When OMB directors stop being polite and start getting real
OMB Director Peter Orszag goes hard at the Wall Street Journal editorial board:
The editorial board that did more to bring supply-side economics – or in George H.W. Bush’s immortal words, "voodoo economics" – to Washington is raising the specter of a fiscally irresponsible health reform bill in which efforts to rein in health-care cost growth are an "illusion." But the ironies run richer, since an editorial that hurls accusations of overselling cost containment itself displays more impressive rhetoric than substantive content.
The Journal makes three fundamental claims. The first is that health reform represents a huge risk to the federal budget, and will end up exploding the deficit, because it relies on an array of speculative policies to control costs.
What the Journal misses is the crucial difference between this health reform effort and the flawed supply-side economics that drove the country into the deep deficits of the 1980s: We are insisting that the legislation be deficit neutral as scored by the Congressional Budget Office (CBO) in addition to including a variety of delivery system reform and other cost-containment measures for the long term. In other words, unlike supply-siders, we are not waiting for magic savings to appear. Instead, we are relying on hard, scoreable savings – not the long-term cost-control measures – to pay for the expansion of health care coverage. This "belt and suspenders" approach provides a crucial fiscal backstop, and it's the prudent, realistic, and wise thing to do. (Note to the Journal ed board: here's the link to the CBO score of the Senate legislation, in case you'd like to read it.)
Oh, snap! But isn't this punching down? I mean, even I don't bother to take issue with the Wall Street Journal's editorial board. It's the proverbial "dining-room table" of economics commentary.
Photo credit: By Charles Dharapak/Associated Press