Debt, Deficits, Social Security and More…

2017-07-10T16:30:10+00:00March 1st, 2010|Budget, entitlement reform, healthcare, Medicare, Social Security|

healthcare chartIf you generally skip bybudget or economic headlines in favor of something more easily comprehendible, we suggest today you make an exception. Here are excerpts from three articles which together provide must-read perspectives on our debt/deficits, Social Security and Medicare.Saul Friedman, Grey Matterscolumnist, takes former Senator and Debt Commission co-chairman, Alan Simpson, to task for perpetuating the myth that Social Security has anything to do with current budget deficits.

?Social Security?s long term fiscal problem has nothing, absolutely nothing, to do with Social Security’s role in the deficit. For, as I have emphasized in my column for years, Social Security costs the budget not one cent-aside from the one percent it spends on its thousands of employees and field offices. Indeed, Social Security helps finance the deficit by loaning the treasury money, for which it earns interest (about $700 million a year.) If what’s owed to Social Security must be cut as part of deficit reduction, will that help Social Security? Nevertheless, Simpson’s statements help perpetuate the myth among right-wingers that Social Security contributes to the deficit.?

CEPR economist, Mark Weisbrot, offers this analysis of what?s truly driving our deficit and debt:

?For the long term, as the CBO has emphasized, the vast majority of the deficit and debt problem is just rapidly-rising health care costs. Of course, we could be like other developed countries and have universal health care, and pay about half of what we are now paying per person. That is the average for the other high-income countries. This would take care of our long-term federal debt problems.Another significant contributor to our long-term debt is the military. On an annual basis, we spent 5.0 percent of GDP on just the Defense Department budget last year. Before 9/11, the CBO had projected just 2.4 percent for 2009. The difference is more than twice the long-term shortfall in our Social Security system, and it is based on an understatement of military spending. Maybe we need to focus on protecting our airports from already existing terrorists rather than recruiting more by occupying foreign countries. Maybe we don’t need hundreds of military bases all over the world.But thanks to the power of what President Eisenhower famously named the “military industrial complex,” President Obama has exempted the military from any spending freeze. Thanks to the two most powerful lobbies in Congress — insurance and pharmaceutical — getting health care costs under control is still a distant dream. And then there’s the people who make the nation’s major economic decisions and actually brought us this mess – Goldman Sachs and their Wall Street friends: they want to put Social Security on the chopping block to pay for their crimes (and bonuses). Anybody see a pattern here? It’s not the debt that threatens our future.?

So, ultimately this brings us back around to health care reform. The New York Times details the ?Cost of Doing Nothing in Health Care?:

?Hands off my health care,? goes one strain of populist sentiment. But what if?Suppose Congress and President Obama fail to overhaul the system now, or just tinker around the edges, or start over, as the Republicans propose ? despite the Democrats? latest and possibly last big push that began last week at a marathon televised forum in Washington. Then ?my health care? stays the same, right? Far from it, health policy analysts and economists of nearly every ideological persuasion agree. The unrelenting rise in medical costs is likely to wreak havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly. ?People think if we do nothing, we will have what we have now,? said Karen Davis, the president of the Commonwealth Fund, a nonprofit health care research group in New York. ?In fact, what we will have is a substantial deterioration in what we have.? Nearly every mainstream analysis calls for medical costs to continue to climb over the next decade, outpacing the growth in the overall economy and certainly increasing faster than the average paycheck. Those higher costs will translate into higher premiums, which will mean fewer individuals and businesses will be able to afford insurance coverage. More of everyone?s dollar will go to health care, and government programs like Medicare and Medicaid will struggle to find the money to operate.

So when someone tells you health care reform is bad for Medicare remember that without it, Medicare will face devastating reforms as budget cutters look for savings in federal spending even though system wide costs will continue to skyrocket unchecked.And when someone tells you Social Security is to blame for our deficits, remind them its American workers who fund Social Security NOT the federal government. In fact, the $2.5 trillion dollar surplusimproved our federal debt picture throughout the past decade of borrow and spend policies.