Most people have a vague understanding that America has a huge long-run fiscal problem.
They’re right, though they probably don’t realize the seriousness of that looming crisis.
Here’s what you need to know: America’s fiscal crisis is actually a spending crisis, and that spending crisis is driven by entitlements.
More specifically, the vast majority of the problem is the result of Medicaid, Medicare, and Social Security, programs that are poorly designed and unsustainable.
America needs to fix these programs…or eventually become another Greece.
Fortunately, all of the problems can be solved, as these three videos demonstrate.
The first video explains how to fix Medicaid.
The second video shows how to fix Medicare.
And the final video shows how to fix Social Security.
Regular readers know I’m fairly gloomy about the future of liberty, but this is one area where there is a glimmer of hope.
The Chairman of the House Budget Committee actually put together a plan that addresses the two biggest problems (Medicare and Medicaid) and the House of Representatives actually adopted the proposal.
The Senate didn’t act, of course, and Obama would veto any good legislation anyhow, so I don’t want to be crazy optimistic. Depending on how things play out politically in the next six years, I’ll say there’s actually a 20 percent chance to save America.
“Here’s what you need to know: America’s fiscal crisis is actually a spending crisis, and that spending crisis is driven by entitlements.”
Dan, we have a military empire which is at least equally complicit in the bankrupting of America. I don’t think we should exclude that fact from the spending crisis.
“America’s fiscal crisis is actually a spending crisis”
This is false. We tax less and spend less than just about everybody else in the OECD. See: http://www.heritage.org/index/explore?view=by-variables
“More specifically, the vast majority of the problem is the result of Medicaid, Medicare, and Social Security”
This is misleading, for two reasons. First, the problem with Medicare and Medicaid is largely the economy-wide problem of rising health care costs. See: http://www.poisonyourmind.com/2011/08/the-long-term-debt-issue-is-health-care-costs-2/ You’ll note that Medicare and Medicaid actually do a better job controlling price increases than do private insurers. Also, the US spends more private money & less public money on health care, and spends about 2.5 times as much as the rest of the OECD, for care that is no better.
Second, it is misleading to conflate health care spending with Social Security. While M&M spending is projected to increase a great deal, SS has a modest long-term shortfall that can be fixed in a number of different ways, such as by reducing benefits in a few decades. See: http://motherjones.com/kevin-drum/2010/10/most-important-social-security-chart
Ephemeral, you can’t simply throw out a bunch of factoids and think it adds up to any kind of coherent whole. It doesn’t really work that way. Some of the points that you’ve made rely on limited data, or make assumptions which are completely irrelevant. You have, in short, made the mistake of not understanding your subject matter and thinking that a few convenient ‘facts’ amount to some kind of truth. With respect, it doesn’t really work like that, though I understand that’s how it is in the blogosphere. Just throw a bunch of sh^t against a wall and watch how it sticks.
Fabrizio: “Some of the points that you’ve made rely on limited data, or make assumptions which are completely irrelevant.”
I listed a series of facts– about the outlook of the long-term debt problem, about the difference between health care spending vs. Social Security spending, about the US’s very low taxes and spending– with links to substantiation.
You indicate that you don’t like those facts.
Now, that’s fine, that’s your right. But could you perhaps be good enough as to offer a rationale for your assertion?
Medicare is the most efficient insurance system we have. Not once did you guys mention preventative medicine, clean air, and water. New sidewalks and bicycle paths would lower health costs. It’s unethical to profit from someone else’s poor health. I am surprised at CATO’s singular adoption of the Ryan Plan, which just lines the pockets of middlemen. The voucher COLA at GDP+ 1% will not keep up with the inflation we are seeing in health care. WAKE UP !
The US has a very poor social system, because it does not correspond with the
“Capitalists” which dictate the system. All the citizens of this country need, is equality…give everyone the same benefirts (healthcare, pensions. etc) as Congress allots themselves.
Only then can you talk about a true democracy, “For the people, by the people, of the people.
Capitalism is as unsustainable as Socialism.has been..An injection of both ideologies is the only thing that is sistainable.
Reflectionephemeral,
First, stating that we tax and spend less than any other country in the OECD, says nothing about the reason for our fiscal crisis and shortfalls. Fiscal deficits are by definition a spending problem. You can argue that more revenue is needed, but until that revenue is actualized any deficit spending is a spending problem. Second, the rising cost of health care were addressed in the first and second video. By subsidizing health care through unrestrained medicare and medicaid, it encourages companies that provide health services and production to increase their prices. This is basic economics. It is the same reason that education costs are rising above inflationary rates, and it is the same reason that housing prices rose unchecked for the last 10 years. So saying that health care entitlements are not responsible for the fiscal crisis denies their culpability for the rise in health care costs to begin with. Third, the Kevin Drum article shows one graph, but fails to communicate the whole report that the graph is part of. It is bad proof-texting and fails to address the overall complexity of the problem.
Thanks for your reply, Macfolk.
It is incorrect to say that “fiscal deficits are by definition a spending problem.” In fact, they are a product of a mismatch between spending and revenue. Now, it’s a perfectly legitimate political preference to want to decrease spending, but it is not compelled by The Math.
As to health care subsidies, the US has the freest health care market in the OECD. We spend much less from public expenditures, but we have much higher costs, and not-any-better results.
The housing bubble was in no way attributable to US government policies. It was a bubble in a private market. See: http://www.ritholtz.com/blog/2011/11/examining-the-big-lie-how-the-facts-of-the-economic-crisis-stack-up/
I don’t understand why the Drum chart is misleading. It shows the long-term SS shortfall. There’s legitimate concern over SS, but its problems are not awful, and it’s not a serious cause of the long-term debt problem.
When the government starts to get into a market, then people start pricing intot he government’s pocket which is essentially bottomless because, as we all know, the government does not have the will the to say “no.” As a result, prices go up and fewer and fewer people can afford whatever it is the government starting paying for as a means of helping out those few how could not afford it before and legitimately needed help and now you’re adding more and more who need the government to pay for them. It happened in the housing bubble. It’s happened in Big Education. How many kids have government subsidized student mega-debt? It’s happening in health care. Why keep your costs down when you can ride the governmnet subsidy gravy train? It’ll work right up until that train derails and the end of the tracks is looming large. We’re in for one heck of apainful market correction because our political will to say “no” is nil.
[...] Cato scholar Daniel J. Mitchell argues America’s fiscal crisis is basically a spending crisis, with excessive spending and borrowing driven by poorly designed, unsustainable entitlement programs like Medicare, Social Security, and Medicaid in: Everything You Need to Know about Entitlement Reform. [...]
[...] payroll taxes and incremental reform should not distract us from the enormously important issue of genuinely fixing entitlement programs, something that is needed to save America from Greek-style fiscal collapse at some point in the [...]
“It’s unethical to profit from someone else’s poor health.”
Who says? In context, I take it that this is a criticism of American drug companies, health insurance, and the like. So what you really mean is, “It’s unethical to profit from helping someone to overcome his health problems.” And I can only say, Why? Would you also say that it is unethical to profit from someone else’s car problems, for example by charging him for your services in repairing it? Is it unethical to profit from someone else’s hunger, for example by running a grocery store?
Well, maybe you say yes. But the solution always offerred to this “ethical problem” is for the government to take over this function. But government employees are paid, so they also profit from people’s problems. Often they are paid very well. Is it unethical to profit from someone else’s ignorance, by accepting money to teach school? Is it unethical to profit from someone being victimized by criminals, by accepting money to be a policeman?
I wonder if the writer of this comment is paid to do some sort of job. Does that job address any problem or potential problem that people may have? If so, then you are profiting from this problem. If not, then I guess you are ripping people off by taking their money for nothing.
[...] elaborate, not all entitlement reform is created equal. As I explained in this set of videos, good reform means putting individuals back in charge and restoring market forces. It means [...]
[...] Given what’s happening in Europe and the fact that politicians so far have failed to enact genuine entitlement reform, the 64 percent should be 94 percent. Rate this: Share [...]
[...] Given what’s happening in Europe and the fact that politicians so far have failed to enact genuine entitlement reform, the 64 percent should be 94 percent Share [...]
@ Jay: The Health Care people receive is deficient, and tends make people sicker. There’s no incentive to reduce costs in the system we have. Preventative care is not in the health care delivery interests. Artificial pricing of drugs is not helping. Fancy hospitals are not curing. 50m People are doing without insurance. This is not working.
[...] Simply stated, the United States is in grave danger of becoming a European-style welfare state. Indeed, that will automatically happen in the next few decades because of demographic changes and poorly designed entitlement programs. [...]
[...] Simply stated, the United States is in grave danger of becoming a European-style welfare state. Indeed, that will automatically happen in the next few decades because of demographic changes and poorly designed entitlement programs. [...]
[...] Simply stated, the United States is in grave danger of becoming a European-style welfare state. indeed, that will automatically happen in the next few decades because of demographic changes and poorly designed entitlement programs. [...]
[...] Simply stated, the United States is in grave danger of becoming a European-style welfare state. Indeed, that will automatically happen in the next few decades because of demographic changes and poorly designed entitlement programs. [...]
[...] He’s right that the main problem is in the future. As I’ve noted before, America is doomed to become Greece because of rising entitlement spending. [...]
[...] He’s right that the main problem is in the future. As I’ve noted before, America is doomed to become Greece because of rising entitlement spending. [...]
[...] key point in this excerpt is that the VAT is a substitute for entitlement reform. Without the VAT, politicians might actually reform the welfare state. But because of the VAT, they [...]
[...] key point in this excerpt is that the VAT is a substitute for entitlement reform. Without the VAT, politicians might actually reform the welfare state. But because of the VAT, they [...]
[...] we’re going to reform entitlements, do it the right way. Rate this: Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike [...]
[...] we’re going to reform entitlements, do it the right way. jQuery('#lazyload_post_0 img').lazyload({placeholder: [...]
[...] will argue that it’s impossible to restrain spending because of entitlement programs, but this set of videos shows how to reform Social Security, Medicare, and [...]
[...] will argue that it’s impossible to restrain spending because of entitlement programs, but this set of videos shows how to reform Social Security, Medicare, and [...]
[...] people will argue that it’s impossible to restrain spending because of entitlement programs, but this set of videos shows how to reform Social Security, Medicare, and [...]
“The housing bubble was in no way attributable to US government policies. It was a bubble in a private market”
That would be laughable if it weren’t so sad that people can actually perpetuate that myth. Bubbles, booms and busts are ALL attributable to goverment monetary and fiscal policy. They are a result of easy money always leading to hard times. Look at data on the housing bubble worldwide, and see the commonality – countries with easy money, government driven artificially low short-term interest rates, ALL experienced the bubble/bust. Even Tim Geithner admitted that the Fed played a critical role in the financial housing/mortgage meltdown..in his own words: “…monetary policy around the world was too loose too long. And that created this huge boom in asset prices, money chasing risk.” Econ 101. When will people actually do some studying? Sigh.
[...] people will argue that it’s impossible to restrain spending because of entitlement programs, but this set of videos shows how to reform Social Security, Medicare, and [...]
[...] is a bit unfair and over the top. After all, these are the folks who voted last year for real entitlement reform, so I need to remind myself that politicians are combinations of good and [...]
[...] payroll taxes and incremental reform should not distract us from the enormously important issue of genuinely fixing entitlement programs, something that is needed to save America from Greek-style fiscal collapse at some point in the [...]
[...] overwhelming fiscal policy challenge for America is entitlement programs, as I explain in this set of videos. To protect America from becoming another Greece, we need personal retirement accounts for Social [...]