Chance favors the prepared mind - Louis Pasteur

And While I’m Up

by Hal_10000

In the last post, I referenced the liberal blogosphere already being on message about entitlement reform.  I thought I’d make a pre-emptive strike on some talking points:

For one thing, I believe, as a lot of people do, that there is no “crisis in Social Security, Medicaid, and Medicare”. (See Figure 1.1 of this report (pdf)). Insofar as there is any problem with Social Security, it is not urgent, and can be fixed by minor tweaks like raising the cap on payroll taxes.

I’ve addressed this before.  In short, raising the earnings cap is a lousy idea for three reasons.  First, the government will simply borrow any additional Social Security revenue from the trust fund.  So instead of having $4 trillion in IOU’s in the trust fund, we’ll have $5 trillion in IOU’s.  I don’t see that as an improvement.  Second, raising the cap would give us one of the highest marginal tax rates in the world (over 50%, just for the feds).  That’s not good for an economy.  And third, if Social Security were a retirement system, you would have to pay out all that extra money back to the rich.  Raising the cap to pay everyone else makes it a pure welfare system.

That’s fine, if that’s what you want.  But then call it what it is.  Quit pretending Social Security is a retirement system.

We do have a problem with Medicaid and Medicare, but that is due to the fact that we have a much more general problem with rising health care costs. Spending on Medicaid and Medicare has risen less rapidly than spending on health care generally over the past decade:

There’s a reason for this: cost-shifting.  Medicare has not significantly raised its physician fees in over 25 years.  The only reason doctors continue to see Medicare patients at all is because they can charge non-Medicare patients more to make up for the loss.  If—as Obama has indicated and I suspect Hilzoy supports—we move more of the country onto Medicare, that will destroy the pool of people against whom to cost-shift.  At that point, there will be only one way to hold down healthcare costs—rationing.

Well, unless you’re rich and powerful and can get what little private insurance remains.

Comments

Posted by on 02/14/09 at 03:41 PM from

Who the fuck are you kidding, Hal?

There is no “social security trust fund” now and there never was. The whole thing is just a “Madoff” style Ponzi scheme and was from it’s inception. Where else do you think madoff came up with the idea from?

Posted by on 02/14/09 at 07:55 PM from

Who the fuck are you kidding, Hal?
There is no “social security trust fund” now and there never was. The whole thing is just a “Madoff” style Ponzi scheme and was from it’s inception. Where else do you think madoff came up with the idea from?

That’s Hal’s point.  Note his mention of IOUs (Hal next time forget the apostrophe-apostrophes are NEVER used to make anything plural-possessives and contractions only).

Posted by mikeguas on 02/14/09 at 08:41 PM from

Who the fuck are you kidding, Hal?

Based on Hal’s posts, it’s pretty clear he is on the fiscal conservative’s side, and has a different set of ideas than WVR. I’m not sure why you are snapping at him. I think he’s well aware the SS is a complete fraud.

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