Hard Truths

| Thu Nov. 11, 2010 1:45 PM EST

I want to make a followup point to my post last night about the deficit commission. Mainly, that post said that if you're serious about the long-term deficit, you need to be serious about healthcare costs. That's pretty much the whole ballgame. The rest is fluff. Matt Steinglass comments:

Mr Drum writes for a liberal magazine. And here he is saying that the main thing we need to do in order to restrain growth in the deficit and in government spending, which will otherwise bankrupt us, is to cut the biggest government entitlement programme, Medicare....Shouldn't this be big news for our contrarian press? "Liberals Call for Cuts to Entitlements!" Aren't we amazed that supposedly big-government liberals want to slash the projected Medicare budget? What an example of responsible bipartisanship on their part!

And yet the press pays absolutely no attention to this. In general, liberals are given no credit whatsoever for acknowledging reality and calling for cuts in social-welfare entitlement programmes. So here's what I'm hoping. I'm hoping some of you read my initial comment about wanting to retweet what Kevin Drum wrote on this and thought, "Well obviously a liberal who writes for Mother Jones would be saying that in the long term massive budget deficits threaten our future, and the only way to seriously reduce that long-term deficit is to slash Medi...wait a minute." Just take that "wait a minute", and maybe give people some credit for coming to reality-based conclusions.

Actually, this is only half the story. It's true that I think we need to rein in spending on both Medicare and healthcare spending in general. Be amazed, conservatives! But there's a flip side to this: the American population is aging and medical care is getting more expensive. This is simply a fact, and it means that even if we slow the rate of healthcare inflation we're going to need more money for healthcare. You want Hard Truths? That's a hard truth. We need to rein in healthcare spending and we need to raise taxes to pay for the higher healthcare costs of an aging population. Anybody who's serious about addressing the long-term deficit needs to deal with this instead of indulging in fantasies.

But fantasies are largely what we get from the co-chairs' report. Nick Baumann takes a closer look at what kinds of cost cutting they recommend for Medicare and concludes that it's (a) politically unrealistic and (b) ineffective anyway:

This is seriously third-rail stuff. There's medical malpractice reform....strengthening the Independent Payment Advisory Board [which is] already under attack by Senate Republicans....Seniors' copays and deductibles would increase.

....After putting forth proposals that will irk trial lawyers, doctors, hospitals, and seniors, the co-chairs still aren't done — they also want to take on Big Pharma....The rest of the co-chairs' health care proposals include ticking off veterans, whose copays would increase; medical colleges, who would receive less in federal subsidies; and states, which would receive less money to cover long-term care for poor seniors. In short, the chairs' health care proposals will force nearly every significant interest group in America to take a haircut.

The kicker is that, under the co-chairs' proposal, a large part of the health care "savings" would be immediately spent [on the "doc fix"]....This is the ultimate proof of Kevin's point: even though our main budget problem is that health care costs too much, the deficit commission wants to spend most of its controversial health care "savings" on making sure that doctors keep getting paid at a level that satisfies the American Medical Association. It's more evidence of just how difficult the long-term deficit problem really is.

In other words, they've offered up a plan that's almost impossible to envision passing, and even at that it would accomplish barely anything. This deserves far more serious attention from centrist deficit hawks, and it deserves attention on both sides of the deficit equation. On the cost control side it means thinking bigger, and on the revenue side it means acknowledging that taxes will have to go up regardless. Liberals will naturally resist a lot of the cost cutting proposals, but at least they acknowledge that cost cutting has to happen. That's a start. But conservatives? I don't have to tell you their position. This makes reducing the long-term deficit impossible. Dealing with healthcare spending can only be done if both sides have political cover, and that means both sides have to make those famous Tough Choices we hear so much about. That will only happen when conservatives start acknowledging demographic reality.