Ravenwood - 05/29/03 04:00 PM
The AFP reports that the Bush Administration tried to bury a report that we are headed for a $44-Trillion* (with a T) deficit. They cite the report as "the most comprehensive assessment of how the US government is at risk of being overwhelmed by the 'baby boom' generation's future healthcare and retirement costs." They also note that the reason for burying the report, is so that he could push his tax cut through for the greedy** rich folks.
At first I thought this was a joke. A $44 TRILLION deficit? Nobody could believe that. As I noted in yesterday's largely ignored essay, our current budget is only $2.3 Trillion. Granted that is a buttload of cash, it is no where close to $44 Trillion. According to the CBO, Social Security taxes collected for 2002 were only $700 Billion. So, just how does this so-called "report" get us up to $44 Trillion?
The London Financial Times cites economist Ken Smetters as their source, and notes that he is "a former Treasury consultant and economist now on leave from the Cleveland Federal Reserve." In an interview, Smetters claims that $7 Trillion of the deficit is from Social Security, and the rest is from Medicare. Smetters says, "Our Medicare number of over $36,000bn is calculated under very conservative health-care growth assumptions."
My guess is that his liberal estimates were into the "Gazillions" of dollars.
According to the CIA World Fact Book, there are currently just over 35 Million Americans ages 65 and older. Dividing 35 Million people into $44 Trillion gets you over $1.2 Million spent PER PERSON. Since deficits are annual, that figure would be EACH YEAR.
It should be noted that while the baby boom is sure to increase the number of Americans over 65, it certainly will not be a tenfold or hundredfold increase. It should also be noted that the entire U.S. GDP is only $10 Trillion. We'd have to be taxed at 440% just to cover a $44 Trillion deficit. Even Michael Bloomberg isn't taxing people that much. It sounds to me like Bush filed this report in the trash can, where it belongs.
*For those of you that cannot comprehend just how much money $44 Trillion is, it is $44,000,000,000,000. That is 12 zeros. That would be enough money to purchase a Dodge Neon for half of the 6 Billion people on the planet.
**Neal notes that it is interesting that people who "want the government to take money away from someone who earned it, and give it to you, [are] NOT greedy. But ... if you want to keep the money you worked for and earned then you ARE greedy.
Category: Left-wing Conspiracy
Comments (5) top link me
lol. dodge neon..
Posted by: John Mays at May 29, 2003 4:54 PMI don't know what assumptions they made so can't comment knowledgeably on the deficit projections. But, thought I would note that a 2000 report called Health and Health Care 2010 projects that baby boomer retirement will up the number of Medicare beneficiaries by approx 15%. In addition to more people, you also have to factor in that people live longer (so Medicare pays for them longer), that chronic diseases are on the increase (and they tend to be costly) and that changes in the private insurance market are reducing Medicare's ability to cost-shift (ie, Medicare over time will have to pay more since providers can't recoup underpayment by charging private insurance more). If the assumptions in that projection included having a drug benefit in Medicare, you'd have to add a hefty chunk of change to future costs, too.
Posted by: hope at May 30, 2003 2:26 PMYes, but is all that going to mushroom into more than four times the Gross Domestic Product? There is a price point where demand for goods and services will reach zero. Even though someone may "need" something, they aren't going to be able to buy it when the ANNUAL price is 4.4 times more than their gross annual salary.
Posted by: Ravenwood at May 30, 2003 2:35 PMI think you're misconstruing what the $44T number is supposed to mean -- it is the projected _cumulative_ deficit over a _seventy-five-year_ window. So it's not saying that the budget for any one year will be in the red by that number, but rather that we should expect the debt to grow and grow and grow.... Seeing as the current deficit is in the neighborhood of 1 trillion, the idea that we'll reach 44 when you add up the next 75 years is not so outrageous.
Posted by: JW at June 1, 2003 7:05 PMJW,
First of all, our current deficit is projected to be around $300 Billion. That is no where near the $1 Trillion that you claim. In fact, you are off by over 330%.
Second, a budget deficit is an annual number. The cumulative effect is called the national debt. The terminology is not interchangeable.
Third, the AFP specifically mentioned the looming health care and retirement costs of the "baby boom" generation as being a cause. While people are living longer, baby boomers will not be around in 75 years. Blaming a deficit on someone 50 or more years after they are dead seems pretty 'outrageous' to me.
Posted by: Ravenwood at June 1, 2003 7:59 PM(c) Ravenwood and Associates, 1990 - 2014
