Solve for the equilibrium

by on August 18, 2012 at 5:43 pm in Current Affairs, Medicine, Political Science | Permalink

…the Romney campaign went up with an ad just days after the Ryan pick, hitting Obama on the $716 billion figure.

“You paid into Medicare for years: every paycheck. Now, when you need it, Obama has cut $716 billion dollars from Medicare. Why? To pay for Obamacare,” the ad says. “The Romney-Ryan plan protects Medicare benefits for today’s seniors and strengthens the plan for the next generation.”

How the GOP ticket talks about Medicare is vitally important in Florida in particular, a competitive swing state with a high retirement-age population. Ryan is visiting the state for the first time today since he was named to the ticket, and will go to The Villages — billed as the largest retirement community in the world — with his mom.

But instead of wading into the policy details with which Ryan is most comfortable, Republican strategists said it would be far smarter for the Wisconsin lawmaker to focus on the Obama move to remove money from the Medicare trust fund and portray Republicans as the program’s savior.

The article is here.  You can try a second exercise, called “Solve for the Equilibrium Ten Years from Now.”

1 Andrew' August 18, 2012 at 6:00 pm

Hope and Same.

2 Orange14 August 18, 2012 at 6:12 pm

The 10 year problem is quite trivial to solve and there are two and only two answers: 1) we will have national health insurance based on the UK model or 2) we will have national health insurance based on a voucher system that pays for private sector delivery of care funded by a VAT. Either way we will have a capital budget that pays for health care for everyone, it’s just a question of the delivery system. The current system doesn’t work and the Affordable Care Act is a kludge that buys a little time. If one of those two answers are not correct then the country will be in so much trouble from a lot of other stuff that health care really won’t matter much.

A pox on both of these parties for not owning up to what the real problems.

3 Andrew' August 18, 2012 at 6:27 pm

The current system works fine except for: 1) The government already pays for half the healthcare spending which is more than most countries pay in total and 2) the tax subsidy of health insurance takes the prices out of the reach of the poor AND uninsured. Fix those and then try your ideas.

4 Orange14 August 18, 2012 at 6:55 pm

I’m like a broken record on this but see: The government does not have a capital budget for healthcare and the Euro countries do in one way or another. I stand by my previous post.

5 john personna August 18, 2012 at 8:13 pm

That would be convincing, if the subsidized alternatives were not the ones with lower costs.

6 Bill August 19, 2012 at 4:10 am

And, if we get Ryan’s private option plan, we get adverse selection with the carriers designing plans and options that attract the healthy, and the sick being dumped on the alternative plan.

Why is no conservative who cares about costs not talking adverse selection?

7 Orange14 August 19, 2012 at 8:56 am

Because it’s an inconvenient truth.

8 MP August 19, 2012 at 5:45 pm

Or maybe because they (we? I?) don’t think adverse selection is the problem it’s made out to be.

Adverse selection is all about information asymmetry. The insured would have to be better able to forecast their health risk than the insurer. I see no evidence that that’s actually the case. Rather, most of the concern is about insurers being TOO able to differentiate. They’d have the ability to attract both the health and most of the sick if they could charge accordingly.

There probably are some people who are such high risks they’d be uninsurable, but I think they’d be few. And there’s be a lot more who wouldn’t be able to afford properly priced insurance. These are both real issues, but they aren’t adverse selection.

9 Floccina August 19, 2012 at 1:44 pm

Medical care is also badly regulated. Regulations that are too restrictive of what license and education level is required to do what seem to keep prices high even while systems and procedures may not be regulated enough.

10 TheAJ August 18, 2012 at 6:15 pm

I think the Republican plan to not burden our kids with “all this debt” is to Leave Big Government in place for Republican voters (geriatric whites and rural states living off of federal income tax money from NY, CA and MA) while just eliminating it for anyone that votes Democratic (just about everyone under 55).

But it is a winning ticket, so I applaud them for that.

11 Doug August 19, 2012 at 1:10 am

A lot of those rural states are already or quickly becoming net tax payers. That’s because of the energy and fracking revolution happening in the Gulf Coast and the rocky mountains. You would think the Democrats would be happy about the Red States finally getting off welfare (after all they complain about it all the time).

Yet it’s the Democrats who are trying to stop them by blocking offshore drilling, stopping new pipeline construction and regulating fracking.

12 Orange14 August 19, 2012 at 9:00 am

Other than North Dakota, can you tell me which of these states are net taxpayers? You are also wrong about the Keystone Pipeline being opposed only by Democrats. The Republican legislature and governor in Nebraska all opposed the first pipeline plane because it crossed the Sand Hills and smack in the middle of the Ogalala aquifer. When the plan was changed they supported it and I don’t see any Democratic opposition to the new plan either. There are still the small group of enviros that oppose it on all grounds but they are small and marginal.

13 mulp August 19, 2012 at 10:45 am

The opposition came from private landowners who were outraged, like Kelo, that their property was being confiscated by a jack boot Canadian corporation for Canadian corporate profits. That was true in Texas as well, but taking private land by force for corporate profit is politically fine.

14 Michael Cain August 19, 2012 at 11:36 am

At least in the West (the 11 contiguous states from the Rockies to the Pacific), interpretation of the “net taxpayer” numbers is problematic. The latest Tax Foundation figures show California, Colorado and Nevada as net payers. Oregon and Washington are close, and become net payers when the Foundation does it adjustment for the deficit. The other six states all have unusual situations. Wyoming — lots of people’s favorite whipping boy — is a net recipient because of Federal Mineral Lease Royalties and Payments In Lieu of Taxes due to large oil, gas, and coal productions on federal lands. If you use the federal Medicaid reimbursement rate as a surrogate for social spending, Wyoming gets the minimum rate. New Mexico, with a small population, is unlikely to ever be a net payer so long as the budgets for Sandia, Los Alamos, and White Sands Missile Range are counted on the federal expenditures side (call those $6B total against a population of 2M). Similar stories throughout the West.

15 byomtov August 18, 2012 at 6:30 pm

Isn’t that the same $716 billion Ryan wants to cut so he can save Romney and his ilk the boter of paying any taxes at all?

16 john personna August 18, 2012 at 8:14 pm

Yes, Ryan accepted the same cost reductions in his plan, but … etch-a-sketch.

17 Andrew' August 19, 2012 at 5:27 am

Big picture: Obama uses the cuts to fund his new entitlement. Ryan’s cuts via Romney go towards traditional Republican talking points.

That’s the heart of it, right?

18 Andrew' August 19, 2012 at 5:32 am

AND it seems pretty disingenuous to attack one side for making political promises. At least they haven’t broken all theirs YET.

When dealing with 10 year budgets and decade out projections and trust funds and general funds it’s very complicated. I think the big picture is close to my comment above and people are jumping on this bandwagon when I have a strong feeling they don’t really understand what’s going on yet.

Ryan apparently has few details on the 10 year cuts, but Obama’s ACA requires cuts. So, since I prefer a phase-out, to me the burden of proof is on Obama here. If Romney-Ryan aren’t planning to cut immediately (whereas Obama has to to fund ACA) then they are doing it right. They can still fail to cut in the future, but we need a commitment to future reform. We don’t need reform RIGHT NOW.

19 Andrew' August 19, 2012 at 6:23 am


What do you think the rich think they get from paying a lot of taxes?

20 john personna August 19, 2012 at 8:13 am

You know, I twigged to Romney running a “trust me” campaign, without details, the day he picked Ryan and threw the Ryan plan under the bus. Romney advisers confirm that is their plan. They serious want to be elected first, and provide details later.

What could possibly go wrong? Well, Bush/Cheney are still pretty strong in my memory.

21 byomtov August 19, 2012 at 11:24 am

Frankly, Andrew, what terrifies me is that the Republicans, if they win, are going to keep their promises.

22 john personna August 19, 2012 at 8:00 am

CNN: “The non-partisan fact-checker has rated a nearly identical charge by Romney, that Obama has ‘robbed’ Medicare of the amount as ‘mostly false.’ It also found Cutter’s assessment of the similarities – but not the description of reductions as “cuts” – between the Romney and Obama’s plans to be ‘true.'”

I think the big lie is the “robbed” part. After that there is a secondary political argument about where you book the savings, but Romney is not really rising that high.

23 E. Barandiaran August 18, 2012 at 6:42 pm

Tyler, since you look bored and struggling to have fun, I recommend to read this post

and think about changing this sentence as suggested

“I’m confused as to why in the world you think your most-loved politician [boyfriend] seems like strong presidential [father] material.”

When you run out of ideas, write to Wendy or call Bryan Caplan.

24 Orange14 August 18, 2012 at 6:56 pm

LOL, my most interesting question is why one of the candidates seems to want confirmation of his thinking from 400 economists. Is he that insecure?

25 E. Barandiaran August 18, 2012 at 7:31 pm

Let me quote from Richard Nordquist’s introduction to James Harvey Robinson’s On Various Kinds of Thinking

In this well-known essay from his book The Mind in the Making (1921), Robinson employs classification to convey his thesis that for the most part “our convictions on important matters . . . are pure prejudices in the proper sense of that word. We do not form them ourselves. They are the whisperings of ‘the voice of the herd.'”

Hope your read the essay.

26 Doc Merlin August 18, 2012 at 7:56 pm


27 Orange14 August 18, 2012 at 8:02 pm

I knew there was a good reason for having three bookshelves of poetry, “…The truest and most profound observations on Intelligence have in the past been made by the poets and, in recent times, by story-writers…” Thank you for pointing me to this, I read the essay and I would also note that the entire book is on Project Gutenberg and now downloaded to my Kindle. I would also note that given what is going on right now it’s worthwhile reading another fine volume also on the Gutenberg site: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay

28 E. Barandiaran August 18, 2012 at 8:03 pm
29 Jason August 18, 2012 at 8:06 pm

“But instead of wading into the policy details …” Ha! From this you get Romney’s whiteboard plan. Seniors: No Change. Next Gen: Solvent.

1. Collect underpants

2. ?

3. Profit

30 Ricardo August 18, 2012 at 8:55 pm

I like the assertion that failing to cut Medicare spending somehow strengthens the Medicare trust fund. Even Bernie Madoff would blush at that one.

Politically, the “small government” rhetoric of Republicans can’t be anything other than superficial and misleading. The Republican Party needs votes from hawks who will never accept defense spending cuts and from seniors who will not accept serious cuts to SS or Medicare. Once you take defense, Medicare and SS off the table — as most Republican policy proposals these days do — you aren’t left with potential cuts that will actually give you “small government.” At best, the strategy of people like Paul Ryan (who voted for Medicare Part D, among other things) is to make drastic cuts to Medicaid and non-defense discretionary spending in order to make more money available for the military and seniors. That strategy may be something but it isn’t “small government.”

31 Careless August 18, 2012 at 11:38 pm

” I like the assertion that failing to cut Medicare spending somehow strengthens the Medicare trust fun”

I’d think the obvious point is that Medicare is not, in reality, about to be slashed by almost 10% per year, so the new spending will be, basically, coming out of the “trust fund”.

32 Kenneth Almquist August 19, 2012 at 6:33 am

As far as I know, nobody claiming that the Affordable Care Act will (or was intended to) cut Medicare spending by 10% per year. The point is that by increasing Medicare revenues and decreasing Medicare spending, the Affordable Care Act improves the financial situation of Medicare. The “Obama move to remove money from the Medicare trust fund” is a Republican fiction.

If anyone wants to check this out from primary sources, the Medicare Trustee’s reports can be found at the following URL:

In particular, look at the first table in section II.B in the recent reports. Medicare funds are used for only two purposes: to pay Medicare benefits and to pay administrative expenses. No money is removed from Medicare for any other purpose.

33 Orange14 August 19, 2012 at 9:04 am

this would require reading a report, something most respondents to this and other blogs don’t want to do as it would destroy all of their preconceptions about what the ACA really does. Too bad really as there is a good debate to be had about Medicare and the payment for health care in general; it’s just not the debate that we are having right now.

34 Yancey Ward August 19, 2012 at 11:05 am

In particular, look at the first table in section II.B in the recent reports. Medicare funds are used for only two purposes: to pay Medicare benefits and to pay administrative expenses. No money is removed from Medicare for any other purpose.

If you are going to make this claim, then ACA is not deficit neutral/reducing over any window of time. By law, your point is completely true, but then a major portion of the financing for the expansion of coverage in ACA is now missing again. You can’t have it both ways.

35 byomtov August 19, 2012 at 12:37 pm

I think the idea is that Medicare costs will be cut by reducing expenses, such as eliminating what seems to be the wasteful Medicare Advantage program.

You may not agree with the cuts, or think they will work, but there’s a clear difference between trying to save money by reducing unneeded expenses and saving it by reducing benefits.

36 Doug August 19, 2012 at 1:00 am

Well, first off saying that Republicans won’t touch SS is just plain wrong. It \
was only 5 years ago that Bush pushed social security privatization. The opposi\
tion was primarily led by Democrats.

Second to say that the budget consists only of medicare, SS and defense is also\
wrong. Discretionary consists of 646 billion, the vast majority of which Tea P\
arty Republicans would like to cut dramatically. 465 billion is other mandatory\
, including unemployment insurance, welfare, food stamps, etc. Republicans woul\
d love to cut these programs.

Out of the 835 billion budgeted for Medicare and Medicaid 295 billion is Medica\
id. Show me a Republican that opposes cutting Medicaid. Show me a Democrat that\
supports cutting it. Medicaid is now almost the size of Medicare, and growing \
fast. So cutting Medicaid even without touching Medicare would go very far to c\
ontaining healthcare expenditures.

Finally don’t forget that tax expenditures, like the mortgage deduction, don’t \
appear on the budget but represent over a trillion dollars. Eliminating tax exp\
enditures is far more economically effective than raising tax rates since it wo\
uld reduce not create deadweight loss.

Republicans are far more willing to eliminate most of the tax expenditures. *Co\
ugh* renewable energy tax credits *cough*. Cutting tax expenditures, at least r\
elative to raising marginal tax rates, is much more tenable to Republicans beca\
use the burden would decrease the extreme progressivity of the US tax code.

So when push comes to shove, assume Republicans are willing to cut the programs\
they dislike by 50%. Even not counting SS privatization which would have trill\
ions over decades, between Medicaid, welfare/unemployment insurance, non defens\
e discretionary and tax expenditures that’s 1.2 trillion annual expenditures sa\
ved per year. That’s enough to balance the budget *today*.

In contrast Medicare, SS are also sacred cows for Democrats. Welfare/unemployme\
nt insurance is as well. The vast majority of non-defense discretionary is Demo\
crat supported. The only thing Democrats are willing to touch is defense spendi\
ng, and maybe tax expenditures at the margin.

I’m not saying either party is likely to solve the budget problem in the long r\
un. But at least it’s a serious issue with some significant fraction of Republi\
cans. Unlike Krugmanities who pretend that since interest rates (on an aggregat\
e 3 year bond duration) are low for now that we can run 10% GDP deficits foreve\
r. Virtually every Democrat has their head in the sand on this issue.

So P(budget crisis gets solved) is orders of magnitude higher with a Republican\
administration and Congress than a Democratic one.

37 Ricardo August 19, 2012 at 9:01 am

“Well, first off saying that Republicans won’t touch SS is just plain wrong. It \ was only 5 years ago that Bush pushed social security privatization.”

Bush’s plan did not call for cutting benefits for current seniors. Bush wound up proposing an SS reform that didn’t touch current benefits but allowed wage earners to divert payroll taxes — the net result was a large increase in the federal government’s debt over the next few decades. That matches quite well with the theory that Republicans will not seriously consider cutting spending on seniors.

“Second to say that the budget consists only of medicare, SS and defense is also\ wrong.”

But I didn’t say that. In fact, most of your comments above show that you did not read my comment carefully.

38 Rich Berger August 18, 2012 at 9:39 pm

More mood affiliation with the Dems, eh Tyler?

39 Gary S August 18, 2012 at 9:52 pm

There are two equilibriums to consider – political and honesty.

You have outlined a political equilibrium.

Regarding honesty, the Ryan criticism of Obama is at least somewhat dishonest. But the baby boomers have been massively dishonest in not reforming Medicare which results in the theft of one generation by another. No amount of dishonest rhetoric can lead to an equilibrium of honesty.

40 mulp August 19, 2012 at 11:02 am

Are you arguing baby boomers are the only reason we don’t have a health care system that covers everyone for less than 12-14% of GDP because boomers alone blocked Medicare for all like they have in Canada or France, or boomers alone HMOs for all like in Israel (which Romney praised), or boomers alone blocked German or Japanese style insurance for all?

The Swiss style reform has been passed with, as far as I can tell, boomer support and signed into law by Obama.

The boomers, by the way, have been paying the bills for Medicare for the past 40 years while getting no benefits from Medicare (other than poor insurance for disability), so is it dishonest for boomers to transfer wealth from their generation to their parents and grandparents generation? If you willingly give me $20, have you stolen $20 from yourself, or have I stolen $20 from you?

41 Gary S August 20, 2012 at 8:45 am

No, I’m arguing that the boomers and the older generations don’t want to change a d*** thing as this country slowly sails over the fiscal cliff. The boomers didn’t want to sacrifice and invest in larger families. They were too busy indulging themselves. Most anytime they had to choose between tax increases versus taking money from a trust fund, it seems like they consistently chose the later. The Ryan plan claims to not affect anyone aged 55 and over, presumably to prevent angering that special snowflake generation.

The “I’ve been paying into Medicare and Social Security all these years so I deserve all the benefits” notion is incorrect. I’ve heard that the average elderly couple has paid $150K into Medicare but will use $350K in lifetime benefits. According to the ‘Estimated net Medicare benefits for different worker categories’ section at , ‘In the first graph (Figure 169) we see that estimated net benefits range from $108,000 to $240,000 for single men and from $142,000 to $277,000 for single women.’ Earlier in the same paragraph, it defines ‘net benefits’ as ‘estimated lifetime Medicare benefits received minus estimated lifetime Medicare taxes paid, expressed in today’s dollars.’ The “I’ve been” paying argument would be truer if the ‘net benefit’ were $0.

You are right that other countries have a better system and ObamaCare did take baby boomer political courage against the ‘Get your government hands off my Medicare!’ types.

42 Lord August 18, 2012 at 10:22 pm

It’s called making the “tough decisions”, “saving it for the next generation”, “fiscal conservatism”, “zeroing in on the deficit”, “making an argument you can win”. I guess they are tough when what you want to do is the opposite, when it is the bill for medicare, conservatism means digging holes that can’t be dug out of, zeroing in on means adding zeros to, arguing both sides. I call it muddling your message at best, exposing it as phony at worse, but mostly admitting you have no idea and you can’t win.

43 8 August 18, 2012 at 10:41 pm

I saw a Democrat in a clip arguing that cutting the rate of growth isn’t a cut. What has changed in Washington is that they can no longer increase spending across the board, someone’s ox is going to get gored. Obama and the Dems gored white seniors. It’s 1995 all over again, only the parties are reversed.

44 mulp August 19, 2012 at 11:06 am

Insurance execs are all “white seniors”?

Or are you talking about the doctors still working fee for service who are all “white seniors”?

45 Turkey Vulture August 19, 2012 at 12:16 am

Old people love their Welfare.

46 Zach August 19, 2012 at 12:22 am

There are a whole lot of people in The Villages on Medicaid, which Romney and Ryan both pledge to cut by thousands of dollars per beneficiary to the extent where, absent states coming up with the money or so-far-unknown reforms to lower costs, will leave enough money for poor people (including children) or long-term care for the elderly but not both. I’m pretty sure that most Republican politicians have zero clue how many of their supporters benefit from Medicaid. Even quite wealthy people benefit by not having to provide for their parents (which, before Medicare and Medicaid often meant living with them). I’m sure one of the biggest nightmares for lots of folks in The Villages is burdening their kids with their care.

47 Doug August 19, 2012 at 1:05 am

“Even quite wealthy people benefit by not having to provide for their parents”

What kind of logic is it that having to provide for your benefit is a smaller cost than having to provide for *everyone’s* parents.

The left needs to stop pretending that social welfare expenditures magically come out of thin air. The fact of the matter is that they either come from taxes or government borrowing. Both of which create deadweight economic loss either in the form of income elasticity or crowding out private investment.

At the end of the day paying for $1.00 of something privately costs $1.00. Paying for $1.00 of something publicly costs ($1.00 + n) because of the deadweight loss. So if you’re going to provide for some good publicly you have to cite a damn good argument for why it makes sense to, i.e. market failure.

There is no good argument for why people can’t privately arrange and provide for their golden years. What’s the market failure?

48 8 August 19, 2012 at 2:05 am

Medicare must be cut. The Democrats have defused the issue and doubly so, because Obama’s plan doesn’t improve the country’s finances, it makes them worse off overall (not that Republicans are better on that score). Democrats will raid your Medicare to finance big government, Republicans would need to kill puppies or something to beat that.

49 Andrew' August 19, 2012 at 6:29 am

Spoiler alert, both sides are politicians. Accusing one side of being politicians is not a compliment to the other side for those paying attention.

What is ACTUALLY worse, the side that cuts a promise to pay for a new promise, or the side that cuts one old promise to pay for other old promises?

I don’t think it’s an easy question because all promises must be cut, but the side making new promises has a little explaining to do. Their explanation is basically “hey, look over there at the guy claiming not to cut promises!” “Look at THEM playing politics!”

50 mulp August 19, 2012 at 11:50 am

Is Ryan a serious budget planner when he is touting Medicare Plus from 1997 couple with a new SGR but for insurers instead of docs?

Why will insurers step up with Medicare Plus plans when Ryan’s plan is law when Ryan knows the insurers had to be bribed in 2002 in Medicare Plus renamed Medicare Advantage-to-insurer-profits, and the 1997 SGR has been put off by Republicans every year since it was to go into effect, with a 30% cut to doc payments scheduled for January 1, 2013.

Insurers have failed to change payments for health care in any rational way. Insurers lobbied to have HMOs killed off because they were doctors able change where and how the money for health care was spent, while insurers were stuck with all the doctors and other providers who were clinging desperately to fee for service. Insurers tried to control how doctors worked by having doctors consult with insurer clerks on how to practice medicine using the fee for service system, but that outraged doctors, and patients when doctors told patients the insurer said “no” to tests or treatment.

Why will the same old Republican “trust the insurance companies” strategy will work this time, when it has failed for decades, even by Republican assessment which led to the bribes to insurers Obama has ended which now has Republicans call cuts to Medicare benefits when they are only cuts to insurers.

51 Zach August 19, 2012 at 4:30 pm

Medicare spending needs to be cut; benefits don’t. There’s literally all the evidence in the world that we can adopt one of a dozen or so nationalized healthcare programs that spend less than Medicare and make it solvent without raising taxes. Nationalize healthcare entirely (shifting a small fraction of current private spending to taxes, but eliminating most of it) and you’ve fixed 90% of the long-term budget problem without diminishing health care quality at all. There’s huge political opposition to this, obviously, but does it compare to the opposition to ending Medicare? Not really? The near-trillion-bucks-per-year we waste as a nation on health care is the only free money on the table right now of any significant magnitude aside from defense spending. It seems politically impossible to change that, but it seems a lot more politically impossible to me to raise revenue so that we can keep wasting money or cut spending in ways that will increase the poverty level.

52 TommyVee August 19, 2012 at 12:32 pm

“There is no good argument for why people can’t privately arrange and provide for their golden years. What’s the market failure?”

The argument is the simple reality that a very large fraction of the population does not in fact provide for their golden years. Whether or not “people can’t privately arrange for their golden years” is beside the point (although it is unlikely that janitors and retail clerks could ever save enough to pay for retirement and privately purchased medical for their “not-so golden” years after meeting basic living costs). Whatever they “could do”, the reality that public policy must face is what they actually do in real life. Of course fact-free ideology can ignore what is and make plans based on what “should be”.
“Indeed, about 46 percent of senior citizens in the United States have less than $10,000 in financial assets when they die.”

53 Zach August 19, 2012 at 4:24 pm

I’m doubtful that many children would buy insurance policies against having to pay for the care of their parents should they suffer dementia, be swindled out of all their savings and be unable to pay for their own care. This is something that happens to thousands of elderly people and their families every year. I think there’s near-universal agreement that this is the sort of thing that everyone wants to insure against, but there are a number of market failures that as far as I know didn’t make this a particularly popular thing to purchase before Social Security + Medicare + Medicaid made it moot. Does such a product exist in countries without socialized long-term care?

One “market failure” here is that people with dementia and memory loss (and, to lesser degrees, blindness, loss of hearing, etc) are not fully functioning participants in a free market. Another is that, in general, children are not contractually involved in their parents’ long-term planning until parents are deemed unfit to make decisions on their own behalf.

Perhaps Ryan and Romney want to argue that we should no longer provide a safety net for long-term care for the elderly. Perhaps we should no longer provide healthcare to children in poor families and/or their parents. Perhaps whether or not these should be priorities should be decided locally by the states. Perhaps Medicaid can be reformed to provide the same care for less. All are fair changes to policy, but Romney needs to be asked to pick one or more and explain how it will work because you can’t cut hundreds of billions of dollars a year in Medicaid and then it grow at the rate of inflation (rather than, at a minimum, the product of inflation and population growth) without choosing one of these things.

54 Orange14 August 19, 2012 at 9:22 am

Part of the discretionary budget is the funding for basic R&D which largely flows to American universities. The National Science Foundation’s most recent survey (FY 2010) shows this amount to be: $61 B ( and some of this came from the stimulus program! Of this George Mason, home to the illustrious TC and AT received $85.7 M (it’s on the small side because of the absence of a medical school; Question for the blogsters here, how much of this should we cut?

55 mulp August 19, 2012 at 12:07 pm

Romney-Ryan Medicare reform is at its core the failed Medicare Plus program from 1997, but with the SGR cost control fix applied to the payment to insurers offering Medicare Plus.

We know the SGR cost control formula turned out to harm an important Republican constituency, the doctors, so the 1997 SGR has been suspended for almost 15 years, with a 30% cut in fees now scheduled for January 1, 2013.

If insurers were to offer Medicare Plus plans, which they refused to do in the first 5 years they could, would Republicans force the price controls on those payments with more willingness than they have implementing their doctor price controls?

In large part, Obamacare returns Medicare back to the 1997 Medicare Plus to save money (eliminating the Medicare Advantage bribes to insurers), and then putting focus into changing the fee for service system which insurers have not been able to change in decades of insurers trying to control health care costs. One insurer can’t dictate a fee for service system different from the existing market and operate, so biggest payer, Medicare, is the only one able to both force a change and do so with the consensus of the market expressed by lobbying and voters.

56 Turing Test August 19, 2012 at 12:21 pm

I used to care about politics and all that — but when the Republicans finally had majorities in both houses and then won the White House and still did nothing to cut spending or reduce the overall size of government, then I stopped voting — all politicians are just con men and scammers — what we need is an armed revolution, not another pretender

57 Duracomm August 19, 2012 at 1:34 pm

Most people have no idea how bad our fiscal situation is and Washington is mostly not willing to acknowledge the problem. Obama’s tax increases on the “rich” provides entertaining campaign tactic, what it does not provide a serious attempt to solve problem.

Our Debt Is More Than All the Money in the World

Just a reminder: We are in trouble.

I have argued that the real national debt is about $130 trillion. Let’s say I’m being pessimistic. Forbes, in a 2008 article, came up with a lower number: $70 trillion. Let’s say the sunny optimists at Forbes got it right and I got it wrong.

For perspective: At the time that 2008 article was written, the entire supply of money in the world (“broad money,” i.e., global M3, meaning cash, consumer-account deposits, checkable accounts, CDs, long-term deposits, travelers’ checks, money-market funds, the whole enchilada) was estimated to be just under $60 trillion. Which is to say: The optimistic view is that our outstanding obligations amount to more than all of the money in the world.

Global GDP in 2008? Also about $60 trillion. Meaning that the optimistic view is that our federal obligations outpace the entire annual economic output of human civilization

58 Ricardo August 20, 2012 at 11:14 am

Will there ever be an internet discussion about the debt where someone fails to commit the old compare-a-stock-to-a-flow fallacy?

Hint: What’s the present-discounted value of U.S. GDP projected out over the next 100 years? Now, what is the PDV of America’s current and future liabilities projected out over the same time frame? How those numbers stack up depends a great deal on what happens to the future growth of entitlement spending. Hence things like the IPAB to constrain future Medicare increases.

59 Floccina August 19, 2012 at 1:37 pm

A similar approach did not work for Cliff Stearns here in Florida. In his ads he he promised to keep medicare unchanged, keep military spending up and no tax increases but did not prevent him from losing in the primary. Those ads made me vote against him. Of course we do not have as many retirees as the rest of the state.

That said I think that politicians will borrow money as long as they can because cutting benefits and/or raising taxes will cause you to lose and whomever is in office when the markets stop lending them the money will lose anyway.

60 Stan August 20, 2012 at 10:17 am

Ryan’s planned Medicare and Medicaid “reforms” strike me as the domestic equivalent of the Iraq War. I’ll change my mind when somebody explains

a) why the medical insurance industry would want to write insurance policies for the elderly after traditional Medicare is scrapped,
b) how the elderly would make informed choices about their insurance, particularly in the absence of exchanges of the type called for by the Affordable Care Act after traditional Medicare is scrapped,,
c) what the elderly are supposed to do when their vouchers fail to keep up with medical inflation after traditional Medicare is scrapped,
d) what happens to the elderly whose nursing home bills are now paid for by Medicaid after the Ryan cuts in Medicaid funding.

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