Crazy Biden Statement Not Quite as Crazy as it Sounds (But Still Probably Wrong)

Peter Suderman | July 17, 2009

Drudge is currently leading with a headline quoting Vice President Joe Biden as saying that "we need to spend money to keep from going to bankrupt." Crazy, right? Well, not exactly. Spending money in the short term to make an inefficient system more efficient can actually reduce spending in the long term. Imagine, for example, a parking garage run by attendants who collect the money. It might cost tens of thousands of dollars to install an automated system in which machines collect the parking fees. But over the long term, the automated system might then be less expensive than the continued expense of paying hourly workers wages and benefits. For manufacturers, building a new factory might require a tremendous initial outlay that could go on to earn all that money and more back over time. For a government beset with rising health-care costs, it's not actually insane to think that some up-front spending on reorganization, new technology, or some other innovation might produce efficiencies that create savings in the long term. 

Problem is, the health-care legislation currently being considered won't save money. In fact, it's likely to make the budget crisis even worse. Now, admittedly, as far as I can tell (I've not seen a complete transcript), Biden didn't specifically say that we had to buy into current health-care reform proposals in order to save ourselves from bankruptcy. But the event in question was held in large part to support health-care reform, and the CBO has said that rising health-care expenditures are the chief cause of the country's dire budgetary outlook. So it certainly sounds as if that's what he was talking about. And if that's the case, he wasn't wrong in theory—spending now can produce savings later—but it certainly looks as if he was wrong in specific. 

Comments

|7.17.09 @ 5:00PM|#

Um . . . duh.

|7.17.09 @ 5:11PM|#

Spending money in the short term to make an inefficient system more efficient can actually reduce spending in the long term.

What in the entire bailout/porkulus debacle can possibly be described as making anything more efficient?

Biden is full of shit, and you're really reaching to try to give him a way out.

-jcr

|7.17.09 @ 5:18PM|#

Peter Suderman -
I'm sure you put a lot of effort into this post, that it is informative, well researched and well written.

However, since everything Biden says I deliberately ignore, I'm not going to read your post.

No hard feelings, OK?

|7.17.09 @ 5:25PM|#

I think Biden just proved -- again -- that he would make a better POTUS than Obama, in the sense that if you're trying to push a really bad agenda, you want the most clownish, ineffectual person possible leading the push for that agenda so enough swing voters say "Oh, crap, THAT's not gonna work."

|7.17.09 @ 5:27PM|#

For a government beset with rising health-care costs, it's not actually insane to think that some up-front spending on reorganization, new technology, or some other innovation might produce efficiencies that create savings in the long term.

Actually, it is pretty close to insane. If there were up-front spending that would make long run costs lower, then the involved private interests would already be doing it.

After all, neither your parking garage nor your factory waited for comprehensive Parking Garage Reform legislation or comprehensive Manufacturing Factory Reform legislation.

The onus most definitely is on the government to explain why, if their proposed changes to the remaining slivers of private health care make things cheaper, they aren't happening now.

Invisible Finger|7.17.09 @ 5:36PM|#

It might cost tens of thousands of dollars to install an automated system in which machines collect the parking fees. But over the long term, the automated system might then be less expensive than the continued expense of paying hourly workers wages and benefits.

But a parking garage THAT IS NEAR BANKRUPTCY can't borrow the money for that kind of capital outlay.

Unless they find some suckers.

|7.17.09 @ 5:42PM|#

Biden really needs his own talk show. Get Magic Johnson as his Ed McMahon and we are into sublime territory here.

hmm|7.17.09 @ 6:11PM|#

Spending money in the short run to gain in the future is not a bad idea. Leveraging your ass to the hilt in order to make small almost negligible gains now is absurd. If we had the money to spend it would be great. We don't we are borrowing the money. So now we need to recoup the cost of borrowing, inflation (yes I know deflation is the worry), and any other financing charges or ramifications that might occur. Then you have to worry about the reorganization or new technology becoming antiquated before you begin to recoup or cover your costs.

The cost of reorganizing is more than just the outlay at day one when you are borrowing the money.

Biden is an idiot. Over simplifying shit to make it sound good has become the mainstay of this administration.

|7.17.09 @ 6:20PM|#

Oversimplifying is one word.

hmm|7.17.09 @ 6:41PM|#

yes it is. That makes it much simpler.

|7.17.09 @ 6:53PM|#

Yes, because what we really need right now, is to help them defend their crazy ass ideas, and did themselves out of the holes they're digging.

Joe Biden|7.17.09 @ 7:49PM|#

Here, stand up, Economy, stand up so everybody can see you. You're in wheel chair!?! What the Hell am I talking about? Give it up for Economy, everybody!

|7.17.09 @ 8:55PM|#

I have a feeling we're already bankrupt.

|7.17.09 @ 11:35PM|#

nice post...
___________________
Britney
Entertainment at one stop

|7.18.09 @ 5:40AM|#

Would someone please take the spammer out behind the barn and shoot it?

Thanks,

-jcr

Xeones|7.19.09 @ 1:28AM|#

What happened to Anonymity Bot? Did the owner of its server discover that it had started to become self aware, and pull the plug?

Also, Joe Biden is a Goddamn retard. That is all.

Joe Biden|7.20.09 @ 1:38PM|#

"I introduced the terrorism bill in '94 that had a lot of these things in it,"

"When I was chairman in '94 I introduced a major antiterrorism bill--back then,"

"I drafted a terrorism bill after the Oklahoma City bombing. And the bill John Ashcroft sent up was my bill."

(Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001)