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Yes, it's progressive to cut wasteful goverment spending

Various libertarians say that a taxpayer receipt would lead taxpayers to want to reduce spending. I think the likely effect on taxpayers is that a receipt will change nothing, but I hope I'm wrong on this, and the libertarians are right. In particular, I hope the sums being spent on Medicaid, Medicare and defense will all raise some eyebrows. Which is rather the point. After all, the idea comes from Third Way's deficit-reduction package.

Libertarians shouldn't act so surprised that a center-left think tank is proposing something that might spur people to cut government spending. Both the Obama and Clinton administrations went to enormous trouble to develop health-care proposals that would pay for themselves and cut both the government's and the system's overall rate of spending. We can argue over whether the proposals will (or, in Clinton's case, would've) worked, but there's no doubt that the Obama administration fought for the excise tax on high-value health-care insurance and the Independent Payment Advisory Board because they think the proposals will work. By contrast, the Bush administration added a prescription drug benefit to Medicare and did nothing at all to pay for it.

The reality is that Democrats have spent years trying to cut spending in the health-care sector, and when they think they can get away with it, in the defense sector, too. That's partially because there's an authentic concern about deficits among the sort of center-left economists who staff Democratic presidential administrations, but it's also because people who think the government underinvests in important priorities such as early childhood education realize that's unlikely to change if health-care spending keeps growing as a percentage of the federal budget. I wrote about this back in June 2009:

Researchers have studied the various forces that decide whether a person will die early of disease: They call them "the determinants of health." In a 2002 paper for the journal Health Affairs, Michael McGinnis, Pamela Williams-Russo and James Knickman conclude that the breakdown goes something like this: "genetic predispositions, about 30 percent; social circumstances, 15 percent; environmental exposures, 5 percent; behavioral patterns, 40 percent; and shortfalls in medical care, 10 percent."

If medical care has such a minor impact on a person's longevity, why are we spending so much time and energy reforming the industry? The answer goes back to the money committees. As Office of Management and Budget Director Peter Orszag has said, "Health care is the key to our fiscal future." Without reform, government health spending alone will reach 37 percent of gross domestic product by 2050. When you hear folks fret over the looming entitlement crisis, it is really the health-care spending crisis that is obsessing them. ... The purpose of health reform, in other words, is to pay for health care -- not to improve the health of the population. Paying for care and improving health are, to be sure, both noble goals. The problem is that they have not settled into a peaceful coexistence. Rather, the spending conversation has consumed the health conversation. [...]

In early April, the Robert Wood Johnson Foundation released a 111-page report titled "Beyond Health Care," which concluded that health insurance does not equal health. "College graduates," it notes, "can expect to live at least five years longer than Americans who have not completed high school. Poor Americans are more than three times as likely as Americans with upper-middle-class incomes to suffer physical limitations from a chronic illness. Upper-middle-class Americans can expect to live more than six years longer than poor Americans. People with middle incomes are less healthy and can expect to live shorter lives than those with higher incomes -- even when they are insured."

Our health is not determined by what happens inside a hospital ward or a doctor's office. It is determined, as the Robert Wood Johnson report puts it, by "where people live, learn, work and play." We are making health decisions when we choose whether to walk or drive to work, when we fill our bags at the supermarket, when we enroll our children in early-childhood education programs. None of these is specifically a "health care" moment, but in the aggregate, they add up to the state of being we call "health." Or, increasingly, to the state of being we call "sick." There are ways to spend public dollars such that the scale tips toward "health" and away from "sick." But the ever-increasing portion of the budget we direct toward medical spending is squeezing them out.

By Ezra Klein  | October 1, 2010; 6:09 PM ET
Categories:  Budget  
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Next: Reconciliation

Comments

Oddly enough, a couple of redditors (www.reddit.com) apparently put together a 'taxpayer receipt' style website, 'What We Pay For' (www.whatwepayfor.com), just the other day. An estimated receipt is generated on the basis of income and filing status for that taxpayer's contribution to the cost of the Federal government, item by item, based on data from the United States Office of Management and Budget. There are overviews available by function and organization, as well as 134 pages of distinct items.

Thus, a single person earning $40,000, for instance, can track their Federal contribution, from the $1198.02 they pay into the 'Federal Old-age and Survivors Insurance Trust Fund' to the single penny that they contribute to 'Miscellaneous Trust Funds' on the State Department's behalf. (Despite appearances, not all of the money disappears into trust funds.)

The system breaks down for programs that would be costing them less that a penny.

Posted by: sleepy_commentator | October 1, 2010 9:08 PM | Report abuse

So if we really wanted to increase average health, add to average longevity, *and* decrease medical spending, we should look at the most common causes of death: heart disease, cancer, high blood pressure and stroke, chronic lung disease, diabetes, and alzeimer's.

Together, these account for 65% of US deaths according to the 2007 CDC report.

We should discourage tobacco and junk food.
We should promote healthy diet and exercise.
We should prioritize medical research for preventing and treating those diseases.
We should enforce pollution regulations.
We should invest in clean power and transportation technology.
We should subsidize education.

That's the real way to bend the curve of skyrocketing medical costs.

Posted by: billkarwin | October 1, 2010 9:33 PM | Report abuse

"It is determined, as the Robert Wood Johnson report puts it, by "where people live, learn, work and play."

According to the journal of Health Affairs report cited, it is determined mostly by who your parents are and what you eat, and very little by how much they spend on medical care....

"The purpose of health reform, in other words, is to pay for health care -- not to improve the health of the population."

The purpose of health reform is to pay more and more money for more and more people to obtain something that we know won't make any difference?

And we are doing this, why?????


Posted by: bgmma50 | October 1, 2010 10:33 PM | Report abuse

I don't object to the notion, but looking at the "receipt" the numbers don't seem right and they are presented in a misleading way. For example, the FBI budget is about $8B and the National Parks budget about $2B, yet Parks shows up much higher. Even higher than the interstate highway system. Then much of the military budget doesn't seem to be there since even after adding up all the separate pieces of it that are shown it only totals 10% of hte budget, yet military is actually almost half the budget. Don't believe it. But in any case, from Veteran's benefits down, those items are each about 1% or much less of the total.

Since most people are "innumerate", it would be better to show the actual percentages instead of the actual amounts, if you want them to understand the real impact.

Posted by: willNeuhauser | October 2, 2010 12:17 AM | Report abuse

I think this is more or less right. You can't persuade people to pay higher taxes if they think you are wasting money. A lot of the problems Obama has had stems from "A crisis being a terrible thing to waste" perception that they created early on. If they could have triangulated a little, e.g. by making the UAW take pay and benefit cuts in return for the bailouts, they'd be in better shape now.

Posted by: MrDo64 | October 2, 2010 2:02 AM | Report abuse

Right-libertarians have a quasi-religious belief that cutting spending and shrinking the state is an end in itself--that it increases "freedom". This belief is asinine but useful; it means that even when it is empirically demonstrated that the state is best at providing some particular public good they can simply dismiss the evidence as irrelevant.

But this stance also leaves them with an ideological need to think the left believe the opposite. They've convinced themselves that progressives are "statists" who think that expanding the state is an end in itself. You would think that exposure to any actual real life progressive would disabuse them of this notion. Maybe most right-libertarians just don't know any?

Posted by: Modicum | October 2, 2010 5:59 PM | Report abuse

--*There are ways to spend public dollars such that the scale tips toward "health" and away from "sick." But the ever-increasing portion of the budget we direct toward medical spending is squeezing them out.*--

That's the eternal collectivist's lament, delusional (there is no such thing as a "public dollar"), wringing its hands over its own powerlessness.

There is only so much that people will let another steal before they get serious about preventing or ameliorating the next theft.

There isn't enough money in the world to throw at even half the crack brained schemes that crack brained do-gooders want to spend other people's money on.

I think, that if do-gooders really want to have a tremendous influence on the choices that people make, they should start with themselves, and see if they can manage to stop meddling in other people's affairs. Really, what better way to remake the world? And you do it by minding your own dim business.

Posted by: msoja | October 2, 2010 7:01 PM | Report abuse

--*We should subsidize education.*--

LOL. Public school grad, right?

Posted by: msoja | October 2, 2010 9:14 PM | Report abuse

"Right-libertarians have a quasi-religious belief that cutting spending and shrinking the state is an end in itself--that it increases "freedom". This belief is asinine but useful;"

Shrinking the state almost always means people are more free to live their lives as they see fit. How does this not increase freedom?

Are you one of those types who insist a person can't really be free unless others are *forced* to cater to his every need and want?

Posted by: justin84 | October 3, 2010 3:31 PM | Report abuse

" it means that even when it is empirically demonstrated that the state is best at providing some particular public good they can simply dismiss the evidence as irrelevant."

Any specific examples you might wish to discuss?

Posted by: justin84 | October 3, 2010 3:36 PM | Report abuse

"The purpose of health reform is to pay more and more money for more and more people to obtain something that we know won't make any difference?

And we are doing this, why?????"

bgmma50,

The only way we can prevent the government from spending 37 percent of GDP on health care in 2050 is for the government to spend more money on health care now. Duh!

Ironically, it seems possible that if access to health care services were sharply reduced, people might alter their behavior such that their overall health would improve. Tell people that no one else will be paying for their triple by pass, and they might well start eating more veggies and start exercising regularly.

As an aside, we can see similar unintended consequences with regards to driving:

http://www.csmonitor.com/Environment/Bright-Green/2008/0625/do-traffic-laws-cause-accidents

http://www.cbsnews.com/8301-501465_162-20017855-501465.html

Posted by: justin84 | October 3, 2010 3:49 PM | Report abuse

The big problem with programs that "pay for themselves" is that they still limit the ability to pay for what we already have. You can rob Peter to pay Paul but you still owe Peter.

Posted by: naples202 | October 4, 2010 9:39 AM | Report abuse

Justin84 wants examples of public good the state is best at providing. How about national defense? Or maybe that would be best provided by contractors like....Blackwater? Even if you believe that, show me the private defense provider with its own tanks and artillery, much less a navy or air force.
How about the court system? I guess we could go back to frontier justice, but isn't it better to have the rule of law? How exactly would private companies provide that, or even agree on how to provide it?
How about highways, air traffic control, things like that? Even if you think those should be totally controlled by state or local governments, they're still best provided by "the state", not individuals, or businesses, for profit or otherwise.

Posted by: shumanpk | October 4, 2010 10:44 AM | Report abuse

If the Democrats were serious about reducing healthcare cost why did they block every Republican admendment that would reduce cost such as tort reform and buying insurance accross state lines. Obamacare will be a big cost increase and has already started with much higher premium rates.

Posted by: hfarmer2 | October 4, 2010 11:53 AM | Report abuse

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