May 19, 2011
The Washington Post has a practice of granting oped space to almost anyone who is prepared to advance its agenda of deficit reduction. Today it opens its pages to Senator Tom Coburn who begins his piece by telling readers that:
“Any honest view of our debt, deficits, size of government and demographic challenges shows we must make major changes if we are going to pass on the American way of life to our children. Each week seems to bring new warning signs: slower-than-expected growth (already as much as 25 to 33 percent every year, some estimate), higher-than-expected unemployment numbers.”
Actually the current period of high unemployment and slow growth has nothing to do with the budget deficit. It is the result of the collapse of the $8 trillion housing bubble. Unfortunately, Federal Reserve Board chairs Alan Greenspan, Ben Bernanke and other policymakers overlooked this enormous bubble as it was growing. Apparently, Mr. Coburn has not noticed the bubble even now that its collapse has wrecked the economy.
At one point, Coburn cites Morgan Stanley Director Erskine Bowles calling the deficit situation, “… the most predictable economic crisis in history.” Actually, the housing bubble was probably the most predictable economic crisis in history. Unfortunately, almost no one in a policy position was able to predict it.
Contrary to Mr. Coburn’s assertion at the beginning of his, any honest view of the debt, deficits, size of government and demographic challenges shows that we have to fix our health care system. If per person health care expenditures were comparable to what they are in Germany, Canada, or any other wealthy country with a longer life expectancy than the United States we would be looking at budget surpluses, not deficits.
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