Krugman's Cruel Budget Cutting Myths

Paul Krugman revisited the Lone Star State yesterday, in another attempt to expose its underlying contradictions.

The Texas legislature is proposing a 10 percent across-the-board cut in Medicaid to help corral its runaway spending. Observing that Texas has low rankings in child poverty, graduation rates, and health, Krugman asks us to think of the children:

Tax increases have been ruled out of consideration; the gap will be closed solely through spending cuts. Medicaid, a program that is crucial to many of the state's children, will take the biggest hit, with the Legislature proposing a funding cut of no less than 29 percent, including a reduction in the state's already low payments to providers — raising fears that doctors will start refusing to see Medicaid patients. And education will also face steep cuts, with school administrators talking about as many as 100,000 layoffs.

The really striking thing about all this isn't the cruelty — at this point you expect that — but the shortsightedness. What's supposed to happen when today's neglected children become tomorrow's work force?

This all comes after Krugman's recent column acknowledging that health care costs are the greatest threat to American solvency at both the state and federal level. When citing wellness indicators, he chooses to ignore that Texas has a much larger Hispanic population than average, of whom a third are in poverty. Not good, but absorbing a rate of population growth twice the national average over the last decade does tend to put some stress on institutions. And people are still moving to Texas.

Krugman also feeds the myth that more spending always equals more good. Spending more on schools, for example, means next to nothing: Costs have tripled since the early 1970s, without any noticeable increase in educational outcomes. And whether Medicaid is paying for 58 percent or 62 percent of beneficiary costs doesn't make much difference if the whole program is bloated and ineffective.

More from Reason on the Professor here.