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

From: sinister (sinister_at_nospam.invalid)
Date: 01/16/05 

Date: Sun, 16 Jan 2005 18:49:16 GMT

"Rob Duncan" <robduncan@gbronline.com> wrote in message
news:t5Sdnf7ScqBsj3fcRVn-sA@gbronline.com...
>
> "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?

Perhaps costs per drug/per operation etc have gone done. I'd wager,
however, that medical spending as a fraction of GDP has increased.

>
>
> Rob
>

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