American Elephants

CBO Assumptions Are Scary, The Reality is Worse. by The Elephant's Child

The Congressional Budget Office (CBO) released it’s Budget and Economic Outlook for years 2012 to 2022 yesterday.  Not Good.

  • The 2012 deficit, projected to be $1.079 trillion, represents the fourth consecutive year of deficits exceeding $1 trillion. All Obama’s.
  • The debt held by the public is $11.2 trillion, nearly 3/4 of total economic output.
  • This year’s $3.6 trillion in spending is almost 1/4 the size of the economy, and way above average spending at 20% of GDP.

The CBO’s assumptions, Heritage expert Patrick Knudsen says, understate the problem, because they employ unrealistic assumptions.  They assume that Congress will allow a sharp reduction in payments to Medicare physicians. That the Bush tax cuts will expire this year as scheduled, and that the Alternative Minimum Tax will broaden to capture a greater number of families.

Over the next decade, federal spending on health care will double.  It is particularly those dratted baby boomers, always causing trouble. They started retiring last year, and will retire in increasing numbers till 2025.  That’s growth from 48 million beneficiaries now to 66 million in 2022, and on top of that spending per beneficiary will grow. If you think that what you pay for health care will go down, welcome to fantasyland.

If payments to physicians remained at their 2011 amounts through 2022, the outlays over the next 10 years would be about $316 billion higher than CBO estimates.

Federal spending on Medicaid will shoot up drastically under ObamaCare. But if it is not repealed, you can expect drastic changes. Right now, Medicaid recipients are having a very hard time finding a doctor who will treat them, which means more emergency room use.

Look to Britain to see how it progresses. Doctors become public servants, working for the government. Fewer of the best and brightest go into medicine, Increasing shortages of doctors. Long waits for treatment, more people die unnecessarily, hospitals decline in quality and care. The goal of providers becomes trying to get reimbursement rather than trying to give patients excellent care. The goal of the all-powerful government becomes keeping costs down so they can go on pretending that medical care is free. It is essential to offer “free” care since that is what keeps the people who aren’t actually in need of much care supporting the system and the political party that guarantees “free” care.

Medicare, Medicaid and Social Security are all social welfare programs were never planned to cover the enormous population bulge of the baby boom. It has long been known that the entitlements were going to cause major trouble, but instead of figuring out how to provide a safety net for the elderly and infirm, Congress has resisted any changes. That is why Democrats, in every electoral campaign, try to tell the old folks that the Republicans are trying to take their Social Security away.  These entitlements were begun by Democrat administrations as a way to guarantee votes for themselves, and they have resisted reform with all their strength.  Not to let Republicans off the hook, they’re not anxious to get seniors mad either.

Paul Ryan has developed a plan to save Medicare and Social Security and been excoriated for it. It will be a major battle. But it is important to understand what the battle is really about, and what our real options are, and not get confused by fancy footwork.

It’s not good, but there is still time to get serious about fixing things.


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