“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, April 15, 2011

Irrational Expectations Concerning Medicare

Since Paul Ryan's budget was released, liberal Democrats have been howling that it will impoverish seniors while giving more tax breaks to the wealthy.

I cannot help but see this as a case in which liberals have chosen to ignore something which is quite obvious, i.e., since the 1930s, Congress has enacted three similarly- and badly-designed social welfare programs- Social Security, Medicare and Medicaid- which have largely accounted for the large, uncontrollable federal spending increases which have resulted in unsustainable, unaffordable federal deficits and net externally-held debt.

Over the past week, I've heard various liberal pundits, journalists and Congress members bemoan how Ryan's plan 'will make seniors pay more for health care,' without acknowledging that the promises which have been made via the various welfare programs were always unaffordable in the long term.

For example, Social Security was intended as a safety net program for the few seniors left without private savings to fund their old age. However, once people knew of the existence of the program- surprise- they began to save less, substituting consumption for savings. Thus, a safety net was turned into an entitlement on which most seniors began to depend for old age pension income, rather than saving for it themselves.

Eighty-some years on, America has finally come to the end of the road in terms of continuing to borrow from the rest of the world to fund its social program spending.

In the meantime, I have just viewed, for the second time in a year, a 2009 program detailing the corroding infrastructure of the US. People in the program ask, rhetorically, how and why the US has let its roads, bridges, water and sewer systems become so decrepit.

That's easy.

Social Security. Medicare. Medicaid.

The fall off in large-scale civil engineering projects, except for the interstate highway system, dates, more or less, from after WWII. By the end of the 1960s, the federal government had expanded its scope, staff and spending to encompass ever more social programs, while tangible infrastructure became less important.

It's my contention that our nation has, in effect, whether explicitly or implicitly, chosen to consume its early-mid-twentieth century infrastructure, by not re-investing in it, while using the money not spent on that to fund lavish retirement and health care programs.

Medicare was never sustainable nor affordable as designed. It's a false choice to suggest that Ryan's replacement of the current open-ended, general-fund-based defined benefit approach by a defined contribution, insurance payment subsidy approach, represents an unfair or unnecessary cut in benefits to the affected.

The choice, as Ryan contends, and his Democratic collaborator, Alice Rivlin, agrees, is between this change, and the end of the program within a decade or so.

To continue to complain that Republicans are cutting benefits for seniors, the ill or poor, misses the point.

Having legislated and then promised citizens levels of social spending which were never sustainable forever, it's not realistic for liberals to voice this complaint.

To return to our Framers' views, what these three programs have done is what Jefferson believed to be the worst thing a generation could do to a following one- bequeath it a debt for money spent. In this case, it wasn't spent on infrastructure, but intangible, fleeting lifestyle expenses for several generations of Americans. Money which can't be recouped and will leave no lasting tangible trace.

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