UPDATE (3:05 p.m.): The authenticity of the memo referred to below is being challenged.  Do we have "Fake but Accurate" II?

John Hinderaker at Powerline produces confirmation of my biggest concern about the so-called financing of the health care reform legislation -- banking on cost-saving in Medicare that I believe will be undone after this bill passes.  John has posted a copy of a memo distributed to Democratic staffers.  Here's the key excerpt:

One of the many dishonest features of the Democrats' effort to conceal the fact that their plan is a budget-buster is the assumption that reimbursements to physicians under Medicare will decline. This accounts for a large chunk of the Democrats' "savings." In fact, all knowledgeable observers understand that this alleged savings will be illusory because Congress will, in separate legislation, raise those reimbursement levels as in the past. The Democrats' memo acknowledges the party's dishonesty on this point, and urges its staffers to continue misleading the public:

Second, most health staff are already aware that our health proposal does not contain a "doc fix." Some Republicans have repeated CBO's November 18 letter that says "the sustainable growth rate (SGR) mechanism governing Medicare's payments to physicians has frequently been modified ... to avoid reduction in those payments, and legislation to do so again is currently under consideration in the Congress." The inclusion of a full SGR repeal would undermine reform's budget neutrality. So, again, do not allow yourself (or your boss) to get into a discussion of the details of CBO scores and textual narrative. ...

As most health staff knows, Leadership and the White House are working with the AMA to rally physicians support for a full SGR repeal later this spring. However, both health and communications staff should understand we do not want that policy discussion discussed at this time, lest it complicate the last critical push to health care reform.

This ten point explanation from Barry Ritholtz lays out the contribution of ultra-low interest rates to the financial crisis.  Shorter version: low interest rates plus ratings agencies for sale equals enormous debacle.  To his tenth point on the lax regulatory environment emanating, in his words, from the Fed, I would add the abject failure of the SEC to hold the line on investment bank leverage ratios.  This report should have had a bigger impact than it did.

A cautionary tale for macroeconomists everywhere.  Why does this not surprise me anymore?

March 18 (Bloomberg) -- North Korea executed an official of the ruling party last week, holding him responsible for unrest sparked by a botched currency revaluation aimed at reasserting the regime’s grip on power, according to media reports.

Pak Nam Gi, who was fired earlier this year from his post as Workers’ Party head of finance and planning, was shot in Pyongyang for intentionally harming the country’s economy, Yonhap News reported, citing people it didn’t identify. Free North Korea Radio, run by North Korean defectors in Seoul, yesterday reported widespread rumors of the execution.

Read the whole thing, and wonder.

My column from today's Fiscal Times explains why and how the federal budget is about to reemerge as an issue

The Federal Budget and Deficit Will Soon Return to the Headlines

I'll be at the Kauffman Foundation's Economic Bloggers Forum.  There is a great schedule of sessions, including David Warsh and Paul Romer and panels on the Great Recession, economic growth, and fiscal policy.  You can catch the webcast of the event starting tomorrow at 8:30 Central time.

Enjoy!

I've been saying for a while that, contrary to the GOP rhetoric that the sky is falling, the 2009 and 2010 deficits were and are the absolutely correct fiscal policies.  Back in October I called the $1.4 trillion deficit "a triumph" and said it was clear that's what needed to be done given that businesses and consumers weren't spending and, most importantly, that monetary policy had done just about all it was going to be able to do.

Paul Krugman yesterday provided three paragraphs in an excellent longer piece that explained this further:

A top House Democratic staffer just told me the reconciliation bill, with some surprises, and a tentative CBO score will be posted on the House Rules web site late tonight or early tomorrow morning.  Then a final CBO score will be posted Friday.  The Rules Committee will meet Friday to mark up the rule.  Then the House will vote on the rule Saturday, engage in perhaps four hours of debate, and, later Saturday, take the final vote on the reconciliation bill, which will deem the passage of the Senate bill. 

This morning's paper carries an op-ed criticizing health care reform primarily on the grounds that it will cost too much. It urges that the plan be sharply scaled back so that it will get bipartisan support.

If this op-ed were written by a Republican member of Congress it would be unremarkable; not even worth publishing. But this particular op-ed was authored by someone who appears to have meaningful expertise on the subject. The writer, Tom Scully, is identified as the former administrator of the Centers for Medicare and Medicaid Services and a White House official during the George H.W. Bush administration.

I wonder if the Founding Fathers envisioned that this sentence (highlighted in bold, courtesy of Harold Meyerson's column in today's Washington Post) would become so commonplace:

The civil rights leaders who have called this march don't doubt that if Obama could enact immigration reform by executive order, he would. In his meeting with them last Thursday, the president affirmed his commitment to the cause. Whether it will become his legislative priority is another question: Congress is waiting to see what Obama does, even as Obama says he needs to see some GOP willingness to enact reform (and this is certainly a cause that some leading Republicans, most notably John McCain, have supported in the past).

Why should Congress wait to see what Obama does?  Congress should do.  Obama should sign, or not.  When you march on Washington, you should be facing east from the Washington Monument, not north.

And he says in National Journal that a value-added tax is on the horizon.

There's nothing really new in Clive's column.  Bruce has been saying that a VAT is logical for a long time.  And among many others, I've been saying that the deficit isn't just a spending problem.

But the fact that Clive is now willing to go where others have boldly gone before is an important indication that the public debate is now changing and that a tax increase is becoming a topic for polite conversation.  It might not yet inevitable but it's definitely becoming more acceptable.