed voters draw the wrong conclusion.

    So I’m done and you’re left to conclude that you are wiser than others again.

  65. comment number 65 by: Brooks / Gordon

    I often agree to disagree with people on all sorts of things, when the matter in question seems to be subject to reasonable disagreement. This doesn’t seem to be such a case, and perhaps the best evidence of it is that, still even at this point, neither you nor AMT have, despite my requests, given me any illustration of how people can have a sensible discussion of the problem and alternative solutions without reference to some version of a status quo to which people can relate. I wonder how you think people would evaluate and discuss and choose whether or not to adopt the (very broadly stated) plan you put forth on your blog without getting a sense of what would change vs. some projection of a status quo scenario (a baeline). I don’t see how it would be possible, and I think I’ve done an adequate job of explaining why, repeatedly.

    And AMT, for his part, was really just all over the road, and his argumentation was filled with numerous points that didn’t seem to fit with one another or make any sense, and he had no substantive response when I pointed out these apparent flaws in his reasoning.

    So you’re left to conclude that, if I’m saying you and AMT are wrong, and given that I’ve done so in the past, and that there are two of you and one of me, then it must be that either I’m wrong or that I’m unreasonably unwilling to “simply agree to disagree”.

    To quote someone far, far more intelligent than I, observing that a number of others said he was wrong, but without offering an adequate argument to support their contention, “If I were wrong, one [with an adequate argument] would be enough.”

  66. comment number 66 by: SteveinCH

    The point about what is on my blog Brooks is that we should have a baseline that links to concepts that people can understand (like zero real per capita growth) rather than an assertion (almost assuredly wrong) of what will be in the future.

    Best to you

  67. comment number 67 by: Brooks / Gordon

    Steve,

    a baseline that links to concepts that people can understand (like zero real per capita growth)…

    Thanks for inadvertently supporting my point. No, people can relate to current policies, like who is eligible for Medicare and what the coverage and provider availability is like, or like what the tax structure is now. Saying “zero real per capita growth” just begs the question “So….what the heck does that mean in terms of policy changes vs. the current policies I can relate to?” I’ve been up and down this with you repeatedly, but I guess I’m just not going to be able to get the point across to you.

    … rather than an assertion (almost assuredly wrong) of what will be in the future.

    Straw man. First, baselines aren’t predictions of what will be. Rather they seek to present a reasonably valid and reasonably useful projection of what will be in the future IF we continue on our current course, however that is defined. Second, sure, they would be inaccurate even if we were to follow that “no policy/practice change” scenario, because many factors are simply impossible to project precisely, such as GDP growth. So what? They are the best-effort by some group of experts to represent the most likely results, subject to some error one way or another, of course. You think that imprecision means we should — or even that we could, not that you’ve ever explained how — consider and discuss the problem and relative merits of alternative solutions without giving people a sense of what will have to change to abide by your budget constraint?? And if you say something like “Revenues should be kept at X% of GDP (or average that over some cycle)”, do you think people could consider the merits of that without a sense of what would change in the tax structure — vs. the current tax structure (to which they can relate) — to abide by that rule? That seems quite silly to me.

    Best to you, too.

  68. comment number 68 by: AMTbuff

    No, people can relate to current policies, like who is eligible for Medicare and what the coverage and provider availability is like, or like what the tax structure is now. Saying “zero real per capita growth” just begs the question “So….what the heck does that mean in terms of policy changes vs. the current policies I can relate to?”

    “So…how does a seat in the lifeboat compare with the warm bed in my cabin? Why would I want to make that change? What does some little iceberg have to do with it? Everybody know that this ship is unsinkable!”

    Your baseline is the cabin on an unsinkable ship. It’s inconsistent with reality. That makes it a fantasy scenario. No fantasy scenario can honestly be called a baseline. Politicians and analysts do it all the time, but it’s wrong.

  69. comment number 69 by: Brooks / Gordon

    AMT,

    Uph, again with the Titanic analogy that I would say is unclear except that, insofar as I was able to discern that (I think) your point is that a baseline that — several decades out — is not really a possible projection should not be used at all in any way over any time period, a view that, as I’ve explained, is nonsensical, not to mention that you have never explained how people could have a sensible conversation about this stuff without implicitly using some status quo scenario projection as a point of reference (oh yeah but you are ok with that as long as those using it don’t say the word “baseline”, even though they usually don’t use that word, and even though your reasons for rejecting implicit references to such a projection would apply regardless of the label…I could go on with your mess of arguments on this topic, but I’ve covered it all well enough).

  70. comment number 70 by: AMTbuff

    Yeah, even if this ship is in danger of sinking it will probably take days, not hours. We are sure to be rescued before then. Maybe the calculations are wrong and we won’t sink at all. So why get into an open lifeboat? It’s cold outside!

    Here’s one reason: If you wait until the Titanic is tilted at 30 degrees before you launch the lifeboats, the launch will go very badly. If the ship is likely to sink we should launch the lifeboats while the ship is still level. Waiting has high risk for little benefit.

    If the financial projections are bad, assume the worst and act on it. Anything less is irresponsible.

    It is true that people regard as a baseline an unsustainable scenario of current tax rates and current benefit promises. That fantasy needs to be discredited, not indulged. Give people the real choices without comparing them to the fantasy they were sold by politicians.

  71. comment number 71 by: Brooks / Gordon

    AMT,

    I’m not interested in continuing to point out the persistent fundamental flaws in your argumentation.

    You simply have not been making sense in this discussion, nor have you been substantively responsive to my questions/requests, nor have your own arguments fit with one another. No sense repeating my explanations re: all of the above.

  72. comment number 72 by: SteveinCH

    Brooks,

    You are missing the point. Let me give you a specific example. What is the difference in terms of the impact on “my Medicare” between the current law and the current policy baseline? Or between the current baseline and the likely baseline (the one that excludes the SGR)?

    Do you really think Americans are prepared to understand that? Now multiply that by 10 or 100 or 1000? Do you still think people can understand it?

    This is why your position is impractical and incorrect.

  73. comment number 73 by: Brooks / Gordon

    Uph, Steve,

    Using a baseline to represent a “no policy change” scenario to discuss the size and nature of the problem, and as a reference point for comparison of alternative fiscal policies and paths, brings some limitations, some inherent likely error, some room for confusion and ambiguity, some manipulative use by politicians, etc.

    NOT using any such baseline leaves people unable (or at least much less able) to sensibly consider and discuss the size and nature of the problem (on our current course — i.e., a “no policy change” scenario) and alternative fiscal policies and paths.

    I’ve explained this, repeatedly and in a variety of ways, on this thread. Although I’m tempted to offer yet another illustration to try to get this through to you, I assume it would be a futile effort, given that you still don’t get it after all I’ve said so far. You and AMT have been quite ridiculous on this thread.

  74. comment number 74 by: Brooks / Gordon

    And Steve, although I may not want to devote time to comment much further, if at all, why don’t you go ahead and explain how you would explain to someone that some formula for revenues — say, 18% of GDP — is ideal, without informing him of how that formula’s projected revenues would differ from revenues experts project for each year if we continue current tax policy (unchanged), and what tax policies would change vs. current tax policies to achieve that difference in projected revenues, not to mention what is accompanies or implied by your plan in terms of changes in spending levels and associated changes in spending policies, and why everything together reflects the optimal balance of priorities and values regarding the trade-offs involved.

    Your position is simply silly. You have a complaint about a concept that is an imperfect tool. That’s all. You have no sensible argument or explanation as to how people could sensibly consider and discuss the size & nature of the problem and the relative merits of alternative courses without applying this imperfect tool as a point of reference to gain some degree of perspective.

  75. comment number 75 by: Brooks / Gordon

    …and yeah, politicians may choose the current law baseline instead in some cases, often to deliberately mislead people, but if you think that is an argument that we can dispense with the use of any status quo scenario projection (i.e., baseline), you are mistaken.

    And by the way, I thought you had backtracked on the above view upthread. Perhaps you are being very unclear now about what it is you are contending, and/or perhaps you have switched yet again. Either way, you’ve presented no argument or explanation whatsoever as to how people can sensibly think and discuss this issue without reference to some status quo scenario baseline.

  76. comment number 76 by: SteveinCH

    Brooks,

    Let me make a suggestion for the future. I’ll avoid replying to you and you do likewise.

    Good bye

  77. comment number 77 by: Brooks / Gordon

    Steve,

    You can choose to do whatever you want, and so can I. This is a public forum, discussing important public policy. If you say something that I think might be mistaken and might mislead some reader, I may choose to point out your apparent error and ask if I’m missing some reason why what you have said (or seem to have said) is valid.

    You can choose to ignore that inquiry/challenge/refutation if you wish.

    An alternative would be for you to discuss/debate in good faith, giving a reasonable degree of thought to what I’m saying and to what you are planning to say, responding substantively to questions/points I’ve made regarding your assertion, acknowledging if/when you just can’t think of any substantive answer to my question/point challenging your assertion yet you (for whatever reason) want to cling unquestioningly to your assertion, or acknowledging that your lack of a substantive, sensible answer means that you no longer hold that assertion or at that point have some doubt.

    My guess is that you’ll often take the course of insisting on the validity of your point, perhaps including something that some reader might mistakenly think is a direct, substantive, logical response to my point/question, and absurdly claim that I’m too unreasonable to engage in discussion with, all as an excuse to avoid a fundamental challenge to your assertion that you don’t feel able to address, while also avoiding an admission of error and/or avoiding an appropriate shift in position in light of the challenge you can’t refute or even really address substantively. I guess we’ll see.

    In this case (this thread) you’ve been pushing a nonsensical notion (from which you seemed to have pulled back at one point, then reverted back to), while never responding to my repeated question/request re: how people can be sensibly consider and discuss the issue without using some status quo scenario baseline as a reference point. Your lack of a substantive response is a obstacle you brought to this discussion, not something unreasonable on my part. In fairness to you, it’s hard to come up with an explanation for how something ridiculous can make sense, but if you can’t you should acknowledge that inability and consider and respond to what that inability implies re: the validity/invalidity of your point. I’ve explained why implicit reference to such a baseline is indispensable, and I’ve asked you to show me how it isn’t indispensable, and you haven’t, presumably because you can’t, yet apparently you don’t want to just admit that, although it can be problematic, it’s nevertheless indispensable. Heck, you won’t even clarify what your assertion is at this point — the one you started with, that you pulled back from at some point, or something else. You have really come across as someone with a complaint who is engaging in silly hyperbole along the lines of throwing out the baby with the bathwater, except it’s even worse than that, since a sensible discussion of the issue is nearly impossible (or at least made much, much more difficult and hard for people to relate to) if this baseline “baby” were thrown out.

    It’s not at all surprising that you wouldn’t respond to my tax policy question (in my 12:17pm comment), just as you haven’t responded substantively to other versions of that question/request on this thread.

  78. comment number 78 by: Steveinch

    Bye Brooks

  79. comment number 79 by: Brooks / Gordon

    Example of how useless AND misleading a proposed fiscal plan is when it avoids using any baseline for spending as a point of reference http://www.cato-at-liberty.org/its-simple-to-balance-the-budget-with-modest-spending-restraint-2/

    First of all, note that he does use a current policy baseline…for revenues. That’s what he means when he says “no tax increase”.

    As for his spending plan (whether or not it’s something he’s actually advocating or just something he’s saying would be much better than our current course — implicitly per some baseline), it is utterly meaningless. It can only beg the question: soooo, what does it mean in terms of changes in policy? How — and how much — does this spending path diverge from a scenario in which we keep current policies, and what policy changes underlie that change in spending path, and who does that affect how much in what way and on what basis? And all of that brings us back to the idea he ridicules in another post to which he links http://danieljmitchell.wordpress.com/2012/01/31/new-congressional-budget-office-numbers-once-again-show-that-modest-spending-restraint-would-eliminate-red-ink/, the concept of a baseline, as if a current policy baseline (which he felt was fine to use for revenues) were meaningless rather than representing a path and an associated set of policies we’d be changing from, including some sacrifices for some people of some magnitude vs. current policies (and/or expectations) to which people can relate.

    Such silliness. Of course, Dan Mitchell is paid to put forth such silliness, and of the misleading sort (as are other professional hyperpartisans of other ideologies), as something like this almost inherently is, devoid of perspective as it is, with it’s misleading implication that no one is worse off by anything that anyone could call a “cut” because, after all, spending is going up and not down, right? It’s an absurd pretense of simple-mindedness on his part, and simply simple-mindedness on those who buy it.