Fred Thompson Thinks He Can Reduce Federal Spending by More Than $72 Trillion
Amy Schatz notes that Fred is indeed a small government conservative:
While all the party’s leading candidates have embraced fiscal restraint, the former Tennessee senator seems likely to go further than his rivals. He has hinted at politically risky proposals to rein in Social Security and Medicare benefits.
But it would seem both Fred and Amy flunked basic arithmetic:
Mr. Thompson has advocated reining in discretionary spending and has been particularly critical of the Medicare drug-benefits program that Congress passed four years ago. He said he wouldn’t have voted for it. “I know this probably isn’t a real popular thing to say, but we couldn’t afford this prescription-drug bill,” Mr. Thompson said last week on a swing through Iowa, home of Republican Sen. Charles Grassley, who helped push the program through Congress. “We basically put a $72 trillion commitment on top of an already-broken entitlement system. Not a responsible thing to do.”
I was also critical of the way this benefit was designed giving a huge incidence of the subsidy to Big Pharma and not finding a tax base to fund this new entitlement. But the $72 trillion figure struck me as a bit off so I checked with Dean Baker:
Why then is Fred Thompson quoted in the WSJ as saying that the Medicare prescription drug benefit added $72 trillion to country’s obligations, without any explanation to readers that Mr. Thompson is off by a factor of seven. The projections of the cost of the Medicare Part D over an infinite horizon are less than $10 trillion. (Before anyone gets too concerned about even this seemingly large number [approximate 1.0 percent of future income], remember that it is driven by the assumption that the government will forever continue to grant patent monopolies that allow the drug companies to charge ever higher prices, instead of adopting a modern system for financing drug research. If we fix the system, all drugs can be sold at $4 per prescription.)
The $72 trillion is likely the sum of the modest infinite horizon Social Security shortfall, the larger Medicare Part D shortfall, and the massive General Fund shortfall. If Fred Thompson is so clueless to attribute all of this to Medicare Part D, I don’t want him in charge of our fiscal future. And the Wall Street Journal should not allow Amy Schatz to cover economic issues if she can’t spot such an egregious error.