Cost Savings And Health Care Reform

The Congressional Budget Office is agreeing with what I’ve been saying all along. While health care reform is designed to accomplish some very good goals, it will not save money as the Obama administration has claimed.

If priority is placed spending less money we would have to go to a more scaled back plan (which the left would protest) or perhaps change to a more economical single payer system (which the right would protest). The other option is to significantly ration care–which everyone would be unhappy about.

Another option might be to consider our priorities and acknowledge that having a high quality health care system which is consistent with American attitudes towards choice, and which is accessible to most Americans, costs money but is a worthwhile expenditure.

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40 Comments

  1. 1
    Lloyd Y. Asato says:

    Cost Savings And Health Care Reform – Liberal Values – Defending … http://bit.ly/tErKG

  2. 2
    Lloyd Y. Asato says:

    Cost Savings And Health Care Reform – Liberal Values – Defending … http://bit.ly/tErKG

  3. 3
    Health says:

    Cost Savings And Health Care Reform – Liberal Values – Defending …: Ron Chusid: Mike, Even if we had single pa.. http://bit.ly/tErKG

  4. 4
    US Health Care News says:

    Cost Savings And Health Care Reform – Liberal Values – Defending …: Ron Chusid: Mike, Even if we had single pa.. http://bit.ly/tErKG

  5. 5
    US Health Care News says:

    Cost Savings And Health Care Reform – Liberal Values – Defending …: Ron Chusid: Mike, Even if we had single pa.. http://bit.ly/tErKG

  6. 6
    Stephen Schimpff, MD says:

    As you suggest, we need to assure all of access to good quality health care but we also need to find immediate and effective ways to reduce the total costs of care. It is possible to reduce health care expenditures without rationing and without draconian across the board cuts to providers. Much of the rapid rise in costs is due to the increase in chronic illnesses that last a lifetime and are expensive to treat – heart failure, diabetes with complications, cancer. Over 70% of healthcare costs go to treat these individuals. And these illnesses are increasing in prevalence as the population ages and as we persist with adverse behaviors such as smoking, over eating, lack of exercise and stress. Chronic illness needs intensive care coordination to prevent unnecessary specialist visits, procedures, test and even hospitalizations – the source of excess expenditures. Primary care physicians [PCPs] are in the best position to coordinate care but do not because they are not reimbursed for the effort. Changing the reimbursements to PCPs with the proviso that they coordinate care would have an immediate impact. Workplace wellness programs that offer reductions in health insurance payments in return for healthy behaviors reduce over-all costs and improve the health of the workforce. Safeway, General Mills and others have convincing data on the value of wellness programs. Insurance policies should have variable rates for behaviors – smoking, weight and obtaining simple screening tests like blood pressure and cholesterol. Combining rights [access to insurance] with responsibilities [live a healthy life style] for patients and rights [increased pay] with responsibilities [coordinate care] for PCPs will have a major impact on the total costs of care and do so quickly.

  7. 7
    Ron Chusid says:

    We definitely should be concentrating more money on primary care and on preventive care. We need better coverage for patients with chronic disease.

    Such measures will improve the quality of health care and in some cases save money. It will take years to see the savings from preventive medicine while providing this costs money and initially will increase health care costs.

    Changing behavior would reduce costs but this is easier to say than achieve. Sure, I manage to get some patients to stop smoking, exercise more, and lose a significant amount of weight but there are far more who continue their old behaviors. There is a limit to how interference in their behaviors that will be tolerated by Americans–especially if this comes from the government.

  8. 8
    Clint says:

    “Another option might be to consider our priorities and acknowledge that having a high quality health care system which is consistent with American attitudes towards choice, and which is accessible to most Americans, costs money but is a worthwhile expenditure.”
    I was worried you were going to come to a far more free market-oriented compromise at the end of this post, but I was pleasantly surprised.
    I think, like you say, we’re going to have to pay if we want the kind of health care that people need (and, more importantly, deserve).  As someone who supports universal health care, I’d much rather the public argument be about human rights than saving money — that’s the stronger side of it.

  9. 9
    Christoher Skyi says:

    “The other option is to significantly ration care–which everyone would be unhappy about.”
     
    In the end, this will be the only option. It won’t matter how strong the “human” rights argument is.  There’s a limit. There just is, and it’s why every form of government health care has some degree of rationing.   That where you start — the honest argument is, yeah, quality of health care overall will go down in terms of access and outcomes, but individuals are not as important as society and equality and fairness.  Those are the values.
     
    You can’t have your cake and eat too.

  10. 10
    Ron Chusid says:

    Nice use of right wing talking points but nonsense:  ” but individuals are not as important as society and equality and fairness”

    It is concern for individuals which motivates health care reform.

    All systems have some form of rationing–not just goverment programs. The US has  the worst form of rationing in the industrialized world where those who develop a serious illness or lose their jobs are at high risk of having coverage denied.

  11. 11
    b-psycho says:

    All systems have some form of rationing–not just goverment programs.

    Exactly.  Once you involve anyone other than the individual seeking treatment, it’s inevitable that someone within the system will ask “is this worth it?”.  The criticism of the current system is obviously that the people asking this now have a habit of interpreting their stated purpose as excess cost to be stamped out.
    While we disagree on the solution, in that the mainstream response is to advocate for a larger pool w/ more resources, whereas I’d favor more pools w/ shorter distance between provider and client (ideally no distance), I largely agree on the problem.

  12. 12
    Christoher Skyi says:

    “right wing talking points”
    But it’s not a talking point. You say over and over “the plan” is not to give us a Canadian or UK health style system with all it’s problems.  Yeah, I’m sure that’s not “the plan.”  Being stuck in Iraq was not part of any “plan,” but everyone against the war predicted, correctly, exactly the outcome we got.
     
    You’ve got to do a better job of making your case that Obama care will be better than Canada Care or UK Care.  Simply saying it will doesn’t cut it.
     
    And the radical left would fully and 100% agree with the proposition that “individuals are not as important as society and equality and fairness.”    When push comes to shove, that’s where they stand.  You want to make health care reform something apart from a radical left agenda, for obvious reasons.  However — the question I have, that many people have is:  can you really?  By backing Obama’s current agenda, you’re more in bed with the radical left than you think.

  13. 13
    Ron Chusid says:

    Resorting to the Canadian and UK plans is the ultimate right wing talking point. As I have said before, anyone who raises this is either totally dishonest or totally ignorant about the health care issue.

    Plans such as those in Canada and UK are not on the table. Most of the industrialized world has health care plans which manage to avoid both the problems in our plan and to avoid the problems in Canada and the UK. There is no similarity in saying these are not the plan and the situation with Iraq.

    To place Obama on the radical left is as ridiculous as comparing health care proposals in the US to those in the UK. I imagine you now consider the AMA, which endorsed the House plan, as being in bed with the radical left.

    This has nothing to do with your silly right wing talking points. It is simply a matter of fixing a problem which has broken. When the AMA has recognized that the current system is no longer viable and must be changed it is a little late to keep repeating such ignorant lines.

  14. 14
    Fritz says:

    Ron, I really disagree with it being only a right-wing talking point to use the Canadian and UK examples.  These are the societies closest to our own in terms of heritage and politics.  There are reasons they got to where they are (and can’t or won’t move away from where they are).  It seems likelier that we will go down a similar road than it is that we will emulate the path of societies with far less shared experience.
     
    Considering all I’ve read about Canada and the UK, of course I hope you are right that we won’t go there.

  15. 15
    Ron Chusid says:

    It is irrelevant that Canada and the UK are closest to our heritage in other areas. Their health care system developed different from ours. Not only are there not people pushing for either the Canadian or UK system but most supporters of health care reform reject these systems.

  16. 16
    Ron Chusid says:

    “Considering all I’ve read about Canada and the UK, of course I hope you are right that we won’t go there.”

    Considering the coverage you get from Microsoft, you should hope we don’t go there as you would be worse off than you are now. For many other people in the country, either the Canadian system or the British system (which are also quite different from each other) would be a tremendous improvement. Fortunately there are other options other than the status quo which is failing and those two systems.

    Actually there is one way in which the Canadian and the British systems would provide you with an advantage. If you ever wound up losing your job you would lose your health care coverage unless you have the money to keep buying (or an incredibly good golden parachute). Whether or not you are at any risk of this, many people are losing their insurance every year due to losing jobs. There are also many bankruptcies every year among those who started out with a job and health care but got sick and lost both. With all their faults, these problems do not occur in Canada or the UK. If you wanted to get a job elsewhere, or even worse if you decided to start your own business and had to buy coverage on the individual market, our health care system might wind up making this a difficult choice.

  17. 17
    Christoher Skyi says:

    “This has nothing to do with your silly right wing talking points. It is simply a matter of fixing a problem which has broken.”
     
    Well you should be grateful for my “silly” arguments and worries because then you don’t have to think though or address 1) how are we really going to pay for it and 2) how is the huge cost not going to lead to significantly rationing care?
     
    What’s “silly,” Dr. Chusid, is ignoring history: any healthcare reform that will not make matters worse will involve undoing many of the “reforms” and policies of the past. The history of healthcare policy is the history of a patchwork of policies designed, in part, to correct the undesirable consequences of previous policies.
     
    Add to that endlessly bleating that the U.S. health care sector is wasteful, but you seem to never draw any connection to the fact that government controls half of it directly and even more it indirectly indirectly.
     
    So, in principle, what’s so different this time other than it’s new “fix” on an unprecedented scale?
     
    But you just take it for grated that a bigger BIG government solution will make things better, this time, finally . . .
     
    An unbiased discussion, ideally, should NOT include doctors.  Economists and people outside the medical field are in a better position to “diagnosis” what’s wrong and how best to proceed.
     
    Healthcare Miracle by Chidem Kurdas | ThinkMarkets
     
     
    “You’ll save money,” says President Obama a propos health reform.  You’ll consume more medical services, the demand for those services will go up and you’ll save money. Truly a miracle, like ancient Kings curing scrofula by touch.
     
     
    The bill passed by a Senate committee requires employers to provide medical coverage for employees or pay a penalty. Individuals who choose not to have insurance face a penalty of up to $750 a year. People below a certain level of income are to receive subsidies to purchase insurance.
     
     
    In effect, medical insurance would become compulsory. That would have a significant impact regardless of how exactly the insurance is provided or subsidized.
     
     
    Compulsory medical insurance and the resulting growth in payments will be a fine thing for hospitals—just what they need to salve their economic woes. Uninsured patients are a drain on hospitals. Surely it is no coincidence that Hillary Clinton and Mr. Obama were the two Presidential candidates that received the most donations from the healthcare industry.
     
     
    For those donors, the bill is what the doctor ordered. But what does it mean for the rest of us?
     
     
    On average the US consumes more medical services per person than any other society, measured as a percentage of national income. Complaints about private insurance notwithstanding, government entitlement programs are the big players in this market, putting immense and growing pressure on budgets and taxpayers.
     
     
    Medicare will almost certainly devour what’s left of the Federal budget and Medicaid is already destroying state and local budgets. California is insolvent in part because of its huge healthcare program.  Massachusetts had to stop automatic enrollments in its own subsidized program.
     
     
     
    Despite the endless expansion of government healthcare spending at all levels, federal  compulsory insurance is being legislated on the ground that some people do not get enough medical services. The other argument is that serious illness imposes a heavy financial burden on those without insurance.
     
     
    If it becomes law, the so-called reform will force employers to pay more of their employees’ compensation in the form of medical insurance and millions of people will be compelled to spend more of their income on medical insurance or get a subsidy for this purpose. They’ll use more services, which will therefore become more expensive, judging from the past.
     
     
    Hence total spending on medicine will grow even faster than it already is growing. To get around this awkward implication, compulsory insurance advocates concocted a myth. The government can lower medical costs by using its market power to keep payments under control, they claim.
     
     
    Consider the Pentagon, a huge monopoly that in theory must have more market power than just about any buyer in any market. You think the Pentagon keeps down the costs of its procurements? Procurement officers pass through the revolving doors of the military-industrial complex and join defense contractors. Politicians, government bureaucrats and the industry are one loving family.
     
     
    The medical-industrial complex works in a similar way. Behind the rhetoric of helping consumers one can discern a scheme to re-distribute resources from the rest of the economy to healthcare, with its powerful interests. Put that way, it does not sound so nice. You could see the expansion of medical entitlements as a payback to campaign donors.
     
     
    But politics is the art of shaping the story so as to make it attractive. No question, the President is very good at rhetoric and has strong support from the media. So the tale is that “reform” will save money.
     
     

  18. 18
    Ron Chusid says:

    Christopher,

    In your cherry picking of right wing sources, which is really intellectually no more rational than quoting the Discovery Institute to claim to prove creationism, you ignore some basic facts:

    1) The status quo cannot go on–the system is collapsing. (This is one reason you are wrong in ignoring the views of  physicians as we might see better than anyone else how we cannot continue with the status quo).

    The most cost effective care is being provided by a government program–Medicare.  If costs is your concern than the best solution is a single payer plan modeled on Medicare. It makes little sense to dwell on the financial problems of Medicare when the problems with Medicare can far more easily be fixed as to the far more serious problems faced by those with private insurance.

    It is also notable that Medicare’s problems were increased by Bush’s attempt to privatize the system. It turned out that it costs 13% to 19% more for private companies to provide care than when the care was paid for by the government plan.

    3) The rest of the industrialized world manages to not only provide health care for its citizens but also provides higher quality care. If everyone else can do it, there is no reason the United States cannot.

     

  19. 19
    Fritz says:

    Ron — what is it about the providing of health care plans (I don’t call this insurance because they typically include paying for routine maintenance) that requires the lack of a profit motive to work well?  You do not seem to believe that a profit motive is a block to actually providing the services — just the plan.  I’m interested in the reason for this.

  20. 20
    Ron Chusid says:

    Fritz,

    I have never said there cannot be a profit motive. There will continue to be insurance companies making profits. We just cannot have a system where insurance company profits are based upon denying care as opposed to providing the service people have contracted for.

  21. 21
    Eclectic Radical says:

    “And the radical left would fully and 100% agree with the proposition that “individuals are not as important as society and equality and fairness.”  ”
     
    Speaking for the radical left (at least for myself, and I am very much on the radical left), this is crap.
     
    First of all, the radical left is not being consulted on the current health care reform planning. Anyone can look at some of the discussions between myself and Ron, some of Ron’s postings, or the attacks on the idea of eliminating the public option to see how true this is. President Obama is on the pragmatic center-right and sees left-wing options to solve problems when necessary, but is always very careful to avoid radicalism. In fact, his primary economic tools (bank and corporate bail-outs) are straight from the playbooks of conservative icons like Hoover and Reagan.
     
    Second, the reason the radical left cares so much about society and equality and fairness is because the individuals being screwed by the current system are also individuals and they are being screwed despite enjoying the same individual rights as any other Americans. The right likes to talk about ‘individual rights vs group rights’, which is a value I strongly share and was one of the reasons my original party affiliation was Republican, but their actual policy is one of ‘corporate rights vs individual rights’ coupled with the selling point of the class warfare strategy of exploiting of the proud man’s contempt for the poor and refusal to see himself as one of them even when the programs being advocated would desperately help him personally.
     
    Unchecked, unregulated corporate ‘freedom’ (which is more properly read as ‘corruption without consequence’) is a far more serious threat to individual economic rights than the government at this point in time. Studying the statistics of small business failure, of corporate mergers and ownership, of regressive labor ‘reform’, and more bears this out. Individual entrepreneurs (of which I am one) do not benefit from the corporate-commercialist economy advocated by the right. Corporations do.
     
    There are inherent dangers in socialism that must be controlled by a constitutional republican system of government and a capitalist economic structure… but there are also inherent dangers in capitalism that must be controlled by a regulatory government and a socialist ethical approach to the needs and rights of every individual.
     
    When someone defends ‘individual rights’ while attacking ‘equality’ in the same breath, it is very difficult for those of us on the radical left to react with a certain degree of skepticism of their regard for ‘individual rights.’ Instead, we are tempted to take this regard for ‘individual rights’ at the expense of equality as the regard for personal and class privileges.
     
    I have a very high regard for the rights of individuals. I don’t want to force anyone to use any system of health care they do not wish to use, I simply believe that society as a responsibility to support its individual members in circumstances where doing so is better for them and the society. Nor do I see certain priveleges and entitlements of class or economic status as ‘rights.’
     
    Individuals are what make society. Without individuals there would be no society. However, some individuals do not have the ‘right’ to exclusively reap the benefits of civil society while disenfranchising others. The notion that the poor or the working class or the middle class are expendable, replaceable cogs in an economy designed to support the privileges of some individuals rather than the individual rights of all is a particularly pernicious form of advocating ‘group rights’ over ‘individual rights’, now isn’t it?
     

  22. 22
    Eclectic Radical says:

    Fritz, the attack on the for-profit medical coverage industry is mine and not Ron’s. 😉
     
    My problem with the for-profit system is mathematical. The middleman creats artificial price inflation by collecting the consumer’s money to pay for the consumer’s medical care. Under a shared cost system, with limited cost sharing pools, the middleman must collect more than he pays for care to make a profit. Therefore there is a strong bottom line motive to charge prices higher than most consumers can afford (which restricts access and endangers public health) or to charge more affordable prices and to seek technicalities to deny care until forced to pay when the need for non-routine care arises (which endangers individual health, violates the spirit of individual contracts, and frequently involves criminal fraud that goes unprosecuted)… or simply to baldly charge cheap prices to provide coverage that covers nothing of serious import or leaves serious gaps in medical coverage, as many of ‘build your own plan’ coverage packages now being offered do. I certainly respect someone’s freedom to take risks as they wish, but this is not a matter of free choice, the current market forces them to take risks they might not choose to take if they had a free choice in the matter.
     
    Profits at the point-of-care can be debated. Through most of our national history, medical care was entirely socialized. Hospitals were supported by city governments and private charities and doctors were supported by the communities in which they practiced. While payment was involved, there was no ‘profit motive’ in the modern sense. Medicine was a calling rather than a profession. We may not be able to return to a system like that, but it should be taken into account how new and unusual our modern health care model really is. Countries like Sweden have shown that point-of-care profits are possible if the system is structured to support them, while the UK has shown that private coverage can be profitable if there is a system in place to support everyone who can’t afford it. Our system has shown that profits make the system break down if there is no support structure for the system.
     
    Being, essentially, a capitalist, I think an industry requiring state support to make a profit is better handled without a profit for simple reasons of economics. If someone can’t make money without large scale subsidization, is a for-profit industry the best system? 😉
     
    Nevertheless, despite my ideological principles, I think any significant reform of the existing system that improves access to medical care for those currently denied it is an improvement worth having.
     
    An important consideration is that some better system is not some strange experiment with inconclusive and unknown results but rather the successful standard (in varying forms) of most of the industrialized world. It is our system which is the bizarre and unusual experiment, and it has failed dramatically.
     
     

  23. 23
    Ron Chusid says:

    Eclectic,

    “Speaking for the radical left (at least for myself, and I am very much on the radical left), this is crap.”

    As you probably realize, Christopher’s rhetoric is basically recycled descriptions of the left which sounds like it comes out of an old Ayn Rand novel. Rand was influenced by her exposure to the early Soviet Union, and applies such descriptions to all on the left (whether or not radical). These descriptions have nothing to do with actual beliefs of those on the left, but her followers as well as many libertarians and conservatives recite them as it makes it easier to take off the wall positions when they describe those as disagreeing with them as having even more off the wall positions.

    They pretty much lump together anyone on the left, from a centrist liberal such as Obama to the true far left. They are totally oblivious to how these Randian descriptions are even less accurate today than they were in the past as even most on the left are supporters of capitalism (even if not extreme laissez-faire capitalism) The lumping together of all on the left and lack of understanding of the difference between the left of today and the left of the early to mid 20th century is seen by the manner in which Christopher claims that a centrist such as Obama is on the radical left.

  24. 24
    Fritz says:

    In some ways, though, Rand is becoming more relevant, not less.  The scene of communities using the seniority of their Congressmen as pull to keep Chrysler or GM from closing a plant in their area was right out of _Atlas Shrugged_.

  25. 25
    Ron Chusid says:

    Certainly we can pull superficial similarities between today’s events and events in Atlas Shrugged. The problem is when so many on the right see these similarities and extrapolate them far further than is justified.

    As for the auto companies, while I disagree with your earlier assertions that the situation shows a desire by Obama for socialism, I certainly do agree that the situation can turn into a real mess. This will definitely provide many examples of government messing with business in ways neither of us would like. The question is whether this will ultimately save the auto companies as private businesses or if this will turn into a fiasco. If I had to put money on it I would lean towards fiasco but I will not definitely say that the attempt will not work. (I also understand Obama’s motivations for trying something, regardless of whether it will work.)

  26. 26
    Fritz says:

    Actually, I believe I stated that it showed a desire for control.   Unlike socialism, that does not require much ideology.

  27. 27
    Ron Chusid says:

    I also doubt that they any desire to take control of the auto companies (and responsibility for fixing the mess). If their desire was control they would have gone for outright nationalization, as opposed to a plan which is designed (whether or not it works) to revert back to private ownership.

  28. 28
    Fritz says:

    I’m not convinced that is the true design.  But that is something we will have to revisit in a couple of years when we have empirical data.  Plainly-stated nationalization would not have made it through even this Congress.

  29. 29
    Christoher Skyi says:

    “The rest of the industrialized world manages to not only provide health care for its citizens but also provides higher quality care. If everyone else can do it, there is no reason the United States cannot.”
     
    Well there’s one very reason almost everyone overlooks:
     
    Total world military expenditure is about $500 billion.
     
    U.S. military expenditure is $650 billion.  Yes, that’s correct. U.S. expenditure is larger than the rest of the world combined by $150 billion.
     
    From Jesse of Le Café AméricainWhy the US Has Really Gone Broke:
     
     
    “It is virtually impossible to overstate the profligacy of what our government spends on the military. The Department of Defense’s planned expenditures for the fiscal year 2008 are larger than all other nations’ military budgets combined. The supplementary budget to pay for the current wars in Iraq and Afghanistan, not part of the official defence budget, is itself larger than the combined military budgets of Russia and China. Defence-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. The US has become the largest single seller of arms and munitions to other nations on Earth. Leaving out President Obama’s two on-going wars, defense spending has doubled since the mid-1990s. The defense budget for fiscal 2008 is the largest since the second world war.
     
     
    But there is much more. In an attempt to disguise the true size of the US military empire, the government has long hidden major military-related expenditures in departments other than Defense. For example, $23.4bn for the Department of Energy goes towards developing and maintaining nuclear warheads; and $25.3bn in the Department of State budget is spent on foreign military assistance (primarily for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic, Egypt and Pakistan). Another $1.03bn outside the official Department of Defense budget is now needed for recruitment and re-enlistment incentives for the overstretched US military, up from a mere $174m in 2003, when the war in Iraq began. The Department of Veterans Affairs currently gets at least $75.7bn, 50% of it for the long-term care of the most seriously injured among the 28,870 soldiers so far wounded in Iraq and 1,708 in Afghanistan. The amount is universally derided as inadequate. Another $46.4bn goes to the Department of Homeland Security.
     
     
    Such expenditures are not only morally obscene, they are fiscally unsustainable. Many neo-conservatives and poorly informed patriotic Americans believe that, even though our defence budget is huge, we can afford it because we are the richest country on Earth. That statement is no longer true. The world’s richest political entity, according to the CIA’s World Factbook, is the European Union. The EU’s 2006 GDP was estimated to be slightly larger than that of the US. Moreover, China’s 2006 GDP was only slightly smaller than that of the US, and Japan was the world’s fourth richest nation.”
     
    Skyi here: so here’s the bottom line. No other country on the planet, in the history of the planet, spends more on it’s military than the U.S.  There’s not even distantly close second place.
     
    Other counties can at least attempt to have universal health care, like the U.E., because the U.S., essentially, is still the world’s policeman. Or to put it more patriotically, the U.S. is the primary defender of the free world (protecting Japan and S. Korea from N. Korea is today’s best example).
     
    Note please that I’m not advocating such an unimaginably large military expenditure.  My point is that all you very smart liberals (and I’m not being sarcastic when I say “smart”) have missed this in your claims that “If everyone else can do it, there is no reason the United States cannot.”
     
    It’s one glaring example of how you just haven’t thought it through.  Even if a larger government take-over of health would really improve things (and I’m not convinced of that), even if it did — we can’t afford it:  literally, materially, practically, using an financial calculation you want, we can’t afford it.  This level of a military commitment is a monetary ball and chain that no other country on the planet has.
     
    Jesse of Le Café Américain continues about the everyday cost of maintaining such a high military posture:
     
     
    Higher spending, fewer jobs

    On 1 May 2007, the Center for Economic and Policy Research of Washington, DC, released a study prepared by the economic and political forecasting company Global Insight on the long-term economic impact of increased military spending. Guided by economist Dean Baker, this research showed that, after an initial demand stimulus, by about the sixth year the effect of increased military spending turns negative. The US economy has had to cope with growing defence spending for more than 60 years. Baker found that, after 10 years of higher defence spending, there would be 464,000 fewer jobs than in a scenario that involved lower defence spending.
     

    Baker concluded: “It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment” (5).
     

    These are only some of the many deleterious effects of military Keynesianism.
     

    It was believed that the US could afford both a massive military establishment and a high standard of living, and that it needed both to maintain full employment. But it did not work out that way. By the 1960s it was becoming apparent that turning over the nation’s largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities. The historian Thomas E Woods Jr observes that, during the 1950s and 1960s, between one-third and two-thirds of all US research talent was siphoned off into the military sector (6). It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles.

  30. 30
    Christoher Skyi says:

    Sorry, that should have been
     
    Total world military expenditure (minus the U.S.’s) is about $500 billion.

  31. 32
    Fritz says:

    Time to stop being the cop unless we get paid.  And not chump change either.
     
    For instance, I see no reason to protect South Korea and Japan from North Korea.  Either of those two fine countries could buy the North for lunch.  Now if they want to pay us $$$ for our protection then that would be a different matter.

  32. 33
    Christoher Skyi says:

    “Time to stop being the cop unless we get paid.  And not chump change either.

    For instance, I see no reason to protect South Korea and Japan from North Korea.  Either of those two fine countries could buy the North for lunch.  Now if they want to pay us $$$ for our protection then that would be a different matter.”
     
     
    Exactly right, but that’s not on the table, and when it comes to almost any new entitlement program or a huge expanse in an existing one, like health care, it’s the elephant in the room no one wants to acknowledge.  The neo-cons were guilt of doing it during the Bush reign of error and liberals are guilty of doing it now (e.g., “were so rich, we can pay for ‘it‘,” whatever “it” happens to be).

  33. 34
    Fritz says:

    We do imperialism ass-backwards.  Can you imagine a Roman general hearing that we took over Mesopotamia and let them loot themselves?

  34. 35
    Christoher Skyi says:

    Liberals have got to address the cost of America being the world’s protector and policemen. You’d think they, more anyone, would excel at this, but so far, they’ve been pretty quiet.
     
    Note: However, team Obama gets a big round of applause for  threatening Veto over F-22

  35. 36
    Fritz says:

    Conservatives might try their hand at that cost-counting also, Christopher.

  36. 37
    U.S. Common Sense says:

    Ron,

    I think you and I might be on a similar track. Just as a doctor searches for the cause of the symptons to find the right cure, Congress should search for what is causing the roadblocks for people to obtain private insurance rather than treating just the “symptoms” by forcing yet another financially insolvent mess on the nation.

    As the Governors (both Democratic and Republican) stated today, the current proposals in Congress will make it next to impossible for them to fund their portions of the program, even in a good economy.

  37. 38
    Christoher Skyi says:

    “Another option might be to consider our priorities and acknowledge that having a high quality health care system which is consistent with American attitudes towards choice, and which is accessible to most Americans, costs money but is a worthwhile expenditure.”
    ~ Ron
     
    “I think you and I might be on a similar track. Just as a doctor searches for the cause of the symptons to find the right cure, Congress should search for what is causing the roadblocks for people to obtain private insurance rather than treating just the “symptoms” by forcing yet another financially insolvent mess on the nation.”
    ~ common sense
     
    Common Sense: I’m not sure if I’m following why you think you’re on a similar track with Ron. Ron is being refreshingly upfront about the likely costs (to avoid rationalizing or sub-optimal care) and says if we want a good government run health system, then we need to pay for one.
     
    You seem to be saying that target price is simply unaffordable.  Did I miss something?

  38. 39
    Eclectic Radical says:

    Most liberals who advocate higher social spending on things like health care also advocate for massive defense cuts and major changes in the way foreign policy works. Defense spending, defense contracts, and the corruption inherent in much of both (combined with massive tax cuts not matched by spending cuts of an equal degree) are one of the biggest reasons for ballooning deficits in the Reagan Era. As one example, Reagan’s military budget increases were actually larger than his across the board spending cuts in all other areas combined, and his tax cut program meant there was less money to pay the higher bill.
     
    Now, it may be strange for a Keynesian like myself to attack deficit spending, but it is important to remember that no economist thinks deficit spending ALL the time is good. Indeed, even Keyenes thought deficit spending bad as a general rule. The Keynesian argument is that lowering taxes and raising expenditures will stimulate the economy in tough times and so deficit spending is sometimes necessary, but the true Keynesian also advocates raising taxes and cutting public spending during times of prosperity in order to control debt. As Hamilton,  Keynes, and Hubert Humphrey all have said, a certain level of debt may be a good thing… but everyone knows that to be an unremitting debtor is bad, and Hamilton’s original financial framework as Treasury Secretary included a sinking fund to pay down the debt that was eliminated by his political opposition, believing that eliminating the means to pay for the debt would magically prevent the government from accruing debt.
     
    Politicians, of course, want to spend money, because the programs are usually popular and do not want to raise taxes, because doing so is always unpopular. The result is that we get, pretty much whomever is in office, constant deficit spending on a level that Hamilton and Keynes would find appalling and without any in-built controls to keep the debt manageable. Defense cuts are always opposed as unpatriotic, even in cases of obvious corruption, or attacked as economically unviable because of the jobs lost. So they too are unpopular.
     
    Personally, I find myself in agreement with Fritz that some of our more affluent allies should be paying for a more significant share of our military’s contribution to their national defense. This particularly true in the case of Japan, whose entire dependence on American military power due to their lack of real military assets has served as a huge economic advantage for them in the past and will again in the future…. when/if the Liberal Democrats (actually neoconservatives whose policies are along the lines of Reagan or Bush Republicans) are finally tossed out of office and their massive corporate welfare program is slowly phased out to force their business to become competitive again and responsible antitrust reform makes their economy properly capitalist again.
     
    I think NATO should be dissolved too, or we should leave it. It was great for fighting the Cold War, but in its present role as Europe’s policeman, it seems best to give the European Union responsibility for running it.
     
    And of course, Christopher, the Iraq War (or Vietnam, back in LBJ’s day) could have easily paid for all the liberal spending smart liberals might want. Smart liberals are aware of this.
     
    The trouble is that the current administration, all propaganda to the contrary, is not liberal. They are more pragmatically neoconservative than Bush and more socially liberal on civil issues, but they are not remotely leftist. Speaking as a leftist. 😉
     

  39. 40
    Fritz says:

    Eclectic, even with as expensive and wasteful as the Iraq War was (or Wars, if you like), I trust in the ability of my smart liberal friends to come up with ways for the government to spend even more.  (And, of course, there is the difference between a purportedly one-off war vs a permanent entitlement program).

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