The Furman/Goolsbee piece in the WSJ today brought a spring to my step and a song to my heart. Finally, a crisp articulation by our team.
While deep in the web weeds early one morning, I ran across recent Congressional testimony by a guy called Peter Orszag, Director of the Congressional Budget Office. Dry as that sounds, it’s worth a read–only a dozen pages or so.
The main purpose of Orszag’s testimony was to point out the ticking time bomb represented by health care costs. Particularly–and especially unique to the U.S.–is the fact that by far the primary driver of our health care costs has been an unquestioning adoption of and reimbursement for all manner of medical technology with almost no regard to efficacy. In three studies Orszag cites, the escalation of medical technology in the U.S. contributed between 35 and 65% or more of total health per capital health care spending, 1940-1990. What better example of the meaningful but too often thrown away point made by Goolsby and Furman: we are stealing from future generations to pay for even the hope of a better life for the current one. More about this to come.
Back to McCain’s plan specifically. Orszag’s testimony lays out two tax/spend scenarios. The first is what he calls the “extended baseline plan,” the main feature of which is the rollback of the Bush tax cuts. The second is the “alternative fiscal scenario, ” which could also be called the “cowardly lion case.” It combines Congress’s historical tendency to sweeten Medicare reimbursement rates with–far more importantly–the extension of the Bush tax cuts a la McCain’s proposal.
The difference is shudder-inducing, and I don’t even have kids. Look at the chart on page 5. In only two generations–2042–the baseline scenario has total debt held by the public as a percentage of GNP at about 35%–still too high, but actually slightly lower than today. The “alternative” scenario is basically a nation that’s out of business. Publicly held debt is more than 200% of GNP by 2042. Under that scenario, the interest the U.S. pays on its debt, which is approximately 40% of what we spend on social security today, surpasses spending on social security only 25 years from now.
I can afford John McCain. Probably for your kids and almost certainly for your grandkids–they can’t. As Furman and Goolsby write, McCain’s platform really is the most fiscally reckless in recent history.