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Posts Tagged ‘entitlements’

The accepted post-election narrative in NY-26 is that the Republicans overreached on Ryan’s Medicare reform plan and the voters socked it to them. Make no mistake, this is the Democrats’ narrative that the media was anxious to adopt. However, there appear to be some inconsistencies with this story.

First, why did the newly-elected Democrat Kathy Hochul denounce support for Obama’s health law? If this was such a victory for the Democrats’ protection of Medicare and their new health law, why would the Democratic candidate not only steer clear of it but even voice her disapproval?

Second, the Tea Party candidate was a wealthy, liberal Democrat that for all intents and purposes seemed to be an impostor trying to co-opt and sully the Tea Party brand. This might be a successful strategy for Democrats going into 2012 but it doesn’t say much about the Ryan Medicare plan.

Third, a steady rule in politics is once you own something, you better defend it. This holds true even more so if it is a bold reform plan – taxes, immigration, entitlements, for example. George Bush got clobbered for his attempts to create private accounts for Social Security when he was unable to rally Republican support. This occurred despite the fact that it was solidly a Republican idea. His failure to rally, and Republicans’ failure to engage in the debate, left the party open to attack on the issue without a real defense of their position. Similarly, John McCain did not invest enough time and energy learning his health care plan in 2008 and got beat up at every turn because of it. This was not because it was a bad plan. In fact, it was a very good one. But it took explanation and impassioned defense. The Republican candidate needed to more forcefully own and defend the Medicare reform plan in NY 26, not present a mealy-mouthed defense for what her party is trying to do.

This is the future Republicans face in 2012 if they do not choose to embrace their own ideas. They don’t have to applaud every detail and say it’s perfect but right now the Ryan plan is the only game in town. And it’s pretty good compared to what the other side has, which basically lets Medicare become either insolvent or vastly rations care.

Democrats have 756 days without presenting a single budget proposal. Moreover, to the extent the Democrats have a plan to save Medicare, it can be found in “Obamacare” and its rationing board made up of 15 bureaucrats (IPAB). It is the ultimate fatal conceit to think that 15 health care professionals are going to be able to effectively and humanely make health care decisions for all of America’s seniors. But this is the current law! So why aren’t Republicans out there making sure America knows that until another alternative plan is presented, this treatment denial board, IPAB, is set to make their health care decisions for them in a few short years? We can be sure America has no clue of this board’s existence right now, nor that this is the new “status quo.”

So to recap, yes, yesterday’s election had a lot to do with Medicare and its need for reform. But the lesson is not that Republicans need to run from Paul Ryan. Rather, they need to put their running shoes on and JOIN Ryan as he defends his plan to save Medicare. Republicans will abandon him at their peril. Or to quote Ben Franklin, “We must all hang together, or assuredly we shall all hang separately.”

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Let’s All Agree, Medicare Needs Fixin’

   Posted by: FMFP    in Budget/Economy, health care   Print Print

Medicare is in serious trouble. This is not propaganda nor is this a secret. And this is also not a surprise. This is so for three very simple reasons. First, when Medicare was first created, the average American male was living into his 60’s and the average American female was living into her 70’s. Today, men are living into their 70’s and women are living into their 80’s and even 90’s. Second, when the program was created the Baby Boomers were just that – baby boomers. Today, they are retiring at a faster rate than there are young workers to support them.

Third, when Medicare was created its cost was expected to rise with inflation. It didn’t take long to realize how absurd this notion was, having grown at several times the rate of inflation for decades now. For example, at its inception in 1966, the program cost about $3 billion a year. The House Ways and Means Committee projected that in 1990 it would cost about $12 billion (a figure that accounted for inflation). What was the real price tag in 1990? $107 billion. And the out-of-control growth of the program has continued at a rapid rate. Today, the program consumes almost 15% of the federal budget. (Remember, this is separate from the additional funds spent on other big entitlements like Medicaid, SCHIP and of course, Social Security which have their own budget issues).

So it’s clear something needs to be done to alter the structure of the program. That is, if we are to have any faith that it will be around for us below 55 years old or that we will be able to honor its commitments to those over 55.

Unfortunately, for many Americans, it’s a struggle to get this far in the conversation.

Moreover, once we get this far, we have only just acknowledged the problem. The trickier part is what follows – the conversation over how to put the program on a sustainable path. This is what Cong. Ryan’s aggressive budget proposal tries to do and why he should be lauded. Ryan’s plan attempts to springboard the political discussion past the question of whether we have a Medicare problem and demands that legitimate participants in the discussion talk about actual solutions for the way forward.

I’ll save for another post an analysis of Ryan’s budget and the Medicare solutions on the table but first, it’s important that we all at least acknowledge what has been glaringly obvious for far too long – Medicare as currently structured is unsustainable.

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Since passage of Obamacare, Democrats of all stripes have been interested in talking about almost any subject other than health care. Put aside talk of a signature achievement, this has been a Pandora’s box of bad policies and politics that Democrats have had to either defend at their peril or run from without directly insulting their party’s leadership and President. At this point, it’s almost a contest to see what claim proved the most outrageous, non-sensical or downright not true.

One of the first claims to fall apart was President Obama’s oft-repeated promise, “If you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan.” Since passage, health care providers have begun consolidating to avoid business-killing taxes and regulations. Insurance companies have been forced to raise premiums to account for scores of new benefit mandates and restrictions on what types of plans they can offer. And small businesses are looking to cut costs by dropping coverage for their employees who will now have to look to the expanded Medicaid program and the state exchanges to cover them. All of these adding tremendous costs and weight to a system that was supposed to become more efficient and cost-effective.

What this has mean for the private sector so far is an effort to get out. And one year out, over 1,000 waivers have been granted by the Department of Health and Human Services (HHS) to unions, non-profits and companies negatively affected by the legislation. Ironically, a cursory review of the waiver list shows a disproportionate number of unions, whom you may remember, were some of the bill’s loudest proponents while it was being debated. Unsurprisingly, when forced to comply with its provisions, unions demonstrated their special status with the Obama Administration and demanded to be saved from this very expensive law.

And it’s not just the basic health care plans that are being altered. Millions of Americans who rely on their FSA’s (Flexible Spending Account) to pay for their child’s special education schooling or HSA’s (Health Saving Account) to pay for over-the-counter medicines will have to find other, likely more expensive options , to get these benefits or pay for these services. Unfortunately, those seeking to actually restrain health care costs are the real losers because it was programs like HSA’s, FSA’s and Medicare Advantage – which also took a major hit under Obamacare – that sought to inject competition into the process and more importantly, give more control over health care costs to the consumer.

Strangely, Nancy Pelosi’s statement that “we have to pass it to find out what’s in it” has proven quite prescient. Slowly but surely, as more of the law’s thousands of provisions are painfully unearthed, we are forced to deal with the explosion of costs, rosy revenue projections, overly burdensome nature of the regulations, and generally unconstitutional nature of the bill’s central provision. I could go on – and I plan to in future posts – but I feel each (broken) promise and corresponding reality deserves its own special attention.

Perhaps next time I’ll discuss what I think could be the biggest whopper of them all, “Obamacare is going to add 30 million people to the insurance rolls AND save billions of dollars doing it.” I know, try not to laugh too hard.

So, what’s your favorite broken promise of Obamacare?

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This picture cost the Pentagon $25 million dollars

My blogging colleague FMFP’s recent writings on the ongoing struggle for the US government to agree on a budget for this coming year highlighted the discrepancy between mandatory (entitlement programs such as Social Security, Medicare, and Medicaid) and discretionary funding, basically everything else the government pays for, including defense spending. FMFP cited a poll that showed that far too many Americans are unaware of the fact that entitlement spending is what is really driving our country toward insolvency and another poll by WSJ/NBC also portrays an American populace unwilling to give up any ‘significant’ portion of these program’s benefits to fix the budget. FMFP, after using Tarrance Group poll results showing that a majority of Americans think the government spends more on defense than on entitlements, accurately pointed out defense/security procurements take up roughly 20% of the budget while Social Security and Medicare take up almost twice as much and are expected to explode in coming decades.

It is this context, that I recently read Robert Kagan’s article ‘The Price of Power‘. Here’s his intro:

The looming battle over the defense budget could produce a useful national discussion about American foreign and defense policy. But we would need to begin by dispensing with the most commonly repeated fallacy: that cutting defense is essential to restoring the nation’s fiscal health. People can be forgiven for believing this myth, given how often they hear it. Typical is a recent Foreign Affairs article claiming that the United States faces “a watershed moment” and “must decide whether to increase its already massive debt in order to continue being the world’s sheriff or restrain its military missions and focus on economic recovery.”

This is nonsense. No serious budget analyst or economist believes that cutting the defense budget will aid economic recovery in the near term—federal spending on defense is just as much a job-producing stimulus as federal spending on infrastructure. Nor, more importantly, do they believe that cutting defense spending will have more than the most marginal effect on reducing the runaway deficits projected for the coming years. The simple fact is, as my Brookings colleague and former budget czar Alice Rivlin recently observed, the scary projections of future deficits are not “caused by rising defense spending,” and even if one assumes that defense spending continues to increase with the rate of inflation, this is “not what’s driving the future spending.” The engine of our growing debt is entitlements.

Kagan is a strong believer in the US global military presence being a source of public good not only for the United States, but also for the world in general. His position on defense cuts is unsurprising, but nonetheless, persuasive. He later in the lengthy article details the main reasons to keep a strong, active US military, with global terrorism and rising great power instability as the key two reasons. Kagan also warns against the assumption that substantial cuts to the defense arena will be without much cost…

In fact, the only way to get significant savings from the defense budget—and by “significant,” we are still talking about a tiny fraction of the cuts needed to bring down future deficits—is to cut force structure: fewer troops on the ground; fewer airplanes in the skies; fewer ships in the water; fewer soldiers, pilots, and sailors to feed and clothe and provide benefits for. To cut the size of the force, however, requires reducing or eliminating the missions those forces have been performing.

In other words, if the US really wants to cut down on our defense spending we are going to have to change or adjust our strategic posture. To some, specifically Jeffersonians and domestic liberals, a smaller US military would be overall beneficial: more money for social programs/less military adventures abroad. For others, a lessening of our international presence will lead us and the world down a potentially dangerous path (great power war, global instability) that will cost us much more than 20% of our budget to get out from under.

I have to admit, though I’m clearly in the ‘US military and global presence is a source for good’ camp, I have to admit that our modern defense industry is bloated and could use some trimming. Greg Scoblete of Real Clear World rightly points out that overall the US currently finds itself in more sure security surroundings compared to the Cold War, WW II, etc. I believe the US needs a strong presence in East Asia to combat a growing China and keep allies such as Japan, Indonesia, and South Korea secure. The scourge of Islamic terrorism is as real as ever and demands a secure homeland and strong military, diplomatic, and intelligence network in numerous hot spots around the globe to deter and defeat. Global trade, which still depends largely on maritime travel, demands safe passage through the earth’s oceans and seas and there is no better guarantor of that than the US Navy. The Middle East, which includes a menacing regime in Tehran, a Turkey posturing away from the West, a vulnerable ally in Israel, oil supplies and pathways up the wazoo, is cauldron of instability and no one knows where these popular uprisings may lead. I could go on…

So in short, yes, I do think the United States could sustain some cuts in our defense spending, but we have to admit that this will come with some costs. which we must choose wisely. and we must not let these cuts distract us from our real budget calamity, ever expanding entitlement programs. This country and the world need a strong American presence and for this to be maintained now and in the future we need not only a capable military, but a fiscal future that doesn’t look so much like present day Greece.

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