Would a universal health care program really cost more? Doesn't the US already spend twice per capita per year what other countries that have universal health care insurance already spend http://www.dailyhowler.com/dh072309.shtml ?

Here's another way to look at it. From the National Coalition on Health Care (http://www.nchc.org/facts/cost.shtml);

"Total spending was $2.4 TRILLION in 2007, or $7900 per person. Total health care spending represented 17 percent of the gross domestic product (GDP).
U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP."

That is the current rate of growth of health care spending is about twice the CBO estimate of cost to the government (which is just a guess anyway). Since many other countries do the job for about half the cost, it is reasonable to expect that reform could cut the rate of growth in half, essentially justifying the expense to government. Note that this would not come close to cutting total expenses down to the level in other countries, it would just be slowing the rate of growth.

That is the current rate of growth of health care spending is about twice the CBO estimate of cost to the government (which is just a guess anyway). Since many other countries do the job for about half the cost, it is reasonable to expect that reform could cut the rate of growth in half, essentially justifying the expense to government. Note that this would not come close to cutting total expenses down to the level in other countries, it would just be slowing the rate of growth.

Well, I'm not talking about inflation. I'm talking about what we are spending now. Right now, other countries do healthcare better than the US at half the cost. If you accept that the goal is to only curb inflation in healthcare spending, then you tacitly accept that paying twice for what other countries do better now is normal or acceptable.

If we really want to get serious about health care in our country, we first need to change the term to help us recognize what we currently have - which is “sick” care, not “health” care. The system pays providers to perform tests and procedures on people who already are sick. That’s where the money is. There is no money to be made on healthy people. True, healthy people will always be subsidizing the sick in any system we come up with as far as I can tell. So what we need to do is reduce the number of sick people. How? Well, more trips to the doctor is not going to do it for most of us. So here are some ideas that might help on a broad, societal basis, since an individual’s health is determined primarily by a combination of inherited genetic traits along with lifestyle choices.
- Tax sugar (instead of subsidizing it!)– The typical American gets about 20% of their daily caloric intake from liquids. This number should be very close to zero since water is all we need and should be drinking. I saw recently that a 3 cents tax is being proposed on soft drinks. Some of the critics are saying it unfairly hurts the poor. Well, the poor (along with everyone else) would be better off financially and physically if they never drank another soda again. I think the tax should be much, much higher.
- Subsidize fruits and vegetables – so, now a bag of cookies will cost more than a bag of apples. See where this is leading us?
- Tax gasoline so it’s about $10 a gallon. Remember when gas was $4 a gallon last year? Wow, didn’t that affect our behavior. More car pooling, increased mass transit, increased biking, etc. Better for the environment (reduced green house gases) and better for our health. It would also reduce the amount of money currently flowing to our “friends” in South America and Saudi Arabia.

The reason why none of this will really happen is that a big chunk of our economy is currently based on creating artificial needs via clever marketing, and then creating products to fill these needs. Soda is the perfect example. Getting potable water to virtually every home in our nation was one of the biggest positive things we have ever done for our overall societal health. But instead of leaving well enough alone, the soda manufacturers take this healthy water (a nearly free resource) and pipe it into their factories where they add things like sugar, high fructose corn syrup, artificial coloring, etc. They then package it in plastic bottles (which is oil based) or aluminum cans (both requiring their own factories), then truck it to stores (again, more oil being consumed) so people can spend money to buy it, drink it, and become less healthy. While lots of people remain gainfully employed by this product, it provides nothing but reduced overall health to society.

This is the big dilemma. We’ve created a society which is greatly dependent on economic activity that harms the citizens living in it. Certainly not all of our activity harms us and there is much that is good, but if you look critically at what is on our food store shelves, you will begin to get a sense for how daunting a challenge is before us.

you talk about the real cost of health care reform but that is not important in this case

cost is an obstacle raised by reform opponents, it is an understandable issue in the legislative debate

the media finances public opinion polls which mine public opinions for content to fill their demanding programming need (text and electronic media)

they use questions framed to provoke a fairly predictable response and then use the result to get audience attention

in this case - cost

of course people are concerned
that health care reform should not have a "huge cost

who would not be

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=07&year=2009&base_name=how_big_is_239_billion_over_10#comment-6283972

Anyone who listens to NPR regularly knows that Mara Liasson is not a reporter -- she's a Republican reporter always putting her preferred spin on the facts.

It's a sorry world we live in.

Once upon a time, Mara Liasson worked for KPFA in Berkeley--the Pacifica station there. How times change.

and then just what pbr may say when the public finds out about the trillion in profits for bigpharma because of the clever marketing for the h5n1(aviary)or now h1n1(porcine)Health care reform is about lowering profits. Can't have that now.

Quick, no cheating* (Googling): What percent of our nation's total health care spending consists of health insurance industry profits?

* Not that I'd put any faith in the honor system with a hyperpartisan crowd. So I mean "no cheating" to be rhetorical rather than an actual expectation of mine.

IMO "health insurance industry profits" is a number relevant to very few people. Health insurance industry gross revenue is the problem. The entire reason for the industry is to figure out any possible way to not pay off claims, and to do it for 10 times the price of a comparable public administration under a single payer system, resulting in significantly worse health outcomes than other countries with a public system.

It's as if we were comparing a 42" television for $10,000 and a 47" television for $1000, ceteris paribus, and inquiring about how much each was discounted from MSRP as if it would speak at all to which was a wiser buy.

Brooks--

Isn't answering questions like that what Google is for?

Sorry for double posting, but the most annoying part about that NPR poll coverage is that they used the response to the question "As you may have heard, President Obama and the Democrats in Congress are preparing a plan to change the health care system. From what you have heard about this plan, do you favor or oppose Obama and the Democrats' health care proposal?" with its 47%/42% result against the plan as an excuse to play a few generic talking points funneled through two or three vox pop recordings, and use them to characterize the majority (53%) of the people who offered any opinion on the issue.

I would guess that some proportion of single-payer advocates may not favor these bills either, and that group has polled before at times as a majority of the population, so should probably not be folded into those vox pop characterizations of a position that are almost diametrically opposed to their beliefs.

Aggravating.

Jamaal,

I'm not seeing your reasoning. Perhaps you could lay it out more clearly.

If health insurance industry profits were zero, than all that gross revenue would go to (1) paying claims and (2) administrative costs (SG&A).

You seem to be making two points that you are lumping together with some awkward, very unclear phrasing. You contend that the private insurers inappropriately deny payment on claims. And you seem to be asserting that their revenue is much higher "10 times the price" of what the cost would be for the same health care under single payer, yet if that's the case, one would expect that additional revenue to be reflected by either much higher administrative costs (vs. what the federal government would have for the same covered population and the same health care) and/or insurance industry profits. What are you saying? If you are saying that profits are not a major factor, then are you asserting much, much higher administrative costs (again, for the same covered population and care)?

Also, are you saying that none of the claims that the insurance companies reject should indeed be rejected -- i.e., that all claims are legitimate?

And along the same lines, I assume you would also say that private insurers are more likely to deny authorization for coverage of a given treatment than would the federal government under single payer, right?

Above "Anonymous" is me.

Peon,
Don't be an idiot. Obviously I was asking for people to either indicate that they knew (which I personally wouldn't have believed) or to guess (which would probably have been more credible due to inaccuracy). But moreover, I just wanted to raise that aspect of the debate, as well (sort of) apply Dean's approach of laying out a tiny number as a percent of GDP to create the impression that it's not something we should bother being concerned about.

Brooks, I think I recall Charlie Baker saying that HarvardPilgrim made 2% profit, and Aetna closer to 7%. (I wish the press would tell us details like that.)

What troubles me is the way so many high-income liberals don't notice how much damage this health plan can do to lower income people.
I don't think they know, for example, how abusive non-profit HMOs can be, even while doing the few basic tests that allow them to quality as providers of "preventive care." Perhaps if high-income liberals did have friends and neighbors who received such limited care, they might have a better sense of the problems we're letting people in for.

Jorge,

I was asking a different question: profits as a percent of our health care spending, not as a percent of insurance company revenues.

Anyway, the answer is about 0.6%. It's around $13 billion (annually) and we spend about $2.2 trillion on healthcare. Of non-government spending on healthcare, it's around 1%. Or as I suppose Dean Baker would put it, it's only about 0.01% of GDP.

Jorge,

the more important issue is the administrative costs as a share of revenue, not profits. If Cigna spends a lot of money denying claims and earns zero profits, it is no better for its clients than if earned large profits and no money denying claims.

The share of revenue that private insurers spend on processing claims is between 15-20 percent. They also increase the costs of providers by a comparable amount because doctors and hospitals have to pay people to shuffle claims. In total, as much as 30 percent of the money that goes through private insurers is wasted in the paper shuffle.

Dean Baker,

1) What is Medicare's administrative cost PER COVERED PERSON (not as a percent of claims) vs. that of private health insurance? Please provide source, which hopefully will show what is being counted as administrative cost, and extent to which comparison is apples-to-apples and indicative of which would have lower administrative cost for the same covered population segments.

2) How much of administrative cost per covered person is variable vis a vis dollar amount of utilization (i.e., a function of utilization in dollar terms) vs. fixed?

3) In which sector is there more effective legitimate cost-control (in design of plans, adherence to that design, prevention of fraud, etc.), public (particularly Medicare) or private (insurers)? (sources?)

And I'll ask you essentially the same questions I asked Jamaal:

4) Are you saying that, of the claims that the insurance companies reject, an insignificant amount (in dollars) should indeed be rejected per the letter and spirit of the plan's coverage and authorization processes? (as opposed to a significant portion of denials of payment representing legitimate cost-control in the sense of denying payment for treatments that are not covered or for which proper authorization was not obtained?

5) Along the same lines, would you say that private insurers are more likely to deny authorization of a given requested treatment in a given case than would the federal government under single payer?

Dean & All,

Re: my question #1 above,
A few weeks ago Krugman (partisan of the left) and Robert Book (I presume a partisan of the right, with Heritage) presented conflicting arguments on this question. I'll provide links below, in chronological order of the exchange, split across comments since the filtering software seems to block comments with too many links.

http://www.heritage.org/Research/HealthCare/upload/wm_2505.pdf
http://krugman.blogs.nytimes.com/2009/07/06/administrative-costs/

http://krugman.blogs.nytimes.com/2009/07/06/administrative-costs/?apage=2#comment-195423
http://krugman.blogs.nytimes.com/2009/07/06/a-bit-more-on-administrative-costs/

http://krugman.blogs.nytimes.com/2009/07/06/a-bit-more-on-administrative-costs/#comment-195793
http://www.heritage.org/Research/HealthCare/upload/bg_2301-3.pdf

Brooks:

Why does the US spend twice what other developed countries per capita per year on healthcare, yet have worse health outcomes for its people and not provide universal coverage? Again see this http://www.dailyhowler.com/dh061809.shtml

"Ms. Liasson noted pollster Stan Greenberg's assessment that people had heard about the program's "huge" $1 trillion price tag, but had not heard about the benefits of the program."

Actually, people have heard about the benefits, and polls consistently show that they are overwhelmingly in favor of a public option and other aspects of reform. What is happening is that those who benefit from the enormous inefficiency of the present system are mounting a last-minute propaganda offensive, as they did in 1993, among other things sponsoring push polls and getting the media to harp on the supposed costs in highly misleading ways. This is probably not so much to influence public opinion directly as to give cover to Senators and Congressmen who are working to write the bill in favor of the big-money interests.

It would probably have been smarter to try to pass a reform bill in an election year. This would make make it easier to expose the fact that lawmakers are not representing their constituents on the issue and to hold them accountable (the probability that any state or district is opposed to a public option for example is small, given the poll numbers). If some sort of useless bill is passed now, the issue will be dead by late 2010. The blue dogs and Republicans are counting on this.

Hardindr,

I don't know the answer to your question, although I have some general ideas/guesses; why don't you tell me if you think you know the answer.

As for the Leonhardt column, it is disappointing, because he starts out seeming like he's going to make a valid and very important point -- that health care is and must be rationed and that the "rationing" rhetoric is mostly just partisan stupidity -- but ends up spewing hyperpartisan rhetoric on his own in the form of the typical partisan, feel-good, all-gain-no-pain, unrealistic talking point that we can achieve huge savings healthcare without adversely affecting the quality and outcomes of anyone's healthcare -- in fact he goes even further, saying that opponents of more restrictive rationing (using comparative effectiveness research, or, I suppose, not) oppose "better medical care"

Listen, there are indeed tests and treatments provided that are more expensive than alternatives (including doing nothing). In some cases there are alternatives that really would be better choices in terms of superior likely efficacy for about the same or even lower cost. But cost-containment is going to require the government (and private insurers) more often saying "no" to tests and treatments that a physician has good reason to think could be the best for the patient, and it's going to mean the government reducing incentives and compensation/pricing in a way that results in less innovation and lower supply of providers, technology, etc. (See my #2a,b,c in comment here http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=07&year=2009&base_name=congressional_ignorance_of_hea#comment-6284732 ) In short, there will be a trade-off between cost and quality, even if Leonhardt and others wish to pretend otherwise.

I don't know the answer to your question, although I have some general ideas/guesses; why don't you tell me if you think you know the answer.

Here are some basic thoughts, if the blog doesn't eat my comments again.

1. Beaurocratic waste: Amongst the thousands of insurance providers and thousands of insurance plans, each has its own coding, billing and payment system. Hundreds of thousands of people are all paid to uselessly shuffle paper around all day in the health care industry. It would be much simpler if their was a single billing system, like Medicare.

2. The profit motive: Upper level-executives and major shareholders siphon away billions of dollars each year in profits from the premiums that businesses and employees use to pay for health care insurance (this happens even among so-called not for profit providers). If this money wasn't wasted on profits, then employees and their business could spend their money on other things, like higher wages or new equipment/physical capital.

3. the drug patent system: Many so called "brand name" drugs are perscribed, when generics would do the same job for less. It would be a lot simpler if the government would just socialize the drug industry, and get rid of all the marketing. Most of the basic research for drugs is done by the NIH, anyway.

4. US Doctors proscribe too many expensive tests and drugs/treatments that may not be necessary, while too many patients demand them. I recognize that many people do not get the tests or treatments that they require.

I'm not sure that in the Leonhardt column you mention above that is talking about "rationing" in the way that most people do. See here http://www.dailyhowler.com/dh061909.shtml .

Hardindr,

Re: your #1, ok, I don't think there is much opposition to the federal government can playing some role in facilitating standardization of "paperwork" and establishing (even largely funding) some medical IT system for patient record-sharing. I don't think that's a major area of controversy and debate over healthcare "reform".

Re:
2. The profit motive: Upper level-executives and major shareholders siphon away billions of dollars each year in profits from the premiums that businesses and employees use to pay for health care insurance (this happens even among so-called not for profit providers). If this money wasn't wasted on profits...

(heh, seems that someone isn't paying attention) What percent of our GDP do you think health insurance profits represent? What percent of our nation's healthcare spending?

Re: your #3, I don't know much about it, but I'm inclined to think (just intuitively) that you are understating the degree of lost useful innovation that would occur if the only pharmaceutical research being conducted were done by the federal government.

Re: your #4, obviously your general "waste" argument is quite broad and imprecise, and suggests no cause nor solution, nor does it address what "babies" come with that "bathwater" and would be lost if we eliminated much of that waste.

Re:
I'm not sure that in the Leonhardt column you mention above that is talking about "rationing" in the way that most people do. See here http://www.dailyhowler.com/dh061909.shtml

I went to that stupid website again per your link. Ironically, the post uses far too many words to make a simple point, all while harshly criticizing Leonhardt for being inconcise. If their point is that Leonhardt is invalidly conflating actual rationing with pricing as a means of allocation of goods (and of limiting the consumption of any given individual), then that is a valid criticism that I've made of others in the blogosphere (and it can be stated as concisely as I just did).

As for your #2, I'm not sure, do you know? But, I do know healthcare is a profitable industry, otherwise it would not attract high paid executives or investors. I do know that the pursuit of profit fuels a lot of waste. Executives and the shareholders who watch over them may not care how good their healthcare is as long they get their slice of the pie in the end.

For #3, a lot of current drug research involves researching so-called "me, too!" drugs that are designed only to avoid competitors patents. If you call that innovation, I've got a bridge in Alaska I'd like to sell you. I don't know why having the government fund research would end "innovation," unless you think all the NIH does is twiddle its thumbs.

For #4, the federal government is getting ready to spend a lot of money to try and determine which treatments are most effective compared to cost. However, the legislation authorizing the funding states the the knowledge gained from the research can't be used to decide which treatments should be used in the real world. I wonder who put that provision in the legislation...

Somerby's point in the link is that the people in the media trying to explain the healthcare issue are doing so in a transparently poor manner and are using language in a way that ordinary people don't. Somerby isnt' an expert in healthcare or the economy, so maybe he uses "too many words" (I thought he used just enough). Presumably Leonhardt is an expert, though he doesn't show it. I don't know if "rationing" in the sense of not being able to purchase certain health care services at any price outside of a government plan is necessary, but Leonhardt doesn't even begin to address the issue.

Re: #2, I gave you a hint, but apparently it didn't work. I discussed it upthread. Anyway, I'm glad because I realized a made a typo. Health insurance industry profits are about $13 billion, which is about 0.1% of GDP and about 0.6% of total healthcare spending (and about 1% of non-government healthcare spending). And by the way, if you add in executive compensation, it has almost no effect on those percentages because it is negligible as a percent of healthcare spending. See http://www.factcheck.org/politics/pushing_for_a_public_plan.html

Re: #3, yes, some innovation is "me too" or adjustments just great enough to extend patents, or other innovation that is worthwhile financially for the individual drug companies but not a good investment from a societal perspective. But you grossly overstep and make a sweeping generalization while falsely accusing me of doing just that (in other words, you set up a straw man). No, I not all drug company research falls into that category, and it's absurd to think it does, considering all the innovation they have brought over the past years and decades. And of course, the same can be said of other suppliers of medical technologies (diagnostic, treatment, etc.). Or do you think we had drugs, medical equipment, etc. that were just as good ten, twenty, thirty and forty years ago as we have today, or that drug companies had no significant role in that innovation? Because if you're not saying that, then you are acknowledging (at least implicitly, even if you won't admit it) that, despite those low utility innovations, the drug companies have also produced a lot of high utility innovations. And no, I didn't say or imply at all that "having the government fund research would end 'innovation'", so that was just a silly straw man on your part. I said I'm inclined to think (just intuitively) that we would lose some useful innovation if the federal government were the only entity conducting drug research. Try to pay attention and think so I don't have to point out your silly rhetorical misrepresentations and explain such simple distinctions to you.

Re: #4 you're going to have to be more specific if you're intention is to have an actual, intelligent discussion rather than just throw out rhetoric. What is it that you are saying should be done, why and how would it work, and do you see any potential drawbacks in terms adverse impact on anyone's healthcare?

hardindr,

Above comment was addressed to you.

Also, re: your last paragraph, Somerby's point takes work to sort out (at best) since those posts are filled with so much unnecessary junk, but again, although it would be correct to point out that some partisans are using the word "rationing" in stupid rhetorical ways, in that column Leonhardt is someone "in the media trying to explain the healthcare issue...doing so in a transparently poor manner [by] using language in a way that ordinary people don't", because he is equating the "rationing" of pricing with rationing in the command economy or regulatory sense, as if every family not being able to afford two cars to price (cost) is the same concept as the government saying that all families will (or can) get no more (and perhaps no less) than one car.

@Brooks:

Yeah, the phrasing is pretty awkward, but since you seem to have understood it pretty well, I don't feel too badly.

I am asserting much higher administrative costs due to redundancy, executive salaries, and the effort that it takes to deny claims. Under a public plan, the things that would not be covered would hopefully be standardized and simpler to judge, and the efforts to retroactively cancel policies through intense research and legal wrangling would be non-existent, reducing staffing.

In addition, the amount of money that went to paying claims would be reduced through the size and bargaining power of the plan, as happens now under Medicare.

I do believe that claims would be rejected less often, but more importantly, I believe that claims could be rejected with the motive of maximizing health outcomes at a constant expenditure, rather than minimizing payouts by any means necessary.

If you added another 0.6% profit to the costs after all of these possible reductions and handed them out to random rich people, I believe the public would still be better off by an order of magnitude. I don't think that's too hard to believe.

Jamaal,

Rather than throw out typical partisan talking points, let's try to think through rationally the advantages and disadvantages (and thus likely relative effectiveness) of a single government payer vs. private insurers in cost control. The following is off the top of my head, so there's a good chance I'm leaving out a couple of items, and I welcome any additions (or challenges to what I've listed).

Each individual insurer is competing to contain costs for the sake of (1) profit and (2) competitiveness on premiums. And management and staff are generally superior (more motivated to pursue and achieve organizational objectives; better skilled; better equipped) in the private sector than in the public sector. So private sector insurers, and the relevant management and staff, have both greater motive and greater ability to:
- Hold patients more strictly to the coverage and procedures of the plan by denying authorization (upfront) and rejecting claims (after the fact) that don’t comply.
- Prevent fraud.
- Determine and apply (through coverage design, authorizations/denials, etc.) cost-effective healthcare (tests, treatments).

And private insurers, although subject to substantial regulation and mandates, are less prone to political meddling that would work against all of the above.

A governmental single payer, on the other hand, would have these advantage in cost-control:
- Economies of scale (the elimination of redundancy that you point out, plus bargaining power with suppliers – to the point of price-fixing as a government monopsony, which tends to reduce quantity and quality, and also to create black/private markets, in this case a two-tier system in which those with the resources get additional/better healthcare outside the government-paid system and pay out of pocket).
- Rationing
- Elimination of profit and higher salaries/wages (although as I’ve shown, profits are only about 1% of privately-funded healthcare spending, and the much-mentioned executive salaries are negligible in that context.
- Elimination of marketing expenses
- Standardization of claims procedures, IT systems, etc. (Although much of this could probably be accomplished by the private insurance industry, perhaps with government facilitation or even funding to get around the free-rider problem and perhaps concerns about the appearance of illegal collusion, either/both of which may be what has kept private insurers from standardizing across the industry – just speculating)
- Greater aggregation of data for comparative effectiveness analysis, dissemination of findings, and application directly in coverage design and authorization decisions.
- Greater ability (if political will is sufficient) to impose models of provider incentives that contain costs (particularly shifts from fee-for-service to more fixed fee models, which will lower health care quality and outcomes in many cases and in other cases will just avoid "waste")
- Same, to some extent, for patient incentives.
- [Note: I’m not putting your typical partisan talking point of supposedly spending a lot of money denying legitimate claims, because (1) this talking point doesn’t provide magnitude so we don’t know if it’s at all significant, (2) it doesn’t address the portion of claims rejected (in dollar terms) that were indeed illegitimate, and (3) in any case, rejection of claims reduces spending, whether legitimate or not.]

How that all would likely net out I'm not sure, and it would be highly dependent on what emerged from the political process in terms of the coverage plans and practices and provider and patient incentives of the single payer entity, but I'm trying to get past the partisan talking points on both sides and have (and generally encourage) an honest, rational, reasonably objective exploration and discussion of the question. I know that such thoughtful, rational discussion and good-faith search for "truth" is more work and less fun and self-satisfying to some than is oversimplification and self-righteous rhetoric, but I'm encouraging the former.

If a reporter were to come to his editor with a proposed article titled, “President Obama is gay,” the editor would demand supporting evidence, before that article ever saw daylight.
However, if the same reporter submitted an article titled, “Federal deficit is too high,” history says the editor would ask for no supporting evidence, nor would the article contain any. The media merely assume, as a matter of faith, that revenue neutrality is more prudent than deficits.
Economics is rare, perhaps unique, among sciences, most of which demand evidence for their hypotheses. Only in economics can intuition, faith and popular wisdom obviate facts or even the desire for facts. Thus, I have had editors, columnists and reporters tell me it is “obvious” that large deficits are unsustainable, crowd out lending funds, lead to recessions, depressions, inflations and hyper-inflations. When I ask for evidence to support these views, I seldom hear from them again, probably because they feel scientific evidence is unnecessary in a science, but more importantly, they don’t have any.
Even the Concord Coalition, an organization that for seventeen years, has collected vast amounts of money to preach for federal deficit reduction, unashamedly offers no evidence to support its views. Check its website, www.concordcoalition.org, or write to them and you will see they neither offer nor have evidence.
Because our leaders parrot the economic beliefs promoted by the media, lack of evidence has contributed heavily to the government actions that yield repeated recessions. Until the media learn to ask, “What is your evidence?” we will continue to suffer periodic, economic traumas. These traumas may seem inevitable and unavoidable, but in reality they are caused by beliefs lacking evidence.

Rodger Malcolm Mitchell
rmmadvertising@yahoo.com
http://www.rodgermitchell.com

Everyone,

Apparently this whack-job Rodger (above) is posting on blogs to promote his lunacy-filled website and what must be an idiocy-filled book based apparently on the notion that we should run up deficits as high as possible (which I suppose would be infinitely high) and just have the Fed monetize whatever levels of deficits and debt we run up, which he apparently thinks would be super awesome for the economy and have no drawbacks, not even inflation.

Rodger, if you're even bothering to read this as opposed to hit-and-run blog-spamming, go join the 9/11 Truthers or the Birthers or some other whack-job group where your wild absurdity would be appreciated.

The currently proposed universal health care plan will raise taxes on those making more than $350,000 per year. "Soak the rich" is the typical, populist way to use the envy low earners have for the high earners. It's a guaranteed vote-getter.
The problem is, no one knows what "rich" means. Say you have $10 million in your IRA. Are you rich? Not unless you have other income, because IRA earnings don’t count. And, if you earn "only" $200,000 and live in Abilene, Texas you are far richer than the guy who earns $350,000, but lives in Manhattan.
The tax code is so byzantine there is no equitable way to determine who can afford what. But we do know one thing. Raising taxes on anyone -- rich or poor -- always hurts the economy, which always hurts the poor more than the rich.
Sadly, the poor don't know it. They know when they lose a job, or can't find one. They know when their salaries are cut. They have a vague realization that federal deficit spending stimulates the economy, but they don't understand that taxation – any form of taxation – is the opposite of stimulus spending and always hurts the economy. Raise taxes, and the rich (whoever they may be) will do just fine, thank you. But the poor will suffer and not understand why.
The only good news in this sad debacle is how few people actually will pay the additional tax. Ways and Means Committee Chairman Charles Rangel of New York said the tax would raise $540 billion over 10 years – a total fraud to placate the debt hawks. Aside from the fact that $54 billion per year is relative peanuts, nothing like that amount will be collected. The rich know how to avoid taxes.
So perhaps, all is well. The poor will feel good that the politicians are socking it to the rich, and some of the 40 million uninsured will gain insurance. Of course, the politicians also want to extract money from hospitals, doctors and pharmaceutical companies, so that additional insurance may buy the poor fewer doctors, fewer nurses, fewer hospitals, and fewer new drugs.
With friends like the populist politicians, the poor do not need enemies.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

To Brooks: As for lunacy, here are facts:
1. Every depression in U.S. history began with federal surpluses, and every one was cured with federal deficits.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

2. The last nine recessions all began with reductions in deficit growth, and all were cured with increases in deficit growth.

3. I have found no statistical evidence showing that federal deficits have caused recessions, depressions, stagflations, inflations, tax increases or have crowded out lending funds or have had any other negative effect on the economy. Rather than sneering and name calling, if you have actual statistical evidence, please supply it.

Rodger Malcolm Mitchell
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www.rodgermitchell.com

Rodger,

First, I'm glad to see that you are not just blog-spamming, but actually engaging on at least this blog.

Usually I'm willing to engage even folks who seem fairly clueless, but you're on an entirely different level unless somehow I'm way off in my sense of what you're saying. I think you're saying essentially that it won't harm us -- and in fact it will benefit us -- if deficits go through the roof per projections based on current fiscal policy, because we can and should just monetize the debt, and that doing so won't cause inflation, let alone hyperinflation or galloping inflation. Am I grossly misreading you, because if not, you are not worth engaging.

Deficits never have harmed us, and are necessary for economic growth. In the past 50+ years we have had periods of enormous debt growth -- Reagan's terms, for instance -- and the result has not been inflation, but rather economic growth.

Hyperinflation has not been caused by deficits. It has been caused by government money-printing in response to inflation.

In short, the inflation came first and the money printing was the response -- a most terrible response. Those governments merely should have raised interest rates to increase the value of their money, rather than printing more.

If this site allowed for graphs, I would send you graphs demonstrating what I have told you.

Pejorative phrasing like "going through the roof" is misleading. In 1980 the debt was $850B. In 1995, it was $5T -- an astounding six-fold increase in only 15 years.

Inflation remained well under control and GDP grew nicely.

Today the debt is $12T. The same six-fold increase would put the debt at $72T by 2024, which translates into a $4T average annual deficit. Would you consider this "through the roof"?

I suspect the economic results would be just as beneficial.

Debt growth is necessary for economic growth, because a growing economy requires a growing supply of money and debt = money.

We have repeated recessions because so many of our beliefs are wrong. The data exists, but intuition has proven stronger than evidence.

Faith is belief without evidence; science is belief from evidence.

Rodger Malcolm Mitchell
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http://www.rodgermitchell.com

Rodger,

Well, for one thing, your use of the gross debt figure (as opposed to debt held by the public) is a tip off that you don't really know what you're talking about.

You also seem to either be ignorant of or conceptually whacked out with regard to the projected growth in our debt-to-GDP and the severity of adverse effects that would eventually come if we stay on that course or if we try to "solve" the problem by monetizing the debt.

Good luck suckering idiots into buying your dumb book.

The problem with most blogs, including this one, is people spend too much time hurling insults and not enough time listening to, or providing, facts.

I'm sorry that "ignorant," "wacked out," "suckering idiots" and "dumb" seem to be what passes for informed conversation.

Everyone can learn. But learning involves listening to facts that may disagree with pre-conceived notions. Hurling insults may make one feel superior, but doesn't allow for learning.

By the way, from the standpoint of year-to-year percentage growth, gross debt and net debt yield essentially the same results.

Further, the debt/GDP ratio, though widely used, is misleading. If you want to know why, just ask.

Rodger Malcolm Mitchell
rmmadvertising@yahoo.com
http://www.rodgermitchell.com

Rodger,

As I said, I usually seek to engage folks substantively, but your comments here and on CG&G show such gross ignorance and/or confusion that I'm not willing to spend much time exploring whatever you would add to those notions or base on them. I responded to you initially on CG&G and a bit here, but just as I don't bother getting into deep discussion with 9/11 Truthers or Holocaust-deniers, I don't generally wish to waste time with someone who starts with obvious, utter absurdities.

If you are saying that we can continue per our currently projected fiscal course, running up debt-to-GDP to 200% or 300% or more with no end in sight, and that we just printing as much money as we need would be a great solution with no damaging inflationary effect, you are simply a nut-job. If you want to lay out a case to the contrary, I'm not stopping you. Go ahead and spew more nonsense in more detail if you wish. It might be chuckle-worthy.

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