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Trivia Tidbit of the Day: Part 562 -- Medicare.

Our Entitlements Are Out Of Control-

Watching a TiVo'd Frontline last night about our national debt, Forrest Sawyer seemed to place most of the blame on the Bush administration. The gist: Bush cut taxes, which starved the government of money, all while fighting a big war and signing the Medicare Prescription Drug benefit.

There is some truth to that criticism, but not much.

Tax relief did not starve the beast, as many hoped/feared. Tax collections were hitting record highs until we entered this housing bubble-caused recession. Revenue was abundantly flowing into the federal government. Revenue was not the problem.

Nor was military spending, or even the Medicare Prescription Drug plan. The cost of Afghanistan and Iraq have been staggering, but a) they are not permanent annual costs and b) our defense spending as a percentage of GDP is still historically low. While adding prescription drugs to Medicare will have a major negative impact on our fiscal picture over the long run, it has had very little impact on our deficits today. Drugs for seniors are such a minor drop in the bucket to this point.

So what's the deal?

Well, revenues were way up until the recession hit. Military spending was certainly up, but not by enough to account for our current deficit. Same with prescription drugs in Medicare. So why do we have these huge deficits? Surely, it's pork, right?

Nope. Not even pork. Pork is also a drop in the bucket, relative to the absurdly large spending leviathan we have created in Washington.

No, the biggest spending increases during the Bush administration were auto-pilot increases in Social Security, Medicare at-large, and Medicaid. Social Security is the largest individual spending program that Washington has right now. Bigger than war. And according to Chuck Blahous, the so-called surpluses are drying up a lot sooner than anyone imagined (watch starting at the 2:30 mark, through about the 7:00 mark).

But what about Medicare? Right now, Medicare is not the biggest problem. Social Security is much bigger. But over the long-term, Medicare as a whole (prescription drugs being a small part of that whole) dwarfs pretty much everything:

It has not always been this way. In 1985, Medi­care drew only 0.4 percent of GDP ($17.9 billion) from the general fund to cover its excess costs. Ten years later, this had increased slightly to 0.5 percent of GDP ($37.0 billion). By 2007, Medicare's draw had more than doubled to 1.3 percent of GDP ($179 billion).

And it's only going to get worse... MUCH, MUCH worse.

Previous Trivia Tidbit: Schools.

Posted by Will Franklin · 26 March 2009 12:43 PM

Comments

Posted by: Scott Larrison at March 26, 2009 01:39 PM

Posted by: ZsaZsa at March 26, 2009 04:51 PM