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I think I can condense current left-of-center thinking about the national debt as follows:
1. It’s a long-term problem, not a today problem or a tomorrow problem or even a day after tomorrow problem.
2. And since it’s a long-term problem, don’t fret about it. Lots of stuff can change between now and then.
3.Oh, it might not even be much of a problem at all since the math is probably wrong.
I think that’s a fair summation. Yesterday, I wrote about an economic report that liberals now contend proves the Congressional Budget Office is overstating future Medicare liabilities. (Doubtful.) And now my friend Derek Thompson over at The Atlantic has a piece downplaying estimates that total long-term US entitlement liabilities are around $100 trillion over the next century. Derek makes several points: a) unfunded liabilities are just future promises that legislators can change; b) ginormous, long-term numbers seem scarier than they really are since the future economy will be so much bigger; and c) all these forecasts are subject to change:
The shortfall in Medicare and Social Security is exquisitely sensitive to just about every demographic trend you can imagine, including longevity, immigration, income growth, and birth rates. Furthermore, it assumes that seven decades of innovation will do nothing to change the rate of health care inflation, which is a brave assumption. We know next to nothing about how medical inflation will change after this decade. The fact that actuaries pretend to know the future doesn’t make them oracles. It just makes them dutiful actuaries.
I would counter as follows:
1. The longer we wait, legislative changes will need to be more dramatic and thus harder to pass.
2. Then there are the opportunity costs of what else we could be doing with our money rather than spending it inefficiently on social insurance programs desperate for modernization.
3. Another way of looking at these liabilities is as a share of GDP. When you do that and take into account possible economic impacts — and even when you don’t — you get appropriately scary budget charts like this one:
4. Right, lots can happen. You bet. Maybe technology will save us and make health care super affordable. Or perhaps Americans will want higher and higher levels of premium medicine and costs will rise even faster. But like our parents say, hope for the best, but plan for the worst. Or at least take your best shot at planning for a realistically bad scenario.
5. And if the debt is no biggie, why are liberals so eager to raise taxes during an anemic recovery? What’s the hurry?
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