by Dale Coberly
I was thinking that someone could fault my essay the other day about the “Intelligence Squared” debate. I said that Howard Dean’s side did not really help anyone understand why, or what, or how to “save the program.” I hope I helped explain the why and what, but I probably wasn’t any more clear than Dean about how.
This will attempt to address that. Recall the original article about the debate
Arithmetic still matters,” Zuckerman began. “Medicaid now pays for both health and long term care for roughly 55 million Americans. It finances more than one third of all births in the United States, and pays the cost of almost two thirds of the people in nursing homes. The federal government underwrites 50 to 77 percent of the cost, depending on the income level of each state. Even so, Medicaid is the second biggest and fastest growing category of state spending. Costs are up more than 60 percent in the last five years and are expected to exceed $450 billion this year and to keep growing by about eight percent annually for the next decade. In the next — by the mid-2030s, the 65 and over population will nearly double, and health care costs, which have been rising far faster than worker productivity since the end of World War II, may be completely out of control, resulting in a tidal wave of federal spending.
Perhaps arithmetic still matters, but Zuckerman is careful to avoid giving us any. Instead he seduces us down a path that begins with apparent sober numerical facts and ends with pure demagoguery.
You need to learn to beware of words like “costs are up more than 60%”…
Sixty percent of what? If Medicare costs went up 60%, they would go from 3% of payroll to about 5%. This might be more than you want to pay. It might even be more than it should be. But it is not exactly an intolerable burden if that’s what it costs to live a longer and healthier life.
But, just as a matter of “arithmetic,” note how a 2% increase in costs becomes a scary “60% increase.” This is typical of the “it’s just math” school of liars.
Similarly, the rest of Zuckerman’s seduction presents numbers intended to scare you into thinking that Medicaid costs are high and growing alarmingly. It would be just as reasonable to think that health care costs are high and will get higher, and that government programs are the best way people have to pay for them. Or even that government needs to step in and find a way to control costs (which is not the same as cut benefits).
But finally we reach the payoff.: be afraid of costs “completely out of control” and “a tidal wave of Federal spending.”
None of the “arithmetic” Zuckerman gives us here actually supports that scary rhetoric. His theorem amounts to: “If costs are going up, we must cut our insurance.”
I don’t know how much costs are going to go up. Neither does Zuckerman. But I can suggest that you try to find out what costs are now in terms of your own personal budget, and what they are likely to be in terms of your personal budget at some reasonable time in the future. And what the estimate is based on. And whether it is a cost you are going to have to pay one way or another… either through taxes or private insurance or out of pocket. Don’t forget this is insurance. You may be healthy today, but with insurance you are paying a little bit now “just in case” you are faced with life or death huge costs…personal costs…in the future.
And what is the safest way to pay for them. Private insurance cannot guarantee that it will be able to pay for your care, even after you have paid premiums for your entire life. The government can.
There is also some reason to suppose that the government might be in a better position to control prices than private insurance. But only as long as we can remind the government that we are paying for our own insurance here, and not just some budget item they can cut “to balance income” with no consequences to the people who thought they were paying for insurance that would be there when they need it.
Pay as you go is the only way that I can think of to make this work. Under pay as you go the people just pay for current costs. Their own future costs will be higher, so they are not bearing an unfair burden. Their own future costs will be paid for (directly) by the workers of that time… who will have higher wages and will be more able to afford it. Those future workers own higher costs in turn will be paid for by the workers of that later time… who will have higher wages… and so on.
Perhaps the process can’t go on forever. But it can go on a lot longer than retired people can afford to pay each month for the “insurance” that would pay for their current level of risk. The ultimate answer to high costs is to find a way to control them, and to decide how much of your current income you are willing to set aside for what level of health care you may want in the future. Please note there is no “looming deficit” here. We just pay the costs as they come up. The magic of pay as you go will assure than none of us pay more than our own “expected” costs. The fact that we are paying in advance of our own need does not mean that we are paying for “someone else” or that we are not paying for ourself.
I don’t know what the whole health care arithmetic will turn out to be when it is done by someone honest, but I can point at something which may be important to keep in mind:
Table VI.F2 of the 2011 Trustees Report tells us that the cost of Medicare (HI) in 2030 will be about 4.4% of taxable payroll, compared to about 3.8% today. This looks to me like about a half of one percent increase in your payroll tax, and half of that will be paid by your boss. That is not a staggering burden. [It might be more reasonable to compare the future cost to the present tax rate.. 2.9%, half from the worker, half from the boss. This would suggest a need to raise the tax 1.5% over the next 20 years. That would be less than half of one tenth of one percent per year for each the boss and the employee….still not a staggering burden. And it goes to pay for your own eventual health care needs.]
Moreover, the real wage is expected to increase at least 1.2% per year between today and 2030. This would result in a real wage that is about 25% higher in 2030 than it is today.
Lets say that today you are making 1000 dollars per week. You are paying 1.45% for Medicare or about $14.50 per month. (your boss pays another $14.50, but if you want to say that is “really” your money, you need to add $14.50 to your income. ) This leaves you with about $986 a week after you have paid for your Medicare.
In 2030, your income would be 1,250 dollars per week (real). And if there were no increase in the Medicare tax rate, your tax would be $18.12, leaving you with $1232 per week after you have paid for Medicare.
If the cost of Medicare goes up to 4.4% of taxable payroll and the tax rate is raised to meet the cost, your share goes up to 2.2%, and you would pay $27.50 per week for Medicare, leaving you with about $1222 after paying for your Medicare.
So even with the increased cost of Medicare, you would have 236 dollars in real money more than you have today AFTER paying for your Medicare.
There are, of course, other taxes, but the arithmetic is the same. After calculating the increased costs, and your expected increase in wages, you are going to be richer in the future, not staggering under a load of “debt”.
All you have to do is pay for what YOU ARE GOING TO NEED. You are not “paying for granny.” Granny already paid for herself.
Note that even if costs for health care go up faster than your wages … in real terms… you are still paying for something you may want more than a new car when you get sick.
I suggest this is the real arithmetic you need to keep in mind.
Thanks for the numbers as there was a headline during the Ryan Medicare debate they blasted a headline of 25% increase which would have been from 1.45% to 1.81%.
You do the numbers for Part A what do parts B and D (the ones subsidized with general tax dollars) look like? Given all the scooters part B pays for and the much higer prices for durable medical equipment compared to the price of the same device on the web? On big change that has happened in the last 50 years is the relative share of total costs paid for by part B has increased.
to be honest, i don’t know. i wish someone who did know all the costs, and break them down by what program, and how they are paid for, would come and explain it to us.
all i can say is be careful of the scare mongers, especially the ones who say “it’s just math.”
and then, think very hard if it’s “government spending” that is “out of control”, or “health care costs” that are out of control, and how are you going to pay for them if they cut Medicare.
especially be careful of numbers presented as “percents.” you need to know what you are paying for and how much it costs in dollars, and whether it is worth it to you… or will be worth it when you actually need the care.
my preference… subject to change when i know all the facts…
is for ALL “Medicare” costs to be brought under the payroll tax, and that tax to be capped like Social Security is. This way we would know what we are paying for, would be able to pay for ALL of it in advance (no co-pays or supplementary insurance when you are old and sick and not working), without “the rich” bearing an unreasonable burden.
I would NOT want to bring “Medicaid” in under this because it is not primarily an “old age” program that makes sense to pay for “in advance.” And until we get some control over costs, and over the extreme poverty in this country, it is likely to be too expensive for ordinary workers to bear.
Again, while I am fine with rich people paying taxes, I regard medical care as more of a personal benefit that people should expect to pay for themselves. if that means they need more pay, that’s where to look for the money. This is not out of tenderness for the rich, but out of a concern for a kind of mental hygiene among the people… to not expect to be paid for by the rich as charity or by forced taxes. Also, a “let the rich pay” approach will fail politically either in the first instance or the last.
On the other hand, until we solve the poverty problem, and the high cost of health care problem, i’d be just fine with taxing corporations to help pay the bill. They are where the money is, and there is at least some hope they would understand the need. And I don’t care if they pass the cost on to their customers. People can still choose what they buy and if the cost is worth it to them. and we need to find a way to pay the real costs of things in our economy.
we can’t buy things at a “discount” because they are made with labor that can’t afford health care.
I read today… no way to validate at the moment.. that “Medicare is 15% of the budget, and will be 17.4% by 2020.
after looking at that for a while i conclude i do not know what it means. but i will guess it means that 15% of the 20% of GDP that are “federal taxes” Medicare in all forms is 15% of that, or about 3% of GDP. HI (part A) is 1.7% of GDP today… so a reasonable guess would be that the other parts are approximately the same
but i DO NOT KNOW
if true, and the other parts were brought under the payroll tax, it would approximately double the cost. You can decide if this is “worth paying.” I think it would be.
But i think it would be better to bring the costs down. That CAN be done.
should note that if you pay it as insurance… direct by payroll tax… you would not have to pay it as a hidden part of your income tax, or as private insurance, or supplemental insurance and co pays when you are old with uncertain income.
one way or another you will pay for it. unless costs are brought down. or only the rich get health care and the poor die young.
Zuckerman is an editor, not one concerned with logic and logic fallacies.
He commits quite a gaff in logic.
Mainly “amibguity” using terms in odd and different ways as premises to a conclusion which is nothing of the sort, it is a forecast.
So, I guess if you use “ambiguity” to develop a forecast it is not a conclusion and don’t worry about the truth or relevance of the premises……………………………..
War is 20% of the US budget, in addition to other parts which do war support.
It is less than 7% of the UK budget.
And a similarly small amount in Euros in the German budget.
While the general in charge of US Army Europe is supporting 800 NATO troops doing riot duty in the former Yugoslavia with front line US military equipment not owned by any NATO force.
The concern for war profits, and empire should give way to caring for the health needs of the aged, infirm, and orphaned.
A few less BMWs in front of Gen Dynamics Land Systems factories would be beneficial to nursing home residents depending on medicaid for their well being.
wall st will change
yes, and he has no shame about saying “arithmetic still matters” when he doesn’t know a damn thing about arithmetic.
With healthcare costs at 16% of GDP, with competitor nations at about half of that, healthcare costs must be made smaller, not bigger. Instead of: “need to raise the tax 1.5% over the next 20 years”, there is a need to lower this and all healthcare costs. And, it dosn’t matter who pays, costs paid for by employees, employers, the government, these all translate to higher priced goods and services and without lower costs there can not be more exports, and without more exports there can not be enough jobs! But it is not just a matter of increasing exports, it is also about minimizing imports, and this is the only way to create enough self-sustaining jobs (Triffen Dilema must be rectified too of course).
Then too, the USA has forced free markets on the ROW and so it will be very difficult to protect our markets while being utterly dependent on most other nations having their markets open to the expansion of a corporate empire that has become the backbone of the US economy. This is what you and so many Americans seem to find impossible to understand, but the trends are very obvious. US corporations own more that half of all global market share and wages in the US have been in a holding pattern for more than 3 decades now… and there is no reason to expect these trends to change in the arrangement known as globalization. Real wages are more likely to continue falling that they are to rise.
So, essentially, you have what is essentially a freeloaders way of seeing the US economy. You ignore the fact that there are consequences to costs regardless of how those costs are channeled. But granny’s coma care is making full-employment considerably more difficult and the notion that the cost of that care is offset somehow by the government, or by an employer, is wrong. We are all in this together, whether we like it or not.
if we are all in this together it is hard to understand why you make silly attacks on what i am trying to say.
i would have thought “we can and do and must pay for this ourselves” would be the opposite of a “freeloaders way of seeing the US economy.”
my post is mainly about the misuse of “arithmetic” to scare people into cutting funding for something they themselves are going to need rather badly. when i address the arithmetic, i point out that a “60%” increase is really a 2% increase. this does not seem to me to be advocating increasing costs.
and while i agree that “it doesn’t matter who pays” in one sense… and even talk about it explicitly in one of my comments here… it certainly does matter in a psychological and political sense, and ultimately in the who actually gets care and who does without.
so while i think you have a valid point about controlling costs, i don’t think your sneering is called for.
“so while i think you have a valid point about controlling costs, i don’t think your sneering is called for.”
Our per-capita healthcare cost is twice the global average ($7500 vs ~$3500). Fixing that gives us the resources to handle the baby boom’s medicare costs.
Not fixing it will bankrupt us.
Currently the economic rents being pulled from health services each year ia $1T or so. It is one of the bigger taps on the working class, even though the sector does have a lot of employment, which mitigates that effect a bit:
what does your comment have to do with the quote at the beginning of it?
I agree that costs need to be controlled. That was my point to rl love, who seemed to be sneering at me because i noted that the projected rise in Medicare costs was less than 2%, not the 60% implied by Zuckerman.
I taught math for a few years and am well aware that understanding numbers is not a widely shared talent. What you are teaching me is that understanding words is not so widely shared as we suppose…. mostly because we don’t understand what the other guy is saying but we always think we do. We just take his words and fit them into our “story of everything.”
There is an article on health care financing that I think you all should read.
It is by Paul Starr and appears in The American Prospect.
jesus what crawled into your ass?
If we cut our health costs to $3500 per capita we’d have $1T to pay for the baby boom’s medicare expenses.
if we don’t then every nurse will be a millionaire and every doctor will be a billionaire.
apparently i am talking to one of the big boys in the back of the room in the fourth grade.
your language is not appropriate here.
no doubt if we cut health costs we’d have more money to spend elsewhere. what makes you think i don’t understand that?
“That was my point to rl love, who seemed to be sneering at me because i noted that the projected rise in Medicare costs was less than 2%, not the 60% implied by Zuckerman. “
Medicare was $850B in 2011 and $550B in 2006. $300B/$550B is a 55% increase.
Annual increase is 5-10%:
and as a percent of wages it’s over 8%, at least with these numbers:
And the baby boom is aged 48 to 65. Peak boomer birth year was 1957, so peak enrollment will start in 2022 with 4M+ enrollees each year.
You are simply too delusional to argue with. You for example claim that ” a “60%” increase is really a 2% increase”, but these numbers are not commensurable. They are instead 2 ways of saying the same thing. So you are basically using the same type of hype that you are critisizing.
Then, where this all becomes more delusional, is with your notion that ” this does not seem to me to be advocating increasing costs” when my argument is that costs must come down… but you are advocating an “increase”. And, as I tried to make clear yesterday, you are clinging to assumptions on wage increases that you have no other support for than “official” nonsense that defies all logic and empirical trends. In other words, YOU ARE ADVOCATING HIGHER COSTS, and, at a time when higher costs are not possible. Delusional.
my point for those who could follow it was the the projections of the Trustees show a less than 2% rise in the cost of Medicare over the next 20 years. That is the meaningful comparison. If the cost of penny candy is now a nickel, you can cry all you want about a “500% increase,” but its still a nickel.
Otherwise your collection of numbers is meaningless until you reduce it to cost per person as a percent of wages, and that person can decide it the cost is worth what he is getting for his money.
of course they are not commensurable. that was my point. but they are not two ways of saying the same thing. one way is a hysterical appeal to innumeracy. the other is an attempt to put the cost into a perspective that is meaningful.
i NO WHERE advocated an increase. I merely pointed out that the size of the increase was not as large as the Big Lie would have you believe.
meanwhile I prefer the “official nonsense” to the rl love numbers from outer space.
you do seem to have trouble with language. the higher costs are not only possible, they are inevitable. if i am advocating anything, i am advocating that we simply pay the higher costs if we want the health care… while we try to find ways to bring the costs down.
i prefer this to howling at the moon and hoping “the rich” will pay my doctor bill or that rl love will lead a workers and peasants revolt that will result in free clinics that don’t cost anybody anything.
“And, as I tried to make clear yesterday, you are clinging to assumptions on wage increases”
yup, I saw that, too.
Even nominal wage increases will be being drawn off by higher food and energy costs, plus inflation in health costs. We also need to raise regular income taxes on everyone, so that’s another loss of cash.
“if we cut health costs we’d have more money to spend elsewhere. what makes you think i don’t understand that?”
My point was not about cutting costs to save money, but that we can’t afford universal coverage at $7500+ per capita. Norway, the next most expensive, pays $4000/yr per capita for full universal coverage.
I assume the profits in the Medicare system are the same in the general system, even though Medicare has about 1/3 the administrative overhead.
Our entire system is sick, and Medicare is going to blow it up. 4 million new enrollees every year soon will see to that.
the argument usually made for universal coverage is that it will bring costs down to what they pay in the civilized world.
and i wasn’t talking about universal coverage. i was talking about the misuse of “math” to mislead.
“my point for those who could follow”
what’s with the hostile attitude? It’s not in the spririt of common discussion. it makes you look like an ass here.
“Trustees show a less than 2% rise in the cost of Medicare over the next 20 years.”
They also are using economic assumptions that real wages will be 40% higher in 20 years, for the intermediate case.
These Medicare numbers are simply hoohaw, based on projecting out the fake economy of the past 15 odd years, an economy driven almost entirely by debt takeon:
Their table shows average beneficiary cost of $15,000 per year in 2020, and starting in 2020 just the new enrollees will be over 4M per year.
The national debt will be $20T by then. The SSTF will need money from the general fund, maybe $100B or so, which would take all of the added revenue of the “Buffett Rule”.
Everything in this economy is on an unsustainable path.
nb, my politics align with eurosocialism (of the scandinavian sort), I think that’s the only fix. But from the looks of it we’re going away from that.
That someone casts insults as unsupported claims, who is a writer on this site, may well explain why this site is increasingly ignored.
What “numbers from outer space” for example. And where have I implied anything about a “workers and peasants revolt”? And how do you reconsile this: “don’t cost anybody anything”, with; “And, it dosn’t matter who pays, costs paid for by employees, employers, the government, these all translate to higher priced goods and services and without lower costs there can not be more exports, and without more exports there can not be enough jobs”. You simply don’t understand the subject matter and so your interpretations are in conflict.
Unsupported claims are childish and irresponsible and not worthy of a rebuttal, but then that is what happens when insults lack something to argue against… they simply cause intelligent people to move on. But then that is why you are so quick to insult your readers in the first place, I suppose, you would rather lose a reader than admit that you are wrong.
it is essential that you are talking about the same thing as the person you are arguing with. the chart you refer to appears to express the cost of all “Medicare,” including that paid for by general taxes, to payroll. It seems to agree pretty much with what I have said above.
So what is your point? You prefer to be frightened because the cost as a percent of itself has gone up “60%” or would you prefer to understand that this represents an increase of 2% of payroll to about 4% of payroll if counting “part A” which was the information I was using to make my point.
If I understand your chart, it appears to be saying that the part of Medicare not paid by the payroll tax is approximately equal to the part that is. Because I have said that i would prefer the whole cost be paid by the payroll tax, I need to say that an 8% tax would look like a lot to me all at once. But if my medical care costs grew to 8% and beyond while my income was more than doubling and i thought the medical care was worth the cost … as the difference between health and illness and death… i might count myself lucky that even after paying the huge cost of health care I still had more money left in my pocket today than i had back in the day when health care was cheap.
The rising costs are a concern. The answer is NOT to cut Medicare benefits so that only the rich can afford medical care. The answer is to control costs and find a way to pay the poor more for the work they do.
One more time: I am trying to make the question understandable. Zuckerman was trying to stampede people into not thinking at all. I honestly can’t see any evidence that Troy or Love even understand the concept of relating one fact to another to see what it really means.
Just pull out a number. “oh, that was a big one!” run around, scream and shout.
Troy and Love
I am not clinging. I am merely noting that the same people who predict the rise in Medicare costs, predict a rise in wages. It is essential to have some basis for thinking clearly. The “official” predictions suggest that the predicted rise in Medicare costs can be paid for by the people who will get the health care, and still leave them with a great deal more money in their pockets than they have today. That does not strike me as a reason to run around and cut off our heads to save on the cost of living.
You are pulling scary tales out of your nightmare fantasies, frankly, because you like to be scared.
“You are pulling scary tales out of your nightmare fantasies, frankly, because you like to be scared.”
What a bizarre thing to say.
Real wages are up only 4.2% over the past 10 years.
That is a 0.4% pa increase, and it came with the greatest rise in debt leverage in history:
(graph is total nonfinancial sector debt / wages)
The baby boom is aged 48 to 65 today, with the peak cohort just 10 years away from Medicare (and social security).
The national debt is going to double from $10T to $20T this decade.
What passes for the “Left” in this country is fighting to preserve Heritage Foundation health insurance plan.
These aren’t nightmares, they’re facts.
The Dems are going to lose the Senate. Dunno about the Presidency, it could go either way I guess.
I agree the right is engaging in fear mongering and distortion — they avoid the fundamental truth that taxes are way to low now — but they’re also Winning the propaganda war.
OWS is the first follow-on salvo after Jon Stewart’s effort in 2010, and it’s welcome if not a little late, but the system as-it-is is rotten to the core.
We’ve made trillions of dollars of promises to seniors that the current tax arrangement is in no position to honor. Uptaxing people is necessary, but it’s also very very deflationary.
i don’t think it matters much what your “politics” aligns with. you start out with fantasy projections, throw out numbers that don’t mean anything because they are not compared to anything.. and you have no proposal about what to do that has any details or any awareness of all the other things that need to be considered at the same time.
YOU are talking about casting insults?
maybe your arguments would have more force if you had the slightest idea what you are saying.
i can think of one reader i’d be just as glad to lose.
sure, all that may be true. now put it into a coherent argument.
I haven’t been by here in a while and I was happy to see the several trolls this site suffered from seem to be in abeyance.
But man, I’d prefer them to this BS.
Good day, sir.
“now put it into a coherent argument.”
We are so screwed.
Someone here recently gave me a link to Steve Keen’s stuff and from what I’ve seen I like it.
My thesis is that the rent-seekers have pretty much won. They’re buying up residential housing stock now, they own oil, they’ve defended our grossly inefficient health care sector, they defend our $500B/yr trade deficit that is ripping jobs and money out of the paycheck economy.
The Left is fighting a rear guard action to keep what we won but the right has succeeded in destroying the fiscal basis of the economy and defending it with their massive media and thinktank forces of deception — “job creators”, http://goo.gl/cMVi3 etc etc.
The top 10% owns 80% of everything, the top 1% owns 40%, etc. Their institutional defenses are strong, and the Left’s attacks are weak. Even Krugman and DeLong don’t really Get It, let alone the average leftie.
I don’t know where this is going but I think we’re going to get a shift to the right before a FDR-scale transition.
I’ve defended Obama’s centrism as the politics of the possible — just about the limit of what the current system can vend — but this very centrism in the face of the long-running and serious imbalances we face is actually part of the problem.
We need to close the $500B/yr trade deficit (modulo the Triffin Dilemma). We need to cut $1T/yr of profit out of the health care sector. We need to tax the shit out of rent-seeking in real estate (which is taking another $1T/yr out of the working class economy). We need to cut our 20 gallon/week gas habit before it hits $10. We need to close the $1T+ deficit, with massive tax raises and massive spending cuts.
None of these things are on the table.
I agree that Zuckerman is part of the rightie media machine that is buffaloing people to intellectually disarm themselves and give up what FDR and LBJ gave us.
That ass Krasting is from the same mold.
“or would you prefer to understand that this represents an increase of 2% of payroll to about 4% of payroll”
Per-enrollee cost in 2010 was $10,000 and that exceeded revenues by 10%.
And the baby boom is just turning 65 this year.
In 2020 to 2030, Medicare costs are going to increase by 30% just from added enrollees, rising from 50M today to 80M in 2030.
In 2030 the baby boom will be aged 66 to 84, essentially the entire (surviving) baby boom will be on Medicare.
So we can expect a 60% increase in cost just due to beneficiary growth, raising the payroll tax from 3% to 5%.
Then we get to whether cost inflation can be stopped. Medicare’s own numbers predict another 60% inflation there, raising that 5% to 8%.
Then there’s Social Security. While a smaller problem, it can eat the return of Clinton rates on the top marginal bracket (~$80B/yr).
The return of Clinton taxes on everyone is probably necessary, but it’s going to be a very nasty shock to the system (“can’t raise taxes during a recession!”).
Another 3-4% of incomes gone to the taxman — this is beginning to add up!
Then there’s state and local taxes. California is screwed here as it is, but we’ll just leave it as not a tailwind.
My economics are rather heterodox — I believe all taxes come out of rents — so I think all this taxation is a good thing, but I understand that the transition to this high-tax system is simply politically impossible.
I don’t know what’s going to happen, but optimism is rather odd IMV. A Soylent Green future seems to be the middle course unless and until the people can get behind a real reform program of taxing the shit out of the capitalist rent-seekers.
yes to all that, but you keep missing my point.
Zuckermans numbers were alarmist.
and you need to understand that with the payroll tax at least we are paying for our own needs. if health care costs go up, we will have to pay for them, or watch the rich live while the poor die. we can’t count on the rich paying it for us. and we shouldn’t want to.
being constrained by the same predictions as everyone else is using, i have to point out that it looks like we can easily afford to, if we don’t scare ourselves to death with “percents.”
the comment was addressed to rl love. i am not yet addressing you as “love.”
i realize it is a physical impossibility for you to realize that you may be contributing to the low tone and frustration in this thread, but since you have actually made sense from time to time i hope you will work on it.
that physical impossibility is not snark. it’s my reading of how humans are wired. some times we can overcome it in part. but it takes real work.
[sound of me banging my head on the table]
all of that may be true, but it’s not coherent.
i tried to present a small coherent article in response to scary numbers, suggesting that numbers need to be tied to a context… and then when, for example you see that the cost of health care is rising… decide if you are going to pay the cost, do without health care, find a way to reduce the costs, or shoot yourself in the head. I recommend start with one, and then work on three. two is not always much fun, but four is a definite loser.
“it’s not coherent.”
Sorry, I don’t have a crystal ball.
The idea that real wages are going to be 40% higher in 2030 is part of the fiction that got us to being $50T+ in debt.
As for “context”, I think the next 20 years are going to be immensely painful. This is a political problem, but the politics have been moving away from us.
They’re actually cutting payroll taxes not raising them!
Medicare is just one piece of the puzzle that’s going to blow up if the system can’t refom itself.
We’ve been writing a lot of checks that our politics can’t cash.
coherence doesn’t take a crystal ball. it takes thigh bone connected to the knee bone, knee bone connected to the ankle bone kind of thinking, and an ability to keep track of when you are talking about current dollars and when you are talking about constant dollars, and if you are going to use someone else’s crystal ball explaining why it is likely to be more accurate than another one…
and i’m fairly sure i said 25% higher, not 40%.
A bit of ambiguity and relevance problem with your logic, are you using sound logic?
So many words and the flow makes it hard to see the premises and conclusions.
Do you suppose keeping all the grannies on life support is more costly than the trillion going down the F-35 drain over the next 25 years, for one fighter which is untested and unreliable (part of the untested is they cannot keep the tests going due to break downs).
Us spends 5% GDP on war 5 times what the rest of the OEDC spends as a share of GDP.
Why talk about extraordinary health expenditures at twice others’ GDP when US brand war is 5 times others’ GDP shares.
And of the 16% for “health” how much is for profit and overhead due to privatized insurance running betting parlors with healthy folks?
Start by closing down private health insurance and free up maybe 3% of GDP just from tht racket. That would be say $400B. Then cut the pentagon to 1.5% GDP that would be anpother $300B lessen demand on the tax bases’ money.
$700B a year, is much for boomers’ medicare.
thing is, if you don’t know how we got here, or even where exactly the hell we are now, you probably don’t have a valid view of where we’re going.
“and i’m fairly sure i said 25% higher, not 40%.”
“the real wage is expected to increase at least 1.2% per year between today and 2030. This would result in a real wage that is about 25% higher in 2030 than it is today.”
yes, I see my math was somehow wrong. Maybe I used 30 for the exponent.
This use of “math” is omnipresent. A favorite of mine is when pharma or some behavior-nazi group says something like, “If you engage in behavior X, your risk for a stroke increases 200%,” or, “If you take our meds, your risk for a heart attack decreases 50%.” Sure sounds a lot more scary than what it actually refers to.
In the past, I’ve always tried to mediate the kind of disagreement you and Troy are having. You both have good things to say, but you each have a particular point you want to make, and it’s getting in the way.
I read an extremely brief NPR article re the IntelligenceSquared debate. It said our point of view won. I’ve watched a couple of those, and found them very frustrating. Sounds like I escaped a lot of jaw-clenching, pacing, and yelling at the tv by not watching.
Lately, I’ve come to see that urge to mediate as counter-productive. Maybe it’s the example set by Obama, or maybe it’s simply that I no longer have the time.
Wish I could stay, but I have another project, where I can’t go on at great length (as I’m tempted to do here), that must be worked on now. 🙂
thanks for the encouragement. i am finding my own effort to “mediate” counter productive. i think i sort of know what’s going on here, but not what to do about it.
mr obama’s style of mediation reminded more people than me of Lot’s offer of his daughters to the men of Sodom if they would just leave his guests alone.
Coberly good posting but help me out here. Not a beef with your calcs, but you say “the real wage is expected to increase at least 1.2% per year between today and 2030″ presumably based on what the Trustees project. I calculate that the real wage has increased 0.294% per year between 1973 and 2009. (I used SSA national wage indexing data at http://www.ssa.gov/oact/cola/AWI.html and the BLS inflation calculator to express the 1973 number in 2009 dollars.) Growth was less than zero 1973-1997. I picked 1973 because I’ve read many times that the real median wage reached an historical high then, dipped below that level for many years, and only recently has been slightly above that peak year.
I bring this up is because real wages could fall again. Indeed they already have started to fall, according to the Trustees. AND it could take decades again to recover, with implications that I prefer not to think about. The scenario would challenge the affordability of Social Security and Medicare, would it not? This doesn’t mean that I’d want to gut these programs. Instead, I think it means the future of these important insurance programs may depend more than we realize on the priority that we give to counteracting political and economic forces discouraging real wage growth.
I am only going by the Trustees Report which is the basis for all the alarmist rhetoric we hear in the “news.” I am only showing that if we take them at their word, and do the appropriate rhetoric, the sky is not, after all, falling.
as for the other estimates of a falling or static real wage… i don’t know. what i hear from people who call themselves economists is that the Trustees projection of rising real wage is TOO LOW.
I don’t make predictions. Just sometimes try to show what the official predictions really say.
BUT if we do enter a long period of stagnant or falling wages, what would happen is that the falling Average Wage Index would result in lower benefits and Social Security would remain in balance (close enough). That would mean the old folks would share the hard times with the young folks.
OR we could reach times so hard the young folks would just eat the old folks. I can’t see any other options.
I suppose the rich could get richer while the poor get poorer, and at some point everyone would ignore coberly and just eat the rich. But that’s another story.
Now if wages fall and medical costs go up… we are first going to have to make some hard decisions about how much we want medical care and how much we want that new car. I have seen No evidence so far that people are prepared to make those decisions. We have systematic denial and reliance on magical solutions… unless of course the problem does turn out to be that the rich have stolen all the money. in that case we need to steal it back. But stealing it by means of a “rich tax” to pay for Medicare would not be what I would choose or expect to succeed.
So let me attempt to make a distinction: SS and to some extent Medicare are not in trouble as such. If wages fall or just don’t go up to keep up with the literal cost of living, we are going to have to take “other” steps… having nothing to do with “cutting entitlements” or “raising the cap.”
please note a distinction between my opinions and my arithmetic.
(let me say it again in case those who left in a huff come back to see if they left their glasses behind) I do not deny all the problems and potential problems that we face. I am merely pointing out that the hysterical rhetoric you hear about Medicare and especially Social Security is not supported by a careful look at the “facts” they are claimed to be based on.
“it’s just math” is just another lie.
using the 1.2% real growth rate — ie arguing that real wage will be 25%+ higher in 2030 — is distorting everything.
“unless of course the problem does turn out to be that the rich have stolen all the money”
Top 1% — 1.4M taxpayers — $1.7T income, 20% of total AGI
Top 5% — 7M taxpayers — $3T income, 35% of AGI
Top 10% — 14M taxpayers — $4T income, 45% of AGI
Bottom 50% — 70M taxpayers, $1T income, 12% of AGI
The rich haven’t “stolen” the money per se, but they’ve won the game.
fwiw, I agree that SSA isn’t in 1/10th the trouble Medicare is in. How could it, with $2.6T in the bank, LOL.
The macro problem is that we’ve been using debt take-on to give us a fake prosperity since ~1995. The financial system levered up first in the 1990s, homeowners followed in the 2000s, and now government is taking their turn.
GDP would be pretty low right now without the $1.2T of deficit spending this past year alone.
Why then attack Medicare or Medicaid which is a reflection of the healthcare industry and the fees for the services cost model????
Why will Medicare blow up?
I am NOT arguing that the real wage will be 25% higher. I am saying that IF the official predictions are the official predictions they do not predict “health care costs will be completely out of control” or “a tidal wave of federal spending.”
you are arguing that YOU predict … some kind of collapse. you are agreeing with Zuckerman. thank you for your help.
what do you propose to do about it?
In fact the arithmetic is irrelevant beyond the fact that numerical data is often used to obfuscate an issue. That’s true for just about any human activity that can be measured. One would think that the only reason such measures of human activity are done is to confuse one issue or another be it social, political or economic. Again, the arithmetic is irrelevant because it clouds the debate. We start arguing over just how big one measurement is versus another. All the while we lose the war by fighting these little skirmishes as though proving one set of numbers adds together more accurately than someone elses set of measures of the same measured phenomenon.
We know the problems and they are actually rather simple and easily recognizable, but damned hard to over come. Misrepresentation in government brought about by the misapplication of financing in the political arena. And even that is only one aspect of the fact of mismanagement of our government. Wealth in politics is a powerful force and a destructive one because it attracts greed rather than good intent. It gets results, but those results are contradictory to a homeostatic process, in this case the process of governing. That wealth can be the leverage of power and influence coupled with the fact that wealth is concentrated in the control of a small minority has had increasingly destructive consequences for our economy and the structure and process of our government. The two go hand in hand. We’ve been arguing this same issue continuously without refocusing our attention to the simplest approach. Replace the government as we know it by replacing the people that are sent to misrepresent you in the government. You can see clearly that it isn’t working. All the debate changes nothing regarding the dysfunction of the government, not in total, but rather in effect of our government’s actions on the vast majority of the people. We have only ourselves to blame if we continue to fail to educate our friends, neighbors and relatives regarding the differences between the One Percenters and the rest of the country and those differences that the misrepresenters in government uphold and abet.
“ I am saying that IF the official predictions are the official predictions they do not predict “health care costs will be completely out of control” or “a tidal wave of federal spending.”
Actually, the official predictions say exactly that, healthcare spending rising from 16% of GDP to god-knows-what.
Here’s Zuckerman again:
“Costs are up more than 60 percent in the last five years and are expected to exceed $450 billion this year and to keep growing by about eight percent annually for the next decade. In the next — by the mid-2030s, the 65 and over population will nearly double, and health care costs, which have been rising far faster than worker productivity since the end of World War II, may be completely out of control, resulting in a tidal wave of federal spending.”
We can argue which growth case will obtain, but that is missing the point. We’re already spending twice the global average for health care (per capita).
The Trustee predictions are worthless, just as worthless as the general OMB predictions about where we’re going to be in 2020.
Zuckerman is not being deceptive in describing the future burden of healthcare in this country. It’s already 16% of GDP and a major rent suck from wage earners to rent-seekers.
Even if real wages grow 25% by 2030 much of that growth will be sucked into housing and energy, so there is not some big untapped future pool of money that’s going to pay for all of this.
This site is “Angry Bear”, it should not be controversial to assert the situation is still screwed.
“you are arguing that YOU predict … some kind of collapse.”
I don’t know what’s coming. I just see a lot of headwinds and no tailwinds. The 1990s saw the rise of trade with China, the GUI, the internet, and the global oil glut keeping pump prices at $1 or so. Plus the beginning of the financial system levering up, which started around 1995.
The consumer joined the debt party in 2002, and levered up along with the financial system. When all that crashed in 2008, the leverer of last resort got back in the game to keep the wheels turning.
I don’t know if a crash is coming (I’m not a Kunstler or Doomsteader) but I sure as hell don’t see any prosperous times coming, rather I think we’re going to have to adjust to the new normal of continued suck.
“what do you propose to do about it?”
LAX -> HND later this decade.
“OR we could reach times so hard the young folks would just eat the old folks. I can’t see any other options.”
Have you seen the movie Soylent Green? (Assisted suicide with enticements followed by a conveyor belt to the food factory) I wish it didn’t seem to be getting more relevant.
You make good points. Replacing those we send to DC with others we like better who will do things differently isn’t nearly as simple as it seems. The 2/4/6 year cycles make it an incremental process and we are notoriously short attention span. More significant, though, is the difficulty presented by the two party system.
Michael Moore has suggested getting a small group of friends together and going to the local Dem Party meetings with a view to eventually taking that local group over. Might work, depending on where you live.
Even that would leave a power structure to overcome. Same with third party efforts. It’s hard to imagine that working in less than a generation. Do we have that long? Could a movement endure that long in the face of all the inevitable propaganda, temptations, and purposeful distractions?
(I’m not trying to put down your ideas. I’d like to hear how you see it working.)
It’s an educational process and it is accomplished over time. Look at the conservative element conquest of the Republican Party. It has been building for the past several decades until now the ideology of a relatively small miinority dominates that party. They used the great wealth of a small few to create a massive web of ideologists in the media as well as the so-called nonpartisan think tank industry. We would have to use the modest wealth of a great many people to challenge the popular wisdom as it has been manufactured. Otherwise it needs to be grass roots and receive our constant attention.
In a few words, don’t ask how it can be done. Just go out and talk about the need to do it to as many people as you can and as often as you can. And don’t stop talking and writing when you can. Don’t allow the focus to be coopted by the same band of entrenched politios who can recognize a popular idea and milk it til dry.