"We Will Control Healthcare Costs, Because We Have To"

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This is a disturbingly common argument heard when one points out that the costs of the domestic programs we have are so far impervious to cost control.  Apparently, it is safe to enact a program that is going to blow a 10-gauge hole in the Federal budget, because the mere fact that we can't currently afford to pay for it will force us to, um, do something.

This is a terrible, horrible, no good, very bad argument in favor of more healthcare spending.  It is true that as the immortal Herb Stein once said, "If something can't go on forever, it will stop."  But, to belabor the obvious, there is more than one way to stop.  This is sort of like saying, "I know I'm going eighty-five now, but it's perfectly okay for me to press the accelerator here down to the floor, because after all, my current speed is already unsustainable."  One wants to know that one can stop with the brakes, rather than the trees decorating the sharp turn seven miles down the road.

People who aren't worried about setting up a big new entitlement, because after all, we're going to have to fix it eventually, are encouraged to read Paul Blustein's excellent book on the Argentinian crisis, And the Money Kept Rolling In (And Out).  Unsustainable fiscal policies can end when the government tightens its belt and raises taxes and cuts spending--or it can end when the whole thing melts down spectacularly. 

Now, we borrow in our own currency, so I'm not suggesting an actual replay of the Argentinian debacle--only that even when everyone knows that the thing is unsustainable, it can go on for a long time, and then implode in a virtual instant.  With an independent central bank, the US options for dealing with unsustainable debts aren't actually particularly attractive.  At best, when we do start cutting back, we will make various people who planned their lives around current government policy substantially worse off.  That's something that we should be thinking carefully about, not blithely endorsing.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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