Tuesday, March 23, 2010

My take on the Senate Health Bill

Surprise surprise: I'm not happy that the Senate health bill passed the House and is about to be signed into law. Friends and family have tried to couch it in terms that "well, it's better than nothing." No, in fact, it's not.

Let's say you have a chronic disease that can be fatal if left untreated. Let's call it, "Debtis Entitlementitis." You have another problem we'll call "Healthus Carus" that you need to solve. If you take the wrong medication for Healthus Carus, it can make you forget about your Debtis Entitlementitis in the short term, but it will actually cripple you in 5-10 years by exacerbating every problem you have including Healthus Carus, Oldus Takecareofus, Roadus Paveus, Poorus CantaffordusPleasa Dontkillus, etc.

This is what Congress just did. Sure, a lot of people can feel better--but the underlying condition of debt has been made worse and, consequently, Congress and Obama made the problem more intractable than it already was.

It's not conjecture and it's not partisan: it's math. We have committed ourselves to spending much more money that we have. Indeed, according to GAO estimates in the 2008 Financial Report of the United States, our entitlement spending in the infinite horizon--that is, everything we've promised to pay so far--is $101.8 trillion. Yes, that's trillion. (cf. Table 6, pdf page 143; report page 137)

That's seven times the economic output of the entire United States in a given year. No, not our tax revenue--our entire economic output. To call this situation "unsustainable" is to understate the case to tragicomic levels.

Blame Bush. Blame FDR. Blame whomever you like--but the fact of the matter is our entitlement spending is going to bankrupt us. We can either address it like adults and treat the problem, or we can act like children and foolishly pretend the problem will go away by itself without ever having to face the consequences.

8 comments:

Carla said...

Forget about the math for a moment. Think about people instead.

JPB said...

But about those people: If you run out of money, you can't help them anymore.

wel said...

JPB, Touche

Nancy said...

FDR's New Deal created a multitude of jobs with "deficit spending" , and it didn't bankrupt the country, in fact, it pulled us out of the depression. It helped people, AND was able to help more, proving that what goes around, gets rewarded.

Tom said...

Whoa.... Great think tank! Good Forum. I am a middle class worker and I had an oportunity to drive a Carbon fiber Z06 Corvette. The acceleration and handling was amazing... AND this would make Al Gore very happy, since it gets BETTER milage than my Evil Durango. I know for a fact, I couldn't take a second or a third on my house and buy one. Wait a minute.... Its better for the envoirment, does a better job than the one I have, It gets better milage than what I'm Driving, so I GOTTA have one. Just like Nancy Pelosi needs a new Jet. Should Everyone drive a Z06? OF COURSE NOT! I could afford one if each American donated $.0025 to my bank account. People from all over the world look to Chevrolet to seek superior exotic vehicle engineering since they have been doing it right for so many years. If the Z06 was priced by the government to be affordable to the masses, I bet it would have as many recalls as a Toyota....

JPB said...

Nancy,

FDR's spending probably prolonged the Depression, but whatever.

Deficit spending is one thing--seven times the entire economic output of the United States is quite another.

Economists of all political stripes realize that social security and our entitlements are running out of money--and its not a simple problem of deficit spending.

The scale is unprecedented. Google Greece in "News" and you'll see what we're headed for without reform.

Josh said...

There always has to be math involved, it's just a fact of life. But as I saw Tom use the reference of a corvette vs. a durango, there is a big difference. Some of us don't have health insurance. Some of us simply can't get it. If something major happens, we will die. If you drive your durango, it is worse for the environment and uses more gas, but you aren't necessarily going to die because of it. There are so many things people have been "trained" to worry about that it all seems necessary, but it should be necessary to find a way to keep people healthy, even if they are poor. This bill is far from perfect. Things don't start out perfectly. What about these countries who have health coverage for all? They seem to still be prosperous countries. I'm sure everything didn't start out perfectly, but here they are, countries to this day. And they get healthcare.

JPB said...

Many of those countries that have health care for all are going broke as their entitlement debt comes crashing down around them--see Greece today, France and Germany tomorrow.

They have it now, but when the crunch comes, the people who will be hurt most will be the people who depend on the government the most. We're giving away money we don't have, which will leave everyone worse off in the long run.

"This is a start" isn't a good argument if you're going in the wrong direction. Sure, it looks nice because it seems we're helping people, but a temporary salve that will make things worse long term isn't a benefit at all.