Wednesday, December 19, 2007
Medicare: What's ahead
The Bush Administration recently announced that the shortfall between the promises the government has made on Social Security and Medicare is $45 trillion over the next 75 years. What a shock.
Earlier this year, Federal Reserve Chairman Ben Bernanke told the Japan Society of New York that the aging U.S. population will present a "daunting challenge to the nation's economy." Bernanke's comment was a profound understatement. Here's why:
According to a recent study in Investor's Business Daily, by 2040, 46.8 percent of government outlays will be public health care benefits to the elderly. If Democrats follow through with their promise to make more seniors eligible for prescription drugs, it's conceivable that Medicare will consume half the nation's budget by the time today's workers retire
Because politicians are loath to limit benefits, tax hikes will be necessary for Medicare to survive. Boston University economist Laurence Kotlikoff says a payroll tax hike of 4 percent is necessary to ensure Medicare's solvency through mid-century. I'm afraid that's a conservative estimate. The confiscatory payroll taxes needed to fully fund Medicare will soon provoke cries of outrage from liberals and conservatives alike.
As Alexander Tytler warned in the eighteenth century, "Democracy ... can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that democracy always collapses over loose fiscal policy."
I'm afraid the coming Medicare crisis will soon prove Tytler a prophet.
Earlier this year, Federal Reserve Chairman Ben Bernanke told the Japan Society of New York that the aging U.S. population will present a "daunting challenge to the nation's economy." Bernanke's comment was a profound understatement. Here's why:
According to a recent study in Investor's Business Daily, by 2040, 46.8 percent of government outlays will be public health care benefits to the elderly. If Democrats follow through with their promise to make more seniors eligible for prescription drugs, it's conceivable that Medicare will consume half the nation's budget by the time today's workers retire
Because politicians are loath to limit benefits, tax hikes will be necessary for Medicare to survive. Boston University economist Laurence Kotlikoff says a payroll tax hike of 4 percent is necessary to ensure Medicare's solvency through mid-century. I'm afraid that's a conservative estimate. The confiscatory payroll taxes needed to fully fund Medicare will soon provoke cries of outrage from liberals and conservatives alike.
As Alexander Tytler warned in the eighteenth century, "Democracy ... can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that democracy always collapses over loose fiscal policy."
I'm afraid the coming Medicare crisis will soon prove Tytler a prophet.
# posted by Joltin' Django @ Wednesday, December 19, 2007 
