TEXT OF COMMENTARY
TESS VIGELAND: One big complaint about the new health care law is that it’s just so complicated — 2,400 pages of political-speak.
But commentator Glenn Hubbard says there’s one simple aspect to it: the fiscal choice it leaves the country.
Glenn Hubbard: The new law requires almost a trillion dollars of new spending over the next decade. It will worsen the deficit. And it requires the federal government to raise a lot of extra money.
Indeed, it raises hundreds of billions of dollars in taxes on Americans with high incomes. And it depends on hundreds of billions in cuts to Medicare.
But, hold on… Weren’t taxes on the rich and Medicare cuts supposed to help fix Medicare and Social Security? Yes, but that’s so 2008.
It’s 2010, and the budget deficit is much worse. It exceeds 10 percent of GDP. Relative to GDP, government debt will approach World War II levels in just three years.
So the bold new health care plan leaves us a simple choice: If we want to keep federal spending on its present course, if we want to pay for health care, Medicare and Social Security, we will have to raise taxes substantially and on everyone.
The shortfall cannot be addressed simply by taxing the incomes of the rich.
To raise enough money, all of us will have to pay a consumption tax, like a national sales tax or its cousin, the Value Added Tax. Unless we change course and slow the rate of growth of spending in Medicare and Social Security.
We can do this in a way that maintains a commitment to lower-income households, and we can do this without a large, across-the-board tax increase — but we have to start now.
The health care budget debate was frustrating because it reflected the problem of ordering off a menu with no prices. Many politicians want voters to choose government spending programs without telling them the prices.
Others focus attention on the prices, but in a way that it makes it hard to figure out what would happen to the choices on the menu.
President Obama’s health care victory has cut through this confusion. We now must put prices on the menu. Then we can decide between a broad-based consumption tax or limiting growth in entitlement spending.
The choice is now simple, and we have to make it.
VIGELAND: Commentator Glenn Hubbard is dean of the Graduate Business School at Columbia University and a visiting scholar at the American Enterprise Institute.
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