David Brooks and the Missing Link

A few days ago, I suggested that when David Brooks fails to link to something that he is referencing and is easily available online, he's probably hiding something. Here we go again:

Spending on domestic programs — for education, science, infrastructure and poverty relief — has already faced the squeeze and will take a huge hit in the years ahead. President Obama excoriated Paul Ryan for offering a budget that would cut spending on domestic programs from its historical norm of 3 or 4 percent of G.D.P. all the way back to 1.8 percent. But the Obama budget is the Ryan budget. According to the Office of Management and Budget, Obama will cut domestic discretionary spending back to 1.8 percent of G.D.P. in six years.

No link to that 1.8 percent figure? You'll find it here, on page 30, with the explanation,

Discretionary spending levels other than overseas contingency operations reflect the budget authority caps under the Budget Control Act of 2011. The split of discretionary spending between security and nonsecurity after 2013 is based on increasing budget authority in each category by the growth rate in the aggregate discretionary cap.

Perhaps Brooks somehow missed it, but right now neither party is keen on implementing the automatic tax cuts that are scheduled to occur under the deficit reduction sequestration provisions of that Act.

Brooks also describes CBO projections,

The current budget calls for a steep but possibly appropriate decline in defense spending, from 4.3 percent of G.D.P. to 3 percent, according to the Congressional Budget Office.

The 3% number apparently comes from here, page 74, for the year 2022:

Most discretionary appropriations for 2013 through 2021 are constrained by the caps and automatic enforcement procedures put in place by the Budget Control Act; for 2022, CBO assumed that such appropriations would equal the 2021 amount grown at the rate of inflation. Given those appropriations, discretionary spending would decline from 8.4 percent of GDP in 2012—which is already below the 2011 level of 9.0 percent—to 5.6 percent in 2022 (see Table 5-1).

In reciting the 3% figure as "possibly appropriate", Brooks is expressing some level of indifference to a cut to that level. His professed fear is that "defense planners are notoriously bad at estimating how fast postwar military cuts actually come", whereas his ability to project future Medicare cost increases verges on perfection (never mind that he appears to be unaware that Medicare spending growth has been lower than projected for the past three years) - and thus at some point in the future the military budget might be cut below the 3% (that results from the sequester, and that both parties appear intent on raising) in the CBO projection. Also, there's an inherent tension between arguing that the 3% figure is "possibly appropriate" and Brooks' overall thesis that the President's purpose in appointing Chuck Hagel is to have him "supervise the beginning of America’s military decline".

First it's the OMB, then the CBO, and then over to the GAO. David Brooks writes,

Keep in mind how brutal the budget pressure is going to be. According to the Government Accountability Office, if we act on entitlements today, we will still have to cut federal spending by 32 percent and raise taxes by 46 percent over the next 75 years to meet current obligations. If we postpone action for another decade, then we have to cut all non-interest federal spending by 37 percent and raise all taxes by 54 percent.

The GAO writes,

One measure of the challenge over the long term is the “fiscal gap.” The fiscal gap represents the difference, or gap, between revenue and noninterest spending over a certain period, such as 75 years, that would need to be closed in order to achieve a specified debt level at the end of the period. From the fiscal gap, one can calculate the size of action needed—in terms of tax increases, spending reductions, or, more likely, some combination of the two—to close the gap.

For example, to keep debt held by the public as a share of GDP in 2086 from exceeding its level at the beginning of 2012 (roughly 68 percent of GDP) in our Alternative simulation, the fiscal gap is 8.3 percent of GDP (see table 1). This means that revenue would have to increase by 46 percent or noninterest spending would have to be reduced by about 32 percent (or some combination of the two) on average over the 75-year period. Even more significant changes would be needed to reduce debt to lower levels.

Brooks says "and", the GAO says "or"... which means Brooks is doubling the size of the problem. Were Brooks to resort to the obscure news source known as the "New York Times", he would find an explanation by Bruce Bartlett of the GAO's projection:

As the table shows, spending is not out of control. Entitlement programs like Social Security and Medicare are rising gently as the baby-boom generation retires. All other spending, including that for the military and domestic discretionary programs, falls – with the notable exception of interest on the debt. Interest rises sharply as the deficit rises, principally because the G.A.O. assumes that revenue will not be permitted to rise above its historical average – as Republicans continually insist....

That leaves interest on the debt as the principal driver of long-term spending and deficits. As the G.A.O. projections show, net interest rises from 1.4 percent of gross domestic product this year to 3 percent in 2020, 4.9 percent in 2030 and continues rising astronomically thereafter as interest accrues on the bonds previously sold to pay interest on the debt.

Interest rises from 6.1 percent of the federal budget in 2012 to 12.9 percent in 2020, 21 percent in 2030 and eventually reaches 59 percent if current projections are maintained through 2082, the last year in the G.A.O. analysis. As a share of the deficit, interest would rise from 19.2 percent this year to 62 percent in 2020. In the long run, virtually all of the deficit is accounted for by interest on the debt.

Bartlett asserts that the way to avoid that enormous increase in the cost of interest is for the present generation of Republicans to stop preventing government from paying for itself. Simply put, the GAO report does not support Brooks' "out of control Medicare" position, but is the result of out-of-control borrowing forced by Republican insistence that government not be adequately funded. If you don't want the national debt to grow and you're not willing to make the cuts to government expenditure necessary to avoid growing the debt, you have to increase revenues.

On the positive side, Brooks seems to have given up on his peer group's historic insistence that the problem is a single program called "medicareandsocialsecurity", and is now focused on Medicare. On the negative side, he's not being honest about what his sources actually say, and he's making what is fundamentally an appeal to fear. The OMB and CBO reports are only relevant if the Republicans refuse to work out a different deal, such that the automatic cuts are not changed. The GAO projection, which is half as dire as Brooks purports, indicates that the growth of Medicare costs remains a significant concern but that the larger concern is that continued, long-term deficit spending will cause the amount the U.S. has to pay to service the debt to snowball. This?

Chuck Hagel has been nominated to supervise the beginning of this generation-long process of defense cutbacks. If a Democratic president is going to slash defense, he probably wants a Republican at the Pentagon to give him political cover, and he probably wants a decorated war hero to boot.

All the charges about Hagel’s views on Israel or Iran are secondary. The real question is, how will he begin this long cutting process? How will he balance modernizing the military and paying current personnel? How will he recalibrate American defense strategy with, say, 455,000 fewer service members?

Fear-based nonsense. First (granting that he's younger than he looks), if Brooks recalls his history, back in 2000 candidate Al Gore was proposing greater military spending than candidate George W. Bush, and Donald Rumsfeld was predicted to have been chosen to oversee a reinvention of the military into a smaller, more nimble force. How did that turn out, again? Second, even Brooks knows that Hagel will not be overseeing a reduction in the active duty armed forces from 1.4 million down to @1 million. Brooks doesn't explain his number, but I expect he's extrapolating from the financial figures from the CBO - a reduction "from 4.3 percent of G.D.P. to 3 percent" over eight years, or 30% over eight years, with 30% of 1.4 million being 4.2 million... that's in the same ballpark.

Never mind that Hagel is unlikley to be Defense Secretary in eight years, that the scheduled defense cuts underlying that projection are not going to happen, that a 30% cut does not prevent prioritization (it would not be 30% of each line item, across the board), that Congress controls the purse strings, that neither this Congress or the President can bind the hands of their successors, or that Brooks himself has suggested that the net result (of the cuts that won't actually occur) may be an appropriate level of defense spending. "The sky is falling - we're turning into Europe and it's going to happen this month."

A still theoretical 30% cut in military spending is not going to "turn us into Europe."

What's missing from Brooks' column? A solution. Brooks implicitly rules out means testing when he argues that a tax increase on the wealthy is "barely a wiggle on the revenue line and does nothing to change the overall fiscal picture". Does he endorse the Democratic initiative to attempt to identify the most effective treatments for medical conditions, why trying also to identify and eliminate costly treatments that are either no more effective than less costly counterparts or that don't work at all? If so, he should write a column criticizing his own political party for its demagoguery about "rationing" and "death panels". Does he want to arbitrarily cap Medicare expenditures and replace the program with vouchers? If so, he's afraid to say so. Does he simply want to reduce compensation levels for doctors, hospitals, and medical equipment suppliers? What's left?

Will Paul Ryan's Budgetary Lies Haunt Romney

They will, if the media does its job. The media should hold Romney's feet to the fire until he identifies enough loopholes and deductions he will ask Congress to close to make his "budget" work.

Ryan was repeatedly challenged to identify the tax deductions he and Romney propose to eliminate to "pay for" their massive tax cut. Predictably, Ryan refused to identify a single one. Even when asked if he would protect the mortgage interest deduction for households earning less than $100,000, he refused to answer.

Here's the thing: There's no way on God's green Earth that Romney and Ryan are the know-nothings they pretend to be on this subject. They're cowards, not idiots. They have specific deductions in mind - probably not enough to make their proposal work, but they do have ideas. They won't name them - beyond some lame demagoguery about Obamacare (which is projected to decrease the deficit) and PBS (whose federal funding is less than a rounding error) - because they're afraid that specifics will cause their bad arithmetic to turn them into budgetary laughing stocks, that their proposed cuts will prove so unpopular that candor costs them the election, or more likely both.

It was fascinating to hear Ryan complaining that the CBO wasn't able to score a speech by President Obama, because they had neither been asked to score anything nor given data to score, and because the speech itself was short of specifics. You know what? To the extent that a politician is making a budget or spending proposal I agree with Ryan that the specifics should be shared, and I agree that when those specifics are produced the CBO should score them. Where I don't agree with Ryan is that the rule should only apply to Democrats. Man up, Mr. Ryan, and submit your latest, detailed budget proposal to the CBO for scoring.

You have to appreciate the audacity, presenting a caricature of Obama's tax proposals then whining that taxes on the wealthy won't be sufficient to close the deficit (as if anybody claimed they were), and in almost the next breath pretending that you can pay for Medicare at its present levels by trimming benefits for the wealthy. You know what? When you target the wealthy it's either class warfare or it isn't, and you promise on top of that "class warfare" to fix the most significant budgetary problem we face, projected Medicare costs, by reducing benefits for wealthy people you are engaging in the very act you misattribute to the other side - because as you've already admitted, the dollars aren't there.

And to keep resorting to the tired distortion about the "$716 billion cut" to Medicare that Ryan included in his own budget, pretending that in Democratic hands a cut he explicitly endorsed through that adoption will devastate seniors? Talk about chutzpah.

Ryan kept complaining that accurate descriptions of his proposals would scare people, suggesting that it was wrong to scare voters. Clever, really, and I expect some people will actually fall for it.

If You Have No Logical Defense, Why Not Embarrass Yourself

Douglas Holtz-Eakin, "the president of the American Action Forum, was director of the Congressional Budget Office from 2003 to 2005", signed a letter to the Washington Post that, frankly, I'm amazed he would want associated with his name. Holtz-Eakin led the CBO during the lead-up to the housing bubble, is an economist and was an adviser to John McCain in 2008, so he's not in a position to claim ignorance of the basic facts of how the recession arose or why we presently have large deficits. Yet there he is, refusing to acknowledge basic facts.

Holtz-Eakin is offended by Peter Orszag's criticism of Paul Ryan's budget flimflammery, but rather than attacking Orszag's analysis he... attacks Orszag:

Certainly, it is unsurprising that a leading Democratic thinker such as Mr. Orszag would put forward the particular criticisms of the budget that he did. But Mr. Orszag’s attempt to shellac Mr. Ryan raises eyebrows. It was Mr. Orszag, after all, who, together with his boss, helped saddle the country with four consecutive $1-trillion-plus deficits. With such a record, a little humility would serve Mr. Orszag well.

With his background in the CBO, Holtz-Eakin should be familiar with CBO projections of how various Bush-era policies, such as tax cuts, unfunded entitlement expansions, and two wars of choice, along with the financial industry collapse and economic downturn that arose under Bush, have affected the deficit. For somebody with his background to whine about "" is difficult to regard as anything but a lie by omission. Perhaps even a lie by commission, given that he suggests that something else was possible.

But Holtz-Eakin's abuse of the facts is not offered in defense of Ryan. It's offered as an attack on Orszag, in effect, "Anybody who was part of a White House that ran up large deficits shouldn't be taken seriously." Perhaps Holtz-Eakin would have us turn to Clinton's economic advisors, the ones who left us with a budget surplus? Yeah, right.

The essence of Holtz-Eakin's comment is that nobody who has been associated with the Obama Administration on budget or spending issues should be taken seriously, no matter what they say, no matter what the facts, no matter what the merits of their argument, because of that past association. An unadulterated presentation of the logical fallacy of guilt by association - "Orszag is associated with Obama, I don't like Obama's budget policies, therefore nobody should listen to Orszag".

But hold on a second,

Mr. Orszag contended that “most serious tax analysts don’t think” that the reforms proposed by Mitt Romney and Mr. Ryan “are politically feasible.” He might be right about such experts — although Erskine Bowles, a co-chairman of the president’s own fiscal commission, called the Ryan budget “sensible,” “honest” and “serious.”

The letter is a whopping four paragraphs long - four short paragraphs - yet Holtz-Eakin can't even maintain internal consistency. Why can't we trust Orszag? He's tainted by his association with Obama. Why should we ignore "serious tax analysts", even though they may be right, and listen to Erskine Bowles? Because Bowle's is associated with Obama and is therefore more trustworthy than the experts.

Had Holtz-Eakin wanted to present an actual critique of Orszag's column, he might have taken a different tack on the line about what "most serious tax analysts" think. The use term "serious" is a rhetorical trick often used to diminish those who disagree with you. Your opponent is put immediately on the defensive by the implicit argument that he's not qualified, not serious, or both. The fact that Holtz-Eakin did not challenge Orszag's statement, though, does not suggest to me that he missed the implicit poisoning of the well. It suggests to me that he agrees with the statement and thus, rather than attempting to refute it, instead makes an ad hominem attack against tax analysts and upon the President:

Fortunately experts do not decide what is politically feasible in this country.

American history is replete with instances of strong leaders accomplishing great things that experts deemed impossible. Presumably, President Obama refrained from taking bold steps to address the deficit precisely because he was listening to such experts, including Mr. Orszag.

It is true that policy in our nation is often formed by people with no expertise on the subject matter they're addressing, whether through legislation or regulation. It's also true that sometimes the experts get things wrong. But on the whole, it is a good thing for people who are ignorant of how something works to consult with the experts and form a policy that is more likely to work than something they extract from their posterior. It's not clear why Holtz-Eakin believes that we are better off being governed by political leaders who know nothing of the subject matters they're addressing than it is for those leaders to attempt to first educate themselves before passing legislation and regulations that, if misguided, could have profound, negative effects. But there he is, unambiguously arguing in favor of our being governed by the willfully ignorant.

Since Holtz-Eakin is speaking in defense of Paul Ryan - sure, a weak defense given that he fails to make even a single substantive point that would support Ryan's plan or refute Orszag's criticism - it's worth noting that in addition to the internal inconsistency it creates, his appeal to authority by reference to Erskine Bowles belies his implication that the President has not attempted to address the deficit. After all, if it weren't for Obama's deficit commission, Bowles would not merit mention. And let's note, the only qualification Holtz-Eakins deems worth mentioning is the association with Obama, apparently because he does not believe that Bowles has bona fide expertise that could stand against the positions of the aforementioned experts.

Further, Paul Ryan served on that commission - and voted against its proposals. And when Obama attempted to negotiate a "grand bargain" on the deficit, it seems that Ryan was one of the Republicans who scuttled the deal. Why? In the former case Ryan claims that he didn't want to vote for a plan that didn't slash Medicare, and that seems possible given his barely disguised plan to transform Medicare into an underfunded voucher program. But more realistically, it's because in both cases he would have had to sign on to tax cuts, and he found it better to have huge deficits than to raise taxes.

If Holtz-Eakin has read Ryan's plan, he knows that's one of its biggest failings - even if we assume that the cuts Ryan is afraid to specify become reality, his insistence upon cutting taxes for the wealthy means that his plan will increase the deficit.

Holtz-Eakin is no fool - I find it difficult to believe that he is unaware that his response to Orszag is anything more than a partisan screed. I can only surmise that this is what he believes will lead donors to give money to his organization.

If You Won't Be Honest, You Won't Stop the Extremism

It's always a disappointment to read Michael Gerson, because even when he opens a column with an idea that appears promising he inevitably reverts to the weak, partisan thinking that exemplifies his... entire career. Gerson used Jeb Bush's testimony before the House Budget Committee as a launching point, and I am fully prepared to give Jeb Bush credit for pushing back against anti-tax pledges, a stance Gerson appears to support. But Gerson quickly resorts to stenography, plucking out the more ideological components of Bush's testimony without relating them to actual facts. Why? Because, in my opinion, Gerson knows the facts and knows that they refute some of the arguments that Bush was making. To advance his own ideological agenda, Gerson uses Bush as a proxy to advance an argument he knows to be false.

For example, Gerson plucks out some choice phrases and strings them together as follows:

Bush insists that responsibility for dysfunction in Washington is shared, but not equally. “I’m disgusted by the system. But Democrats are more to blame, because they control the Senate and the presidency. They have not led.” At least Rep. Paul Ryan’s budget, he argues, “put a down payment on the problem. But congressional Democrats are using it as a tool to plug Republicans and don’t even offer a budget.” The president received the report of his deficit reduction commission, but, Bush said, “hasn’t uttered the words ‘Simpson’ and ‘Bowles’ in the same sentence again.”

We can start by asking, where was Jeb Bush when his brother was in the White House? Why did he remain silent during the glorious period when the Republicans controlled all three branches of government? I understand why Gerson doesn't want to mention the history or legacy of Jeb's brother, G.W., as (a) that history reflects terrible Republican governance, (b) it undermines Jeb's present assignment of blame, and (c) Gerson was employed by the G.W. Bush Administration and was thus part of the problem. But still, an honest man would acknowledge at least some of that reality.

It's quite easy to understand why we're not reaching "grand bargains" on important issues when we're looking at gridlock created by the ideological rigidity of the minority party and its extraordinary use of procedural rules to block the progress of important - and even unimportant - legislation. But if we are to say that the Democrats aren't showing enough "leadership" to get the Republicans to come across the aisle and support legislation addressing major problems, what are we to make of the failure of the Bush Administration to fix the nation's problems - or of the fact that it's policies served to worsen some of the nation's problems - in an era when it was able to obtain sufficient Democratic support to pass most important legislation?

Paul Ryan's plan can be said to "put a down payment on the problem" if that means sneaking a credit card out of somebody's wallet, using it to put a down payment on an item you want, and chuckling about "the look on that guy's face when he gets the bill," but as actual economic policy it's a bad joke. Jeb Bush might respond, "at least it's something", which is not actually a defense of his argument or support for his position, but his endorsement was pretty thin. Gerson has no similar excuse. He knows better. He prefers to let a Republican talking point stand and imply that Ryan's plan is somehow "serious", than to address the facts.

Finally, as Gerson surely remembers, the G.W. Bush Administration was big on the notion of privatizing Social Security until it found out that people hated the concept, so it changed its terminology - and started to complain that the use of the term "privatization" was unfair even though they were the ones who introduced it. Gerson knows that President Obama attempted to broker a deficit reduction deal with the Republicans that largely followed Bowles-Simpson. The fact that he didn't expressly reference the unpopular, unsuccessful deficit reduction commission or the report of its leading members does not change the substance of the proposed "grand bargain", and it's simply dishonest of both Jeb Bush and Michael Gerson to pretend otherwise.

As previously mentioned, Gerson acknowledges President Obama's effort to broker a "grand bargain" on deficit reduction:

Republicans in Congress are led by House Speaker John Boehner — who attempted a budget deal including tax increases — and Senate Minority Leader Mitch McConnell. These are hardly the four horsemen of the tea party apocalypse.

Gerson knows that it was Boehner, not President Obama, who refused the deal. Gerson's boss, Fred Hiatt, recently wrote a missive complaining that it was somehow the President's fault that Boehner walked away, apparently because Obama was serious about balancing the budget and wanted a sufficient tax increase to actually achieve that goal. So when Gerson argues,

Addressing this vast structural problem will require a grand bargain that includes entitlement reform and higher revenue. Those who rule out the possibility of compromise as a matter of ideology are undermining the public interest.

he should include a correction of Bush's pretense that the failure resulted from Obama's failure to lead. Although I agree with Gerson that if anti-tax zealots dictate policy "all hope is lost", there is no evidence that the Republican Party is willing to stand up to the likes of "[Grover] Norquist and [Rep. Debbie] Wasserman Schultz". Pretending that the Ryan Plan is credible, that John Boehner is prepared to stand up to that type of pressure, or that Mitt Romney should be expected to do so? At best, naive.

CBO Scoring

I've mentioned in the past my skepticism of CBO scoring... we have something of a Churchillian "it's the worst scoring system except for all the others" thing going on, with the non-partisan nature of the office helping to achieve, but not of itself proving, either objectivity or accuracy. CJR offers a quick summary of some of the questions raised in recent news stories about the CBO's scoring of the healthcare reform bill.

Gerson on the Ryan "Plan"

Michael Gerson's column today is a typical display of weak thinking and water-carrying. I'll mostly defer to Steve Benen for the response.

I think it's worth adding one more thing, though: Gerson is flat-out wrong when he argues that the CBO projects that Ryan's budget proposal "eventually achieves a balanced budget". In fact, the CBO was asked by Ryan to ignore his actual tax proposals and assume that they would generate 19 percent of GDP in taxes.

But, and this caveat is a whopper, CBO assumed this wonderful outcome would occur only if the revenue portion of Ryan’s plan generated 19 percent of GDP in taxes. And there is not the slightest evidence that would happen. Even though Ryan’s plan has a detailed tax component, his staff asked CBO to ignore it. Rather than estimate the true revenue effects of the Ryan plan, CBO simply assumed, as the lawmaker requested, that it would generate revenues of 19 percent of GDP.

If Ryan isn't willing to take his own tax proposals seriously, even if we ignore his historic preference to blow the roof of the budget, why should we regard him as something other than an opportunist who doesn't even believe his own words?

Newt Gingrich's "Health Idea" Deceptions

Although they say "Never attribute to malice that which can be adequately explained by stupidity", Newt Gingrich is not a stupid man. So there's no reason to cut him, or his writing partner Jon C. Goodman, any slack over their Wall Street Journal piece on "GOP Health Ideas". The first distortion comes right in the headline - despite his past role, Gingrich is not a spokesperson for the Republican Party. Instead he profits by advocating on behalf of the health industry. John Goodman likes to brag that he helped take down healthcare reform under the Clinton Administration, and if his mini-bios are indicative prefers to be called libertarian as opposed to "Republican". In other words, these aren't GOP ideas - they're the private ideas of the authors.

It isn't difficult to find the actual GOP ideas on healthcare reform. All you have to do is go to GOP.com and click, er, look under, er... search... Hm. Not so much a GOP priority? Well then, let's try GOP.gov... and whoah - they summarize their plan as reflecting four ideas:

Number one: let families and businesses buy health insurance across state lines.

Number two: allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do.

Number three: give states the tools to create their own innovative reforms that lower health care costs.

Number four: end junk lawsuits that contribute to higher health care costs by increasing the number of tests and procedures that physicians sometimes order not because they think it's good medicine, but because they are afraid of being sued.

And four ideas that neither offer any meaningful reform beyond weakening state protections to health insurance consumers and victims of malpractice - while simultaneously giving lip service to federalism. The CBO's scoring of the last "serious" GOP proposal boiled down to "It's just short of a joke". The proposal provided about 40% of the cost savings projected from the Democratic bill, while insuring 33 million fewer people (3 million more people insured by 2019, as opposed to 36 million under the Democratic bill).

Now I don't want to read too much into a CBO rating, as their methodology is not always great - and neither is their track record. Being nonpartisan does not, of itself, make your economic projections more accurate. But as CBO ratings are often held up as a gold standard by both major parties, it seems reasonable to compare actual GOP proposals to the Democratic bill on that basis.

No wonder Gingrich and Goodman prefer to embellish. Follow the links for more information on each idea:

1. Make insurance affordable


2. Make health insurance portable


3. Meet the needs of the chronically ill


4. Allow doctors and patients to control costs


5. Don't cut Medicare


6. Protect early retirees


7. Inform consumers


8. Eliminate junk lawsuits


9. Stop health-care fraud


10. Make medical breakthroughs accessible to patients