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Friday, October 16, 2009

The Senior Stimulus and Health Care Reform

By now, most are probably aware that President Obama is proposing a one time $250 check to seniors because there won't be a COLA (cost of living adjustment) increase this year to Social Security.

With the bulk of the $787 billion stimulus package still unspent, some lawmakers say, President Obama should not be adding yet another $13 billion to the deficit by funding a one-time $250 Social Security payment.

This story is indicative of two things. First, seniors are one of several third rails in politics. You never want to do anything that can be viewed as short changing seniors. So, when Congress decides that prices didn't go up so there need not be a COLA increase, the president swoops in to propose a check to make up for what would have been a COLA this year. The president wants to avoid at all costs being on the receiving end of criticism that he and his party short changed seniors.

Second, it's indicative of the spending orgy currently going on in this White House. Between the stimulus, the bailouts, and the budget, $13 billion is chump change and so the White House didn't even think twice of proposing it.

Now, one of the keys to the president's health care reform package is a cut of roughly $500 billion in Medicare spending. That's how all projections appear to be at or near budget neutral. If there aren't $500 billion in Medicare cuts, that adds about that much to the deficit and debt. Now, in D.C., a cut is often not really a cut. Politicians don't usually like to cut spending. So, often, when they slow down the rate of increase in spending they call that a cut. Sometimes when a program decreases for a 3% increase in annual spending to 1.5% increase in annual spending, politicians claim they have cut that program. Of course, they haven't.

That's all very important because the president actually means he will cut Medicare spending by $500 billion. Think about that for a minute. The average COLA increase is about $400 yearly. That's about what seniors lost this year. The president sprung into action and proposed a $250 check. So, this same president and Congress that can't stomach a one time freeze on spending that costs the average senior about $400 this year is supposed to be trusted to CUT $500 billion from Medicare.

The same president that's spent half of TARP, created a $75 billion mortgage relief effort, $3 billion cash for clunkers, $787 billion stimulus, nearly $4 trillion budget, and a separate bailout for the automakers is now to be counted on to stomach a half trillion dollar cut to Medicare. Is that realistic?

What this clearly shows is that the president and the Democrats have no credibility in living up to cuts in Medicare. If that's the truth, then we are looking at adding about half a trillion to our deficits. Health care reform hinges on the Democrats, in the future, actually having the stomach to follow through and cut Medicare, and any one who believes them ought to ask if they can't stand a one time freeze in COLA adjustments how they'll stomach a half trillion dollar cut in Medicare.


Anonymous said...

To be sure, Seniors will probably be a problem for President Obama for quite some time. The seniors of Clinton's era were the middle aged adults of the Johnson era. Today's seniors were yesterday's Nixon Republicans and Reagan Democrats.

That being said, I think you're being far too generic about what the Democrats mean when they talk about cutting Medicare. Specifically, we're talking about cutting Medicare Advantage, the failed program that let seniors use Medicare funds to pay for private insurance.

mike volpe said...

I don't think that Medicare Advantage is big enough to have a half trillion dollar cut to it. Second, I don't know what you mean by failed. Medicare itself is broke so how do you define failed. Seniors like that program. That's not a failure.

Tom Degan said...

My younger brother Jeff is the shame of the Degan family. He not only lives in France, he actually likes it there. He has a French wife and two gorgeous little French daughters. Honestly I think the guy is a closet commie. Back in August, in a letter to his fellow countrymen and women regarding health care, he ended it by saying:

"In short, in the US, you pay more, get less, and die younger than we do in Europe. What part of that don't you understand?"

Well, hey there! That's a danged good question! What part of that don't we understand? Why is it that so many of us have to be dragged, kicking and screaming like half-witted little preschoolers, into the brave new world of change? What the hell is the matter with us anyway? How can it be that such a huge number of Americans cheerfully join movements of mass stupidity and salivate on cue to the sound of Dr. Glenn "Pavlov" Beck's bell? It kind of ma
Goshen, NYkes you wonder, huh?

Tom Degan
Goshen, NY

Anonymous said...

Why do you guys keep saying Medicare and Social Security are broke? Last time I checked, people are still receiving payments.

mike volpe said...

Of course, it pays out. The government can tax, print money and take money for other sources. Still, social security is about to take in less than it pays out and that trend will only get worse and worse. Medicare has already gotten that way. If you take in less than you pay out, you go broke.

Anonymous said...

Right, but they're GOING broke, they aren't broke right now. In fact, they're not even insolvent yet. That's like saying you crashed into a tree when you're still 3x the stopping distance away from it.