Medicare Meets Mephistopheles: Health Care, Government Spending, and Economic Prosperity

This essay is an edited version of my remarks during the first panel of the Mississippi College Law Review’s symposium on health care reform, which was held on February 26, 2010, in Jackson, Mississippi. The essay integrates my prepared comments with my responses to comments and questions during the discussion period. I have also added some further thoughts on several of the issues that are relevant to the subject matter, especially in light of the subsequent passage of a major federal health reform bill. These remarks are necessarily brief, and they therefore can include only a hint of the issues that arise with respect to a subject as important as health care reform. These remarks do, however, provide an opportunity to describe some of the most important issues at stake in our continuing efforts to improve our health care system: the quality of care available, the number of people to whom care is provided, and the cost of providing that care. In future work, I will expand upon the ideas raised in this essay, focusing in particular on whether the 2010 health care law appears to be succeeding in reducing health care costs

Social Security is Fair to All Generations: Demystifying the Trust Fund, Solvency, and the Promise to Younger Americans

The Social Security system has come under attack for having illegitimately transferred wealth from younger generations to the Baby Boom generation. This claim is incorrect, because it fails to understand how the system was altered in order to force the Baby Boomers to finance their own benefits in retirement. Any challenges that Social Security now faces are not caused by the pay-as-you-go structure of the system but because of Baby Boomers’ other policy errors, especially the emergence of extreme economic inequality since 1980. Attempting to fix the wrong problem all but guarantees a solution that will make matters worse

Social Security and Government Deficits: When Should We Worry?

In this Article, I critically examine the assumption that the Social Security system faces a financing crisis and that the government can avert the crisis only by acting now to cut benefits or to raise taxes. The best conclusion we can draw from the current evidence is that the system is not doomed and that it is not necessary to institute immediate changes. We should, of course, continue to monitor the situation closely to determine whether future changes become necessary. This conclusion is further strengthened by the likelihood that any changes the government makes to the Social Security system today will be regressive, harming the middle class and the least fortunate in order to forestall a crisis that may never occur or that future progressive changes in policy will be able to address

Why We Should Never Pay Down the National Debt

Calls either to balance the federal budget on an annual basis, or to pay down all or part of the national debt, are based on little more than uninformed intuitions that there is something inherently bad about borrowing money. We should not only ignore calls to balance the budget or to pay down the national debt, but we should engage in a responsible plan to increase the national debt each year. Only by issuing debt to lubricate the financial system, and to support the economy’s healthy growth, can we guarantee a prosperous future for current and future citizens of the United States

Is It Sometimes Good to Run Budget Deficits? If So, Should We Admit It (Out Loud)?

There are bad deficits and there are good deficits. What makes a fiscal deficit good or bad depends on both the context in which the deficit is run and the reason that the deficit is rising. The belief that it is unquestionably foolish to adopt policies that directly or indirectly increase the government\u27s annual borrowing on the financial markets - which is what it means to run a budget deficit - is not the universal truth that the current conventional wisdom might imply. Budget deficits are potentially dangerous and must be monitored carefully, but they are not always, inevitably, completely, and irreversibly horrific. Far from it. Knowing that deficits are not evil incarnate raises some difficult questions, however, most notably whether it is dangerous for policy makers or economists to admit publicly that deficits might sometimes be the result of wise policy choices. While there is always a danger that such knowledge can be distorted and misused, I argue in this article that we have a responsibility to adjust our public discussion of budget deficits to admit that there are good deficits as well as bad. Enhancing the discourse requires us to remind ourselves what it is about budget deficits that can make them harmful, both in the long term and the short term, as a necessary step in understanding when deficits can be beneficial. Only then can we have a full and honest discussion of our taxing and spending policies

What Do We Owe Future Generations?

In the United States, it is common for legal scholars, economists, politicians and others to claim that we are selfishly harming our children and grandchildren by (among many other things) running large government budget deficits. This article first asks two broad questions: (1) Do we owe future generations anything at all as a philosophical matter? and (2) If we do owe something to future generations, how should we balance their interests against our own? The short answers are Probably and We really are not sure. Finding only general answers to these general questions, I then look specifically at U.S. fiscal policy and its effects on conventionally-measured living standards, exploring (using standard utilitarian and Rawlsian analyses) whether we are currently doing enough to secure the prosperity of future generations. It turns out that even pessimistic forecasts of economic growth are so promising that we could arguably either stop worrying about future generations\u27 economic well-being or even enact policies to shift economic well-being from the future to today. The flaw in that reasoning, however, lies in the unequal distribution of our economic prosperity, with a gap between rich and poor that is profoundly troubling. Even if future growth turns out to be as high as current forecasts predict, there is a very real chance that the least among us will not see their living standards rise at all, even as the more fortunate ascend to untold levels of affluence. I thus argue that a better approach to analyzing intergenerational issues is to view them as straightforward matters of distributive justice, focusing on how policies change the distribution of incomes across time as well as currently. Such an approach simplifies the analysis and allows us to protect the interests of our children and grandchildren in a more meaningful and long-lasting sense

\u27Generational Theft\u27? Even with Stimulus and Bailout Spending, U.S. Fiscal Policy Does Not Cheat Future Generations

Despite the oft-heard claims that current generations are stealing from future generations by running fiscal deficits, both theory and evidence suggest that this is either not true or not knowable. Intergenerational justice is not an appropriate lens through which to analyze fiscal issues, because there is no obvious starting point from which to build a moral consensus about whether current generations owe anything at all to future generations - and even if we do believe that we owe something to future generations, no one has offered a useful method by which we can determine whether we are doing enough for our progeny. Moreover, if we believe that future generations should be made better off than current generations ( I want my kids to be richer than I am. ), even pessimistic forecasts indicate that future generations will be much wealthier than current generations, meaning that we are already being quite generous to our children and grandchildren. In addition, the recent significant decline in our economic prospects does not argue for a more contractionary fiscal policy in light of concerns about future generations. In fact, when times are bad, there is no conflict between the interests of current and future generations. Spending by the government helps to improve the economy, which encourages businesses to invest in future productivity. This virtuous cycle is even stronger if the government\u27s spending is itself used to invest in future productivity

The Uses of the Concept of Efficiency in Tax Analysis

The flexibility and ubiquity of the term efficiency in tax analysis can be a double-edged sword. While tax scholars are naturally drawn to the notion of efficiency, with its implied virtues of eliminating waste and of guiding policy choices through objective, non-normative analysis, the danger exists that we can lose sight of which type of efficiency we are talking about when we invoke the concept. What one scholar calls efficient might be quite inefficient under the definition or perspective used by another scholar