On Tuesday, the Committee for a Responsible Federal Budget convened a major conference to discuss the nation’s long-term fiscal crisis. Key players like Ben Bernanke, Gene Sperling, Alan Simpson, and Paul Ryan were in attendance. You can read my recap of the event here; below is some follow-up on a few things I wrote about earlier.
(1) Most of the coverage of the conference has focused on Fed Chair Ben Bernanke’s warning to politicians not to mess around with the debt ceiling or treat it as a political game. As I pointed out, many others at the conference, including Gene Sperling and Neel Kashkari, gave the same warning. Hopefully it will be heard.
(2) Two additional perspectives on what level of economic growth the U.S. can realistically achieve in the coming years: Stanford economist and Hoover Institution Fellow John B. Taylor says we can reach 5% with the right policies in place. Donald Marron of the Urban/Brookings Tax Policy Center argues that reaching that level of growth and sustaining it over several years is highly unlikely.
(3) I posted earlier today about Larry Lindsey’s discussion of three ways we are underestimating the size of the coming debt crisis. One of his assertions was that we are underestimating the costs of the Affordable Care Act, a claim he based on a recent study from McKinsey. I pointed out that he was citing the McKinsey report incorrectly and that the study’s findings aren’t in line with previous estimates. I looked into it further today and found that a lot of people have been questioning the validity of this research.
Depite the weaknesses of the latest study, I think what I wrote in my earlier post is still valid – that we are likely misestimating (it could be under- or over-estimating) the costs of healthcare reform because there are so many unknowns about the impact it will have.