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You gotta love Krugman laying it out like it is.
"But I think it’s unfair to George Bush the elder, because it makes the savings and loan rescue seem like a discretionary decision that Reagan the pure wouldn’t have made.
It wasn’t. Thrift deposits were insured; the federal government had an obligation to make them whole.
The Reagan administration tried to shirk that obligation; rather than pay up in the early 80s, when paying off the depositors of failed S&Ls might have cost something like $15 billion, the Reaganites decided to play double or nothing — deregulating S&Ls in the hope that the magic of the marketplace would let them invest their way out of their problems. Instead, there was an epidemic of moral hazard, including a fair bit of plain old looting, which caused the problem to balloon in size.
What the elder Bush did was recognize reality. That wasn’t weakness — it was just good government, or at any rate better government than his predecessor had provided."
And this
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A thought after reading Tyler Cowen’s latest: the issue of health care economics seems to make libertarians act like robots on bad science-fiction TV shows. You know, the ones that, faced with information that doesn’t fit with the assumptions in their programming, say “Does not compute! Does not compute!” and collapse.
The basic facts on health care are clear: government-run insurance is more efficient than private insurance; more generally, the United States, with the most privatized health care in the advanced world, has a wildly inefficient system that costs far more than anyone else’s, yet delivers no better and arguably worse medical care than European systems.
But all of this runs so counter to libertarian assumptions about the superiority of individual choice and market mechanisms that they just can’t take it on board. So we have bald assertions that Europeans receive much less care than Americans, even though the data clearly show that it just ain’t so. And we have assertions that mean-testing Medicare is the answer to our problems.
I could say a lot more about this, but maybe the key point is this: we don’t have a Medicare crisis, we have a health care crisis. Private insurance is collapsing as we speak. Means-testing Medicare, aside from many other problems, would just push older Americans into a failing private system — a system that, by the way, has never worked for the elderly, for whom adverse selection issues are especially acute.
If we’re serious about controlling Medicare costs, Peter Orszag and his staff at CBO have had a lot to say about this. Means-testing isn’t the answer; setting priorities for care is.
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