Arnold Kling  

The Neo-neoliberals?

The ZMP Hypothesis... The Macro Doubtbook, Installme...

CNN Money reports,

"I don't want to see revenue as a percentage of GDP be much higher than 21%," Bowles said. "At the same time we have to work to make the tough choices to bring spending down to the same level, to about 21% of GDP. ... None of this is going to be easy."

That is Erskine Bowles, co-chairman of President Obama's deficit commission. He understands that this requires serious cutbacks in entitlements. The question is what this means for health care policy.

a) magical thinking (the current approach)
b) rationing (not an easy sell in our culture)
c) greater use of vouchers in Medicare and Medicaid, and more personal responsibility for health care spending in general

On the off chance that the commission pushes the Obama Administration in the direction of (c), I would then argue that the net effect would be to have revived neoliberalism.

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COMMENTS (7 to date)
GU writes:

Since "neoliberalism" is pejorative in most circles, this post will not help your cause.

Maniel writes:

21 cents from each dollar I earn should go to the federal government; that is indeed a dubious goal. Aside from the entertainment value the president and congress provide on a daily basis, it is hard to see what I get for this non-trivial sacrifice. I find this tragic (or humorous, depending on my mood), since any services I receive from the public sector are provided at the state and local levels at lower cost; of course, public unions are working feverishly to obliterate the favorable comparison.

GU writes:

Government revenue equivalent to 21% of GDP ≠ effective tax rates of 21% for everyone.

Doc Merlin writes:

Among economists neoloberalism is a positive term.

Matthew Gunn writes:

I'm concerned that budgetary pressures might drive a huge increase in regulation, that the legislature will hide the cost of government in regulation rather than operating through the budget.

For example, the government could reduce ethanol subsidies but increase regulation mandating the purchase of ethanol. Magic! Government spending is reduced and support for farmers is increased.

GU writes:

And a cursory glance at the U.S.'s public policies reveal that economist's views are often ignored when formulating/implementing policy.

The public tends to dislike economists' favored policies. The public is wrong, but that doesn't mean they'll change their minds. So, my point is that "neoliberalism" is a scare word ("Pinochet's Chile bro!") among most people. IMHO branding a sensible solution as "neoliberal" is a losing strategy if your goal is to actually implement the solution.

MattW writes:

Link the age of eligibility for entitlements to life expectancy, and make health insurance and health care entitlements more like car insurance (insure against accidents, not pay for regular maintenance).

Ideally medicare and social security would be rolled into medicaid. No need for transfers from rich to rich, or middle to rich, or middle to middle, or rich to middle. Rich to poor or middle to poor may be justifiable (depending on your values and worldview). The rest is distortionary with no benefits.
(Didn't Dr Kling say something similar about transfers in a previous post? I looked for it but was not successful.)

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