I’ll Have What Mankiw’s Having

Greg Mankiw has a plan for cutting the deficit.

Greg Mankiw:

I have a plan to reduce the budget deficit.  The essence of the plan is the federal government writing me a check for $1 billion.  The plan will be financed by $3 billion of tax increases.  According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.

Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit.  Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit.  But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.

Glenn Reynolds counters, “I’m prepared to do it for half what Mankiw wants.”   I’d do it for half again as much, except for one thing:  We really, really need to cut the deficit.   So I’ve got a plan to cut the budget 20 times what Mankiw’s does.

FILED UNDER: Economics and Business, Humor, Quick Takes
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Andyman says:

    James,

    Re: the revenue-raising portions of HCR. Do you really think that 1) they’d survive a repeal attempt, or 2) they’d have *ever* been proposed or enacted without HCR?

    The honest answer to both questions is no. So how are they not part of the HCR package?

  2. john personna says:

    Mankiw runs a blog without comments just so that he can engage in such obvious sophistries.

    Paying our debt? Equivalent to giving some guy $1 billion.

  3. James Joyner says:

    @Andyman: Makiw is arguing — or, presumably, referring to past arguments — that the goodies aren’t part of the cuts, just sugar to make the medicine go down.

    @jp: I gather the piece is a joke about the way we do things in Washington, where it costs $1 in boondoggle spending to get $2 in cuts.

  4. john personna says:

    No James, consider this central paragraph:

    Healthcare reform, its advocates tell us, is fiscal reform. The healthcare reform bill passed last year increased government spending to cover the uninsured, but it also reduced the budget deficit by increasing various taxes as well. Because of this bill, the advocates say, the federal government is on a sounder fiscal footing. Repealing it, they say, would make the budget deficit worse.

    As others have noted, the crazy inner claim is that providing for the uninsured is like giving Mankiw free money.

  5. Andyman says:

    James,

    I think you’re misreading Mankiw as well. There’s a meme in conservative circles that HCR shouldn’t have been read as budget-neutral (or actually much better!) because the tax increases that paid for it are somehow not closely related enough to the expenses.

    The analogy a friend gave me is that you can’t appropriate an extra $1 billion for the National Parks, raise income taxes by $1.5 billion, and call it a budget-reducing Parks bill. Mankiw’s “proposal” is along similar lines.

    I think they’re both wrong, however. The gov’t only uses a certain number of levers to raise revenue. It’s absurd to expect that the revenue to pay for spending also comes from the exact same realm of gov’t responsibility. As I said in my first comment, the relevant question when deciding whether it’s fair to call HCR budget-friendly is not whether the extra revenue also comes from health care but whether the extra revenue would have existed without the bill as proposed and passed. It wouldn’t. Therefore the package should be conceived of as a unified thing.

  6. James Joyner says:

    @jp:Makiw isn’t arguing that giving him money (about which he’s joking) is the same as taking care of a social problem. He’s just saying that both are an expense, not a cost savings.

    @Andyman: Agreed that the spending greased the way for the revenue measures. Mankiw’s just making a humorous aside that it doesn’t make the spending cost saving. That it comes with more-than-offsetting credits doesn’t make it not a debit.

  7. mantis says:

    Mankiw’s a moron. The gall of the person who advised President Bush when he 1) passed a second set of tax cuts, and 2) passed the Medicare Prescription Drug Benefit. Both of those items hugely increased the deficit, with nary a though of how to offset them.

    Now he complains that raising more revenue than you spend is “sloppy thinking?” Unbelievable.

    Yes, James, his post is a joke, but not for the reason you think. He is a joke, his economic acumen is a joke, and anyone who thinks he makes a good point is a moron.

    And that’s without even getting into the fact that Mankiw equates getting ~30 million uninsured people medical insurance with giving money to Greg Mankiw for no reason. PPACA does real demonstrable good for many people, Mankiw, and it cuts the deficit. Two things you never even attempted, jackass.

  8. TG Chicago says:

    @Joyner: FYI, you’re misspelling Mankiw’s name here, most notably in the headline to the post.

    Anyway, I echo Jonathan Chait’s thoughts (which are actually about Krauthammer, but Krauthammer makes a very similar point to Mankiw’s):

    http://www.tnr.com/blog/jonathan-chait/81924/charles-krauthammer-laughs-arithmetic