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Megan McArdle

Megan McArdle - Megan McArdle is a senior editor for The Atlantic who writes about business and economics. She has worked at three start-ups, a consulting firm, an investment bank, a disaster recovery firm at Ground Zero, and The Economist. She is currently on leave.
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Megan was born and raised on the Upper West Side of Manhattan, and yes, she does enjoy her lattes, as well as the occasional extra-dry skim-milk cappuccino. Her checkered work history includes three start-ups, four years as a technology project manager for a boutique consulting firm, a summer as an associate at an investment bank, and a year spent as sort of an executive copy girl for one of the disaster-recovery firms at Ground Zero � all before the age of 30.

While working at Ground Zero, Megan started Live From the WTC, a blog focused on economics, business, and cooking. She may or may not have been the first major economics blogger, depending on whether we are allowed to throw outlying variables such as Brad Delong out of the set. From there it was but a few steps down the slippery slope to freelance journalism. She has worked in various capacities for The Economist, where she wrote about economics and oversaw the founding of Free Exchange, the magazine's economics blog. She has also maintained her own blog, Asymmetrical Information, which moved to The Atlantic, along with its owner, in August 2007.

Megan holds a bachelor's degree in English literature from the University of Pennsylvania and an M.B.A. from the University of Chicago. After a lifetime as a New Yorker, she now resides in northwest Washington, D.C., where she is still trying to figure out what one does with an apartment larger than 400 square feet.

Why the Democrats Can't Cut Costs

By Megan McArdle
Jul 21 2009, 5:01 PM ET Comment

For a long time, Republicans, and conservatives, and libertarians, embraced a strategy known as "starve the beast." The idea was that you pass tax cuts now, and the resulting budget deficits will hold down spending increases. Eventually, it will get so bad that they'll have to cut spending, because tax increases will be so unpopular.

Hrm. Didn't work out as planned. Arguably, in fact, it made things worse:  by assenting to budget deficits, Republicans took a price tag off new spending.

On health care, it seems to me that many Democrats want to do the same thing in reverse. Pass programs now, and figure out how to control costs later.



That was the strategy behind the Massachussetts health plan, which more than one liberal pundit has earnestly praised as a strategic model for a federal program. Instead of starve the beast, we stuff it. Hell, we stick a tube down the federal beast's throat and gavage the sucker.

Both have the same flaw: the same political forces that keep you from cutting costs now will keep you from cutting costs later.  In fact, they will be worse, because the greater magnitude of the fix, and the larger number of people it will affect, make it harder to implement the changes that this federal engorgement is supposed to enable.  Politicians in the future will be no braver or wiser than the ones we have now.  Perhaps they'll fix the nasty problem you've bequeathed them, but on the other hand, perhaps they'll just make it worse and we'll get a taste of life in a banana republic. There is no good reason to think that the former is more likely than the latter.  Our founders tried this sort of stunt in the Constitution, and the result was eight decades of slavery, and about 600,000 dead soldiers.

Thus I think that honest pundits, and voters, have to answer the question:  is this program a good idea if it provokes a crisis, instead of much needed change?  In the case of tax cuts, I think the answer is clearly not, which is why I think Republicans should lay off them unless they're planning to pay for them by cutting spending now.  I also think expanding health care without a clear and immediate plan for costs is a huge mistake--but then, I don't like it anyway, so you'd expect me to say that.

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