The debt-hawks are to economics as the creationists are to biology.
The Committee for a Responsible Federal Budget proposes the following steps to “save” Social Security and Medicare. The CRFB projects the indicated 10-year federal savings (more correctly, “increases in payments by you”). If the numbers are correct (big “IF”), here are the implications:
“Increase Cost-Sharing” Government pays $150 billion less. Americans will pay $150 billion more for our health insurance.
“Enact Medicare Malpractice Liability Reform” Government pays $60 billion less. Americans will be limited as to what we will receive in the event of serious negligence by a doctor or hospital.
“Limit Tax Exclusion on Employer-provided Health Care” Government receives $250 billion more from all employees. This is a $250 billion tax increase for working people.
“Increase Medicare Eligibility Age to 67” $60 “savings” for federal government. We will have to buy private insurance for two additional years – our older years when private insurance is most costly.
“Strengthen the Independent Payment Advisory Board ((PAB).” Government “saves” $30 billion. “Strengthen” is a euphemism. The purpose of PAB is to reduce federal payments for drugs and medical procedures. We Americans will pay $30 billion more.
“Use ‘more accurate’ measure of inflation to calculate cost-of-living adjustments.” Government pays $140 billion less. “More accurate” is a euphemism meaning, “more restrictive.” Result: We’ll receive lower benefits.
“Slow the growth of benefits for middle-and high income earners” Government pays $25 billion less. Remember how the Alternative Minimum Tax was only supposed to affect “rich” people? This proposal eventually would penalize nearly all Americans.
Raise the retirement age to 68, then increase it further, based on life expectancy. Government savings: $? Social Security already pays you nothing if you die before retirement, and not even a living wage if you live after retirement. Now they want to raise the retirement age, so we receive less, and receive it later.
Increase FICA by another 1% for anyone making more that $56,000 per year. Government savings: $? Since you pay 7.65% and your boss pays another 7.65%, that “little 1%” amounts to an 6.5% FICA tax increase.
Thus, does the mistaken belief that Social Security and Medicare will go bankrupt, erode our quality of life. The federal government is a monetarily sovereign nation, which means it cannot go bankrupt. It can produce unlimited money to pay debts of any size. Similarly, Social Security and Medicare never can go bankrupt, nor can the Department of Defense, Congress, the Supreme Court or any other federal agency. No agency of the federal government can go bankrupt.
Debt-hawks wrongly believe FICA pays for Social Security and Medicare. It does not. FICA could be eliminated, and this would not affect by even one penny, the federal government’s ability to support these federal agencies.
Even the most obtuse debt-hawk recognizes the ability of the federal government to create enough money to pay any bill of any size. So what is the concern? It all boils down to fear of inflation. But, since we went off the gold standard, inflation has not been related to federal deficits (See: INFLATION), and inflation easily is prevented and cured by interest rate control. So in brief, debt-hawks prefer the absolute surety of great harm to us today, because they have the unreasoned, unsubstantiated fear that maybe, possibly, perhaps we sort of might have some unknown degree of inflation at some unknown time in the theoretical future.
Organizations like the CRFB do great harm, by supporting unnecessary limitations on Social Security and Medicare. And that’s not all. Their grim calls for austerity, their unreasoned fear of inflation, has limited the government’s ability to cure this recession, costing millions of people their homes, their livelihoods and their happiness. Debt-hawks claim fiscal responsibility, when in fact they are the most irresponsible people imaginable, prescribing bitter snake-oil cures for real economic problems.
My only hope is that when these debt-hawks personally need help from Social Security and Medicare, the limitations they have supported make benefits unavailable to them. And I hope this recession causes them the great grief they have caused the rest of this nation. That would be justice.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity