Deficits and Foolish People

Feb 1, 2010

If you are worried about the deficit, and think that Congress should start over on health care legislation it's because you are stupid. That's Ezra Klein's opinion anyway. health care first:

The administration's first year was premised on two very difficult, very counterintuitive and very important economic arguments. The first was that the deficit problem is a function of health-care spending. The second was that the government's role in a recession is to spend, and to spend hard. The rhetoric and policy of the past week were proof that Americans have not been convinced. "Our health-care problem is our deficit problem," Obama said in September. "Nothing else even comes close." He's right...That's why health-care reform was so important to former Congressional Budget Office director Peter Orszag, and why the administration pushed so hard for a deficit-improving bill that included an independent Medicare Commission empowered to control Medicare costs. But the effort was wasted, at least from a public relations perspective.

Klein is right that Obama is right, we must have health reform which controls costs. You know who else is right? The CMS, Scott Davis, NFIB, Time, the Minneapolis Star-Tribune, The Wall Street Journal, Robert Samuelson, Ken Thorpe, the Concord Coalition, Dr. Denis A. Cortese, Dr. Toby Cosgrove,Dr. Jeffrey Flier, Ralph Neas, Dr. John Kitzhaber, Robert Bixby, Jon Gruber, Christine Eibner, David Walker, Brian Klepper, David Kibbe, Robert Laszewski, Alain Enthoven, and David Cutler in saying that the current legislation does not achieve this goal. This isn't a public relations problem, this is a failure-to-fix problem.

Then comes this gem on the stimulus, or "Keynesian economics in practice":

Key to this whole theory is that the government should act "counter-cyclically": In good times, it should save and store, and in bad times, it should spend and borrow. The exact opposite holds true for businesses and individuals, which makes the whole project pretty unintuitive. Students in macroeconomics classes learn all this in the first week of September. After a year of trying to explain it to an economically distressed nation, however, Obama basically gave up.

You poor simple people, unable to even understand the first week of a basic economics course.  If you were only smarter you would grab a bucket, and stop worrying about things like employment. Why, oh why, won't you listen? Oh....

There is an enormous amount of idle productive capacity in the U.S. economy at present. There is thus a case, as liberal economists such as Paul Krugman keep urging, for further stimulus spending. The problem is that such spending is irresponsible unless coupled with a credible commitment to repay, after the economy recovers, the money borrowed to finance the spending. Not only is there no such commitment; at present the only realistic prospect is of staggering deficits stretching indefinitely into the future.

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