Protectionists Warn Over National Debt

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Dean Baker
Beat the Press, August 24, 2008

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This could have been the headline of the Washington Post article on a forum about the long-term debt problems facing the United States. The article reported on a forum surrounding the release of IOUSA, a documentary on the debt problems facing the country.

While the film and several participants in the forum try to argue that the United States budget is facing an enormous gulf in coming decades, the overwhelming majority of the projected shortfall comes from projections of continually increasing health care costs in the United States. Since roughly half of health care expenses are paid by the government through programs like Medicare and Medicaid, these projections imply enormous budget deficits in future years.

However, the health care cost projections also imply that the enormous gap between the cost of health care in the United States and the cost in countries like Germany, Canada, and France will explode to tens of thousands of dollars per person per year. Unless the United States hugely increases the protectionist barriers for our health care system, it will be impossible for it to sustain these sorts of price differences. People will take advantage of more efficient health care systems elsewhere in the world, unless we fix the system in the United States.


Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. He also has a blog on the American Prospect, "Beat the Press," where he discusses the media's coverage of economic issues.