Healthcare Reform Thread

[Guynemer]

I can understand (if not agree with) some of your other criticisms, Drake, but that one strikes me as hollow.

A top tax rate of ~55% is still far, far lower than it has been in the past.

[Drake Tungsten]

A top tax rate of ~55% is still far, far lower than it has been in the past.

What's your point? By this logic, a top tax rate of less than 94% is acceptable.

[Guynemer]

Yes, and...?

Seriously, the government had far less responsibilities back then, and you expect it to get by now with a top marginal rate that's just over half as high?

[Drake Tungsten]

Seriously, the government had far less responsibilities back then

The peak 94% top tax rate was instituted during WWII, so I think this statement is incorrect.

you expect it to get by now with a top marginal rate that's just over half as high?

Yes.

[Guynemer]

I dunno, I'd have to look up government spending per capita, and I'm too lazy. But between Iraq, Afghanistan, the Global War on Terror, and the myriad military bases we now have all over the world as a result of WWII, plus all the additional government spending in health care, education, law enforcement, welfare, housing, corporate subsides, etc. etc. etc., I'd be rather surprised if we're spending less now than we did then.

If you don't want a deficit, we're gonna have to raise taxes, health care reform or no.

[Drake Tungsten]

I'd be rather surprised if we're spending less now than we did then.

I'm not sure why you'd be surprised, but here's the evidence.

If you don't want a deficit, we're gonna have to raise taxes, health care reform or no.

You also need to cut spending, which the Democrats appear to have no interest in doing.

[Guynemer]

Ah, I stand corrected. Mea culpa.

We're getting close, though. To have the top marginal rate that much smaller when our spending in only marginally less still makes no sense whatsoever.

[Drake Tungsten]

We're getting close, though.

That's the problem. There's no reason to be spending that much money.

[Ben Kenobi]

Having a top tax rate of 94 percent is useless. No one will claim enough to get into that bracket, and find loopholes around the number.

You'd be better off lowering taxes and removing incentives to cheat.

[KrazyHorse]

Thinking that the top marginal rate is the prime determinant of tax revenue isn't very insightful.

Currently the proposals are to levy extra taxation on households in the top < 1% range of annual income, with most of the increases on households in the top 0.1% range or so. Unfortunately, the top 0.1% of households only have ~6% of the total income of US households. You can jack up their rates all you want and still not get to where you need to be, especially at marginal rates close to 60% are beginning to get close to the regime where there are definite disincentives to work, and strong incentives for tax avoidance. Most of the new revenue needs to come from the bottom 99%. The math just doesn't work any other way.

[Drake Tungsten]

Elmendorf sure is a buzzkill...

The Long-Term Budget Outlook

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. The following chart shows our projection of federal debt relative to GDP under the two scenarios we modeled.

Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.

Measured relative to GDP, almost all of the projected growth in federal spending other than interest payments on the debt stems from the three largest entitlement programs—Medicare, Medicaid, and Social Security. For decades, spending on Medicare and Medicaid has been growing faster than the economy. CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035. By 2080, the government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.

In CBO’s estimates, the increase in spending for Medicare and Medicaid will account for 80 percent of spending increases for the three entitlement programs between now and 2035 and 90 percent of spending growth between now and 2080. Thus, reducing overall government spending relative to what would occur under current fiscal policy would require fundamental changes in the trajectory of federal health spending. Slowing the growth rate of outlays for Medicare and Medicaid is the central long-term challenge for fiscal policy. ...

Federal spending on Medicare, Medicaid, and Social Security will grow relative to the economy both because health care spending per beneficiary is projected to increase and because the population is aging. As shown in the figure below, between now and 2035, aging is projected to make the larger contribution to the growth of spending for those three programs as a share of GDP. After 2035, continued increases in health care spending per beneficiary are projected to dominate the growth in spending for the three programs.

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.

http://cboblog.cbo.gov/?p=328

[Guynemer]

Yup, we're pretty much ****ed.

[Drake Tungsten]

The Baby Boomers screwed the country well and good. Hopefully this is their last term in control of the Presidency...

[Dinner]

It seems like there is going to be so much wasted potential in the attempts to reform. I mean big pharma is making out like bandits and proving that being one of the largest lobbyists in Washington does indeed mean you've bought special protections and privileges from lawmakers. Everyone's talking about how big pharma was so nice that they made $30 billion in price reductions for perscription drugs but that's, on average, less then a 3% cut in price, while in return big pharma got it written in that drug coverage will only buy name brand and not generic drugs. That's insane. They gave away 2%-3% and in return they lock in taxpayers paying 300% or more for name brand drugs when a cheap generic would do the exact same job much, much cheaper.

[Adam Smith]

Elmendorf sure is a buzzkill...

The CBO Director's job is to be the skunk at the Congressional garden party.
Each new director receives a stuffed animal skunk courtesy of the staff.

Adam Smith
Proud member of the skunk works since 2007