Wednesday, April 4, 2012

The central Republicon lie about "Big Government"

Obama has at long last given an in-depth rebuttal of the Republican economic plans, and defense of his own, in his speech before American Society of Newspaper Editors (ASNE). The transcript is here.

A key fact that Obama notes is that is that discretionary federal government spending is the smallest percentage it has been since Eisenhower. As Krugman has put it, our government now is basically "an insurance company with an army." The insurance aspects, such as social security, medicaid and medicare are huge, but they are transfer payments. When the government gives you a social security check, they don't tell you how to spend it. In spending health care dollars you also have a choice of provider. That's why the specter of 'big government controlling your life' is such a lie: the 'big' part of the government is transfer payments, including for health care. They are not programs run by the government.

The "Republi-con," as I call it, misrepresents transfer payments as government control of your life, and then advocates ripping holes in the safety net so the rich can get more money.

The key issue as far as the deficit long term is, as Ezra Klein has said: health care, health care, health care. And the only way to get costs under control is more government intervention in the health care market to keep costs down and increase efficiencies. That's because, as Nobel-prize winning economist Kenneth Arrow argued long ago, health care has all the qualities that makes it *not* work for all as a free market, such a lack of information and time to make decisions, and lack of alternative goods. The alternative to health care is sickness or dying. Only government subsidies will enable the poor to get health care, and only government power of bargaining and of regulation can bring down costs.

It is clear that Obama "gets it" as far as the need for government investment in public goods for future growth of our economy. That is very good news, if he makes it a centerpiece of his campaign.

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