Intellectual Floor Falls Out From Under GOP on Austerity, Opposition to ObamaCare

Solid analysis today from Jonathan Chait.  The stubborn facts about austerity and about ObamaCare’s effect on health care cost inflation are proving the GOP’s diagnoses (and thus their prescriptions) wrong.  They’re being left behind by the real world.  (Emphasis added in the following excerpts).

PaulRyanTwo [changes in the way we think about the world] have come together recently, both reported in the New York Times. The first is the collapse of intellectual support for the notion that immediate austerity can boost economic growth. The second is a growing consensus that health-care-cost inflation is slowing for deep structural reasons, rather than having undergone a mere temporary dip from the recession. These trends have something in common: They blow to smithereens the intellectual foundations of the Obama-era Republican policy agenda.

The doctrine of expansionary austerity — the premise that we must cut deficits not just eventually but immediately — has suffered a series of disastrous reversals. It has failed repeatedly in Europe, and its most prestigious academic basis, a paper by Harvard’s Carmen Reinhart and Kenneth Rogoff, was exposed for a series of fundamental errors. A New York Times article this week represented a watershed, baldly stating in its headline, as the entire macroeconomic forecasting field has understood all along, that the short-term deficit was too low, no longer a counterintuitive dissent but a clear and barely contested reality.

Over the last few years, health-care inflation has indeed decelerated — far more deeply than even the most optimistic backers of the law dare hoped. The federal budget for Medicare and Medicaid in 2020 is now projected to be 15 percent lower than forecasters expected a few years ago.

At first, the sharp slowdown in health-care costs was assumed to have happened because the recession is making people cut back on their medical care. … But as the trend has persisted, and undergone deeper study, a consensus is emerging that this is not the case at all. Several studies have found that the recession does not account for all, and possibly not even most, of the slowdown.

And yet the canon of [Paul Ryan and the GOP] has undergone no revision whatsoever. The debt crisis is “irrefutably happening,” Ryan insisted recently. Obamacare, he said yesterday, will “collapse under its own weight.” Ryan and his party are so certain of these foundations his worldview rests upon that he can’t even be bothered to look down at the rubble all around his feet.