Thread by @wgoggin

Suppose a large new federal program can be implemented by deficit spending alone (with no tax increases) without causing inflation.

Would you nevertheless require its proponents to identify tax increases to “pay for” the program, knowing that such taxes would be deflationary?

Of course not. But that’s exactly what M4A proponents are being required to do by centrist Dems and the MSM.

See, it’s not at all clear that deficit spending to implement M4A w/o tax increases would necessarily cause inflation.

Anyone who tells you otherwise is just guessing.

The purpose of “pay for” rules is to prevent inflationary deficit spending. Implementing M4A w/o taxes may be inflationary.

But assuming that spending must be matched dollar-for-dollar with tax increases up front to prevent inflation is economically and politically illiterate.

It’s quite likely that correct modeling would show that only a small fraction of M4A spending need be offset with taxes or other measures to avoid inflation, and only in certain areas of the economy.

It’s also likely that M4A will be deflationary overall, and free up resources.

By caving to demands to “pay for” M4A up front with dollar-for-dollar tax increases, progressives are unwittingly accepting and adopting a false frame that argues against broader acceptance. Not all demanding “pay fors” are disingenuous. But many are, seeking only to head it off.

For example, suppose we knew that M4A could be phased in, initially without tax increases, and that inflation would manifest gradually across phases, in predictable and controllable ways.

Shouldn’t any tax increases required to “pay for” it over time reflect such considerations?

Of course they should. Also what if those with employer-based insurance who will lose it, or have it substantially reduced over the phase-in period, can be covered as well? Perhaps as many as 50% to 75% of them? With inflation under control.

Shouldn’t this also be factored in?

Of course it should. But those insisting on up-front dollar-for-dollar “pay fors” haven’t taken any of the above into consideration.

And so far most proponents haven’t either. Even though we currently spend $60T, we scramble to find a $30T “pay for” in taxes.

This must change.

Not enough?

Okay, what if you also knew that the cost of phasing in M4A would be no more than the cost of a well-designed public option, i.e., one broadly attractive, even to those dissatisfied with or losing their employer-based insurance?

Wouldn’t that be useful information?

Of course it would. That would mean that M4A was as economically and politically feasible as the best public option and, as important, far better than poorly designed ones.

Keep in mind the HC industry will fight a PO with the same intensity they would M4A.

They did last time.

In fact, there’s no reason an M4A phase in can’t be designed to cost as little as an honestly designed public option. Keep in mind those proposing a PO have yet to show how they will “pay for” it up front with tax increases. Wouldn’t it be nice for them to be explicit about that?

Of course it would.

On a practical note, wouldn’t it also be nice to have a set of examples showing how the savings from eliminating insurance premiums compared to estimated tax increases for middle income individuals and families? For both a phased-in M4A and an effective PO?