Monday, September 1, 2014

Dana Milbank Joins Parade Of WaPo Hysterics Over Social Security And Medicare

Dean Baker has posted on this more completely and effectively than I shall do here (and his url is so long on this one, I shall not link directly, sorry), but I simply want to throw in my two cents completely supporting him on this.  As several of us have been doing for some time, we have been criticizing a bunch of Very Serious People (VSPs) at the Washington Post (WaPo) for their repeated rantings and ravings to the effect that the US faces an awful future due to its future liabilities with regard to both Social Security and Medicare, with somehow these people usually focusing on cutting future Social Security benefits now, because if we don't, eeeeek, we might have to in the future (and they somehow also think that this is easier to achieve politically than other budget adjustments.).  Those in this parade have long been led by editorial page editor, Fred Hiatt, who often does columns under his own name as well as unnamed ones officially for the Post, on this matter.  His most regular follower on this has been the long execrable Robert J. Samuelson, although Ruth Marcus is also part of this group.  It is sort of funny that most of these people are nominal liberals, sort of, but it means that WaPo's house conservatives such as George Will can ignore this issue to prattle on about other stuff, given that these people spout conservative lines on this matter.

So now we have yet another of these sort of nominal liberals joining this pathetic parade, Dana Milbank, and he makes an even bigger spectacle of himself than most of these others do, waxing seriously hysterical about the matter.  What is really funny, and Dean is great on the irony of this, is that the report that triggers this outbreak of panic by Milbank in fact is an optimistic one, the CBO now projecting slightly smaller budget deficits in the future than awhile ago.  A decade from now the debt to GDP ratio is expected to be 77%.  This sets Milbank into a frenzy of  fear, "bone-chilling" he calls it, and, one of my favorite words, "catastrophic." Yikes, we should all run for the hills faster than we can put our pants or other lower body wear on.

Of course, not only is this lower than was previously forecast for that time (and not much higher than our current ratio), it is well below what we see in most other high income nations.  With a few exceptions, most of these nations are having no problems financing their ongoing budget deficits at quite low interest rates.  Milbank's hysteria is ludicrously misplaced, quite aside from the silliness of it responding to a report that says things will be a bit better in the future than we recently thought.  All I can think is that Hiatt is really coming down on his minions to toe the paper's party line on this, and somehow Milbank is sufficiently insecure about his position that he has to fall in line spouting the prevailing line, although maybe even Hiatt might realize that the trigger for this silly report is really quite absurd.  But, as Dean Baker notes, it is policy at the Post to punch old people in the face rather than suggest any reductions of income for drug companies or other beneficiaries of our out-of-control medical establishment, with it obvious that the really effective way to reduce future budget deficits would be too seriously rein in medical care costs in the US.

Barkley Rosser


Don Levit said...

The low interest rates help with the interest part of the debt. The principal part of the debt has been ignored for many years, a tactic that would put everyone else into bankruptcy.
The principal of the Medicare trust funds has been lent to the government to pay for federal expenses. In its stead is placed debt in the form of Treasury securities.
If an insurer had reserves like the Medicare trust fund has rreserves, it would be given a cease and desist order by the state department of insurance.
Don Levit said...


Well, the federal government is not a private insurer, so this becomes a big "so what"?

Don Levit said...

No, the question is "If it has special privileges as a government entity, is it abusing those privileges?
Faith in the dollar is based on peple's perceptions, partly of which the amount of debt and interest in relation to government revenues is an important relationship.
Funny how math tends to bring out the truth.
Don Levit said...


As Dean has pointed out, the debt/GDP ratio in US is not all that bad compared to many other countries, including those whose currencies are the ones to be compared with the dollar. And the forecasts are not all that bad either.

Look, we have better demographics than almost any of those other high income countries. People freaking out about Social Security like to vaporize about how in 2030 we shall a 2 to 1 worker to beneficiary ratio. Guess what? Germany already has that and is doing fine in paying its pensions. This stuff is just ridiculously hysterical.

Of course, the obvious solution, which I think will really be done eventually, is to get medical care costs under control. Ours are twice as high as the average in other high income natinos. I think we can move closer to their levels, and that debt/GDP ratio starts looking a whole lot better in the future.

Don Levit said...

To get medical costs under control is tricky.
As far as controlling insurance premiums, the biggest bully with the lowest network provider reimbursements usually has the lowest premium, all else being equal.
What is interesting is the actuarial statistics which apply if you are Blue Cross and Blue Shield or National Prosperity Life and Health: pre-funding the deducible to $30,000 reduces the premium 50%; pre-funding the deductible to $60,000 reduces the premium 80%.
Don Levit