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How Obama Could Really Bury Us in Debt

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One trillion dollars for health care reform? Psshh. That's chump change compared to Obama's plan to extend Bush's tax cuts. As Howard Gleckman points out at the TaxVox blog, if the fiscal hawks really care about the deficit, they'll raise bloody murder over the prospect of $3 trillion of tax cuts.


Here's Gleckman:

It is interesting, and perhaps worth noting, that while political opposition seems to be hardening against the $1 trillion, ten-year cost of the early versions of health reform, barely a peep of concern has been raised about the $3 trillion price tag for President Obama's plan to extend most of the Bush-era tax cuts.

The message seems pretty clear: The President, congressional Democrats, and nearly all Republicans are fine with busting the budget to cut taxes for nearly everyone, notwithstanding a cumulative deficit over the next decade of $9 trillion. They are, by contrast, unwilling to spend one-third as much to provide medical insurance for those who cannot afford it. I've always felt that health reform is as much an ethical choice as an economic one. We appear to be making ours.

I think this is dead on, but we can still imagine objections. Mine would be: You can't expect Obama to propose a tax increase during a tail of the recession -- although I think Geithner has already opened to the door to possible future tax increases. The right-wing argument against Gleckman, I suppose, might tap the old Reagan/Laffer theory that cutting taxes leads to higher economic growth, which conveniently returns more revenue to the government's coffers even with the lower rate. It seems pretty clear to me that lower taxes will not bring in more government revenue, and I know I'm not the only person blogging here who thinks so.

The clearest distinction between trillion-dollar health care and three-trillion-dollar tax cuts is political. That's not to discredit arguments against health care reform on the merits; it's just to state the obvious. Just about all voters are directly impacted by a tax break. "Here's some more money" is a tested and verified strategy for winning elections. On the other hand, ninety-three percent of voters already have health care. The value of health care reform to them is a little more subtle. And the murkier the payoff, the more glaring the price tag.

About the Author

  • Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.