UPDATE: My response to Ezra’s Response
Reader and sometime commenter Adam Ozimek passes along this note
Three days ago Ezra Klein claims he can’t see a mechanism whereby the public option increases the debt, because as it is it reduces the deficit, and making it more costly would require bills that would be filibustered unless congress is somehow more liberal in the future, which it won’t be.
http://voices.washingtonpost.com/ezra-klein/2009/11/lieberman_will_filibuster_heal.html
Yesterday, he counters the concern that the bill is too modest from a liberal perspective by arguing that Medicare and Medicaid started out modest and then expanded over time, and " it is not hard to imagine health-care reform following a similar path." He then lays out all kinds of expansions that could happen, like "the public plan could be strengthened…Subsidies could expand, and new funds could be used to encourage the development of integrated care organizations".
Does he not see the disconnect here? He cannot imagine how the public option could increase the debt when arguing for the modesty of the plan, but when arguing for the liberal achievement of it he can foresee it expanding like Medicare and Medicaid.
http://voices.washingtonpost.com/ezra-klein/2009/11/is_a_flawed_health_care_bill_b.html
Specifically, I tend to think that Klein is being coy about the deficit. He knows that Health Care Reform is likely to be more popular as an existing entitlement than as a proposal. This is why he sees it as a launching pad for future change.
And, since health reform will be more popular in the future it won’t have much difficulty finding votes for unfunded expansion.
From a geek perspective this introduces and interesting issue about rate of time preference inconsistency in politics. Suppose I am a blue dog who is concerned about the deficit. I might like to vote for health care reform because the bill I see before me is good. However, I know that once this bill is in place I will not be able to resist voting for expansion. What then is my optimal vote now?
How do I weigh the differing preferences of two would-be future selves?
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Thursday ~ November 12th, 2009 at 4:21 pm
But Isn’t The Public Option A First Step? « Modeled Behavior
[...] Ezra says Karl Smith has a theory explaining how the public option could drive the government deeper into debt. The argument, [...]
Thursday ~ November 12th, 2009 at 4:37 pm
anon
This is ridiculous. By this argument, government should never do anything popular, because people might like it and demand more of it, which inevitably leads to deficits because there is not a similar public appetite for tax increases. By this argument, we cannot make roads or clean water or decent schools or bridges or mass transit. Because they might work as advertised and hence be popular.
This is a spectacularly stupid way to govern.
I’d like to point out that the reason we have a Republic and not a Democracy is, in fact, to deal with this precise problem. The Founders were not morons. They had this vague notion that people would like to have their cake and eat it too. Which is why they set up a system where we don’t put the budget up for a vote. We elect Representatives who are supposed to govern within the bounds of reality.
Sadly, we now have an entire political party that’s devoted to the notion that wars are free, that drives up spending while cutting tax rates, and that argues for trickle-down economics and the laffer curve. Where every president from that party has driven us ever-deeper into debt simply to gain political favor. This is when they’re not too busy going to tea parties. The elites in the Republican party have done what the Founders never expected a large group of elites to do: abdicated their responsibility to govern in a reality-based way.
If you’re mad at fiscal profligacy, blame the Republicans. George Bush’s “health reform” will cost $1 Trillion over the next 10 years. Not a nickel of it is paid for.
Thursday ~ November 12th, 2009 at 7:00 pm
Nick Benjamin
Dude, Lieberman and friends are not opposing the entitlement. The subsidies are the entitlement, and Lieberman likes the subsidies. They get a line in the budget. The public option does not.
If overall premiums increase quickly the subsidies increase, if the people tell Congress to subsidize more stuff the subsidies increase. In either case government spending would have to go up. If overall premiums stay flat, or increase at a reasonable rate, and the people don’t demand more subsidies government spending stay pretty much the same.
The public option is irrelevant to what the government decides to subsidize. If it turns out to be less efficient than the private plans it won’t get any customers, and its inefficiencies will be trivial in terms of overall costs. OTOH if it is more efficient than private companies it will keep costs down by providing increased competition.
Friday ~ November 20th, 2009 at 9:06 am
What Happens After the Public Option Passes? « Modeled Behavior
[...] few days ago Karl had a back and forth with Ezra Klein, which was prompted by an email I sent Karl. I wondered how Ezra could [...]
Monday ~ November 30th, 2009 at 5:02 am
Public Debt and the Public Option | The Incidental Economist
[...] Some have argued that notwithstanding the express provisions in the bills that a public plan must be funded entirely by premiums, once it is established, we won’t be able to help ourselves from expanding it with deficit spending. Perhaps this is a sad fact about Americans. But is it generally true? [...]