Peter Orszag vs. the WSJ
OMB director Orszag didn’t much like a WSJ editorial about the lack of fiscal prudence of ObamaCare. And he said so on his blog. I think Orszag makes a few reasonable points, like not counting on cost savings from the pilot programs. But he side-stepped that fact that America will be spending more on healthcare, even if paid for. Then there is this:
For an economist, the irony is rich. The editorial board that did more to bring supply-side economics – or in George H.W. Bush’s immortal words, “voodoo economics” – to Washington is raising the specter of a fiscally irresponsible health reform bill in which efforts to rein in health care cost growth are an “illusion.” But the ironies run richer, since an editorial that hurls accusations of overselling cost containment itself displays more impressive rhetoric than substantive content. The Journal makes three fundamental claims. The first is that health reform represents a huge risk to the federal budget, and will end up exploding the deficit, because it relies on an array of speculative policies to control costs. What the Journal misses is the crucial difference between this health reform effort and the flawed supply-side economics that drove the country into the deep deficits of the 1980s.
Me: 1) The 1980s tax cuts saved the US from complete economic collapse, yet Orszag sees them only as an accounting issue. Also, the worst deficit-to-GDP year of the 1980s was like 6 percent. The US may well average that number over the next decade.