Statement by Dean Baker on the Final Meeting of The President's Fiscal Commission
For Immediate Release: December 3, 2010
Contact: Alan Barber, (571) 306-2526
Washington, D.C.- Dean Baker, Co-Director of the Center for Economic and Policy Research (CEPR) released the following statement on the final vote of the President's deficit commission:
"With the failure of the President Obama’s fiscal commission to issue a report and the release of November’s abysmal jobs data, maybe the country can now get away from its game-playing with imaginary budget numbers for 2035 and focus again on the economic disaster that confronts us.
"This commission was a silly distraction that was intended to appease powerful interest groups. The country has a large deficit today because the collapse of the housing bubble wrecked the economy. This is simple and obvious to everyone familiar with the dynamics of the budget and the economy. If the unemployment rate were at its pre-recession level of 4.5 percent, we would have, at most, a modest deficit.
"Furthermore, the story of out of control government spending is entirely an invention of people with an agenda to pursue. In 1980, non-interest spending was 19.8 percent of GDP. The Congressional Budget Office projects that it will rise to 21.1 percent of GDP in 2020 under President Obama’s budget. An increase in spending of 1.3 percentage points of GDP over 40 years hardly qualifies as out of control.
"Much of any additional revenue needed can be obtained by a tax on Wall Street financial speculation. Remarkably, the commission’s co-director’s apparently never considered this obvious source of revenue.
"The long-term horror stories of exploding deficits are entirely the result of a broken health care system, which is again an indisputable fact. Currently, per person health care costs in the United States are more than twice the average as in the countries with longer life expectancies than the United States. The projections show per person costs in the United States rising to three and four times the average in other countries.
"If health care costs follow this trajectory then it will have a devastating impact on the economy. It will also have a devastating impact on the budget since we pay for more than half of our health care through the public sector.
"Honest people would talk about this as a problem of the health care system and discuss ways to fix health care. The commission’s co-directors instead tried to hide this health care cost problem as a budget problem.
"The country does not have time for this sort of nonsense. In the longer term we have to focus on ways to fix the health care system. More immediately we need to get the economy moving again and get people back to work. With the end of this commission, maybe Congress, the President, and the media can again focus on the country’s real problems."