What if there's no deficit problem?
What if theres no deficit problem?
By Jonathan Bernstein, Updated: March 15, 2013
Everyone who cares at all about budgets, deficits, and debts needs to look very carefully at the charts
Sarah Kliff walks us through today from the Economic Report of the President. The finding? Medicare may may no longer be a cost problem.
And if thats the case, theres really no deficit problem.
But what if health care costs are no longer rising faster than GDP? In fact, if health care costs follow whats been happening over the last several years, there will be no explosion at all and that would mean budget savings of about 2 percent of GDP a year in about twenty years. Thats enough to entirely wipe out the real threat of budget problems. Of course, we dont know whether this moderation will continue, but it very well might.
What this really means is that we need an immediate moratorium on grand bargain talk. We need a halt to any major reforms undertaken purely for budgetary reasons either the major cuts that Republicans have pushed for or the search for a deficit reduction deal exchanging spending cuts for new revenues that Barack Obama wants. It means the best replacement for sequestration is probably nothing, at least for now. And, most of all, it means continuing to implement the Affordable Care Act, especially those provisions that are intended to reduce costs.
Is it possible to move everyone off of their focus on budget deficits? Probably not. But surely, if the actual facts of the fiscal situation were what drives the conversation, that would be where everyone was headed.
http://www.washingtonpost.com/blogs/plum-line/wp/2013/03/15/what-if-theres-no-deficit-problem/