Thursday, July 28, 2011

National Debt: A Simple Solution

The debt limit issue is not a crisis, and resolving it still leaves us increasing the national debt by $15 trillion over the next decade.  We have problems, but the debt ceiling is the least of them.

A little snarky perspective is in order...
Was 2007 the Dark Ages? Was Grandma forced to make soup out of dewdrops and moss? Were our soldiers sent into battle with spitballs and slingshots? Were scientists and researchers shaking tin cups in doorways? Were our 18-year-olds unable to scrape together enough loans to attend our finest universities so they could prepare for a dynamic global job market by sharpening their Beer Pong and sexting skills? (Forbes - Kyle Smith)
He goes on to explain how what we are facing is nothing compared to Greece's calamity.  They are spending 50% of GDP.  Here in America...
Federal spending has averaged 20.2% over the past half-century. As recently as 2007, the last year before the (permanent?) state of emergency began, federal spending was 20% of GDP. And that takes into account the huge increases in spending on homeland security, not to mention Iraqland and Afghanistanland security. In 2011, spending is suddenly 24% of GDP. In a quarter of a century, that figure will be 33.9% of GDP if something isn’t done to alter the trend line.
So compared to Greece, our travails are a piffle.  Trim annual spending to 18% of GDP and our financial situation is stabilized.  Cut an extra 1-2 % off and we're now starting to fill in that deep hole we've been digging for over 180 years now.

The solutions are so obvious even a politician can see it...
Indeed, they are so obvious even the politicians are aware of what they are: turn Medicaid into block grants for states, reorganize Medicare as a subsidy for well-regulated private insurers along the lines of the Paul Ryan plan, raise the qualifying age for Medicare and Social Security and means-test the latter to return it to its roots as a cure for elderly poverty instead of a checkbook-abusing free-for-all.
 As a bonus, stop giving money to fetid foreign sewers full of bug-eyed screamers who hate us, and declare a moratorium on foreign military adventures and global community organizing.

Teach Government to Live on 18% of GDP
History suggests that Americans have a settled notion of what the federal government is worth: about 18% of GDP. Why should shopping for public services be any different than shopping for groceries? We Americans know what we can afford.
People like Ducky perform the useful task of reminding us it's not just income tax.  There's also payroll taxes, state, city, county and local taxes, not to mention business taxes.  Who can calculate the final horrible total that is sucked into the voracious bureaucratic beast's insatiable maw?

And I don't trust the bond market people either.  The US goose is laying golden eggs for them and these rent-seekers need that goose to stay healthy, and in debt.  If the US cleaned up it's debt and only engaged in current account-type borrowing, that would be a huge blow to the global debt markets.

Once the curtain descends on the latest DC kabuki, a good reporter would ask the president how long he thinks the US can continue to borrow $1.5 trillion per annum.  Don't hold your breath.

Kyle Smith - Debt Ceiling Panic Button 
Heritage Foundation - Balanced Budget Amendment
Mark Zandi - How to Cut the Deficit


Mark Adams said...

One last hurdle would be to get Washington off its spending binge. We all know what it takes, but Washington thinks they know best.

Anonymous said...

The only thing I disagree with is the block grants for Medicaid.

Now before I get flamed, hear me out. I think there's a better alternative, and that would be the capitated program.

For those that aren't familiar with it, the capitated program is much like a block grant but a bit different. The idea is that hospitals are told that they have a set amount of money every year for Medicaid. If they go over that amount, they WILL be covered, *however* if they spend UNDER the limit then they get to keep whatever it is they didn't spend.

This has worked wonders for hospitals here in Columbus, as the doctors are practicing medidince much more efficiently in order to create real savings and actually MAKE MONEY off of Medicaid, and all that extra money goes to improving the hospital itself. At Nationwide Children's Hospital, patient care has gone up exponentially ever since they started doing the capitated program.

All that aside, defaulting on our loans is a pretty big deal. No one wants to see interest rates get any higher at a time when people are already strapped.

Always On Watch said...

What kind of benefits do immigrant asylees receive from the federal government? Just asking.

Bd said...

I know, disband the GOP. Every GOP administration has left us with massive deficits for Democrats to clean up!

Silverfiddle said...

Jack: No disagreement. My point is that the federal government has no business in health care.

States should be free to try capitation, private insurance, government control, whatever works for that part of the country.

Get the federal government out of it.

Silverfiddle said...

Bd: If you hate the GOP debt, you must completely detest Obama, since he's racked up more debt than all republican president combined, and only in his first three years.

Anonymous said...

"Why should shopping for public services be any different than shopping for groceries? We Americans know what we can afford."

The simple answer to that is Government has no competition.

In most things we have a choice. If you don't like Ford, you can switch to Toyota, or Hundai. If you can't afford a Cadillac, you probably can buy a Volkswagen. If you don't like one pharmacy, there are usually several others nearby you can try. The same is true of doctors, undertakers, furniture stores, food markets, etc. But you are pretty much stuck with whatever government you have, unless by some miracle you can get enough like-minded people together to vote them out of power.

"I place economy among the first and most important virtues, and public debt as the greatest danger to be feared."

~ Thomas Jefferson (1743-1826)

"He that goes a-borrowing goes a-sorrowing."

~ Benjamin Franklin (1706-1790)

"The ultimate result of shielding men from the effects of folly is to fill the world with fools."

~ John Tyndall (1820-1893)

It's pretty obvious we have become a nation of fools. If that were not true, we wouldn't put up with the stuff and nonsense that goes on in Washington, DC -- and from the Mayor and Council in most every city and town in the land.

I don't have the math, but I imagine if every item we buy from our houses down to our groceries were stripped of taxation at every level, we as individuals would all be one hell of a lot better off financially than we are now.

Someday we ought to discuss the positive aspects of government. What do we really need it for? If it were up to me, building and maintaining infrastructure (roads, bridges, tunnels, sewers) and defense would be about it. I used to believe in public education, but it's proved itself to be a hugely expensive flop.

~ FreeThinke

Z said...

SF: such a good point about "GOP DEBT"......good luck getting some people to understand.

Jack, that seems like it could lead to panels deciding people don't need help because the hospital might lose money if they go over the limit? Has that been discussed there at all?

Anonymous said...

I could live with what you are saying although I think i would prefer fixing a debt target rather than a spending target.

Silverfiddle said...

Conservativesonfire: I think we're saying the same thing.

Basically, the federal government needs to work like most states do. GDP is X, we collect 18% of that, figure out what that amount is, and make sure your budget is under that amount.

Anonymous said...

I've been stealing money from people and giving it to my friends so they'll think I'm special, but I've promised too many of my friends other people's money, so I've been borrowing from loan sharks to cover the amount I couldn't pay with money that I stole from the people that worked hard and made good decisions to earn it.

Now, I owe the loan sharks a bunch of money, and I keep promising more of my friends more of other people's money. If I don't do something about it, the loan sharks will come for me and my friends won't think I'm special anymore.

Hey, I've got a great idea! I'll solve this problem by borrowing more money from the loan sharks and finding new ways to steal from people! The people I don't steal from will like that, so they'll think I'm special too, and I can keep promising more of my friends more of other people's money, and they'll think I'm even more specialer than before!

Then I'll fly away on a winged unicorn, to a world of rainbows and gumdrops, where I can dance and prance forever with my fairy friends.

Most Rev. Gregori said...

We could save a lot of money and get the government out of our daily lives by abolishing ALL unconstitutional Federal Departments, i.e., Department of Education, Department Health and Human Services, Dept. of Agriculture, etc. We must also abolish all unconstitutional rules, laws, regulations and statutes, such as all "special victims laws", all of the Federal gun control laws pertaining to gun ownership by private citizens.

Ducky's here said...

Why are the unconstitutional?

I don't understand why you whiners don't band together an petition the court on the matter. There are plenty of right wing loon lawyers who would take the case but for it's being doomed to failure but you can probably find the odd true believer.

You want the agencies abolished, put up or shut up.

Ducky's here said...

Block grants to private insurers.

Medicare has an administrative cost that is rough;y 15% of private insurance but you want to pee more down the drain by contributing more to private insurance overhead which does nothing for health care delivery.

Country Thinker said...

As things stand, 18% of GDP won't cover SS, M/M and interest in a decade or so, meaning all other government spending would wave to be eliminated (e.g., defense, federal courts, etc.).

I point that out solely to underscore the severity of our entitlement problem. They were poorly designed and poorly implemented, but how to clean up the mess will be a poltical nightmare.

Anonymous said...

My simple response to any government at any level - SSMM!

Stop Spending My Money!

~ Will

Anonymous said...

"Medicare has an administrative cost that is roughly 15% of private insurance but you want to pee more down the drain by contributing more to private insurance overhead which does nothing for health care delivery."

Ducky, I'd like to know where you get your figures? The DNC, perhaps, or maybe the GAO? Or maybe The Daily Worker, Michael Moore? Truthout, The Nation, the Daily Kos,, The Huffington Post, The New Yorker Magazine, The Atlantic, Greg Pallast?

It never ceases to amaze me how Marxists, and other social activists, applecart upsetters and rude iconoclasts seem to have one set of facts, while those who oppose them have another.

"Facts are ventriloquists’ dummies. Sitting on a wise man’s knee they may be made to utter words of wisdom; elsewhere, they say nothing, or talk nonsense, or indulge in sheer diabolism."

~ Aldous Huxley (1894–1963) - attributed

In my lifetime I have witnessed the birth of the health insurance industry. Blue Cross was the first, and its cost was negligible. It has only been since the institution of Medicare that healthcare costs have been rising exponentially every single year for nearly half a century.

If anyone can show there is no direct correlation between the establishment of Medicare and the terrifying rise in private insurance rates, let him please step forward.

As government has laid more and more regulations and restrictions on doctors, hospitals and laboratories, the amount of paperwork generated entirely by government ALONE has driven up costs astonishingly.

"Get government off our backs, and walking by our sides," as Reagan said, and we might begin to see daylight. There can be no doubt that the Progressives created a monster that threatens to chew us up and spit us out.

It doesn't matter anymore whether their intentions were good or bad. In a world ultimately ruled by Pragmatism RESULTS ARE ALL THAT COUNT.

~ FreeThinke

Silverfiddle said...

FreeThinke: That Huxley quote is from one of my favorite books, Time Must Have a Stop.

Quite Apropos!

Silverfiddle said...

Ducky: Thank you for trotting out a tired socialist talking point that you no doubt hear on MSNBC, and you believed it because it came from Rachel Madow and she was wearing eyeglasses and doing her best Walter Krankenhaus imitation.

Your talking point is bogus

QandO explains it best, with help from John Stossel:

But here’s the catch: because Medicare is devoted to serving a population that is elderly, and therefore in need of greater levels of medical care, it generates significantly higher expenditures than private insurance plans, thus making administrative costs smaller as a percentage of total costs.

Furthermore, Book notes that private insurers have a number of additional expenditures which fall into the category of “administrative costs” (like state health insurance premium taxes of 2-4%, marketing costs, etc) that Medicare does not have...

But, as you might expect, when you compare administrative costs on a per-person basis, Medicare is dramatically less efficient than private insurance plans. As you can see here, between 2001-2005, Medicare’s administrative costs on a per-person basis were 24.8% higher, on average, than private insurers.

Source: QandO

I love exposing liberal lies and propaganda. Thanks Ducky! Toss us some more softballs!

Anonymous said...

Don't know how you and Finn and Hugh have gotten yourselves in touch with and on top of so much factual data, SilverFiddle, but I'm grateful for the obvious effort the three of you have made.

It's a tremendous help to have one's perceptions and intuitions bolstered by specific references. I'm afraid I rely too much on anecdotal evidence and long years of watching us go merrily down the drain.

Intuition, however, is not to be despised as long as it comes from within and is not merely an echo of someone else's "talking points."

~ FreeThinke

Anonymous said...

This just in from Comedy Central:

Overheard in the Cockpit of Obama's private jet while Barry, Michelle and Oprah were traveling together recently:

Obama looked at Oprah, chuckled and said, 'You know, I could throw a $1,000 bill out of the window right now and make somebody very happy."

Oprah shrugged her shoulders and replied, 'I could throw ten $100 bills out of the window and make ten people very happy."

Michelle added, 'That's not much, I could throw one hundred $10 bills out of the window and make a hundred people very happy."

Hearing their exchange, the pilot rolled his eyes and said to his co-pilot, "Listen to those friggin' big-shots back there! I could throw all three of them out the window and make 256-million people very happy."

~ Submitted by FreeThinke

Finntann said...

In the immortal words of Sergeant Major Dan Daly:

"Come on, you sons of bitches! Do you want to live forever?"

The answer to that question sums up the problem with medical care today, because the answer is yes.

The debt incurred by Medicare, Medicaid, and the reason for exhorbitantly high insurance costs is the direct result of not wanting to give up the ghost, and has positively nothing to do with routine medical or comfort care.

Might sound harsh, but think about it.

A sixty-eight year old man diagnosed with brain cancer will expend all available resources, his and the governments to grab at any chance of an additional year or two. He might live six months, he might live six's a gamble, but he will make that bet.

When once we used to go willingly into that good night, today we must be dragged kicking and screaming to the brink.

My sixty year old sister died of breast cancer a year ago after spending all her money and a good chunk of the governments fighting it for about nine months, in the end she wished she had just spent all her money touring Europe, which she had done often.

Perhaps we have heeded Dylan Thomas' words to closely:

Do not go gentle into that good night, Old age should burn and rage at close of day; Rage, rage against the dying of the light.

Dia dhuit!

Finntann said...
This comment has been removed by the author.
Ducky's here said...

Furthermore, Book notes that private insurers have a number of additional expenditures which fall into the category of “administrative costs” (like state health insurance premium taxes of 2-4%, marketing costs, etc) that Medicare does not have...


That's right, so go to single payer and reduce costs. Works in other nations.

When private insurer profits (which accomplish nothing) approach the level of Medicare administration then you have a serious inefficiency. Private insures suck up nearly 20% of the premium dollar in all forms of overhead but that's okay. If they had to administer more cases it would be cheaper. Fact is we win if you recover most of that 20%.

Ducky's here said...

Administrative costs are customarily expressed as a percentage of total costs, that total being the sum of administrative costs and health benefit claims paid. In the case of Medicare, the cost to the Centers for Medicare and Medicaid Services (CMS) of operating the Medicare program has ranged in recent years from 2.8 to 3.4 percent; adding in costs incurred by other government agencies in support of Medicare brings the total to a range of 5.7--6.4 percent.


That's from the Heritage Foundation. Now that 5-6% figure is about equal to the profit of private insurers. If you can figure out a way that we win by shifting to something like a private insurer voucher system when profits are going to eat up the current administrative costs before we get to all the other expenses.

Other industrial nations do not use for profit health care systems. Their health outcomes are better, costs are cheaper. There is no evidence that private for profit insurers are of any value.

Leticia said...

Free Thinkie that was classic! I may have to borrow that joke for my Facebook page, lol!

Excellent post. I just hope a solution and compromise happens soon.

Finntann said...

Other industrial nations have a bigger debt crisis than we do:

Ireland, Portugal, Spain, UK, Iceland, Belgium... what other industrial nations are you referring to?

Give it a rest, there is no proof that socialism works.

Silverfiddle said...

FreeThinke: Yes, "gut feelings" informed by wisdom and education is not to be discounted. This is the problem with progressive socialism. It goes so against human wisom, history and human nature. I just smells wrong, but so many of us don't have the time to get the facts to refute the BS.

Silverfiddle said...

Ducky: Glad to see I could pull you back into the land of facts and reason.

The private sector is more efficient per insured person. Period.

Now, what makes private sector profit somehow dirtier than rent streams flowing to a government bureaucracy?

And you logic on turning it over the the government is deeply flawed. They've screwed everything else up so badly, what makes you confident they could get health care right?