Again, UltraVires, inflation is not added value. Inflation is holding the goods steady and looking at changes in prices. This is why it’s basically meaningless over a long period of time.
I know you don’t LIKE that that is his inflation is calculated, but it is what it is. We’ve always done it like this.
You often hear a quip that in 1950s, people could live on one income, why do they need two today? The answer is that a family CAN live on one income today, if they live like it’s 1950. That includes no advanced medical care, no electronics or cell phone, etc etc. THATS inflation.
Is the medical care getting more expensive because more care is being provided, or because, after costs are adjusted for inflation, the same-old care is more expensive? If it’s the latter, then there’s a market distortion. Absent scarcity, and presuming demand remains constant, real costs should fall over time. If scarcity is the issue, I suspect it would be more cost effective for the government to try to stimulate the training of health care professionals and examine if any artificial barriers to entry into medical professions can be removed, than to simply throw money at the problem.
If demand for like-for-like health care is increasing even after population demographics are adjusted for, then unfortunately the government will be faced with difficult societal problems. I’ve read that higher levels of obesity and lower levels of exercise are leading to poorer health across all age ranges, and not just in the US. Likewise I’ve read that modern societies are seeing mental health issues related to social media that didn’t exist a generation ago. Education and preventative programs, which I acknowledge will also cost money, can partially ameliorate a tendency towards poorer health due to worsening lifestyle trends. However, if society as a whole is choosing to have less healthy practices, it should expect its health care costs to rise, and there’s not much government can do about it. It’s easier to manage supply than demand, and ever-escalating demand will always hit a point where the cost of supply to meet it, even if the supply is increased, is prohibitive.
If neither scarcity nor increased demand are the culprits in increasing medical care costs, then the cause, as noted earlier in my comments regarding insulin costs, is market disfunction. I would much rather the government eliminated market disfunctions than paid for them.
If medical care costs are increasing because the amount of medical treatments available are increasing, then that’s a good thing, but just because a treatment is available doesn’t mean it should automatically be supplied. Cost effectiveness and overall budgetary considerations need to be considered. That’s what fiscally responsible government does. And it applies to all age groups, not just the elderly.
Specific to the US, I don’t think a National Health Care service is a viable option. The US medical care infrastructure is too big, and the switchover would cause too much disruption. I think that gradually increasing the number of people covered by Medicare, and letting individuals or companies buy into Medicare as an alternative to private health insurance is probably a good idea. But there would still need to be strict cost management and a gradually increasing pool of beneficiaries, not a steep increase. Essentially, over time, have the government provide basic medical insurance as a public service, have set costs for the treatments supplied under Medicare, incentivise people to pursue health care professions so personnel supply isn’t an issue, and let private insurance compete over supplemental heath care. The US would end up with a two-tier insurance system, but at least there’d be a decent baseline. And of course people would still whine about how unfair it was and how much the government could be doing if only they’d spend more, but I think that’s a societal constant, at least from a certain portion of society.
I’m not sure. I tend to think that the amount of technology available to society, medical or otherwise, is not only constantly increasing but accelerating. So graphically, an upward curve. If you take any point on that curve, and then map its cost over time, the cost of that point of technology should go down. However, if you take a ratio against the technology curve, even a sliding one, then I suspect the cost of the increases in technology would probably surpass the cost efficiencies gained over time.
I tried putting this rather abstract explanation into a model to see if I could explain it better. Unfortunately, without graphs, I think it’s even more confusing. But try thinking about it this way. Suppose the real costs of 2000 medical care, costed at a 1:1 ratio, have gone down by 33% in 2020. However, 2020 medical care offers 50% more care at today’s rates. The old care costs 0.67, the new care costs 0.5, and the combined total is 1.17. So 0.33 of the new care, which is 66%, can be supplied with no increased overall spend. However, that is only 85.5% (1/1.17) of the total care available. Even though more is being supplied for the same amount, there’s a perception that less is being supplied because of that 34% that isn’t being supplied. And note that there are no inefficiencies in this simple explanation, which is obviously not true of the real world.
Do you have any data that this actually happens? This paper says that end of life cancer patients in Australia had 27% more health care costs than end of life patients with no cancer history.
My father-in-law died at almost 101 (and cheaply.) There is no chance in hell he would have approved expensive (and no doubt painful) cancer treatments if he had cancer. I doubt the people he lived with of a similar age would either.
That is not at all what I am asking. That question would be relevant in 1950, 2000, or 2020.
That’s true for some things, but not others. There’s no reason a doctor in 2020 should charge more (adjusted for inflation) than a doctor in 1950 to dispense medical advice. The 2020 doctor has all of the knowledge up to today and had to attend a CLE about the new advances in 2019. The 1950 doctor had to read up about the latest breakthrough in 1949.
Let’s say I suffered from depression. The doctor would give me the 1950 advice, and prescribe me Vistoril at a nominal price, or offer me this new drug that they had some success with in Europe at an inflated price. In 1985, the doctor would give me the 1985 advice, prescribe me Vistoril at a nominal price or offer me this new drug “Prozac” at an inflated price. In 2020, the doctor would give me 2020 advice, prescribe me Prozac at a nominal price, or offer me this new drug “Trinillex” at an inflated price.
The “normal” price stays the same while providing me superior medical care, but I can always get the latest and greatest at an inflated price. There’s no reason why the doctor should be charging more related to inflation. Technology makes things cheaper. Added value costs money but then that becomes the new normal, and importantly causes a reversion to the old price in real dollars.
A cell phone bill is not anymore, adjusted for inflation, than a landline bill was thirty years ago, and I get free long distance and texting. An internet connection, even with the goofing off you do on it, more than pays for itself by the productivity it creates. I can pay my bills with one click whereas I used to have to sit down for an hour or more writing paper checks and paying for checks and stamps. I don’t spend two hours in the grocery store; I fill my cart online and swing by and pick up the order. I don’t have to hire a professional for many household tasks, I watch a YouTube video. I can work from home and not pay for the commute.
I can pay $7.99/mo. for Hulu, far less in real dollars than a cable bill was 40 years ago and get more movies and TV shows than I could ever watch in that month. Magazine subscriptions? Who needs them? I can get more information on any topic immediately that I could with 100 magazine subscriptions in 1985. All of this is the tip of the iceberg.
Now, your point is well taken when it comes to luxury items and our growing expectation of what luxury we should have. The 1950 family had one car, but today we need two, even if one family member doesn’t work. It’s considered child abuse if a 16 year old doesn’t get a car for her birthday. When I was a kid, our vacations were to a local lake or if we really splurged, the beach. People who make middle class money want their vacations today to be to the Caribbean or to Europe. We want to eat out all of the time or pay $500 or more for prom dresses.
In short, I don’t see by any measure how necessities of life, or even small creature comforts of life, even adjusted for the fact that these necessities are of better quality and better technology, have caused expenses to rise above inflation.
So, disabuse me of this notion that the rise in government spending above inflation and above population growth is just an inevitable fact of existence and not as a result of needing Caribbean vacations?
*It sounds like you’re asking why healthcare costs have risen faster than inflation. That is a separate topic for a separate thread.
Unless you’re asking that people dependent on government for their healthcare should get healthcare inferior to the general population. Such alleged inferiority is already a talking point of the right-wing Party. Are you hoping to make this right-wing wish come true?*
Did you study the statistics in my #10? Discretionary spending is down sharply since 1987 — since after Reagan had already waved his “Government is the problem” wand.
Despite confusion in the thread, the distinction between “discretionary” and “mandatory” spending is real. Moreover please note that the big mandatory items are more-or-less self-funded by regressive payroll taxes. Discretionary spending is funded by income taxes. Doesn’t it seem illogical to call for a cut in payroll tax-funded programs to cope with Trump’s cut in income taxes? And, the huge size of payroll tax is masked because (for those on W2s instead of 1099s) half the total tax doesn’t appear on statements. UIAM, payroll taxes, as a percent of total USG revenue, are at record high, while income tax revenue declines.
What part of my post made you think I am talking about healthcare? I only mention health care because it is used as an example of spending which must, to the exclusion of all other spending, continue to increase and spiral out of control.
I am talking about every type of spending. That’s why I reject your “discretionary” and “non-discretionary” labels. All those labels do is beg the question and declare that this type of spending must rise as much as we say it will rise, budget be damned, but the other spending we can do whatever with. It is a self-imposed label that reflects a partisan value choice.
You further beg the question because of this “self funded” description of social security. I don’t care how it is funded. Why does it have to rise in cost greater than population and inflation? Why does defense have to rise in cost greater than population and inflation? Pick the Republican program you hate and ask why it has to rise in cost greater than population and inflation.
Despite my continuing attempts to not make this a partisan exercise, you insist that we do so.
About 40% of your latest post was confined strictly to the topic of healthcare. And healthcare, as a share of mandayory spending, has been rising rapidly. That IS where your debate is regarding “budget balancing.” IF you include mandatory spending.
In addition to Medicare and Medicaid, “mandatory spending” includes SocSec, SSI and government/military pensions. in you plan, do we tell retired soldiers that their pension is to be cut 6%? Fine, if that’s what you want — I just want you to understand what cutting mandatory spending means.
There’s a reason why mandatory spending is called mandatory.
(There are concrete ways forward, e.g. means-testing SocSec. That would be on-topic. But waving your arms and asking for across-the-board cuts without specific plans is a joke.)
One thing I think we can agree on. Taxes on the rich have been cut; you propose to make up the shortfall by cutting programs like SSI. In other words, you want to stop the transfer of income from the rich to the needy. Fine, if that’s what you want — I just want you to understand what you’re asking for.
You really should refine your understanding of the words “mandatory” and “discretionary.”
Your final sentence is humorous!
Your plan is to fund tax cuts for the rich by reducing programs like Medicaid, SocSec and SSI for the needy. That is straight from the partisan GOP talking points.
YOU propose these cuts. I try to get you to understand that. But I am partisan? :smack:
Are “SocSec” and “SSI” abbreviations for different programs? If so, please explain the distinction between the two.
Claims that the US government is bound by past legislative decisions regarding budgetary spending with no recourse seem spurious. I’m in favour of governments keeping their promises. However, a claim that a past government made an over-generous promise and it binds future legislative sessions seems dubious. Especially if the budget for the promised spending, labelled as “mandatory”, doesn’t have a specified figure. I don’t want to see a Social Security recipient receiving a lower monthly payment, or a year-on-year payment raised by less than the government’s budgetary inflation rate. But the idea that unbudgeted promises from the past are “mandatory” stipulations for future legislatures to provide above-inflation individual benefit increases is absurd. Governments should set realistic increases based on the current rate of inflation, population demographics, and specified extraneous factors. Stating that they have a “mandatory” obligation to provide an above-inflation per-capita increase is a falsehood, as their obligation is to provide an optimal budget that looks after both current and future citizens.
Social Security is perhaps the shining example of fiscal conservatism: we figured out what we wanted to do, we devised a simple way to fund it, and for close to a century it has been tinkered with fewer times than Big Ben. I mean, what can be more fiscally prudent than that?
The only reason that people who call themselves fiscal conservatives get annoyed by it is that there is massive confusion — intentional of course — over what a fiscal conservative is. The common sense definition is that a fiscal conservative would like to see policies that match revenues to expenditures in a prudent way to maximize predictability and avoid catastrophic failures.
However, the term has been hijacked by people who:
want to cut taxes on the wealthy, no matter what the reason, and
If you’re serious, Google “SSI.” Near the top of results, Google offers a place to click on “What is difference between Social Security and SSI?”
Briefly, SSI is a Marxist program intended to transfer money [del]from rich people able to pay it[/del] from East Asian banks who buy U.S.G. bonds to American citizens who need the money.
Is it just the word “mandatory” you’re objecting to? Many both on the left and the right have proposed cuts to SocSec, so nobody treats the term as a 100% absolute. (Perhaps the difference is that “discretionary” spending requires an Act of Congress, while to suspend or revise “mandatory” spending would require an Act.) In any event, I hope you can see a qualitative distinction for programs that honor decades-old commitments.
BUT a key question I’d like to see you answer is this:
“Znaqngbel” spending is largely funded by regressive payroll taxes. The budget is in deficit because of massive cuts to progressive income taxes. Does it seem appropriate that the regressive payroll taxes be left intact, while the programs they support are cut to compensate for the shortfall from cuts in the progressive income tax?(I’ve replaced the word that offends you with its rot13’ed form.)
Note that “Well, I’d cut the payroll taxes too” is a non sequitur in the context of this thread, where SocSec cuts are proposed to balance the budget.
I disagree. The reason conservatives - fiscal and otherwise - dislike it is that it is a matter of faith to them that government can do no good, so government doing good - especially in a socialistic program like Social Security - makes them angry. And makes them want to fiddle with it to kill it.
Biggest exception was Reagan, perhaps because he wasn’t born with a silver spoon in his mouth.
Thanks. Looking at the figures, Supplementary Security Income paid out $56 billion to 8.1 million people in June 2019.
It looks like the number of recipients in 2007 was 7.36 million. https://www.ssa.gov/policy/docs/statcomps/supplement/2019/7a.html
Interestingly, the number of recipients seems to have been dropping. From the same source, the 2007 SSI spending was $41.20 billion.
The SSA figures are more detailed than the CBPP figures, but only go up to 2018. But we can probably get a better analysis if we stay with a consistent data set. The SSA figures for SSI spending for 2018 are $54.85 billion for 8.13 million people. For inflation, US Inflation Calculator is my top Google hit, and it says it uses US government CPI data. It’s 2007-2018 cumulative rate is 21.1%.
A review of the figures shows that the calculated expected spend and the actual spend were very close, with the actual amount lower than the calculated amount by 0.5%. So from a costs versus inflation perspective, that’s a fiscally well-managed program.
Feel free to check my math:
2007 SSI Recipients 7,359,525
2007 SSI Spending 41,204,645,000
Spend per Recipient 5,599
You’re consistently discussing Social Security as an independent program. I have no issue with that, but it’s not how the US federal government presents its budget or calculates its deficit. Looking at 2018, Social Security revenue versus expenditure was roughly break even.
https://www.ssa.gov/OACT/TR/2019/tr2019.pdf (p.10) (PDF)
Take that out of the 2018 budget and you have $3.1 trillion of non-Social Security federal spending and $2.3 trillion of revenue. There’s also a $18 billion difference between the two data sources, possibly due to actual versus budget, or inclusion of other costs. That still leaves the US federal government with a deficit of $779 billion. Fiscal Policy
So now you have a smaller base from which to reduce costs, and a smaller base for increasing revenues. That makes deficit reduction harder, not easier.
I have no problem with your definition of a fiscal conservative. However, I’d include an expectation of consistency into the definition. If the Social Security surplus has been used to reduce the amount of the total US federal deficit over the past decades, then the program’s costs also need to be examined as aspects of the total budget. Also, I’d expect controlled spending across the entire budget, and not ring-fencing of the highest budgetary item.
Yes, and us real fiscal conservatives are angrily waving our spreadsheets at those impostors.
My issue with the word “mandatory” in relation to government spending is that it’s false, and it’s used as a shield to hide behind rather than making tough decisions. The US government needs to restrain itself from spending increases across the board. That can’t happen as a nominal freeze. From the very start of this thread, it’s been acknowledged that spending will have to increase with inflation. It also can’t happen as an inflation adjusted freeze. The first reply to the OP pointed out that population increases also need to be accounted for in spending decisions. Demographic changes within the population also need to be considered, which I believe I was the first person to point out. But if a program’s costs are increasing even after all three of those factors are taken into account, then that’s a problem and the government needs to reduce or stop those increases. Saying that the government can’t because those cost increases are mandatory or non-discretionary is wrong. The government can legislate the budget however it wants. Regarding past promises, maybe the US government would be able to keep those promises if had restrained its spending in the past. But spending wasn’t restrained in the past, it’s not being restrained now, and the US federal deficit is ballooning. Sooner or later, the US national debt is going to become untenable and that balloon is going to pop. I’d rather spending was controlled now, rather than when it becomes an emergency.
I’m discussing spending because it’s the subject of the thread. But I’m happy to discuss revenue as well. Maybe you should start another thread. My general thought is that US federal revenue, which is mainly taxation, is too low and needs to be increased so there’s a better baseline for starting deficit reduction. Raising the caps on payroll taxes seems a good way to start. I’d probably also bump up the Income Tax rates for the tip five brackets, maybe a 1% bump on 22% and 24%, and a 2% bump above that. If the US goverment could increase 2021 taxes above what it currently has planned by 4%, that’s a $154 billion drop in the deficit. After that, look at tweaking the revenue each year by practices such as freezing the brackets rather than than increasing them based on inflation. But basically have revenue rise at a higher rate than spending. Keep in mind that economic growth will be the main contributor to revenue increasing. Put in the tax rise and then if real GDP increases by an average of 2% a year, and tax revenue tracks that, while real spending only increases by 1% a year, the federal budget would be balanced with no deficit in 20 years. Keeping above-inflation spending capped at 1% a year probably isn’t realistic, so there would need to be constant adjustments on the revenue side. The key would be to ensure that revenue, over the long term, is increasing at a higher rate than spending. But the only way for that to happen is for spending to be under control. Which means taking a hard look at all spending, including Social Security, SSI, Medicare, Medicaid, discretionary spending, and whatever else you want to name and limiting its increase.
SS COLAs do outpace actual increases in cost of living, hence repeated proposals to shift them to C-CPI-U. But good luck with your reelection if you vote to effectively decrease future payments to seniors.
I don’t think you’re unaware that spending overruns were contemplated even before this thread was started. SocSec was always a big problem in the near term because of the Boomer demographic. Government-funded healthcare is a huge problem partly due to the demographic but also because medical costs rise much faster than inflation. It’s disconcerting that we’ve gone around in circles for dozens of posts just to get this far.
I don’t know why SSI helps fewer today than it did a decade ago, but that’s not a big issue in the context of this thread.
What is more intriguing to me would be your definition of “fiscally well-managed program.” Is it your claim that SocSec is “badly managed” because of the Baby Boom? Even though SocSec deliberately ran a surplus for decades because the impending demographic shift was anticipated?
In your latest post, you suggest that a tax increase might be helpful in reducing the deficit! Bravo!! That’s the sort of advanced state-of-the-art thinking we need more of in threads like this!
My claim is that when I look at Social Security spending, it’s rise in costs is outstripping both inflation and the increase in the number of participants.
Here’s what I posted before, examining Social Security spending from 2007-2019:
So $93 billion in overspend, and that’s using an cumulative inflation rate of 27% when the CPI based inflation rate for 2007-2019 is 23.3%.
The counter-argument seems to be that that Social Security overspend is okay because it was funded by payroll taxes which provided a surplus in the past and are somewhere around slightly below break-even today. The problem with that argument is that those past surpluses were spent. They were used to fund other programs. If Social Security spending was adequately funded, then non-Social Security spending was even more inadequately funded than the current deficit and debt figures indicate. That spending isn’t recoverable. The best the US government can do is try to control spending going forward. Which, guess what, means restraining spending on Social Security and medical benefits.
Do you actually think the current US government spending trends are sustainable? I don’t. I think the US government should use 2020 spending as a baseline, and try to control spending going forward. I think the US government should try to avoid a future debt crisis by controlling spending and increasing tax revenues. Thanks for labelling my revenue ideas as “state of the art”, but I’d prefer the labels “realistic” and “common sense”. But what are your counter-proposals? US spending since 1999 has been increasing at a rate of 4.8%. GDP growth in that period has averaged 4.1%. Revenue growth has been at a rate of 3.44%. Do you want to maintain the spending rate, but bring revenue growth up to somewhere above 4.8%? If so, what’s your plan for doing so? Do you understand that substantial tax increases will have a negative impact on GDP growth? Do you also understand that tax revenue increases cannot perpetually exceed GDP growth?
The US federal government has a major problem with its deficit. It needs to control spending and raise tax revenues. Both sides need to be part of the solution. The idea that you can have a revenue-side solution, while continuously increasing spending at a rate above GDP is infeasible.
Oh no. We’ve been around and around on that fallacy as often as 1≠0.99999…
If you can’t get Google to help you understand this fallacy, please re-read one of the old threads.
*It sounds like you’re asking why healthcare costs have risen faster than inflation. That is a separate topic for a separate thread.
SocSec was always a big problem in the near term because of the Boomer demographic. Government-funded healthcare is a huge problem partly due to the demographic but also because medical costs rise much faster than inflation. It’s disconcerting that we’ve gone around in circles for dozens of posts just to get this far.