Fiscal Solutions Tour Misses the Obvious Solution

October 25, 2010

The Fiscal Solutions Tour stopped into Philadelphia on Friday. Who are these 5 white guys? Well, they represent the brain trust behind the National Debt Commission and are proposing “solutions” to our $13.6 trillion budget deficit which grows astronomically.

So the tour guides are:
Robert Bixby- Executive Director of the Concord Coalition, a non partisan “grassroots” organization dedicated to fiscal responsibility.
Douglas Holtz-Eakin – former chief economist of President Bush’s Council of Economic Advisor, former Director of the CBO, and former Advisor to Sen. McCain’s residential campaign.
William Novelli – Professor at Georgetown Business School, former President of AARP, founder of the public relations firm, Porter Novelli
Eugene Steurle – Fellow at the Urban Institute, former President of the National Tax Association
David Walker – founder and CEO of Comeback America Initiative, former CEO of the Pete Peterson Institute and former US Comptroller General

A distinguished but biased group. Our FY 2010 budget includes $2.14 trillion in revenue and $3.49 trillion in expenses leaving us with a $1.3 trillion dollar deficit. More than 50% of our deficit is held by foreign countries. Our major budget expenses are health care and Social Security. Our deficit, unchecked, will be 235% of our GDP by 2035. This, of course, is unsustainable.

We agree with the problem, but their solutions – namely severely cutting Medicare, Medicaid and SS are a recipe for disaster. Interestingly, the budget for defense in the US exceeds the next 14 countries COMBINED (including Russia and China). This is an obvious area that needs cutting.

In terms of health care, David Walker’s slides makes general comments like “reduce the rate of increase in health care costs and target taxpayer subsidies (largely the tax deductibility of insurance premiums)” and “future health care reforms consider cost, quality, coverage and personal responsibility (read high deductible, consumer directed health care)”. Doug Holtz-Eakin is the “health guru” among this group and he clearly let his disdain for single payer come through by saying that government funded health care is not a solution. During the Q and A I asked why not single payer since every other country in the world has used this as a way of controlling cost? He answered that he was more concerned about having “a budget than whether it was single payer or not” There was no opportunity for followup questions since time was running out.

One thing that is clear is that if you had a fixed budget for health care and had the providers and insurers all fighting for the same pool of money, it would quickly become obvious that the insurers served no useful purpose and that the money would go farther if the “budget” directly paid the providers to care for patients. Hmm . . . sounds eerily like single payer. So, I believe their ideology precludes them from seeing single payer, but if we use their solution and put everyone under a fixed budget, I think the absurdity of the insurance industry would become obvious.

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