The New Republic

Absolutely, we cannot afford to cut discretionary spending. But, as usual, Galston draws the wrong conclusions, as he is an economics ignoramus. The not so hidden agenda here is that Galston (David Brooks' doppelänger) believes, along with Brooks that entitlements are going to eat the entire rest of the government. Hence, they want to slash them. What neither of these two boobs can get through their thick as plank heads is that retirees are going to eat, and therefore will consume a share of GDP, whether it is government financed or not -- unless that is we are prepared to let them starve or live and die in dire poverty. Likewise, medical care is going to consume a share of GDP whether it is publicly or privately financed -- unless that is we are going to deny people medical care based on what they themselves can afford. Is the Brooks/Galston melded thingy actually prepared to advocate either of these outcomes overtly, or only covertly? Get this straight, you morons! Both of you, Galston and Brooks, Brooks and Galston, Tweedle-Dum and Tweedle-Dumber. The issue is the cost of these things and how much of GDP we are willing to devote to our own retirement consumption and to our own medical care. The structure of the financing is a secondary issue. If we can afford the share of GDP that it costs for retirement and for medical care (which we can although there is no good reason other than your widely shared stupidity that medical care in this country has to cost us as much as it does), then we can without question finance the cost. In fact, whatever is actually consumed is necessarily financed, although the way in which it is done may not be obvious. It is only because we decline, for purely political reasons, to collect adequate taxes for the share of GDP that we choose to devote to government spending, which could easily be 50% of GDP if that is what we wanted, that there is any appearance of a choice between present discretionary spending and entitlements. You, Galston, in your ignorance, keep perpetuating the false dilemma. There is no fundamental difference between private consumption and public consumption. It is all stuff, it is all services. The difference is in who makes the decision to spend is made, whether by individuals or, collectively, by the political system. Of course, we cannot have unlimited consumption, whether it is private or public consumption. We have a finite economy. But we have a large per capita income. If we want to devote more of it to publicly financed medical care and less of it to a life-time supply of mayonnaise at Sam's Club, we can choose to do that. The choice is absolutely not between two particular goods -- public investment (discretionary spending) and entitlements -- but amongst all of the public and private goods from which we can choose. If, as is the case, a large chunk of income escapes taxation altogether (there is a huge gap between NDP, net domestic product, and reported taxable income) and if, as is the case, income now accrues hugely disproportionately to the top, and if we decline to levy highly progressive taxes at the top because that is where the income is to tax, we will surely be short of revenues for public consumption. We will be starving the beast. That is what is going on here, but it is purely a political decision. It is not a necessity of economic life that this be the case. If we can afford the share of GDP, we can finance it. Period. We just don't want to because too many people, including the Galston/Brooks, Brooks/Galston melded thingy have drunk the conservative, right-wing wacko Kool-aid. Can no one rid us of this guy? Can't TNR at least find someone else to write here who has a grasp of macroeconomics and public finance?

- roidubouloi

January 9, 2013 at 2:14pm

Galston is simply taking the revenues (i.e., taxes) we can expect to collect based on current tax rates, etc. (including those in the fiscal cliff deal), apportioning them among the government programs, concluding that there's not enough to fund everything, and suggesting the apportionment of the inadequate revenues he prefers (to wit, discretionary spending as opposed to entitlements). My (and most folks') objection is that Galston lumps social security with Medicare, understandable but I (we) still object. Conceptually Galston is wrong because there is a reserve (called the "trust fund") to fund social security benefits for many years to come; but practically Galston is correct because, like Santa Klaus, there is no reserve (the "trust fund" was stolen by Congress in part to offset large income tax cuts primarily for the wealthy). We can pretend there is a reserve, just like we can pretend the government will, by some miracle (printing money being one of them), have the funds to repay the sums stolen, I mean borrowed, from the "trust fund", but pretending doesn't make it so. I recall that Galston has expressed support for broad based (i.e., middle class) tax increases in order for the government to meet its anticipated expenses, but that idea has no takers, certainly none in politics. It's true that our anticipated expenses can be met solely with tax increases without any cuts to entitlements or discretionary spending, but that would result in a public sector of over 30% of GDP. So what do we do: make the difficult choice of a broad based tax increase, fully funding entitlements and discretionary spending, cutting entitlements, or cutting discretionary spending. The near geezer that I am makes me choose fully funding entitlements, but the good citizen I like to think I am makes me choose fully funding discretionary spending; while the realist in me knows that broad based tax increases are as likely as Obama and Boehner going on vacation together.

- rayward

January 9, 2013 at 3:22pm

The thing is, rayward, that unless people are not going to get medical care, or seniors who are dependent on social security are going to starve, then the economy is going to allow us these goods, retirement and medical care, regardless of government financing. That means fewer of other goods that we might also wish for. If healthcare is 18% of the economy and none is publicly financed, then maybe the public sector is only 15%. If all of healthcare is publicly financed, then 33%. But nothing fundamental has changed either way. Whether you pay your insurer and your care providers or pay the government a tax, it is the exact same chunk of change and you have the same amount left over to spend on other things. Carrying on about the so-called size of the public sector is moronic. What matters is the real cost, not the financial mechanics -- except that the financial mechanics can affect both efficiency -- single-payer being far more cost effective than all other alternatives as yet identified -- and income distribution -- a purely private system resulting in many who cannot afford it not getting medical care they need. In turn, the only thing affected by whether we borrow or tax is the income distribution. We ought to focus on that and get off the ridiculous subject of whether we can afford discretionary spending or entitlements since we can, without question, afford both. People are not going to go without medical care to pay for discretionary spending. The question in reality is whether we are going to starve public investment/discretionary spending so that the wealthiest can continue to enjoy an absurd share of after-tax GDP. Were they poor in 1980, before the huge run-up in the disparity on income? Galston understands neither the problem nor the available solutions. He is just a deficit scold, and a particularly ignorant one, with the exception of David Brooks to whom he bears an uncanny resemblance. Exact same dumb ideas.

- roidubouloi

January 9, 2013 at 4:33pm

James Buchanan (the conservative economist lionized by both conservatives and libertarians) died today. Buchanan was the economist who popularized "popular choice" theory: that legislators will approve tax cuts and spending increases for projects and entitlements favored by the electorate, which combined will lead to ever-rising deficits, public debt burdens, and increasingly large governments to conduct the public’s business. Here's a paragraph from his obituary in the NYT: "Dr. Buchanan partly blamed Keynesian economics for what he considered a decline in America’s fiscal discipline. John Maynard Keynes argued that budget deficits were not only unavoidable but in fiscal emergencies were even desirable as a means to increase spending, create jobs and cut unemployment. But that reasoning allowed politicians to rationalize deficits under many circumstances and over long periods, Dr. Buchanan contended." Of course, the irony is that he's describing conservatives, not progressives. May he rest in peace.

- rayward

January 9, 2013 at 5:34pm

"But that reasoning allowed politicians to rationalize deficits under many circumstances and over long periods, Dr. Buchanan contended." Of course, the irony is that he's describing conservatives, not progressives." Right, rayward. The only thing worse than taxing and spending is not taxing and spending. Nobody increases our deficit like Republicans. You have to give them credit for chutzpah though, when they blame Democrats for almost all of the deficit. I wish Obama had the chutzpah to blame a lot of the deficit on the Republicans. He probably can't do that though, because he has supported the Afghan War and Medicare Part D.

- magboy47.

January 9, 2013 at 6:35pm

Yes by all means let's favor the grandkids by killing off the grandparents. That makes sense! Off to the ice floes guys, if you can find any. PS: did anybody ever here of a country called Japan? In Japan, elders are venerated. Old people are considered to have irreplaceable wisdom and experience. In America on the other hand, we have Congressmen introducing bills to give zygotes full 14th Amendment rights! Yes indeed. So here in America we value wisdom and experience, not. We value life, not, once it's born that is. And, we are good Christians unless it comes to helping poor people, for example seniors and sick people, who must be sacrificed for the sake of the zygotes. Forward!

- Sophia

January 9, 2013 at 7:00pm

OK, "hear," so I'm old but not so wise. This is what comes of dealing with right wingers who think we should throw seniors to the wolves. Loss of little grey cells. Oh - by the way: what kind of society do you guys think we're in the business of creating here?

- Sophia

January 9, 2013 at 7:04pm

According to Keynes, we should run surpluses in a strong economy and deficits in a weak economy. According to wacko conservative nutcases, from which class I would not exclude Buchanan, notwithstanding his Nobel Prize, we should run deficits in a strong economy and strive for a balanced budget in a weak economy. Blaming conservative economic lunacy on Keynes is like blaming Otto von Bismarck, an arch conservative, for the invention of the social security system. Oh, wait. Bismarck did invent the social security system. Never mind. There is no possible analogy for the utter stupidity, dishonesty, venality, and self-serving ideological blindness of attributing conservative pseudo-economics to Keynes. Goodbye, Mr. Buchanana. RIP.

- roidubouloi

January 9, 2013 at 7:37pm