Curtis Bowman

Thomas Schaller on the Elderly and the Lack of a Real Health Care Debate

Thomas Schaller notes the irony of the fact that the elderly are complaining the most about government involvement in health care while simultaneously receiving the most government health care dollars.

Here's a significant excerpt from Mr. Schaller's column that addresses the widespread ignorance of how much the federal government spends on health care for the elderly:

So let's have a national debate about the government spending for health care, fine. But as we do, let's be clear about where - or rather, on whom - the government spends the bulk of its health care money: senior citizens.

Of course, elderly Americans have more expensive health care needs. And I can honestly say I've never met a single person who begrudges senior citizens the opportunity to live out their retirement years without enduring sickness or pain.

Nor, by the way, does President Barack Obama begrudge them. In fact, a significant chunk of his speech Wednesday night to a joint session of Congress was dedicated to allaying the concerns of seniors. No other group received attention.

"More than four decades ago, this nation stood up for the principle that after a lifetime of hard work, our seniors should not be left to struggle with a pile of medical bills in their later years," Mr. Obama said at a Saturday health care rally in Minnesota, as further assurance. "That is how Medicare was born. And it remains a sacred trust that must be passed down from one generation to the next. That is why not a dollar of the Medicare trust fund will be used to pay for this plan. Not one dollar."

And yet, on our televisions we see enraged senior citizens at health care town halls with signs warning about the rise of socialism in America. That is, the group most worried about government intervention into health care is the group that benefits from the greatest government investment in public health care the planet has ever witnessed. Are you kidding me?

Prior to the government's redistributive investments in Social Security and Medicare, poverty and illness made for a brutal end-of-life experience for millions of seniors. According the National Bureau of Economic Research, "a large increase in the incomes of the elderly stemming from pre-Social Security social programs and the phase-in of the Social Security system has coincided with suicide rates for that group dropping 56 percent since 1930."

Yet we have to listen to knuckleheads like Sarah Palin, the 2008 Republican vice presidential nominee, scaring seniors with bogus warnings about the government creating "death panels." But before Social Security and Medicare, the sad truth is that many seniors issued what we might call self-imposed death panel verdicts: They took their own lives.

I don't remember this many seniors complaining about socialism during the past four decades, a period during which the poverty rate among seniors was reduced to a third of what it was, Medicare and Medicaid expanded drastically, and Mr. Obama's Republican predecessor in the White House pushed through an expensive prescription drug benefit - in short, an era that witnessed a giant, "socialist" transfer of cash from younger Americans to their parents and grandparents, some of whom are now complaining about a too-big government.

As I've said before, in my darker moments I sometimes think that the elderly are the enemy.

Pretty Stupid, It Seems

I was in a bookstore yesterday and came across a fascinating book by Rick Shenkman entitled Just How Stupid Are We? Facing the Truth About the American Voter. In short, the book deals with the ignorance and irrationality that currently plague our country's politics, especially at the national level. The surveys paint a dismal picture of a populace easily manipulated and swayed by emotional appeals that fly in the face of the facts. I've blogged such things from time to time in the past.

I read the entire book last night. It's enjoyable, informative, and more than a little scary. I found myself in serious disagreement with Mr. Shenkman only once. On page 35 he claims that the Social Security Trust Fund is a fiction. Here's what the Trust Fund FAQ page maintained by the Social Security Administration has to say on this issue:

Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.

Otherwise, I found myself in agreement with Mr. Shenkman on all the major issues raised by his book. I have to admit that I don't share his rather muted optimism that things might get better, but overall his book is well worth reading.

Also, there's a blog associated with the book that should be added to your regular reading until the November election.

No, Social Security Won't Disappear Before We Retire

Alexander Hertel of the Economic Policy Institute explains why Social Security won't disappear before we retire.

Robert J. Samuelson on Barack Obama

Robert J. Samuelson, whose columns I blog from time to time, has written a brutal assessment of Barack Obama. In short, says Samuelson, Obama's agenda is "completely ordinary, highly partisan, not candid and mostly unresponsive to many pressing national problems."

Samuelson then looks at the case of entitlement spending:

A favorite Obama line is that he will tell "the American people not just what they want to hear but what we need to know." Well, he hasn't so far. Consider the retiring baby boomers. A truth-telling Obama might say: "Spending for retirees -- mainly Social Security, Medicare and Medicaid -- is already nearly half the federal budget. Unless we curb these rising costs, we will crush our children with higher taxes. Reflecting longer life expectancies, we should gradually raise the eligibility ages for these programs and trim benefits for wealthier retirees. Both Democrats and Republicans are to blame for inaction. Waiting longer will only worsen the problem."

Instead, Obama pledges not to raise the retirement age and to "protect Social Security benefits for current and future beneficiaries." This isn't "change"; it's sanctification of the status quo. He would also exempt all retirees making less than $50,000 annually from income tax. By his math, that would provide average tax relief of $1,400 to 7 million retirees -- shifting more of the tax burden onto younger workers. Obama's main proposal for Social Security is to raise the payroll tax beyond the present $102,000 ceiling.

Samuelson clearly has a point. It's not as if anyone is vigorously addressing the issue of entitlement spending. But since Republicans have so poisoned the debate about taxes and the federal budget for so long, it's hard to see how Obama (or Clinton, for that matter) can fully face the issue without committing political suicide. Samuelson wants to hold Obama to a higher standard, as he says in the rest of the column, because it's Obama's avowed standard. I sympathize with Samuelson's position. But should Democrats pave the way for another Republican president by emphasizing the unwanted truth?

Robert J. Samuelson on Bush's 2009 Budget Proposals

Robert J. Samuelson looks at President Bush's budget proposals for 2009. No one in either party, says Samuelson, is willing to talk about the hard choices.

If you look at my posts on entitlement spending, you'll find links to some of Mr. Samuelson's earlier columns about the federal budget.

A "Tsunami of Spending" Awaits Us

This recent column by Jacob Sullum of Reason is worth reading in conjunction with Robert J. Samuelson's latest effort to prod us into a serious discussion of entitlement spending. (I blogged Mr. Samuelson's column in my previous post.)

Mr. Sullum's column brought to my attention a recent speech by David M. Walker, the Comptroller General of the United States. In that capacity Mr. Walker is the head of the U.S. Government Accountability Office, and thus he can be expected to know a thing or two about entitlement spending. You can use this link to download the text of Mr. Walker's speech (PDF, 124 KB).

Here's a mind-boggling excerpt to keep you awake at night:

Believe it or not, the federal government's total liabilities and unfunded commitments for future benefits payments promised under the current Social Security and Medicare programs are now estimated at $53 trillion, in current dollar terms, up from about $20 trillion in 2000. This translates into a defacto mortgage of about $455,000 for every American household and there's no house to back this mortgage! In other words, our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases.

The Medicare program alone represents about $34 trillion of our current $53 trillion fiscal gap. If there is one thing in particular that could bankrupt America, it's runaway health care costs. And don't forget, the first "baby boomers" will begin to draw their early retirement benefits under Social Security in a couple of weeks! And, just three years later, they will be eligible for Medicare. When "baby boomers" begin to retire in big numbers, it will bring a tsunami of spending that, unlike most tsunamis, will never recede.

The prescription drug benefit alone represents about $8 trillion of Medicare's $34 trillion gap. Incredibly, this number was not disclosed or discussed until after the Congress had voted on the bill and the President had signed it into law. Generations of Americans will be paying the price — with compound interest — for this new entitlement benefit. In many ways, the 2003 Medicare prescription drug episode arguably represents government "truth" and "transparency" at its worst. Unfortunately, based on adding the prescription drug benefit and other spending and tax actions, the federal government seems to be ignoring the first rule of holes in connection with its fiscal affairs. Namely, when you're in a hole, stop digging!

If trillions of dollars aren't big enough to get your attention, believe it or not, in fiscal 2007 over 62 percent of the federal budget was on "auto-pilot" and this percentage is on the rise! Shockingly, the major functions expressly envisioned by our Founding Fathers as a proper role for the federal government — things like national defense, homeland security, foreign policy, the treasury function, the federal judiciary, the Congress and the Executive Office of the President — are in the remaining 38 percent of the federal budget! And this portion of the budget is set to get squeezed.

Mr. Walker's speech was supposed to roll out a new report intended to instruct the American people about the fiscal challenges in our future. An abstract is available here, and that page contains a link to a PDF of the full report.

Robert J. Samuelson Takes on the Entitlement Issue Once Again

On several occasions I've blogged Robert J. Samuelson's columns about entitlement spending. Unless my memory is mistaken, Mr. Samuelson's jeremiads tend to appear more frequently when an election is approaching.

Anyway, since we're nearing a presidential election, we're hearing the usual rhetoric about what can be done to provide the children of this country with the future they deserve. Etc., etc., etc. We've all heard this sort of thing before.

Mr. Samuelson's latest column points out the fiscal difficulties in the way of this laudable ambition. They aren't limited to entitlement spending, of course, but that's the spending category that will prove costliest.

Here are several paragraphs containing the usual eye-opening figures about entitlement spending, along with Mr. Samuelson's ritualistic browbeating of the politicians who aren't brave enough to discuss the issue seriously:

Our children face a future of rising taxes, squeezed -- and perhaps falling -- public services and aging -- perhaps deteriorating -- public infrastructure (roads, sewers, transit systems). Today's young workers and children are about to be engulfed by a massive income transfer from young to old that will perversely make it harder for them to afford their own children.

No major candidate of either party proposes to do much about this, even though the facts are well known.

Social Security, Medicare and Medicaid -- three programs that go overwhelmingly to older Americans -- already represent more than 40 percent of federal spending. A new report from the Congressional Budget Office projects that these programs could easily grow to about 70 percent of the budget by 2030. Without implausibly large deficits, the only way to preserve most other government programs would be huge tax increases (about 40 percent from today's levels). Avoiding the tax increases would require draconian cuts in other programs (about 60 percent). Workers and young families, not retirees, would bear the brunt of either higher taxes or degraded public services.

Similar pressures, though less ferocious, exist at the state and local levels. Schools, police, libraries and parks will be squeezed by the need to pay benefits for retired government workers. A study by the Pew Charitable Trusts found that states have promised retired workers $2.7 trillion in pension, health care and other benefits during the next three decades. Only about $2 trillion has been set aside; the rest would come from annual budgets.

Medicaid, a joint federal-state program with states paying about 40 percent of the costs, represents another drain; about two-thirds of its spending stems from the aged and disabled. Roads, water and mass transit may also be shortchanged. States and localities pay about three-quarters of their costs.

But facing these facts would expose candidates to three daunting problems.

First: Lightening the burden on the young requires cutting retirement benefits for the old -- raising eligibility ages, being less generous to richer retirees and making beneficiaries pay more for Medicare. Simply increasing taxes or cutting other programs won't work. The problem is not just closing the budget deficit.

Second: We can't wait. Ideally, prospective retirees would have received several decades' warning, but we've delayed too long. We need to cut benefits for baby boomers and even some existing retirees. They are the source of mounting costs.

Third: Even if retirement benefits were cut, pressures for higher taxes and lower public services would not disappear. Social Security and Medicare are part of the nation's social fabric. Although individuals' benefits can be responsibly trimmed, the growth in the elderly population (a doubling by 2030) and rapidly rising health-care costs would still expand total spending. The increases would simply be smaller.

A moral cloud hangs over our candidates. Just how much today's federal policies, favoring the old over the young and the past over the future, should be altered ought to be a central issue of the campaign. But knowing the unpopular political implications, our candidates have lapsed into calculated quiet.

If you look back at my posts about entitlement spending, you should be able to find similar facts and figures.

More: After you've read this post, you might want to look at my next post, in which I blog a recent speech by David M. Walker, the Comptroller General of the United States. Mr. Walker's speech, as you'll see, contains some mind-boggling figures about entitlement spending.

Robert Samuelson Looks at Entitlement Spending for the Umpteenth Time

Here is an eye-opening excerpt from Robert Samuelson's latest attempt to draw attention to the entitlement spending crisis in our future:

From 2000 to 2030, the 65-and-over population will roughly double, from 35 million to 72 million, or from about 12 percent of the population to nearly 20 percent. Spending on Social Security, Medicare and Medicaid -- three big programs that serve the elderly -- already represents more than 40 percent of the federal budget. In 2006, these three programs cost $1.1 trillion, more than twice defense spending. Left on automatic pilot, these programs are plausibly projected to grow to about 75 percent of the present budget by 2030.

Stalemate results because all the ways of dealing with these pressures are controversial. There are only four: (a) massive tax increases -- on the order of 30 to 50 percent by 2030; (b) draconian cuts in other government programs (note that the projected increases in Social Security and Medicare, as a share of national income, are more than all of today's domestic discretionary programs); (c) cuts in Social Security, Medicare and Medicaid -- higher eligibility ages or lower benefits for wealthier retirees; or (d) undesirably large budget deficits.

If you look at my posts devoted to entitlement spending, you'll see that I've already linked to Samuelson's work on several occasions.

Robert J. Samuelson on Figuring Out How to Pay for the Baby Boomers

Well, another presidential election is nearing, and politicians on both sides are doing what they usually do: that is, they're dodging the issue of federal spending for the soon-to-be-retiring-in-droves baby boomers.

Here are two eye-opening paragraphs from Robert J. Samuelson:

The aging of America is not just a population change or, as a budget problem, an accounting exercise. It involves a profound transformation of the nature of government: Commitments to the older population are slowly overwhelming other public goals; the national government is becoming mainly an income-transfer mechanism from younger workers to older retirees.

Consider the outlook. From 2005 to 2030, the 65-and-over population will nearly double, to 71 million; its share of the population will rise to 20 percent from 12 percent. Social Security, Medicare and Medicaid -- programs that serve older people -- already exceed 40 percent of the $2.7 trillion federal budget. By 2030, their share could hit 75 percent of the present budget, projects the Congressional Budget Office.

The rest of Samuelson's column is devoted to a quixotic scheme to encourage liberal and conservative think tanks to come up with honest solutions to the problem.

If you look at my posts on entitlement spending, you'll see that I've blogged this issue before.

Unfunded Liabilities Said to Reach $59 Trillion

According to this article by Dennis Cauchon of USA TODAY, unfunded taxpayer liabilities have reached a record level of $59 trillion.