Medicare and Social Security reductions?
AARP notes a planned reduction in Medicare funding. I have not hear much from them as in times past.
If you read through the umpteen pages of the Senate tax bill, you won’t find a clause that says it dramatically cuts Medicare spending. But the effect of the legislation being debated this week would be to slash up to $25 billion from the health program in 2018 and possibly more in the future.
That’s because the tax measure would prompt the “pay-as-you-go” law, commonly referred to as PAYGO. The law was designed to keep the deficit in check by requiring the administration to institute spending cuts in many mandatory federal programs if Congress passes any measure that increases the deficit but doesn’t include offsetting revenues.
The Senate tax proposal would add $1.5 trillion to the federal deficit over the next 10 years. Under PAYGO, if this bill were to become law, the government would have to lop off $150 billion in spending every year for 10 years.
Medicaid, Social Security, food stamps and other social safety net programs are exempt from the PAYGO law, which went into effect in 2010. But Medicare and other programs — such as federal student loans, agricultural subsidies and the operations of the Customs and Border Patrol — are not exempt.The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to a report by the nonpartisan Congressional Budget Office. The annual amount could increase in subsequent years depending on the size of the deficit and Medicare’s budget.
The $25 billion reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not change and neither would premiums, deductibles or copays. But with so much less money going to providers, the cuts could have major impacts on patient access to health care — such as fewer physicians accepting Medicare patients.
“We’re deeply concerned that the tax proposals being made will very directly affect the ability of Medicare to maintain services, and we do not think it is fair that older Americans who have paid into Medicare their entire working lives get stuck with the bill for a tax overhaul,” says Cristina Martin Firvida, AARP director of financial security.
Bruce Bartlett predicts that as soon as the tax bill is passed the deficit hawks will rise again.
Be prepared for an onslaught of reports from Republican “deficit hawks” the second the tax bill passes, demanding immediate action to slash SS & Medicare b/c the deficit suddenly & mysteriously got much, much worse. But no taxes or defense cuts, period.
Your Bruce Bartlett link is broken. It was probably this twitter link:
https://twitter.com/BruceBartlett?lang=en
AARP unenthusiastically adds this paragraph:
“Congress has the authority to waive the PAYGO law and forestall such cuts. But it is not yet clear whether lawmakers would do so. And waiving the rules would simply cause higher deficits in later years.”
This tax cut is looking more and more unlikely. And good riddance, given the way it is structured.
They can not cure the problems in this economy with a relatively small tax cut for individuals and the tax cut for businesses is completely irrelevant. Stock buybacks and investments in bleeding edge companies will not solve our problems over the next 10 years.
I believe that either government will have to bring manufacturing jobs back to the US or make the income tax extremely progressive. Start with zero income taxes for anyone earning under $50,000 and 70% rates for anyone earning over $1,000,000.
The powers-that-be show no inclination to do either. So we are trapped in our poorly measured economic quagmire. It has been 10 years since the beginning of the Great Recession. Most of us actually did recover, but the deaths by drug overdose tell another story.
There were about 64,000 drug overdose deaths in 2016 and prescription opioids accounted for only 14,400. It seems unlikely to me that fully employed and adequately paid people would seek oblivion as a pastime.
See: https://www.nytimes.com/interactive/2017/09/02/upshot/fentanyl-drug-overdose-deaths.html
American consumers are adrift in a sea of debt, just waiting to be forced to some lower economic stratum by the next recession. Retailers shut down more stores each year. (Fewer employed consumers.)
But none of this is considered relevant. Somehow the powers-that-be expect that overall, consumers will continue to increase spending. Their faith is almost childlike.
Jim:
Thanks. Fixed and linked to WP.
JimH,
I believe that either government will have to bring manufacturing jobs back to the US or make the income tax extremely progressive.
In normal countries (think continental Europe) they have something (I don’t mean to be sarcastic, though this sounds like it) called labor unions — in normal, healthy economies — which equalized the market power of labor and management.
In cabdriver economics: if fast food can pay $15/hr with 33% labor costs, big boxes like Target can pay $20/hr with 10-15% labor costs and Walmart ought to be able to pay $25/hr with 7% labor costs.
You can ship all the manufacturing overseas that you want to — as long as you don’t outsource fast food jobs to immigrants who are willing to go at a dead run for eight hours for next to no pay. If Walgreen’s pays $20/hr robots can take over my taxi job — or should I say take it over from immigrants who have been doing my old job for next to nothing. (Don’t know how they make any money at all — and I drove in NYC, Chicago and SF for 28 years so I should know something about it).
Does anybody in this country realize that most of our economic and political problems are just symptoms of (the pathological condition of) de-unionization (or should I say morbid condition)?
***************
Our next Congress can put the (natural) freedom to join a union without fear back in our lives by borrowing a big page from the Republican playbook — with mandatory certification elections added to re-certification elections every so many years — in private as well as government work.
Why Not Hold Union Representation Elections on a Regular Schedule?
November 1st, 2017 – Andrew Strom
The continuing attack on “entitlements” is, indeed, the game. They are trying to structure it so that its effects won’t start to be felt until after the midterms.
…”as soon as the tax bill is passed the deficit hawks will rise again.”
Of course. That ‘s the plan — it’s always the plan. It’s called Starve the Beast…. aka anti-federalism… aka States Rights… aka Jeffersonianism..
This is standard operating procedure since the founding. .
if the text says “Medicaid, Social Security, food stamps and other social safety net programs are exempt”, why is SS in the post title?
There is a question mark in the title, yes?
Well
just to (try to) remind everyone:
social security is not paid for by the government. it is paid for by the people who will get the benefits.
this important fact is ignored deliberately by the people who want to destroy social security by calling it a tax we can’t afford. sadly, the people who say they want to save social security have started “demanding” the rich (aka the government) pay for it. when that happens you can be sure that SS will be cut.
the trouble with medicare is that the rich already pay for about half of it. that will be cut. it would be better if the workers paid for all of it themselves. they would then need an honest government that could control costs. they would end up paying about an extra 3% of their income for medicare, but then they wouldn’t have to worry about not having medical insurance to pay for their medical care when they get old.
but that leads to another problem. most people apparently freak out at the thought of paying an extra 3 or even 2 percent for something they absolutely need out of an income that is twice as much as what their grandparents lived on. i think it’s mostly because they have no numerical sense at all, but some of the ones i have talked to just sound insane with greed to me.