Let me see if I can explain where Galbraith is coming from.
Suppose there a technology, that had the power to create any amount of money, whenever you wanted. Now suppose that machine was in the hands of the government, and the government could use it to create any amount of money, whenever it wanted.
Now suppose somebody told you the government couldn’t do something (take care of the sick and elderly, for example) because it didn’t have enough money.
You’d say, “Dude, the government has this machine, that it can use to create any amount of money, whenever it wants,” right?
So, I mean, there might be any number of reasons why you wouldn’t want to do something - for example, take care of the sick and the elderly - but not having enough money would never be one of them. Because, the government has this machine that it can use to create money.
Well, here’s the thing: the government has this machine, that it can use to create however much money it wants, whenever it wants.
Indeed, not only should Social Security and Medicare be disentangled, but SS-Retirement and SSDI/SSI need to be distinguished as well. One trust fund (disability) will be tapped out by 2016, thus posing an urgent problem.
It has been mentioned above but it can’t be repeated enough: SS and Medicare are completely different in terms of the magnitude of the problem. SS is easily manageable with a few tweaks to revenue and benefits whereas Medicare is a much more difficult problem. Igorant pundits don’t understand this and constantly lump the two together. Kevin Drum has many excellent posts about this but thisone really captures the essence: basically SS costs level off after 2030 and the deficit remains at a completely manageable 1.5% of GDP afterwards. With Medicare by contrast, the costs explode over the next few decades because of rising medical costs.
Bottom line: there is no entitlement crisis, there is a Medicare crisis a large part of which is a health care cost crisis.
As for what to do about that, there is no single answer. After climate change, this is perhaps the largest and most complex problem facing the United States. Obamacare has a few decent ideas to “bend the cost curve” but it’s only a start. Cutting benefits, while politically difficult, should not be ruled out. The US spends too much public money on the elderly while neglecting more urgent priorities like infrastructure and early childhood education.
To me “crisis” means a massive policy problem where the solutions are very difficult to implement. Climate change and Medicare fall in this category. I don’t think the SSDI and SSI do not least because the poor and disabled aren’t politically powerful in the way the elderly are. It’s not hard to see Congress pass some modest benefit cuts to make up any shortfalls in these programs.
This is probably be what happens. More desirable, and a better approach over the long-term, would be to clarify the law on what “disabled” (particularly as to those impairments whose limitations are hard to know objectively—mental health conditions, spinal degeneration).
Across-the-board cuts will impact those who can’t work (but has a good work history) due to intractable cancer just as much as it will impact someone who can’t work (and who has never worked, in the case of SSI) due to bipolar disorder, Type 2 diabetes, and back pain. One sees a lot more of the latter cases than the former. Nor will it stem the uptick in claims (which tend to look more like the latter than the former), which is thus just kicking the can down the road. (Although, I guess at some point, the benefit will be reduced so much that it’s pittance-nature will be disincentive enough, although I’d expect this self-discouraging benefit amount to have to be very low indeed.)
SS is an easy fix. There are several things we can look into doing to keep it solvent.
Raise the cap
Raise the tax rate
Raise the retirement age
Cut benefits
I’ve heard raising the tax from its 12.4% up to about 14-15% alone would keep it solvent until the 22nd century. We should also raise the cap. So a simple fix like raising the cap (or creating a donut hole like Obama proposed in the primary before he became president) and raising the rate to maybe 14% would fix the problem until it is Jetsons time.
As far as medicare, that also isn’t an impossible fix (at least not on paper). We need more comparative effectiveness and to manage medicare with the goal of providing the highest quality care for the lowest cost. Areas that spend twice as much as other areas don’t show any improved health. So devote large amounts of time to finding ways to make our medical system as efficient and well run as possible. Japan supposedly devotes a good deal of effort to providing the best care at the lowest cost. We could take a page from them. An MRI costs $98 in Japan vs the 2k they cost here because the Japanese work on low cost/high quality efficiency in their health system.
So both problems have solutions. They are just not politically viable solutions (raising taxes to fund social security and government intervention in the medical marketplace to direct the market and reduce the market share of powerful medical industries, which would also require some rationing).
I just don’t see it happening. When Social Security was first created, both the taxes and the benefits were very small compared to today; in fact, the age at which benefits started was 65, higher than the average lifespan back then. Since that time, both taxes and benefits have inched up hand-in-hand. Congress essentially gives workers at deal: accept higher taxes now and we’ll give you nicer benefits in the future. Raising taxes while chopping benefits simultaneously would not be a deal and I can’t see how anyone could expect to get it through, given that Republicans are generally opposed to tax raises and Democrats to benefit cuts.
And yet exactly that (raising the taxes - well, accelerating the increase as well as taxing some of the benefit, and reducing the benefit - a six-month COLA freeze and a bump in the eligibility age) was done in 1983 with bipartisan support.
Average life expectancy at birth is not the correct number when discussing life expectancy for SS purposes. There are many tables available, but this one shows that at 60, life expectancy in 1939 was 15 more years. In 2004 it had increased to 21 years, a 6 year increase - while if measured from birth, the increase was almost 12 years.
I’m all for a different option. How about we increase the share of the nation’s GDP that goes to middle class wages at the expense of capital gains? This would increase the portion of GDP that gets paid in payroll taxes, as well as reduce income inequality. I don’t know that there’s a simple government plan to do this, but we’ve been moving in the opposite direction since the late '70s or so. I suspect a huge increase in unionization would help. But anything that can reverse the ongoing stagnation of middle-class wages will have the benefit of helping payroll tax-funded entitelment programs.
Yes. To treat Medicare as a bookkeeping problem is to confuse a donkey with its tail. If society deems it appropriate to spend 10% of GDP on healthcare, then spend 10% on healthcare. If 9% or 11% is more appropriate, then spend 9% or 11%.
This shouldn’t be hard for good-spirited people to understand. Earmuffs may be needed to drown out the strident gibberish from nincompoops.
Define “vastly” and then Google “concept of insurance” to locate one misconception. More importantly, realize that some people prefer to be “charitable” rather than “rational.”
Septimus is right. For all the hooting and hollering about taxes over the past few years, let’s take a brief look at reality, ok? We have the largest economy in the world, and also one of the smallest tax burdens as a % of GDP in the world, see chart here. (We’re at ~24% while European countries tend to be over 40%) As unpalatable as tax increases can be from a political perspective, there is quite a lot of wiggle room in our economy for them.
Tax increases are not the answer to everything IMHO, but I do think that people not really understanding the scope of income inequality in this country is the crux of the issue. Low earners are easily fooled into thinking we’re talking about them when we discuss tax increases when we could increase total taxes by 3-5% of GDP without affecting them at all, and while everybody at the top continues to live like kings. The wealthy (or their representatives anyway) have become way too greedy and have overreached in shaping opinion on this subject. Increasing taxes is pretty much only a political problem and not a practical one.
Assume I’m right for just a moment, and taxes can be raised 5% of GDP without any real negative effects outside of people screaming. $16 trillion GDP x 5% = $800 billion. That is almost our entire current budget deficit. Cut $200 billion from defense and there is your trillion-a-year deficit. We’re fine, it is only the extremely aggressive rhetoric of Koch types that have people thinking otherwise. Starting from a balanced budget, SS and Medicare look pretty manageable.
I think it would be pretty easy to get many folk to agree at the extremes - heroic and very expensive efforts to prolong the life of a newborn born to indigent parents when that child has no chance of reaching adulthood and will require supportive services throughout his/her short life. Or expensive procedures to prolong the life of an aged person who has never been gainfully employed - possibly someone whose health problems are likely brought on/exacerbated by their longstanding lifestyle choices including tobacco and alcohol intake.
I’m aware of the concepts of charity as well as insurance. I do not consider the 2 to be synonymous, however. I favor a public insurance program which provides SOME level of assistance for those least fortunate. But I do not believe the public fisc ought to be expected to provide all things possible to every person desiring. Unfortunately, bad things happen to people. And I think there is room for a healthy and respectful debate as to the extent of public assistance that should be available when such things do occur.
I am typing as I think, and may regret posting this, but I suppose I might support a more utilitarian approach to public health. I believe every person should receive access to preventative and emergency care, many medications, and palliative care. But I think there is a limit to such care, for individuals who are extremely unfortunate and/or haven’t made private arrangements for such possibilities.
It would be very interesting to see statistics (perhaps broken down by country) showing what portion of the average health-care dollar is spent on extending life at an expected cost of more than, say, $30,000 per month. I’ve no idea what that statistic would look like, nor how to Google for it.
All sensible people understand that limits are needed: when right-wingers babble “Would you spend a million dollars to prolong life one month? A billion dollars to prolong life one hour? A trillion dollars to prolong life one minute?” my only reaction is “Why haven’t I set this guy to Ignore yet?”
So, yes, medicine should be cost-effective … or, in modern American diction, the government needs to institute Death Panels to kill your grandmother.
But I do wish right-wingers would make up their mind why they hate UHC. Is it the fact we’re spending a billion dollars to prolong Grannie’s life? Or the Death Panels? I don’t see how you can have it both ways.
… And when the SDMB’s most prominent right-winger writes “it is more efficient for health spending to be allocated by the free market”, I can only wonder what kind of mushrooms he’s been eating. Remember that this is the same guy who wants to abolish minimum wage, even though minimum-wage workers cannot afford health insurance as it is.
The “free market” would divert the doctors presently treating the infections and broken bones of the poor to provide more cosmetic treatments for the rich. That result may be “more efficient” in a libertarian sense, but not in a humanitarian one.
Soc Sec is super easy. People are living longer so we need to adjust the retirement age for those in the pipeline but not too near retirement once in a while. We also need to raise the ceiling on wages.
