Tuesday, November 11, 2014

He Could Be Worse. He Could Be One Of The Other Three.

It would be sacrilegious to castigate John McCain, of all people, on Veterans Day. So call me sacrilegious.

In a recent interview with Salon, Elias Isquith asked the Arizona senator (photo below from Jeff Malet via Salon) remarked

[At the beginning of his presidency], I think the president had two choices: one was [to take on] healthcare reform, and the other was [to address the] debt and the deficit. I believe that … historians may view that as a mistake, not to have gone to debt and deficit reduction when he had 60 votes in the Senate and an overwhelming majority in the House … That might have been something that would have been significantly more impactful and long-lasting than the Affordable Care Act.

McCain warns "everyone that I have talked to that's smart on it says within three, four, five years- as we see the dramatic increase in enrollment in the entitlement programs- it's going to start going back up."

Rest assured, Senator, historians will not view as a mistake he failure to pursue debt reduction while we were in the throes of the Great Recession. In July, Paul Krugman explained

For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.

That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.

I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.

About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.

Things are expected to deteriorate after that, mainly because of the impact of an aging population on Medicare and Social Security. But there has been a dramatic slowdown in the growth of health care costs, which used to play a big role in frightening budget scenarios. As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century. Oh, and the budget office now expects interest rates to remain fairly low, not much higher than the economy’s rate of growth. This in turn weakens, indeed almost eliminates, the risk of a debt spiral, in which the cost of servicing debt drives debt even higher.

In promoting the Affordable Care Act, the President yielded to GOP concerns and took painful steps to assure, as much as possible, that reform would not add to the deficit. He did so, in part, by including a medical device tax, which McCain specifically cited to Isquith as a needed change in the law.  The tax likely will not bring in a great deal of revenue, but McCain's concern that it will drive business offshore is likely misguided because, as the Center on Budget and Policy Priorities has noted, it "applies equally to imported and domestically produced devices, and devices produced in the United States for export are tax-exempt."

Nonetheless, the Arizonan claims "it has not been a success at all," probably because the GOP raison d'etre is to explode the federal deficit, whether by cutting or eliminating a tax or by jacking up spending.  

And as you would expect, there is one area in which the Senator never would question spending.  He reminds readers that he was an avowed supporter of arming the Free Syrian Army, one of the groups fighting the Syrian regime of Bashir Assad.  Wherever it might be- Iraq early in the last decade, Iran, Libya, Syria, Israel, or Iraq and Syria again- John McCain has been vocally on the side of more intervention and/or more weapon transfers and greater use of the American military. There is rarely a mention of cost- which probably already exceeds $1 billion for the anti-ISIL campaign (photo below from Center for Strategic and Budgetary Assessments),  for that would not be compatible with the weeping and the gnashing of teeth over deficits.

But on Veterans Day, it is only appropriate to say something nice about Senator McCain. Of the last four Repub nominees (McCain, Palin, Romney, Ryan) for national office, John McCain still makes the greatest amount of sense.

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