Comments on: Cost Savings And Health Care Reform

By: Fritz

Fritz — Mon, 20 Jul 2009 15:32:43 +0000

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).

By: Eclectic Radical

Eclectic Radical — Mon, 20 Jul 2009 08:51:18 +0000

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.

By: Christoher Skyi

Christoher Skyi — Mon, 20 Jul 2009 04:01:14 +0000

“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?

By: U.S. Common Sense

U.S. Common Sense — Mon, 20 Jul 2009 01:07:51 +0000

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.

By: Fritz

Fritz — Sun, 19 Jul 2009 05:49:25 +0000

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

By: Christoher Skyi

Christoher Skyi — Sun, 19 Jul 2009 04:30:13 +0000

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

By: Fritz

Fritz — Sun, 19 Jul 2009 04:00:28 +0000

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

By: Christoher Skyi

Christoher Skyi — Sun, 19 Jul 2009 03:47:37 +0000

“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).

By: Fritz

Fritz — Sun, 19 Jul 2009 02:57:39 +0000

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.

By: Christoher Skyi

Christoher Skyi — Sun, 19 Jul 2009 02:32:04 +0000

World's Top Military Spenders

By: Christoher Skyi

Christoher Skyi — Sun, 19 Jul 2009 02:30:04 +0000

Sorry, that should have been

Total world military expenditure (minus the U.S.’s) is about $500 billion.

By: Christoher Skyi

Christoher Skyi — Sun, 19 Jul 2009 02:28:58 +0000

“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 Américain, Why 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.

By: Fritz

Fritz — Sat, 18 Jul 2009 19:20:47 +0000

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.

By: Ron Chusid

Ron Chusid — Sat, 18 Jul 2009 19:13:04 +0000

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.

By: Fritz

Fritz — Sat, 18 Jul 2009 18:54:41 +0000

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