The Agenda

Will Congress Really Cut Medicare?

Ezra Klein interviews Jim Horney of the liberal Center on Budget and Policy Priorities on the key question about health reform. I’m skeptical, but Horney is clearly well-informed. My central objection is this:

I think people are contradicting themselves when they say the deficit reduction in here isn’t big enough, and it won’t stick because Congress won’t do it. But they also just haven‘t looked at the record. When there’s been political will, and there has been in the past, Congress has done significant deficit reduction. 

I actually think that Horney is right: there have been moments of fiscal sanity. The issue, however, is whether the health reform package really reflects a turn towards spending discipline. The model I find plausible is that the political will for deficit reduction is tied to a willingness to endure economic restraint across the board. Spending cuts and tax increases tend to go together, as in the early 1990s, and tax cuts and spending increases tend to go together, as we saw during the 2000s. It should go without saying that all conservatives want both spending cuts and tax cuts, but historically these things don’t go together, at least in the modern American context. William Niskanen of Cato made this argument in 2006, and it strikes me as basically sound. That’s why I think doing the hard work of slashing spending should be central focus of conservatives, not slashing taxes while leaving spending intact. 

If this health reform package were, as Douglas Holtz-Eakin recommended, built solely on entitlement and delivery system reform, it would reflect a very different gestalt, and it might have attracted bipartisan support as a response to a bona fide economic and fiscal crisis. Of course, Democrats and Republicans have no confidence in the willingness of the other party to adhere to hard spending limits, which is why it occasionally feels as though our country is at risk of becoming a banana republic.   

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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