Posted on 06/22/2003 11:46:04 AM PDT by The Old Hoosier
Are We All Socialists Now?
Franklin Roosevelt and Lyndon Johnson would be proud of what the Republicans who run the federal government are doing now: They are planning to add a massive new element to the welfare state.
Cheered on by President Bush, the Republican Senate is poised to approve a bill adding a prescription drug benefit to the already bankrupt Medicare program. So far, there is no organized resistance to the plan in the Republican House.
This new entitlement is politically shortsighted, pandering to forces that could eventually smother the Republican Party. But worse, it is fiscally and morally indefensible.
In the short run, Republicans figure it will help them in the 2004 elections—particularly in the pivotal state of Florida, which George W. Bush barely won in 2000, and which has a large elderly population. In the middle run, however, the GOP may pay a great price for it at the polls. And, in the long run, it could help precipitate an economic and social crisis unequaled since the Great Depression.
A Fiscal Joke
As the Senate Finance Committee describes it, this benefit will give all 40 million Americans currently eligible for Medicare huge annual subsidies to buy drugs. For a nominal monthly premium of $35, a recipient gets a drug insurance plan with a $275 annual deductible. Between $275 and $4,500, taxpayers will cover 50% of the cost of all drugs that a Medicare recipient purchases.
Above $4,500, the benefit lapses until a recipient has paid a total of $3,700 for drugs out-of-pocket (equal to $5,873 in total drug purchases). From there on, taxpayers will pay 90% of a recipient’s drug costs.
Congressional Republicans estimate this will cost $400 billion over 10 years. The estimate is a joke.
"Since the program is an entitlement, there is no fixed budget," writes analyst Stuart Butler of the Heritage Foundation. "Moreover, the evidence from both private and public sectors in recent years suggests that future costs are likely to exceed projections. But even if they are accurate, it is not the next 10 years that matter. It is the years after that, when the full force of the Baby Boom generation hits Medicare and Social Security. Within 15 years Medicare already faces a Niagara of red ink. Adding a drug benefit without serious reforms and constraints on future spending means massive tax burdens on generations to come." Butler may be optimistic.
Medicare is already in the red—even if the government sometimes tries to hide this fact with smoke-and-mirrors accounting gimmicks worthy of Enron. In April 9 testimony before the House Subcommittee on Health, Richard S. Foster, chief actuary of the Centers for Medicare and Medicaid Services (which runs Medicare), stated the program’s bottom line for fiscal 2003. "Medicare, overall," he said, "is . . . projected to draw a net amount of $87.7 billion from the budget."
Fiscal Armageddon
Over the horizon looms fiscal Armageddon.
The two major elements of Medicare are Hospital Insurance (HI, or Part A) and Supplementary Medical Insurance (SMI, or Part B). HI is underwritten by a 1.45% payroll tax paid by all employees and employers (2.9% for the self-employed). By statute, SMI recipients are supposed to pay an annual premium set at 25% of its cost, with taxpayers picking up the other 75%. There are now fewer than four workers per Medicare recipient paying the taxes to cover these costs. By 2030 there will be only 2.3 workers per recipient. (For more info, click here.)
When Social Security and Medicaid (federally subsidized health care for the poor) are added into the fiscal equation for tomorrow’s welfare state it becomes obvious there is no realistic prospect for sustaining that welfare state—even without a prescription drug benefit—unless the government is willing to tax middle-aged working people into poverty.
On July 25, 2001, U.S. Comptroller General David Walker spelled out the problem for the House Budget Committee. "Taken together, the two major government health programs—Medicare and Medicaid—represent an unsustainable burden on future generations," said Walker.
"Assuming, for example, that Congress and the President adhere to the often-stated goal of saving the Social Security surpluses, our long-term simulations show a world by 2030 in which Social Security, Medicare and Medicaid absorb most of the available revenues within the federal budget," he said.
"Absent changes in the structure of Medicare and Social Security," he predicted, "sometime during the 2040s government would do nothing but mail checks to the elderly and their health care providers."
Between then and now, Republicans would find themselves perpetually out-bid by Democrats in their mutual efforts to pander to retired Baby Boomers who had been tutored by government to depend on government.
America would become a socialist country—with an increasingly aggrieved and impoverished bloc of people struggling to pay the taxes to cover the Social Security, drug bills and other medical costs of other people’s grandparents.
Conservatives believe freedom is a moral imperative—for old and young alike. Bloating the welfare state today with a new prescription drug benefit will diminish American freedom now, and could help extinguish it in the future. Republicans who call themselves conservatives should fight the plan, not help push it through.
The whole income/payroll tax scheme doesn't work, obviously.
There is a more stable, broader base that is better for funding MC/SS.
A national retail sales tax would collect from everyone, not just wage earners. It would collect from illegals, every time they spend. It would collect from drug dealers, every time they spend. And, most importantly, IMO, is that all imports would pay the tax too.
For a quick rundown of a national retail sales tax, already in Congress with 32 cosponsors, look here.
Add that the IRS would go away, and it's kewl!
Didn't you pay attention in the US History Class when they taught you that The United States has a Government of the people, by the people and for the people"?
Even less than really astute people should be able to figure out that when a majority of Americans want something, their public servants will enact it. Did it ever dawn on you why they are called Public Servants and not Public Rulers? I didn't think so.
Let me give you a clue about how our system works. When a majority of the American voters want something, politicians run for office promising to do it. Then when they get in office they do it. When a significant minority of voters want something politicians promise to do it... But when they get elected they don't do it.
What you want to happen will never happen because you are looking for a politician that will promise to do what you want. If a majority does not want it done, then they will promise you and break that promise.
Here is how you get things done.
First you convince a substantial majority of American voters to your views... That is it. Then just sit back and watch it happen.
I hardly think so. One and all can have an anyerism over Dubya's spending plans when in effect his spending is one he!! of a government spending cut! He is performing fabulously in respect to making sure another liberal democrat does not get re-elected. We have got a tax cut and at the same time a military spending increase. Both of which are formitable conservative concerns. If Dubya' goes for broke and cuts across the board he is assured of being a 1 term President. My way of looking at it is his increase in spending on these programs are a cost factor in doing business to cut government spending. After all if he loses the election I can guarantee massive spending that will put to shame what Dubya' has on the table for spending and massive tax increases to pay for it, on top of it, which has been professed by ALL the Democratic runners as a platform for election.
I hardly think that ANYBODY feels that if Algore got elected that we would be better off today. These changes take time and if Dubya' changes things overnite, the shock to the population would prevent his re-election.
Sir Alex Fraser Tytler (1742-1813). Scottish jurist and historian:
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury.
From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship
These days it seems to come down to the lesser of two evils- Dems who will go full-speed growing the government and stealing our money, or the Republicans who will do the same thing but not as quickly. I'm going to abandon the party just yet- I understand that in politics you never get everything you want- but this is getting rediculous. The Constitution party is looking better and better.
The Old Hoosier: You seem to be the quintessential ignorant left-winger, who thinks our Constitution doesn't make any difference.
Oooh, this oughtta be good. I'm going to get some popcorn...
I don't think so either. But that doesn't mean we should start creating huge, new entitlement programs that will dramatically increase spending and require new taxes down the line.
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