Les Jones: U.S. Credit Rating Threatened by Medicare, SS, Debt Liabilities

January 11, 2008

Health Care > U.S. Credit Rating Threatened by Medicare, SS, Debt Liabilities

Financial Times - US's triple-A credit rating 'under threat':

The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring health care and social security spending, Moody's, the credit rating agency, said yesterday.
The warning over the future of the triple-A rating - granted to US government debt since it was first assessed in 1917 - reflects growing concerns over the country's ability to retain its financial and economic supremacy.

People are willing to talk about the national debt (it was the centerpiece of Ross Perot's 1992 presidential campaign, which led to some deficit reductions and even modest debt reductions in the '90s). People are even willing to talk about Social Security shortfalls (which led to modest Social Security changes, such as changing retirement age from 65 to 67 for those of us born after 1959).

Few people are willing to talk about the truly massive unfunded obligations of Medicare and Medicaid ($33.4 trillion), which dwarfs unfunded Social Security obligations ($4.6 trillion) and the national debt ($10 trillion). The U.S. also has "$2.3 trillion unfunded liability for medical and disability benefits promised to civil servants and military personnel who retire."

Social Security needs a few tweaks to stay viable. Removing the $85,000 ceiling for contributions and indexing payments to prices rather than wages would help. Reducing Social Security payments doesn't seem like an option - the government has made express commitments of specific dollar amounts upon retirement. It would undermine credibility in the government to reduce those payments.

Medicare on the other hand doesn't have the same type of specific obligations, and in general pays out much more than it takes in. Medicare represents our largest financial shortfall, so reform there is mandatory for our government to stay solvent.

This looming threat is one reason I do not want government-provided healthcare. The government has already shown it can't provide a health care system with balanced books. My guess is that if we don't get nationalized health care the next ten years it will be off the table. Once people realize how financially unstable the current government health care system is they won't want another.

Posted by lesjones | TrackBack

Comments

Of course the government can't balance its health-care books, it provides health care for people who can not afford it. Duh.

It's the private health care system that is failing. The private system is based on employer-provided insurance, but employers have worked diligently over the past couple of decades to escape that obligation. The market has not stepped in with any affordable alternative, so the pool of private-health failures continues to grow.

So the government steps in out of compassion because, you know, we live in a society founded on Christian principles and shit, and people like you blame government for creating the mess it is only trying to clean up.

Your stance boils down to "If we ignore the solutions, the problem will go away."

Posted by: persimmon at January 11, 2008

I thought you were being optimistic when you said: "Once people realize how financially unstable the current government health care system is they won't want another." Then I read the first comment. Yep.

See, it's not the government's fault; it's the greedy corporate capitalists'.

Posted by: Thibodeaux at January 11, 2008

Persimmon: that compassion's great right up until we have to turn out the lights because there's no more money to pay for the compassion. Then what?

Posted by: Les Jones at January 11, 2008

If the lights go out, it won't be compassion that got us there.

I know you guys like to fancy yourselves defenders of the taxpayer, but the Bush years have exposed the lie. All this talk about bankrupting the government is just an a way to avoid speaking the truth, which is that caring for the poor and the sick is simply not a priority for you. Spending a trillion exacting bloody revenge on cave-dwelling holdovers from medieval times doesn't bother you, but spending a fraction of that to repair our failing health care market gives you fits. Obviously the money is not the real issue.

Posted by: persimmon at January 12, 2008

Well, I'm not sure who "you guys" are. Is it people who always voted for Democrats (and Ralph Nader in 2000) and who only voted for a Republican presidential candidate for the first time in 2004?

Anyway, here are the numbers:

- $1 trillion for the Iraq war (your number)
- $2.3 trillion unfunded liability for medical and disability benefits promised to civil servants and military personnel who retire (some fraction of which is related to Iraq, but not that much)
- $4.6 trillion unfunded Social Security liabilities
- $10 trillion national debt
- $33.4 trillion unfunded liabilities for Medicare

So how is Iraq bankrupting us relative to the rest of that stuff?

Posted by: Les Jones at January 12, 2008

I'll define "you guys" as those who say the government ruins all it touches, therefore we can't let the government solve our problems (never mind the false dichotomy between "government" and "our").

My point is not that Iraq is bankrupting us, but that "you guys" are hypocrites. There has never been a more blatant example of a government program riddled with graft and corruption than the invasion of Iraq, but government-health-care whiners have had little to say regarding that huge waste of lives and dollars. What is really bankrupt is the philosophy that underlies your obstructionism.

If you are going to rail against government waste, rail against it, but don't do so only as a smoke screen to hide your more selfish motives.

Posted by: persimmon at January 13, 2008

Persimmon, it isn't waste per se that concerns me. Sure, there was waste in Iraq, and in SS and Medicare, or any government program.

The problem with Medicare isn't waste. It's that even without any waste the program is going to cripple the economy. Does that not worry you in the least? You're A-OK with this country going bankrupt?

Compassion is great, but to paraphrase Lloyd Bensten I can create the appearance of compassion all day long if you let me write rubber checks.

Posted by: Les Jones at January 13, 2008

I am not OK with health-care costs crippling the economy, but people are going to have heart attacks and strokes whether we have private health care or public health care, and prejudices that dictate up front that government can't solve the problem are less than worthless. What we are witnessing is a failure of private-market solutions, specifically employer-based health care.

Your approach offers nothing but allowing the problem to fester under the current flaws so that it grows ever harder to solve.

Posted by: persimmon at January 13, 2008

"Reducing Social Security payments doesn't seem like an option - the government has made express commitments of specific dollar amounts upon retirement. It would undermine credibility in the government to reduce those payments."

Credibility?!?

HAhahahahaha! That was funny Les.

Posted by: theirritablearchitect at January 13, 2008

"prejudices that dictate up front that government can't solve the problem are less than worthless. What we are witnessing is a failure of private-market solutions, specifically employer-based health care."

Yet there is no proof of this, is there?

Posted by: theirritablearchitect at January 14, 2008