neil: so paul krugman says deficits don't matter. nobel prize-winning economist writing in today's "new york times" our fixation with red ink won't fix our problems. we need to spend even more to get past the problems. i'm thinking to myself, self, where was paul when george bush was piling up deficits. back then they sure mattered. back then they were a problem and back then their very increasing size made the bush presidency at least in paul's views an even bigger problem. not with the new guy. paul gives him a pass. now if that doesn't take the nobel for chutzpah, i don't know what does. so, am i just being too stupid to see the wisdom in what paul is writing and these kind of deficits are different? ask jonathan hoenig, tracy byrnes, christian weller, gary b. smith. gary, what do you say? >> not only, neil, did he say that the deficits don't matter, he said that is exactly what we need. they help. they're the only thing stimulating the economy. he always makes the assumption though that government spending is better than private spending. why not go the opposite way? we had a depression in this country in 1920 and 1921. ere the government cut taxes and cut spending, and we were out of that depression in about a year. instead the government thinks they know better than the private economy. so they will raise taxes. they're increasing spending. tell you what, it is all going to you know what in a handbasket over the long term i think. neil: bottom line, mr. smarty pants, he has a nobel prize and you don't. christian, what do you make of that? >> there is so much stuff flying here. you must have read a different op-ed by paul krugman than i did, because the one i read says deficits matter. the main thing hear is the short-term deficit versus a long-term deficit. short-term deficit was unadvoidable. if you look at the numbers large driving factors were past administration and weakening economy and weakening economy. he is in the op-ed is saying long-term deficits are things we need to address. he also lays the clearly at the feet of the politicians and there is question of politics but the politicians have to address the long-term deficits. no economist in their right mind who will say long-term deficits don't matter. we all agree the long term structure of long-term deficits. neil: christian, maybe you didn't hear what i said at the outset. what he is saying deficits a larger percentage of gdp under the prior president, just, hear me out. double what they were under his greatest boogeyman, ronald reagan, that, that is not, in those moments, big deal. this snapshot in this moment, not a big deal. hypocrite critical, no? >> no, no. it is not hypocritical you have to look what drives deficits under reagan, under bush and under obama. the current deficits we're facing for 2009-2010, the large degree spike deficit driven by temporary measures and economy. what we're all criticizing, and what paul krugman criticized in the '80s and 2000s was the structuralçóxd policies, largely tax cuts, and spending iniiiatives that were not paid for such as war in afghanistan and iraq but also medicare prescription drug benefit. ultimately blew up the deficit. they're not, main distinction we teach all our students. neil: deficits are deficits, red ink, red ink and -- >> no they're not. neil: fine, fine. you can say that i'm just saying that is crazy argument. that's all i'm saying. >> that is entire economics literature says that. distinction between permanent deficit and temporary deficit. neil: i didn't hear that literature being bandied about when bush was president or other guys were if the. >> in fact it was written by the same people. >> the point i'm not getting a lot of people are not understanding this notion of short term versus long term. not like poof, the deficit is going to go away after a short period of time. we -- >> they're not going to disappear but they will shrink substantially. >> impede capitalism in the process because all we're doing handing out money left and right for the short term. apparently the belief this is good thing this will get the economy going again. come the long term, it is gone? this is something we're struggling forever. >> i think, look at the numbers. cbo, saying deficits will shrink and ultimately reach a level that certainly needs to be reined in. we'll not look deficits, 11 or 12% of gdp for years to come. neil: you're making that assumption. i do want jonathan in. >> don't know what the future will look like. we're talking about omb numbers. neil: man, oh, man, jonathan, what do you think of this whole argument? >> well, neil, to begin with, spending does not create wealth. it didn't create wealth under george w. bush. and it is not going to create wealth under president barack obama. what we need to productive, profit-seeking investment. no the things like "cash for clunkers", take money from one constituency to give it to another. do deficits matter or not? the whole word credit comes from latin word meaning to believe. the higher that deficit goes the less people we're borrowing money from believe we can pay it back. i think there is tremendous long term risk running up huge deficits from which no productivity ultimately comes. neil: christian i want to leave you with something. christian, give you something that your buddy said. the real interest on all this additional debt will probably be around 1% of the gdp or 5%. federal revenue. that doesn't sound like overwhelming burden. never mind the fact that the gdp with debt, you're going to be looking at something in the neighborhood of 13 to 15% of what this entire country produces. he is sloughing it off in that statement and you're okay with him sloughing it off? >> no. neither is paul krugman. the main point is that ultimately you have long-term deficits that are structural deficits that need to be reined in. omb numbers, cbo numbers put deficit at 3 to 4% of gdp. neil: i forgot how reliae they are. quick break, president poised to seize control of internet. a draft bill that has some worried. stick around.??

you're paid as a fixed salary and there are models like that in the u.s. f you go to the mayo cleanic, cleveland clinic. these organizations are highly effective, well-known internationally, have systems like ours. >> so they are paid on salary. >> yes. there are huge cost elements, duplication of tests, fragmentation of care. take one example, long term conditions, diabetes, asthma, they are costing your system a tremendous amount of system. you need better integration. >> thank you very much. we appreciate it. i thank you again for giving us your perspective on the truth and false of some of the allegations out there. again, thanks. >>> is the united kingdom's universal health care model the prescription for america's health care cris or not. let's bring in christian weller, associate professor of public policy at the university of massachusetts boston along with michael tanner author of "healthy competition: what's holding health care back and how to free it." christian let me throw up these numbers. we have these -- it's pretty amazing. we spend $7,290 per year per person in this country. in the uk they spend $2,992. i know you can't judge a system on one number alone, but that is a pretty damning number for the u.s., isn't it? >> well, it's a damning number and it comes out of many studies. the main issue here is that the u.s. does pay, has the most costly health care system even if you adjust for our income levels, and that's ultimately where the crux of the problem lies, that we pay a lot, and we don't seem to be outperforming the rest of the world. it depends a little bit on which studies you look at, but generally we are as good as the rest of the world or a little worse in some cases. so the question in the end is how can we ultimately make our system more efficient and that's ultimately what the discussion is about is how can we make sure that the current dollars we're spending actually go a lot further. there is a lot of inefficiencies in the market. in 2005 the mckenzie global institute expected we speed $500 billion too much on health insurance and that was largely because of profits to health insurance corporations. the other problem is we have too much bureaucracy in the market. >> what do you say about the other point, talking about this board that was affiliated with the national health services, of course, but not run by the government. and its job is to evaluate the studies that are out there so that decisions are made that are cost-effective. i mean, the word rationing seems so loaded i don't even want to use it, but that actually sounds like it makes sense and it's what right now is done by 180 different insurance companies in this country. >> well, first of all, i think he sort of contradicted himself. he said that they don't deny cancer drugs and then he said this board originally had not approved a drug and then later allowed that particular drug to be sold. so clearly they did deny it in the first place. which contributes to the outcomes they have in britain. if you look at cancer outcomes, the british medical journal, the lancet, surveyed five-year life expectancies for different types of cancers for all the different cancers in the industrialized world. britain came out last in europe, well behind the united states, which came out number one because of our health care system. so i think you have to look at what are the results if you're going to sort of arbitrarily say what is and is not available to people for their health care. >> michael, i do want to say i think what he was saying was whether it would be available for any woman with breast cancer. i think what his point was, they did a further study and you found a smaller pool of women for who -- >> so later on they decided not to ration that particular drug. >> but, michael, the big question is i don't understand the issue of rationing. health insurance companies do it right now, and they don't even have to give you a reason as to whether they approve something or don't. >> sure. >> so we already have rationing. so why is it such a fear item? >> it is who decides. in a government controlled system once they decide to ration, there is no appeal. there is no way around it. if i don't like what my insurance company approves, i can choose from one of 1300 other insurance companies or i would be able to under the type of system that i support, and that ultimately i can pay out of my own pocket for that care. in the end, of course, health care is rationed. it's a commodity. there's a finite amount of it. the question isn't whether we're going to ration, but who decides. a government bureaucrat, an insurance bureaucrat, or an individual? i think it should be the individual. >> you're saying you don't like the current system or some of the proposed reforms it sounds like which is fair enough. >> no. >> well, i mean the proposed system would be more government potentially and the current system is insurer, right? >> why not simply turn the money over to the individual and let the individual make those decisions. >> you're proposing a different reform. >> but -- >> yes. >> i think the main thing here is you can have a universal health insurance system which we're talking about, we're not talking really health care. you look at countries like france or germany where it's not really -- i mean, it's a heavily regulated private insurance market. it's not a government system. it's not a single payer system where people have access to the kind of services that michael is talking about. in the end it's about squeezing out inefficiencies and you can do that with substantial competition. you have 200 insurance companies in germany and they work reasonably well as i can attest from personal experience. that's one thing. the other part is also putting too much burden on the individual, look at like we expect that everybody is going to be a brain surgeon and can evaluate the health care services they need properly. >> that's a fair point. >> i think given how much difficulty people have investing in their 401(k) i think that's the wrong-headed direction. >> i want to get each of your take on this. we will have the form are new york insurance commissioner on in a moment. one thing i really don't understand is people say in america we have so many health insurance companies and it's a free market, michael, but when i'm here at ge, i only have a few choices. so as far as i'm concerned -- >> you're sleuabsolutely correct. if we want more competition, why don't we open it up so people can buy insurance across state lines? you're talking new york state insurance commissioner. they have one of the most highly regulated most expensive insurance markets in the country. it's dominated by three insurers that have about 60% of the market. why don't they let new yorkers go online and buy it anywhere in the country? >> michael makes a point that contradicts a bit, shows the internal contradiction here. we have heavily regulated insurance markets for a reason, because the consumers aren't