Re: Samuelson: "It's More Than Social Security"

From: Rob Duncan (robduncan_at_gbronline.com)
Date: 01/16/05 

Date: Sat, 15 Jan 2005 23:08:29 -0800

"sinister" <sinister@nospam.invalid> wrote in message
news:BJ6Gd.761$HT6.185@trnddc04...
>
> "Rob Duncan" <robduncan@gbronline.com> wrote in message
> news:27qdnRf2-p_ALnXcRVn-hQ@gbronline.com...
>>
>> <imbibe@mindspring.com> wrote in message
>> news:1105692749.391903.149210@f14g2000cwb.googlegroups.com...
>>> http://www.washingtonpost.com/wp-dyn/articles/A8100-2005Jan13.html?sub=AR
>>>
>>> It's More Than Social Security
>>>
>>> By Robert J. Samuelson
>>> Friday, January 14, 2005
>>>
>>> "We have a problem, and the problem is America is
>>> getting older and that there are fewer people to
>>> pay into the system to support a baby boomer
>>> generation which is about to retire. Therefore,
>>> the question is, does this country have the will
>>> to address the problem?"
>>>
>>> -- President Bush, Dec. 9, 2004
>>>
>>> The answer seems to be "no," starting with the president.
>>> Language matters. How we discuss something -- the words
>>> and phrases we select -- determines whether what we say
>>> makes sense. The fact that both Bush and his opponents
>>> have chosen to debate only Social Security, highlighted
>>> by the president's "personal accounts" proposal, betrays
>>> a lack of seriousness that promises failure. The nation's
>>> problem is not Social Security. It is all federal programs
>>> for retirees, of which Social Security is a shrinking part.
>>> Admit that and the debate becomes harder, but it also
>>> becomes more honest and meaningful.
>>>
>>> Our national government is increasingly a transfer mechanism
>>> from younger workers (i.e. taxpayers) to older retirees. In
>>> fiscal 2004 Social Security ($488 billion), Medicare ($300
>>> billion) and Medicaid ($176 billion) represented 42 percent
>>> of federal outlays. Excluding spending that doesn't go to
>>> the elderly, the Congressional Budget Office crudely
>>> estimates that these programs pay an average of almost
>>> $17,800 to each American 65 and over. By 2030 the number
>>> of elderly is projected to double; the costs will skyrocket.
>>>
>>> It makes no sense to separate Social Security from Medicare.
>>> Most Social Security retirees receive Medicare. Similarly,
>>> it is the total cost of these programs that matters for the
>>> budget, taxpayers and the economy. By itself, Social Security
>>> is almost irrelevant. Indeed, the big increases in future
>>> spending occur in health care. The actuaries of Social
>>> Security and Medicare project that Medicare's costs will
>>> exceed Social Security's in 2024 -- and then the gap only
>>> widens. (The projections don't include Medicaid, which pays
>>> for some nursing home care. Including Medicaid would widen
>>> the gap further.)
>>>
>>> Look at the numbers. From 2004 to 2030, the combined spending
>>> on Social Security and Medicare is expected to rise from 7
>>> percent of national income (gross domestic product) to 13
>>> percent. Two-thirds of the increase occurs in Medicare. To
>>> add perspective: The increases in Social Security and Medicare
>>> represent almost a third of today's budget, which is 20 percent
>>> of GDP. Covering promised benefits would ultimately require a
>>> tax increase of about 30 percent; that assumes today's budget
>>> is balanced (dispensing with the issue of Bush's tax cuts).
>>> In current dollars, the needed tax increase would be about
>>> $700 billion annually.
>>>
>>> The central budget issue of our time is how much younger
>>> taxpayers should be forced to support older retirees -- and
>>> both political parties and the public refuse to face it.
>>> What's fair to workers and retirees? How much of a tax
>>> increase (never mind budget deficits) could the economy
>>> stand before growth suffered badly? How much do today's
>>> programs provide a safety net for the dependent elderly,
>>> and how much do they subsidize the leisure of the fit or
>>> well-to-do? (About 15 percent of elderly households have
>>> incomes exceeding $75,000.) How long should people work?
>>>
>>> We need a new generational compact to reflect new realities.
>>> In 1935, when Congress passed Social Security, life expectancy
>>> at birth was 62; now it's 77. In 1965, when Congress passed
>>> Medicare, the 65-and-over population was 9 percent of the
>>> total; by 2030, it's expected to be 20 percent. The
>>> generational compact includes Social Security, Medicare
>>> and Medicaid. If this year's debate focuses only on Social
>>> Security, it will be an exercise in deception. Unfortunately,
>>> both the White House and congressional Democrats have a stake
>>> in that deception.
>>>
>>> Democrats argue that "the Social Security problem" can be
>>> fixed with tolerable tax increases and benefit cuts, imposed
>>> mostly on the upper middle class and the rich. True. The
>>> long-term gap between promised benefits and present taxes
>>> equals 1 to 2 percent of GDP. Though large, the needed changes
>>> in taxes and benefits probably wouldn't be crippling. There's
>>> no "crisis," say Democrats and supporting pundits. What they
>>> omit is Medicare. Adding that, tax increases would be huge --
>>> and hard to limit to the wealthy.
>>>
>>> The focus on Social Security also suits the White House. For
>>> starters, it avoids the reality that until now many Bush
>>> policies have favored the old over the young. In 2030 the
>>> new drug benefit raises Medicare spending by an estimated
>>> 36 percent. The tax cut on dividends and capital gains (to
>>> 15 percent) benefits the old -- particularly the wealthy
>>> elderly -- because they own a disproportionate share of
>>> stocks. Elderly households with incomes exceeding $100,000
>>> will receive 27 percent of the benefits of these cuts (worth
>>> about $6 billion) in 2005, estimates the Tax Policy Center.
>>> As for personal accounts, they would involve immense
>>> practical problems. Why run the risks if, because Medicare
>>> has been ignored, the real problem of federal retirement
>>> spending remains largely unaddressed? Good question. The
>>> White House isn't asking.
>>>
>>> What's discouraging is that, along with most Republicans and
>>> Democrats, many "experts" and pundits also evade the hard
>>> questions. Their purpose is mainly to condemn or cheer George
>>> Bush. The debate we need involves generational responsibility
>>> and obligation. Anyone who examines the outlook must conclude
>>> that, even allowing for uncertainties, both Social Security
>>> and Medicare benefits will have to be cut. We can either make
>>> future cuts now, with warnings to beneficiaries, or we can
>>> wait for budgetary pressures to force abrupt cuts later, with
>>> little warning. That's the problem, and to answer Bush, no
>>> one wants to address it.
>>
>> Obviously written by, and then posted by, two idiots. I guess in the
>> next several decades we should expect no advances in medical science that
>> decreases costs? Always the problem with the left.
>
> Not clear that medical advances will decrease overall costs, espcially the
> way medical care is purchased and administered in the US.

Taking inflation into account, medical costs have ALWAYS gone down. Care to
provide an example to the contrary?

Rob

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