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Tag Archives: Medicare

What the Heck, Huck?

Gov. Mike Huckabee has seized the no-changes-to-entitlements mantle from among the Republican wannabes and he’s set to run on it, aligning himself with people like Elizabeth Warren.

Politically, this is not such a dumb idea. There are a lot of seniors, including conservatives, who are understandably worried about their potential lack of gold to fund their Golden Years and fear changes to Medicare and Social Security. A barnstorming populist like Huckabee is particularly well suited to take the issue to his more buttoned-down rivals in the GOP.

Screen Shot 2015-05-07 at 12.58.10 PM“Let them end their own congressional pensions, not your Social Security!” Huckabee thundered Tuesday as he announced his candidacy. Washington, he said in a video, “has done enough lying and stealing. I’ll never rob seniors of what our government promised them and even forced them to pay for.”

Huckabee, as a matter of principle, is right. Government has promised these benefits and now can’t pay them. But that’s also the problem. The government can’t pay its obligations. It made promises it couldn’t keep. Because that’s what government does.

The latest estimate of the 75-year unfunded obligation for Medicare and Social Security is about $50 trillion

Now, let’s make this clear. That’s not the the government’s total obligation. That’s its unfunded obligation. It’s money it is supposed to pay out, but for which it hasn’t even assessed taxes or found spending cuts to get the cash.

THERE IS NO MONEY, HUCK.

People talk about when Social Security and Medicare will be bankrupt. I have some news. THEY ARE BANKRUPT RIGHT NOW. What else would you call a business running a $352 billion shortfall every year?

Those projected “bankruptcy” dates you hear about are accounting illusions. They presuppose that there are actually “Trust Funds” now being “tapped” to pay beneficiaries. But the Trust Funds, as you may know, don’t exist. The government collected your Social Security and Medicare taxes and spent it on other stuff. And now the Social Security and Medicare taxes it brings in aren’t enough, so it must plunder the General Fund that’s supposed to be for regular government spending.

According to the Medicare and Social Security Trustees:

The total General Fund requirements for Social Security and Medicare in 2014 are $352 billion, or 2.0 percent of GDP. Redemption of trust fund bonds, interest paid on those bonds, and transfers from the General Fund provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

The annual deficit for Social Security alone, at $77 billion, is less than Medicare, but will rise quickly:

The Trustees project that this annual cash-flow deficit will average about $77 billion between 2014 and 2018 before rising steeply as income growth slows to its sustainable trend rate after the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.

Nobody is realistically proposing taking benefits from current or even near retirees. But if the programs are to be saved, cuts to benefits for future wealthier retirees and an eventual increase in the retirement age, among other reforms, must occur. Otherwise, benefits for all will have to be cut, for rich and poor alike. That’s where Huckabee’s rhetoric is leading.

Because the money isn’t there. And every year we wait, as we have done under President Obama, the long-term shortfall gets worse.

Yes, it is breaking a promise to those who have contributed even a dime. It is not, however, as is sometimes suggested, taking people’s actual money away, since Social Security and Medicare are not savings programs. Your contributions fund current retirees, not yourself, and that’s the way it’s always been. If you are retired, current workers are funding you. So call your kids and thank them.

What entitlement reform does is try to set up a plan where those who can most afford the cuts get them. Because benefit cuts will have to happen. Unless retirees want payments as fictitious as the Trust Funds.

Obama Debt: Over 8 Percent of $1 Quadrillion

The longterm U.S. debt under President Obama’s latest spending plan is far worse than his budget suggests, reaching a total of about $84 trillion – that is, 8.4 percent of a quadrillion dollars, or $0.084 quadrillion.

Yes, it’s time to start using the quadrillion number, because with trillions getting added to the debt at an accelerating pace, the numbers are starting to become meaningless again unless put in the proper perspective.

The Obama budget forecasts a startling federal debt of just over $25 trillion. But that’s only the beginning of the frightening story of the government’s longterm obligations.

Over future decades, Medicare – before taking into account Obama’s “cuts” – has an unfunded liability of close to $43 trillion, according to the most recent Social Security and Medicare actuaries report. That is what the government is currently obligated to pay out to this and the next couple of generations – but for which it has no method on the books of raising money. It just owes that amount, and would currently have to borrow to pay it.

Similarly, the unfunded liability of Social Security is about $20 trillion. And the government has about $6 trillion in unfunded obligations for federal worker pensions. All told, we’re in the hole for about $94 trillion, or nearly $0.1 quadrillion.

Obama’s budget makes cuts to Medicare over the next decade totaling about $370 billion – as you can see, a minuscule portion of the total obligation. And the cuts are mainly to health care providers, which doesn’t amount to the type of serious “reform” needed to save the program. What’s more, the reductions are unlikely to be fully realized because of the lobbying muscle of doctors, hospitals, and other providers.

Obama’s call for chained CPI is, however, a serious proposal that could reduce Social Security’s imbalance by 20-25 percent. So let’s assume under Obama’s plan, Social Security would have an unfunded mandate of about $15 trillion. And let’s be generous and lop $5 trillion off the longterm obligations of Medicare, bringing its shortfall to about $38 trillion.

We’re still at $84 trillion, or $0.84 quadrillion, in total indebtedness.

Now you understand why Republicans are demanding Obama get serious about reducing the debt and enacting entitlement reform, and why his current plan doesn’t seem very serious at all.

Obama Was Against Demonizing Ryan Before He Was For It

President Obama once counseled against the very attacks his campaign is launching against Wisconsin Rep. Paul Ryan’s Medicare plan, saying during a January 2010 appearance that politicians shouldn’t demonize proposals by charging they would harm seniors:

We’re not going to be able to do anything about any of these entitlements if what we do is characterize whatever proposals are put out there as, “Well, you know that’s – the other Party’s being irresponsible, the other Party’s trying to hurt our senior citizens.”

Have a look:

And yet, in a new video, the Obama campaign says exactly this, flashing across the screen this judgment about Ryan’s Medicare proposal: “It hurts seniors.”

The ad is the spearhead of a comprehensive campaign designed to do what Obama claimed to be against.

In the just the 48 hours since Mitt Romney announced his selection of Ryan, Obama campaign adviser David Axelrod has said “Republicans don’t like Medicare,” and that Ryan’s plan would “ship thousands of dollars of costs onto senior citizens.”

In a fundraising email, Senate Majority Leader Harry Reid (D-Nev.) said Ryan’s plan would “destroy Medicare” and amount to “dismantling the nation’s social safety net.”

The attacks are sure to only escalate.

Obamacare Raids Medicare and Makes Off With $716 Billion

Obamacare would snatch $716 billion from Medicare to pay for its expensive outlays, an startling increase of nearly $200 billion from the original estimate of the law’s impact, according to an analysis by the independent Congressional Budget Office . The new numbers create a potential political hazard for President Obama, who desperately needs the votes of… Continue Reading

Public Supports Entitlement Overhaul, but Not Cuts

Updated 4:09 pm With Social Security and Medicare reform apparently in the debt ceiling talks mix, the Pew Research Center has just released a poll showing that the public indeed supports major changes to the programs – but not cuts in benefits. This is approximately like saying you want to lose weight, but on the… Continue Reading