Free Markets, Free People
In this podcast, Bruce, Michael, and Dale discuss the sudden end of Kieth Olberman’s “Countdown”, the Republicans’ proposals to cut government spending, state bankrupties, and much more.
The direct link to the podcast can be found here.
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If you’re interested in reading one of the most mixed up pleas to get entitlement spending under control, I invite you to read Neel Kashkari’s (I love the last name though)op/ed in the Washington post.
His premise is that entitlements are breaking us.
His assumptions, however, are all over the place and misrepresent the real problem.
He claims that it is a ubiquitous "me first" mentality that both drives the market and also drives entitlement. That self-interest drives the boat.
Yes, self-interest is always a motivator. But when it comes to the market and entitlements, "me first" mean entirely different things. In the market, "me first" means seeing what you want, earning what is necessary to get it and then obtaining it. Pricing and demand come from that – and jobs, expansion, etc. The point is, in the sense of the market it’s "me first because I’ve earned what is necessary to purchase it".
Not so when it comes to entitlements. In that case, "me first" means, "I want what someone else has earned because I (excuse goes here) and therefore I’m owed this".
That’s an entirely different concept of the market "me first". In the latter, money is taken from the earner (thereby limiting his ability to act on his "me first" priorities), the market is denied whatever percentage as it is taken by government, wends its costly way through the system, and ends up in the pocket of someone who has determined that the benefit of earning the equivalent through work is just not worth it.
Kashkari then tries the “fairness” argument:
Cutting entitlement spending requires us to think beyond what is in our own immediate self-interest. But it also runs against our sense of fairness: We have, after all, paid for entitlements for earlier generations. Is it now fair to cut my benefits? No, it isn’t. But if we don’t focus on our collective good, all of us will suffer.
Fairness has nothing to do with this. Is it fair when you take money from one person to give to another for whatever arbitrary reason? Of course not. So if we want to play the fairness game, the first stake holder on the "not fair" side of the game is the taxpayer who has his earning taken to subsidize someone’s entitlement benefit.
And, honestly, our "collective good" would be better served by getting government to hell out of the entitlement business (and there by reducing its size and the size of the chunk it takes out of our wallets) and getting back to what has made America both great and, despite Obama’s claims, exceptional.
… [B]ailing out the financial system went directly against our shared beliefs in free markets and fair play. While the vast majority of Americans did not cause the financial crisis, we all had to sacrifice to stop it. Such a cultural violation has angered people nationwide, which makes cutting entitlements more difficult because it will again betray our sense of fairness.
Here’s where he almost gets a clue, except he attributes it to “fairness” again. Instead it was a revolt of the taxpayers, already enraged about the cost of government and the impact it had on their own choices, saw government suddenly expand that cost exponentially, head into areas it had never been before and indenture their grandchildren and great grandchildren to a tune of multi-thousands of dollars each. It wasn’t about “fairness” it was about “get the hell out of my life and wallet”. The Tea Party movement wasn’t formed because anyone was concerned with “fairness” – it was formed to cut taxes, reduce the size of government and demand government spend less. And yes, if that means cutting entitlements, then by all means, do so.
Kashkari’s concludes with 3 steps to cut entitlements:
– Our economy needs to experience sustained growth, creating good jobs, so Americans feel economically secure. It is hard for anyone to think about long-term sacrifice when they are worried about how to pay their bills today.
– The emotional bruising inflicted by the financial crisis needs to heal. Along with the passage of time we need a renewed sense that people are succeeding and failing on their own merits.
– Our leaders need to make the case for cutting entitlement spending by tapping into our shared beliefs of sacrifice and self-reliance. They must be willing to risk their own political fortunes for the sake of our country.
Or to paraphrase myself from above, we need to get government back to basics and Americans back to a culture that made this nation great, rich and exceptional. And that includes self-reliance, sacrifice and earning our own way in life. It is the latter part of the equation that will solve the entitlement problem and something Kashkari doesn’t include.
One more time into the breach. The CBO has issued a warning to Congress about entitlement spending. Again. Here’s a key paragraph:
Almost all of the projected growth in federal spending other than interest payments on the debt comes from growth in spending on the three largest entitlement programs–Medicare, Medicaid, and Social Security.
Most of you know that Medicare and Medicaid have an unfunded future liability of 36 trillion dollars. That’s about 3 times the annual total GDP of the US economy. And they are the very same type of “public option” program – i.e. government insurance – that the left says is so very necessary and crucial to real “health care reform”.
In other words, the left’s argument is that adding at least 47 million (presently uninsured), plus the possibility of adding 119 million who are shifted to the public option from private insurance (private insurance, btw, doesn’t have any effect on the deficit whatsoever since we, the private sector, are paying for it) will somehow make the deficit picture better?
I’m obviously missing something here.
With the public option, we’re adding a new entitlement (47 million who presently supposedly can’t afford insurance, meaning taxpayers will subsidize theirs). Assuming it is set up originally to be paid for by premiums, at some point, like Medicare and Medicaid, and every other government entitlement program I can think of, it will pay out more than it takes in. How can it not? It is a stated “non-profit” program and it will include subsidies. At some point, another revenue stream is going to be necessary as it burns through the premiums with its payouts.
Well, say the proponents of government involvement in your health care, we’re going to save money by doing preventive health care. Yes, preventive care is the key to lower costs because a healthier population is one which visits the doctor less. While that may seem to be at least partially true (you’d think a healthier population would, logically, visit the doctor less) the part that is apparently missed when touting this popular panacea is the cost of making the population healthier (and the fact that the assumption of less visits isn’t necessarily true) doesn’t cost less – it costs more:
If health care providers can prevent or delay conditions like heart disease and diabetes, the logic goes, the nation won’t have to pay for so many expensive hospital procedures.
The problem, as lawmakers are discovering to their frustration, is that the logic is wrong. Preventive care — at least the sort delivered by doctors — doesn’t save money, experts say. It costs money.
That’s old news to the analysts at the Congressional Budget Office, who have told senators on the Health, Education, Labor and Pensions Committee that it cannot score most preventive-care proposals as saving money.
So with that myth blown to hell, we’re now looking at a government plan which will add cost to the deficit by subsidizing the insurance of 47 million and (most likely) many more, plus a plan to use a more costly form of medicine as its primary means of giving care.
But, back to the entitlement report – or warning. The CBO says that unless entitlements are drastically reformed (that means Medicare, Medicaid and to a lesser extent, Social Security) we’re in deep deficit doodoo:
The most frightening findings in this report are the deficit and debt projections. In this year and next year, the yearly budget shortfall, or deficit, will be the largest post-war deficits on record–exceeding 11 percent of the economy or gross domestic product (GDP)–and by 2080 it will reach 17.8 percent of GDP.
The national debt, which is the sum of all past deficits, will escalate even faster. Since 1962, debt has averaged 36 percent of GDP, but it will reach 60 percent, nearly double the average, by next year and will exceed 100 percent of the economy by 2042. Put another way, in about 30 years, for every $1 each American citizen and business earns or produces, the government will be an equivalent $1 in debt. By 2083, debt figures will surpass an astounding 306 percent of GDP.
The report also finds high overall growth in the government as a share of the economy and of taxpayers’ wallets that provides an additional area of concern. While total government spending has hovered around 20 percent of the economy since the 1960s, it has jumped by a quarter to 25 percent in 2009 alone and will exceed 32 percent by 2083. Taxes, which have averaged at 18.3 percent of GDP, will reach unprecedented levels of 26 percent by 2083. Never in American history have spending and tax levels been that high.
Here’s the important point to be made – these projections do not include cap-and-trade or health care reform.
Got that? We’re looking at the “highest spending and tax levels” in our history without either of those huge tax and spend programs now being considered included in the numbers above. Total government spending, as a percent of GDP is now at an unprecedented 25%. And they’re trying to add more while this president, who is right in the middle of it, tells us we can’t keep this deficit spending up forever.