Jared Bernstein | The Correct Diagnosis
In my opening post to this new blog, I pointed out that a top objective was to correct false assertions regarding economic arguments. Well, allow me to outsource to my CBPP colleague Paul Van de Water.
If we’re going to meet the fiscal challenges we face, we’ve got to accurately diagnose the problem. The much-circulated CBPP analysis sorting out the factors behind the increase in the deficits provides just this diagnosis and does so in one friendly graph (see figure).
Now, the plot thickens. The conservative Heritage Foundation went after the analysis claiming that we cherry-picked the Bush tax cuts, the wars, and the recession as the main factors explaining the increase in deficits over the next decade when we could just as easily have picked Social Security or Medicare.
But as Paul’s rebuttal makes clear, before Bush cuts, etc. took place, non-partisan budget analysts were predicting surpluses based on spending and revenues including, of course, the entitlements.
“Heritage charges we arbitrarily picked certain elements of the budget to blame for the deficits, saying one could also single out Social Security and Medicare to explain the entire deficit. Yes, the costs of Social Security and Medicare will rise over the next decade as more baby boomers retire and health care costs continue to rise. But Heritage misses the key point: Analysts knew this would happen back in 2001; their forecasts of large surpluses over the following two decades took those increases into account.”
It’s Diagnosis 101: if something changes—in this case, predictions of surpluses to deficits—don’t look for the ongoing stuff you already knew about. Look for something new to the system, in this case, the cuts, the wars, etc. – Jared Bernstein
This entry was posted on May 18, 2011 by ablackmanjr5. It was filed under Economics and was tagged with Economy, Heritage Foundation, Jared Bernstein, Joe Biden, medicare, Social Security, United States, White House.