TUESDAY, NOVEMBER 28, 2023
Only The Shadow knows: We're so old that we can remember when this sort of thing seemed to matter.
In his new column for the New York Times, Paul Krugman discusses Nikki Haley's stance on Social Security. Here's what the headline says:
Nikki Haley Is Coming for Your Retirement
This isn't a favorable column about Candidate Haley. Along the way, Krugman discusses the best way to close Social Security's "funding gap."
(According to Krugman, that funding gap is real, but it isn't as large as you might think. It could be easily closed.)
We can recall when such discussions almost seemed to matter. Along the way, Krugman also says this:
KRUGMAN (11/28/23): It’s true that the budget office projects a much bigger rise in spending on Medicare and other major health programs. But much of this projected rise reflects the assumption that medical costs will rise much faster than economic growth, which has been true in the past but need not be true in the future. Indeed, since 2010, Medicare spending has been far less than expected. And there is every reason to believe that smart policies could further curb health care costs, given how much more America spends than other wealthy nations.
"Given how much more America spends" on health care? How much more is that?
As part of his decades of MVP work, Krugman first wrote about this topic long ago. This isn't his major topic today, but he offers a link to this recent set of figures:
Health consumption expenditures per capita, U.S. dollars, PPP adjusted, 2021 or nearest year
United States: $12,914
Germany: $7,383
France: $6,115
Canada: $5,905
Australia: $5,627
United Kingdom: $5,387
Japan: $4,666
PPP adjusted? Don't even ask! (Instead, you can just click here.)
It's been a while since we presented figures for per capita health care spending. As you can see, the spending gap remains extremely large—and it remains unexplained.
Where's all that extra money going? Once again, don't ask!
Krugman first discussed this topic in a striking series of columns back in 2006. He stressed the fact that health care outcomes were largely the same, despite the massive difference in health care spending.
Those columns generated exactly zero discussion in our major news organs. For whatever reason, this is a topic which doesn't seem to generate interest within such upper-end orgs.
At any rate, we Americans spend more than twice as much per person as all but one of those comparable nations. Where's all that extra money going? Why do we spend so much more, per person, than other nations do?
We're so old that we can remember when presidential campaigns, and the years leading up to same, involved discussions of such topics—discussions which were generally bungled within the upper-end press corps.
Example: Back in 1995, was Speaker Gingrich proposing a Medicare cut? Or was he simply "reducing the rate at which the program would grow?"
As we discussed in some detail, that conundrum puzzled the press corps for several years. Long ago, Krugman once linked to our work on the topic, though we no longer have the link to Krugman's blog post.
Today, we talk about Donald J. Trump and his various trials, and we talk about little else. Where's all that extra money going?
Apparently, only The Shadow knows—and The Shadow doesn't care!
ReplyDeleteIs this the famous Internet-Is-No-Better-Than-Fax-Machine wise man Krugman?
Krugman is great, you are little, and I am Corby.
DeleteCorby is adorable.
DeleteKrugman knows so much more than I do about almost every area of economics. The one exception is Social Security and Medicare. He asserts that he knows better than the top actuarial experts at the Social Security Administration who spend their entire career studying Social Security and Medicare. He blithely assumes that all these experts are too pessimistic in their projections. However, history and outside experts show that these SS and Medicare experts have generally been too optimistic. Why does Krugman make this ridiculous statement?
ReplyDeleteIMO the reason is that Krugman follows the liberal line. The current liberal line is to minimize the threat of SS and Medicare running out of money, so that's what Krugman says.
Those top actuarial experts at the SSA who spend their entire career studying SS and Medicare are the very same people the corrupt rapist criminal treasonous bastard who you will vote for is promising to fire on his first day in office.
DeleteThis is why David likes Trump:
Deletehttps://apnews.com/article/trump-military-insurrection-act-2024-election-03858b6291e4721991b5a18c2dfb3c36
Social Security is a much easier fix than Medicare. However, the Republican party has only one answer so far for SS: cutting benefits.
DeleteThe real answer is sending more money to Israel and Ukraine. That's the best investment. It'll return ten-fold.
DeleteI agree that SS is easier to fix than Medicare, but SS is very difficult to fix. Medicare is very very difficult. Fixing SS is politically difficult. Increasing the assessment rate, or cutting benefits or changing it from quasi-insurance into a pure welfare all are opposed by powerful constituencies. Using the general fund is a problem, because the deficit is already enormous. The two parties could get it done if they made the fix entirely bipartisan. Today there is no movement in that direction. Paul Krugman’s unwarranted optimism makes it harder for the pols to take the necessary, unpopular actions.
DeleteAbove comment from David in Cal
DeleteYes, that's right, David. Democrats want to fix the problem, republicans want to destroy social security. But it won't affect you, so fuck it, right. Jackass.
DeleteFixing Social Security is a lack of political will, not lack of money.
DeleteBack in my day, we were taught in school to be proud of the United States of America, not act like it's a shit hole country.
Politically difficult, but not financially difficult.
DeleteRemove the income cap, and watch Social Security's financing flourish. Hell, we could probably lower the FiCA rate, and still fill it's coffers.
Agreed, everything that I have read about social security is that it can be brought into solvency without putting people on the street. Repubs want to reduce benefits first and foremost. Occasionally they say it out loud. Rick Scott, the Medicare fraud guy, ironically is one who spearheads such talk. Class act, that guy.
DeleteMost of us understand that, as the candidate produced by the Tea Party years, Trump added trillions to the National Debt, largely in giveaways to the rich. Somehow we picked that up while giving consideration to the stuff that just bored Bob, like his attempt to overthrow the government so he could remain in power after losing the election.
ReplyDeletePut it into context.
DeleteJames Comer and Hunter Biden:
ReplyDeletehttps://jabberwocking.com/republicans-turn-down-hunter-bidens-offer-of-public-testimony/
Many years ago I traveled to France with friends for the New Year's holiday. During our stay, one member of our party had an allergic reaction and visited a Paris emergency clinic. She was treated promptly.
ReplyDeleteWhen we tried to pay, the doctor laughed at us.
"I weel send zee beel to America!" he said.
Something's wrong with your story. In France you do pay for medical services. Much less than in the US, yes, but still they would charge you.
DeleteNothing wrong with the story. Charging for services is discretionary and likely more trouble than it is worth in that case.
DeleteLet's tell the truth about Social Security. Back in the 1980s, the federal government increased the amount of payroll taxes collected from workers and their employers to a level far in excess of what was needed to pay current benefits.
ReplyDeleteThe reason given was that the Baby Boom generation, then in its prime working years, would someday begin to retire and would strain the finances of they system. Thus, by raising payroll taxes, a fat reserve fund could be created to offset the future increase in pension payments.
So the government collected these taxes. But simply stashing that money in something akin to a savings account would remove all that money from circulation, in effect reducing the money supply and inducing inflationary pressure.
So instead, the government issued special treasury bonds to the Social Security trust fund and used the receipts to fund other government expenses--and allowing sharp cuts in the top marginal income tax rate.
The net effect of this policy is this: Workers paid higher SS taxes. The government borrowed the money and cut the taxes of wealthy tax payers. They took money from lower paid workers and let the rich keep more of their money.
Now the time has come to redeem all those treasury bonds, to pay back the workers who have been overpaying all these years. The GOP would like to renege on those obligations and simply declare that SS is "underfunded." The correct solution is that the federal general fund owes a debt and should pay it. If that requires reversing some of the tax cuts enjoyed by the wealthy for the past 40 years, then that's what needs to be done.
Well put.
DeleteQuaker - you are close to right. It's a timing issue. The assessment rates were higher than immediately needed, although they're no high enough in the long run. Anyhow, in the short run SS ran a surplus. That's what funds the so-called SS Trust Fund. The General Fund has been paying interest on the borrowed money. And, over the next few years, the General Fund will pay back to SS all the money they borrowed.
DeleteHowever, it is indeed the case that the current SS assessment rates are not high enough to support the outgo. Politicians can deal with the shortfall in only three ways: increase assessments, decrease benefits or use the general fund to make up the deficit.
Who is overpaying is a deep philosophical question. Here's why. In the traditional insurance company annuity, a group of insureds pay in. Later this same group will get money back. The money paid in + interest should equal the money paid back. However, SS is close to a pay-as-you-go plan. Current working people and their employers are paying for the benefits that go to currently woroking people. If you match assessments with benefits, no group is over paying, because then benefits exceed the assessments plus interest.
Only the first $160,020 of income is taxed for Social Security. All income should be taxed. Problem solved.
Delete@9:00 The benefits are tied to the assessments paid. If high earners pay more assessments, they will receive more benefits. The shortage remains.
DeleteNow if you increase the assessment to high earners without increasing their benefits, that helps the deficit, but it's alien to the concept that SS is an insurance program.
The goal of the social security program is not to reduce the deficit.
DeleteYou can reduce the deficit by taxing the rich more.
DeleteBTW, that's also the solution to reducing inflation, when inflation is caused by too much money in the economy.
Yes, US tax structure inevitably funnels money to the rich compared with those below the 1%.
DeleteThe super-rich don't pay much taxes; 15% (cap. gains) at most. Not subject to FICA. If you try to significantly raise their taxes, some (most?) of them are likely to renounce citizenship and emigrate. What you'll have then is "capital flight". Not good for the country.
DeletePerhaps the upper middle class can be milked more. Doctors, lawyers, managers. But then they will probably try to convert their income into capital gains too somehow. Or find some other loophole. Who knows how it's gonna play out.
In general, whatever the government attempts when trying to collect more taxes, the rich usually can avoid it. Or else they leave.
"Or else they leave."
DeleteWin-win.
Let them ask the Cayman Islands military to protect their global profits and assets.
There's always a reason why the filthy rich don't have to obey the laws passed by congress, cause they're filthy rich, don't you know. Funding the IRS so they can recover legal taxes owed by the filthy rich? Hell no, say the congress critters owned by the filthy rich.
DeleteThat's how the world works, 1:04 PM. And everyone with a functioning brain knows it.
Delete2:11,
DeleteTrue, but saying it out loud (unlike having a special justice system protecting the rich) is "class warfare".
or we could elect more democrats so republicans can't allow the filthy rich to piss in our ears
DeleteThis comment has been removed by the author.
ReplyDelete3/4 of the long term SS insolvency issue would be solved by abolishing the maximum taxable base. This is why abolishing the maximal taxable income is the most beneficial of all possible adjustments. Raising the retirement age by 2 years, for example, gives much lower insolvency relief, on the order of less than 10% improvement.
ReplyDeleteThis is why Republicans, who focus predominantly on raising the retirement age as a viable approach are, as usual, not to be taken seriously. They are either innumerable or cynically disingenuous, or a combination of both. Likewise, DIC's claim that eliminating the cap on taxable earnings would make no difference is fallacious. Information from experts who have written extensively about this problem is readily available on the internet. I do not, for the life of me, understand why people spout nonsense in comment sections that is so easily debunked.
ReplyDeleteInnumerate
ReplyDelete