Mike Kueber's Blog

November 17, 2010

The liberal alternative for balancing the budget – supplemental sales tax and death panels

New York Times columnist Paul Krugman is one of America’s most influential liberal economists.  This past Sunday he created a firestorm on a Sunday talk show by declaring that America’s budgetary mess will require not only a national sales tax, but also death panels. 

You may recall that Sarah Palin was ridiculed by liberals and the press when she asserted that ObamaCare would lead to death panels.  Now it appears that Palin wasn’t being reactionary; she was being prescient.   

To dampen the firestorm that his comments created, Krugman promptly issued a clarification in his blog.  (See Conscience of a Liberal, November 14, 2010 posting attached below.)   In his blog, Krugman explained that America’s budgetary mess is so severe and systemic that only radical game-changers will suffice.  Obviously a national sales tax is a game-changer that many conservatives have recommended for years to replace the national income tax.  Unfortunately, Krugman is not talking about a national sales tax to replace the income tax; he wants a sales tax to supplement the income tax. 

Just as the national income tax, which was ratified in 1913 as the 16th Amendment, enabled the federal government to expand to an unprecedented level, Krugman admittedly believes that a supplemental sales tax will enable the federal government’s share of GDP to increase a few more percentage points. 

Good luck on selling that to the American people.  There is no question that Americans are unwilling to pay for more government services, so the role of a statesman is to quit telling voters that more government services can be had without paying for them.  

Krugman’s second game-changer is the implementation of death panels.  Although his blog post attempts to ameliorate his comments by saying “not really death panels,” it then goes on to say “at some point, how much we’re willing to spend for extreme care.”  Well, that is precisely the death panels that Sarah Palin was railing against.  She correctly foresaw that (a) ObamaCare would not adequately “bend the cost curve,” but rather would drive up the total cost of medical care in America, and (b) the only way to pay for the increase costs would be to eliminate coverage for certain procedures, especially for the elderly. 

Paying for terminal care is not a new issue.  My first recollection of this issue was Colorado governor Richard Lamm suggesting in 1984 that the elderly “have a duty to die.”

  • We’ve got a duty to die and get out of the way with all of our machines and artificial hearts and everything else like that and let the other society, our kids, build a reasonable life.” 

This plain talk earned him the sobriquet “Governor Gloom.”  Since then, the relative cost of terminal care has become more problematic.

Republicans, of course, demagogued the issue during the ObamaCare debate by claiming that the government should not come between a doctor and his patient.  That is patent nonsense.  Whoever is paying the bill, government or insurance company, has a role because the doctor is not going to do anything without an assurance of being paid.  That fact was dramatically revealed today in a USA Today article on an Arizona man who forfeited a life-saving liver transplant because he could not raise the $200,000 needed for the surgery.  http://www.usatoday.com/news/nation/2010-11-17-arizona-cuts-liver-transplant_N.htm?loc=interstitialskip.

But Democrats are certainly not innocent when it comes to demagoging.  During the ObamaCare debate, Florida congressman Alan Grayson described the Republican alternative in a particularly grotesque way:

  • It’s a very simple plan. Here it is. The Republican health care plan for America: Don’t get sick. That’s right, don’t get sick. If you have insurance, don’t get sick. If you don’t have insurance, don’t get sick. If you’re sick, don’t get sick… but it’s not quite a foolproof plan so the backup plan in case you do get sick – if you get sick America, the Republican health care plan is this: die quickly. That’s right. The Republicans want you to die quickly if you get sick.”

I believe the federal government is already too big and powerful, so providing it with the wherewithal to get even bigger is a bad idea.  Because of the popularity of a national sales tax, I think it is an idea worth trying, but only if we concurrently phase out the income tax.

Regarding so-called death panels, I believe that government and private insurers cannot afford to give doctors/patients a blank check for whatever treatment they agree on.  That is a prescription for exploding costs and diminishing benefits.  Cost-benefit decisions have to be made, not by the doctors and patients, but by the people who ultimately pay for the treatment – i.e., insurance policyholders and government taxpayers.  Just don’t call them death panels. 

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The Conscience of a Liberal by Paul Krugman

November 14, 2010, 12:40 pm

Death Panels and Sales Taxes

I said something deliberately provocative on This Week, so I think I’d better clarify what I meant (which I did on the show, but it can’t hurt to say it again.)

So, what I said is that the eventual resolution of the deficit problem both will and should rely on “death panels and sales taxes”. What I meant is that

(a) health care costs will have to be controlled, which will surely require having Medicare and Medicaid decide what they’re willing to pay for — not really death panels, of course, but consideration of medical effectiveness and, at some point, how much we’re willing to spend for extreme care

(b) we’ll need more revenue — several percent of GDP — which might most plausibly come from a value-added tax

And if we do those two things, we’re most of the way toward a sustainable budget.

By the way, I’ve said this before.

Now, you may declare that this is politically impossible. But medical costs must be controlled somehow, or nothing works. And is a modest VAT really so much more implausible than ending the mortgage interest deduction?

So that’s my plan. And I believe that some day — maybe in the first Chelsea Clinton administration — it will actually happen.

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