A Fiscal Fantasy

This morning on MSNBC Ezra Klein made a great point about how most of the talk surrounding Ryan’s budget plan has been limited to the Medicare issue. But there is a lot more to it than that:

What people don’t realize about it is the cuts to other health care programs, primarily Medicaid, are almost twice  as large as Medicare…

Medicaid, of course, is a means-tested health program for low-income folks, including children, the elderly, and the disabled.  More than half of the funding for each state is provided by the feds.

According to the Kaiser Commission on Medicaid and the Uninsured, those Ryan—now Romney-Ryan—cuts Klein referenced, along with repeal of the Affordable Care Act which Romney and Ryan promise to accomplish, will in, say, Missouri mean that somewhere between 46% and 53% of folks who would otherwise be enrolled in Medicaid under current law in 2021 would not be so enrolled.

That represents between 650,000 and 750,000 Missourians whose well-being, unless the state came up with more revenue itself (!), would be sacrificed in the name of budget austerity that has as its guiding principle the idea that rich folks need more tax cuts.

But that’s not all. Klein also makes the point that the Ryan plan is designed to shrink other parts of government spending as a share of the economy, to uncivilized levels by 2050. He  presented this graph:

Klein wrote something remarkable that should be shouted from the housetops (emphasis mine):

The truth is that the Ryan budget’s largest long-term savings don’t come from Medicaid or Medicare or Social Security, or even Medicaid and Medicare and Social Security put together. They come from everything else. Ryan says that under his budget, everything the federal government does that is not Medicare, Medicaid or Social Security will be cut to less than 3.75 percent of GDP by 2050. That means defense, infrastructure, education, food safety, energy research, national parks, civil service, the FBI — all of it. Right now, that category of spending is 12.5 percent of GDP.

Think about that. A government that small could not possibly “establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity” in 2050. But it’s all nonsense, as real-time, Nobel Prize-totin’ economist Paul Krugman pointed out:

Look, Ryan hasn’t “crunched the numbers”; he has just scribbled some stuff down, without checking at all to see if it makes sense. He asserts that he can cut taxes without net loss of revenue by closing unspecified loopholes; he asserts that he can cut discretionary spending to levels not seen since Calvin Coolidge, without saying how; he asserts that he can convert Medicare to a voucher system, with much lower spending than now projected, without even a hint of how this is supposed to work. This is just a fantasy, not a serious policy proposal.

Well, what is serious is the philosophy behind the proposal, which philosophy is based on a fantasy, a fantasy that what is wrong with our fiscal house can be fixed by throwing the poor, the elderly, and the sick in the streets to fend for themselves and by shrinking government to a size that could truly be drowned in Grover Norquist’s bathtub.

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  1. The chart really brings home the reality of the Romney-Ryan plan, and the most chilling part of it, for me, is the Medicaid part. That is personal for me because of my mentally-disabled sister in Oklahoma. Now 61, she lives in a group home and would otherwise be completely unable to fend for herself, even if she had the wherewithal, which she doesn’t. She has nothing. I have a modest special-needs trust I manage for her – it was sourced from our mother’s small estate, and that provides for needs beyond the basics of food, clothing and shelter.

    What will happen to people like her? I will take care of her to the extent that my limited finances and limited life span permit, but there are many who will have no humane recourse. (Does Ryan envision funding insane asylums, I wonder?) I imagine the conservative line is that it isn’t government’s problem, just as it isn’t government’s problem if somebody’s medical expenses happen to exceed $6,000 in any particular year. That’s an easy position to take if your income is so large that necessities are a negligible fraction of it, but in my opinion a modern society should be better than that.

    This is the distinction the Ryan choice has now thrust upon the Presidential campaign: shall we expect from government a certain minimum of social support, including things like Social Security, Medicaid for the disabled, and unemployment insurance, or shall we return to the nineteenth century where everybody is essentially on his own and the Robber Barons thrived in a regulation-free business environment?

    The choice before the electorate just became more clear, but will they pay heed? I am not sanguine. I was amazed to hear a statistic on the news today – they said a new poll revealed that 40% had never heard of Paul Ryan before. People should read blogs more.


  2. ansonburlingame

     /  August 14, 2012

    to all,

    Duane writes, “Ryan plan is designed to shrink other parts of government spending as a share of the economy, to uncivilized levels by 2050”.

    Please define “uncivilized”.

    And after you do so, including Jim’s sister’s care, please tell us all how to pay for what is “civilized” on a sustainable basis. Do I need to define sustainable for you?

    OK, “living within our means” meaning we do not SUSTAIN such funding by ever increasing debt. At some point in time we and any other democracy must pay as we go.

    I have an idea how to START to care for Jim’s sister. Don’t let any millionarie receive ANY Medicare or SS payments. As well raise the wage limit subject to taxation for Medicare and SS to NO LIMIT. If wages are $1 Million then tax ALL the wages, not just the first $110K, for starters. But such an approach is only a START in my view, financially.

    If you and yours want to keep “Medicare as we know it”, fine with me as long as sufficient taxes are levied each and every year to ALL Americans to PAY FOR IT, Medicare as we know it.

    My wife and I have had an “expensive year” health wise. Our Medicare premium is $96 per month per person, rounded off the about $2400 per year for the two of us. ONE visit to an emergency room for just one of us and we have “eaten up” about 4 times what we have paid into the system as premiumns. As we get older that is going to only get worse.

    Bottom line is I see NO WAY to raise taxes high enough to keep Medicare as we know it, do you? For sure I have never heard a plan from anyone how to SUSTAIN Medicare as we know it through just taxation alone, much less just taxation on the “rich”.

    Rant all you like about the Ryan Plan. But then come up with your own plan that puts us in a sustainable program for HC, SS, defenses, etc. meeting “civilized” demands for such services. If you fail to do so, then I see no alternative to reducing the services, keeping Jim’s sister as comfortable as possible.



  3. RDG,

    David Stockman, Ronald Reagan’s budget guru, doesn’t care for Ryan’s “bold” Randian fantasy-cum-budget. Considering that the perpetual conservative purity purges have but a few snake handling “Christians” and corporate toadies in house to drag around what little remains of “Ronaldus Magnus”, Stockman’s grim evaluation will be ignored as Socialist/Marxist/New Deal apostasy.



    • Stockman’s assessment of Ryan’s fiscal thinking rings true and the summary is devastating:

      In short, Mr. Ryan’s plan is devoid of credible math or hard policy choices. And it couldn’t pass even if Republicans were to take the presidency and both houses of Congress. Mr. Romney and Mr. Ryan have no plan to take on Wall Street, the Fed, the military-industrial complex, social insurance or the nation’s fiscal calamity and no plan to revive capitalist prosperity — just empty sermons.

      I notice he left out the “medical industrial complex” that produces the world’s highest priced unneeded products (e.g. viagra and statins) at the expense of vaccines and desperately needed preventive care, but hey, there’s room for just so many problems in one article.

      His take on the GOP’s Defense tunnel vision is incisive:

      Indeed, adjusted for inflation, today’s national security budget is nearly double Eisenhower’s when he left office in 1961 (about $400 billion in today’s dollars) — a level Ike deemed sufficient to contain the very real Soviet nuclear threat in the era just after Sputnik. By contrast, the Romney-Ryan version of shrinking Big Government is to increase our already outlandish warfare-state budget and risk even more spending by saber-rattling at a benighted but irrelevant Iran.

      Thanks, anyway, John for steering us to the link. Stockman must be one of the world’s more lonely human beings to be clear headed among the politically polarized.


      • Jim,

        I agree that Stockman omitted the “medical industrial complex” (good name) in his op-ed. As you have pointed out in clear detail, moving to a single-payer system is the only feasible solution. While the Affordable Care Act addressed several key health-care delivery problems with the current for-profit insurance industry, any long-term solution will have to replace the privately owned, over-priced monopoly now in place.


  4. ansonburlingame

     /  August 15, 2012

    And thus the debate continues, BUT it is limited to a critique of one plan with little or no effort to show a better path forward.

    McKnight writes, “any long-term solution will have to replace the privately owned, over-priced monopoly now in place.”.

    So what has been proposed, in general but with NO specifics, as an alternative approach to both the “Ryan Plan” as well as the status quo (including ACA in the status quo).? “Universal HC” or even “Medicare for all”.

    Well I agree that achieves the goal espoused above. No more private insurance, standard government dictated rates for all HC services, medicines, etc. Such becomes as eutophia of equality for all in that everyone gets the same, the exact same HC.

    Now go pay for it!!!!

    I will even make it easy for you. Just pay for Medicare as we know it today through taxation/fees alone. Just how much would the Medicare taxation on wages, copays and premiumns for those over 65, span of treatment for EOL care, etc. etc. change?

    If my understanding of the current deficit in Medicare alone, Medicare as we know it today, is around $300 Billion per year. Because you won’t change benefits today or other costs coming from working Americans and those receiving Medicare, I would suggest you MUST reduce payments to providers AND raise taxes TOGETHER to meet that annual $300 Billion deficit. As well you must put in annual escalation of such “deficit reductions” to keep up with future rising costs of Medicare as we know it.

    If you progressives face financial reality, put pen to paper to resolve such financial issues and stop all this whining about “fairness”, my guess is you will raise taxes/fees so high that NO ONE would vote for you. To compensate for such “unpopular” taxation/fees as well you would have to cut so much out of payments to providers that our current doctor shortage would grow to unbelievably proportions, not to mention salaries plummeting for technicians and nurses.

    Ah, you say cut the CEOs pay in every hospital, etc. and all will be well, right?

    Bottom line to me is your numbers will never add up to a sustainable system, one where equality for all in services is “high” enough (EVERYONE gets GREAT services) to be financially sustainable unless you raise taxes to European levels for ALL.

    Let me put the situation this way. Come up with a “progressive Ryan”, a man or woman that puts together your plan with the same financial detail as the current Ryan Plan. Do that in detail and publicly, subject to the same level of analysis and critique that Paul Ryan has faced.

    My guess is such a plan would face the same outright rejection, politically, that Obama’s last three budgets have faced, a 96 – 0 rejection in the Dem controlled Senate.

    Actually you progressives “sort of” tried that approach with ACA did you not EXCEPT that is no more financially sustainable than “Medicare as we know it”. And look at how popular ACA is in America today.

    Your critique of Ryan, et al is that it is “uncivilized”. OK. Come up with your own SUSTAINABLE and “civilized” plan, put it out there publicly, call for a vote in Congress and see what happens!!!

    The only way you could achieve such (a passing vote in Congress) is to “change America as we know it” while keeping “Medicare as we know it”, alone without all the other bells and whistles you would add to that approach.

    You came no where close to resolving HC reform with ACA, nowhere close and I think you know it. Yet look what happened in 2010. Well raise taxes and fees and lower payments to providers JUST to keep Medicare as we know it and see what might happen in 2012. You know the answer to that as well, do you not.

    Well, no guts, no Navy Cross. Put up or shut up sounds like a good plan to me.



  5. Isn’t the reason we can’t afford basic healthcare for everyone that most of the increased profits of the last several decades have gone to corporations and their wealthy investors, but not to the workers? Yet we don’t want investors, who don’t have to work for their income to pay as high an income tax rate, instead trusting them to spend that money on workers. Well it hasn’t happened, so I think it’s time we admit that idea has failed. Going back to the turn of the century robber barons is not progress.


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