Ugly budget math

Back-of-the-envelope estimates of what must happen to balance the long-term federal budget read like horror stories:

By 2020, government spending is projected to equal 26 percent (and rising) of G.D.P., mostly because of Medicare and Social Security. Taxes are on pace to equal just 19 percent…

A solution that relied only on spending cuts would dismantle some bedrock parts of modern American society. Paul Ryan, the ranking Republican on the House Budget Committee, recently released such a plan, and it got rid of Medicare for everyone now under 55.

A solution that relied only on taxes would muzzle economic growth. To cover the costs of future spending — the retirement of the baby boomers and everything else — federal taxes would have to rise by almost 50 percent, immediately and permanently, according to a recent analysis by the economists Alan Auerbach and William Gale.

The Obama Administration should be using these dire forecasts to demand single payer healthcare, which would cover every American at lower total cost than we’re currently paying to cover 45 million fewer Americans (and only pretending to cover the rest of us… until we lose our job or suffer an expensive illness that leads our insurer to cut us). Economically and ethically, single payer is a no-brainer. A single government program would cut out the do-nothing insurance companies who eat up dimes on every healthcare dollar while providing nothing tangible in return. A single government healthcare buyer would also have tremendous market power to dramatically drive down prices paid from their current absurd levels, which are completely unhinged from what those services/drugs actually cost providers.

Single payer is only a political loser… because politicians love the billions in bribes campaign contributions they’re receiving from pharmaceuticals, hospitals and insurance companies.

When we’re looking at a structural deficit of 7% of GDP, shouldn’t we be taking such an obvious step that would lower costs while providing widespread benefits?

Posted by James on Wednesday, March 17, 2010