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The growth solution

I think Ross Douthat gets me slightly wrong here: The point of focusing on growth -- both growth of the economy and growth of the debt -- is that it gets you focusing on the right solutions. We don't have any policies that could move GDP growth from 2.5 to 4 percent over the next 10 years. But the second option I offered -- slowing the growth rate of health-care costs, which are primarily responsible for our rising deficits -- really can be done, if not easily.

One way to think about this is to consider the GOP's current position on reducing the deficit. On the one hand, they want to repeal not just the health-care reform bill in its totality, but its cost controls and Medicare reforms in particular. At the same time, they're offering vague promises of spending cuts at some point in the future.

Even if there were reason to think those spending cuts would materialize, this would still be an awful trade. Something like the Independent Payment Advisory Board really might slow the growth in Medicare's spending. A spending cut, by contrast, will just be wiped out by the growth rate of Medicare's spending. But since people don't think of this stuff in terms of growth, the relative value of different types of reforms aren't well understood.

By Ezra Klein  | October 22, 2010; 5:06 PM ET
Categories:  Health Reform  
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Next: Reconciliation

Comments

"We don't have any policies that could move GDP growth from 2.5 to 4 percent over the next 10 years."

Don't we? How would sufficiently large spending increases and/or tax cuts fail to do this?

Or do you just mean we don't have any policies acceptable to Washington conventional wisdom...?

Posted by: amileoj | October 22, 2010 5:32 PM | Report abuse

I'm guessing he means none that are in place.

Posted by: DDAWD | October 22, 2010 6:24 PM | Report abuse

Getting the economy to grow at a 4% rate right now is purely a matter of political will; an appropriate fiscal stimulus would do the trick. But that's only because there is a lot of unused capacity in the current economy which could be put to use. Once all the currently unused production capacity is put into use, the only way to continue to grow the economy at 4% per year would be to increase the capacity of the economy to produce goods and service by 4% per year, and we don't know how to do that.

Posted by: KennethAlmquist | October 23, 2010 1:35 AM | Report abuse

Change is Never easy. It takes 9 months to produce a child and then that child takes 18 years to become a woman or a man. It takes months for a seed to break open the ground and become a seedling and then years for it become a strong tree. But it takes only minutes to destroy something.

I am so glad that Pres. Obama has the strength and fortitude to bring the message home so clearly as to what is at stake in this election! More jobs overseas? No! -- Higher education costs? No! Rising health care costs, rising auto costs, rising home costs, and lower wages, NO! -- GOP always gives a no to raising the minimum wage, no to investing into clean renewable energy -- which would bring thousands of jobs to our economy. They (GOP) want to Cut spending, an yet they do not want to Invest in America and that brings on death and decay.

I for one was tired of GOP lies and misrepresentation. I was going to vote, but I was just plain tired of fighting. That is what they want for us to get tired. It took Pres. Roosevelt YEARS to dig us out of the ditch and they know it, but they will not (main stream media) educate the people about it! Well thank God for Pres. Obama's message. I am energized and fired up!

Posted by: wdsoulplane | October 23, 2010 12:59 PM | Report abuse

amileoj @ October 22, 2010 5:32 PM wrote "How would sufficiently large spending increases and/or tax cuts fail to do this?"

They never have. Didn't under Reagan and didn't under Bush. Under both we got severe recessions and financial scandals or collapses.

Posted by: AMviennaVA | October 23, 2010 1:12 PM | Report abuse

I've heard members of the GOP call for repeal and REPLACE. Sometimes, it makes more sense to tear down a house and build anew rather than to remodel. I would agree with doing that. I don't know of anyone who doesn't want the basics--portability, choices (across state lines), no one can be dropped, protection from previous condition, etc., but, the rest is a total mess and must be addressed carefully.

Posted by: coffic | October 25, 2010 8:25 AM | Report abuse

We need to come to grasp with living in a low-growth world. Even a "decent" growth rate of 3.5% implies that the American economy would be 22 times bigger in 2100 than it is today. There is simply no way that it can be this large. The physical limits of our planet are already pushing down on us, making it unlikely that we can more than double our current energy and material flows, and in some cases, even maintain them. A ten-fold increase in our GDP/energy and GDP/material ratio is a wild stretch.

We should be prepared for growth to be less than 2% on average for the next century.

Posted by: brickcha | October 25, 2010 11:06 PM | Report abuse

We need to come to grasp with living in a low-growth world. Even a "decent" growth rate of 3.5% implies that the American economy would be 22 times bigger in 2100 than it is today. There is simply no way that it can be this large. The physical limits of our planet are already pushing down on us, making it unlikely that we can more than double our current energy and material flows, and in some cases, even maintain them. A ten-fold increase in our GDP/energy and GDP/material ratio is a wild stretch.

We should be prepared for growth to be less than 2% on average for the next century.

Posted by: brickcha | October 25, 2010 11:09 PM | Report abuse

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