Dean Baker: The Deficit Problem is a Health Care Problem

Dean Baker, Co-Founder of CEPR

 

 

 

You’ve heard the demands from DC insiders. “Cut this!  Cut that! Cut the war! Cut health care!” The truth is, there is no cut big enough to solve America’s problems, which means only growth will save us.

“It’s easy to sit around and talk about what needs to be chopped up.  It takes courage to talk about what you’re going to build,” says Dylan.

“If you look at where the revenue for this country comes from, which is taxing the economic activity of the country, and then you look at the economic policies of this country, which are designed for a very few number of individuals.   Tell me a system that you have seen where you are extracting the life out of that system in which it functions better,” says Dylan.

“Basically, you have a power structure that’s trying to preserve its power.  And what’s going on in the last three decades is that you’ve seen enormous upward redistribution of income.  That’s had enormous consequences certainly for people who have been the losers in that story, and the overall economy.  We’re sitting here right now with 25 million people unemployed, underemployed, or giving up looking for work altogether.  We could think of lots of ways to go forward, but basically they’re largely blocked by the fact that these people control power.  They’re not anxious to give it up.”

Dean points to Washington’s “tribal ritual” of pointing at deficits as being our most pressing issue right now.  “In the short term, there is no deficit problem.  The short term is we have high unemployment, because we had a collapse in demand with the housing bubble collapse.  The government is filling the gap, and we should be glad for it,” says Dean.

Dean traces the deficit problem to one main issue.  “We are looking at a deficit problem, but that’s all due to health care.  We currently pay about twice as much per person as the average for other wealthy countries — Germany, Canada, England — and that’s projected to rise to three and four times as much per person.”

Listen in for an extended talk on the connection between health care expenses and the deficit, and Dean’s strategy for digging ourselves out of the hole our economy is in.  Here’s a clue: it’s not by cutting our way out, but growing our way out.

For more from Dean Baker, read his recent columns and op-eds here, and follow him on Twitter @BeatThePressDB.