The Glade 4.0

This was pointed out to me and I wanted to get you guys' input on it. The estimated tax receipts for non-payroll taxes in the US in 2010 are $1.441 trillion. Under Obama's budget proposal, discretionary spending in 2010 will be $1.368 trillion. Interest on the debt is $160 billion. That means for this portion of the budget, the deficit is "only" $87 billion. Winding down the Iraq and Afghanistan wars will more than cover that. All other spending is either SS, Medicare, Medicaid, or the Stimulus.

The stimulus will expire in 2012. At that point, the only thing that seems to be creating a deficit is SS and Medicare. If these programs are cut enough to be made solvent, (Yes, that would require massive cuts to Medicare, but the point stands) so that payroll tax receipts equal expenses, the federal government would actually be running a surplus. And that's assuming the 2010 tax income, which is 11% less than 2009. If the economy grows at all in the next two years, that could potentially be a large surplus. And as many people have pointed out to me, the only reason the US can run a large trade deficit is because of the federal government debt.

A lot of people say the US has no hope, but could we really fix all our fiscal problems just by cutting down these three entitlement programs?

It's that simple, but it's not easy.

It's like working out. It's a simple concept that increasing exercise will improve body health. Putting it into practice and having the drive to do it, certainly isn't easy though.

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I prefer to think of them as "Fighting evil in another dimension"

Bush tried to address Social Security and look how that went. And he only wanted to make a tiny incremental change. Result: Easy pickings for democrats. Bush hates the elderly and wants to steal your SS. It would be the same with medicare, but worse.

This is another reason people fear a universal health care entitlement. And make no mistake, if Democrats for some reason decided to cut either of them, R's would be all over them as well. It's just easy politics.

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“Strong people are harder to kill than weak people, and more useful in general”. - Mark Rippetoe

Yes and no. Doing so would let us start chipping our way out of debt. Doing so without addressing the social attitudes and economic policies that lead us to irresponsibly create those entitlement programs in the first place wouldn't keep us on that track, though, so I don't think it's fair to say that it's "simple."

It's definitely the tangible part of the solution. The hard part is the intangible part that would both set us up for being able to pass those eliminations more realistically and staying out of trouble on the road to recovery.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

No. The problem is that SS and Medicare are simply symptoms of the disease (although harsh and possibly fatal ones). The problem is that the government cares not for its spending for its is personally profitable for those in power and that the government attempts to control the economy. (The second is done so that the first can be increased, it also has the effect of convincing some politicians that they can act without actual harm (thank you Keynes).

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Only total elimination of those programs would do it, not "chipping away" at them.

By 2020, all Federal taxes must be doubled or all programs except Medicare would have to be cut, just to afford Medicare.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Can you source that, DFK? I just read an op-ed by Bruce Bartlett that made a much less dire (but still daunting) estimate:



It's an interesting op-ed, by the way, if you feel like reading it.

I'd be happy to, if I can find it. It was a report done by the AEI I believe.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Based on what I read on the first page, its junk.

Found it:

http://www.heritage.org/Research/Budget/bg2114.cfm

Though I have to apologize, apparently I got the year wrong on when we'd have to cut all other federal programs by a not-insignificant number. It's actually 2049. Also, it's all of CMS and SS, not just Medicare. Sorry.

As to the doubling of tax rates, that's correct. Second paragraph:

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Social Security isn't even in that bad of shape, I've read that a 13% payout cut would make it solvent for the next 75 years. Even with such a cut, beneficiaries are still receiving far more from SS than was originally envisioned when it was created. Remember that when SS was created the average life expectancy of an SS pensioner was 8 years, today it's over 20 years.

Medicare is obviously totally insolvent, but there's no reason you couldn't cut down the payouts so they're equal to that brought in by the payroll taxes. Medicare has been pay-as-you-go since it was started so nobody is even being "stolen" from by doing this.

Except that they're already telling people my age, and I just received my statement to prove it, that we're currently going to get 76 cents on the dollar. That's without further issues.



One, they haven't really been pay as you go at all.
Two, you can't make any further cuts to physician reimbursement in a voluntary program without many, many physicians starting to refuse them.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Out of curiosity, does anyone know how Medicare reimbursement rates compare to (i) private insurer reimbursement rates in the US, and (ii) reimbursement rates in other western countries?

(i) Generally speaking, less than private insurers in the US. Medicare is often 20% (or more) discounted from private rates. It's hard to tell though because while Medicare tabulations, though arcane and complex, are public knowledge, private payer fees are confidential.

(ii) You really can't compare, as the entirety of the health systems are different. For example, Japan is much lower, but their patients are far more compliant, their health system is going bankrupt, and their system is more homogenous. Taiwan, on the other hand, has higher rates, but are being forced to make cuts for affordability. They've also got a ground-up system they designed a few years ago, also allowing for extreme homogenaity. (sp?)

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine