Fiscal Responsibility, part II

I don’t understand how Conor can say this with a straight face:

You’d think after rightly complaining about the Bush Administration’s unprecedented irresponsibility for eight years, leading Democrats would understand that we’re trapped in a terrible hole, but instead they just keep digging, figuring that while they’re in power, why not lobby for a massive new health care entitlement, game its scoring to make its cost seem more palatable to voters, and pay for it by pretending that it won’t cost any more than what we currently spend. […]

Republicans may be full of it when they promise that if returned to power they’ll cut spending and pay down the debt, but at least they recognize the need for those measures, and that they’re an appropriate priority.

The reflexive, evidence-free dismissal of the CBO scores (High Broderism at its finest) at the beginning of Conor’s post is enough to convince me that he isn’t actually interested in hearing liberal ideas for bringing the United States back on a firm fiscal footing. That said, it’s worth reminding Conor that in the three decades since the Republican Party became the dominant political coalition in American politics, the deficit has been reduced exactly once, and that was during Bill Clinton’s presidency. All three Republican presidents of the “conservative era” – Ronald Reagan, George H.W. Bush, and George W. Bush – were responsible for significant increases in the deficit, and in the case of the latter, a tremendous increase in the overall national debt.

Here’s a graph that illustrates the point (I found the data here):

Fiscal Responsibility, part II

Moreover, it’s not even really accurate to say that Republicans recognize the need to reduce spending, and Democrats don’t (by implication). The Obama administration’s central conceit on health care reform has been that absent systemic change in the way we deliver and pay for health care, the United States is facing fiscal ruin. As such, the only real requirement the administration has for health care reform – as per Peter Orszag – is that it “bends the curve.” We’ve heard more about cost controls and deficit reduction from this Democratic administration than we did in eight years of the previous Republican one. Indeed, if there’s been anything notable about nearly every major Democratic policy proposal we’ve seen this year, it’s that both congressional Democrats and the White House have been adamant that they pay for themselves at least in part.

I hate to be super partisan about this, but it’s one of those situations where you can’t actually avoid it. The simple fact is that while neither party is perfect, Democrats at least have something of a claim to the mantle of “fiscally responsible.” President Clinton was the first president in a generation to balance the budget, and President Obama’s economic team shows an obvious concern for the long-term fiscal viability of the United States. They’re just also concerned about not letting the United States fall into economic ruin, hence the various stimulus-related deficits.

On that note, I want to make one last point: when considering Republican and Democratic deficits, you can’t make a one-to-one comparison without also thinking about the actual content of spending. Or, to borrow from a post I wrote a long time ago at my own blog:

Spending trillions of dollars financing a massive reinvention of our transportation infrastructure – an unquestionable public good – is a lot different then spending trillions on say, video games. Which, while awesome, aren’t exactly a wise investment (I’m looking at you Atari Lynx and Sega Game Gear). The real measure of fiscal responsibility isn’t deficit spending as much as it is the return on said spending. If President Obama’s spending puts the country on a sustainable fiscal footing in the long-term, even if it is significant, it will be far more “responsible” than President Bush’s comparatively smaller, but overall disastrous, spending.

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23 thoughts on “Fiscal Responsibility, part II

  1. I’m not sure it’s appropriate to consider the Clinton-era surplus without acknowledging that those surpluses came about when the GOP had control of Congress – this is doubly important when you consider that spending bills are Constitutionally mandated to be introduced in the House. As far as the deficit goes, the evidence suggests that over the last forty years or so, a Dem Prez + a GOP Congress is the best combo, followed by a GOP Prez + a Dem Congress, followed by unified Dem government, followed by unified GOP government. Whenever there is unified government, the numbers show that the party in charge spends like drunken sailors.

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    • Seems fair to me Mark.

      As for which is the party of fiscal responsibility I suspect that we’ll know in the next couple of years. The Republicans fumbled that ball hardcore so it’s in the Dem’s hands but it’s anyone’s guess as to whether Obama is actually going to try and make a play on it and tighten up the finances. After he’s done kicking healthcare around and after cap and trade is a rotting carcass on the Senate floor his next move may give us an idea of where things are headed.
      As a neolib I’m certainly hoping he tries. But I’m not holding my breath.

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    • Mark, you’re right. No one ever points out that the Dem/Dem spending and the Rep/Rep spending were both awful. I don’t even know if the experience of the late 1990’s can be duplicated by another Democratic president and Republican Congress, without the distraction of a sex scandal and relative peace in the Mideast. It’s also worth noting that the graph in the article doesn’t include current years. I estimate that the FY2009 deficit would hit the word “Indeed” in the paragraph below it. So let’s not sugarcoat the Dem/Dem spending habits.

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      • It’s worth noting that if you look at the actual trendline given there and do a derivitive (IE: how much is the deficit changing?) the actual entirety of Clinton’s presidency (including the Dem/Dem parts) is negative. This means that even without Republicans, the Clinton presidency was working in the right direction from the start. So let’s not prematurely run with the idea that only when Republicans force Democrats is it possible for there to be deficit reduction.

        That said, I do remember having seen things that support the general point, but I think people are too willing to do the analysis in the abstract, without figuring in the realities of the situations (IE: you should well know that going ‘lol Dems’ to the current budget problems is highly disingenuous, or alternately, taking the first two years of Clinton as ‘bad’ even though it’s clear that they were the first two years of a good trend. Just because you can’t turn around the federal government on a dime…)

        -Mecha

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  2. It is somewhat ridiculous that the biggest stink that’s been raised regarding a spending bill and its effect on the deficit in the past few decades regards a bill that runs a $140 billion surplus over ten years and, for the Senate version but not the House version, is projected to continue running surpluses beyond that window.

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  3. If you want to take a look at the CBO numbers, there is a convincing argument that the purported deficit savings are products of Enron style accounting: (link here)

    In its analysis of the Senate legislation, CBO estimates the potential budget savings from the CLASS Act at $72.5 billion, representing 55.8% of the $130 billion in deficit reductions the office projects the bill would yield from 2010 through 2019. In the House, which passed its health care reform bill Nov. 7, the numbers are even more stark. An earlier CBO report on the House bill showed the $72.5 billion in savings representing 69.7% of the $104 billion in deficit reductions that bill is projected to yield over the next decade.

    Projections of the long-term care plan’s impact from Department of Health and Human Services Chief Actuary Richard Foster were less generous, estimating the bill would yield federal budget savings of $39 billion over the first nine years of its existence, but that the savings would begin to decline by 2016. By 2025, Foster said, benefit outlays would exceed premiums. Foster anticipated the program would attract 2.8 million enrollees by year three, or roughly 2% of potentially eligible individuals, compared with a 4% participation rate in private long-term care insurance.

    Foster’s take roughly jibes with an earlier joint analysis of the legislation by the American Academy of Actuaries and the Society of Actuaries, which estimated that, based on a proposed $65 monthly average premium and a $50 daily benefit, the fund would be insolvent by 2027. Were the fund to offer a $75 average daily benefit, it would be insolvent within 11 years, by 2021, the actuaries wrote.

    The Senate bill calls for premiums to be recalculated, if needed for program solvency, and would allow such recalculations to be performed annually. But Foster suggested actuarially sound premiums, which would vary by age at enrollment and year of enrollment, would have to start off at average of $180 a month, exceeding rates in the private market. Moreover, since the plan would have no underwriting requirements, it is likely to draw a particularly undesirable population of enrollees.

    “In general, voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants,” Foster wrote. “Individuals with health problems or who anticipate a greater risk of functional limitation would be more likely to participate than those in better-than-average health. Setting the premium at a rate sufficient to cover the costs for such a group further discourages persons in better health from participating, which may lead to further premium increases.”

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  4. “reflexive, evidence-free dismissal of the CBO scores”

    Has the CBO, traditionally, been accurate? I know it’s non-partisan… but is it good at making an accurate assessment of what Program X will cost in 2 years, 5 years, 10 years, and 20 years?

    Because, if it ain’t, I don’t see how anything but reflexive dismissal would be appropriate.

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  5. As usual, the commenters here miss the point entirely– Conor acknowledges that the Republicans won’t do anything to lower the deficit, and yet he is still willing to praise them for “acknowledging” the problem. There is absolutely no reason for a rational person to believe that Republicans are going to lower deficits. Absolutely none. So why do people continued to be credulous to their claims, or to support the empty verbiage and not the actuality?

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    • Without defending the Republicans, one can certainly doubt the Democrats would be/are acting any better.

      If you want to get into which of these two evils is better, that’s fine and between you and those who want their bread with the butter side down, but both parties are unquestionably awful at fiscal responsibility. If he wants to be “super partisan” about it, as he says, he should look the facts of his party’s plans in the face and not just address Conor’s dismissal of the CBO as if it were in no way related to the truth.

      I think “no party is perfect” is giving both parties too much credit.

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      • Furthermore, because Clinton and Obama bear the same party identifier hardly makes them simpatico in their practices.

        And to clarify, I know Jamelle said he “didn’t” want to be “super partisan,” but he admitted to doing so reluctantly. “want” was a poor choice of words. Can’t edit comments.

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      • You just can’t get away with false equivalence here. Between 2001 and 2007, the Republicans passed two rounds of massive tax cuts, gutted the estate tax, passed Medicare Part D, started 2 wars, massively increased defense spending on other projects in addition to those wars, and attempted to “reform” social security in a way that would have blown another hole in the budget, all completely on deficit spending. At no point did they make any attempt to pay for all of this, unless you count fiddling with the numbers to disguise the magnitude of their irresponsibility.

        With the exception of the stimulus and the bailouts/TARP, the Dems have adopted PAYGO and stuck with it since taking Congress. so you have two parties, one of which had all three branches of government during an economic expansion, and then losing power to the other one during a massive recession and the near-collapse of the global financial system, and there is still only one example of the Democrats financing their spending with debt that didn’t have broad support from the Republicans too. How can a reasonable person look at that and conclude with pox-on-both-their-houses Broderism?

        If you are interested in such a high standard of fiscal responsibility that the parties look the same to you, how is this false even-handedness useful? Shouldn’t you reward the party that is better on these issues, even if they are only a marginal improvement?

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        • You lost me at “With the exception of nearly a trillion dollars in outlays to people proven to be god awful with money and making products people want to buy…”

          We’re not a year into this presidency and the fiscal record to date is atrocious. I wish people would stop making this an R versus D thing. So long as you continue in that dynamic, it’s just the Rs wanting to waste billions/trillions on their shitty ideas and Ds wanting to waste billions/trillions on theirs.

          The fact that insane, disingenuous Republicans are now rediscovering their long-abandoned commitment to fiscal discipline doesn’t mean they are wrong. Nowhere did I promote anything remotely Republican.

          The problem for principled advocates of restrained government spending and intrusion is that we’re lumped in with the Limbaughs and the Becks, casting our genuine and legitimate qualms with populist nutjobs. It isn’t that there aren’t principled opponents of Obama’s (and Bush’s) spending programs, but that the loudest ones getting all the attention make it seem as if the only people against it are doing so for partisan or otherwise disingenuous reasons.

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          • You’ve responded to my accusation of occluding the issue by… further occluding the issue. The Republicans offer no material alternative on deficit spending to the Democrats, so Conor using that as a pretext for attacking Democrats makes no sense. You haven’t addressed that issue.

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          • “The fact that insane, disingenuous Republicans are now rediscovering their long-abandoned commitment to fiscal discipline..”

            I’m sorry; with that assertion (assuming, for arguments’ sake that you were actually serious), you’ve just blown up any credibility you might have had in a manner that would make the Muppets’ Crazy Harry envious. What the GOP has “rediscovered” is simply the pleasure of moral-sounding “do as I say, not as I do”-ism. They rediscover this like clockwork every time they are out of power, only to conveniently re-forget it when they regain power.

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    • The Republicans can go to hell for all eternity. Burning and screaming in boiling pitch, they can beg the Democrats to dip their fingers into some water and then touch the tips of their moistened finger to the tongues of the Republicans… and the Democrats can look down in ecstacy and say “no”.

      Boy, that felt good.

      Now, a question:

      Has the CBO, traditionally, been accurate? I know it’s non-partisan… but is it good at making an accurate assessment of what Program X will cost in 2 years, 5 years, 10 years, and 20 years?

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      • This is a good question (that I can’t answer), but there’s also an important corollary: if they have been inaccurate, has it been a consistent bias? I.e., do they consistently underestimate costs, or overestimate them? If not, I’d say that we have to give at least some weight to the CBO estimates, simply because they’re the best we can come up with.

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        • I did some binging (that word right there is why bing will never overtake the google) and found that the CBO claims not accuracy but consensus. Here is a direct quote from the site:

          “Historically, the accuracy of CBO’s two-year forecasts and five-year projections has been very similar to the accuracy of those by the Blue Chip consensus (an average of private-sector forecasters) and the Administration.”

          Given that the question was “How accurate are CBO’s economic forecasts?”, the answer of “we come to many of the same conclusions as other folks!” is one that leads me to this conclusion:

          If the CBO were accurate, they’d say “we’re accurate”. If they could make a vague case that they were pretty accurate all other things being equal, they’d say “we’re pretty accurate all other things being equal.” They didn’t even say *THAT*. They said “we reached the same conclusions as other folks.” Fair enough, I guess. No one knows what the economy will look like in a decade, right?

          So what about the budget predictions? Let’s look at *THAT* question and answer:
          How accurate are CBO’s budget projections?
          By statute, CBO’s baseline projections must estimate the future paths of federal spending and revenues under current law and policies. The baseline is therefore not intended to be a prediction of future budgetary outcomes; instead, it is meant to serve as a neutral benchmark that lawmakers can use to measure the effects of proposed changes to spending and taxes. So for that reason and others, actual budgetary outcomes are almost certain to differ from CBO’s baseline projections.

          Look at that answer again.

          Read it yourself:
          http://www.cbo.gov/aboutcbo/faqs.shtml

          I can’t claim to reach any conclusion but this: when it comes to economic forecasts, they crib from the consensus. When it comes to budget forecasts, they don’t even pretend that their info is anything more than a “benchmark”.

          I’m not terribly impressed.

          (And, of course, Republicans should go to hell and be impaled on firey spits and have their innards eaten by red (fireproof!) ants as they scream for relief, mercy, even annihilation, from the Democrats who will be able to joyously answer “no” from their vantage point in heaven.)

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          • The point is that subsequent changes to relevant law will almost always make their projections wrong. Ergo they can’t claim accuracy but can claim to be an honest broker based on historically mirroring private forecasts.

            The CBO’s expertise lies in knowing how to read laws and how they interact with existing law. By design, the CBO’s forecasts preempt the predictions used for comparison, so there is some merit to matching subsequent predictions.

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  6. But, sure, let’s assume for a second that the CBO is telling the truth. Exactly *HOW* is it telling the truth?

    Well, there’s an interesting blog post at Reason’s Hit & Run.

    http://reason.com/blog/2009/11/24/how-much-does-health-care-refo

    Here’s the gist. If you say that the first decade of health care will be from 2010 until 2019, you get one number for the cost of the program. Fair enough. The CBO says that the costs don’t start kicking in until *AFTER* year four is done. So the last 6 years in the decade are the ones where we see costs that are representative of how much it will cost down the road (again, assuming that the actual numbers won’t deviate overly from the CBO’s benchmark).

    The costs of the first decade, as stated, are about 40% less than they will be in subsequent decades. Using that number is… well… I’m sure that now that such has been pointed out, at least those on this site will avoid quoting it as the cost.

    And, of course, Republicans deserve to be put in an eternal return where they relive Christ’s passion from Thursday until Friday Sunset over and over and over and over and over again like on Groundhog Day, with special attention focused on the moment where they realize that God has forsaken them. Let them scream to the heavens for their absent Father, forever.

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