Daily Archives: October 20, 2013

Adam Green Explains What A Progressive Is

Adam Green of Progressive Change Campaign Committee, was on C-SPAN for about 45 minutes explaining what a Progressive is, what progressive priorities are right now, and how they decided whether or not a political candidate is a bold progressive. He answered a number of questions from viewers.

Green was refreshingly articulate on what my kind of progressivism is. In a survey after seeing the C-SPAN episode, I rated his performance as nearly perfect.

The only reason I did not rate his performance as perfect was his failure in a few instances to understand a viewer question well enough so that he could represent the progressive side as well as he might have.

Why Health Care Matters and the Current Debt Does Not

In October 2011, the St. Louis Federal Reserve Bank published the report Why Health Care Matters and the Current Debt Does Not.

 The overwhelming obstacle to a sustainable fiscal path for the United States, regardless of the size of the current debt, remains health-care spending.

In discussing a figure published in the report, the authors draw three key inferences, to wit:

  1. If growth in government spending on health care and Social Security is matched by growth in government revenue, the cost of servicing the debt, and moreover the debt itself, will largely stabilize as a percent of GDP from 2020 to 2030. In other words, the current level of the debt is not by itself an obstacle to fiscal sustainability.
  2. If, on the other hand, the government increases spending on health care and Social Security without raising additional revenue, the debt, and the cost of servicing the debt, will skyrocket toward unmanageable levels.
  3. As a share of GDP, outlays on Social Security are expected to largely stabilize by 2030. Hence, the overwhelming driver of increases in government spending is health care.

These points were often made by President Obama in justifying his drive at the beginning of his Presidency to focus on what came to be called The Affordable Care Act (ACA).  When people wondered why he focused on this, rather than the debt problem, his point was to remind people that reining in the cost of health care was THE way to solve the long term debt problem.

One point that President Obama did not make strongly enough is that the unrestrained rising cost of health care will overwhelm our economy no matter who pays for it.  Even if the government paid nothing toward the cost of health care and individual people and business bore the entire burden, the cost of health care would still overwhelm the economy.

Since the passage of ACA, President Obama seems to have forgotten the key message.  In all the cries about getting our fiscal house in order, the President needs to keep pointing out that the passage of the ACA is the first step to doing just that.  Attacking Social Security and Medicare is not part of the solution.  Repealing ACA rather than fixing it and improving it will be a giant leap away from fixing the long term debt problem.

The problem of the long term debt is not that the Government could not produce enough money to cover that debt.  The problem is that the economy could not produce enough goods and services to meet the needs of the costs of health care and meet all the other needs of the people of this country.  It does not make any difference what you use as the measuring stick (U.S. money as is now done or some other proxy measure), the productive capacity for making real goods and services is the ultimate limit on what can be done.

The Fed report mentioned here was the center of the previous post How to Talk About Debt and Deficits: Don’t Think of an Elephant*, however, I think its significance and the points it made were lost in the shuffle of that post.

Economist: There is no debt crisis

The Real News Network has the interview Economist: There is no debt crisis. Some of this is old news because the debt ceiling crisis is over for a while.  However, the comments about the U.S. debt are worth hearing again.

DESVARIEUX: But you do have those that say that long-term debt is not really in the interests of the country. I know, you know, you cannot compare the United States Treasury to the way a household operates, but at the same time, in the long term we shouldn’t really be accumulating more and more debt. What set of policies do you think would most effectively lower the nation’s debt?

EPSTEIN: Well, one really has to look at this more carefully and see that debt is not really the issue, because after all, debt is just one side of the balance sheet. There’s the liabilities. That’s the debt. But there’s also the assets that you get for the debt.

The big problem for the United States is not the amount of debt that it owes, but it’s the way that it’s been investing in social assets–in education, in infrastructure, in all the things that can make the economy develop properly. There hasn’t been enough investment in green technology and so forth. So we really should be focusing on the investments in the real economy, in the infrastructure and the education. And oftentimes those kinds of investments, they pay for themselves in terms of more and more revenue.

But as the economy grows, the amount of debt relative to the GNP goes down anyway. And I think most economists, including at the Congressional Budget Office and elsewhere, realize that this whole debt is a secondary issue.

So what is the issue? The issue, from the perspective of the Congress, financed by big billionaires, the right-wingers that are financed by big billionaires like the Koch brothers and others, their goal is to completely dismantle those aspects of the government that threaten them. And that includes threaten them with higher taxation, threaten them with environmental regulations, carbon taxes, etc. They want to paralyze the government so it’s not able to impose those kinds of things.

And this debt ceiling fight has gotten out of control. They can’t necessarily control the system, and it’s led to a very dangerous impasse.