This month, the first baby boomers turn age 65. Somewhere between 5,000 to 10,000 people a day are going to be entering retirement for the next 15 years. I think this should result in a change in press coverage that will reduce confusion and save valuable ink and paper.
Current coverage: Congressman Alltalk today said he would balance the federal budget without touching Social Security and Medicare, noting his opposition to the mohair subsidy, the X9 kill-em-all fighter plane and Department of Education grants to the states. The mohair subsidy was created in blah blah blah and does blah blah blah blah, the X9 fighter plane is supposed to blah blah blah but in tests hasn’t been able to blah blah blah, and Education Department grants to the states fund blah blah blah and are strongly supported by Governors like blah blah and blah blah but have their critics including blah blah blah blah blah.
New Proposed Coverage: Congressman Alltalk said he would balance the federal budget without touching Social Security and Medicare, which is impossible.
Variant of New Proposed Coverage: Senator Feelgood said she would balance the budget without touching Social Security, Medicare, Defense, Veterans programs, or Homeland Security, which is even more impossible than doing so without touching the first two.
Yes, I know there is silly and wasteful federal spending and I give goo-goo points to journalists who keep track of that. But fundamentally, to delve deeply into details of all the proposed list of cuts that have circulated in Washington for decades is to facilitate the spreading of a lie, namely that we don’t have any extremely hard choices in front of us.
We are going to have more people retired than we ever have had in U.S. history, at a time when life expectancy at age 65 is as high as it ever has been. We can have a massive tax increase or we can cut entitlements for the elderly or we can do some of both. But whatever we do it’s gonna hurt, and every moment we spend on mohair instead of acting like grown ups is going to make our ultimate suffering even greater.
Years ago there was a guy in my church who was living on the mohair subsidy. Nice fellow, but I’m not clear why it survived. I agree that sweating the small stuff is not gonna do it, but I think it is still important to sweat the small stuff as well as going after the big stuff. As Ev Dirksen never said (but wished he had) ‘a billion here, a billion there, and pretty soon you are talking about real money’.
There is middle-sized stuff, too: the ethanol subsidy, about which Mike OHare has been scathing. The mortgage interest tax deduction, a huge subsidy to the upper middle class, the folks who least need housing help. Kill enough middle size boon doggles, you have killed a big boon doggle.
I don’t want to trample on your symbolism and all, but:
1.) For people born in 1946, full retirement under SS is age, 66, and, therefore, next year.
2.) Less than full retirement kicks in sooner, and so baby boomers have been retiring for a while now.
The scheduce is here:
http://www.ssa.gov/retirement/1943.html
Not that I think the budget should be balanced by simply raising taxes, but do you really want to claim that tax increases are “impossible”?
“We can have a massive tax increase or we can cut entitlements for the elderly or we can do some of both.”
There’s a third option: squeeze medical providers to European relative wages and costs. GPs earn $100,000 take home; specialists $150,000; health insurance CEOs, $250,000; pharma earns 10% on equity. (You can pay the guy who runs the national health IT system $10m, as you only need one.)
It’s also playing into the hands of the deficit parrots (all sqwawk and no talons) to create a non-operational fusion category of “entitlements to the elderly”. As has been demonstrated ad nauseam, the USA has:
(a)a financially sound state pension scheme called Social Security, which poses no immediate threat to the budget and down the road can be fixed actuarially with trivial changes;
(b) a doomsday state health care scheme called Medicare, which will destroy the budget unless its costs are brought under control. ACA started but much, much more needs to be done.
@ James
In support of your position, let’s remember that into the 1960s, physicians were definitely part of the middle class, and mostly the middle-middle class at that. Physician’s take-homes were roughly comparable to university professor’s.
Today, not so much. A family practitioner (GP) makes two or three times what a run-of-the-mill English professor makes. Granted, a FP in a rural practice gets called out at all sorts of weird hours, while an English professor doesn’t get called at 2 AM to edit a run-on sentence. I don’t begrudge some differential to make up for that sort of thing. But the jobs require roughly comparable training and abilities, so why the huge differential? (BTW, Bux, Brett and Malcolm and any other of you, don’t tell me it’s a supply and demand thing when licensure requirement enforce a huge barrier that limits the supply.)
I expect that what will really end up happening is that primary care is going to be taken over by nurse-practitioners and chiropractors while physicians become strictly specialists. That (at least) would bring the primary care income down to European levels. Specialist physicians are going to continue to make way more than $150K, but I don’t see how we squeeze them down.
@Bruce: Medicare eligibility begins at 65, not 66, and that program poses by far the more severe fiscal challenge, so the problem is here now not a year from now.
@James: One could impose salary caps on physicians, which would be a form of cutting the Medicare benefit. There would be fewer providers both from bright younger people deciding to become investment bankers rather than doctors (oh joy…) and older doctors retiring from practice (BTW, older doctors tend to take care of older patients, so anything that tempts doctors approaching retirement to hang it up means more older people needing a doctor). Senior citizens, as the group which relies most of the health care system, would bear the brunt of such changes in terms of increased waiting times and generally lowered access to care. Not saying that makes it right or wrong, just that de facto your proposal is effectively a cut to the value of Medicare benefits. On social security, the general rule is that the older you are, the more sound it seems. Current beneficiaries are getting out far more than they paid in, while 20-year olds get the statement saying they will not even get 3/4 of what they pay in.
why are you conflating SS and medicare- when the problem is really medicare?
Indeed, Social Security is fully funded. If it goes into drawdown phase, and more needs to come from the general fund - so be it. Reneging on the trust fund would be simple, massive theft from the working class by the plutocrats.
And while Medicare is a budget problem, it is only one due to the absurd 18% of GDP spent on the health sector due to the US refusal to cut out the middlemen & get control of spending, which every other rich country did 30 years ago.
I didn’t really understand the import of your post, until you posted comments, and I don’t like it very much.
Social Security and Medicare are different and distinct programs. Medicare is in serious fiscal trouble, because medical care costs are rising rapidly. Social Security is, basically, in sound fiscal shape, endangered politically only by the unwillingness of the very rich to pay taxes on their economic rents to fund general government expenditures.
Your proposal to confuse Social Security and Medicare is identical to a Republican talking point, designed to confuse issues.
The terms, “benefit” and “value”, do not mean what you seem to think they mean.
There’s a certain point where I wonder if the press can do much. Anybody who follows the news with any sort of regularity knows that Medicare/Social Security are getting way too big. The ones who don’t know that (the majority of people) have decided they aren’t going to listen, or they aren’t interested in politics. This means it’s often political suicide for a politician to propose cuts to Medicare. The ones who do support cuts to Medicare are going to avoid the issue during an election. This means you often have to find out other things about a politician to figure them out.
Bruce Wilder, Social Security is in “sound fiscal shape” because it holds US Treasury Bills. If they simply burned those bills Social Security would be in terrible fiscal shape, but the US government overall would be no better or worse than it is today. Social Security makes up 20% of the government’s spending, so cutting it is definitely something that can make a big difference in the government’s overall fiscal footing. The rest is just budgeting trickery to fool you into thinking that Social Security isn’t part of the problem.
It’s not trickery, it’s funded separately through a regressive payroll levy. The payroll tax has always been paid on the promise that the funds would eventually come back to the people who paid them in. To suddenly announce that the surplus is not real, and has been taken to pay for lower taxes on the rich would indeed leave the US Government in much worse shape - we’d be facing a revolution.
@David C — the problem is that the very, very rich and the corporations they love are looting the country and unwilling to pay a reasonable level of taxation. The country simply cannot afford what the average Fortune 500 CEO is paid, let alone what top Hedge Fund Managers take home. All the growth in the economy over the last 30 years has fed into incomes not subject to the FICA taxes that fund Social Security. Meanwhile, from the increased payroll taxes of the working and middle classes, a surplus was accumulated in the Social Security trust fund in anticipation of the Baby Boomers retiring, and now rich people want that money, instead, to fund massive tax cuts for themselves.
Nationalizing the biggest banks and jailing their top executives would also improve the country’s economic prospects. I’m not holding my breath.
Bruce Wilder,
All the growth in the economy over the last 30 years has fed into incomes not subject to the FICA taxes that fund Social Security. Meanwhile, from the increased payroll taxes of the working and middle classes, a surplus was accumulated in the Social Security trust fund in anticipation of the Baby Boomers retiring, and now rich people want that money, instead, to fund massive tax cuts for themselves.
A nice summary.
Keith, adding onto Brett’s comment (the second time I’ve agreed with him today), and to others:.
First, Social Security is not Medicare, and even in what you’ve written here, you’ve switched from one to the other.
Second, as has been pointed out, Social Security is self-funding. Even if the worst-case scenario happens, it’s nothing compared to other problems.
Third, taxing the rich at the Clinton-era levels would make a major difference, and probably solve all budget problems. And after the Bush debacle and the Crash, it’s not possible to honestly state that taxing the living f*ck out of the rich would cause any problems whatsoever.
@David C: Good points. It may be that people want to believe so much that everything is fine that no amount of information will overcome that.
In Britain, GP partners earn om average £105,000 ($168,000), salaried (junior) ones £57,000 ($91,000). NHS hospital consultants earn on average £120,900 ($193,000) - with a longish tail, as top specialists award themselves “clinical excellence awards”, and many take private as well as NHS patients. British GPs are as well paid as American, the specialists, who drive the US medical cost disparity, clearly not.
Now places in British medical schools are greatly oversubscribed: the national ratio of applicants to places was 2.4:1 last year, after a big expansion in provision. Note that entry is determined at age 18, not later. The centralised UK university application system rations the number of choices, and strongly discourages long shots. You only apply if you think you have a decent chance given the market conditions. The medical schools demand nearly straight As in A-levels plus non-academic things like volunteering, a clinical aptitude test, and sometimes entrance exams (unlike any other discipline).
Nor SFIK are there shortages or applicant quality problems in other Western European countries.
The inference is that US specialiat medical earnings are held up artificially by monopolistic restrictions on entry and an uncompetitive market on the demand side. It’s very doubtful that deflating the monopolistic excess and paying doctors more like engineers would create major supply or quality problems. US law schools are still popular in spite of the over-expansion and coming earnings crunch.
James
This is worthy of discussion over a pint, its too complex to type out, but briefly: I hold medical school faculty appointments in the UK and the US and have been involved in training physicians in both places. I am blessed with many long-term collegial relationships and friendships with physicians in both countries. These experiences have taught me that the entire culture of health care and its values are different between the two countries. In the US, the underlying, not always articulated concern is that the “fanciest care be provided to the fanciest people” (corrollary: The fanciest doctors should be paid lavishly) and in the UK and Western Europe the concern is that the “Everyone gets reasonable care” (corrollary: Nothing wrong with being a jobbing physician, we all have to do our bit, you know). These values are suffused in the health care systems, their financing and in the values of doctors.
At its best, US care is the best in the world. Zillionaires who can go anywhere almost never fly to London to get on an NHS waiting list, they come to America for complex high-end procedures, and the US does that better than any other nation (This may offend nationalism, but it’s the truth). On the other hand, low income people get much more access to health care in the UK than they do in the US. This difference is even borne out in medical research design: US clinical trials tend to exclude many subjects to find out if treatment works among highly selected subjects, UK trials tend to assume that if a treatment doesn’t help a broad swath of people, its not worth bothering about, and therefore enroll more representative samples.
So…your proposal assumes that the difference between the two nations is a technical one, we can tweak pay as if it were not enmeshed in a cultural surround. We can’t. Bright American medical students are avoiding primary care because the pay in their eyes is too low even now. Others are avoiding medicine entirely (including specialist work) because again, the pay is too low — they can become investment bankers and make twice that without having to deal with stress of the health care system. Many of them expect to be paid like stars in a way that the top british physicians I know find unseemly.
One could argue that the US system should have European values, many have. But in the world we are living in, if the US suddenly adopted European pay scales, the population (to return to the subject of this post, Medicare recipients) would be outraged: What do you mean I can’t see a specialist? I’m 94 years old and I demand to see an thoracic surgeon immediately! What do you mean there is a waiting list? I have insurance, I deserve better etc (never mind that seeing a specialist was never very likely for the uninsured population). And American students, with different ways of thining about medicine as a career, would flee the field in droves. Many of them simply do not want the work lives and incomes that many of my British physician friends find satisfying.
Keith:
I’m reduced to a niggle. “Zillionaires who can go anywhere almost never fly to London to get on an NHS waiting list.” They can’t anyway - rich foreigners must pay full whack. And quite a few do go to private hospitals like the London Clinic. Less hassle for sheikhs at the airport, even now.
My personal experience (32 years) is largely about France. My late wife was treated in the Strasbourg university hospital by Professor Jacques Marescaux, a world-famour telesurgery pioneer. His outfit had visiting American surgeons. The culture definitely wasn’t “good enough for government work”, but aiming for and often achieving excellence. Ok, an outlier. But stars are outliers everywhere.
The sudden wage cut I postulated in my first comment is of course only a thought experiment and provocation. Realistically, relative US medical earnings could only be brought down gradually. But they will have to be to stave off fiscal and economic catastrophe: that’s not a provocation but a statement of the bleeding obvious.
As for the would-be medical stars who might decide they’d rather be investment bankers, good riddance.
Note that we’re simultaneously worried that the ratio of working-age-people to retired-age-people is going to be too low *and* we have 10% of the working-age-people looking for work but unemployed and others working fewer hours than they would like and so on. In the real physical world (never mind the numbers in the accounting databases) working people using the currently available knowledge and tools make goods and services and somehow we have to divide that up among the working and the (old, young, disabled, just plain laid off and unemployed, etc) non-working.