Entitlements

I'm old enough to remember the days before auto liability insurance was mandatory.  One of the biggest arguments for its passing was that it would bring down the cost of insurance for everyone.

Well, it didn't.

It made the cost go up.  Before, if you were high-risk, the insurance companies would reject you for coverage, or the expense would be so great that you couldn't afford it.  But then, by law, they had to cover everyone-- and everyone had to pay a piece for covering those high-risk motorists.

We're seeing this now with health care coverage.

Personally, I'm going to be taxed on my insurance, something like $2800 a year.  In effect, my insurance just went up by $230 a month, so that I could pay for insurance for someone that won't pay for it themselves.  I have a great insurance plan, granted; but it's part of my compensation package-- I earn it.

Let me step you through the cost-benefit analysis a little bit here.

From the AP:

Nearly 4 million Americans - the vast majority of them middle class - will have to pay a penalty if they don't get insurance when President Barack Obama's health care overhaul law kicks in, according to congressional estimates released Thursday.The penalties will average a little more than $1,000 apiece in 2016, the Congressional Budget Office said in a report. 

Now to the funny part:

Democrats argue that the requirement and the penalties are a necessary part of a massive overhaul designed to expand coverage to millions who now lack it. They point out that getting more Americans, especially young and healthy people, in the insurance pool will reduce costs for others and could lower premiums."The new law will make health insurance affordable for everyone and CBO's analysis confirms that the vast majority of uninsured Americans will find health care affordable and choose to participate," said White House spokesman Nick Papas. 

---snip---

By 2016, those who must get insurance but don't will be fined $695 or 2.5 percent of their household income, whichever is greater.

---snip---

About 3 million of those required to pay fines in 2016 will have incomes below $59,000 for individuals and $120,000 for families of four, according to the CBO projections. The other 900,000 people who must pay the fine will have higher incomes.

(emphasis mine)

One more time:

It's necessary to fine people, notably those that don't really need it so much, for not buying insurance, so that we can say that it costs less, because we just took their money without providing them a service.

That is to say, it's all about getting something for nothing.

Some people are going to get something while giving nothing, and others are going to give something while receiving nothing.  It's that Robin Hood effect.  Young people and healthy people simply do not pay enough for insurance.  The solution?  Rob them.

If you make less than $28,000 a year, you will have to pay only $695 for not having insurance; ie you receive nothing except a bill.  If you make more than that, there's no limit.

Also from the AP:

More Americans will be covered, but costs are also going up.

---snip---

"During 2010-2019, however, these [cost-cutting] effects would be outweighed by the increased costs associated with the expansions of health insurance coverage," wrote Richard S. Foster, Medicare's chief actuary. "Also, the longer-term viability of the Medicare ... reductions is doubtful."

Now, why was I thinking that anyway?  Something about driving around in my car....

This is something of a mystery to me:

Tax credits would help many middle-class households pay their premiums, while Medicaid would pick up more low-income people. Insurers would be required to accept all applicants, regardless of their health.

The fact of the matter is we already have tax credits for that.  You have to itemize (Schedule A) to take the credit; but the only reason people don't itemize is if they come out better for not doing it.  But now, we need some other kind of tax credit.

The biggest health care expense most young people will face is having a baby.  That can get expensive.

There used to be a way for people to do that without having to worry about the expense of it.  It's called "Join the military."

Same with making a college education available to everyone.  We already have a program for that.  It's called "Join the military."

This health care fiasco is just another rob-the-young redistributionist scheme to give people who contribute nothing more than they're worth.  If anything, I see it as a reason for young people to become more involved in the political process.  You're going to be paying quite a bit for all the entitlements that the boomers voted in for themselves (Clinton balanced the budget largely by doubling the social security deduction from your paycheck-- look forward to more of that).

It's really your call as to how many losers and bozos you want digging in your pockets.  But until you realize that you're getting robbed, not much to the good is going to happen. 

Y'know, there's a little mantra that exists about relationships, whispered between friends when they discuss their loves, their interests, their sex, whatever:

They're trying to control you.

You need out, man. You can't let her boss you around like that. You need to do what you want, when you want. You're in control of yo-sef. 

Girl, he's mistreatin' you again? And you're still with him? Don't you see he's got some kind of mind-control on you? The sex can't be that hot. He's tryin' to control you! 

Freedom, right? 

What "choice" have we predominately heard about when it comes to healthcare? Doctor choice? Clinic choice? Shot choice? No, pro-choice abortion. Ok? Your choice of deciding whether to have someone stick a probe up your uterus, suck your baby into a sink, or maybe syringe some saline solution to burn the baby out. If you're a guy, then it would apply to your choice of having your progeny decimated, it's brains squished and bloody body mangled enough to be poured into the same test tube you might use for donating your semen. Yeah, it's bad. Fight to keep your child alive.. or keep your boys safe to begin with. 

But, "choice." Because that "control" -- mind-control, sex control, intimidation control, whatever -- didn't allow you to choose to keep your legs shut or your penis in your pants in the first place. Because you didn't have a choice before conception, only after. 

Now it's come to light that someone actually admits that Obama's healthcare legislation is what conservatives knew all along: Control. Control over your medical choices.  Control over your medical decisions, what proponents of pro-choice  have argued against for decades: control over your body. 

A talk show host alludes to Democratic Representative Dingell:  if it's an emergency, if 18,000 people keep dying as a result of non-coverage, as dems proclaim, why are we waiting to implement socialized healthcare? Why over the course of years? Why not NOW? 

Dingell's response: we're not ready to control the people.

Oh, no. You're wrong, you say. They're not controlling our decisions. We can still choose our insurance and stuff. 

Nope. Guess who controls the insurance companies now. 

To you, I say this: leave him, honey. He isn't any good for you. If you think he's okay because he buys you trinkets, offers you a job, buys your dinner or pays your rent, it's all about control. Divorce yourself from the Progressive Movement and ditch Obama. 

Neither offer you your freedom.

You know the amazing accounting miracle of the health care reform bill,  where we can add a trillion dollars to federal spending and reduce the deficit.

Once again, if it sounds too good to be true, then it isn't.

Since the announcement that made Democrats 'giddy" we've ben treated to how this report isn;t worth the ink used on the paper. Forget the obvious dodge here, where the taxes kick immediately for ten years and the expensive part of the bill ony runs for six; we've got bigger fish to fry.

There seems to be a hard to justify $29 billion "plug number" in Medicaid reductions years from now.  

Unless the Democrats are really eager to hammer the medical community, it is assumed that they will forego a reduction in Medicare reimbursements...i.e. the "doc fix".  Remove this spurious budget reduction and there's about $208 billion in added costs; and this alone makes the bill in the red by $59 billion.. 

The Democrats have challenged the authenticity of a memo outlining this pretty little scam, but there's no doubt of the truth of the central allegation....the bill's true cost is being hidden so that in the midst of an era of trillion dollars deficits a fig leaf of fiscal responsibility is provided to the Blue Dogs.

I also suspect that one way the federal numbers were managed was to expand the unfunded Medicaid mandates on the states, therefore shifting expenses on their backs and imploding their already precarious budgetary situations. 

I'll leave to the likes of Megan McArdle and Keith Hennessey to find the other scams and gimmicks embedded in whatever bill Nancy Pelosi can cajole 216 votes for this evening. One message to deficit hawks. Tax increases and budget cuts deferred now for political expendiency now are highly likely to be deleted in the out years for political expendiency. But the left will defend the entitlement rules and expenditure levels.  Don't fall for the "Wimpy" approach.

I've seen documents like this before. It's like a sham appraisal used to get a subprime lender to approve a loan for more than what the property is really worth. It's like a Moody's rating on the MBS instruments secured by the bogus mortgages. It's a transparent "Made as Instructed" canard only Bernie Madoff could love.  Subsitute "Blue Dog" Congressman for "pension fund" and we now see a bogus deficit neutrality score is like a bogus investment grade rating. It justifies unwise investments.

Once upon a time there was an urgent matter for the national administration, which it sought to gain public and congressional support.  Supposedly the folks supposed to provide objective analysis were pressured into providing the evidence necessary to gain support for the policy agenda.

There were also allegations about memos and reports being "sexed up" to better sell the policy.

After we are years into the quagmire of expanding entitlements as the nation careens towards bankruptcy like a Toyota with a stuck accelerator, I suspect we will get some tell-all book about how the CBO budget process was manipulated.  I can;t wait to read the "CBO Street Memo"   Once upon a time even Ezra Klein complained about gimmicks.  I look forward to the meal of crow down the line.

 P.S. Last night on the House floor Ohio Democrat Rep. Ryan compared health care reform to Chevrolet.  Rep. Ryan is aware that General Motors went bankrupt, isn't he?    

Newt Gingrich and John C. Goodman list Ten GOP Health Ideas for Obama.  There's really too much to excerpt, so you'll have to read the whole thing for yourself.

My initial take: Some of these are very good ideas, some are less appealing.  But whatever their individual merits, it's hard to see an overarching "vision thing" in the proposals. It is tinkering.  Perhaps good tinkering, but it lacks a structural narrative that makes it easier to sell these as a package.

The GOP needs a much more comprehensive approach to entitlements in general, not just health care.  At this point, I think we need to do one of two things: Either....

• Government as a Last Resort - Government can insure everybody for any yearly expenses over 20% of annual income, which completely eliminates the problem of unbearable costs, both for consumers and for insurers (and which ought to dramatically lower insurance costs, since the potential risk is far smaller).   That shouldn't have a major distortive effect on the market, either, because most catastrophic costs tend to be things about which we can't/don't often make good cost/benefit calculations.  This would also eliminate the need for Medicare/Medicaid, since this would automatically cover people who have little/no income. While there are undoubtedly problems with this, it seems on the whole better than a system that gets government involved at much lower decision and cost levels.  Or...
• Government as a Safety Net - Restructure our entitlement system along the lines of what (if I recall correctly) Milton Friedman and Charles Murray have recommended: expand the EITC to cover basic costs of living on a means-tested basis, so we can predicate entitlements upon actual need, rather than blanket distribution.

In either case, I think you have a pretty strong, compelling message: Government should provide a safety net, not a straitjacket.  We are not going to let people fail completely, but safety nets should not catch people who do not fall.

These options would allow Republicans to strengthen the safety net for people who genuinely need it, while making the program more sustainable by removing the "safety net" for people who don't actually need one.  Importantly, this would also eliminate the "third rail" problem of entitlements, and we could actually begin making better cost/benefit decisions about them.

Paul Krugman's commentary from 2003, when the deficit was $374 billion.

It has been obvious all along, if you were willing to see it, that the administration's claims to fiscal responsibility have rested on thoroughly cooked books. [...] There's no mystery about why the administration's budget projections have borne so little resemblance to reality: realistic budget numbers would have undermined the case for tax cuts [2009: spending increases & new programs]. So budget analysts were pressured to high-ball estimates of future revenues and low-ball estimates of future expenditures ...

Furthermore, this time huge deficits have emerged [2009: increased] just a few years before the baby boomers start retiring and placing huge demands on Social Security and Medicare. ...

But haven't administration officials said they'll cut the deficit in half by 2008 [2009: 2013]? Yeah, right. I could explain in detail why that claim is nonsense, but in any case, why bother with what these people say? ...

The last defense of the budget deficit is that it helps a depressed economy — to which the answer is "yes, but." ...  And yes, deficits are appropriate as a temporary measure when the economy is depressed — but these deficits aren't temporary ...

Still, do deficits matter? Some economists worry, with good reason, about their long-run effect on economic growth. But I worry most about America's fiscal credibility.

You see, a government that has a reputation for sound finance and honest budgets can get away with running temporary deficits; if it lacks such a reputation, it can't. Right now the U.S. government is running deficits bigger [2009: much, much bigger], as a share of G.D.P., than those that plunged Argentina into crisis. The reason we don't face a comparable crisis is that markets, extrapolating from our responsible past, trust us to get our house in order.

But Mr. Bush [2009: Mr. Obama] shows no inclination to deal with the budget deficit. On the contrary, his administration continues to fudge the numbers and push for ever more tax cuts [2009: spending increases & new programs]. Eventually, markets will notice. And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush [2009: Mr. Obama] will pass along to other Congresses, other presidents and other generations.

The 2009 deficit is estimated to be $1.7 trillion.  So take Krugman's 2003 criticisms and multiply them by 4.5.  And the long-run deficits are much, much worse, too.

Now, there are legitimate - if unproven - economic arguments that, in the absence of many monetary options, rapid and very temporary fiscal stimulus/deficit spending can be beneficial in reducing the deadweight loss of a potential output shortfall.  But these are not temporary deficits. 

• They are structural - even under the administration's absurdly optimistic economic assumptions, the deficits remain very large. Under the CBO's economic assumptions (pdf), they never go below $658 billion.
• They are permanent - CBO estimates the 2019 deficit at over $1 Trillion (pdf).
• They are driven by entitlements - Entitlements currently amount to about 45% of the federal budget, and that percentage increases dramatically in coming decades.  Yet Obama wants to dramatically expand entitlement spending (e.g., health care).

Republicans irresponsibly ran up enormous deficits during the Bush administration.  Democrats are now doubling down on the disaster.   Republicans and Democrats have played a game of chicken with tax cuts and spending in recent decades.  That's been a major strategic mistake.  Democrats have the advantage, because the majority of long term spending is structural.  When the bill comes due, taxes or inflation will rise dramatically.  For everybody.  At all income levels. There's simply no way around it.

"There are some things we have to do at home to get our house in order. No. 1 is we shouldn't be running up budget deficits." - Barack Obama - May 2006