Cost-Cutting Ideology

Greg Mankiw is skeptical of the president's proposal to add a "provision" to the health care reform bill that "requires us to come forward with more spending cuts if the savings we promised don't materialize."

Meahwhile, Megan McArdle is dismayed by Andrew Sullivan's comment that "no one can argue that what looks like the current healthcare reform would cripple future finances as profoundly as [the Medicare prescription drug benefit]." Megan writes:

In short, it is not only not true that "no one" believes that this will cost more than Medicare Part D, it's not really very reasonable for anyone to disbelieve it. We are, after all, preparing to provide health care for millions of more people, who will not only be consuming prescription drugs, but also heart catheterization and asthma treatment and the leg amputations that doctors apparently prefer to providing routine diabetes care. Prescription drug costs are on the order of 10% of overall spending, even for Medicare.

So, why all the push-back from right-of-center economists?

The idea that the the Obama administration can ensure deficit neutrality by simply adding a cost-saving "provision" to the legislation is a bit too much to swallow. For example, Megan points out that the Medicare "sustainable growth rate" -- which is supposed to keep Medicare spending in line with inflation -- has consistently been adjusted upward by Congress in order to keep doctors from refusing Medicare patients. This has been a big problem, and it's why Medicare has come to occupy an increasingly larger percentage of the federal budget.

I think Megan is also correct about another thing -- there seems to be a growing tendency among some Obama partisans to uncritically accept the administration's talking points as some sort of substitute for reality. This goes beyond mere ideological loyalty.

For example, I was stunned when Ezra Klein -- a normally sensible left-wing political analysts -- actually criticized the CBO when its numbers conflicted with the administration's numbers. I've also seen friends and relatives question the accuracy of this article because they trust the president more than they trust a well-respected, independent fact-check site.

This kind of thing really has to stop. Progressives rightly criticize some of the more ideologically rigid conservative pundits for refusing to acknowledge reality, even when it smacks them in the fact.

They shouldn't be falling into the same trap. The president is not the arbiter of truth.

Update: Andrew responds to Megan, and Megan replies with a rather wonky, long-winded post explaining the complexities of budget scoring.

Update II: Andrew posts a reader response to Megan, and Megan retorts.

Again, I think Megan wins this one. It's true that Medicare Part D isn't quite the same as the health care legislation currently under consideration, but I think this is the salient point:

If any of the cuts or the taxes fails, the deficit starts bigger, and gets bigger faster. Meanwhile, Obama has moved forward one of the really expensive bits, covering people who are uninsurable because they have some expensive disease.

How are we paying for this? Dunno. It's all too vague. But to my ears, Obama has so far failed to rule out anything expensive, like generous subsidies, and also failed to outline who he's going to tax or cut benefits to if he's serious about deficit neutrality. So a mere stated wish to stay deficit neutral just won't do--every president states that sort of wish. The question is, what will they do to get there? Obama's coyness on this topic is reaching it's sell by date. It's time for the president to commit to an actual plan with actual numbers we can check.