----- Original Message ----- From: "Erik Reuter" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[EMAIL PROTECTED]> Sent: Saturday, May 15, 2004 5:29 PM Subject: Re: Beheading Avenges Prison Abuse
> On Fri, May 14, 2004 at 07:05:07PM -0700, Gautam Mukunda wrote: > > > I don't think that the entitlement problem is in any sense > > catastrophic - given recent increases in productivity, it may, in > > fact, be entirely manageable. > > Do you have numbers to back that up? Or is that just wishful thinking? > > The present value of promised entitlements (SS, Medicare primarily) > amounts to $45 trillion. That is 4 times GDP, or about $154,000 per > American alive today. There are two parts to this. Let me address SS first. At http://www.ssa.gov/OACT/TR/TR03/II_project.html the future of SS is discussed. As things stand now, SS is expected to be about 3.5 trillion in the hole in 75 years. Assuming a 3% growth in the ecconomy/real ROI for treasury bills over that time, I'd guess we'd only be talking about 0.25% of the GDP per year in reduced benefits/increased taxes to pay for this. Moving the retirement age up a year and modest increase in the maxium real wages (the inflation adjustment plus a modest real adjustment) for which SS taxes are applied would work. Let us next go to Medicare. That is definitely worse. The yearly shortfall is expected to be about 3.5% of GDP by 2075. The worst part of the added cost is the massive rise in health care costs. This will have to be addressed, one way or another. The US has far higher medical costs than other major countries without a corresponding advantage in the statistics of health. Part of this will our coming to terms with the fact that there will be life extending health improving procedures that we cannot afford for ourselves and our parents. Debbie can correct me on this, but the present system for care of people without health insurance is crazy. A hospital can find ways to not admit folks without health insurance. But, once they admit them, they cannot refuse any services on a cost basis. So, hospitals have a massive incentive to turn people away, and have no ability to control costs once they are in. This can be addressed. It won't be easy, but its not unsolvable. We can have a very good health care system for all, and still not break the economy. We just can't have the best for most. A real tax increase/cut in other spending will probably be needed though. 1%-2% of GDP should be enough. Further, if we decrease the real national debt (national debt as a % of GDP), aside from this, over that period, then we will have more flexibility. That's why the change in economic strategy is so important. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
