POLITICS MAY 20, 2011
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To senior citizens at town hall meetings angry or worried about their plan to convert Medicare to a private insurance scheme, Republicans have a simple answer: It’s not about you. You’ll be fine. This is for “the next generation.”
The next generation is everyone 55 or under, since the plan would not start for ten years and would affect only newly eligible seniors. The stated logic of the ten-year delay is that it takes time to put the system in place and that people need time to plan. But if “premium support” (a euphemism right up there with “enhanced interrogation”) were ever going to work, it could be implemented as quickly as the Affordable Care Act (four years) or Medicare’s prescription drug coverage (two years). Presumably, the delay is mostly a political kludge, intended to avoid a backlash from those now or soon to be dependent on Medicare by affecting only those young enough to be giving little thought to retirement health coverage.
But the line they chose is more than a gimmick: The 55-and-over cutoff marks a sharp and significant generational divide. Those over 55 will continue to benefit from one of the triumphs of social insurance in the Great Society, while the rest of us will be on our own, with a coupon for private health insurance. If you consider what it means to be 55 years old in 2011, you’ll see the significance of the line.
Today’s 55-year-old was born in 1956. That’s not generally considered a major break in the generations. It’s smack in the middle of the Baby Boom (the peak of the boom, in fact), with almost a decade to go before the first Gen-Xers were born, dreaming of Winona Ryder. But the difference between early and later Boomers, especially in their experience of the economy, is dramatic.
A baby born in 1956 would have graduated from high school in about 1974, from college in 1978 or so. Look at almost any historical chart of the American economy, and you see two sharp breaks in the 1970s. First, in 1974, household incomes, which had been rising since World War II, flattened. Real wages started to stagnate. The poverty rate stopped falling. Health insurance coverage stopped rising. Those trends have continued ever since.
Second, a little later in the decade, around the time today’s 55-year-olds graduated from college (if they did—fewer than 30 percent have a four-year degree), inequality began its sharp rise, and the share of national income going to the bottom 40 percent began to fall. Productivity and wages, which had tended to keep pace, began to diverge, meaning that workers began seeing little of the benefits of their own productivity gains. The number of jobs in manufacturing peaked and began to drop sharply. Defined benefit pensions, which provide a secure base of income in retirement, began to give way to 401(k)s and similar schemes that depend on the worker to save and the stock market to perform. While the benefits of higher education rose, college tuitions started to rise even faster. Those trends, too, have continued.
If there was ever going to be a generational war in this country, that high school class of ’74 would be its Mason-Dixon line. It’s the moment when Bill Clinton’s promise—“if you work hard and play by the rules you’ll get ahead”—began to lose its value. Today’s seniors and near-seniors spent much of their working lives in that postwar world, with their incomes rising, investments gaining, their health increasingly secure, and their retirements predictable. Everyone 55 and younger spent his or her entire working life in an economy where all those trends had stalled or reversed. To borrow former White House economist Jared Bernstein’s phrase, it was the “You’re On Your Own” economy. Finally, those 55-year-olds are spending several of what should be their peak earning years, years when they should be salting away money in their 401(k)s and IRAs, in a period of deep recession and very slow recovery.
The Ryan plan, in other words, delivers to the older generation exactly what they’ve had all their lives—secure and predictable benefits—and to the next generation, more of what they’ve known—insecurity and risk. It’s hardly the first generational fight the GOP has started. The previous one was just last fall, when they campaigned for Medicare, and against the $500 billion in cuts (mostly by getting rid of the overgenerous subsidies to private insurers in an experimental program) passed as part of the Affordable Care Act. With an off-year electorate that was overwhelmingly older, they could put all their bets on the older side, knowing that seniors would see little benefit from the Affordable Care Act and were naturally worried about any change to the health system they enjoyed.
Heading into the 2012 election, however, the electorate is likely to shift back to one in which younger and middle-aged voters vote in proportion to their share of the population, so a “Mediscare” campaign won’t work. This time, the GOP hopes to play both sides of the generational war, gambling that while seniors want security, younger voters never expected the certainty of Medicare, just as they don’t expect reliable pensions or Social Security benefits, and thus will embrace a plan that sounds innovative, flexible, and market-based. Contending that the only alternative to premium support is the end of Medicare entirely, they are offering a generation that is accustomed to getting less than their parents a little bit, rather than nothing.
This strategy is a variation on the generational conflict the Bush Administration tried to launch in 2005 over Social Security privatization. Although it never reached the level of specificity that Ryan achieved, the calculus was the same: Younger voters would welcome the opportunity to take advantage of the stock market for their retirement, rather than the stodgy and predictable system their parents and grandparents liked.
That wager didn’t work, however: It turned out that older voters were terrified of Social Security privatization and younger voters unenthusiastic. Within five months, the radical move that every pundit thought was a near-certainty when George W. Bush declared “I've got political capital and I intend to use it,” had disappeared, never even introduced as legislation. And despite this week’s relaunch of the Ryan plan, it’s likely to end in the same result. If Social Security is any precedent, younger voters will be indifferent, while older voters won’t believe they’re exempt. The Republicans will again walk away from the conflict, hoping to get credit for being “serious” without bearing a political price for the error.
For Democrats, the defeat of the Ryan plan, like the failed Social Security privatization before it, will be regarded as a great victory, and an opportunity to get a fresh start with worried older voters. But they should not ignore the generational divide revealed by Ryan’s cutoff. If progressive politics has nothing to offer the late Boomers and the generations that follow except the same old programs, and nothing that responds to their distinctive experience of the economy, then eventually they’ll fall for one of these gimmicks from the right.
Mark Schmitt is a senior fellow at the Roosevelt Institute and former editor of The American Prospect.
Follow @tnr on Twitter.
26 comments
Respectfully I don't think that older workers have been spared the issues confronting those 55 and younger. We've been through the same cycles and suffered the same recessions and many of us are confronting our early 60's in a deep recession, too old to be hired or maybe too sick: life has scarred us, working in an increasingly demanding marketplace where "productivity" has really meant very heavy workloads for fewer workers - and/or long stretches of semi-employment as a temp without any benefits including retirement benefits. So, savings have often been tapped simply to make ends meet - there just isn't a nest egg, period, let alone lucrative new opportunities knocking at the door. And, the health insurance boondoggle is punishing for older people. The cost of insurance is simply prohibitive for many; illness bankrupts people, yes even hard workers; not just those mythical slackers that make up the Republican/Libertarian idea of the underclass: people who deserve to be poor because they refuse to work. One has to ask: are they simply unaware of that large class of Americans known as the working poor? The future looks truly bleak for many Boomers. I doubt if it's substantially better for those of born before '55 - probably the real dividing line is for those already safely retired - with Medicare and supplemental insurance and a decent stash and hopefully, some kind of pension. Many of us still under 65 haven't had the kind of security that resulted in savings, retirement funds and pensions so - we'll have to go without and what kind of future does that portend, with nothing but Social Security? Rent on an apartment can be more than that in many major cities. Even people who've managed to accrue property, a home for example, can't count on its value. In fact, many homes are under water and can't be sold for anywhere near the mortgage value - this is a particular hardship to older women who find themselves widowed or divorced and unable to sell their property without going six figures into the hole. Women face additional hardships simply because we've been underpaid throughout our working lives - indeed that hasn't changed even for young women despite the best efforts of feminists and others to level the playing field. Maybe we'd better go buy lottery tickets.
- Sophia
May 20, 2011 at 1:43am
Most of the people I know who are already retired realize the Ryan plan represents a real threat to their benefits as well. A neighbor of mine put it this way "How long are you going to want to keep paying for my benefits if you know you aren't going to get them when it's your turn". That pretty well sums it up. You see the same attitude now with funding pensions, instead of people saying "I need to get that for myself" they are saying"why the hell are may tax dollars going to them?!?!". The exact same thing will happen if they make that generational divide in benefits, within 5-10 years everyone will just get a measly stipend instead of guaranteed benefits.
- Attrill
May 20, 2011 at 2:10am
Referring to something that is deceptive and manipulating as brilliant is a little disturbing even if the scheme is politically effective. Referring to someone as a brilliant liar would produce the same reaction.
- Nusholtz
May 20, 2011 at 7:42am
GWB would support his plan to privatize SS by telling folks that the SS "trust fund" didn't exist, that it was only a piece of paper in a file cabinet. The implication was that the government would not repay the "trust fund" (the government has been "borrowing" (I say stealing) the excess of SS tax collections over benefits for almost 30 years, the balance being about $2.6 trillion today). I always felt that was the high water mark for GWB's snickering cynicism. Of course, we now know that GWB actually meant what was implied, as the Republican leader in the Senate has stated numerous times since that, if it were up to him, he would not use income tax collections to repay the amounts "borrowed" from the "trust fund". Last week I saw a chart showing the perentage of income consisting of SS benefits for different cohorts above age 65. The percentages were amazingly high, going up with each cohort. Astute observers in the aughts would point out that the Bush tax cuts weren't tax cuts at all, but tax deferrals, for a "cut" that creates a deficit merely defers the tax increase eventually imposed on later generations to repay the amounts borrowed by government to fund the deficit. The same principle would apply if the Republicans were to succeed in gutting Medicare or SS; the nation has already experienced widespread poverty among the elderly and found it intolerable, adopting SS and then Medicare. That future generations would find widespread poverty among the elderly any less intolerable is both cynical and callous. We live in a gilded age, when those at the very top who have amassed fortunes over the past 10 years not only don't want to pay their fair share of taxes but wish to defer to future generations the costs of a civilized society.
- rayward
May 20, 2011 at 8:02am
I agree with everything that’s been said here, and Sophia is absolutely right that many of the early Boomers (of which I am one) have experienced the same economic difficulties as later Boomers and Gen X and Gen Y. It hasn’t been Easy Street for many of us. Downsizing and other negative economic developments have been around for a long time now. Ryan and his fellow Republicans apparently think that older Boomers are a greedy bunch who will be content to see those farther back in the pipeline get shafted as long as their own Medicare and Social Security benefits are preserved. Well, a lot of us still believe in social justice. That’s a quaint notion to the GOP, but I think it’s a sentiment that still exists. Even though my Medicare coverage is supposedly secure, I don’t have a screw-you attitude toward people younger than me. I’d like to see universal health care, even if it would require higher taxes—which it would. But it’s high time for the tax burden to become more progressive and for all the many loopholes to be closed (and KEPT closed). I’m so damn sick of hearing Boehner and other Republicans moaning about how “we’re broke.” There’s plenty of money to be tapped in this nation if we could simply have a decent Congress concerned with the welfare of the nation as a whole.
- DAVIDDREIER@EARTHLINK.NET-old
May 20, 2011 at 8:59am
It's a bad idea for every generation. Adult children are affected by cuts in the benefits and other economic losses experience by their parents, and parents are affected by the economic insecurity of and lesser resources and benefits available to their adult children. Right now, many older adults, including many on on the wrong side of Ryan's cut off, are spending down resources to help their struggling young adult children in an economy that has been especially hard on those entering the job market. Those are resources that can't go to easing the burdens and mitiagating the economic losses they will inevitably experience with age. Their children in turn will inevitably be required to contribute more to their care and support as they age, compromising their own ability to form families, care for their own children, and prepare for their own elder years. Anyone younger than 55 who thinks this is a good deal for them is a fool or expects of a substantial inheritance, or both.
- esmense
May 20, 2011 at 10:29am
As a Democrat, I love the Ryan Plan and the fact that the entire House Republican contingent is wedded to it. It is just such a loser. And I love that when Newt, smart guy that he is, deigned to criticize it as "right wing social engineering", he was mauled by all the House Repubs who had taken the oath. Mark Schmitt's generational thesis is intriguing and bodes well for Obama in 2012. Republican Presidential and Congressional candidates will torn between keeping faith with a political kamikazi pact or wandering off the reservation a la Newt. It will be entertaining to watch them squirm.
- JackR
May 20, 2011 at 11:43am
As this excellent discussion illustrates, large numbers of people on both sides of the Ryan dividing line have suffered during the periods of poor economic growth since the mid 70's. There are every few who feel secure. Republicans say that when the Ryan plan is accurately described, opposition falls, yet when I hear then describing it accurately, they seem to place an inordinate emphasis on the aspect that if you are over 55, then you won't be affected. (What shining examples of integrity all around?) However, don't neglect the implications of block granting MedicAid, roughly half of which goes to paying for services for the elderly and the disabled, and cuts to which will effect those already retired. What happens when there is a future recession and government revenues fall while the need for safety net spending goes up. If the federal government refuses to raise the block grants, the states will have no choice but to cut eligibility, provider payments or services covered. Our state legislatures have not, as a rule, been exemplars of political courage. How are they going to allocate resources between the elderly (who regularly vote their self interest) and the children of the poor? Now consider that something like 35% to 40% of our children are presently served by MedicAid or SCHIP. Come some future recession, as that need is increasing, we are going to cut that funding? This is a plan?
- aduncanson
May 20, 2011 at 11:57am
The GOP’s brilliant generational weapon in the Medicare fight. Terrible title. There is nothing brilliant about watching Republicans commit suicide and with their antics with regard to the debt ceiling, take America down with them. Attrill is right, there is no way in hell Medicare won't be cut down to the bone if people under 55 aren't going to get it, you will see nursing home support fade to nothing as localities try to unload county supported homes to the private sector who in turn will create warehouses to stuff old people in until they die. And in 10 years when Republicans use the savings to give upper class tax cuts who will be their constituency then? It is like Paul Ryan is the ultimate Manchurian Republican, bringing down the party all on his own.
- blackton
May 20, 2011 at 12:34pm
Do we need Republicans? For what purpose?
- skahn
May 20, 2011 at 12:45pm
Bravo, Sophia! Great ananlysis. The only thing I'd add is that our children will face the insecurity of caring for their parents (us) as well as taking care of themselves when their time finally arrives, without any safety net under the Repub's plans. I'm a late Boomer (born in '57) who's struggling to take care of an elderly parent (he's living in our house but, thankfully, has financial resources) and a twenty-something who still needs assistance. Couple that with the fact that I was forced into early retirement 9 months ago at age 53. I'm one of the lucky ones, howevwer, because I was able to save up 28+ years of sick leave and use that to continue my existing health insurance until Medicare kicks in. If Medicare still exists in ten years, that is! If not, I'm really screwed.
- desertdog
May 20, 2011 at 1:16pm
For those currently younger than 55, it would appear that the Ryan plan would shift the whole risk of medical cost inflation to the individual. This seems unwise since the government would appear to be in a much stronger position to negotiate with providers than are individuals. Theoretically those of us over 55 would emerge unscathed from the change. But how long would those still working be willing to pay high taxes for our benefits if these were viewed as far superior to the ones they could expect?
- brthompson
May 20, 2011 at 2:55pm
Another divisive cynical Republican wedge scare tactic. I'm amazed that so many voters have been duped. Just who are the Republicans representing out there? Are there really tens of millions of "them", in addition to the Koch brothers and the Paul Ryans, immune to the Recession? Reminds me of a job where the executives richly rewarded themselves while the staff was always told that "times are bad", hence no raises.
- amidut
May 20, 2011 at 4:18pm
I am late 40s age. If the older generation votes GOP like 2010 I am going to start to think what my own parents now believe: that the older folks will just have to die out before real change comes to this country. Attrill is correct, why should I be forced to pay mass of taxes (more than recipients had to pay) for other's benefits that will not be there when I (or my own kids) need them?
- NR027810
May 20, 2011 at 5:24pm
Matt Yglesis has written about this extensively: "And on the politics, it’s a mess. Right now we have conservatives simultaneously calling for huge spending cuts and also getting the line’s share of old people’s votes even while the vast majority of non-security spending is on old people. In essence, by first separating the domestic budget into “discretionary” and “entitlement” portions and then dividing the entitlement programs up into “what today’s old people get” versus “what tomorrow’s old people will get” the political class has created a large and vociferously right-wing class of people who are completely immune from the impact of their own calls for fiscal austerity. In my view, that reality is the biggest driver of our current political dysfunction. There’s some need for spending to be lower over the long term than it’s currently projected to go and I think it’s politically and morally vital that the adjustments be made in a balanced way. You frequently hear of the need to exempt everyone over the age of 55 from any possible cuts. That’s nice for them and encourages them to go right on complaining about out of control spending. But the average 55 year-old will still be alive and collecting benefits in 2035 so the long-term budgetary implications of this “let the geezers keep their full benefits while they whine about how Democrats are bankrupting the country” are actually pretty significant. If I were the president, my line would be closer to the reverse: I don’t want to cut Social Security benefits for anyone, but if the Republicans want to tempt me into a compromise they’re going to need to make sure that their own core constituency—people born before 1955 or so—pay a fair share of the price. Progressives don’t need to indulge the premises of this “welfare state for me but not for thee” brand of conservatism that’s taken over the country." The last election showed the power of cranky old white people ginned up on FOX News. I am sorry if that hurts peoples' feelings but it is the truth. Had the senior vote simply split 50/50 we would be looking at Speaker Pelosi and Ryan would still be some doofus in the background. I recently went to vote in primaries that are located in a seniors's home. It was wall to wall Republicans in Medicare paid for scooters. I wanted to scream, "What the f--- is wrong with you people?" Of course, nobody's life has been free of pain and struggle. The point is that so many of the GOP base seems so quick to deny (i.e. health care) to the young when they are so heavily subsidized themselves by the very young they wish to give a royal screwing for. I have hopes that the basic decency of the American people will say no to this!
- MikeB.
May 20, 2011 at 8:06pm
MikeB, I think you need to make a distinction between your stereotypical Cranky Old White People Who Vote Republican Because It Said So On FOX and 60-100 year old people who have been Democrats (or further left) our entire lives and who, despite our age, might actually NOT BE WHITE. One problem the Republicans have revealed and that's ageism. It's appeared in these discussions before. It is no more right to stereotype people because of age than because of sex or color or religion. For myself, I am very angry with everybody who didn't take the time to vote in 2010. Judging from polls, the majority of people don't feel like FOX Republicans of any age. Nevertheless, an awful lot of people couldn't be bothered to vote. That skewed the election. Also, when people talk about "shared sacrifice" I'd like to know what's meant by that. People who've worked and struggled all our lives are not in a position to accept cuts at this stage. Please get a grip. We have precious little as it is and we don't have that one precious commodity that would allow us to make adjustments now: time. If you want to discuss income level, ability to pay, etc, that's fine. But ageism isn't any more right than racism or sexism.
- Sophia
May 21, 2011 at 12:21am
So many promises made by those with no idea how to keep them. Far from the ideal of so many on these boards, the legacy of SS (minimum income support, fraudulently funded), and MC (HC for all over 65, fraudulently funded) is easy political promises made without any concept or responsibility as to how they would be funded. As funding discrepancies were discovered, we ramped first dollar taxes to 15% of earnings, partially capped. 15% ain't small change, and yet we assume it is not enough. You all hate Ryan, sure. Yet he is the only one who has had the common sense to flesh out a solution. Fix what we can and will spend as a % of GDP. Right now it is roughly 5% on SS and 6% on all federal medical expenses. If it needs to be a little higher, so be it. Including federal ACA subsidies will drive it higher still. Prior politicians have not done the right thing, what makes you assume that those in the future will be any better? I see more promises, and more phony funding. Yet everybody here wants to continue more of the same, or wants to tax the unicorns more to pay for it. Well, the unicorns are us. We can not continue this way. The way to overcome the intergenerational problem so evident on this board is to define the amount of GDP that will be spent on things deemed necessary to have a civil society. The only person trying to create that responsible conversation is Ryan. Many, even most may disagree with his details, but we as a society need to grow up and pick a number.
- ds111
May 21, 2011 at 12:29am
Sophia I think you miss Matt Y. and my point. I don't want to cut seniors's social security, etc. I do agree though with Matt. Y's larger point. The GOP has been very good at telling seniors that they will be protected by the GOP and the hardships will fall on the young. It has led to a dysfunctional political system. I am hoping the seniors that voted GOP in 2010 and put on farby tri-corn hats, and got their info from Glenn Beck, are waking up to the fact that they helped put into office a bunch of sociopath imbeciles, who don't really give a sh-t about them. That is not agism. My late grandfather was a World War II veteran and a New Deal Democrat his whole life. He knew who was on his side. God bless him. I can't understand why in my native state though a man who wants to privatize Medicare and Social Security corporate robot Pat Toomey won overwhelmingly among seniors against a guy, Joe Sestak who was as pro-senior as you can get? This is this vast disconnect. As I said when I was voting in the senior center, I saw all the people benefitting from these programs that Republicans have fought tooth and nail against and they were supporting the Republicans. It made no sense, beyond some of the ugly dog whistle type issues FOX uses to ginn up outrage among them.
- MikeB.
May 21, 2011 at 12:37am
Oh dear Ds, Does Ryan pay you to flak for him so shamelessly? You said this: "We can not continue this way. The way to overcome the intergenerational problem so evident on this board is to define the amount of GDP that will be spent on things deemed necessary to have a civil society. The only person trying to create that responsible conversation is Ryan. Many, even most may disagree with his details, but we as a society need to grow up and pick a number." Yeah that 3 percent for discretionary spending was the height of having a responsbile conversation. Just like cutting tax rates for the rich, but promsing to get rid of tax expenditures but not spelling it out exactly is more adultness personified. Calling a voucher "prem. support" is also very adult. Using Medicare Advantage which is MORE expensive than Medicare and saying it is cheaper is very adult too, because adults lie a lot. Also, how was or is Social Security "fraudulantly funded?" It has been a great boon to finance upper income tax cuts of Federal taxes. Is that what you mean?
- MikeB.
May 21, 2011 at 12:50am
I don't give a crap about Ryan. But short of Bowles-Simpson, which has been dumped by it's sponsor, he seems to be the only person making an attempt to work with what we have. So i'm using his name as a proxy for a competing vision. I don't have to endorse the details to agree that it is in the right conceptual ballpark. He apparently lifts CBOs rev assumption, and plugs in a clearing flat rate with minimal deductions (25%, from the roadmap, I think) on order to create a growth friendly tax structure which conveniently raises 19% revs. CBO assumes 19% GDP revs ad infinitum under any plan. Can we agree to that, since they put it in writing? I'm stumped by it, and think we'll need higher. Perhaps it's a faulty assumption on their part, but to assume higher revs is simply not serious, at least not according to CBO. Federal employee benefits are "premium support", with an identified minimum. Why is it then wrong to limit fed HC expenditures that way? Federal responsibility for Medicare and Medicaid, and ACA for that matter, should be limited to a percent of GDP. It is the only sound way to make them sustainable. I don't really care how you do it, but it isn't being done now. If the cost of health care keeps going up, guess what, we can't afford it. Heck we can barely afford it now. CBO has Obama's budgets, driven largely by federal health care spending, with no commensurate increase in fed revs, heading toward gigantic out year deficits. Thats responsible? SS and MC were the worst of Ponzi schemes. From 0% to 12% GDP in one lifespan. SS was largely fixed by raising revs to about 5% GDP. We'll have to tweak it again as the trust fund debt gets swapped for public debt since cash revs won't cover cash expenses. MC remains unaddressed, used as a cudgel, the new third rail, by both left and right, with no solution in sight, and heading toward intergenerational conflict, as indicated by this piece and the comments that follow. They were not sold that way. We should convert them to what they are, a societal obligation to assist the aged and infirm, connected loosely to lifetime earnings.
- ds111
May 21, 2011 at 8:20am
Ryan is working the same fraud he did on revenue he did on the Roadmap. It worked once why not do it again. http://yglesias.thinkprogress.org/2010/08/paul-ryan-is-a-fraud/ You seem unable to grasp this. He took the 19 percent and just assumed it with further tax rates cuts for the rich. He does not get there because he does not tell the deductions he will get rid of. This is another old trick. "Broaden the base, lower the rate." The rate gets lower, but the tax expenditures are still there. Since Ryan has fought tooth and nail for tax expenditures that can't be justified in any economic or moral sense for oil companies for example, why would it be so smart to take him at his word? Premium Support is not what Ryan is offering. The Federal employee or "just like a member of Congress" line is a lie. There is no weasel words to get around it. Prem. support goes up with the actual cost of health care. Ryan's plan goes up with the CPI. That is NOT prem. support. As far as limiting healthcare, Bowles-Simpson and the ACA attempted to do so with using the power of the state to set lower prices and ration. Who fought that too tooth and nail? Why none other than fraud boy Paul Ryan. He is more interested in this proven false method of controlling costs by giving money to private entities to skim off the top. "Ponzi scheme" is a GOP talking point, but I don't think you understand what it means. A true ponzi scheme requires that new "investors" be brought in all the time fraudulantly. It is Ryan who would do that. The newer investors (the young) would pay for the older ones but get less and less back. Your desire to explain away lies, ridiculous assumptions, etc. from Ryan is what is so striking. Under the idea that he is the only one having an honest conversation.
- MikeB.
May 21, 2011 at 9:26am
Ponzi. Yes mike, new "investors" have been brought in, as the SS tax rose from 1% to 12.4%. Same for MC, now up to 3.8%+ maximum under ACA. If we choose to spend more on medical care, that is a legit choice. But the relative cost of a doctors services have not increased. We have however made ever increasing use of new technology and pharmaceuticals. We spend more because there is no arbiter between value and cost. Many want that arbiter to be govt, which it is now for about half our spending, many don't. The expert rationing method is legit, as with single payor systems, but they have their own problems, and is an ongoing political controversy. The main problem with your assumption is that we are hostage to ever increasing costs, and must pay them no matter what, or at least until an expert system can figure out a fair way to ration care. Fine: but first you should define the amount of public spending as a % of GDP.
- ds111
May 21, 2011 at 10:41am
We first need to agree on a set of parameters. We need revs in the 20% range. CBO pegs the long term realistic # close, at around 19%. Seems reasonable to me, with close to an additional 15% at the state and local level, putting us within the OECD range. Agree? I'd like a simple, fair, and growth promoting tax system. 10/25 seems low to you. Ok, so maybe 10/30 with all income taxed. 15/40?, I don't care, pick #s that will get us there, but without damaging growth and scored fairly. We then need to decide how to whack up the 20%. In any case, you need to define spending in % GDP terms, vs expected revenue, with a little wiggle room on both sides for emergencies. If you have a more responsible method, I'd like to hear it.
- ds111
May 21, 2011 at 11:07am
Well, Ds there are so many things I disagree with your premises. The "growth" mantra I think is misplaced. The killer in growth in our economy has been IMHO the lack of aggregate demand due to our third world like levels of income inequality. I don't think going back to Clinton rates or higher rates at the top (as I am in favor of) is going to stop growth. As far as percentages... Well let's see the left wing "People's budget" has Federal outlays at 22.2% of GDP by 2021 and revenues at 22.3%. I don't know that we have to go that high. Simpson/Bowles got 21%. You seem to think 20% is some magic number that if gone over will kill us. I suppose you would say the CPC budget is too unfriendly to growth. But it actually balances the budget a lot quicker than Ryan, and doesn't use the same fuzzy math. Yes, the tax burden must shift to upper middle class and rich people even further (I would go lower than 250,000) because the income distribution has changed so much. Since you aren't going to get a lot of money from the unemployed and the working poor. Yes, I do believe the governmnet with proper power can control health care costs as it does in just about every first world country. Ryan does nothing about this, except shift the cost (after his friends in the insurance industry take a nice cut) to the very old. Single payer is not a system without problems (show me one that doesn't have them) but it controls costs far better and is far more rational and humane than Ryan's ideas.
- MikeB.
May 21, 2011 at 7:26pm
Seems we may be getting somewhere. Agree that Clinton rates were fine for growth, though they did include a big discount for capital gains and dividends. I'd rather have a lower top rate and tax them all the same. We've grown faster than Europe over the last 40 years, simultaneous with their higher rate structure. There are some outliers, and I don't believe the comparison is apples to apples, but we have generated persistently more rapid GDP growth, which compounded has had a significant positive effect on relative living standards - not that we don't have our warts. I've no problem with Simpson/Bowles 21% - and good spot - 20% is no magic number, just one that CBO thinks untenable. As I said, I'm not sure why. Yes the "people's budget" is unfriendly to growth, let alone absurd. Throw it in the circular file. HC is a tricky area, but I'd be happy with a version of single payor as a base level of care, and suspect we need it so as to provide coverage to all - as we should - though I'd prefer it at the state level. But as importantly, the level of care will likely be similar to Britain's, or Italy's, with public care limited by public budget, and private care available for those who wish to pay additional for it.
- ds111
May 21, 2011 at 10:14pm
Well, again I have totally different takes on certain things. No need to look to foriegn countries. I can look GDP growth and employment rates in America over the last 60 years and find there is very little correlation to the marginal rate of income tax at the top income level, despite what The Club for Growth, Heritage, et al. say. In fact, the best correlation to high growth seems to be the share of income the middle class has defined broadly. The less income is concentrated in fewer hands, the more is consumed and powers businesses. So, I do not think pro-growth is defined as you and Ryan would have it. BTW, The Rivlin-Domenici budget has the Federal share of spending of GDP at 23% in 2020, higher than the Progressive Caucus. Again, I am still baffled by the notion that Ryan is the only serious person out there. His budget does not even add up on its own terms. It is still based on that supply-side religion when it comes to revenue. This is why more than a few (myself included) have yelled "fraud" at Ryan. Ryan makes no attempt to even examine defense spending in any real way. Its voucher system for Medicare would be a nightmare for any Gen. X'ers and Y'ers after they of course have to foot the bill for the old GOP base... Its block grants for Medicaid are simply another way to shift costs and pretend that they will magically happen. Why is state level single payer better than National? You are foregoing one of the key benefits in cost control of having the Federal Government being a much more powerful bargainer for price. Can Mississippi and West Virginia really make a true single-payer health care system on their own?
- MikeB.
May 22, 2011 at 3:03pm