View Research by Author - C. Eugene Steuerle

More about C. Eugene Steuerle's areas of expertise can be found on this Urban Institute expert's page.

Citation URL: http://www.urban.org/CEugeneSteuerle

In his State of the Union address, President Obama no doubt will promise to attack the deficit. Trouble is, the deficit is only a symptom of a chronic disease that strikes at the very heart of democratic government. The disease? Fiscal sclerosis — setting future national priorities in stone long before the future has arrived. Our fiscal arteries are so clogged and hardened that to do anything new, meet any emergency, or engage any new opportunity, the president must renege on past legislators' promises. If he doesn't address unsustainable promises head on, government will be tied up with yesterday's problems and the demands of yesterday's voters.

It's an old story. Come a financial collapse, somebody's got to pay to get the nation's financial house back in order. While many on Wall Street made millions losing money for their companies, every young American is now saddled with tens of thousands of dollars of additional government debt. While buyers walked away from homes when they went underwater, others who had mustered large down payments simply absorbed their losses—in some cases, wiping out years of saving. While speculators who borrowed to buy stock or real estate shrugged off debt by declaring personal or corporate bankruptcy, those who invested in their 401(k)s helplessly watched their retirement savings erode.

In a speech to the American Economic Association on January 3, Ben Bernanke, chairman of the Federal Reserve System, took on the question of whether easy monetary policy led to the recent bubble in housing prices. I don’t disagree with his broad conclusions about the importance of regulatory policy. But it wasn't until the end of his speech that he dabbled briefly with the far more important question: whether new types of monetary, fiscal, and regulatory actions are required to contain bubbles in all major assets, not just housing.

This presentation to the National Tax Association at a plenary session covers many of the aspect of our current fiscal dilemma: the squeeze on important budget functions, the long-term potential deficits, the rise and fall of domestic discretionary spending, and the impact of the ability of voters to choose the type of government they want.

This presentation outlines some of the dilemmas of a new health reform subsidy that is not available to those who get insurance from employers. For instance, most low- and middle-income earners would be better off receiving insurance from an exchange than an employer. Implications for labor markets, equity issues, and administration are briefly outlined.

Presentation to the National Tax Association briefly covers some of implications of Roth accounts and their increased availability in 2010. It points to the negative budget consequences and some of the tax inequities that result-but also to the advantages to some individuals of converting some of their retirement assets in Roth accounts.

Consider an employer who bears an equal cost for their employees and must choose between the proposed subsidy for those on the exchange and the current subsidy for those who get employer-provided health insurance. What are the consequences for the employee? This article discusses the results for the employee under the current health care bills in the House and the Senate.

Should Medicare set prices for what it covers? Should it determine what services it will cover? During the health reform debate, these questions have dogged attempts to reduce unsustainable Medicare cost growth. At the most basic level, the questions are silly. Of course Medicare sets prices. Of course it determines what services it will cover. It just doesn't do it very well—for reasons ranging from limited administrative power to constant political interference.

Political theater? Such is the label many have attached to the tax reform task force headed by Paul Volcker. But I heard the same claim made about President Reagan's State of the Union request for a tax reform study from the Treasury Department to be made only after the 1984 election was over. Congress literally burst out laughing.

An old congressional hand once confided that tax legislation usually looks like sausage making, but, compared to health legislation, it starts to look like French cooking. His main boeuf? The extraordinary amount of hand waving in health bills due to the questionable assumption that administrators can solve problems the legislation can't.

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