> From: James Devine <[EMAIL PROTECTED]> > Subject: [PEN-L:10264] budgetary matters > Max S. writes >> Post-1986, US borrowing is financing tax revenue erosion > and increases in health care (Medicare and Medicaid). . . . > I would amend the above: > > 1) It's not "health care" that is increasing. It's _spending_ on health > care. The phenomenon of health cost inflation is well known. That is, the > actual use-value received from Medicare/Medicaid spending has increased > much much less (per person) in recent years than the price of the > use-value. In yet other terms, it's the medical and insurance industries > that have benefitted much more that the Medicare/Medicaid recipients. Quite right, simply in terms of already-published medical cost deflators or price indices. This speaks to the limited increase on the benefit side, but of course it has great bearing, inversely speaking, on the cost in terms of foregone, alternative consumption. I'm not sure how you would quantify 'use-value,' but whatever it is, the increase is much less than spending. It remains the case that there is growth in services consumed per person or per beneficiary in the public programs. > . . . > (The system [Social Security] is also running a surplus, helping to cover up a big > chunk of the government deficit.) This has become the least-effective cover-up in history. Also it might be noted that before the less-than-epochal budget deal, the budget was projected to produce primary surpluses for the next ten years under current law and policies (e.g., the baseline). > BTW, is government spending on elementary schools to be seen as > "intergenerational redistribution"? After all, kids don't produce anything Sure, why not? Intergenerational redistribution is not a pejorative. > and don't pay any taxes. (Parasites all! Let them eat ketchup!) In the > future, when the ratio of old geezers to paid workers rises, we will also > see a fall in the ratio of kids to paid workers. So the geezers can be paid > using the funds freed up by the declining importance of kids. This is well-taken as far as it goes, but kids are much cheaper in the public sector than the elderly, and the disparity grows with time as health care spending grows. Also, it's mostly the states that finance kids and mostly the Feds that finance the old folks, so shifting financing sources entails a non-trivial, albeit managable adjustment in fiscal federalism. > I thought that it had been pretty well settled (on pen-l at least) that the > problem with social security was not with the ratio of oldsters to > youngsters but the slowdown in labor productivity growth (which may have in > fact have been reversed). It should be stressed that the Trustees of the SS Good. I don't disagree and didn't say otherwise. > . . . > There was a pretty good article by Richard Leone (of the 20th Century Fund) > on the op-ed page of the April 4, 1997 issue of the LA TIMES, page B9. He > points out, among other things, that the ratio of nonworkers (and nonpaid > workers) to paid workers was significantly higher in 1964 than currently or > in the projections for 2030 when the "boomers" become oldsters. 1964 was > not a period of excessive burden for the paid workers. Yes but in 1964 it was the excess of kids, not old people, that was behind the ratio's magnitude, and health care spending had a long way to grow, so to speak. > BTW, Doug: who are the Trustees of the SS system? May I guess that many of > them are Reagan-era appointees? The president appoints them. They are a pretty moderate group, as were the Reagan/Bush appointees, by and large. The trustees serve a caretaker function more than anything else. Their reports have been consistent and centrist over the years in content and methodology. Policy prescriptions have come from the Social Security Advisory Council, also appointed by the president, which was headed by Edward Gramlich and included some genuine right-wingers, the most notable of whom is Carolyn Weaver. Even so, the recommendations of the council (there were three factions) were mild compared to the rantings of the Kerrey Commission and the Concord Coalition. As a matter of research, I would encourage list'ers to consider the long-term economic outlook. Currently the most harmful influence on current policy debates is the mainstream economic projections for the next fifty years, as embodied in the Social Security trustees reports, the FRB growth models, etc. The left has failed to present a credible, alternative future. It would be most helpful to have discussions and evidence that doom is not preordained, or that practical policies could avert doom. The same follows at the international level, where the combination of aging populations (more old people, not more kids) and sagging labor productivity growth is held to require the dismantling of social insurance systems, a fundamental pillar of the neo-liberal agenda. Cheers, MBS =================================================== Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] 1660 L Street, NW 202-775-8810 (voice) Ste. 1200 202-775-0819 (fax) Washington, DC 20036 Opinions above do not necessarily reflect the views of anyone associated with the Economic Policy Institute. ===================================================
