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.
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.
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.
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.
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.
Robert Samuelson has written another of his typical broadsides on entitlement spending.
Here's a large excerpt from Samuelson's column:
For those who believe our leading politicians are utterly shameless, there was dreary confirmation last week. President Bush publicly bragged about the federal budget. Here's the objective situation that inspired the president's self-congratulation: With the unemployment rate at 4.6 percent (close to "full employment" by anyone's definition), the White House and Congress still can't balance the budget. For fiscal 2006, which ends in September, the administration projects a $296 billion deficit; for fiscal 2007, the estimate is $339 billion. How could anyone boast about that?
Easy. In February the administration projected a $423 billion deficit for 2006, so the latest figure is a huge drop. A skeptic might say that the first estimate was inept; some cynics argue that it was deliberately exaggerated to magnify any subsequent improvement. Naturally the president had a different story. The shrinking deficits, he said, proved that his tax cuts are working. The economy is great; the budget benefits. All around Washington, Republicans staged media events to hug themselves for their good work.
The tendency for politicians to claim credit for favorable news is as natural as flatulence in cows. Still, the Republicans' orgy of self-approval amounts to a campaign of public disinformation. It obscures our true budget predicament. Let's go back to basics. Here are two essential points.
First, budget deficits are not automatically an economic calamity. Their effects depend on their timing, their size and other economic conditions. During recessions, deficits may prop up the economy. In a boom, they may drain money from productive investments. Similarly, deficits are only one influence on interest rates; others include inflation, the demand to borrow, the supply of savings and Federal Reserve policy. At present the effect of deficits is modest; otherwise, rates would be higher than they are (about 5 percent on 10-year Treasury bonds).
What truly matters is government spending. If it rises, then future taxes or deficits must follow. There's no escaping that logic. The spending that dominates the budget is for retirees. Social Security, Medicare (health insurance for those 65 and over) and Medicaid (partial insurance for nursing homes) already exceed 40 percent of federal spending. As baby boomers retire, these costs will explode. Unless they're curbed, they'll require tax increases of 30 percent to 50 percent over the next 25 years.
Second, the budget should be balanced -- or run a surplus -- when the economy is close to "full employment," as it is now. Balancing the budget forces politicians to make uncomfortable choices. Which programs are sufficiently needed or popular to justify unpleasant taxes? Balancing the budget also lightens the debt burden. One figure Bush doesn't praise is the annual interest payment on the growing federal debt. Even by White House estimates, it will rise from $184 billion in 2005 to $302 billion in 2011.
Some conservatives rationalize their indifference to deficits as "starving the beast." If you cut taxes and create deficits, government will spend less because it has less -- much like a teenager whose allowance is cut. But the theory doesn't fit the facts. Economist William Niskanen of the Cato Institute, who worked in the Reagan administration, examined the relationship between deficits and federal spending from 1981 to 2005. He found that, contrary to the theory, spending rises when deficits rise. Deficits are what they seem: a way for politicians to escape inconvenient choices.
The rest of Samuelson's column criticizes the Democrats, although it does so less plausibly, if you ask me. It's not that Democrats are immune to criticism on matters involving the federal budget, but they have shown themselves to be willing to raise taxes in order to balance the budget. And that willingness has always expressed itself in the form of progressive taxation, which is wildly contrary to Republican ideas about taxation.
Furthermore, as I recall, the bond market and the stock market reacted favorably to Clinton's fiscal policies which the Republicans opposed, I might add and that favorable reaction contributed to the economic climate that produced the surpluses that Bush inherited. Consequently, it seems fair to me to say that the Democrats and their policies were at least partly responsible for the vanished surpluses.
The Medicare prescription drug benefit was a base political ploy, as everyone knew. Not only was it the sort of big government initiative that Republicans had been condemning for decades, but after it was written into the law books, we learned that the Bush administration had hidden the initial cost estimates of the program from Congress. The price tag has risen considerably since then, to no one's surprise.
Well, now that the benefit has gone into effect and senior citizens have begun to enroll in the program, it turns out that the benefit guidelines are so poorly written that many people can't understand how to sign up for the benefit. As I mentioned in an earlier post, this debacle of a rollout is imperiling support for the GOP among the elderly.
Here's what Michael Kinsley has to say about these aspects of the benefit:
The hideous complexity of President Bush's prescription drug program has reduced elderly Americans -- and their children -- to tears of bewildered frustration. The multiple options when you sign up, each with its own multiple ceilings and co-payments; the second round of red tape when you actually want to acquire some pills; the ludicrously complex and arbitrary standards of eligibility, which play a cruel and pointless game of hide-and-seek as they lurch up and down the graph paper like drunks. Suddenly a mystery is solved: So this must be what he means by "compassionate conservatism."
Thus Bush's only major domestic accomplishment in six years as president has not achieved its intended purpose of cementing the affection of senior citizens for the Republican Party. Many Republicans are sobbing with frustration, too. It is one thing to put aside your principles and spend hundreds of billions of taxpayer dollars on the largest expansion of the welfare state since the Great Society if it is going to help you win elections (so you can pursue your dream of smaller government). It is another to sell your soul and not get anything for it. No one looks more foolish than a failed cynic.