Felix Salmon on Simpson-Bowles

by Reihan Salam

Felix takes apart a highly misleading WSJ article on the Simpson-Bowles tax proposals, and he also takes exception to some of Paul Krugman’s scare-mongering. But I think Felix’s take on the Simpson-Bowles approach to entitlement spending is off-base:

The point here is that the deficit commission chairmen are doing everything in their power to perpetuate the intellectually dishonest meme that if we just pare enough excess from the government’s discretionary budget, that can somehow solve the problem of the soaring deficit. It can’t. Liberals like Drum recognize the problem, and can work out the mathematics of Medicare in public. The deficit commission, it seems, can’t.

I think that’s an unfair characterization. If Simpson-Bowles had only focused on domestic discretionary spending, they wouldn’t have attracted nearly as much opprobrium from critics on the left. The Social Security proposals are rigorous and predicated on protecting low lifetime earners. The Medicare proposals point in the direction of transforming the Medicare entitlement into limited defined contributions towards the purchase of insurance, which is an eminently serious approach that is far more likely to contain taxpayer exposure to medical cost growth than the proposed slowdown in the growth of Medicare FFS reimbursements in PPACA, which may well require yet another “doc fix” in the not-too-distant future. (Incidentally, Simpson-Bowles have a sober plan for the “doc fix.”)

But containing taxpayer exposure is only part of what we want to accomplish. Unfortunately, PPACA insulates large general hospitals and encourages provider consolidation in a way that will exacerbate the underlying cost growth problem.  

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.