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How I Single-handedly Eliminated the Federal Government’s Budget Deficit

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It’s no secret that our nation is deep in debt. Enormous annual budget deficits are projected to continue for…well, pretty much forever, unless something rather drastic is done, and soon.

Well, everyone can relax. I just solved all our problems.

Thanks to this handy tool from the New York Times, I was able to turn a projected $418 billion shortfall in 2015 into a $58 billion surplus. I was also able to turn a projected $1.345 trillion dollar deficit in 2030 into a $161 billion surplus.

Here’s how I did it:

- Cut foreign aid in half - Sorry, Israel. We’re broke!

- Eliminate earmarks - John McCain would have been proud. Oh, wait…he’s still alive. Never mind!

- Eliminate farm subsidies - Although we may need to develop National Pitchfork Defense to prevent an uprising in Nebraska…

- Cut pay of civilian federal workers by 5 percent - Take that, public sector unions!

- Reduce the federal workforce by 10 percent - This can be done mostly through attrition.

- Cut 250,000 government contractors – There are simply too many of them at present.

- Assorted other cuts to the federal government – NPR and the NEA are gone!

- Cut aid to states by 5 percent - Force states to cut the fat from their budgets.

- Reduce noncombat military compensation and overhead – Healthcare premiums would have to rise for the first time in a decade.

- Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015 – Surely this is doable, right? I mean, if it’s not, then we are really and truly screwed…

- Enact medical malpractice reform – “The first thing we do, let’s kill all the lawyers.” I read that somewhere. 

- Cap Medicare growth starting in 2013 - Cap Medicare growth at GDP plus 1 percent.

- Raise the Social Security retirement age to 68 - Just one year higher than already planned.

- Reduce Social Security benefits for those with high incomes – Means test it.

- Tighten eligibility for disability – Too many crooks on this as it is. I’ve met some of them.

- Use an alternate measure for inflation - Daniel Patrick Moynihan was right!

- The Lincoln-Kyl proposal for estate taxes - The first $5 million is exempted.

- Return capital gains and dividend tax rates to Clinton-era levels – Sounds reasonable.

- Subject some incomes above $106,000 to the payroll tax - Brings in a lot of revenue.

- Eliminate some tax loopholes - The tax code is simplified and more revenue is brought in.

This plan is comprised of 74% spending cuts and just 26% tax hikes. That sounds like a reasonable ratio to me!

Please feel free to offer your own plans in the comments.

(PS – Oh, and REPEAL OBAMACARE!)

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About RJ

  • http://www.republicofdave.com Dave Nalle

    That’s a cool tool. The problem is that the options are so limited. I wanted to cut some of the suggested items far more than it allowed. Nonetheless I had no problem solving the budget problem with no real harm done to anyone. Maybe Congress needs a tool like this.

    Dave

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    RJ, if you were able to turn the deficit into a surplus without eliminating Obamacare, then what, pray, is so objectionable about it?

  • island

    Stop paying foreign so called refugees to come to the US. Stop borrowing money from China, and taxing me and my children to Pay foreigners to come and live in the US. We pay people to come to the US and live from Pakistan, Somalia, and many other countries. We borrow money from China and Give them food, shelter, clothing, medical care, education. Then many go back to their countries to learn jihad. Then as soon as they become US citizens they bomb Times Square. This would save billions of dollars.

    And then there are the million and a half legal foreigners that “support themselves” the government imports each and every each year, enough people to replace the entire native born American population of 3 states each and every year, to compete with Americans for jobs. Why import foreigners to take to take American jobs?

  • Doug Hunter

    #2 It’s a little something called individual freedom, you probably wouldn’t understand. As an analogy I’ll give you retirement. What is so bad about Social Security and having the government handle your retirement? Well, let’s see just from this list.

    – Raise the Social Security retirement age to 68 – Just one year higher than already planned.

    – Reduce Social Security benefits for those with high incomes – Means test it.

    In other words you have zero control over it. I have felt ever since I can remember feeling that the social security retirement money I put in was just being stolen and I would never receive any tangible benefit from it and I still believe that. They will decide that because I wasn’t a consumerist jackass who spent every dime I made and depended on the government to bail me out that I deserve to receive nothing or barring that they’ll simply continue to raise the age to the point where I’ll never see it.

    Let’s contrast that with saving your own money in a private plan. With my own money, If I want to start eating into my capital at 68 I can, or 62 or 35. I don’t need a ‘means test’ to decide if I can use the money I worked for. I understand, as always, the price of freedom is responsibility and generally people do not handle that well. Some people will never save for retirement and those people are the same people who likely won’t earn enough in there lifetime to fund their retirement even with mandatory taxes. I understand I must work twice as much and be twice as creative in my life so that the excess I create can be redistributed to someone who contributes nothing but a mouth to feed. I understand it, I just don’t like it.

  • Baronius

    I can get two-thirds of the way there (and a greater percentage in the long run) with only two tax hikes: a millionaire’s tax and the Bowles-Simpson plan for eliminating loopholes and lowering rates. And I’m still uncomfortable with the millionaire’s tax. The problem with all these tax increases is that the estimates of their impact are based on static modelling. Under static modelling,

    change in tax rate -> direct change in tax revenue

    In dynamic modelling,

    change in tax rate -> direct change in tax revenue
    (and)——————-> change in national income -> indirect change in tax revenue

    In other words, the whole notion of economic incentives is ignored with static modelling.

  • Arch Conservative

    Cutting the deficit is only one third of the battle.

    We as a nation need to be debt free.

    The third element is manufacturing. We don’t do it anymore. That’s a big problem.

    We’ve got a long, long way to go from playing with ridiculous budget calculators from the NYT.

  • Glenn Contrarian

    Baronius!

    Hey, whaddaya know – a conservative who sees the benefit of tax hikes for the wealthy (who do NOT need them to begin with) and closing the tax loopholes that allow corporations like Exxon to get away with paying less in taxes than any BC blogger does!

    There’s hope for you yet!

    (P.S. tax cuts resulted in an increase in tax revenue only ONE time…and that happened to be the SAME year (under JFK) that taxpayer identification numbers first went into effect for ensuring that everyone paid their taxes. If high taxes for the wealthy were that bad, then why didn’t they go broke when the top tax rate was 90% for ten years and 70% for twenty years after that? (1950-1980))

  • Baronius

    Arch, we don’t need to be debt-free. Nations, families, and companies can take on some debt to get through hard times or to pay for a major expense. But if you’re borrowing to make everyday purchaces, you’re in trouble.

    As for manufacturing, yeah, we could be better. We manufacture 25% less than China, which has 4x our population. We manufacture a little less than India, Japan, Germany, and Russia combined. In terms of manufacturing, we’re about 80% of NAFTA. And keep in mind that the service industries aren’t “burger flipping” jobs. They’re in education, finance, health care, entertainment, and telecom (among other industries). The US is doing a lot of cutting-edge stuff in those fields.

  • Baronius

    Glenn, that’s not true. Federal revenue went up following the Bush tax cuts of 2003. In the early 1920’s it’s hard to track, because the tax cuts were phased in, but tax revenue was stable while tax rates were cut by 2/3.

    As for your PS, I’ve noticed that you point out the high maximum rates in the postwar years a lot. When Dave points out that those rates were applied to very few people, you never reply. It seems to me that the income level at which a certain rate kicks in is as important as the rate, because if it’s high enough it won’t affect anyone. But you never reply. I’d think this would be one of those opportunities for you to either seal an argument or admit to an error, two things you’ve said that you’re always willing to do. I know that Dave has given you multiple chances.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Doug (@ #4):

    Supposing someone embezzles away your retirement fund, or you get seriously ill and have to withdraw all of your savings to pay your medical bills?

    Suddenly, you qualify for Social Security via a means test.

    I don’t plan on relying on Social Security for my retirement either, and I’m continuing to pay into an employer-provided health plan (actually my wife’s, which sucks significantly less than my employer’s does).

    But it’s nice to have a safety net.

  • Glenn Contrarian

    Baronius –

    Actually, total federal revenue went DOWN each year from 2001-2003. The federal revenue went UP in 2004…but bear in mind that 2004 was the beginning of the real estate bubble – and purchases of houses with greatly-inflated prices also included greatly-inflated tax revenue. The below are the federal revenue per year, in billions, in 2005 dollars:

    1999 2106.33
    2000 2284.86
    2001 2196.84
    2002 2012.00
    2003 1894.29
    2004 1943.02
    2005 2153.86

    So…what I said stands.

    And as for your comment:

    As for your PS, I’ve noticed that you point out the high maximum rates in the postwar years a lot. When Dave points out that those rates were applied to very few people, you never reply. It seems to me that the income level at which a certain rate kicks in is as important as the rate, because if it’s high enough it won’t affect anyone. But you never reply.

    Baronius, you should know by now that I’ve no problem addressing any particular issue. I’ve shown by word and deed that I am grateful when someone proves me wrong on any particular issue. I honestly haven’t seen Dave make such a claim (which is not to say that he hasn’t, but that I can’t check BC every single day (or week))…and I’d wholeheartedly agree with the high taxes being applied to only the very wealthiest, say, less than 2% of the taxpaying population – you know, sorta like what Obama’s been saying about keeping the tax cuts for all Americans except for those who make a quarter million or so every year.

    Exactly why it is that Republicans want to keep Reaganomics (too-low taxes and too much deregulation) with the crises and recessions it’s brought (’82 recession, ’88 S&L crisis, ’91 recession, ’01 dot-com bubble, ’07 real estate bubble, and the ’08 Great Recession)…when the nation’s fiscal policies in place from WWII until 1980 obviously worked quite well and brought us VERY few such recessions…

    …is beyond me. They don’t want to do what American history proves works just fine, but they want to keep doing what American history proves to not work nearly so well.

    Baronius, I just wish that y’all would make your decisions based on what has and has not worked before.

  • Clavos

    closing the tax loopholes that allow corporations like Exxon to get away with paying less in taxes than any BC blogger does!

    BC bloggers and all citizens who buy Exxon products and services pay Exxon’s taxes, which, in accordance with standard business practice, are incorporated in the prices of their products and services; as are the taxes of all US corporations that “pay” taxes (None do — they collect them for the gummint, then pass them on to their customers).

    The only taxpayers are the private citizens; the consumers.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    That’s a radical statement, Clavos.

  • Glenn Contrarian

    Clavos –

    So…you think that businesses should pay no taxes at all. Is that what you believe? And do you really, truly believe that if all of a sudden there were no more business taxes, that the CEO’s – the kind, gracious, big-hearted Real Americans that they surely are – would drop their prices one whit?

    And you call me naive!

    You do realize, of course, that if businesses don’t pay any taxes, then the tax rates of all Americans will have to be raised – and an even greater burden will be placed on the middle- and lower-class population since the rich can afford accountants to ‘adjust’ their earnings so that they pay as little as possible.

    Ah, but I forget! Not only do you think that businesses shouldn’t be taxed at all, but that it’s okay that rich people pay proportionally less of their income than the middle class does.

    Clavos, you’ve been sticking a wee bit too close to the grape Kool-Aid dispenser….

  • Baronius

    Tax cuts became law in May 2003. Revenue went up in 2004.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    He ain’t saying that, Glenn. The import is that you’re being shafted and you don’t even know it.

  • Clavos

    So…you think that businesses should pay no taxes at all. Is that what you believe?

    Your reading comprehension,never very good ,seems to be deteriorating as you age, Glenn.

    I didn’t say that. What I said was that you fool yourself if you think that businesses pay taxes — they don’t, their customers pay their taxes as part of the price of their goods and services — taxes are part of the businesses’ costs and as such are added into their prices.

    As a result, the ultimate taxpayer in this country is the consumer — we pay ALL the taxes.

    You do realize, of course, that if businesses don’t pay any taxes, then the tax rates of all Americans will have to be raised…

    They already are Glenn, in the prices we pay for what we buy — everything we buy!

    If you don’t realize that, you’re not only naive, you don’t know anything about business.

  • Clavos

    @# 13:

    But true, Roger…

  • http://pajamasmedia.com/blog/author/danmiller/ Dan(Miller)

    Glen, I see the logic of your position just as clearly as you see Clavos’ intemperate suggestion that corporations pay no taxes at all. Shame on him, so blinded by rightist dogma that he can’t see the truth!

    Obviously corporations, wicked money grubbing creatures that they are, raking in scads of undeserved profits from the brows of the enslaved working poor, should pay all the taxes and not be permitted to pass any of them through to their foolish but untaxed customers. If that results in killing off the corporations, good; then the benign government must take over all production of goods and services. It will then be unnecessary to go through the legal entanglements of expropriation. The world will be a far better place for it.

    Dan (Miller) on behalf of Hugo Chavez

  • Clavos

    Let me give you a concrete example, Glenn. I own some rental properties. On those properties I “pay” property tax, and on the profit from the rent, I “pay” income tax.

    But in reality,I’m not paying those taxes, because I include them in the rents I receive for those properties, so in effect, I’m merely collecting the taxes for the government from the consumers, my tenants, and passing them on to the governments who charge them.

    ALL businesses do that, Glenn, because if they didn’t do that, not only with their taxes but with ALL their expenses incurred in the production of the widgets they sell, they wouldn’t have a profit, and would be out of business in very short order.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    Wow, Clavos, you’re a little capitalist pig. I thought you just sell yachts but in effect, you’re also a landlord, which makes you a little feudal pig.

    No wonder we hate your guts.

  • Glenn Contrarian

    Baronius –

    Research a bit more about the tax laws. The 2003 law passed simply accelerated some facets of the 2001 tax cut. The 2001 tax cut had been completely implemented for everyone in the bottom two tax brackets…but not for anyone in the other four tax brackets whose taxes were retroactively lowered in the 2003 tax cut.

    Again, the increase in federal revenue in 2004 is largely due to the real estate bubble that began after the end of the dot-com bubble crashed. Nearly every one of those real estate transactions with inflated prices yielded higher property taxes than would otherwise be expected. I really don’t think you can disagree with this since real estate is one of the single biggest sectors – if not THE biggest sector – of the American economy.

    Furthermore, Baronius, look what the Bush tax cuts really cost the American taxpayer:

    The tax legislation enacted under President George W. Bush from 2001 through 2006 will cost $2.48 TRILLION over the 2001-2010 period. This includes the revenue loss of $2.11 trillion that results directly from the Bush tax cuts as well as the $379 billion in additional interest payments on the national debt that we must make since the tax cuts were deficit-financed.

    And while we’re at it, Baronius, how’d the unemployment stats change when Dubya’s tax cuts took effect? After all, if conservative dogma held true, then those tax cuts should have resulted in MASSIVE gains in employment and good times for all and sundry, right?

    But what happened to those massive gains in employment? They went the way of the dodo bird and the federal budget surplus that Dubya was handed when he took the oath of office.

    Baronius, the rich got much richer under Dubya…but there was almost ZERO growth in income among the middle class. The tax cuts didn’t help you or me or Clavos or Roger. It helped the rich…and golly-gee-whiz, their great good fortune did NOT trickle down to the rest of us.

    ‘Trickle-down’ economics doesn’t work, Baronius. That’s why Dubya’s dad called it ‘voodoo economics’…and he was right.

  • Clavos

    Gee, Rog, and I thought you were a fan!

  • Glenn Contrarian

    Clavos –

    No, I do understand very well what you’re saying…but what you’re forgetting is the influence of the ‘magic of the marketplace’.

    If you have a really, really good income coming in from all your businesses, does that mean you raise or lower your prices? No, of course it doesn’t. Your prices are determined by the market. Yes, you DO pass much of the cost of the taxes applied by the local/state/federal government…but not all of it, because you still have to keep your prices somewhere close to those of your competitors.

    Furthermore, your competitors are rarely equal to you. Some are smarter, some are dumber. Some have better accountants, some have hacks who think they know accounting. And some have tax breaks that you do NOT have.

    Life is rarely fair…and the same goes for business. It’s like a sensible quote (gasp!) I heard from a Tea Party speaker: “If you find yourself in a fair fight, it’s because your tactics suck.” If anything, I’d have to say that if you’re allowing taxes to hinder you as much as those taxes hinder your competitor, it’s because your tactics suck.

    So while all businesses at least to some extent pass on the cost of taxes to the customers, very few of them pass on ALL of that cost to the customers, but instead take a little less home than they might otherwise.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    For the life of me, Glenn, I really don’t understand your point. Do you?

  • zingzing

    if i get clavos right, he’s saying businesses should pay no taxes. which would seem to make sense. they undoubtedly pass those taxes onto the consumer, and probably err on the side of charging just a little more rather than a little less of the (rather smaller than fair) amount they have to pay. so it would make sense to axe their taxes and watch prices fall for the consumer. the consumer of course, would then have a higher tax burden, but the savings on consumer goods would balance that back out.

    right? that’s really, really giving the businesses the benefit of the doubt. what would force them, as a group, to lower their costs? the markets? maybe that would do some, but you can be damn sure they’d be eyeing each other, trying to not let the price fall too far. and maybe their paperwork would get a little sloppy and shifty if they weren’t being taxed and scrutinized. and the richest companies would still have the shrewdest accountants doing their best to work within the new system to produce a monetary advantage for their employers. prices wouldn’t go down far enough to justify the added tax burden on consumer (not that it matters whether they consume anything or not at this point).

    as usual in right-wing utopia, the rich would get richer and the poor would get poorer.

    i wonder if any right winger remembers latin america in the 70s. leftist and developmentalist gov’ts toppled by military coups set up to promote right wing chicago school free market experiments, resulting in poverty, high unemployment, a vanishing middle class, disappearances, torture and political genocide. but hey! a few people got rich.

  • Clavos

    So while all businesses at least to some extent pass on the cost of taxes to the customers, very few of them pass on ALL of that cost to the customers, but instead take a little less home than they might otherwise.

    No, Glenn, it doesn’t work that way. All overhead costs (and taxes are overhead) are accounted first, because if not, the business cannot determine whether or not it is even meeting its cost burden, much less how much to allocate for reinvestment, expansion, R&D, etc. If they “take a little less home than they might otherwise,” it’s precisely because they are amortizing all costs PLUS reinvestment, R & D, etc., BEFORE taking a “Profit” or paying shareholder dividends. Because they cannot control tax rates, businesses MUST amortize their tax load and other uncontrollable costs first — completely. Tax accountants can only do so much (legally) — that I’ve learned from experience; if you can’t pay ALL your costs AND make a profit (or pay your shareholders — same thing), you don’t have a viable business and will soon be closing the doors.

  • Clavos

    if i get clavos right, he’s saying businesses should pay no taxes.

    One more time: no, I’m not. I’m saying that the librul attitude of “let’s make businesses pay more taxes” ignores the fact that the burden of paying all the tax bucks rolls downhill to your pocket and mine — NOBODY except end users pays the country’s taxes — NOBODY.

    My further point is that every time taxes are raised on businesses, they are effectively raised on US, the taxpayers, so it would behoove us all to keep that in mind.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    Two separate issues here. The consumer pays the taxes. The business make profit, which is subject to taxation.

    So the only way to prevent passing the tax burden to the consumer would be by way of price control, in short, a socialist type of system.

    I believe that’s the dichotomy Clavos is presenting.

  • Clavos

    i wonder if any right winger remembers latin america in the 70s. leftist and developmentalist gov’ts toppled by military coups set up to promote right wing chicago school free market experiments, resulting in poverty, high unemployment, a vanishing middle class, disappearances, torture and political genocide. but hey! a few people got rich.

    True, but not because of the Chicago school or any other economic dogma. Rather, because Latino countries are among the most corrupt and lawless places on earth.

    The major (and stellar) exception of course, is Chile, whose economy since 1975 is Ta-da! run almost entirely according to Chicago school principles by Chilean disciples of Milton Friedman and others. Funny, that.

  • zingzing

    ah, except in chile, land of pinochet, if you forget, the army took over by force, killing over 3,000, including the president, imprisoning 80,000 and forcing 200,000 to leave within a few days. and this was 1973, not 1975. inflation reached 375% within a year, unemployment skyrocketed and hunger became rampant. the only ones to benefit were the regime, the chicago people (friedman’s students) and multinational corporations.

    the people, if they weren’t just suffering the ill-effects of the economy, were living in fear. the rest of the world condemned pinochet and chile and tried to persuade corporations to stop investing in chile because of the atrocities. tens of thousands were put into stadiums, some were disappeared and tortured, and some were killed in mass and in plain view of the others to spread fear.

    the economy shrank by 15% in that first year and employment reached 20%, and it would stay near that for years. almost 3/4s of a family’s income had to be devoted to bread. pinochet went even further, privatizing former gov’t institutions, including education. the economic turmoil and the terror went on for several more years, until a 1982 crash produced hyperinflation and 30% unemployment (pinochet’s predecessor’s admin’s highest total was 3%).

    so pinochet started re-nationalizing a lot of companies and throwing off some of friedman’s orthodoxies. and by 1988, the economy was booming, but chile still remains a model of inequality between the rich and the poor.

    but none of that failure, mass murder and poverty stopped friedman’s people from spreading their gospel to chile’s neighbors. brazil, argentina and uruguay (i think it was uruguay) all came under his sway. military juntas took over, the economy was wiped out, fear and torture pacified the masses, and friedman had another playground to test his theories. these countries, chile, brazil, argentina and uruguay even set up something called “operation condor,” wherin they would cooperate and allow hit squads to cross borders and kill fleeing leftists or other enemies of the state.

    it was no accident that all these countries had military coups and sudden economic collapses around the same time. they fell like dominos from leftist gov’ts to right wing “free market” dictatorships. i’m sure you’ll happily admit that the cia helped these things to occur. but friedman was there as well.

    so yeah, not funny.

  • zingzing

    when something would go wrong with his theories, freidman would say it wasn’t that his theory was wrong, it was that there was some “distortion” within the system. that “distortion” was gov’t interference in business. if the market was truly free, he said, then everything would go according to theory.

    hence the military coup, the disappearances, the torture, the mass murders, river chocked with bodies, the destroyed economy, etc: a blank slate for freidman to scribble on. but something always seemed to go wrong.

  • http://www.roblogpolitics.blogspot.com RJ

    I miss Pinochet.

  • Glenn Contrarian

    Roger –

    Yes, I do understand what I said. Clavos’ premise does have a lot of merit…but it’s also simplistic and does not address all the factors that do play a significant role. I was trying to show some of those factors that also play a part.

    For instance, look at his statement:

    if you can’t pay ALL your costs AND make a profit (or pay your shareholders — same thing), you don’t have a viable business and will soon be closing the doors.

    For a more extreme example, let’s look at United Health Care – they are subject to market forces and have to keep their cost down (and will have to do so to a greater extent beginning in 2014). BUT if the government increases their taxes, will they be more likely to increase their prices? Or will they perhaps take a look at their CEO who IIRC gets $20M+ per year?

    I guess what I’m trying to say is that when it comes to relatively small businesses, Clavos makes a good point; however, large corporations are a different matter altogether, and they’ve often got more fat to cut than people think (witness United Health Care’s 20%+ administration costs compared to Medicare’s 2%).

    Taxes, like so many other things, aren’t as simple a matter as people would like to think.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    What I’m trying to say, Glenn, is an insoluble dilemma, like being stuck between a rock and a hard place. It’s part of the capitalist system and there is no escaping it. Simplistic perhaps but true.

    Anyway, that’s my two-cents worth.

  • zingzing

    rj: “I miss Pinochet.”

    you don’t know pinochet.

    i wish that his name meant something stupid.

  • Baronius

    Glenn – According to your first paragraph, tax revenue in the early 2000’s didn’t increase after the lower tax brackets’ rates were cut, but did increase after the higher brackets’ were cut. That’s a pretty strong supply-side argument.

    With regard to the numbers you gave, you took them from Crooks and Liars, which took them from Citizens for Tax Justice, which derived them from the Institute on Taxation and Economic Policy model. It’s an impressive model, amazing in its analysis of tax incidence, but it’s static. See my earlier comment (#5 or something) for why that model doesn’t help in this case.

    You and I are like two explorers using different sextants. Yours is telling you we’re to the north; mine says we’ve gone south. You can’t solve the debate by using your sextant again. A static model isn’t designed to take changes in behavior into account. You can’t use one to prove that changes in behavior have no impact.

  • Clavos

    but chile still remains a model of inequality between the rich and the poor.

    As are a number of other economies,including virtually ALL the LatAM ones (yes, even Venezuela, Cuba, Nicaragua and El Salvador) and the good (?) ol’ USA!

    There always has been (throughout human history) a disparity between poor and rich, there likely always will be. NO economic system thus far devised by humans has overcome this, and personally, I doubt there ever will be one.

    The Declaration of Independence notwithstanding, all men are NOT created equal; some are smart, some not; some are lucky, some not; some are industrious, some not — you get the idea.

  • zingzing

    true, clavos, even the best are less than stellar. but chile is worse than most.

  • Clavos

    witness United Health Care’s 20%+ administration costs compared to Medicare’s 2%

    Oh, puleeze that’s a total canard!

    First of all, those numbers are based on cute accounting tricks by the government: As Tom Bevan, cofounder of Real Clear Politics points out in his article on that site, the government “uses administrative costs calculated as a percentage of total health care costs…But here’s the catch: because Medicare is devoted to serving a population that is elderly, and therefore in need of greater levels of medical care, it generates significantly higher expenditures than private insurance plans, thus making administrative costs smaller as a percentage of total costs. This creates the appearance that Medicare is a model of administrative efficiency.[The Medicare cost ratio] is really just a statistical sleight of hand. [Furthermore,] private insurers have a number of additional expenditures which fall into the category of “administrative costs” (like state health insurance premium taxes of 2-4%, marketing costs, etc) that Medicare does not have, further inflating the apparent differences in cost.

    But, as you might expect, when you compare administrative costs on a per-person basis, Medicare is dramatically less efficient than private insurance plans…between 2001-2005, Medicare’s administrative costs on a per-person basis were 24.8% higher, on average, than private insurers.

    This confirms two things most Americans already know: 1) government is rarely, if ever, more efficient than the private sector, and 2) if something sounds too good to be true, it almost always is.

    Another point, not made in the article, but true nonetheless, Medicare does not do its own billing — a significant portion of “administrative costs” in the medical insurance business; Medicare’s billing is handled for it by CMS, which is a separate government agency with a separate budget, which is not included in the calculations of Medicare’s administrative costs.

  • http://www.RoseDigitalMarketing.com Christopher Rose

    As a non-faithist and therefore unencumbered with attractive if implausible notions of an afterlife, life is particularly important to me, being so very unique an experience.

    I like to enjoy life so am a natural optimist, unlike overly fearful doom mongers who post on this site.

    Granted, it is still possible that we might blow ourselves to pieces; poison the planet with our waste to such an extent that it causes a mass die off of our species; get hit by a big asteroid; or simply fall back from the cultural, economic and political progress we have made as a species since we largely gave up the nomadic life about ten thousand years ago.

    That said, I think the current disparate economic conditions that prevail on the planet are very much just passing through, albeit a bit too slowly for some tastes, including mine.

    Just as the overall level of human richness, economically and otherwise, has increased these past 10,000 years, I believe it will continue to do so, barring disaster of course.

    I think we can already see the outline of a bold new future emerging out of the mist thanks to increasing scientific understanding of our world/system/galaxy/universe, a future in which money and wealth become far less important due to their abundance and ubiquity.

    The cost of producing ever more complex machines continues to fall at quite a rate and everybody on the planet has access to far more technology to help them in their lives than ever before.

    It doesn’t seem unreasonable that overall wealth levels could increase to such a level that there simply won’t be a meaningful “disparity between poor and rich” at all. I believe our economic systems are overcoming this disparity and just wish it would happen faster.

    In this kind of world, there won’t be rich and poor, there will just be people of differing imaginations doing wonderfully different things. I for one can’t wait!

    It follows then that all economic setbacks or the kinds of “interesting times” we are living through are actually our common enemy, not rich v poor as some seem to see things.

    I just hope I live long enough to see it all happen, which I might just be fortunate enough to do given the impressive advances in everything from longevity research to new stem cell derived medical advances we are seeing these days.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    Well, Christopher, aren’t your views affected somewhat by being above the fray and all that? Not that I necessarily disagree with your prognosis (because globalization will bring about changes we can’t even dream of). Meanwhile, Eurozone is in trouble and if it fails, it will be the first failed experiment.

  • http://www.RoseDigitalMarketing.com Christopher Rose

    Roger, in which way exactly am I “above the fray”?

    I don’t see how the unforeseen changes caused by future globalization will have any meaningful impact on my understanding of how our future might play out.

    Similarly, although I hope the Eurozone doesn’t fail, albeit it is in need of reform, I don’t think it will change anything, just delay it, like all hindrances to progress.

  • http://takeitorleaveit.typepad.com/an roger nowosielski

    Globalization will have positive effect, that’s what I meant.

  • Glenn Contrarian

    Clavos –

    Sooo…did you see where your reference contradicted himself? He said that when admin costs of Medicare per-person is LESS efficient than private insurance companies:

    But, as you might expect, when you compare administrative costs on a per-person basis, Medicare is dramatically less efficient than private insurance plans…between 2001-2005, Medicare’s administrative costs on a per-person basis were 24.8% higher, on average, than private insurers.

    But earlier in the article he says:

    But here’s the catch: because Medicare is devoted to serving a population that is elderly, and therefore in need of greater levels of medical care, it generates significantly higher expenditures than private insurance plans, thus making administrative costs smaller as a percentage of total costs.

    He tries to explain the difference by pointing out that the private insurance plans have to pay state taxes…and that they also have to pay for marketing; whereas Medicare is not directly budgeted for billing.

    What he’s also not pointing out is that the administrators of private health insurers get paid FAR more than their Medicare counterparts…and they extend to their customers the costs of their private jets and company conferences in ritzy resorts.

    Furthermore, unlike Medicare they tend to keep very, very quiet about fraud that they detect and that they commit…and it’s naive to think there isn’t. The difference is, up until this last summer, Medicare would pay first and investigate later. They’re doing it differently now – if they suspect any possibility of fraud, they investigate first and then decide whether to pay. That’s the difference between Republicans and Democrats – the Dems want to keep what works and fix what’s broken, whereas the Republicans want to trash the whole system in their drive to ‘privatize everything’ (which begs the question – how many elderly people would have lost everything during the Great Recession if Social Security had been privatized and people allowed to invest where they will? Truly, Enron writ large).

    Clavos, there’s no comparison. Medicare takes the most expensive patients, denies almost no one, and still has a lower administrative cost since they spend little in the way of advertising, much less in admin personnel costs…and they’d spend even LESS if they were allowed to negotiate the price of prescription drugs like the VA and ALL the private insurance companies are allowed to do (and who’s to thank for this last one? REPUBLICANS). All that you showed contrary is window dressing, tap-dancing that avoids and obfuscates the fact that in the big picture, Medicare is a VERY good program.

    Yes, Medicare has its faults…but without it, what would happen? More healthcare rationing by private insurance companies, to wit:

    The four largest health insurance companies in the US denied coverage to more than half a million individuals because of their pre-existing conditions from 2007 to 2009, according to a congressional investigation. The investigation found that the number of people who were denied coverage increased about 49 per cent from 2007 to 2009. In that period, the groups refused to pay 212,800 claims for individuals who were already insured based on their previous medical conditions.

    The above was denial of health care coverage to ONE OUT OF SEVEN OF ALL CLAIMANTS belonging to those four insurers. Is that kind of system really, truly what you want, Clavos?

    Is it?

  • Clavos

    Once again, you misread, Glenn. There is no contradiction in what he has written.

    What he said (very clearly) is that on a per person basis, (that is, without regard to costs) Medicare is less efficient, but that on a cost (expenditure) basis, Medicare comes out with a better (seemingly) admin cost ratio. But, that’s not how costs are accounted for — the accepted practice is to state them on the basis of numbers of insured treated, not on an overall cost basis. No contradiction at all.

    What he’s also not pointing out is that the administrators of private health insurers get paid FAR more than their Medicare counterparts…

    Irrelevant, because the lower echelon workers get paid far less than government workers and do not get the generous retirement plans (which we ALL pay for — regardless of whether or not we’re Medicare beneficiaries) that the gummint types get.

    No, Glenn, from the USPS to Medicare, the government has shown repeatedly that it cannot operate as efficiently as organizations providing the same service for a profit.

    As to rationing: what difference does it make to the patient whether those doing the rationing are government agencies or private companies? My wife was rationed (ALL Medicare patients are — the amount of hospital days paid by Medicare in a year is limited). And we bumped up against the limit four times in the five years before she died. Had we not had a private insurance plan as well, we (she) would have been up shit creek without a paddle.

    Even with Medicare, she’s being dunned by various medical suppliers for an aggregate total in excess of $100K, including the business office of the hospital in which she died, which apparently is unaware she is dead. Go figure.

  • Glenn Contrarian

    Clavos –

    I understand your loss, and I fear the day when my Darling passes away. Please accept my condolences and understand that though you and I disagree on much, nothing I say is ever against your wife or is meant to lessen your memories of her in any way.

    Back to Medicare – for those who are enrolled in Medicare, does Medicare provide coverage for almost everything at least up to a certain point? Yes. But with the top four private health insurers, one out of seven of them are finding out that they’re not covered when they receive a letter stating, “We decided not to pay for your illness because of [place excuse here]”.

    Does Medicare promise come back later and tell you “No, we decided not to cover your illness because of a pre-existing condition”? No. But the top four health insurance companies do so for one out of seven of their customers.

    You know, Clavos, I really don’t like to gamble. I don’t want to have to take a one-out-of-seven chance that this or that private health insurance company will drop me with no notice because I didn’t let them know I had acne when I was sixteen (and YES, this was one of the reasons used).

    Clavos, SOME guaranteed medical coverage – or even a SIGNIFICANT AMOUNT of guaranteed coverage such as that provided by Medicare – is a heck of a lot better than NO medical coverage at all…which is the risk you’re taking when you’re dealing with private insurance who can drop you with no notice for the most ludicrous of reasons!

    Over fifty million Americans now have no health insurance since many have to choose between health insurance and little things like rent or food on the table…

    …and you know what? When they get sick, the taxpayers wind up footing a MUCH greater bill because these people can no longer work and pay taxes and become a drag on our social services including courts and police, not to mention us footing the bill for their emergency room and hospitalization.

    Remember, Clavos, ONE HALF of ALL bankruptcies are due at least in part to medical bills…a situation that is NEVER a concern in the other first-world industrialized nations.

    But I guess it’s really more patriotic to let your people suffer and risk bankruptcy from lack of medical care. Ain’t the American Way a wonderful thing?

  • Baronius

    I’m no expert in this field. But I’ve read that Medicare rejects twice as many individual claims as private insurers. How does this square with Glenn’s comments?

  • Clavos

    Clavos, SOME guaranteed medical coverage – or even a SIGNIFICANT AMOUNT of guaranteed coverage such as that provided by Medicare – is a heck of a lot better than NO medical coverage at all…which is the risk you’re taking when you’re dealing with private insurance who can drop you with no notice for the most ludicrous of reasons!

    Agreed, Glenn. So why not regulate them and rein them in a little more tightly, instead of allowing the incompetent government attempt to take their place and run them out of business, which will result in the loss of hundreds of thousands of additional jobs at a time when we already have millions out of work?

    The government can’t pour water out of a pitcher that has the instructions printed on the bottom, so why do we have this knee jerk reaction, every time we perceive a deficiency, to turn the responsibility for remedy over to the least competent entity in the country? Government is the source of almost all that is wrong with this country, yet we persist in handing it ever more power and ever more opportunities to screw us, which is the one thing at which government truly excels.

  • Glenn Contrarian

    Clavos –

    So why not regulate them and rein them in a little more tightly, instead of allowing the incompetent government attempt to take their place and run them out of business, which will result in the loss of hundreds of thousands of additional jobs at a time when we already have millions out of work?

    For one thing, when have the Republicans EVER tried to regulate the health insurance agency even a little more tightly? There’s increased regulations with the Health Care Reform Act…and you see for yourself how everyone on the Right stood in lockstep against it!

    And why would we still have to have Medicare? Because the private health insurance agency would make very little money – and likely lose money – if a significant percentage of their customer base was comprised of the elderly and the severely disabled…which describes the majority of Medicare’s customer base! Medicare’s essentially caring for those whom the private health insurance industry has little incentive to be the primary insurance. Secondary, sure, after Medicare’s covered the lion’s share, but not the primary.

    Lastly, if we had single payer health care like the forty-odd countries that are now above us on the list of countries listed by life expectancy, our employment system would IMPROVE because we wouldn’t have millions going into bankruptcy because they couldn’t pay their medical bills!

  • Clavos

    @# 50:

    Lotta words, but no answer to either of the questions I posed in #49.