Should-read: Justin Fox: Paul Ryan’s roadmap was an epic fiscal failure

Should-Read: Justin Fox is right in noting that Paul Ryan was always running a con game—that his aim was a more unequal country with lower taxes on the rich, not a country in which the federal government balanced its budget. But I would quarrel slightly with how he sets up this article. “Entitlement crisis” is a political framing that appeals not just to “very wealthy people and/or those with excellent health insurance”: it also appeals to lazy centrist journalists with no understanding of demography or policy, and no desire to learn. We never had—and do not have—a Social Security crisis. We had—but apparently no longer have (but it may return)—a health care cost explosion crisis. We still have a we-pay-too-much-for-the-health-care-we-as-a-country-get crisis. “Entitlement crisis” leads us away from getting value for our social insurance spending, and toward an unequal and unhappy society: Justin Fox: Paul Ryan’s Roadmap Was an Epic Fiscal Failure: “Paul Ryan did not cause the financial crisis. He has nonetheless failed pretty spectacularly… his actions have made the situation much worse than it had to be…

…I pin this on two main flaws in his approach: One has to do with the term “entitlement crisis,” the other with tax policy. The big problem with “entitlement crisis” is that it’s a political framing designed to appeal only to very wealthy people and/or those with excellent health insurance and retirement plans…. Improving Social Security, Medicare and Medicaid so that they can keep delivering benefits is a political project that, while fraught with pitfalls, has a chance of eventual success. Hacking at them to avert an “entitlement crisis” decades in the future appears to be a non-starter. The reason I keep putting “entitlement crisis” in quotes is, first, that “social insurance” better describes the programs than “entitlements” does and, second, that projected increases in social spending alone are unlikely to bring on a crisis. It is increasing government spending without also increasing government revenue that could, eventually, cause trouble….

Ryan got his way on tax cuts while making no progress whatsoever on that “entitlement crisis.” A 0.8 percent-of-GDP drop in tax revenue isn’t the end of the world. It is, however, a move in the wrong direction if you’re worried about growing fiscal imbalances…. Raising the tax burden, though, was never part of Paul Ryan’s plan. He wasn’t even willing just to hold it constant. Which would seem to mean that he was never all that serious about fixing America’s fiscal ills…

April 14, 2018


Brad DeLong
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