Budget Arithmetic: Can NPR Reporters Learn It?

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Tuesday, 16 November 2010 19:54

That's the question that listeners to All Things Considered must be asking after hearing Mara Liasson tell them:

"If you sit down with the numbers and look at what the government actually does and how it pays for it, it's obvious that there is no simple solution."

Actually, anyone who bothered to sit down and look at the numbers would see that there was not a big deficit problem by any realistic measure until the housing bubble collapsed. If NPR could find a reporter who could read a simple chart (to paraphrase Senator Simpson in one of his famous e-mails) they would quickly recognize that the debt to GDP ratio rose only modestly over the last business cycle, even with the huge increase in defense spending associated with the wars in Iraq and Afghanistan.

The real run-up in the deficits and the debt began in 2008. That's right folks, it was the collapse of the housing bubble (which NPR never talked about) that led to the big deficits. While NPR is telling its listeners that the deficits are a problem, the deficits are giving people jobs. If we either cut spending or raised taxes we would be pulling money out of the economy and throwing people out of work.

In this sense, people who want lower deficits in the current slump want more people to lose their jobs. This is the same as people who want fish to live out of water effectively want them to die. It is possible that people who push for lower deficits do not know that this would mean throwing people out of work, just like it is possible that some people don't know that fish cannot live out of water, but neither group of people should be working as a reporter for a serious news outlet.

The longer term deficit is also very simple. It is a problem of exploding health care costs. We currently spend more than twice as much per person for health care as the average for the countries that enjoy longer life expectancies than the United States. The long-term budget projections assume that this ratio will rise to three or four to one. If the United States spends four times as much per person on its health care as Germany, Canada and everyone else, then it will face enormous economic problems. One of these problems is a serious budget deficit, since more than half of health care in the United States is paid by the government.

However, honest people would talk about the problem of health care costs, since nothing about the situation is helped if the government saves money by just cutting back its spending without fixing the system. In that case we would just be left with a situation in which tens or perhaps hundreds of millions of people could not afford decent health care.

So contrary to what NPR told its listeners, there is a very simple solution: fix health care.