Knight Of The Mind

I'll do my best to present a philosophical and generally conservative look at current events and life, the universe and everything. Readers are invited to take all that's posted herein with a grain of salt. or if they prefer, a grain of salt, a slice of lime and a shot of tequila.

Location: Alexandria, Virginia, United States

Greetings and welcome. My name is Steve, I'm 35 years old and I work for the US Army as an Operations Research Analyst. Hence my blog title Knight Of The Mind.

Wednesday, February 09, 2005

Entitlements, Budgets and Cost Estimation

President Bush can generally count on the unquestioning support of the very conservative Heritage Foundation. This, however, excludes the debacle surrounding health care policy in general and more specifically, The recently passed Prescription Drug Panderation Act. This ominous money vacuum has even President Bush's strongest ideological supporters scratching their heads and asking a few very pointed questions.

Robert E. Moffet, The Heritage Foundation's ranking expert on health care policy, kicked off proceedings with the following cheerful tidbit.

"Recently, David Walker, the Comptroller General of the United States, noted that the official debt of the United States is more than $7 trillion, which is about $24,000 for every man, woman, and child in America. Mr. Walker told the National Press Club, however, that if you count the unfunded liabilities--in other words, the promised benefits of entitlement programs, including the new $8 trillion unfunded liability on the prescription drug benefit alone--you are talking about $42 trillion, equal to about $140,000 for every man, woman, and child in America.

Medicare is the toughest problem substantively. It is also the most difficult problem politically. The question is: Can Congress contain those costs? Will Congress contain those costs? How can Congress contain these costs?..."

Joseph R. Antos, a former Congressional Budget Office, added the following good news.

"....My former colleague at AEI, Jagdeesh Gohkale, estimates that the Medicare drug benefit will have an unfunded liability that is more like $13 trillion. That assumes that things proceed along in a normal fashion without Congress expanding the Medicare benefit.

Can Congress contain Medicare's explosive growth? There is a 39-year track record on this question and it does not look too good...."

How bad is 'not too good'? Antos offers us a 'ferinstance'.

What is the real number? It might be $400 billion; it might be $500 billion; it might be $800 billion; and it might be $13 trillion in promised, but unfunded, benefits over the long term. Whatever the total might be, it is an unlimited amount because this is an entitlement.

Not surprisingly, spending an unlimited amount does wonderful things to The Federal Budget. Another Ex-CBO staffer, Jeff Lemeuix, lays it out in somewhat plain English.

The latest projections are that the federal deficit is going to be about $440 billion this year. That is almost 4 percent of gross domestic product (GDP). It will probably range somewhere between 3 percent and 3.5 percent of GDP for the next several years as the economy recovers. After that, things just go downhill.

How far downhill? None of the wise men at Heritage seem to care to speculate. One thing David Crippin, the final panel member, gives us even more cheerful news.

Therefore, if we continue to tax an average 18 percent or 19 percent of GDP--as we have since World War II--almost all of that federal revenue would have to go to funding Medicare, Medicaid, and Social Security. Put another way, we would have to eliminate the rest of the federal government as we know it, including the Defense Department.

I'm not quite that libertarian, and I'm certain Donald Rumsfeld and the board members at ADM and Con Agra would all have to be put to the sword in order to make this happen. The propensity for Congress to spend has got to be changed. If it is not, there will be a day when all the benfit recipients line up for their Hershey Bar and there is no candy to hand out.

It won't feel like Christmas, when millions of government benefits recipients wake up one morning and discover that there ain't no such thing as Santa Claus. The entitlement programs like Medipander and Social Security have to either be reformed to where we can support them or flat-out ended cold turkey.

People can whine all they want about the fairness of all this, but at the end of the day, the numbers on a spreadsheet just don't give a $hit. Right now, those numbers only add up to trouble in America's future. The time to cut the budget is now. The time to kill The Prescription Drug Panderation Act is now.

Update I: Patrick Presscott gives us an excellent idea of what we're up against in reforming entitlements...AAARGGHHH!!

Update II:Sean Hackbarth hates Medipander as much as I do. He wants them to pass a new drug to the left (just kidding, Sean). Excellent post!

Update III: Martin O'Malley calls GWB the equivalent of a 9-11 Terrorist for daring to spend less the day after he annouced a $440Bil deficit. Mayor O'Malley is the Michael Moore of fiscal commentary. So There!!


As you may or may not already be aware, members of the Watcher's Council hold a vote every week on what they consider to be the most link-worthy pieces of writing around... per the Watcher's instructions, I am submitting one of my own posts for consideration in the upcoming nominations process.
Here is the most recent winning council post, here is the most recent winning non-council post, here is the list of results for the latest vote, and here is the initial posting of all the nominees that were voted on.

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