The goals of tax reform and expanded health care coverage have much to recommend them. But, the policy process would be far better served if more likely tradeoffs and costs were acknowledged. Not doing so could lead to poor choices now, with a reckoning later in the form of higher federal budget deficits and debt and their attendant risks. In particular, higher federal debt levels would boost interest payments on the debt — which already are on track to be more than 7½ percent of total federal spending this year — and further squeeze other government programs. In addition, the resulting higher debt could limit the government’s ability to respond aggressively to a national emergency such as a natural disaster or security crisis. And, the associated government borrowing will, in time, put the squeeze on private borrowing that could be financing economy-growing capital.
Conditional cash transfer programs are effective in achieving the dual goals of alleviating poverty and helping individuals from poor households improve their chances of escaping poverty. While the programs are not perfect and do not achieve all their goals, they are a useful tool for poverty reduction and could be combined with other policies to make them work better. For instance, interventions to improve the schools or health facilities may be important in terms of achieving better quality of education and health.
It is clear that health care has a significant administrative burden, especially in the context of billing and payments, and that this is higher in the United States than elsewhere. But we do not yet know whether this burden is justified, and whether it is worthwhile. The key question for health care policy is whether the burdens are commensurate with the benefits. Which insurers best manage the tradeoff between billing simplicity and spending resources effectively? More research is needed to determine how administrative costs relate to quality of care, rates of fraud, and health care costs.
Coal and nuclear power plants have been suffering financially for the last decade due to the emergence of cheap and abundant natural gas, power market reforms, the decreasing cost of renewables, and, for coal plants, environmental regulations on emissions. Clearly, the U.S. electric sector is shifting into something that is more low-carbon, distributed, cheaper, more resilient, and reliable than a centralized grid, and only drastic federal intervention will be able to slow that shift.
The Turkish crisis did not come about because of the United States, but it has been made worse by the political fight between the Presidents Erdogan and Trump. Political pressure in Turkey might mean that the central bank finds it difficult to take measures to stem the collapse of the lira, a precondition to the resolution of the crisis. But, at this point, raising interest rates might not be enough if confidence in the Turkish economy cannot be regained. The crisis could spread to other potentially vulnerable emerging markets, those that are borrowing heavily from abroad, especially if the borrowing is in foreign currency and inflation is high (which is an indicator that the domestic currency will likely weaken). There is the possibility that the Turkish economic crisis has an impact on Europe as well, since many European banks have lent to Turkish banks and companies. The pivotal role that Turkey has played in the refugee crisis introduces another set of concerns, since Europe cannot afford to have an unstable Turkey in its backyard. The United States, while more insulated from the economic fallout of a Turkish crisis, will face political pressures if the crisis brings Turkey closer to Russia and introduces a new source of economic and political tension in a volatile region.
