The real cause of the federal deficit

This morning’s “must read” is this post by economist Dean Baker.

The final paragraph, in particular, is worth ruminating on:

“In reality, both left and right can agree that the broken U.S. health care system is the problem. The United States already pays more than twice as much per person as the average in other wealthy countries. If our per person health care costs were the same as those in Canada, Germany or any other wealthy country, we would be looking at huge budget surpluses, not deficits.” 

In other words, while the President has certainly made some errors during the last three years — not pushing for a large enough stimulus right from the beginning comes to mind — he was  clearly right in his initial assessment that the U.S. has to  make health care reform a (if not the) top priority. Would that he could have promoted a Canadian or German-style system.


CBPP’s Greenstein on Boehner plan: “Could produce the greatest increase in poverty & hardship of any law in modern U.S. history”

Robert Greenstein, President of the Center on Budget and Policy Priorities, released a statement last night on just how devastating Speaker John Boehner’s proposed deficit-reduction plan would be for the future of the country.

In particular, Greenstein characterizes the plan’s attack on programs for low- and moderate-income families and retirees as “class warfare.”

The entire statement is well worth reading, but here are the key points worth noting:

The Boehner plan would force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor.

It would do so even as it shielded all tax breaks, including the many lucrative tax breaks for the wealthiest and most powerful individuals and corporations.


Senators Burr & Hagan Throw Support Behind ‘Gang of Six’ Deficit Plan

NC Public Radio reported this morning that both of North Carolina’s US senators have come out publicly in support of the bipartisan “Gang of Six” deficit-reduction plan.

Although the plan leaves much to be desired and shares many flaws with the Bowles-Simpson framework it’s meant to implement, it does succeed in taking a significantly more balanced and reasonable approach to the nation’s long-term deficit than the radical, dangerous and ill-conceived “cut, cap, and balance” plan passed in the US House earlier this week (with the support of eight of North Carolina’s thirteen members of congress – Reps. Shuler & McIntyre among five Dems nationally to vote yes, Rep. Jones among nine GOPers nationally to vote no).

It remains to be seen whether enough members of the House would be willing to support the Gang of Six deal in order to avert a disastrous default on the nation’s debt, but the substantial bipartisan support in the Senate suggests that the tide may be turning in favor of a large-scale deal on the debt ceiling that incorporates a balanced approach.