Tuesday, February 11, 2014

Raise Debt Ceiling Equals Responsible?

Based on Hiram's recent comments, he should be happy that the House passed a "clean" debt ceiling increase bill.  MinnPost House Passes Clean Debt Ceiling Increase  Which of course means that our government is continuing to spend more than it is raising in revenue.

Hiram apparently considers this the responsible thing to do. (ie "pay our commitments") I see this as the irresponsible thing to do. (ie "spending our children's money") Here were 3 actions that can be taken when one is running deficits:
  1. Do nothing and keep raising the debt limit, it seems to be very popular politically.  I mean many of the citizens that will need to clean up the mess and bear the increased cost can not even vote yet.  And a lot of the voting citizens that will benefit from this course of action may be dead when the consequences arrive.  No wonder the politicians and self centered citizens like this one.
  2. Proactively cut "mandatory" and discretionary spending so that we are living within our means.  As has been pointed out here, "mandatory" does not mean that it must be paid out.  It just means that "current law" requires that it be paid out.  The politicians are free to pass laws at any time to reduce the "mandatory" spend.  It just isn't very popular with people that are going to get more out of a system than they paid in.  Most folks like it when the "insurance benefits" pay us more than the premiums we paid.
  3. Raise taxes, fees, etc so revenues meet the current spend.  The Democrats pressured the Republicans to let the Bush tax cuts lapse on the well to do citizens.  Maybe we will need to reverse them for the rest of us.  I mean if we want this high level of spend, shouldn't we all be paying for it?
To me 2, 3 or some combination of them would be the "responsible" thing to do.  This would mean that the current voting and tax paying citizens would be paying their bill.  They wouldn't be buzzing through the drive thru telling the cashier that someone behind them will pay for their food.  The idea that many people support doing that (ie #1) still puzzles and frustrates me. 

Especially when it is my daughters generation that will need to pay for our generations selfishness.  Thoughts?

59 comments:

Anonymous said...

What's causing government expenditures to rise is the aging of the population. The obvious solution is to stop the population from aging.

How do we do that?

--Hiram

John said...

Well, kind of.

See, normal pension funds and insurance programs can handle long term demographic changes. They simply adjust their premiums and/or benefits as necessary.

If they saw life expectancy or health care costs increasing, they would make changes to keep the system viable. In this case, neither payroll taxes nor the retirement age is changing fast enough.

Crystal balls don't work so well over the decades...

Sean said...

The debt ceiling is not the place to have the argument over how much we're spending.

That argument should occur when debating the annual budget. When the House and Senate agreed on their compromise budget, they agreed on a level of deficit spending that requires an increase in the debt ceiling. As such, increasing the debt ceiling shouldn't be a question.

John said...

Shoulda, Woulda, Coulda.

If a household sets an unrealistic budget and maxes their credit card, I am assuming that a discussion regarding the budget (ie revenues & spend) should occur before they apply for the next card.

And as I said, if the current voting citizens insist on getting more than they paid and are paying for, there is little that the politicians can or will do.

Hopefully our friend Benjamin Franklin was not correct when he said, “When people find that they can vote themselves money, that will herald the end of the republic.” ...

FYI, here was an interesting and somewhat related link I found while looking for the quote noted above...
5 Liberal Falsehoods

Sean said...

The U.S. government is not a household, and shouldn't necessarily be run like one. If one household fails to pay its bills, the economy of the rest of the neighborhood doesn't collapse.

Anonymous said...


"If they saw life expectancy or health care costs increasing, they would make changes to keep the system viable. In this case, neither payroll taxes nor the retirement age is changing fast enough."

But we don't want to do that, hence the rising deficit.

--Hiram

jerrye92002 said...

In this case there has been far too much time and effort spent on fixing the blame and not nearly enough spent on fixing the problem, especially since the solution is so simple. We all know what happens to people who find themselves with excessive debt, and how they get out of it. First, you cut up the credit cards. You quit spending more than you take in, i.e. you quit raising your debt ceiling. Immediately you must then prioritize your spending – and this is the unpleasant part – so that maybe you have to give up that golf club membership, eat out less, and maybe even give up one of the three cars. You get to set the priorities, but the spending MUST be cut. Period. And finally, you cut back a little more so that you can start paying down the debt that you owe and saving the interest charges. It is just that simple.

It is true though that the federal government does not run like a household in that the federal government can always just print more money, and thus the incentive of onrushing bankruptcy doesn't exist, while the temptation to spend somebody else's money grows ever greater.

I think our only hope is for somebody to take power and present a bold yet sensible solution, such as the "Penny plan." A balanced budget amendment to the Constitution is probably needed, but it wouldn't do much good unless somebody found the political will and common sense to follow it.

Sean said...

The recent CBO report shows that our annual budget deficit in each of the next five years is projected to be below (as a % of GDP) the average of the last 40 years.

Republicans fail to acknowledge that we've already taken significant steps to reign in spending.

Anonymous said...

"We all know what happens to people who find themselves with excessive debt, and how they get out of it."

So when an older person gets sick, the solution is to cut up his or her credit cards?

--Hiram

jerrye92002 said...

"So when an older person gets sick, the solution is to cut up his or her credit cards?" I was talking about accumulation of debt through profligate spending and living beyond one's means. An old person who falls ill but has otherwise limited debt HAS credit to be tapped, as well as, if wisely allocated, insurance for that purpose. Congress doesn't have any such excuse.

jerrye92002 said...

Sean, please post a link to that CBO report. I am guessing that their GDP numbers are a rosy scenario. And percentage of GDP is one way to measure the debt. Inflation adjusted dollars is another, and by that measure, as far as I can tell, we're in deep dren.

Anonymous said...

The old person may have insurance. We are paying for it however. Profligately.

--Hiram

jerrye92002 said...

"The old person may have insurance. We are paying for it however. Profligately."

Exactly so, but WHO is doing that profligate spending? Not me. Look at Congress, promising that I will pay for all these goodies that THEY get the credit for passing around. It's like the chap who throws lavish parties for his friends using somebody else's credit cards. He gets the appreciation and somebody else gets stuck with the bill. That's not a good person, or Congress.

And here I am fixing the blame, again, but what else can I do? They know the solution as well as I do.

John said...

Some Links:
US News CBO Report
CBO Outlook 2014 to 2024
CNN Money CBO

It looks like Sean is correct... We are only going to spend $514,000,000,000 of our children's money this year. However it apparently starts climbing after that...

John said...

Busn Insider CBO Graph

John said...

That graph does depress me... How can rational responsible citizens approve of running deficits decade after decade?

I would think even the Keynesians would like to see periods of goverment suplus between the times when the government spends more to support the economy.

John said...

A man after my own perspective.
Forbes Spending Problem

Another guy's perspective.
Forbes No Need for Ceining Increase

And one of my favorites, since he blames it on both parties need to be "popular". (ie Citizens hate raising taxes and cutting spending... Go figure...)
Forbes It's a Spending Problem

Anonymous said...

Exactly so, but WHO is doing that profligate spending?

We are.

==Hiram

Anonymous said...

No one disputes we pay too much for health care. We are beyond profligate. So what's the solution? Would the Republican approach to the budget work? Can we tell health care providers, "Sorry, we won't pay your bill because it's beyond our means, and besides there isn't any provision in the budget for it"?

--Hiram

Anonymous said...

Republicans, by the way, recommend a market based solution, just not one proposed by a Democratic, to the problem of rising costs. But markets don't necessarily make things cheaper or more available. If they did, the stock market would always go down and everyone would own stocks.

--Hiram

John said...

You have a strange view regarding markets. Competition usually drives costs down and quality up. Open markets just make transactions more transparent.

When selling products or services, markets should encourage people to offer low cost high quality.

When selling investments, markets just promote easy transactions and consistent prices at any point in time. It is the perceived value of the investment that makes the price vary.

jerrye92002 said...

Hiram, you have a real talent for making fruit salad-- if you will excuse the personal attack. Democrats in general propose only government solutions, some more aggressively socialist than others, but all with the theory that they know better than you do what you need, want, and are willing to pay.
Republicans generally want you to choose, in a free market, some less so than others, and only because we haven't had a true free market in health care for a long time, and because Democrats keep saying that markets don't work (they're socialists, remember). I say we ought to give it a try, and I expect, just as Mayo does, that costs would drop to 50% of what they are now. The reason that socialized health care works at all is because it is rationed in both quantity and quality. Otherwise costs would be even more out of control than ours are. Amazing how much demand there is for "free stuff." And what a small number are willing to supply it.

jerrye92002 said...

Let's get back on topic. Yes, it is government-run health care that is going to bankrupt us. Medicare and Medicaid alone would have done it, but with Obamacare added in it will arrive sooner, though most of us will be dead from lack of health insurance before then.

But it doesn't have to be that way, if Democrats would step aside and let entitlement reform take place, it could be done with minimal disruption for almost everybody, with a private sector spending less, but what is necessary as government steps out of the marketplace. Simple, sensible, and essential, but it just isn't in the politicians playbook.

John said...

With that in mind, Americans must value life/health very highly since we begrudgingly keep paying more and more for it.
G2A Healthcare Cost Factors

Based on Sean's ideas, we should probably deregulate care, lower the "standards" for healthcare providers, reduce lawsuit payouts, have people pay for their own care, etc.

This would probably increase the "supply" side of the equation and hugely reduce the cost.

Also, it would encourage people to take better care of themselves. I mean why live healthy if someone else will pick up the bill for your excesses or risky behavior?

And even the Conservatives may start to support euthanasia if they have to pay for Grandma's long term care even though she hasn't gotten out of bed or remembered anyone for a year.

It would probably also reduce the HUGE healthcare costs we spend on a few people. Is that premie's life really worth $2,000,000, or that old man's hip really worth $100,000?

So it seems easy, if you want to reduce healthcare costs, reduce it's "value" and increase the supply of providers by reducing the Provider requirements and the Malpractice risk.

Now do I want someone with a 4 year degree who pulled C's operating on my brain? I guess we need to get competing quotes from an open market and then I can decide. If it saves $500,000 that my family can use if I die. Then maybe the "cheap" guy may be appealing.

jerrye92002 said...

I hadn't seen that idea from Sean, but if so, he is correct. And we don't have to completely "deregulate" medical care to achieve all of those benefits, but we need to do 4 things: eliminate first dollar medical coverage (unless you pay for it), eliminate 3rd party payers (you pay for your own insurance or care, your choice), eliminate fee-for-service (where Medicare pays x for y and w for z, so the doc gives you both when what you really need is q, because w+x pays better.), and eliminate defensive medicine (medical tort reform). What all four have in common is that they are all driven by current gov't interference in the health care/health insurance marketplace. In other ways, government also drives up cost-- requiring an MD to set a broken finger bone, or stitch a serious cut, for example, rather than a medical corpsman-type with all the necessary training. And allowing insurance to be sold across state lines, and decoupling insurance from employment to open up the marketplace.

John said...

I expanded on his idea. He wants us to let foreign Doctor's and Nurses flood the American market so costs/salaries will go down.

John said...

It did surprise me somewhat since he is usually pro union, teacher tenure, teacher licensing, "higher compensation, higher job security, etc.

By the way, Sean are you a he? Just want to check to make sure I am using the correct pronoun...

Sean said...

You "expanded" on my idea to make it utterly unrecognizable. Again, I'll thank you not to do so.

Regarding foreign doctors, the problem we have is that we make it practically impossible for foreign doctors to get licensed in the U.S. before they come to the country. This means that they have to come here and then often work in some other field for several years before they can get licensed. There are ways to make this process go more smoothly and make it easier for foreign doctors to enter the country, while ensuring they have the training and education to provide quality care.

You should do the research on medical malpractice. You'll find it's not driving up health care costs, and that in fact, doctors are getting off easy based on the number of preventable medical errors that occur in this country.

John said...

Your goal though is to reduce costs by bringing in lower wage alternatively licensed workers from other countries. Correct?

Show me your tort research and I'll show you mine...

Anonymous said...

"Republicans generally want you to choose, in a free market, some less so than others, and only because we haven't had a true free market in health care for a long time, and because Democrats keep saying that markets don't work (they're socialists, remember)."

Faced with a serious diagnosis, involving expensive treatment, do you want a choice, or do you want medical care?

I do understand Republican proposals which they have never come close to enacting involve supplementing insurance premiums. The problem is that with a dysfunctional Congress, the supplements will never keep up with increasing costs. Since we don't deny care those costs must go somewhere. These hyper complex programs aren't very efficient at delivering health care. What they are good at is allowing specific individuals to avoid responsibility for negative decisions.

--Hiram

Sean said...

"Alternatively licensed", yes. Lower quality, no.

jerrye92002 said...

"the supplements will never keep up with increasing costs. " -- Hiram

The point of replacing government-dictated health care and costs with a subsidy for free-market choices is that costs will radically go DOWN as a result. Millions and millions of free choices are "smarter" than the choice one bureaucrat makes for everybody; it simply cannot be otherwise.

John said...

If one follows a different process one is likely to get a different result. And per the Teacher's and dozens of other Unions and Professional societies , alternative licensing always leads to lower quality.

How would one compare a Medical degree earned in India to one earned through the US "intense" process to ensure the result was "better" and not "worse"?

How does one determine "better" and "worse" given different curriculums, cultures, techniques, grading criteria, residency reqts, etc?

I actually support the concept of alternative licensing, however I think it should apply to most jobs. Not just one where you personally have determined the people are paid too much or the hurdles are too great.

Though it doesn't pay as well a Doctor's license... I have Professional Engineers License... I don't know if it makes me any more capable as an Engineer, but it took money, years and specific steps to get it...

Sean said...

From an immigration perspective, we already have standards established for the education of foreign doctors. That's not the issue.

The issue is all the other hoops foreign doctors have to go through to get into the country and practice their profession. Some states require additional education (even though the foreign doctors has met federal standards) and the foreign doctors have to do residency programs here before they can be licensed as well.

I'm all for re-evaluating licensing requirements on all jobs, as I have stated in the past.

John said...

Excellent, I am happy to hear that !!!

Unfortunately I think the "employee / profession" lobbying groups have this tied up pretty tight. I know Ed Mn sure fights it, as I assume will the nurses unions and medical bars.

John said...

Besides what incentivve would the medical establishment have for doing this? As soon as someone gets hurt by an alternative licensed professional, someone will sue the licensing body.

Another cost brought to us courtesy of our current tort system.

John said...

And I assume they would also sue the hospital that hired them.

Are you sure you want to stick with the position that our current tort law isn't really expensive?

Sean said...

The medical establishment shouldn't control licensing. That's the problem -- government run by and for special interests.

Can you show me examples of people suing licensing bodies over their actions and winning? Because I don't think that's a terribly credible threat.

Anonymous said...

The point of a medical malpractice suit is or should be, to provide a way to pay for the costs generated when a doctor screws up. The fact is, doctors screw up all the time, and are not sued. It's kind of amazing to me, not that doctors pay so much in malpractice costs, rather that they pay so little. Part of the reason for this is that there are so many barriers to bringing successful malpractice suits. Doctors are loath to testify against other doctors. Juries, for a lot of reasons, some of them very sound, are reluctant to find doctors liable. The fact is, just in the course of business, malpractice lawyers turn down a lot of good cases, as opposed to seeking out spurious cases. And really doesn't this fit with our experience. I know lots of people who have had really bad experiences with doctors, but hardly any of them even consult lawyers.

--Hiram

John said...

I think it is more appropriate to say many people have problems with infection, anesthesia, complications, poor communication, uncertain diagnosis, etc. The people are then unhappy and want someone to blame.

If an immediate return to previous health with zero complications is the customer expectation, they are likely to be disappointed. Now which are "true incompetence" and which are "typical risk" is a challenging thing to determine.

And instead of having medical experts evaluating this, we have a jury of people who think the grieving widow is owed something... (and that big company has deep pockets... they can afford it...)

Anonymous said...

"I think it is more appropriate to say many people have problems with infection, anesthesia, complications, poor communication, uncertain diagnosis, etc. The people are then unhappy and want someone to blame."

So what is it that distinguishes unhappy blame assigning people who don't bring lawsuits from those who do?

--Hiram

John said...

Levels of common sense, greed, emotional distress and lawyer availability,etc.

I agree that true terrible obvious errors do happen and that settlements should be made in these cases. I mean if you are expecting one surgery and you get a different one. Get out the checkbook.

Anonymous said...

"Levels of common sense, greed, emotional distress and lawyer availability,etc."

Note that none of those factors relate to whether malpractice has actually been committed.

--Hiram

John said...

Exactly... I am happy you got my point...

Sean said...

So you're asserting there's lot of medical malpractice claims won in courts that aren't actually malpractice?

John said...

I am asserting that there are a lot of claims that get settled before they go to court. Thus preventing the risk of a very expensive jury decided settlement.

I am asserting that Hospitals, Clinics, Doctors, Insurance Companies, Health Equipment Providers, etc incur a lot of non-value added costs for fear of being sued. I am guessing all that risk/fear is pretty hard to quantify.

I see it a lot on the equipment manufacturing side, and I don't even work in the Health Care field where it is much worse according to my friends in that industry..

Anonymous said...

"I am asserting that there are a lot of claims that get settled before they go to court. Thus preventing the risk of a very expensive jury decided settlement."

Plaintiffs, according to one study, win only 27% of jury verdicts. The vast majority of medical malpractice suits are settled out of court.

Being subject to suit can be expensive. One alternative would be to provide that doctors and other medical professionals would be immune from civil lawsuits. Is that a good idea?

--Hiram

jerrye92002 said...

I think the two pieces of medical malpractice tort reform that most reformers are talking about are a) a substantial penalty for filing "frivilous" malpractice claims, rather than being rewarded with a "cheaper than trial" out of court settlement, and b) eliminating the substantial cost of "defensive medicine" that is, as John says, "non value added."

Anonymous said...

Should defendants be sanctioned for mounting frivolous defenses? But really, doctors make costly mistakes all the time and lawsuits against them are far more the exception than the rule.

The idea out there is that doctors are prescribing medially unnecessary procedures. That's more a problem for doctors then lawyers.

John said...

" doctors make costly mistakes all the time " Source?

Good idea? I'll start a new post on this topic.

jerrye92002 said...

It's not an "idea" that doctors are prescribing "medically unnecessary procedures," it's a fact. Difficult to quantify, perhaps, but anecdotally true and logically obvious. Like so much of public policy, what liberals refuse to consider is the incentives that they create. If you threaten doctors with ruinous lawsuits for any hint of error, they will take every precaution they can, necessary or not, to avoid it. If you underpay doctors for the necessary procedure, as Medicare and Medicaid do, doctors will "throw in" one or two unnecessary ones to cover their costs.

Anonymous said...



It's not an "idea" that doctors are prescribing "medically unnecessary procedures,

Well, then they should be held accountable for that.

==Hiram

John said...

Hiram,
How would you propose holding them accountable?

They may be sued if they miss anything, and there is no real downside to over testing.

What would you do as a Doctor?

jerrye92002 said...

You can't hold a doctor responsible for NOT doing extra tests, and you can't hold her responsible FOR doing the extra tests at the same time.

And the other reason for the extra tests is to get properly compensated when Medicare/Medicaid (or private insurance, if there were such a thing) pays less than overhead cost. Get rid of the "fee for service" model and that part of the "unnecessary procedures" problem goes away.

Anonymous said...

How would you propose holding them accountable?

I don't think there is a problem here, and so I feel no particular need to hold them accountable. I think this notion that doctors prescribe a whole lot of unnecessary procedures is mostly a self serving myth on their part.

--Hiram

Anonymous said...

The answer to the malpractice issue generally is insurance. People sue because they have medical conditions that they can't pay for. If they are insured, it reduces the incentive to sue.

--Hiram

jerrye92002 said...

I don't think health insurance much matters. People sue because their health care did not produce the desired result. The insurance that matters is the cost of malpractice insurance, and in some cases it has driven doctors out of business. They can't possibly be that incompetent.

Anonymous said...

People sue because their health care did not produce the desired result.

Lots of people don't get the desired results yet lawsuits, considered in terms of the number of people who get treatment, are very rare. People sue because they need health care they can't otherwise afford.

--Hiram

jerrye92002 said...

I don't think so. People sue because they can get money for any imagined grievance against a medical provider. They DIE because they can't afford necessary medical care. And of course there is nobody in the US allowed to die for lack of medical care; it's the law. Obamacare, on the other hand, guarantees you the right to die because you don't have medical insurance.