Tag Archives: Medicare

01.25.2013 | The Debt Ceiling: A “Choose Your Own Adventure” Story

Have you ever read a “Choose Your Own Adventure” book? Letting the reader select a plot path, the series had multiple endings. Now, a Quartz reporter very cleverly has suggested alternative endings for the “plot path” of the Congressional debt ceiling discussion.

Proposed less than 2 weeks ago, the “Choose Your Own Adventure” debt ceiling story, however, needs to include an unforeseen twist. The House just passed new legislation for a debt ceiling hike to last until mid-May with a Congressional salary clause. The clause? If a “chamber of Congress” does not agree on a budget then its members don’t get paid until one develops or until their terms end.

Still relevant, the “Choose Your Own Adventure” starting scenarios, each with its own series of results, were:

“A fiscal consolidation bargain”
“A concession to Republican demands”
No agreement and the Treasury has insufficient funds to cover its obligations.

Now we can add a fourth initial scenario:

The House passes legislation to raise the debt ceiling for a limited time period.

Discussing the debt ceiling, we should take a look at the debt. Whenever the US borrows, someone, somewhere buys a Treasury security such as a bond. So who has more than $16 trillion in government securities?

Actually, we do.

We owe 2/3 of the debt to ourselves. The US government lends to itself by using, for example, Medicare trust fund cash it does not need. Meanwhile, individuals, businesses, state governments, local governments, pension funds–the list is long– also buy US Treasury securities.

Washington Post data from 2011. Now the total would be over $16 trillions but the holders remain very similar.

Washington Post data from 2011. Now the debt total would be over $16 trillion but the proportions for debt holder categories are similar.

The rest of the US debt is held by foreign governments, businesses, citizens, etc., with China and then Japan at the top of the list. Next are Caribbean Banking Centers, Oil Exporters, Brazil and then still, a long list with South Africa at the bottom.

Sources and Resources: Here, at Quartz, you can see the entire debt ceiling ”Choose Your Own Adventure” while for the debt, my information came from the US Treasury and Fox News and graphs are from the NY Times and the Washington Post. Finally, you can read more here in the Huffington Post about the debt ceiling legislation that just passed in the House. In addition, here and here econlife has debt ceiling facts and history.

Posted by: adminEcon
Tags: China, debt ceiling, Medicare, social security
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11.05.2012 | Election Economics: Looking at the Millennials, Xers, Boomers, and Silents

Before tomorrow’s election, let’s take a look at the voting age gap. Absent since 1972, the young and the old again are voting differently.

The Silent Generation: The oldest slice of the population, the Silent Generation was born between 1928 and 1945. Representing 17% of all registered voters at the end of 2011, they tend toward conservative views, support less government, and are politically engaged. One of their top issues, Social Security, reflects a contradiction. The Silents tend to be Republican but favor the Democrats’ position on Social Security.

The Baby Boomers: Currently 47-65, the Baby Boomers are a potent political cohort. Numbering 37% of all registered voters, the older Boomers tend to be more Democratic than their younger peers. The concern, though, that resounds for many is uncertainty about their financial future and retirement security.

Generation X: Born between 1965 and 1980, Xers make up 26% of all registered voters. Politically, they tend to split by age. Older Xers sympathize with Republicans while those closer to 30 are more likely to vote Democratic. As for the issue they most care about, it appears to be financial health.

The Millennials: The youngest population group that votes, Millennials are currently 18 to 30 years old. relatively unengaged politically, and 17% of the electorate. 41 percent nonwhite or Hispanic, they are diverse, vote Democratic, and are almost evenly split on whether we have too much or too little government. According to a July 2012 USA TODAY/Gallup Poll, creating good jobs was the key issue for those under 30.

How to summarize the similarities and differences? I suggest looking at the table below. Although it is based on data from October 2011, still the priorities remain similar according to the more recent Gallup poll. And, for more background data, the graphs that follow it are fascinating.

Election Economics Topics:

Sources and Resources: The surveys on which I based my facts were from Pew (Nov. 2011) and USA TODAY Gallup (July 2012). Also, you might have some fun with this USA TODAY candidate match game. All graphs and tables are from Pew.

Posted by: adminEcon
Tags: 1972 election, baby boomers, campaign issues, deficit, Democrats, financial security, Generation Xers, George McGovern, jobs, Medicare, millennials, Mitt Romney, President Obama, presidential election, Republicans, Richard Nixon, Silent Generation, social security, voting generation gap
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10.27.2012 | Seeing the Elderly You

More of us are worried about financing retirement. But it’s not the “gloomy boomers” who said three years ago, at 50 or so, that they feared outliving their money. Now, according to Pew Research, the most worried demographic is adults in their late 30s.

However, if you look at the St. Louis Fed graph below, we are not doing a very good job of saving. One reason might be our relationship with our future selves.

I just read a fascinating study about retirement savings decisions in which researchers created elderly lifelike images of participants in a virtual mirror. The results? People who actually saw their future aged selves saved more. And, when experimenters had those self images respond happily or sadly to amounts of savings, more was set aside.

Where does this leave us? With Social Security and Medicare soon to experience severe financial difficulties, retirement savings are ever more important. And yet most of us, worried or not, tend to favor current consumption over saving. For that reason, social scientists and neuroscientists are suggesting how to change our savings behavior. Richard Thaler and Cass Sunstein have described a default savings option that people would actively have to reject. Or maybe the answer is some form of pre-commitment before the actual time to make the savings decision arrives. And now, we are also advised that if we see our elderly self, we can diminish the “empathy gap.”

A final thought: Observing your future self could relate to a host of decisions. For example, before devouring 10 chocolate chip cookies, should your virtual mirror reflect the weight gain?

Sources and Resources: My reading for this post took me to a Bloomberg article, the “virtual mirror” research, and the Pew Research study on retirement worries. I also looked at the St. Louis Fed for savings trends and went back to Nudge by Thaler and Sunstein.

The ratio of personal saving to disposable personal income, our personal savings rate, is dipping.

Posted by: adminEcon
Tags: Cass Sunstein, immersive virtual reality, low savings rate, Medicare, Nudge, retirement savings, Richard Thaler, savings default provisions, savings pre-commitment, social security, St. Louis Federal Reserve, virtual mirror
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10.11.2012 | Big Bird’s Issues

All the talk about Big Bird and federal funding is really about 2 much bigger issues.

1. Discretionary Spending

With proposed spending in the Obama 2013 budget at 3.7 trillion dollars, a tiny proportion–between 1 and 2 percent, goes to the Corporation for Public Broadcasting (CPB). In fact, add to CPB money, the EPA, the entire judicial brach of government, homeland security, education, transportation, agriculture, foreign policy, NASA, and other discretionary categories (except defense) and you approach 15 percent of all federal spending.

The other 85%?

Social Security
Health and Human Services (primarily Medicare and Medicaid)
the Interest on the Debt
Defense

You can see that for real deficit reduction, we need to focus on 3 mandatory (required by law) budget components and defense–not Big Bird and not discretionary spending.

2. Lighthouses

Would Big Bird pass the lighthouse test? Economists like to point out that when we try to decide what government should pay for, we can start with a lighthouse. Used by anyone, depleted by no one, and a necessity, a lighthouse would be tough to fund privately. So government should step in.

The lighthouse test is a handy start for deciding what should be covered by federal funds.

Sources and Resources: This NY Times interactive graphic is a superb shortcut for illustrating and understanding the federal budget. Also very well done, the NPR Planet Money podcast on public goods was fascinating.

Posted by: adminEcon
Tags: Big Bird, Corporation for Public Broadcasting (CPB), defense, discretionary spending, federal budget, federal deficit, Governor Romney, mandatory spending, Medicaid, Medicare, PBS, President Obama, presidential debate, public goods, social security
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10.01.2012 | Election Economics: What To Know For The First Presidential Debate

Presidential debate moderator Jim Lehrer said there would be six 15-minute segments in the first presidential debate on October 3rd. Devoting the entire first half to “the economy,” he will also cover healthcare, the role of government, and “governing.”

Like the candidates, let’s do some prepping.

The Economy:

In an excellent NY Times column, James Stewart asks, “Are Americans Better Off?” His answer initially takes us to the basic economic yardsticks that EconLife Election Economics looked at last week: GDP, unemployment, household income and inflation. Tepid, all are slowly improving but close to where they were when Mr. Obama entered office (except the inflation rate which has been low).

How affluent we feel--the wealth effect–is a different story. As Mr. Stewart points out, it all depends on who you are. Those who have more feel richer and more secure because stock markets are up, household debt is down, and home prices have started to rise. However, bombarded by foreclosures, student loans, auto loans and unemployment, the less affluent are not feeling better. Add to that anyone living on interest from treasuries and other securities with a “0″ return and you get many people who are not feeling better off.

Where are we? I hope that each candidate will explain whether we are better off.

Healthcare:

Statistics about US healthcare are tough to pin down when you challenge, defend and predict the impact of the Affordable Care Act of 2010. For example, you could judge healthcare on the basis of mortality rates. However, people disagree about mortality rates because the numbers you select depend on whether you look at the causes of death. With many statistics, equally defendable alternatives are probably feasible.

We can be sure, though, that as the average age of our population ascends, Medicare, Medicaid and Social Security will be increasingly stretched. I mention Social Security here because demand for its disability benefit has been soaring.

Where are we? I hope that each candidate will convey the daunting challenges we face because of increasingly inadequate revenue for government programs that relate to health care.

For more detail, you can look at 2 Election Economics posts, Assessing the Quality of Current US Healthcare and Our Aging Population.

Role of Government and Governing:

Here we have the great divide. Whether looking at taxes, healthcare or financial regulation, there is an ideological split. The Keynesian side says government, through taxation and regulation can perpetuate economic health and fairness. By contrast, the Adam Smith/Hayek/Friedman perspective says economic prosperity and US freedom depend on the incentive to benefit from hard work, education and entrepreneurship.

Where are we? I hope that each candidate explains and presents the implications of his economic philosophy.

EconLife presented more detail about Keynesian economics here, and the Hayekian view, here.

A final thought: Most articles about the presidential debates focus on “turning the tide,” Janet Brown, the person who organizes the debates, practicing, what to call the president, what each candidate needs to achieve. You see that sadly, few articles are preparing us for content.

Sources and Resources: My thanks to James Stewart for his ideas about being better off and to the LA Times, as the only news source I could locate with an outline of debate topics.

Election Economics Topics:

Posted by: adminEcon
Tags: Affordable Care Act of 2010, Are we better off?, Barack Obama, Dodd-Frank, financial regulation, Friedrich von Hayek, irst presidential debate, Jim Lehrer, John Maynard Keynes, Medicaid, Medicare, Milton Friedman, Mitt Romney, social security
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