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