On budget solutions, a call to drop the economists for the game theorists

The comments came on the same day the Congressional Budget Office (CBO) released a bleak 75-year look-ahead at the nation's budget, revealing that federal spending remains on an unsustainable course, despite the new healthcare reforms that were designed to control costs.

"Growth in spending on healthcare programs remains the central fiscal challenge," Doug Elmendorf, the head of CBO, told members of the administration's newly formed deficit commission Wednesday. The health reform law "made a dent in the problem," he added, "but did not substantially diminish that challenge."

Butler, in calling for a new approach, offered several solutions. 

— The budget process itself needs improving, so all real costs are acknowledged and the long-term fiscal problems are identified. Rule changes should be designed so they don't advantage just one party, but make it easier for both sides to make their arguments. And CBO scores should recognize the long-term effects of reforms. "It's as though nothing after 10 years is relevant to the conversation."

— Lawmakers need to engage the public, so voters are aware of the long-term budget troubles and won't riot when reforms are proposed. "You have to have the public's permission to make major changes in programs," Butler said, citing the Bush administration's failed 2005 attempt to privatize Social Security. ("He gave people a solution for a problem they didn't know existed.")

— Specific policy changes — like conservative calls to reduce spending and liberal proposals to hike revenues — should be accompanied by broader entitlement reforms that recognize the unsustainable nature of the current budget curve. "It's not just cutting costs or raising revenues in isolation."

Butler was part of the bipartisan group of policy experts that met at the White House last year for a high-profile discussion about how to tackle the nation's budget woes. Butler said Wednesday it was a good, productive talk, but he hasn't heard from the administration since. 

"Nobody was ever contacted after that," he said, "at least not on the right."

The failure of policymakers to come together in search of solutions, Butler warned, will only prolong the problems. And getting the parties to sit down together is not an issue of economics.

"We need more beer summits and fewer health summits."


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