Medicare, the Deficit, and Political Playacting

No doubt you know by now that the Chair of the House Budget Committee, Representative Paul Ryan (R-WI), has proposed to reduce the federal budget deficit by eliminating Medicare for everyone younger than 55. Here is a link to the proposal. The House of Representatives has actually passed this proposal with every Democrat and 4 Republicans voting No. It is going nowhere. The Senate will not pass it, and President Obama singled it out for criticism in his speech on the budget last week. Medicare is extremely popular, and Republicans who voted for it drew criticism in their town meetings during their recent town meetings.

Nevertheless, the Republicans have accomplished one of their goals. They now have everyone thinking that Medicare has something to do with the deficit. It does not! The basic parts of Medicare, covering physicians services and hospitalization, are paid for out of the trust fund with money from the Medicare tax we all pay. That money cannot be used for anything else, only for Medicare. Right now  that fund is in surplus.

Now there is a sense in which you can add up all federal expenditures and federal revenues, including both Medicare and Social Security, and call the result a deficit or a surplus. However, that is just an accounting trick. If those part of the budget that are not either Medicare or Social Security (or a few other, much smaller trust funds, like the one you contribute to if you buy a duck stamp) are in deficit, the government will still have to borrow to pay for them.

So if we want to reduce the deficit, we have to look elsewhere. And there are really only two places to look: stopping all these wars, and ending the Bush tax cuts. Other cuts can be made, but there is not enough money there to have an impact on the deficit.

As I’ve said in other posts, I think a deficit that creates jobs would actually be good right now, but that means the money has to be spent productively. Giving it to the super-rich doesn’t provide any stimulus at all, since they do not increase their consumption, they just invest it to make even more money. So ending the Bush tax cuts for the rich today would not hurt the economy.

There is a problem with Medicare. The trust fund is in surplus now, but it is declining; present estimates are that it will run out in 2029. That gives us some time to find solutions, but there is no need to end the program. Obama’s health care plan, which goes into full effect in less than 3 years, saves some money already. In addition, we can get big savings by allowing the government to negotiate prescription prices. (Everyone knows that prescriptions are cheaper in Canada, but sometimes we forget why: it’s because Canada makes the big drug companies sell at the lowest price that lets them make money, while Congress requires Medicare and Medicaid to pay them their asking price. Go figure!) We also need to reduce health-care profiteering radically. There’s a good reason why more and more non-profit hospitals are being taken over by profit-making corporations: there is a lot of money to be made.

There are many other ideas out there, and they are all worth considering. My point is not that I have the answer, just that we can solve the Medicare cost problem without ending the program. And let’s be clear about that. Ryan’s proposal does end Medicare. He claims he is trying to save it, but he’s not. He wants to end it and replace with something completely different – instead of paying your medical bills, with the usual deductibles and copayments, the new “Medicare” would give you a coupon for a fixed amount, good for the purchase of health insurance. If health insurance costs more than your coupon, you have to pay the rest yourself.

Moreover, the value of each year’s coupon increases at a set rate that is less than the annual increase in the cost of the insurance – so every year either you have to pay more yourself, or you have to switch to a plan with poorer coverage. That’s noe Medicare.

Even though people are rejecting Ryan’s plan, if we end up believing that Medicare is a big part of the deficit, we will think it has to be cut. That’s the sneaky victory that Ryan is putting across on the public.

Why the US Should Care about Democracy in Bahrain

If you follow me on Twitter (@jcberg) or read my Facebook page, you probably have noticed that I have been posting a lot of news stories about Bahrain, and maybe you wondered why. I want to explain my reasons for doing this.

When the massive pro-democracy protests in Bahrain broke out February 14, I knew very little about that country – just that it was small and located somewhere on the Arabian Peninsula. I didn’t even know that it was an island, or that it was the home to the US Fifth Fleet.

However, as I learned more, I came to think that we Americans have a special responsibility for what happens in Bahrain, for several reasons:

  • Because, as mentioned, it is the headquarters of the US Fifth Fleet. That means that the overwhelming military presence on the island is the US; anything they do, they do with the tacit approval of our government.
  • Because both the king of Bahrain and his patron, the king of Saudi Arabia, are completely dependent on the US for survival. We sell them almost all their weapons; without those, as absolutist rulers of small states, they would be swept away in an instant.
  • Because successive US governments, including the current one, have endorsed brutal despotism in Bahrain (and in Saudi Arabia) so that the profits of the oil companies will not be threatened.

Most Americans are like me – knowing nothing about Bahrain – so I felt obligated to try to spread the information around. In particular, I try to reenforce a few points:

  1. Bahrain is not a “moderate” country; when people say that, they just mean that it is friendly to Israel (and Israel is not moderate at all!) It is an absolute monarchy (there is a parliament, but the king appoints most members and can dismiss it at any time), and rules by violence and brutality. The king hires foreign mercenaries from Pakistan and other countries, so the troops will have less compunction about shooting down Bahrainis.
  2. This is not a sectarian conflict between Sunni and Shia. The royal family and the elite are Sunni, while a big majority of the people are Shia, and Shia do face a lot of discrimination – but a persistent sign and chant in the protests has been “No Sunni, No Shia, Only Bahrainis.” Some Sunni have been taking part, as well. However, the press in Bahrain is very tightl controlled by the king, and they have convinced many Sunni that the protesters are Shia Islamist fanatics controlled from the outside (see next point).
  3. Iran and Hezbollah have nothing to do with it. The government of Iran has been making statements about Bahrain, but these statements are condemned by the protesters whenever they make them.
  4. The goal of the protesters is democracy, not a religious state. Most want a constitutional monarchy, though a few have been so angered by the king’s brutality that they now want a republic.
  5. The King and other monarchists are out of touch with reality. They like to play that they are real royalty (the king proclaimed himself a king about 30 years ago). Right now their main concern is to bring a Grand Prix auto race, canceled because of the protests, back to Bahrain. The king likes to socialize with the royalty of Europe, and is making big plans for the royal wedding in England, to which he has been invited. (British activists are demanding that the invitation to this butcher be revoked).

There has been a near-blackout of the repression in Bahrain, which is very severe right now. Bloggers and twitter-users are being arrested and tortured; doctors and nurses are arrested if they try to treat people wounded in protests; and everyone is living in fear. This may be starting to change. There was a front-page story in the New York Times today, and a strong op-ed by Amy Goodman in the Guardian. We need to keep this up! Obama’s policy on Bahrain has been pretty cynical; there’s even a rumor that he told the king of Saudi Arabia that he would accept their invasion of Bahrain (they now have over 1,000 troops there) in return for Saudi acceptance of the intervention in Libya.

But Americans do believe in democracy, and if the current situation in Bahrain gets enough public attention, Obama will have to change his position. He could probably end the repression with a phone call; let’s make him lift the phone.