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Should the ‘Smarties’ Really Be Put in Charge of Health Care?

If leftists are so intelligent, why are we so broke?

by
Tom Blumer

Bio

March 6, 2010 - 12:00 am

In a delicious coincidence, another supposedly scientific study telling us that liberals and atheists are more intelligent than everyone else appeared during a weekend when two dreadful reports on the tangible results of their supposedly superior circuitry arrived.

I’ll leave detailed critiques of the study to others, but you’ll have to excuse me for suspecting that its conclusions were reached using the same degree of experimental rigor and attention to detail last seen in attempts to “prove” that human activity causes global warming.

The Treasury Department delivered most of the evidence of the wonders done for us, or I should say to us, during the past 75 years by those higher beings on the left known as liberals, leftists, and “progressives” last Friday. It came in the form of the “2009 Financial Report of the United States Government,” a 254-page, 2.4 megabyte behemoth which tells us where the nation stood financially on September 30 of last year in painstaking detail — with a heavy emphasis on the pain.

The report’s Table 1 lays out Uncle Sam’s balance sheet, but also has two big line items near its bottom, under the category called “Social Insurance Net Expenditures.” These really represent taxpayers’ obligations to future government entitlement program beneficiaries. The first listing, amounting to $7.677 trillion, is Social Security.

Following much of the model pioneering smarties like Bismarck had initiated in Europe, that quintessential smarty Franklin Delano Roosevelt got his rubber-stamp Congress to pass the Social Security Act in 1935, primarily as an old-age retirement plan. Its early cost of 1% of the first $3,000 of individual earnings, plus a matching amount paid by employers, was modest enough, while early Social Security Administration publications promised workers and employers that their taxes would never increase.

Oops. The program’s subsequent history is one of continually increasing tax rates and taxable amounts, while the roster of those forced to make “contributions” has grown to include the self-employed and many others. In 2010, employers and employees must each pay 6.2% of the employee’s first $106,800 of earnings into the system. The maximum amount a person and his employer might pay of $13,243 (12.4% x $106,800) is over 220 times the program’s initial price tag of $60 (2% x $3,000).

Yet the reported $7.677 trillion liability shows that it’s still nowhere near enough to meet future promises, primarily because:

  • FDR and his smarties didn’t build the improved life expectancy of future generations into the program. If they had, today’s normal retirement age would be somewhere between 70 and 75, instead of its current 66-67, depending on one’s year of birth.
  • The method of indexing chosen in the mid-1970s has caused benefits to go up faster than the real living standards of everyone else, and has subtly changed the program’s perceived purpose from preventing destitution to providing the means to ensure a lower middle-class lifestyle.
  • The smarties also didn’t anticipate lower birth rates that were already occurring, and which were then dampened even further almost 40 years later by legalized abortion. As a result, at the end of 2008 there were less than 2.6 employed workers for each Social Security beneficiary (143.3 million divided by 55.8 million).
  • Additionally, as shown in several previous columns (one is here), the so-called Social Security “trust fund” has been wantonly raided for the past 40 years and used to pay for the government’s everyday operations. The “trust fund” contains virtually nothing except $2-plus trillion in IOUs from the rest of the government, which is itself trillions of dollars in debt.

Because of all of this, even the astronomical taxes noted earlier have been less than benefits paid for most of the past year — and it’s going to get worse. The crisis that supposedly didn’t exist in 2005 is here. Thanks, smarties.

As bad as Social Security is, the $38.1 trillion future obligation for Medicare, a mid-1960s creation of the oh-so-brilliant, is almost five times worse. Besides having most of the design flaws just noted, the program has consistently driven up medical costs faster than inflation and is riddled with roughly $60 billion a year in fraud, a double-digit percentage of the program’s 2008 cost of $468 billion.

As a reward for its 45 years of miserable Medicare management, the government’s smarties now want to control the entire health care system. Besides the myriad moral reasons why this cannot be allowed, there’s a more practical one, which arrived with full force in the other bit of news last weekend, when we learned that our supposed betters have already committed to spending what they think they have available for statist health care on covering their screw-ups in housing and mortgage lending.

After the markets closed on Friday, February 26, former “government-sponsored enterprise” Fannie Mae, which is now a ward of the state, announced that it lost over $74 billion in 2009. Combined with the $26 billion loss at Fannie’s kissing cousin Freddie Mac, that’s $100 billion down the drain in just a year. There’s no real end in sight to the government’s open-ended financial commitment to these two zombies. The ultimate price tag could top $1 trillion; one member of Congress thinks it’s more like $5 trillion. What’s more, the commitments to Fan and Fred aren’t included in the Financial Report above.

No one with an ounce of real smarts can possibly think there is any real money available to pay for state-run health care, and nobody familiar with the smarties’ track record can possibly believe their breezy claims of cost savings. Instead, regardless of intentions, we will inevitably see draconian cuts in the quality of care, serious rationing, and Zeke Emanuel-like death panels.

At some point, you have to ask yourself, “If they’re so smart, why are we so broke?” It’s hard not to believe that the real answer to the question is, ”Because they want us to be.”

Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.
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