Wednesday, August 18, 2010

False equivalence in WSJ's portrayal of structural deficit

Reporting on voters' attitudes toward the Federal budget deficit yesterday, the Wall Street Journal's Jonathan Weisman provided a misleading portrait, rife with false equivalence, of the nation's long-term fiscal challenge and the solutions favored by Democrats and Republicans. This front-pager

  • did not address the serious efforts at controlling Medicare and Medicaid costs embedded in the Patient Protection and Affordable Care Act -- e.g., the tough Independent Payment Advisory Board for Medicare, for which Obama went to the mat -- or the CBO's conservative estimate that the healthcare reform law will reduce the deficit by $125 billion over the first ten years and by $1.4 billion over the next ten.

  • Did not clarify that social security is relatively easy to fix and constitutes a small proportion of the long-term structural deficit compared to Medicare/Medicaid.  As Kevin Drum has demonstrated nicely, SS can be fixed via a variety of mix-and-match menu options such as raising the payroll tax cap and/or upticking the tax rate, raising the retirement age, and modestly reducing the inflation adjustment formula.
  • Did not mention that Paul Ryan's "deficit reduction" plan includes about $4 trillion in tax cuts over the next ten years and  would end Medicare/Medicaid as we know it by replacing benefits with vouchers that would have no hope of keeping up with medical inflation (and no real hope of reducing it).
  • Did not mention that Republicans crying crocodile tears over the deficit and long-term debt engineered the structural deficit we now face with gigantic tax cuts and the deficit-financed Medicare prescription drug benefit, rammed through with tactics that make the PPACA process look by comparison like a Platonic ideal of disinterested legislating.
  • did not distinguish clearly between short-term and long-term needs. With respect tot he possible findings of Obama's deficit commission, the Journal reported, "the president may run into opposition in his own party. A group of liberal economists argue that deficit cutting now would kill off the struggling recovery and send the deficit soaring higher."  The  findings of Obama's deficit commission may indeed run into resistance from Democrats. But that has nothing to do with arguing that the country needs more stimulus now or that any tax hikes proposed should not take effect immediately.
The article also characterized the American people as fickle, based on the ramblings of a WSJ-convened focus group. Perhaps they are. But the solutions that voters most strongly favor according to the WSJ/NBC poll, also cited in the article,  are roughly on target:
74% said it would be acceptable to change Medicare to provide larger subsidies for low-income seniors, while cutting subsidies for the more affluent. Sixty-four percent would accept capping Medicare and Medicaid payments to health-care providers, while 58% backed subjecting incomes over $107,000 to Social Security taxes.

I take "capping Medicare and Medicaid payments" somewhat metaphorically, as an option thta people respond to positively in a poll. Every other wealthy country in the world provides universal healthcare at 1/2 - 2/3 the per capita cost of the US because the government effectively controls prices paid to providers, whether or not payments are filtered through private insurers, as in Germany France and Japan.  Medicare and Medicaid offer only partial control over payments to the Federal government, and my guess is that people sense that that control needs to be strengthened - as the IPAB commission should do, if it's not gutted by Republicans who are simultaneously bemoaning government spending on healthcare and opposing (demagoging) all meaningful cost controls in the PPACA.

My own "ideal" of this article might be slanted in a liberal direction. But I don't see how anyone could dispute that it is absolutely incumbent on anyone citing Ryan's plan to mention its tax cuts; that the relative proportion of projected long-term deficit attributable to Medicare/Medicaid as opposed to social security is crucial context, and that the CBO's estimates of the PPACA's deficit reduction effects belonged in any discussion of long-term entitlement reform.

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