April 07, 2005

Stop Focusing On Numbers

David Broder's column today is by turns dull, dumb, and disingenuous. Best of all, I like how he met Dean Baker of CEPR, listened to Baker rebut all of the stale and tired arguments about Social Security being in a crisis, and then says, "But I'm not convinced, because of [X, Y, Z stale and tired arguments about Social Security being in a crisis.]" Dude, retire already, please.

But anyway, Broder then throws out the "safe" pundit argument these days—that we should fix health care before Social Security. Long, long ago I peddled a very similar argument. It goes like this: Medicare "Part B" premiums are increasing much faster than wages or inflation, and hence gobbling up more and more of those Social Security checks with each passing month. If we were to cut Social Security benefits now in order to bring the program into balance, without fixing Medicare, then the real value of the Social Security safety net will erode over time. Simple math. Conversely, if we knew how to control Medicare costs, Social Security would be safe, and we could then determine how best to cut benefits in the future without doing real harm to seniors.

But the more I think about it, the more that's sort of wrong. Sure, if we were to just slash health benefits willy-nilly, we could "control" health costs very firmly, and then we'd know exactly how much Medicare premiums of the future would eat into Social Security checks. But realistically, health care reform just doesn't work that way. The clever ideas, like premium support for Medicare, are more or less a "wait and see" endeavor. We do things that we think will control health care costs now, and then see if it pans out. But odds are we can't predict what health care costs will do, or what effect these changes will have. It's never a matter of saying "Do X reform and we'll reduce the long-term Medicare deficit by Y percent," as it is with Social Security. Health care costs are truly impossible to foresee, even over the very short term.

Anyway, no "knockout" argument here, just saying that the health care debate will be on weirdly confused grounds if we keep on focusing excessively on the numbers surrounding future deficits for health care spending. We can do smart things that in theory might control future costs—get people exercising more, or import more foreign doctors—but who knows how it will all pan out. In other words, there's no chance that we're going to "fix" the long-term deficits right this minute, unless we implement truly draconian benefit cuts. So it helps to be a little flexible on the subject.

Okay, now one extra point that somewhat goes against what I said above. I'm usually sympathetic with the "wait and see" argument on Social Security (and, to some extent, Medicare), on the grounds that it's ludicrous to try to take drastic action on long-term deficits today when a) projections into the future are wholly uncertain, and b) it's silly to try to bind Congresses of the future. Nevertheless, there's one other factor here. In the future, we can say with some certainty that seniors will grow as a percent of the total population, and thus wield vastly more political power. That's something to keep in mind. It may be politically easier to cut benefits today than it will be, say, 30 or 40 or 50 years hence. Indeed, part of me would rather that we hacked benefits today and then raised them in the future—which will be easy because seniors of the future will be powerful—than try to do the reverse. Clever, huh? Still, there's a political reality at play, and obviously this isn't the sort of thing we're going to discuss today, not so long as the president insists on stealing payroll taxes from the American worker and questioning the full faith and credit of the United States government.
-- Brad Plumer 5:56 PM || ||