I am a candidate in the May 15 Nebraska Republican Primary for the U.S. Senate because the incumbent, Deb Fischer, is ignoring our enormous and out-of-control national debt. In fact she recently voted twice to make it worse.
The new tax law, in spite of its good individual features, increases our debt by $1 trillion over the next ten years, even after new growth is taken into account. The new budget agreement increases spending by hundreds of billions of dollars. Fischer voted for both of these measures.
The Hoover Institution analyst, John Cogan, summarizes our dire fiscal situation in the above chart which compares three major categories of federal spending since 1950: defense, entitlements and all other. Entitlement spending is steadily increasing. The other two categories have stabilized at about 3.5% of GDP each.
The Manhattan Institute scholar, Brian Riedl, explains why this situation is so serious that it is already an emergency:
Between 2008 and 2030, 74 million baby boomers, will retire into Social Security and Medicare, at the rate of 10,000 per day.
Today’s typical couple has paid $140,000 into Medicare and will receive $420,000 in benefits, largely because physician and drug benefits are not prefunded with payroll taxes (only hospitalization is). Social Security recipients also come out way ahead.
The imbalance is so large that something has to give. Doubling the top tax rates of 35% and 37% to 70% and 74% (I.e. taxing the rich) would only cover 1/5 of the long term shortfall in revenue. An increase in inflation (purposeful or not) will not dilute away our debt. Social Security and Medicare benefits are also tied to inflation. Faster inflation would also increase interest rates and therefore interest payments on our rapidly growing debt.
Restructuring cannot wait. Every year of delay sees 4 million more baby boomers retire and get locked into benefits which will be difficult to alter. “Reality will soon fall like an anvil on Generation X and Millennials as they find themselves on the wrong side of the largest generational wealth transfer in world history.”
Conclusion. A severe form of fiscal cancer is gradually creeping over the body politic. We ignore it at our grave peril.
America is facing great challenges in healthcare. Our national health expenditure is $3.1 trillion per year, 17.4% of GDP, and is projected to reach 19.6% of GDP by 2024. Some 34% of Americans are obese (BMI>30), far more than in any other country. Their medical expenses will soar in the years ahead. Medicaid now covers over 70 million low-income people at a cost of $500 billion per year. Medicare spends $615 billion per year on the 42 million Americans over age 65. The Hoover Institution’s Scott Atlas has just published “Restoring Quality Health Care: a six-point plan for comprehensive reform at lower cost.” He claims that his plan will save $2.75 trillion over a decade for private healthcare and an additional $1.5 trillion per decade for federal healthcare programs such as Medicare, Medicaid and the Affordable Care Act.
The elements of his plan are to:
Expand Affordable Private Insurance by allowing all insurers to offer high deductible, limited-mandate catastrophic coverage (LMCC) to all citizens, which would be owned by individuals and portable.
Establish and Liberalize Universal Health Savings Accounts (HSA) for all citizens, individually owned and portable.
Instill Appropriate Incentives with Rational Tax Treatment of Health Spending equal for all, whether individual, self-employed or employer-based, requiring LMCCs for all.
Modernize Medicare for the 21st Century by establishing a private insurance option with defined-benefit premium support based on regional benchmarks featuring cash rebates to individual HSAs if premium is less than benchmark, otherwise additional cost paid by enrollee.
Overhaul Medicaid and Eliminate the Two-Tiered System for Poor Americans by permitting all insurers to offer LMCC plans to entire state population as well as setting up government seeded HSAs for all Medicaid enrollees.
Strategically Enhance the Supply of Medical Care While Ensuring Innovation by stimulating private retail clinics and loosening practice restraints on nurse practitioners and physician assistants.
A plan along these lines would go a long way towards both improving the quality and lowering the costs of American healthcare.