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Posted at 10:45 AM ET, 01/17/2011

It's not (just) about the deficit

By Ezra Klein

"My hope is that the centerpiece of the [State of the Union] will be a comprehensive plan for dealing with the long-run budget deficit," writes Christina Romer. Not me. My hope is that the State of the Union will be a comprehensive plan for economic growth. That will include deficit reduction, of course, because massive deficits threaten long-term growth. But it also means investment in both our physical and intellectual infrastructure, and beginning a conversation over tax reform, and maybe considering something significant on education. (And, for the record, growth is the single best way to lower deficits.)

As it happens, Romer agrees with all that. Her piece mentions the importance of infrastructure investment and tax reform and education. But it's all framed in terms of deficit reduction. It shouldn't be. That's not the goal. We could, for instance, shrink the deficit by defunding America's higher-education system, but virtually no one thinks that's a good idea (though a number of states are doing it out of necessity) -- a less-educated workforce means less economic growth, less innovation, lower standards of living. Those are the goals. And so they're what the State of the Union should be about. It's easier to avoid wrong turns when you're clear about where you're trying to go.

By Ezra Klein  | January 17, 2011; 10:45 AM ET
Categories:  Budget  
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Comments

--*it also means investment in both our physical and intellectual infrastructure, and beginning a conversation over tax reform, and maybe considering something significant on education*--

If you're talking about government "investment" (which is actually politicized redistribution of stolen goods), then you are already on the wrong track and doomed to failure.

Your "something significant on education" is equally hopeless, unless you mean getting government OUT of the education biz.

Posted by: msoja | January 17, 2011 10:56 AM | Report abuse

--*it also means investment in both our physical and intellectual infrastructure, and beginning a conversation over tax reform, and maybe considering something significant on education*--

If you're talking about government "investment" (which is actually politicized redistribution of stolen goods), then you are already on the wrong track and doomed to failure.

Your "something significant on education" is equally hopeless, unless you mean getting government OUT of the education biz.

Posted by: msoja | January 17, 2011 10:58 AM | Report abuse

The Movable Type installation is full of bugs.

Errors on "Submit". And the "SEARCH THIS BLOG" form works only sporadically for as long as I've been trying to use it.

Posted by: msoja | January 17, 2011 11:02 AM | Report abuse

And we could reverse the deficit by fixing health-care, i.e., stop paying two and three times what other countries pay for better health.

Unfortunately Romer probably reflects Obama's thinking, and the plutocratic economic orthodoxy that he has installed around him. What need is there for economic growth now that they've bailed out the banks and bonus-babies? Everybody they know has a job, or doesn't need one.

Posted by: jtmiller42 | January 17, 2011 11:18 AM | Report abuse

--*stop paying two and three times what other countries pay for better health.*--

Yeah, and if we want pigs to fly, well, we should just make them fly.

The cost of health care in the U.S. is the unavoidable clash of what's left of the free market in health care trying to worm its way around all the government disincentives piled on top of one another the last hundred years. Obama's DeathCare is another pile of it and will result in another huge leap in total costs.

Posted by: msoja | January 17, 2011 11:24 AM | Report abuse

Sadly, MSOJA is not the only one who wants to get government out of education, allowing for even further disparities in opportunity. Governor Rick Scott of Florida doesn't even need the pretext of disastrous state finances to defund all education, AND siphon off research grant funds (government and private) from the universities he is starving to death. Apparently the way to get a world-class university is to split half its income with corporations, particularly those with ties to health care. No conflict of interest there.

Posted by: RavenLen | January 17, 2011 11:32 AM | Report abuse

MSOJA: So why do other countries pay less with much greater govt. control, i.e., mostly single-payer?

Costs are too high because they are too high. We are paying too much. It's just that simple.

Posted by: jtmiller42 | January 17, 2011 11:43 AM | Report abuse

I'll save you the suspense - the recent hirings made by the Obama administration signals that they will attempt to play on the Right's playing field and win there - all the rhetoric will be about deficit - instead of attempting to craft a unique and alternative narrative that they could then sell to Democrats in Congress and the American people.

Posted by: y2josh_us | January 17, 2011 11:47 AM | Report abuse

Exactly right. Anytime the discussion begins with "deficit reduction" Republicans have won. The GOP strategy for 30 years has been to undermine popular Democratic programs like SocSec and Medicare by CREATING DEFICITS. Deficits are a conservative political strategy.

Yet year after year Democrats walk into the trap of earnestly discussing deficit reduction. It's ludicrous.

It's like watching Charlie Brown try to kick the football out of Lucy's hold every year.

Posted by: stevedwight | January 17, 2011 11:48 AM | Report abuse

--*So why do other countries pay less with much greater govt. control*--

There are numerous factors, all of which boil down to: They aren't us. These "other countries" are smaller, more homogeneous, rather more inured to the lot of their welfare systems. Also, their health care isn't particularly "better". Longer lives, for instance, may owe more to lifestyle than to any particular health care system. Further, costs in much of the world have long been subsidized by American innovation and endeavor. And, even further, the ever seemingly popular European welfare mentality results in a lower standard of living, across the board. You, too, can live like a Frenchman if you shrink your house by a third, throw out your clothes drier, turn the thermostat way down in the winter, and dispense with common toiletries.

And even if you ignore (or disagree with) all that, there is no button one can push to turn us into them. If you want to cut 50% out of the country's health care expenditures, who are you going to take that money from, and what do you think their reaction is going to be?

Posted by: msoja | January 17, 2011 1:08 PM | Report abuse

--*get government out of education, allowing for even further disparities in opportunity*--

The public schools are furthering and fostering the disparities you decry. And worse.

There is no point in pretending to teach those who refuse to be taught. It's wasteful on every level. It ruins the environment for those who do wish to learn.

Public schools are cess pits of degeneracy, and are otherwise failing whole generations of students. The more government applies its heavy hand, the worse it gets. Property taxes across the country to pay for it all are ruining communities. It's time the insanity stopped.

Posted by: msoja | January 17, 2011 1:15 PM | Report abuse

--*Costs are too high because they are too high.*--

Costs are high because costs go up when demand is subsidized.

A corollary is that shortages occur when caps on prices are imposed.

The U.S. is very lucky; We're going to get both.

Posted by: msoja | January 17, 2011 1:24 PM | Report abuse

What a damn joke. Obama does not have a plan for economic growth. If he did, he would instantly repeal his massive increase in Medicaid spending.

Posted by: krazen1211 | January 17, 2011 1:33 PM | Report abuse

"Exactly right. Anytime the discussion begins with "deficit reduction" Republicans have won. The GOP strategy for 30 years has been to undermine popular Democratic programs like SocSec and Medicare by CREATING DEFICITS. Deficits are a conservative political strategy. "


If Lyndon Johnson had been honest about the cost of his Medicare program, it would never ever have existed.

It, of course, has added hundreds of billions of dollars in government spending over the last 45 years.

Posted by: krazen1211 | January 17, 2011 1:36 PM | Report abuse

Amen. Fantastic post. So much of the economic debate in this country is growth for growth's sake and defecit reduction for its own sake. People forget that this is supposed to be about making life better.
Also, I really enjoyed watching you on Charlie Rose the other week with Jon Meacham. The contrast between Meacham, who was reacting to the Arizona shooting exactly as you'd expect a TV journalist to react (namely by implying larger meaning based only on the scope of the publicity) and your very rational reaction that there might not be a need for a new law based on this, was very interesting. I sometimes wonder if a feature of Internet based news is that there are more voices and more voices increases the possiblity that the rational actor who tells everyone to chill out, gets heard.

Posted by: phillycomment | January 17, 2011 2:00 PM | Report abuse

Obama has no credibility on the deficit. When he took office, the deficit was only $1.2 trillion. In two years, he's increased it all the way up to $1.4 trillion, a whopping 17%.

Posted by: suehall | January 17, 2011 2:28 PM | Report abuse

Ezra, I'm sorry is there another Christina Romer somewhere? The reason I ask is that the one I recall had argued that the 800 billion dollar stimulus WASN'T ENOUGH! (that couldn't have added to the deficit could it?)

I guess this is just another case of the traditional definition of an economist being someone who can say "on the one hand, but then on the other hand", over and over again.

Posted by: johnmarshall5446 | January 17, 2011 2:37 PM | Report abuse

MSOJA: Those factors may be relevant. But there's no question the biggest factor is that our providers are paid more. And no serious question that they're not worth it. However you value the benefits you think we're getting they don't justify twice and three times the cost.

Which goes to your second point. And you're quite correct that there is no magic button to fix this right now. Doctors and Pharma have bought more than enough lobbying clout to stymie effective action on costs at this point.

But that doesn't mean we shouldn't face up to the fact that we're being ripped off.

One hopeful note (to me): Latest poll says 62% of the country approves of the ACA or wants something stronger.

Posted by: jtmiller42 | January 17, 2011 3:54 PM | Report abuse

Thank you for the voice of sanity. The mania for not paying for anything in this country is overwhelming and stupid. Let's face it--if cheapness were the first priority, the cheapest services? Are. none. Do we want no roads, no libraries, no support services for veterans? Then we have Somalia. Businesses accept debt and spending as the price of growing and getting anything done. We need to mature our thinking about the public sector.

Posted by: ciocia1 | January 17, 2011 4:33 PM | Report abuse

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance the government's reckless fiscal policies." - Barack Obama

Posted by: krazen1211 | January 17, 2011 5:26 PM | Report abuse

--*Doctors and Pharma have bought more than enough lobbying*--

You have everything backwards. Docs & Pharm have lobbyists because that's their only defense against activist government bent on telling them how to run their businesses, how much they can earn, who they have to treat, even where they can work, etc., etc., etc. The private market has been increasingly backed into a corner, and now they're being pinned in ever more tightly. Insurance companies are "private" in name only. Big Pharma is beholden to the career bureaucrats at the FDA and every politician with an eye to wringing a vote out of a useful idiot.

And all the Hope & Change that was promised was just another load of grease on the skids to more of the same, only now with rows upon rows of pasty faced commissars ready to deal out whatever political favors they feel like dealing out after the last crumbs are swept into their big socialist dustbin.

Remember, you cheered it on, largely because you didn't have a clue and picked the big happy face that someone painted for you. You haven't said a single thing that was correct on this dumb comment page, but you want to push all your fellows into a one size fits all straitjacket of government dispensed poison. It's the new American way, and it's a disgrace.

Posted by: msoja | January 17, 2011 8:08 PM | Report abuse

IF IT WERE NOT FOR THE FACT THAT REPUBLICANS ARE CRYING POOR, AT EVERY MENTION OF SPENDING THE PUBLICS TAX DOLLARS FOR THE PUBLIC'S BENEFIT AND WELFARE, INCLUDING INFRASTRUCTURE HERE IN THE U.S., WOULD THE PUBLIC BE INTERESTED IN THE DEFICIT AT ALL? IF THEIR MONEY WAS BEING SPENT ON THEM, AND THEIR IMMEDIATE AND PRESSING NEEDS WERE BEING MET WITH THEIR TAX DOLLARS, WOULD THEY EVER TURN AN EAR OF INTEREST TO THE ISSUE OF DEFICIT?

COMMONSENSEFORCOMMONGOOD.COM

Posted by: commonsense4commongoodcom | January 18, 2011 12:26 AM | Report abuse

Yes, raise the educational level of USA. How is bringing in 120,000 LEGAL immigrants per MONTH who are mostly unskilled or at best semi-skilled helping?

The demand for such labor is near zero today and will be going forward -given 15 million unemployed already.

Think Macro not just micro.

Posted by: wooldridge1 | January 18, 2011 8:39 AM | Report abuse

If people would click through to read Romer's piece I think they'd see Ezra picking a fight where none exists in order to make a point about growth. Christina Romer's piece is chock-a-block full of points about growth and using the issue of long term deficit reduction as an angle to talk about the priorities of government long term.

Posted by: jamusco | January 18, 2011 12:38 PM | Report abuse

phillycomment wrote:

" I sometimes wonder if a feature of Internet based news is that there are more voices and more voices increases the possiblity that the rational actor who tells everyone to chill out, gets heard."

msoja apparently wants to be the exception that proves the rule, and will have the makings of a case just as soon as there's evidence anyone is actually hearing him/her

Posted by: gjudd | January 18, 2011 2:26 PM | Report abuse

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