The Washington Post and most of the important people in Washington want the United States to be like Kazakhstan. Unfortunately, this is not another Borat movie, this is about the central focus of economic policy in the United States today.
Kazakhstan has a debt-to-GDP ratio of just 14.2 percent, one of the lowest in the world. By other measures, Kazakhstan doesn't score so well. Its per-capita income is $11,800, just over one-fourth as much as the United States. Life expectancy for the people of Kazakhstan is just 68.2 years, putting it behind countries like Iraq and Honduras. By most measures, Kazakhstan looks like a rather unappealing place, but factors like the health and wealth of the population don't matter to the policy elite in Washington. They care about budget deficits and debt, and by that standard Kazakhstan is golden.
If there were ever any doubt about the absurdity of Washington economic policy debates, it was eliminated with the release of the 2010 Social Security and Medicare Trustees reports. Usually these reports do not differ much from one year to the next. They involve projections over a 75-year time horizon. Even a bad or terrible year, like 2009 or 2010, doesn't make much difference in the context of a 75-year planning horizon.
However, there was a big change in the 2010 reports. The Trustees decided that President Obama's health care reform would substantially lower the growth trajectory for health care costs. (The chief actuary for Medicare strongly disagreed with this assessment, but that is another issue.)
The change in projections has very direct implications for Medicare. The slower projected growth in costs eliminated more than 80 percent of the projected long-term deficit.
The shortfall in Medicare over its 75-year planning horizon is now projected to be just 0.3 percent of GDP over this period. This is roughly equal to the annual cost of President Bush's tax cuts to the wealthy. If these projections prove accurate, then Medicare is very much an affordable program long into the future.
The assumption of lower health care costs also had implications for Social Security. In the last several decades, the portion of workers' compensation that went to pay for employer-provided health insurance had been increasing at a rate 0.2 percentage points each year. This was the result of rising health care costs.
The 2009 projections assumed that the cost of employer-provided health insurance would continue to rise. The 2010 projections assume that the cost will actually decline at the rate of 0.1 percent a year. This makes a small difference in improving the solvency of Social Security, since wages are subject to the payroll tax, while employer-provided health insurance is not. Therefore the new numbers means the taxable wage base is projected to increase more rapidly through time.
However, the change in the projected growth of health care costs also has another much more important implication that went altogether unnoticed. It means that workers in the future will be considerably wealthier than we had previously believed. In other words, if healthcare reform will effectively contain cost growth without jeopardizing quality, then our children and grandchildren will be far wealthier than in a world without health care reform.
The 2010 projections show the average worker's wage will be 47.8 percent higher in 2040 than it is today. This is after adjusting for inflation, so the projections show that workers' purchasing power in 2040 will be 47.8 percent greater than it is now. The new projected annual wage for 2040 is 6.3 percent higher than figure projected for last year.
To understand the importance of this change in wage growth projections, suppose we told our children and grandchildren that the payroll tax would have to be raised by 3.0 percentage points to support Social Security (an extraordinarily large increase). They would have more money in their pockets with the tax increase under the current projections, than with no tax increase and the wage growth projected in the 2009 report.
If the important people in Washington actually cared about our children and grandchildren and their living standards, then they all would have been celebrating the prospect of the higher living standards implied by the new projections. But that wasn't the case. Not one of the big deficit fighters even mentioned the projected rise in living standards.
So, let's be really really clear. The deficit hawks don't give a damn about the living standards of our children and our grandchildren. They just want to take away our (and their) Social Security and Medicare. This is a class war where the wealthy want to take away anything and everything they can from the people who are not rich. The story about intergenerational equity is just a bad joke.
I don't care that I have paid into it for 20 years. It is a tax cut. I don't expect any compensation if I have been paying for a tax, and now I don't.
Most anyone today understands Soc Security will NOT cover basic living needs when we retire. I would prefer to make my own plans and handle it myself. I could take all of the savings and put into my own retirement saving, make interest, and control it myself.
What they want are cheap production costs. Who they will sell these goods to remains another question.
Why does India or Vietnam have low standards? Was it thier own policies that prevented growth?
Japan was quite able to raise their standards without the resources of the US?
Why should we reward failure states?
The assumptions are, I agree, utterly ridiculous. No sane person could agree with them.
We are on a receiving end of a class warfare and act like everything is hunky dory. They've brainwashed us, sanitized us, and deodorized us into a sheeple. They offer us a choice between crazy Republicans and corporatist Democrats. Good luck Amerikans!
By Ian Welsh
"Social Security Trustees report that social security will be able to make full payments until 2037. Tax receipts will dip below outlays before then, but this is precisely why the Social Security program has taken in more money than it needed.
Increase growth by a little bit and the entire "problem" goes away. Get rid of the taxation cap so the rich are not capped in what they pay and the entire problem goes away. Assume higher employment, and the entire problem goes away. Assume a reduction in inequality, and the problem goes away.
The US has a number of problems at or near crisis, such as employment, inequality and healthcare costs. Social Security is not one of them. Politicians and billionaires like Pete Peterson who are trying to gin up a crisis should be ashamed of themselves.
If they want the US budget more in order they should look at health care, where single payer could cut costs by at least a third, and at the military, where real spending has doubled since the end of the Clinton administration.
Or they should work on increasing employment and increasing wages for ordinary people. That's a crisis.
Instead of dealing with real problems, instead of tackling the medical industry or the military-industrial complex, instead of fixing the job situation, they want to steal money from old people."
http://crooksandliars.com/ian-welsh/social-security-trustees-report-no-socia
The IOU's from the US treasury have been spent - it is not money saved. Social security is began running a deficit in 2010.
"If they want the US budget more in order they should look at health care, where single payer could cut costs by at least a third". cut costs by a third - this would be a reduction in care (ala obama care or the British NHS)
The Republicans are going to use the money to pay for war, not debt reduction, per John Boehner. Their budget proposal doesn't balance the budget until the year 2083.
http://fdlaction.firedoglake.com/2010/06/29/alice-rivlin-wants-to-cut-social-security-so-john-boehner-can-spend-it-on-wars/
http://blogs.alternet.org/speakeasy/2010/02/05/why-dems-should-taunt-the-gop-for-lacking-ideas/
SS does not add to the deficit in the way it is computed.
http://www.angrybearblog.com/2010/07/social-security-deficit-debt-and-how.html
Moving to an NHS would be a reduction in care? You're lost in the right wing propaganda. The U.S. wastes $1 trillion per year compared to every other developed country (310m x $3200) and still has 25% of its people uninsured or underinsured. Every other developed country has 100% coverage.
The 'fiscal conservatives' complain about Obamacare, which is a sellout to insurance companies. But it's better than Republicancare which has been certified again and again as the worst health care system in the developed world.
The following ratings show the UK system 2nd compared with the U.S. 7th and last. http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2010/Jun/Mirror-Mirror-Update.aspx
http://www.reuters.com/article/idUSTRE65M0SU20100623?type=domesticNews&feedType=RSS&feedName=domesticNews
1. The IOUs AREN'T spent anymore than any money that's borrowed is spent. I mean one borrows in order to spend. That doesn't mean the debt isn't trustworthy. Even when you put money in a savings account in a bank, the money gets spent. The SS surplus is invested in U.S. Savings Bonds, the most trustworthy investment in the world, having the full faith and credit of the U.S. behind them. Paying off the SS bonds doesn't even require increasing the deficit, since new bonds can be sold to pay off the old ones. In other words the deficit stays exactly the same when they're paid off, all that changes is who owns the bonds.
2. Social Security isn't running a deficit in 2010. Social Security has TWO incomes, like so many corporations and wealthy people do. One is the payroll tax. The other is interest on the surplus. The shortfall for a time in 2010 in income from the payroll tax wasn't bigger than the interest for 2010. So NO deficit. Furthermore, this shortfall isn't the result of a structural problem with SS's income and the projected coverage until 2037. It's a blip due to our current recession. Fixing the economy with Keynesian investment fixes SS's shortfall. Oh well.
That's the only reason I can think of.......
http://blogs.abcnews.com/politicalpunch/2010/04/medicare-actuary-story-being-pushed-by-republicans-about-delayed-health-care-analysis-is-false.html
And - cuts are not necessarily reductions in quality, if they aren't done the BP way.