The spending freeze vs. health-care reform
In a post at the New York Times, Ross Douthat criticizes me for suggesting that the short-term discretionary freeze is meaningless from the perspective of deficits, while health-care reform is meaningful. Douthat's argument? That the freeze will save up to $250 billion in the next decade, while health-care reform would save $130 billion. The freeze is bigger!
Well, no. Health-care reform, as Ross notes, is projected to save up to $650 billion in the next decade. He says that's under a "rosy" scenario, but that's actually just under the CBO's estimation of the basic elements of the law. Is it rosy to think the law will work as advertised? Maybe, though the predictions could just as easily be underestimating the savings (bundling payments might work really well, for instance, or employers could respond to the excise tax slightly more aggressively than the Joint Committee on Taxation predicts). But in any case, it's no rosier than thinking Congress is going to abide by a spending freeze, which is not the sort of thing they've had much interest sticking to in the past.
Finally, the point here is long-term deficits are a function of health-care spending. The freeze is a shot at short-term deficits, which are not a problem. Don't believe me? Look at the graph of interest rates on Treasury bonds atop this post. If the short-term deficit were a problem, they would be going up. Instead, they remain uncommonly low.
The health-care reform bill is not a sufficient response to the long-term problem. But it's at least aimed at it, and it offers a plausible start on a solution. The spending freeze isn't aimed at the right problem and isn't a plausible beginning to any solution. It's an effort to do something that sounds like deficit reduction because the administration has been unable to persuade Congress to do things that sound less like deficit reduction, but have more potential to reduce the deficit.
It's the difference between someone who wants to lose weight skipping one meal and simply ceasing to keep snack food around the house. Neither, on their own, will be enough to achieve the goal. But one of them is a part of what will achieve the goal, and one of them isn't.
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