I.O.U.S.A - Addison Wiggin [107]
Where does the $ 92 billion dollars come from every year? From we the American people. To put it in context, this year our total c16.indd 216
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spending is going to be something close to $ 3 trillion, and in fact, the money that hopefully we ’ re going to save when we stop doing Iraq would be more than enough to fund a fully saved program to guarantee fi scal security and fi nancial security for individual Americans, every one of them. This is not a family thing — this is if you ’ re an American, you as an individual will have fi nancial security when you get to 65. This is a doable proposition now, but there ’ s a transition problem. In order to do this, we ’ re going to have to fi gure out to pay for the generation now living that ’ s got Social Security and Medicare entitlements as we work our way through this problem.
And there are ways to do that, including fundamentally fi xing our health and medical care system on a bigger basis than Medicare alone. I spent lots of time working on issues of our health and medical care system, and I think the data would support me when I say that if we simply did well, extremely well, at everything we already know how to do in health and medical care, we could simultaneously improve the outcomes for our population and reduce the cost by 50 percent a year. Which is to say, instead of spending $ 2 trillion a year on health and medical care now (upwards of 16 percent of our GDP), we could spend $ 1 trillion a year and have a better outcome. That ’ s a longer story; it ’ s a diffi cult proposition to improve how we practice medical care.
Q: Let ’ s revisit the conversation that you had with Vice President Cheney prior to you being fi red. Can you discuss the difference of opinion that you had in regard to tax cuts and defi cits?
Paul O ’ Neill: Sometime after the election — it must have been mid - November — there was a meeting of the Economic Policy Group, including the vice president. As we sat at the table in the Roosevelt Room, we talked about where we were and where we were going. If I remember right, Glenn Hubbard made a presentation that was displayed on the screen at the front of the Roosevelt Room and showed where we were going and what different tracks looked like and GDP growth and the rest, including the effects of the proposed third tax cut. I made the c16.indd 217
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argument, which I had been making over and over again since maybe June or July, that it was not advisable to have another tax cut because of the need to fi x Social Security and Medicare and to have some money to smooth the fundamental redesign of the tax system. We needed to have in effect rainy - day money in the event that we had another 9/11 event — and at that point it looked like maybe we were going to go to Iraq, and it was not going to be cheap to do that.
So I argued that we should not have another tax cut because the economy was going to be in positive territory and doing okay through the next couple of years anyway without another tax cut, and there were all of these other compelling reasons not to risk a defi cit and not to risk adding more to the national debt.
And the vice president basically said, “ When Ronald Reagan was here, he proved that defi cits don ’ t really matter and so it ’ s not a consideration or a good reason not to have an additional tax cut. ”
I was honestly stunned by the idea that anyone believed that Ronald Reagan proved in any fashion, certainly not inconclusive fashion, that defi cits don ’ t matter. I think it is true on a temporary basis that a nation can have a defi cit and have a good reason for having a defi cit. I think the Second World War there was no way we could avoid having a defi cit, but when we came out of the Second World War we started running budget surpluses again and did that through the ‘ 50s and into 1960. It ’ s interesting, it