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Looking For A Reality Check

Feb 15, 2011 • Economic Debates, Government • 205 Views    No Comments

Saying how the U.S. government spends our money, Washington Post columnist Ezra Klein said, “It’s an insurance conglomerate…”

His explanation?

Medicare, Medicaid and Social Security expenses add up to 2/5 of federal spending. With Medicare covering health insurance for people over 65, Medicaid relating to health insurance for  low income individuals and families, and Social Security primarily covering old age insurance, yes, we could say that the government is in the insurance business.

His point?

That the debate over the President’s 2012 budget proposal makes politicians sound fiscally responsible without focusing on the real issues.

Meanwhile, one writer at The Atlantic says spending proposals are like a spork. “The same way a spork makes an incomplete fork and an ineffectual spoon, this compromise budget provides for both incomplete investment and ineffectual deficit reduction.”

Paul Krugman, though, tells us to focus instead on House Republicans. Providing insight about why politicians are focusing on cuts in discretionary spending, he says it is all about the future. If, as a recent Pew Survey indicates, voters really want no cuts that affect them, then what to do? Cut “future-oriented” programs in order to slice immediate spending.

The Economic Lesson

For a reality check, we should return to the report from the President’s Deficit Reduction Commission. Their recommendations cover 6 categories. 1) Discretionary spending cuts 2) Comprehensive tax reform 3) Health care cost containment 4) Mandatory savings 5) Social Security reforms 6) Budget process changes. For a quick summary, you can look at pages 14-16 of their report.

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