GOP freshman unconvinced on Geithner's debt ceiling timetable

You don’t think it’s a little misleading to show $793B in combined Medicare and Medicaid, but not show that only $460B of it is actually Medicare (http://www.socialsecurity.gov/OACT/TRSUM/index.html) and therefor the other $333B is pure welfare ?

They are both welfare, wealth redistribution schemes. The revenue collected to pay for Medicare is not enough to pay for the benefits. By law, 75% of the benefits for Parts B and D come from the General Fund. Medicare represents an unfunded liability of $38 trillion.

Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs. However, the aging population and rising health care costs will cause SMI costs to grow rapidly from 1.9 percent of GDP in 2010 to approximately 3.4 percent of GDP in 2035 and approximately 4.1 percent of GDP by 2085. Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries. Small amounts of SMI financing are received from special payments by States and from fees on manufacturers and importers of brand-name prescription drugs.

The states pay about 50% of the Medicaid costs. Medicaid represents about 22% of state budgets--this includes the federal share.

See, I think it’s important. When people say “let’s eliminate all welfare programs”, Medicaid represents $333B that can be cut immediately, while Medicare can only be tweaked over a number of years.

Medicaid includes the CHIPS program. 7% of Medicaid recipients also receive Medicare. They are the most indigent and poor among us, most folks in nursuing homes and with serious disabilities. The idea that there is the political will in this country to cut all federal funding for Medicaid is laughable. It is not realistic. And Obamacare adds another 18 million to the Medicaid rolls.

From your charts, I can’t tell how much is spent on HUD, FoodStamps, TANF, Crop Subsidies, Flood Insurance, and all the other programs for freeloaders.

The other mandatories include the 44 million on food stamps, unemployment benefits, etc. HUD is the discretion part along with almost all government departments and agencies including NSA, the CIA, State Department, etc. And although the chart shows DOD separately, that is also discretionary.

also can’t tell how much of the $689B for DOD is for current and retired troops — which I think should be inviolable — and how much is for bases in South Korea, Japan, Philipines, Germany, etc. — which I might opt to close unless the host country is willing to pay their costs. I seem to remember Glenn Beck coming up with $300B in DOD cuts and I’d like to see all the numbers to see how many I’d agree with.,

Operation and Maintenance--$283.3 billion; Military Personnel--$154.2 billion; Procurement--$140.1 billion; Research, Development, Testing & Evaluation--$79.1 billion; Military Construction--$23.9 billion; Family Housing--$3.1 billion;

Note: The countries where we have our biggest and most numeous bases already pay us cost offsets as part of burden sharing agreements. We can always try to up those amounts.The Japanese pay us about $2 billion a year. Japan agreed to absorb 100 percent of the cost of Japanese nationals employed at U.S. military facilities and to pay for all utilities supplied to U.S. bases, to increase the amount of military and family housing construction that it is providing to support U.S. forces, to continue to provide facilities at no charge to the United States and to waive taxes and fees that might otherwise apply to U.S. activities.

You see, without the details I don’t buy the “it can’t be done all in one year” argument. Any serious attempt to eliminate the deficit needs the line items involved. Pretending the budget only has SIX categories of spending and labeling them “Mandatory”,”SS”,”Medicare”, etc. is a ploy to shut down discussion of cutting.

You see, the details are not necessary to grasp the big picture and my point that we can't balance our budget in one year. To set unrealistic goals is not a good strategy. And if you try to take a meat ax to the budget by cutting all of Medicaid for instance, there will be no political support to take such actions. By 2030, one in five residents of this country will be 65 or older--twice what it is now. There will be two workers for every retiree. The entitlement programs are the drivers of our debt and will increasingly do so as our society ages. Unless we reform Medicare and SS, both unsustainable as currently structured, we will go bankrupt.

Good question on where I would cut spending. Here is $1.2 Trillion:

Eliminate Dept of Labor, Dept of Education, Dept of Commerce, US Postal Service subsidy, National & Community Service (primarily Americorps), Small Business Administration, Department of Energy, National Science Foundation, EPA, HUD, Department of Agriculture, Department of HHS discretionary spending. Totals $598.2 billion.

Cut the following by 10% - Medicare, Army Corps of Engineers, Medicaid, Social Security, Dept of Interior, NASA. Saving of $154.3 billion. If the Medicare, Medicaid and Social Security savings cannot be realized through efficiencies and administrative headcount reduction, cut benefits.

I would cut defense by $300 billion from roughly $700 billion to $400 billion. This will take us to the 2004 level, excluding spending at the time for the Iraq and Afghanistan wars. To realize the spending reduction I would pull our troops out of Afghanistan, Iraq, South Korea, Germany, Okinawa, and most other “legacy” foreign bases. Let the rest of the world deal with their own problems. I would also cut the DOD civilian bureaucracy by 20-25% as well as a significant amount of contract services and reduce the bloated senior and general officer ranks.

I would cut Homeland Security by 20%. The remaining departments - Treasury, State and Justice would get cuts of 50 to 80% eliminating most program. The Postal Service and Amtrak subsidies would also be eliminate.

Eliminate $108 billion contribution to the International Monetary Fund.

My cuts total $1.2 Trillion of the $1.3 trillion needed. To bring the budget to surplus I would do the following:

1) Apply a 10% tariff surcharge to all imports of goods. Such a tariff would raise close to $200 billion (10% of $1.935 trillion).
2) Privatize through IPO’s - TVA, US Postal Service, Amtrak, REA, General Motors, AIG, Fannie Mae, Freddie Mack, and other off budget or on budget agencies involved in activities that could be performed by the private sector. Return management of student loans to the private sector as well as all default risk.
3) Privatize and fund through user fees functions currently performed by the government such as air traffic control and airport security. Assess $10 fee on every non-citizen entering the US (many countries do this) when passing through immigration to partially offset the cost of the immigration service. Assess a $1000 fee on every container offloaded in a US port to partially offset the cost of the Customs Service, the Coast Guard, and other costs the federal government incurs with respect to maintaining harbors and waterways. Charge admission to all parks, recreation areas, and museums including the Smithsonian. Anywhere costs can be directly tracked back to users, assess user fees to defray the costs.
4) Eliminate all “cost of living” raises for federal employees including the military, Congress, and the President. Require a Congressional vote for any cost of living raise for federal employees and limit it to no more than the percentage of average annual wage increase in the private sector for the preceding year.
5) Eliminate all defined benefit pension plans for federal employees, replacing them with defined benefit plans.
6) Aggressively attack Social Security fraud, particularly in the area of disability payments.
7) Institute a flat income tax with no deductions or credits.
8) Lower corporate income tax to 20% and eliminate all special deductions and credits. Offset any revenue loss with higher tariffs.
9) Cut $4.5 billion annual cost of running Congress in half.
10) Exit the United Nations, NATO, World Bank, IMF, and other international agencies.

WRT Medicaid vs. Medicare: “They are both welfare, wealth redistribution schemes.”

And yet, one is an entitlement and the other is pure welfare. What do I mean ? Although Medicare doesn’t pay back according to what any individual contributed, people feel entitled to it because they DID contribute to it to some degree. Just as with SS, people feel they paid in and are therefor entitled to the benefit while it is government mismanagement and hence government’s problem to provide what was promised. Contrast this to Medicaid where the recipients contributed nothing. The political will does not exist to cut Medicare benefits because it is a true entitlement, but that is not true for Medicaid where nobody paid into it and nobody is entitled to anything from it. If you were to list out every line item in the budget and ask the people to prioritize them with the understanding that the items beyond the actual tax revenue for the previous year would simply be eliminated, Medicaid, Foodstamps, Foreign Aid, etc. would be at the bottom of the list and be eliminated by default.

We have to insist that people see the separate parts so they can make the distinction between welfare and entitlements. Lumping them together lends legitimacy to welfare programs that a majority of Americans would dump if they were asked to prioritize all expenses.

The political will does not exist to cut Medicare benefits because it is a true entitlement,

That's a real problem because Medicare is bankrupting us. It represents an unfunded liability of $38 trillion. If we don't cut benefits, Medicare will consume our entire budget and take the country down with it. FYI: Obamacare took $500 billion from Medicare and reduced drastically the Medicare Advantage program. That is a reduction in benefits.

The political will does not exist to cut Medicare benefits because it is a true entitlement, but that is not true for Medicaid where nobody paid into it and nobody is entitled to anything from it.

There are 60 million people receiving Medicaid benefits. This includes the Children's Health Insurance Program (CHIPS)which has over 5 million enrollees. 33% of Medicaid expenditures are on long term care, i.e., nursing facilities, intermediate care facilities for the mentally retarded, mental health, home health services, and personal care support services.

You may want to abolish all of Medicaid, but I doubt you would get much support by tossing the elderly out of nursing homes or fail to provide children with adequate health care. There is no doubt that these programs have been expanded beyond what we can afford and what is necessary, but there is no way we are going to remove this safety net entirely. Robert Rector of the Heritage Foundation told me that 60% of all births in this country are funded thru Medicaid. I bet a lot of them are the 300,000 to 400,000 anchor babies born each year to illegal aliens.

I disagree. We need to disabuse people of the notion that there are entitlements. These programs are not sacrosanct. They can't continue to grow and expand if we can't afford them. SS is a Ponzi scheme. We should get the government out of the business of providing directly pensions and health care. Medicaid should be treated similar to what Ryan wants to do with Medicare. 40% of doctors don't even accept Medicaid patients because the reimbursement rates are so low and are not keeping up with costs. 12% of doctors don't accept Medicare patients for the same reason. Obamacare will add 18 million to the Medicaid rolls.

If you want to really get your hair to stand on end, read this testimony by Robert Rector on Means-tested welfare. Rector authored a major report on this issue as well.

Separating Medicaid from Medicare is the first step to identifying which spending can be eliminated immediately vs. phasing out. Trying to cut 33% from that single slice in your pie chart will go nowhere politically, but reassuring people that Medicare reform is a long-term project while Medicaid can be restructured for an immediate $200B in savings will have plenty of support.

“We need to disabuse people of the notion that there are entitlements. These programs are not sacrosanct.”

I realize the SCOTUS has ruled that contributors have no property rights to SS, but I disagree with that ruling. When contributors are promised something specific by the government in exchange for taxes, we need to identify why the promises can’t be kept and how close we can come, rather than simply hanging the contributors out to dry.

“They can’t continue to grow and expand if we can’t afford them. SS is a Ponzi scheme. We should get the government out of the business of providing directly pensions and health care.”

I agree that SS is a Ponzi scheme, of course. But remember that when a Ponzi scheme is prosecuted, the perpetrator is forced to make restitution to the best of their ability. So what does that mean when the perpetrator is the US government ? In effect, the taxpayers ? SS benefits will have to be cut, but it will have to be phased out over DECADES and restitution made to the best of the government’s ability.

Saying the government should use future taxes to pay for welfare or Medicaid or should means-test my SS benefit so it can default on its obligation to me is ridiculous.

With all due respect, whether you agree or disagree about the decision rendered in Flemming vs. Nestor that entitlement to Social Security benefits is not contractual right, it is the law of the land. Your contributions don't belong to you and Congress can change the rules of SS anytime it wants.

SS benefits will have to be cut, but it will have to be phased out over DECADES and restitution made to the best of the government’s ability.

Not so. Congress can change the rules and amount of benefits at any time. When I joined SS, the age for full benefits was 65. In 1983 it was changed to 67. There will be no restitution.

Saying the government should use future taxes to pay for welfare or Medicaid or should means-test my SS benefit so it can default on its obligation to me is ridiculous.

That is the reality. The government can do whatever it wants. Did you know that the government is already means-testing Medicare premiums for Parts B and D? Do you know that the way SS benefits are computed is weighted to give lower income earners higher pensions? SS is a wealth redistribution scheme. There is no cap on the Medicare portion of the payroll tax.

I hope you read the link I provided you on means-tested welfare.

Some more grist for the mill on those "entitlement programs."

U.S. funding for future promises lags by trillions

"The federal government's financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows."

"The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.

Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.

The $61.6 trillion in unfunded obligations amounts to $534,000 per household. That's more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises

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