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Here’s the Deal: How Washington Can Solve the Deficit and Spur Growth
With the manufactured “crises” of the fiscal cliff and the debt-ceiling showdown, it is easy to dismiss our federal budget-deficit and debt clashes as a passing fad, just a case of partisan politics. But there is, in fact, a very real problem here: us, the voters. We can’t make the tough choices. We want government spending, but we don’t want to pay the taxes that fund it.
What kind of government and society do we really want? And what combination of taxes and spending will create the economic growth we need to ensure good lives for our children and their children?
In this timely book, David Leonhardt, the Pulitzer Prize–winning New York Times economic columnist and Washington bureau chief, explains lucidly and with calm authority the mess we are in—and how we can get ourselves out of it. As the Obama administration settles into its second term, and a Republican Congress grapples with what it hopes to accomplish in the next two years, Leonhardt draws on a deep understanding of the issues and the newest data, as he ranges across topics from education to Social Security, from our “investment-deficit” disorder to our wasteful medical system. What he offers is a radically sensible plan, one that Washington would do well to heed if it wants to close our deficit, shift spending to investing—especially in the young and innovative—and get us back to growth.
ABOUT THE AUTHOR
David Leonhardt is the Washington bureau chief of The New York Times. He won the Pulitzer Prize for Commentary in 2011, for his columns on the economy, and the Gerald R. Loeb award for his 2009 New York Times Magazine story on “Obamanomics.” A New York native, he studied applied mathematics at Yale.
PRAISE FOR “HERE’S THE DEAL”
"If we were electing a prime minister soon, I'd want the winner to read Leonhardt's book. And if you're NOT a member of Congress and just want to understand the budgetary landscape on the merits, this is a great place to start." — Matthew Yglesias, Slate
What kind of government and society do we really want? And what combination of taxes and spending will create the economic growth we need to ensure good lives for our children and their children?
In this timely book, David Leonhardt, the Pulitzer Prize–winning New York Times economic columnist and Washington bureau chief, explains lucidly and with calm authority the mess we are in—and how we can get ourselves out of it. As the Obama administration settles into its second term, and a Republican Congress grapples with what it hopes to accomplish in the next two years, Leonhardt draws on a deep understanding of the issues and the newest data, as he ranges across topics from education to Social Security, from our “investment-deficit” disorder to our wasteful medical system. What he offers is a radically sensible plan, one that Washington would do well to heed if it wants to close our deficit, shift spending to investing—especially in the young and innovative—and get us back to growth.
ABOUT THE AUTHOR
David Leonhardt is the Washington bureau chief of The New York Times. He won the Pulitzer Prize for Commentary in 2011, for his columns on the economy, and the Gerald R. Loeb award for his 2009 New York Times Magazine story on “Obamanomics.” A New York native, he studied applied mathematics at Yale.
PRAISE FOR “HERE’S THE DEAL”
"If we were electing a prime minister soon, I'd want the winner to read Leonhardt's book. And if you're NOT a member of Congress and just want to understand the budgetary landscape on the merits, this is a great place to start." — Matthew Yglesias, Slate
55 pages, Kindle Edition
First published January 1, 2013
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Displaying 1 - 26 of 26 reviews
February 24, 2013
This is a great short piece that should be required reading for US voters. Leonhardt cuts thru the misinformation and politics surrounding the US Gov't budget and deficit economics. In addition to highlighting the areas that really matter (namely growth, taxes, medical spending and social security), he provides context and data to make his case. Unfortunately, we seem to be entrenched in a cycle of endless deficit crises that are almost entirely manufactured by congress. But Leonhardt shows very effectively that it doesn't have to be this way, and, in fact, the solutions are not that difficult if we do the right things.
October 25, 2023
We need at least 750 billion – 1 trillion of taxes or spending cuts every year for the next twenty-five to balance our budget? Nothing a few center-left technocratic tweaks can’t fix!
Sarcasm aside, this is a budget cutting primer designed to accommodate the touchy sensibilities of your typical New York Times crowd. The validity of the New Deal is never questioned. Whether a domain the federal government is spending money on really is a wise “investment” is taken for granted. Whether something would be better managed by the states or private sector goes unaddressed. Also neglected are the role of present government interventions in creating many of the problems we’re in. For example, higher education and health care subsidies/regulations are the primary preventable reasons costs have so unnaturally ballooned. This would, if mentioned, undermine the wisdom of more government interventions as the preferred solution. When David Leonhardt tells you “Here’s the Deal,” it's presented more as a command than suggestion, frequently couched passive-aggressively with “...a nonpartisan/bipartisan study has shown,” or coy misappropriations of quotes from famous right-wingers.
This breezy read sorely underestimates the true severity of the problem by making it look as though there are a couple levers and buttons with names like “eliminate health care ‘waste’” or “raise taxes equitably” or “invest in America’s economy, not ‘special interests’” that are gathering dust somewhere, and all we require is trust in our betters to pull the levers once more and all will be well. Leonhardt fails to seriously consider alternatives from the status quo vision he represents. I’m afraid this induces a false sense of security for the reader, especially during his discussions of taxes and health care:
A. Taxes – These will have to go up, preferably from removing deductions. But Leonhardt goes one step further to argue that it doesn’t really harm economic growth that much. Yes, yes it does. I’ve read the CRS study he cites as his real proof a while back, and its methodology is fundamentally flawed. If you want less of something you tax it. He supports a carbon tax a few pages later for this very reason. Labor force participation rates and hours worked are much lower in Europe today. They were roughly equal to ours in the past. A good proportion of the hypothetical revenues are offset by a smaller private sector.
Every $1 of new federal tax revenue has to be funding something so valuable that it is worthwhile taking out 60 cents out of the private sector. Certainly some amount of infrastructure and defense spending fits this bill, but his idea that the government needs to make ‘investments’ in the 'basic R&D' that the private sector supposedly doesn’t have the wherewithal to do itself is exaggerated. Our bloated military is no Silicon Valley. The economic value of higher education's pedagogical role and research hub credentials, commonly used to justify massive higher education subsidies, is also less clear cut than popularly perceived.
B. Health Care Reform – Yes, the prices you pay at the hospital are ridiculous and disconnected to services rendered. Yes, health care needs to be rationed better. But it’s another thing entirely to say that:
1) America’s health care is more expensive than other developed countries simply because of ‘waste.’
2) A ‘panel of experts’ can actually identify this ‘waste,’ and can
3) humanely remove it with a new batch of regulations, (which add costs of their own and help entrench established players in the industry), while
4) surmounting the myriad special interests suckling at the government teat, and
5) bureaucrats can do 2), 3) and 4) better than a deregulated health care market could.
We do actually get relative bang for our buck right now on health care quality and quantity. America has the highest life expectancy in the world when you remove omitted variables, like homicide rates or accidents, which health care providers have little control over. Americans consume much more food and drugs too, which perhaps insurance companies could reduce with lower premiums for people who took care of themselves better, were it not for government regulations banning this practice out of ‘fairness.’ We don't have to painfully wait months in line for treatments, which boosts our worker productivity and quality of life immeasurably to boot.
Government-run rationing, as seen in Europe and Japan today, necessitates reductions in quantity and quality of care (plus much higher and regressive taxes), because price control fiats from on high cannot make consumers economize on their consumption the way the price mechanism can. American politicians have attempted quality-preserving cost reductions for decades by squeezing suppliers, to no avail; insanity is repeating the same thing over and over and expecting better results. - February 2013
Sarcasm aside, this is a budget cutting primer designed to accommodate the touchy sensibilities of your typical New York Times crowd. The validity of the New Deal is never questioned. Whether a domain the federal government is spending money on really is a wise “investment” is taken for granted. Whether something would be better managed by the states or private sector goes unaddressed. Also neglected are the role of present government interventions in creating many of the problems we’re in. For example, higher education and health care subsidies/regulations are the primary preventable reasons costs have so unnaturally ballooned. This would, if mentioned, undermine the wisdom of more government interventions as the preferred solution. When David Leonhardt tells you “Here’s the Deal,” it's presented more as a command than suggestion, frequently couched passive-aggressively with “...a nonpartisan/bipartisan study has shown,” or coy misappropriations of quotes from famous right-wingers.
This breezy read sorely underestimates the true severity of the problem by making it look as though there are a couple levers and buttons with names like “eliminate health care ‘waste’” or “raise taxes equitably” or “invest in America’s economy, not ‘special interests’” that are gathering dust somewhere, and all we require is trust in our betters to pull the levers once more and all will be well. Leonhardt fails to seriously consider alternatives from the status quo vision he represents. I’m afraid this induces a false sense of security for the reader, especially during his discussions of taxes and health care:
A. Taxes – These will have to go up, preferably from removing deductions. But Leonhardt goes one step further to argue that it doesn’t really harm economic growth that much. Yes, yes it does. I’ve read the CRS study he cites as his real proof a while back, and its methodology is fundamentally flawed. If you want less of something you tax it. He supports a carbon tax a few pages later for this very reason. Labor force participation rates and hours worked are much lower in Europe today. They were roughly equal to ours in the past. A good proportion of the hypothetical revenues are offset by a smaller private sector.
Every $1 of new federal tax revenue has to be funding something so valuable that it is worthwhile taking out 60 cents out of the private sector. Certainly some amount of infrastructure and defense spending fits this bill, but his idea that the government needs to make ‘investments’ in the 'basic R&D' that the private sector supposedly doesn’t have the wherewithal to do itself is exaggerated. Our bloated military is no Silicon Valley. The economic value of higher education's pedagogical role and research hub credentials, commonly used to justify massive higher education subsidies, is also less clear cut than popularly perceived.
B. Health Care Reform – Yes, the prices you pay at the hospital are ridiculous and disconnected to services rendered. Yes, health care needs to be rationed better. But it’s another thing entirely to say that:
1) America’s health care is more expensive than other developed countries simply because of ‘waste.’
2) A ‘panel of experts’ can actually identify this ‘waste,’ and can
3) humanely remove it with a new batch of regulations, (which add costs of their own and help entrench established players in the industry), while
4) surmounting the myriad special interests suckling at the government teat, and
5) bureaucrats can do 2), 3) and 4) better than a deregulated health care market could.
We do actually get relative bang for our buck right now on health care quality and quantity. America has the highest life expectancy in the world when you remove omitted variables, like homicide rates or accidents, which health care providers have little control over. Americans consume much more food and drugs too, which perhaps insurance companies could reduce with lower premiums for people who took care of themselves better, were it not for government regulations banning this practice out of ‘fairness.’ We don't have to painfully wait months in line for treatments, which boosts our worker productivity and quality of life immeasurably to boot.
Government-run rationing, as seen in Europe and Japan today, necessitates reductions in quantity and quality of care (plus much higher and regressive taxes), because price control fiats from on high cannot make consumers economize on their consumption the way the price mechanism can. American politicians have attempted quality-preserving cost reductions for decades by squeezing suppliers, to no avail; insanity is repeating the same thing over and over and expecting better results. - February 2013
February 24, 2013
Well researched quick read on the major issues impacting our country's finances. While the solutions he poses certainly lean left, the discussions and research he presents can give anyone good food for thought. If you want to develop a better understanding of our economy in under an hour this is your book.
July 26, 2013
A standard book on the us deficit and ways to solve the problem. It's pretty basic, but full of rational and workable solutions to the problem. Worth a quick read if you want to become an instant fiscal policy wonk.
January 19, 2020
This was a wonderful little book about the US national debt and budget deficits. The book makes the argument that the national debt gets larger and larger, and that sooner or later the government policies will have to adjust to prevent the deficits (and consequently the national debt) from getting ever larger. This concise book makes the argument that this will have to be done both by raising revenues (by raising taxes) and by cutting expenditures, but more importantly, through economic growth. Economic growth will be the most important solution.
The author, who has been writing about economics at New York Times for many years, doesn't take a partisan view. It also does not say for whom the taxes should be increased, or which taxes should be increased. It goes into a bit more detail about which expenditures should be cut: social security, medicare and medicaid. It points out that even the military expenditures pale in comparison, and savings there would not be enough.
The math and reasoning is simple: budget deficits add to national debt. as debt increases as % of GDP, a real risk arises that debt holders may wish to get paid, and that the country cannot repay its debts. Debt to GDP ratios beyond a certain threshold can also be bad for economic growth. The author argues that the budget deficits are set to become a fact of life. This is driven by demographics (an aging population, increasing number of retirees), lower productivity growth (driving lower economic growth), which then results in lower revenue growth.
I remember the author saying either that deficits have reached 8% of GDP, or that they are forecast to reach that number annually. A deficit of about 3% is acceptable (under average annual economic growth of 3%). That means savings will have to be found and revenues will have to increased, to the tune of 5% of the US economy.
All in all, very concise and clear book about how US economic policies will have to adjust to tame the deficit and national debt. Must read for anyone interested in economics and policy.
The author, who has been writing about economics at New York Times for many years, doesn't take a partisan view. It also does not say for whom the taxes should be increased, or which taxes should be increased. It goes into a bit more detail about which expenditures should be cut: social security, medicare and medicaid. It points out that even the military expenditures pale in comparison, and savings there would not be enough.
The math and reasoning is simple: budget deficits add to national debt. as debt increases as % of GDP, a real risk arises that debt holders may wish to get paid, and that the country cannot repay its debts. Debt to GDP ratios beyond a certain threshold can also be bad for economic growth. The author argues that the budget deficits are set to become a fact of life. This is driven by demographics (an aging population, increasing number of retirees), lower productivity growth (driving lower economic growth), which then results in lower revenue growth.
I remember the author saying either that deficits have reached 8% of GDP, or that they are forecast to reach that number annually. A deficit of about 3% is acceptable (under average annual economic growth of 3%). That means savings will have to be found and revenues will have to increased, to the tune of 5% of the US economy.
All in all, very concise and clear book about how US economic policies will have to adjust to tame the deficit and national debt. Must read for anyone interested in economics and policy.
May 29, 2013
Here's the Deal: How Washington Can Solve the Deficit and Spur Growth by David Leonhardt
"Here's the Deal" is a succinct look at our deficit and how we can address it. Pulitzer-winning columnist David Leonhardt provides the reader with a clear big picture of the main issues and a general approach on how to solve the deficit. This concise 59-page book is composed of the following nine chapters: 1. The Disconnect, 2. Why Growth Matters, 3. The False Promise of Tax Cuts, 4. Invest, Invest, Invest, 5. Where the Savings Are, 6. Inequalities of an Aging Nation, 7. Living with Medical Rationing, 8. Your Taxes are Not Too High, and 9. Back to Surpluses and Growth.
Positives:
1. A well-written, accessible and succinct book for the masses.
2. An excellent and meaningful topic in the hands of an accomplished writer.
3. Fair and even-handed approach backed by many citations. The author uses a very respectful and controlled tone.
4. Does a wonderful job of cutting to the chase and highlighting the main issues regarding our deficit.
5. The reality of the situation clearly defined. "Eventually, the country will have to confront the deficit we have, rather than the deficit we imagine. The one we imagine is a deficit caused by waste, fraud, abuse, foreign aid, oil-industry subsidies and vague out-of-control spending. The one we have is caused by the world’s highest health costs (by far), the world’s largest military (by far), a Social Security program built when most people died by age 75—and, to pay for it all, the lowest tax rates in decades."
6. The importance of economic growth. " Arguably, the single best way to cut the deficit is to make sure that any deficit-cutting plan does not also cut economic growth. Ideally, it will lift growth."
7. The defining economic policies of the past. "In fact, the Clinton tax increase played a major role in creating the first federal budget surpluses in three decades." Interesting but of course there is always much more to the story.
8. Great inventions that resulted from scientific research backed by government funding. " Government financing was central to every one of those inventions. The Defense Department literally built the Internet. Many of the country’s great innovations, from Apple, Google, Boeing, Celgene and elsewhere, have built upon government investment."
9. The pots of money that can solve the deficit problem.
10. Calling it as he sees it, "The single biggest cause of the long-term deficit is the gap between what Americans pay for Medicare and what they get back from it."
11. One of the most important issues, the urgent need to get a grasp of our ever-increasing health care system. "Whatever the benefits of our approach, the costs are enormous. The American health-care system is vastly more expensive than any other country’s, but our results are not vastly better."
12. Rationing as an inescapable part of economic life.
13. The reality of our taxes. "That is, most Americans have paid far less in total taxes in recent years than they would have paid 30 years ago had they been earning the same inflation-adjusted income."
14. Corporate taxes in perspective. " Yet the government raises less money in corporate taxes than it once did, because of all the loopholes that have been added in recent decades."
15. The ideal reform needed.
16. Excellent notes section.
Negatives:
1. No graphs or charts, paramount for a Kindle Single since a pictures is worth a thousand words.
2. Let's face it, economics is a very complex issue. No single book let alone a brief one like this can capture the magnitude of its complexity. It does a better job of defining its ills versus solving them.
3. A glossary of terms never hurts.
4. No formal bibliography.
In summary, a very solid Kindle Single that provides an appetizer on how to address our deficit. Leonhardt does a commendable job of capturing the main issues of our economy. As with most books of this ilk, the author does a much better job of defining the problems versus providing the issues. A very solid, well cited Kindle Single!
Further suggestions: "Endgame" by Jonathan Tepper, "Red Ink" by David Wessel, "The Benefit and the Burden" by Bruce Bartlett, "Age of Greed" by Jeff Madrick, ""White House Burning" and "13 Bankers" by Simon Johnson and James Kwak, "End This Depression Now!" by Paul Krugman, "Beyond Outrage" and "Aftershock" by Robert B. Reich, "End of Growth" by Richard Heinberg, "The Price of Inequality" by Joseph E. Stiglitz, “Winner-Take All Politics” by Jacob S. Hacker, "The Fifteen Biggest Lies About the Economy" by Joshua Holland, “Screwed the Undeclared War Against the Middle Class” by Thom Hartmann, “The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America…” by Michael W. Hudson, “Perfectly Legal…” by David Cay Johnston, and “The Looting of America” by Les Leopold.
"Here's the Deal" is a succinct look at our deficit and how we can address it. Pulitzer-winning columnist David Leonhardt provides the reader with a clear big picture of the main issues and a general approach on how to solve the deficit. This concise 59-page book is composed of the following nine chapters: 1. The Disconnect, 2. Why Growth Matters, 3. The False Promise of Tax Cuts, 4. Invest, Invest, Invest, 5. Where the Savings Are, 6. Inequalities of an Aging Nation, 7. Living with Medical Rationing, 8. Your Taxes are Not Too High, and 9. Back to Surpluses and Growth.
Positives:
1. A well-written, accessible and succinct book for the masses.
2. An excellent and meaningful topic in the hands of an accomplished writer.
3. Fair and even-handed approach backed by many citations. The author uses a very respectful and controlled tone.
4. Does a wonderful job of cutting to the chase and highlighting the main issues regarding our deficit.
5. The reality of the situation clearly defined. "Eventually, the country will have to confront the deficit we have, rather than the deficit we imagine. The one we imagine is a deficit caused by waste, fraud, abuse, foreign aid, oil-industry subsidies and vague out-of-control spending. The one we have is caused by the world’s highest health costs (by far), the world’s largest military (by far), a Social Security program built when most people died by age 75—and, to pay for it all, the lowest tax rates in decades."
6. The importance of economic growth. " Arguably, the single best way to cut the deficit is to make sure that any deficit-cutting plan does not also cut economic growth. Ideally, it will lift growth."
7. The defining economic policies of the past. "In fact, the Clinton tax increase played a major role in creating the first federal budget surpluses in three decades." Interesting but of course there is always much more to the story.
8. Great inventions that resulted from scientific research backed by government funding. " Government financing was central to every one of those inventions. The Defense Department literally built the Internet. Many of the country’s great innovations, from Apple, Google, Boeing, Celgene and elsewhere, have built upon government investment."
9. The pots of money that can solve the deficit problem.
10. Calling it as he sees it, "The single biggest cause of the long-term deficit is the gap between what Americans pay for Medicare and what they get back from it."
11. One of the most important issues, the urgent need to get a grasp of our ever-increasing health care system. "Whatever the benefits of our approach, the costs are enormous. The American health-care system is vastly more expensive than any other country’s, but our results are not vastly better."
12. Rationing as an inescapable part of economic life.
13. The reality of our taxes. "That is, most Americans have paid far less in total taxes in recent years than they would have paid 30 years ago had they been earning the same inflation-adjusted income."
14. Corporate taxes in perspective. " Yet the government raises less money in corporate taxes than it once did, because of all the loopholes that have been added in recent decades."
15. The ideal reform needed.
16. Excellent notes section.
Negatives:
1. No graphs or charts, paramount for a Kindle Single since a pictures is worth a thousand words.
2. Let's face it, economics is a very complex issue. No single book let alone a brief one like this can capture the magnitude of its complexity. It does a better job of defining its ills versus solving them.
3. A glossary of terms never hurts.
4. No formal bibliography.
In summary, a very solid Kindle Single that provides an appetizer on how to address our deficit. Leonhardt does a commendable job of capturing the main issues of our economy. As with most books of this ilk, the author does a much better job of defining the problems versus providing the issues. A very solid, well cited Kindle Single!
Further suggestions: "Endgame" by Jonathan Tepper, "Red Ink" by David Wessel, "The Benefit and the Burden" by Bruce Bartlett, "Age of Greed" by Jeff Madrick, ""White House Burning" and "13 Bankers" by Simon Johnson and James Kwak, "End This Depression Now!" by Paul Krugman, "Beyond Outrage" and "Aftershock" by Robert B. Reich, "End of Growth" by Richard Heinberg, "The Price of Inequality" by Joseph E. Stiglitz, “Winner-Take All Politics” by Jacob S. Hacker, "The Fifteen Biggest Lies About the Economy" by Joshua Holland, “Screwed the Undeclared War Against the Middle Class” by Thom Hartmann, “The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America…” by Michael W. Hudson, “Perfectly Legal…” by David Cay Johnston, and “The Looting of America” by Les Leopold.
February 12, 2013
Leonhardt is a New York Times columnist who does good reporting work on the economy, and this is a short piece of about 60 pages that tries to explain the federal budget deficit, its causes, and some proposed solutions in an admirably clear, calm, and numerate manner.
I'll lead with the money quote: "In the simplest terms, Republicans have won the debate on taxes, and Democrats have won the debate on benefits. We, the voters, have chosen the winner of each. In exchange, we have a federal government facing enormous deficits in coming decades." This short-termism is yet another product of our penny-wise pound-foolish broken political system. However, the word "benefits" in that sentence turns out to mean "benefits that go increasingly to the old and wealthy", and at this rate our funding for the military, Social Security, Medicare, and the like might render us unable to make the kinds of vital investments in infrastructure (think dams, interstate highways, the electrical grid, the school system, etc) necessary for future growth. "Eating your seed corn" is the popular phrase.
So the deceptively simple choice of higher taxes or lower benefits can be finessed in a way that in large part is the cutting edge of modern technocratic proposals from the Democratic Party: building on the medical payment reforms of Obamacare to improve care while lowing costs, tweaking the funding and payment structure of Social Security by raising revenue and the retirement age, removing wasteful tax breaks like the mortgage interest deduction, reforming the corporate tax code to reduce loophole-gaming, and the like. The long-term gap between revenues and expenditures is about 5 percent, and thought some of the changes to the Big Three of Social Security, Medicare, and the military might be arguable (e.g. raising the Social Security eligibility age would disproportionately hurt poor seniors with no other sources of retirement income, and they tend to die sooner than wealthier seniors who need Social Security less), overall he presents a good framework for thinking about budget choices.
The problem is that our political system, with its endless veto points, interest groups, and opportunities for corruption, is not well-situated to begin acting on the deficit. While it's important to understand that a large deficit is not the biggest problem in a world where the government can borrow at negative real interest rates (i.e. investors are literally paying the government money for the privilege of lending to it), this world won't last forever. The interview in the beginning with former VP candidate Paul Ryan is yet another reminder of how unserious and disconnected from reality the modern Republican Party is on any issue related to budget policy, yet they currently have the power to block any more major progress from being made. Investments in the future that will lead to economic growth are a vital policy tool, yet the Republican outcry over the stimulus gives little hope that they'll come around any time soon.
In the meantime, Leonhardt has written a clear guide that is very helpful for thinking about how to approach the fiscal side of deficit reduction. His regular columns provide useful supplements on how policymakers are either addressing or ignoring various aspects of the problem he talks about here, so this is a good place to start reading.My favorite long-term guide to thinking about the budget remains Paul Krugman's The Conscience of a Liberal, but this is a welcome and more up-to-date addition to that stable.
I'll lead with the money quote: "In the simplest terms, Republicans have won the debate on taxes, and Democrats have won the debate on benefits. We, the voters, have chosen the winner of each. In exchange, we have a federal government facing enormous deficits in coming decades." This short-termism is yet another product of our penny-wise pound-foolish broken political system. However, the word "benefits" in that sentence turns out to mean "benefits that go increasingly to the old and wealthy", and at this rate our funding for the military, Social Security, Medicare, and the like might render us unable to make the kinds of vital investments in infrastructure (think dams, interstate highways, the electrical grid, the school system, etc) necessary for future growth. "Eating your seed corn" is the popular phrase.
So the deceptively simple choice of higher taxes or lower benefits can be finessed in a way that in large part is the cutting edge of modern technocratic proposals from the Democratic Party: building on the medical payment reforms of Obamacare to improve care while lowing costs, tweaking the funding and payment structure of Social Security by raising revenue and the retirement age, removing wasteful tax breaks like the mortgage interest deduction, reforming the corporate tax code to reduce loophole-gaming, and the like. The long-term gap between revenues and expenditures is about 5 percent, and thought some of the changes to the Big Three of Social Security, Medicare, and the military might be arguable (e.g. raising the Social Security eligibility age would disproportionately hurt poor seniors with no other sources of retirement income, and they tend to die sooner than wealthier seniors who need Social Security less), overall he presents a good framework for thinking about budget choices.
The problem is that our political system, with its endless veto points, interest groups, and opportunities for corruption, is not well-situated to begin acting on the deficit. While it's important to understand that a large deficit is not the biggest problem in a world where the government can borrow at negative real interest rates (i.e. investors are literally paying the government money for the privilege of lending to it), this world won't last forever. The interview in the beginning with former VP candidate Paul Ryan is yet another reminder of how unserious and disconnected from reality the modern Republican Party is on any issue related to budget policy, yet they currently have the power to block any more major progress from being made. Investments in the future that will lead to economic growth are a vital policy tool, yet the Republican outcry over the stimulus gives little hope that they'll come around any time soon.
In the meantime, Leonhardt has written a clear guide that is very helpful for thinking about how to approach the fiscal side of deficit reduction. His regular columns provide useful supplements on how policymakers are either addressing or ignoring various aspects of the problem he talks about here, so this is a good place to start reading.My favorite long-term guide to thinking about the budget remains Paul Krugman's The Conscience of a Liberal, but this is a welcome and more up-to-date addition to that stable.
March 12, 2013
As an e-book, it's a very well done exercise in laying out the arguments around long-term budget deficits and what can be done to fix it.
But it also exhibits one of the flaws in the e-book market. By my count this is the third or fourth e-book on the same issues I've read. It's probably in the upper tier of that group (less wonky and better written than Robert Reich's and not as comprehensive but better than Alex Tabarrock's, but I'd say not as good overall as Dean Baker's, which blends the wonk with the writing and a level of outrage), but is it really all that different? I'd argue the conclusions vary, but by and large they all feel like they touch on the same issues--health care, taxes, infrastructure. And when the books are largely opinionated and not reported, what differentiates one from the other? In some ways, you instead get a first-mover advantage, kind of like why websites like Politico, TPM, etc., obsess so much about getting to the story first.
Now, is having multiple books on the same topic a bad thing? Of course not. But it does leave a lot of the work in this space feeling largely similar. Is this one on the better end? Definitely, but if you've already read one of these types of e-books, you probably won't gain anything new from this one.
But it also exhibits one of the flaws in the e-book market. By my count this is the third or fourth e-book on the same issues I've read. It's probably in the upper tier of that group (less wonky and better written than Robert Reich's and not as comprehensive but better than Alex Tabarrock's, but I'd say not as good overall as Dean Baker's, which blends the wonk with the writing and a level of outrage), but is it really all that different? I'd argue the conclusions vary, but by and large they all feel like they touch on the same issues--health care, taxes, infrastructure. And when the books are largely opinionated and not reported, what differentiates one from the other? In some ways, you instead get a first-mover advantage, kind of like why websites like Politico, TPM, etc., obsess so much about getting to the story first.
Now, is having multiple books on the same topic a bad thing? Of course not. But it does leave a lot of the work in this space feeling largely similar. Is this one on the better end? Definitely, but if you've already read one of these types of e-books, you probably won't gain anything new from this one.
March 1, 2013
My problem with this kindle-single-mabob is pretty "meta" (see question 1): it chafes that a political commentator who has as much influence as David Leonhardt should be spending any time writing a signature thinkpiece about the deficit. So consider this a "protest" rating/review/rant. You could think of Leonhardt's proposals as way of moving the US to, in a best-case scenario, what we had in the 90s: a high-growth economy and a federal budget that is basically balanced while still making investments in education, research, infrastructure, etc. The problem is that a "return to the 90s" won't touch the primary sources of immiseration produced by what we do and don't spend federal money on. On the do front: mass incarceration and a far-flung military currently optimized to kill people by remote control and with no public oversight. On the don't front: climate change mitigation and adaptation, as well any sort of response to current unemployment or long-term increases in inequality and wage stagnation for everyone but the not-rich.
January 2, 2014
This single starts in with what appears to be a non-partisan view of what is going on with our economy. Unfortunately it ultimately ends up being somewhat left leaning, which is fine, but not as advertised.
The analysis is hitting the right subjects but isn't asking the right questions. Comparing the USA tax rate to Spain and suggesting that we aren't doing enough for taxes, but completely ignoring the complete mess that Spain has become is quite misleading. You don't get to fit the data to conclusions. It's intellectually dishonest.
On the topic of heath care and related costs, isn't the right question to ask: what is the break down of all the components of specific costs which are rising the fastest and why are they rising so much? I get that we all want top dollar healthcare, but shouldn't decreasing costs ultimately materialize if we improve on things that were working well enough even 5-10 years ago?
The analysis is hitting the right subjects but isn't asking the right questions. Comparing the USA tax rate to Spain and suggesting that we aren't doing enough for taxes, but completely ignoring the complete mess that Spain has become is quite misleading. You don't get to fit the data to conclusions. It's intellectually dishonest.
On the topic of heath care and related costs, isn't the right question to ask: what is the break down of all the components of specific costs which are rising the fastest and why are they rising so much? I get that we all want top dollar healthcare, but shouldn't decreasing costs ultimately materialize if we improve on things that were working well enough even 5-10 years ago?
May 4, 2013
I read this in the Nook edition, not the Kindle edition. Conservatives will hate this book, and even liberals won't be too happy with Leonhardt's prescriptions for social security. Leonhardt, rightly, argues that our most pressing economic problem is putting people back to work and putting real money into people's pockets. The federal deficit, which has received most of the attention lately in Washington, is also a problem, but it is a long-term problem whose solution is actually manageable. His solutions are sensible, but of course in today's political climate sensible solutions are too radical to be implemented.
Read
December 11, 2016Short & sweet (Kindle Single) survey of federal budget deficits and surpluses, economic growth and politicians' fact-denial about same. Leonhardt does a great job making the potentially arcane easily read and understood. Regrettably, the 2016 Presidential election has left the primary deniers in control of economic policy. Nonetheless, a great read one will likely re-read.
March 10, 2013
Very quick read, and very well put together. Not all new information for anyone who follows politics or the economy, but lays out the current economic situation very clearly, and explains some of the solutions.
October 17, 2013
Great short Kindle single that summarizes the federal budget deficit problem and proposes a workable, straightforward means to solve it. Moderates of both parties should pay attention and take action.
December 24, 2015
Short, to the point, well-sourced
A good, non-partisan look at what challenges we face as a nation and possible solutions that should be acceptable to most, regardless of your fiscal leanings.
A good, non-partisan look at what challenges we face as a nation and possible solutions that should be acceptable to most, regardless of your fiscal leanings.
February 10, 2013
The author makes some very compelling arguments for how to approach America's fiscal situation. There were some interesting facts included that I had not heard before.
June 26, 2015
A book that delivers a vision of how to manage the US deficit. I especially liked its emphasis on future and economic growth, something people don't pay enough attention to.
February 22, 2013
Good, quick read, although not a lot of new information for the well informed.
February 27, 2013
Rather informative. Enjoyed how he broke down the major expenditures and talked about how the government can encourage growth
March 4, 2013
Good over view of the budget and deficit issues. Short but information dense. Recommend to anyone looking to better understand the problem in about fifty pages.
March 10, 2013
Clear and concise account for how we can deal with our budget deficit while promoting growth.
March 19, 2013
So clear and well stated.
March 30, 2013
Very pertinent read given the current fiscal crisis.
September 13, 2013
Solid. Good info and overview. Learned a lot of how interconnected things are as well as what really has lasting impact on the deficit.
January 25, 2016
Great! A cogent argument for a reasonable managing of our national debt and economy.
January 9, 2018
Nicely presented arguments on how broken Washington is to prevent solutions to basic problems.
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