Blessed Sanity on the Debt-bacle

July 28, 2011 at 10:29 am (By Amba)

Now here’s a point of view that makes total sense to me.  No wonder — it’s subtitled “A Pox on Both Parties.”  This is Jeffrey Miron, Harvard economist and Cato Institute fellow:

Each party has valid concerns about the other’s approach to avoiding default, yet each is relying on counterproductive articles of faith.

To address the debt crisis, both sides must give up their cherished, but misguided, ideas.

The problem with the Democratic position is that it regards redistribution, rather than economic productivity, as the prime goal of government policy. The Democrats therefore want to address the deficit with higher taxes on “the rich,” not expenditure cuts.

This approach, however, cannot remotely address the long-term debt outlook; the available revenue from the wealthy is far too small. And higher taxes discourage economic growth, making deficits worse. Thus whatever the morality of soaking the rich, it will not work.

Likewise, Democrats refuse to accept that Medicare is the primary driver of the U.S. fiscal nightmare. […]

A good approach to scaling back Medicare would be a substantially higher deductible. Imagine, for example, that every beneficiary paid an extra $2,000 out of pocket each year. This is affordable for most families, especially those a few years from retirement.

This one change in policy would save at least $100 billion a year. Better yet, Medicare beneficiaries would face the full price for more of their health care, while still having insurance against extraordinary expenditures. So they would pay more attention to prices and demand less health care, slowing the growth of health care costs.

And proposing real cuts in Medicare is the perfect opportunity for Democrats to steal Republican thunder. Many Americans believe that Democrats will do anything to forestall entitlement cuts, even if that means an exploding debt. […]

For Republicans, the crucial mistake is their refusal to distinguish between the tax revenue that comes from higher rates and that which comes from fixing tax loopholes that inappropriately privilege certain consumption or production.

The Republicans are correct that raising tax rates is a terrible idea. By discouraging savings, work and investment, higher rates dampen economic productivity in the long run. […]

But closing tax loopholes — lowering tax expenditure — is a terrific idea. Many tax expenditures distort economic decision-making and therefore slow economic growth. Crucial examples include the home-mortgage interest deduction and the preferential treatment of employer-provided health insurance. Thus Republican skepticism about explicit expenditure should apply equally to tax expenditure, regardless of the revenue implications.

To be sure, some “tax expenditure” is good for economic growth, so Republicans are right to be careful. Those features of the corporate tax code that permit rapid depreciation, for example, are beneficial because they encourage investment.

But blanket opposition to any additional revenue, or insistence that reduced tax expenditure be offset by lower tax rates, is ultimately counterproductive. […]

Opposition to tax expenditures also allows Republicans to blunt Democratic concerns over balancing the budget “on the backs of the most vulnerable.” The home mortgage interest deduction, for example, is highly regressive; poor people do not own homes or itemize deductions. Scaling back such anti-growth tax expenditure is thus the right way to change the distribution of income: eliminate bad policies that favor the well-to-do.

Yes, these policy changes would “hurt” the middle class—but only by removing incentives that have encouraged and cushioned unwise decisions, like buying too much house and consuming unneeded health care.  The sacrifice of subsidized folly is a good kind of sacrifice to have to make.

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103 Comments

  1. mockturtle said,

    He makes some excellent points. But I refuse to believe that Medicare costs are mainly driven by consumer choices. The health care ‘industry’ [Love that word!] is to blame. If a physician tells his patient that tests x,y & z are necessary, does the average consumer know differently? If a hospital doesn’t send an itemized statement but insists the recipient must ASK for one, what is the likelihood of the average consumer doing that? And, having read the medical abbreviations on the statement, how likely is it he/she will know if charges are accurate? I am a watchdog but only because I happen to have the time and the knowledge necessary to be one. In the past three years, with my husband in and out of medical facilities, I have questioned many charges for supplies and equipment not used and procedures not done and gotten many reversed. I have made it clear that, neither we nor Medicare should be charged. We need a LOT more watchdogs and maybe Medicare won’t be the budget-eating monster it is today.

  2. amba12 said,

    You are completely right. But the two aren’t incompatible. If we were being personally charged for the first $2000 a year in medical costs, wouldn’t we question whether those expensive tests were necessary, and wouldn’t we demand itemized bills? Wouldn’t we demand less of a markup on routine lab tests, or shop around for a lab that would do them more economically?

  3. realpc said,

    “Medicare beneficiaries would face the full price for more of their health care, while still having insurance against extraordinary expenditures. So they would pay more attention to prices and demand less health care, slowing the growth of health care costs.”

    Even though a lot of what he said seems sensible, and I agree about Medicare, I am sure that most people would strongly object, because they are brainwashed by medical industry propaganda. I think Medicare, and health insurance in general, should be mainly for extraordinary emergency expenditures. Most of what is provided by the medical industry, aside from emergency surgery and antibiotics (when they are actually needed, that is), is worthless or worth very little.

    However, the medical industry propaganda says we are living longer healthier lives thanks to the new unaffordable drugs they keep cranking out. This is a fallacy, and her is one article that helps explain why: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2669876/

    But the government, especially Democrats, are brainwashed into adoring the medical industry. Well actually, so was G. W. Bush, so it isn’t just Democrats.

    So if Medicare really is the biggest contributor to our debt, as I guess it must be, and if we can only solve this problem by controlling Medicare expenses, then we are really effed.

  4. Tom Strong said,

    The Democrats therefore want to address the deficit with higher taxes on “the rich,” not expenditure cuts.

    While I agree with parts of the article, this is simply untrue. Kent Conrad, who is a fairly centrist Democrat, proposed a plan that was 50% tax increases and 50% spending cuts. It was roundly ignored.

    No Democrat that I know of has proposed addressing the deficit solely with tax increases. Even Bernie Sanders hasn’t suggested that. Can someone please provide an example?

  5. mockturtle said,

    Annie, I do agree that the increased premiums are a valid measure. It just seemed to me that he was blaming runaway health care costs on the consumer. Just recently I was in a position of wanting to tell an ER physician that, “No, he doesn’t NEED a ‘quick’ CT scan” and wimped out under the stress of the moment. My husband’s urologist later confirmed that it was totally unnecessary and it was obviously done to make more money for the hospital. People do need to be informed enough to make good medical choices and the right to say NO to superfluous, expensive procedures without being made to feel like they are risking their health or that of their loved ones.

  6. Elaine said,

    There needs to be a new understanding and division of middleclass. Many of us elders who live on social security, with tiny pensions and small savings are on the brink of poverty. We worked hard all our lives, secured a decent education and did non glamorous simple work for ourselves and society.
    Now we cut back on heat, lights and food. With an increase in our deductable and other medical expenses we would have to do away with internet, cable, our pet, and more food. If the furnace goes down…..
    There are many of us out there. We are the lower middle class and invisible.

  7. mockturtle said,

    Yes, Elaine, and as my husband and I are now spending our retirement savings on his nursing home expenses, we will be in the same category. In fact, I will probably not be able to live in this community much longer because of the monthly maintenance fees but will be able to sell the house in today’s market. The economy giveth and the economy taketh away. :-(

  8. mockturtle said,

    Unable to sell the house, that is!

  9. chickelit said,

    Unable to sell the house, that is!

    This depends on location.

    @amba: I agree–this was a saner assessment than most. That such treatments go ignore says a lot about our public sanity.

  10. amba12 said,

    Elaine – maybe the deductible would have to be income-related then – means-tested.

  11. mockturtle said,

    That would certainly make more sense.

  12. Stephanie said,

    Was talking with my dad tonight- he believes Medicare should be means tested. What does Warren Buffet need with Medicare?

  13. Icepick said,

    The health care ‘industry’ [Love that word!] is to blame. If a physician tells his patient that tests x,y & z are necessary, does the average consumer know differently?

    This is funny to me. My mother is probably going to be dead soon because the goddamned doctors DID NOT run enough tests (stuff like CT scans) back when asked (by us) because they didn’t seem to think that such tests met goddamned Medicare fucking guidelines.

    Here are real tests for whether or not goddamned Medicare and the goddamned doctors are doing lots of unnecessary tests. (1) Does goddamned Medicare test more frequently for a given condition private insurance? (2) Are goddamned Medicare’s expenses growing faster than insurance claims in the private industry? Remember to adjust for the age adn health of the patients in noth cases. (That should be easier for (2), but it isn’t trivial.)

    If the answers to both of those questions aren’t “YES”, then the problem is greater than you think. And you will find that medical COSTS have been growing at a faster than inflation clip for privae insurance for a long time now. The problems are deeper than simply the goddamned doctors exploiting goddamned Medicare.

    (And yes, I am angry and bitter on this topic. I am tired of getting fucked by Big Whatever every single time. And I am especially angry with the entire goddamned medical industry. They are about as slimy as politicians and lobbyests. Fucking bloodsuckers.)

  14. Icepick said,

    The news is moving very fast today. Not only is the advance Q2 GDP number a terrible 1.3%. Q1 has been revised downard to 0.4%. On top of THAT, there have been major revisions to previous quarters going back a few years. The BEA is now stating that the recession was substantially worse than previously stated.

    On top of THAT, the FED has told primary dealers (bond buyers) to meet with them and Treasury Department officials today at noon for an emergency meeting. This is NOT the regullarly scheduled meeting. Apparently they will discuss the Treasury’s emergency plan for how to pay off bond holders after Tuesday. This is reminiscent of the emergency meetings in September of 2008.

    In addition, other numbers continue to come in weak as well. The Chicago PMI came in worse than expected, and the numbers under the headline number are even worse than the headline would suggest. (Employment headed down, inflation headed up.) Naturally the brand new consumer confidence numbers are out and they are also terrible.

    Note that most of the bad news above doesn’t actually have anything to do with the debt ceiling debate. That’s just going to be the gasoline thrown on top of the inferno.

    So, are we having fun yet?

  15. amba12 said,

    Ice: “Big Whatever.” There ya go. The Big Whatevers are all in league with each other, as far as I can tell, and generally speaking those who run them view the rest of us approximately as cattle, faceless units of profit production whose outcomes are measured in their numbers, not in our well-being. Those who slip through the cracks, like your mother, are counted approximately as downer cattle: oh well. There are people working here and there in the system who still care, or would like to, but they have to impede the flow of production to do so, and it costs them extra energy (of which they have little to spare) to do so.

    I don’t know the answer; I’m not even sure I know the question. Maybe bigness and anonymity and the prioritizing of the System over its components are inevitable side effects of numbers, of living in a technology-enabled mass society.

  16. Icepick said,

    Maybe bigness and anonymity and the prioritizing of the System over its components are inevitable side effects of numbers, of living in a technology-enabled mass society.

    I thought we had been moving away from the Pharaohanic model of society. :)

    In all seriousness, I’m not sure I know the answer either. But stuff like this worries me too. Sample:

    Unlike those in the lower half of the top 1%, those in the top half and, particularly, top 0.1%, can often borrow for almost nothing, keep profits and production overseas, hold personal assets in tax havens, ride out down markets and economies, and influence legislation in the U.S. They have access to the very best in accounting firms, tax and other attorneys, numerous consultants, private wealth managers, a network of other wealthy and powerful friends, lucrative business opportunities, and many other benefits. Most of those in the bottom half of the top 1% lack power and global flexibility and are essentially well-compensated workhorses for the top 0.5%, just like the bottom 99%. In my view, the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability. The odds of getting into that top 0.5% are very slim and the door is kept firmly shut by those within it.

    This just can’t be sustainable.

    Back to real life now.

  17. wj said,

    One other way to look at the whole discussion:
    In 1960, the Defense Department accounted for just over 50% of US government spending. Today, with two (and a half) wars going, it accounts for more like 20%. Over 50% is Social Security and Medicare — and that’s before most of us Baby Boomers retire.

    Regardless of what we think *ought* to be the case, regardless of what any of us may think is fair, that is simply unsustainable. So we are going to have to, by whatever means, cut down on how much money is being transferred by the Federal government every year from those who work to those who are over 65.

    Now we can argue about where the cuts have to come from. We can argue about whether some people ought to pay more. We can argue about when you ought to become eligible for those “entitlements.” What is delusional is to believe that we can balance the budget by cutting other stuff. (And to believe that we can do it instantaneously and painlessly, by letting the debt limit shut down spending, is simply insane.)

    We might wish the world were otherwise. But just wishing will not make it so.

  18. amba12 said,

    There’s undoubtedly lots of other stuff we can and should cut; but you’re right, this is the heart of the problem.

    You’ve also hit on the reason Social Security has NEVER made sense to me: how can you take money from people and then regard giving it back to them as an “entitlement”? Are they entitled to their own money or not? But wait: it’s NOT their own money any more; it’s younger people’s money. Also: are they simply getting back what they put in, with interest calculated by some formula? Or are they getting payments related to what they put in by some more byzantine and indirect formula? And when the value of the dollar has changed and the proportion of the sizes of generations has changed, then younger people can never possibly get back what they put in!! It’s just insane, and also murderously difficult to phase out without its amounting to, as I said yesterday, confiscatory taxation of the middle and working classes.

    A welfare program for truly indigent seniors could be justified. (And the medical expenses of old age are a knotty problem apart from Social Security that I can’t even get into here*.) But what you want to do is encourage people to start planning early and to set aside (invest) THEIR OWN money for THEIR OWN old age. The existence of Social Security has encouraged many people NOT to do this. And the sad part is that if you start regularly setting small amounts aside early enough, you’ll probably be fine. (I inserted “probably” because it’s hard to figure out these days what would be safe to invest in.)

    *But I’m going to get into it a little bit anyway. Old people are a gold mine for the health care “industry.” It would be shocking to really find out how many old people are taking drugs they’d be better off without, the side effects and interactions of which are causing further problems requiring further drugs, etc.

    And here’s another long-term plan: bring back physical education as a required course in public schools. And instead of (or in addition to) playing dodgeball, teach kids to create a basic physical fitness routine that they can make a part of their daily lives. Establish the pleasurable habit of moving vigorously nearly every day. Teach that this is a normal and expected part of life. The costs savings five decades later? Priceless.

  19. amba12 said,

    P.S. Freelancers have to pay both their own and the employer’s contribution to Social Security. It adds up to over 14%.

  20. karen said,

    Your whole, entire #18 comment is WORD, amba!!!

    What ideology is that? Common sense, for sure.

    “But what you want to do is encourage people to start planning early and to set aside (invest) THEIR OWN money for THEIR OWN old age. ”

    Wasn’t that suggested not so long ago? And laughed down. To our detriment.

    Ice, does any of this dire news surprise you– at all?? It doesn’t me. Upside-freaking- down kinda world, dude.

    We’re all downer cows. I KNOW what happens to them:0(.

  21. chickelit said,

    The news is moving very fast today.

    A pendulum swings fastest as it bottoms out, heading for the other upside. The potential for change is expended at this point and everything is in motion.

  22. chickelit said,

    Was talking with my dad tonight- he believes Medicare should be means tested. What does Warren Buffet need with Medicare?

    I agree with this sentiment.

    A welfare program for truly indigent seniors could be justified.

    Not just “could be justified,” but “is justified.” But what about people who deliberately don’t prepare, who could save, but don’t? How do we phase that out? The people I’ve met in that category (more than 3, less than 10) were basically counting on their parents dying one day to tide them over.

  23. amba12 said,

    Right. Well, saving can’t exactly be mandated, can it? or can it? but at least (like my notion about exercise) it has to be incentivized and normalized. I remember Republican talk about “personal savings accounts.” If instead of Social Security, the same amount of money went into such savings accounts, which were untouchable (? or penalty-protected?) until a certain age . . . big biz for banks or investment funds . . . I don’t know what I’m talking about here, someone please help.

  24. Ron said,

    eyeball this one…

    http://usdebt.kleptocracy.us/

  25. chickelit said,

    @Ron: Where on earth did we ever find all the paper for that debt? ;)

  26. chickelit said,

    @Ron: You probably remember what Nietzsche thought: debt = guilt.

  27. mockturtle said,

    Does anyone else here remember when we used to get interest on our money? Hah Hah! Quite a concept, isn’t it? I expect any day now to find our banks charging us to keep our money. At one time it was even a significant source of income. You could get 5-6%–or even more–on a CD.

    Annie, I agree that Social Security needs to be revised or totally replaced. Maybe savings bonds or treasury bonds would be a reasonable investment. You can’t very well expect people to trust their money to the securities markets alone. Maybe energy stocks and pharmaceuticals have done well but a lot of others have tanked during this recession.

  28. amba12 said,

    Nope, Nietzsche didn’t think that; the German language did. The word Schuld means BOTH debt and guilt. Think about the psychological implications of that!

    I’m also struck by the resemblance of Schuld to Schulter, shoulder. And the idea that both debt and guilt are burdens to be “shouldered.”

  29. chickelit said,

    Nope, Nietzsche didn’t think that; the German language did. The word Schuld means BOTH debt and guilt. Think about the psychological implications of that!

    Yes, I’m aware of that. But I don’t think he rejected the equivalence, especially in older cultures. He used the similarity in German to support his argument.

  30. chickelit said,

    I should have mentioned Schuld. I had a conversation with myself at Althouse about that once and then extracted it out and put it here.

  31. Ron said,

    @amba @chickelet You crazy Krauts! (und Freunds thereof!) Even though German myself, I can’t go all linguist on ya…. But I like where these threads go….so I’ll have to connect the debt to Don Draper. Or something.

    WWF&GD? We know the answer to that one…

  32. Ron said,

    @chickelit Aren’t greenbacks more a cloth than paper? Is that so?

  33. chickelit said,

    @chickelit Aren’t greenbacks more a cloth than paper? Is that so?

    Annoying factchecker too, eh? :)

  34. chickelit said,

    But I like where these threads go….so I’ll have to connect the debt to Don Draper. Or something

    When’s that all gonna restart? I’m willing to give that show one more chance.

  35. Tom Strong said,

    amba, the problem is that even in 2005 when Bush proposed them, the “private savings account” that is enforced by government was incredibly unpopular. It’s only going to be more so now. Why? Because if he had succeeded, everyone on social security would have gotten completely screwed in 2008 when the markets crashed.

    Not to mention that it would be yet another windfall for the big banks, which would receive a huge influx of new assets to screw around with.

    In itself, I think privatization is both a bad idea and just politically impossible anyway. I’d rather just see some form of means testing and a higher taxable income cap.

  36. Ron said,

    When’s that all gonna restart? I’m willing to give that show one more chance.

    They start shooting next week.

  37. Icepick said,

    Still reading comments (daughter is in the crib, and may even nap eventually) so I’ll take them in order.

    Amba: But what you want to do is encourage people to start planning early and to set aside (invest) THEIR OWN money for THEIR OWN old age.

    This is uch harder than it sounds. If we had a stable currency, one could just stash the cash and do okay. However, we have an inflationary currency, which means one HAS to invest it somewhere, which means giving it over to the financial industry. In other words, it’s cash for looters.

    Karen, yes, this has largely been foreseeable. Doesn’t make it any less annoying.

  38. Icepick said,

    Funniest of all, we’re having THIS crisis at THIS point because we have a freshmen class in the House that is having an outbreak of principle! Unfortunately (in my opinion) they are having this outbreak on the wrong point – pass a damned debt ceiling extension and then do this during the budget debates. The practical effect on government spending would be the same but we wouldn’t have to worry about the financial industry bullies looking to kill all the rest of us just to show they can.

  39. Icepick said,

    I’m not sure I remember getting interest. Mom’s got a couple thou in a “high performance money market” – she’s getting 0.02% interest last time I checked. I keep meaning to talk to my brother-in-law about this and buy an ounce of gold with the money instead.

  40. realpc said,

    “It would be shocking to really find out how many old people are taking drugs they’d be better off without, the side effects and interactions of which are causing further problems requiring further drugs, etc.”

    I think it’s much worse than anyone imagines. I think a lot of the dementia epidemic is caused by drugs. And now many millions of Americans are taking antidepressants, even though they aren’t really depressed. These drugs are addictive and do god knows what in the brain. Eventually I think there will be an explosion of dementia.

    And then there are all the new drugs they are churning out every year. The drug industry propaganda says Americans are living longer and healthier lives because of the drugs. There is research to prove it.

    However, the research is probably paid for by the drug companies. Here is an example http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2669876/ of criticism of the kind of lousy research they churn out to fool the public. Just read the abstract if you don’t like statistics.

  41. Icepick said,

    I can’t speak for all anti-depressants, but at least some of them aren’t addictive.

  42. Icepick said,

    And because I haven’t brought you enough good news yet today, here’s more! The leadership of the Turkish military has resigned! Not sure what this means, but it can’t be good.

  43. Elaine said,

    If you are one of the many people who work at service jobs in this country,(including the people who take care of our children, empty bed pans, provide support for business, banking, hospitals,schools, libraries, the military, government, social services, etc.) you are probably saving a bit of every pay check. However, those wages are so stagnant, and that work so undervalued that over a lifetime it amounts to very little in the face of all the demands, including childred and illness, Just wages need to be carefully considered.

  44. mockturtle said,

    How many of you would think to ‘ask your doctor’ about a drug if you hadn’t seen it advertised? Ever listen to all the disclaimers? :-O

  45. Icepick said,

    How many of you would think to ‘ask your doctor’ about a drug if you hadn’t seen it advertised? Ever listen to all the disclaimers?

    I generally would ask about a type of drug. E.g. “Do you have a drug that can given me slimmer trimmer thighs while also allowing me to dunk a basketball and become fabulously rich?”

    I only listen for the really funny stuff in the disclaimers. I remember an anti-anxiety drug for people that got nervous in crowds – one of the possible side-effects was “anal leakage’. (!!!!) I’m wondering how high do you have to be that you aren’t anxious in a crowd even if you are up against anal leakage?!

    I also remember watching Pardon the Interruption after the first Super Bowl where they not only advertized Viagra or Cialis or whatever, but actually said WHAT IT DID, as opposed to the then usual vague allusion to rock hard cocks. Anyway, the law is apparently that if you SAY what the drug does you must list the side effects. So on PTI the remarked upon this thusly:

    Michael Wilbon: So Tone, what do you think about calling your doctor if you have an erection that lasts four hours or more?

    Tony Kornheiser: Call your doctor? Call your girlfriend. Call everybody’s girlfriend!

  46. mockturtle said,

    My average home health patient was on 12 medications. Some were on more than thirty and that’s separatedrugs, some taken multiple times a day. Most of my patients were on Medicare, therefore elderly. Elderly people do not absorb, metabolize or excrete medications at the same rate as younger people. You BET they are overdosed!!!! This has been a pet peeve of mine for years.

  47. realpc said,

    Most MDs believe the drug company propaganda that their “medicines” promote health and healing. And they believe the phony research. MDs often refuse to even consider whether a symptom might be a drug side effect. So naturally they are going to prescribe an abundance of drugs to elderly patients. If it were true that the drugs keep people alive and healthy, this would make sense.

    But it isn’t true. Most of these drugs are very very bad. The drug companies have so much money and can publish as much BS research as they want, and hardly anyone is motivated to oppose them. The money spent on useless harmful drugs is probably one of the biggest drains on our economy.

  48. mockturtle said,

    Doctors used to get incentives from the drug companies. i.e., they were actually paid to prescribe a drug. This is now illegal, AFAIK, but there is still far too much influence.

  49. realpc said,

    “Doctors used to get incentives from the drug companies. i.e., they were actually paid to prescribe a drug. This is now illegal, AFAIK, but there is still far too much influence.”

    MDs are brainwashed. Instead of considering if a symptom might be a drug side effect, they would rather prescribe an additional drug to treat the side effect. I know of amazing examples of this. It’s because they literally do think of the drugs as medicine, with healing properties.

    MDs don’t need financial incentives to prescribe drugs. They are indoctrinated by their non-holistic education. They don’t think the body has any natural wisdom or self-healing capabilities. They think it’s a poorly designed messed up machine that evolved haphazardly.

    Therefore, throwing all kinds of poison into this haphazard mess of a machine is perfectly ok.

    Until they start teaching Intelligent Design in medical school, our society will continue drowning in poison drugs.

  50. wj said,

    Old people are a gold mine for the health care “industry.”

    The real gold mine is the last couple of months of life. I seem to recall seeing that a huge percentage of all Medicare payments occur then — huge as in over 25%. A little more willingness to use hospice care would save us all a bundle. Without “pulling the plug on granny.”

  51. mockturtle said,

    Hospice care is also pretty expensive. One way to demonstrate this is to count the number of for-profit hospice organizations that have come on the scene in the past ten years. If it weren’t profitable, they wouldn’t be in the biz. They are still paid by Medicare.

  52. amba12 said,

    Elaine 5:44: It seems almost as if the only work that isn’t undervalued nowadays is making more money from money.

  53. wj said,

    Hospice is expensive. Just way cheaper than having someone in hospital (the usual alternative) and getting expensive “treatments” which at best extend life a few weeks. Having just been thru this with my mother, I have to say that the price was far lower, and she was a lot more comfortable.

    Hospitals are great at what they do well. But care for someone at the end of life is not one of their strengths.

  54. amba12 said,

    As I’ve posted before, hospice is often used to help care for a person who has become helpless and/or unmanageable in the later stages of Lewy body dementia, which my husband died of. Lewy is known to be an inevitably terminal disease, but since its course is somewhat unpredictable and can drag out for a long time, for most of that time, IMO, hospice is unacceptably and unnecessarily expensive. Hospice saved my health and I am very grateful that it was prescribed, because there was no other way to get Medicare-funded assistance, but J was in it for a year (and I know of people who have been in hospice for 3 years), and the part of it that really mattered for most of that time — two CNAs for an hour or two three times a week — could have been provided for a small fraction of the cost. There was not much that could be done for him medically. There really needs to be some intermediate option. It would be a huge saving if Medicare could simply pay for a modest amount of home-care assistance; you would then also save much of the medical cost of spouse-caregivers themselves getting sick, as they so often do from sheer exhaustion.

  55. mockturtle said,

    My agency charged Medicare $225/visit and I got $35, which included my transportation and paperwork, phoning, and other administrative time spent. Guess who’s making the money? I don’t remember what they charge for a CNA visit but PT/OT were the same as mine, I think. I don’t know what they are charging today–I’m afraid to find out.

  56. amba12 said,

    I had kept all J’s Medicare statements, but I got rid of them when I was trying to lighten up for the move, and also because I could hardly face them, for so many reasons. I don’t remember what they billed for CNA visits, but it was certainly three figures. I heard that the CNAs got $11 an hour. Imagine the savings if they just gave a home caregiver an allowance to use for help, respite, and supplies. Of course gray-market home health aides are a gamble (one of mine came well recommended but turned into a crack addict in front of my eyes), but if they are good you can pay them decently. An agency will charge you $20 an hour and give them $9.

  57. mockturtle said,

    The CNAs in AZ only got $8/hr. and that was as late as 2005! :-O Up here, they get $10. Piss-poor. They deserve twice that. The do most of the important work, IMHO, and the clients really appreciate them.

  58. amba12 said,

    I totally agree. And they were also human beings. That sounds self-evident, but sometimes the higher people’s professional status, the more they get entangled in protocol.

  59. mockturtle said,

    That’s right. We [the ‘professionals’] had to handle IV meds and oversee the overall care, do wound care, etc., but our role was minimal when compared to that of the aides–the unsung heroes of our health care system. Truly, I am not exaggerating one bit when I say that I spent more time doing paperwork [virtually all Medicare-created] than I did seeing patients, including driving. The forms for an initial visit take over two hours to complete and mostly consist of data gathering of no relevance to the care. The government’s thinking is: If we’re going to pay them, we’ll at least make them gather reams of data for us. They even pay the agencies to fill out these same forms for non-Medicare/Medicaid patients!!! So we even had to do the dreaded ‘OASIS’ on private insurance cases. :-\

  60. Icepick said,

    I think Obama may not have gotten what he wanted out of this deal. He get’s the debt ceiling raised about 2.1 trillion dollars. But with the country’s economy sliding backwards again, probably into recession, tax revenues are going to drop. He may well find that come October of next year we are in the middle of another debt ceiling debate.

  61. mockturtle said,

    Nancy Pelosi doesn’t like it. It MUST be good! ;-)

  62. Icepick said,

    Nobody likes this deal. The markets did a little bit, but the rising tide of bad economic data has already flushed that mini-rally down the toilet. I’ll call it now: The NBER will eventually get around to stating that we entered another recession in March of 2011. They’ll use that date to blame it on the earthquake in Japan.

    Somethig I had missed is that the US Senate hasn’t done any actual budget work since April. So we’ve got 60 days before the US starts it’s second straight year without a budget. Can’t blame THAT on the Tea Party folks.

  63. mockturtle said,

    As I’ve said before, the sole occupation of our congressmen is to get themselves reelected. Few of them give a damn about us or the country.

  64. amba12 said,

    Presidents, too. That’s why my favorite idea for a constitutional amendment is: ONE six-year presidential term, period.

  65. mockturtle said,

    I agree. Term limits for all elected officials with longer terms [to avoid having so many campaigns].

  66. Icepick said,

    From an AP article:

    WASHINGTON (AP) — The first phase of a deal to raise the government’s borrowing limit would pose little threat to the economy in the short term because almost none of the spending cuts would occur before 2014.

    Discretionary spending, which excludes Social Security, Medicare and Medicaid, would be cut by only $7 billion in 2012 and $3 billion in 2013, according a summary by Senate Democrats. That’s a tiny fraction of the nation’s $14 trillion economy.

    So this whole show has been a great big nothing-burger with extra nothing.

  67. Icepick said,

  68. Tom Strong said,

    While I’m all for term limits, enacting that on its own will just mean that instead of angling for their next election, officials will angle for the best post-government lobbying job their efforts can buy.

  69. Icepick said,

    Oh, and a side of wildly exhagerrated rhetoric.

    “I am concerned about this because we don’t know the details. And until we see the details, we’re going to be extremely non-committed but on the surface it looks like a Satan sandwich,” Rep. Emanuel Cleaver (D-Missouri) said on MSNBC.

    http://realclearpolitics.com/video/2011/07/31/dem_congressman_debt_deal_a_satan_sandwich.html

  70. Icepick said,

    Tom, or they can seek appointments to some government sinecure or another, as has happened in CA at the state level.

  71. Tom Strong said,

    Yep.

    Regarding the spending cuts, I think it’s fairly apparent that all rhetoric to the contrary, Keynes is still king in DC. So no one there really wants to make present-day spending cuts in a weak economy.

    Which I’m not against, BTW – I have yet to see a compelling argument that Keynes was wrong. But it is clear to me that there are structural elements to the economic stagnation that deficit spending only aggravates. And no one wants to take those on.

  72. Icepick said,

    Keynes overall theory is wrong because it ignores the human element. Sure, counter-cyclical spending seems like a good idea – in fact, it seems like such a good idea that we’ll keep spending like that once the crisis is past, and the hell with the savings side of things.

  73. mockturtle said,

    I think Keynesian economics is one of the main reasons why we’re in the mess we’re in today.

  74. Icepick said,

    THe problem is that we only ever get the one half of it over and over again. No counter-balance as Keynes invisioned.

  75. mockturtle said,

    Maybe it would have to be called ‘hyperKeynesian’. But the philosophy of ‘spending is good, saving is bad’ will eventually bite you in the butt.

  76. chickelit said,

    As I’ve said before, the sole occupation of our congressmen is to get themselves reelected. Few of them give a damn about us or the country.

    I’m gonna have to disagree with that. My Congressman, Darrell Issa, does little to no advertising, campaigning, preening, electioneering, etc. He does put himself out there in the news, and his constituents mostly like him. His work sells itself.

  77. Tom Strong said,

    @Icepick – that’s an important criticism of Keynesian economics, but it doesn’t invalidate the overall theory any more than some of the more astute criticisms of Darwinism invalidate it. I do think the argument that Keynesian strategies can’t be effectively implemented except under very specific political circumstances could be true.

    @mockturtle – for an individual, sure. But when discussing a society the picture is a lot different. Spending requires trade, and trade creates value for both parties. And yes, government spending undoubtedly incurs some deadweight loss – but in recessionary circumstances there’s little evidence that the deadweight loss overpowers the gains from trade.

    In any case I’d like to read a compelling argument that austerity measures will do more to improve growth in a recession than deficit spending will. I’ve read a few such arguments but have found none of them remotely convincing. Happy to take suggestions.

  78. mockturtle said,

    WHAT ABOUT THE NATIONAL DEBT, YOU GUYS??!!! Spending what we don’t have? Borrowing more to pay it off? Companies leveraging buyouts? I’m certainly a believer in investment and stimulus spending when your debts are paid but I would not buy a bunch of risky stock if I owed $80K in credit card debt. You are both obviously knowledgeable about the mechanics of economic systems but you’re missing the forest for the trees, IMHO.

  79. Icepick said,

    crap, just had another few hundred words eaten by the internet. Grrr.

  80. Icepick said,

    Tom, I’m not arguing that austerity will spur growth. What I am arguing is that annual deficit spending that is more than 10% of our GDP cannot be sustained indefinitely without catastrophic consequences. Fitch just put out their report today letting the USA keep its triple A rating. That was good. What was bad was that they stated that US government debt will pass 100% of our GDP before the end of 2012. We are very rapidly approaching Greek levels of public debt.

    Now the economists are saying we aren’t Greece because we have our own currency. What they aren’t saying is that that means we can inflate our way out of debt. It’s what they mean, but not what they will (usually) say in public. How is that going to impact most Americans?

    Again, we haven’t had a government debt-induced economic crisis – yet. But we’re really really close. Given that following the crisis of 2008 and the recession that followed has left our economy in the pits, and that the economy isn’t likely to see strong growth again for the next several years, perhaps the next decade, how long will the government have to spend money at this rate to keep things afloat? How long can that happen? The government debt crisis will hit long before we have a robust economy again. Better to try and mitigate that crisis now before it becomes an utter disaster later.

    One final bit – the demographics of the nation are against us. Our native born population is getting older and demanding more and more government services at a time when they will put less and less into the government. These age cohorts* have been tremendously innovative and productive. The only reason our demographics don’t look worse is because we have been importing millions and millions of people from the Third World. However, importing peasants from the Third World isn’t exactly going to spark the high-end growth needed for long-term economic health with these demographic trends. We’re trading out the generations that brought huge economic and technological innovation to the economy (literally, they put people on the Moon and computerized the world, amongst other things) for a bunch of day laborers and house servants.

    So I ask you, what evidence is there that non-stop government deficit spending will actually fix the economy, especially given demographic headwinds? The Japanese experiment is highly suggestive that this cannot work. Especially given that the Japanese had various advantages we do not have (societal homogeneity and a high personal savings rate that meant the Japanese government has been able to borrow a great deal domestically), while only missing one advantage (that the US dollar, and not the Japanese yen, is the reserve currency of the world).

    * I am speaking not just of the Baby Boomers, but of the age cohort that came before them as well.

  81. Tom Strong said,

    Icepick –

    Just so you’re clear where I’m coming from, I don’t really disagree with you. At least not on the big picture. I don’t believe we can afford much more public debt. And while I’ve been very critical of the decision to play economic hostage games with the debt ceiling – which I blame mostly on the Republicans but I recognize is at least partly the fault of Obama and the Democrats – I think the underlying goal of trying to achieve fiscal balance is an important one, and I think spending cuts, especially in healthcare, are going to have to be a major part of any such effort.

    But here’s where I differ. First, I think the risks of deflation are at least as great as the risks of inflation. If Keynes is right and deficit spending can help us get out of a recession, then sharp immediate cuts are a thing to be feared, and may end up doing more harm than good. To borrow mockturtle’s analogy above, while you generally shouldn’t borrow more if your credit cards are maxed out, you also can’t pay off your credit cards if you’re unemployed.

    And if immediate cuts do hurt the economy – then they also hurt the prospects for larger future cuts. Every action has an equal and opposite reaction, and the result of increased unemployment and negative GDP will be political tumult. I don’t believe more political chaos will result in people suddenly getting the benefits of open market policies. Markets almost never benefit from political chaos, especially if it is sustained.

    Second, one area where we do differ from Greece is on the overall level of taxation. Their basic income rates are similar to ours – a little higher – but their payroll taxes are MUCH higher, a 28 percent contribution from employers and 16 percent from employees. Those rates are insane, and an under-discussed part of why Greece is so screwed – they have no way to increase revenue without driving employment further into a ditch.

    That’s not a problem we have yet. We can raise tax revenues, and we must. Really, once we decided to start running annual deficits even in growth years, we also decided to raise our own taxes in the future – it will happen because it must. And while I think we’ll be well and truly fucked if our taxes go to Grecian levels, we have considerable leverage there that needs to be used. In particular, I see the Medicare payroll tax of 2.9% as unrealistically low given the way healthcare costs have skyrocketed.

    Finally – I don’t think non-stop deficit spending will fix the economy. The most I can see it doing is preventing further deterioration. The things I think we most need to do to improve the economy for the long term have less to do with huge sources of spending and more to do with infringements on market function. These include: making IP law sane again; breaking up the big banks and make it impossible for them to achieve such concentration again; unwinding the GSEs and stopping tinkering with housing policy; implementing tax reform; shifting the requirements for FDA approvals of drugs and medical technologies so they focus on safety first, efficacy second, rather than the reverse; and so forth.

    I recognize that a lot of people think the only way to get these kind of changes made is if we essentially start from scratch. I’m not there yet, and I see the risks of such an approach as being far worse than what we currently face, which to me looks like a long period of stagnation with occasional crises.

  82. Icepick said,

  83. Icepick said,

    If Keynes is right and deficit spending can help us get out of a recession, then sharp immediate cuts are a thing to be feared, and may end up doing more harm than good.

    Yes, but we’re not going to get sharp immediate cuts. We’re talking about maybe cutting 20 billion in 2012 and/or 2013. That’s within the margin for error on a budget that’s well north of 3 trillion.

  84. amba12 said,

    Re: Egypt: those privileged, young, cosmopolitan Egyptians are more in tune with us than with the rest of their own countrymen. They could have accomplished a lot more long-term by being cleverer, stealthier, more patient and strategic — more aware of ordinary people’s priorities and fears. A little like the 1960s “Movement” and counterculture: the backlash to that is still in force.

  85. Icepick said,

    On taxes: I agree that overall revenues should be raised. However, I think the only sane approach will require a major overhaul of the tax code. And I don’t see the current Idiots in Charge being the men and women to fix it. They created this mess, they benefit from this mess, and they will continue to rule indefinitely, barring bloody revolution that removes their heads from their bodies. In other words, I believe we are well and truly fucked.

    As for all your points in your penultimate paragraph – I agree with all of them. But I also don’t see any of that happening with the current Idiots in Charge.

    The future I see is one of short- to mid-term stagnation, followed by epochal changing crises.

  86. Icepick said,

    Amba, if they had been stealthier, they would have ultimately sold out to the system.

    GODDAMNIT. The comment box just ate my comment. Again. Is anyone else having trouble with all the damned feed buttons on the bottom blocking everytihng off so that you can’t see what you’re typing? Grrrr.

  87. amba12 said,

    *sigh* why is the privileged and educated minority never welcomed as the light-bringers they believe themselves to be . . .

  88. Icepick said,

    Because the privileged and educated minority are invariably the sons and daughters of the privileged and educated minority in charge, i.e. the people screwing everyone else. Why assume their kids are alright?

    Speaking of The Who, who won’t be fooled again?

  89. amba12 said,

    Occasionally I hit one of the feed buttons by mistake and lose my comment. Occasionally I lose a whole post, too.

  90. Icepick said,

    Of course, the good news is that if people aren’t happy with voting for Barack “Money Bags” Obama, and also aren’t happy with Mitt “The Mormon Menance” Romney, there’s always the hope that Donald “The Donald” Trump will run as an independent.*

    * That’s sarcasm, BTW.

  91. amba12 said,

    And the latest thing is that after I post a comment, the same comment still appears in the composing box, needing to be erased before commenting again.

  92. Icepick said,

    Yeah, I’ve noticed that last bit too, about the comment needing to be erased. I really need to compose everything more than two sentences long in WORD.

  93. amba12 said,

    (re Trump) whew, you had me worried there for a moment (NOT).

    Because the privileged and educated minority are invariably the sons and daughters of the privileged and educated minority in charge, i.e. the people screwing everyone else.

    Good point!! And then on top of that, education makes them aliens to most people’s concerns. I credit Karl Marx with one good diagnostic insight, anyway: “The conditions of existence determine consciousness.” “Determine” sounds too fatalistic, but if you give it some cold hard thought, it is very nearly right.

  94. Icepick said,

    “Determine” sounds too fatalistic, but if you give it some cold hard thought, it is very nearly right.

    But is it fatalistic enough?

  95. mockturtle said,

    *sigh* why is the privileged and educated minority never welcomed as the light-bringers they believe themselves to be . . .
    Naivete and idiotic idealism.

  96. mockturtle said,

    I’m sure you were asking that question facetiously, anyway. ;-)

  97. Icepick said,

    Tom, this post, and the underlying article and the first three comments, states things fairly well. The key to getting out of a balance sheet recession should be to repair the balance sheet.

  98. karen said,

    Hhmmmm- is that an eagle’s eye– or the Grinch’s??

    I liked this from Drew– maybe because i am a farmer and can relate to the threat of slaughter:

    “I know what I’m about to say will generate the usual flurry of arrows…….

    50 years of bad policy has no elegant solutions. But we have to unleash the private sector and quit “coddling” the subsidized and less productive sectors: government itself, finance, health care, education, etc. This generally bring howls of scorn about “killing demand” or being cruel to workers in those sectors, or wanting to slaughter grandma. No elegant solutions, people.”

    Agriculture is ~coddled~ by subsidies. So many so-called ~farmers~ benefit financially from this kind of corporate welfare, if i’m using the term correctly- when the real need is ignored… A little better targeting of those in need is– needed.

  99. mockturtle said,

    Karen, you are right. Smaller farmers never see a dime of government subsidies but huge, corporate farms continue to rake it in. I remember my grandfather who was, himself, a cattle rancher, labeling Roosevelt an enemy of the people for his ‘socialistic’ policies, especially those that ‘paid farmers not to plant crops’. I don’t think FDR’s policies were bad–indeed, they may have saved capitalism–but should have died when he did.

  100. karen said,

    But, MTurtle– small farms do benefit sustenance from the teat of Big Gov’t. There are programs that we can use that give us a return $$$$ amt- there are a lot of them in the name of Conservation. More for the sake of ~Fairness~.

    Conventional milk prices are at the whim of a pricing system attached to the market of cheese. It’s a very bumpy rollercoaster ride when it comes to money made. Fluctuation of income was one of the real reasons we went organic– who wants to make paymts on nonexistent income? Projections do not pay the bills. Organic systems concentrate more on supply/demand and incentives to meet the market needs. Even though i should know the maketing end of our business– i only want to study the business end of a cow:0)– the machinations of supply/demand are more up spud’s alley– or my husband’s.

    Anyway– we do get something called MILC checks- an acronym menaing Milk Income Loss Check, maybe? I don’t know because i refer o it as the Welfare check. When our price goes below a set amt– this kicks in from the gov’t and we(the farmer) can still survive(how well depends on a slew of things, eh?). Being in a completely different market- organic- we still receive this compensation. I blow my whistle at our special treatment here– but, seriously– if i were to stand on the principal of this situation, we’d be out thousands. Yet, i would give them up to balance the budget– thousands– and what is a life-saver to us is only laughable when looking at 1)the whole picture and b) the amt of money made by those who are on the dole- swilling from the trough of Big G.

    Fairness would be to teach us all to fish and let us go. Stocking the pond at our expense? That’s cheating, isn’t it?

  101. mockturtle said,

    Great question, Karen! Do we really want a truly ‘free market economy’? Or is it better to support American farmers than to completely concede agriculture to Mexico or Central and South America? Possibly.

    Dairy price supports were under fire a decade or so ago because of a ‘milk glut’. There were more dairies than were necessary for demand, partly due to supports. Maybe Guernsey cows should be phased out in favor of, say, Jersey to limit production, LOL!

    You are smart to be in the organic biz. It’s big here in the west and I’m sure demand will only continue to increase.

  102. karen said,

    Organic Valley is our Coop.
    Stonyfield Yogurt is what our milk is usually used for.

  103. Throw Out the Bums? They’re All Bums said,

    […] Hat tip: Amba […]

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