Andrew Samwick on Fiscal Responsibility
Andrew Samwick reports on the annual conference of the Committee for a Responsible Federal Budget. I can see why they invited him:
the government budget should be in balance over the course of business cycle, where budget here refers to the General Fund, excluding surpluses or deficits in entitlement programs. As an alternative, I would accept a weaker standard that there be no trend in the ratio of total federal debt to GDP. (This debt figure includes any debt held by government trust funds.) Second, all entitlement programs like Social Security and Medicare should be sustainably solvent using enumerated and dedicated revenue sources … Enumerated and dedicated revenue sources means that the practice of relying on the General Fund to finance upwards of 75 percent of Medicare Part B and D should end – no open-ended commitments. Enumerate a revenue source to pay for it. Personally, I won’t work actively for the election of any political candidate or the in the administration of any politician who espouses a budget policy at odds with these targets.
Andrew criticizes the current administration’s fiscal record in general and with this specific complaint:
If concern over tax burdens on future generations is what motivates you, then it is completely inconsistent with that motivation to pass a Medicare prescription drug bill that generates a projected unfunded obligation that is bigger than the projected unfunded obligation in Social Security. It is also completely inconsistent with that motivation to run General Fund deficits that are not balanced by later surpluses, raising the debt burden on future generations. This sort of inconsistency will doom any chance at prudent reform of any of the programs.
He continues noting his concern that the Social Security debate is being framed in terms of a class conflict. Indeed it is – especially for those who ignore his call to think in terms of balancing the General Fund over the long-run.
Update: AB reader Bruce Webb mentions the one thing that sort of bothered me with Andrew’s post:
Why Medicare Part B and D should require any dedicated revenue source beyond what is required for any other government program is simply assumed here. Yes we are taking a portion of your income and using it to pay for health care for the elderly. Yes we are taking a portion of your income and using it to buy aircraft carriers. As a nation we have accepted the notion that we need to fund public roads, and public libraries, and airports, and law courts. Yet Samwick insists on walling off public health.
To be fair, we should contrast what Andrew writes to what President Bush has done. Bush decided to increase public funding of health care (as in that prescription drug benefit) as he reduces income taxes. And this hack we have to call President often brags about both fiscally irresponsible moves in the same speech. After all – the modern Republican Party thinks money grows on trees.