This “end Medicare as we know it” line — and many like it (“end Medicaid as we know it,” “end carbon-based life as we know it,” etc.) — is the lead-off talking point for the entire Democratic party in response to Rep. Paul Ryan’s just-released budget proposal, “The Path to Prosperity.”
Here’s the thing: Of course he wants to end Medicare as we know it. You know why? Because the way we know it right now, the program is barreling toward insolvency.
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Personally, if I were on a plane that had one engine out and was belching smoke, I would certainly hope somebody with some judgment and competence might calmly remove his oxygen mask long enough to suggest “ending this flight as we know it.”
I should back up. In case you haven’t been paying attention, Ryan, chairman of the House Budget Committee and a would-be green-eyeshaded savior of the Republic, has come out with a 2012 budget proposal that actually averts what Ryan rightly calls the “most predictable crisis in the history of our country.”
In brief, he proposes:
• Turning Medicaid into a block grant to the states — the way we did for the immensely successful welfare reform of the 1990s — in order to allow for more flexibility and experimentation.
• Transforming Medicare into a defined-contribution plan similar to what government employees and congressmen already have. Seniors will get a direct subsidy to buy insurance for themselves (along the lines of the popular prescription-drug benefit enacted under George W. Bush). The hope is that seniors will help drive cost savings in the medical sector if they actually care about the price of services.
• Closing out various tax loopholes and corporate welfare — like ethanol subsidies — in order to lower tax rates and streamline the tax code without losing revenue.
• Freezing spending below 2008 levels for five years.
In response, Democrats have come unglued like wallpaper in an un-air-conditioned Saigon motel in August.
The Ryan plan is “a path to poverty for America’s seniors & children and a road to riches for big oil,” Nancy Pelosi announced on Twitter. Meanwhile, Rep. Jan Schakowsky (D., Ill.) proclaimed the Ryan plan a “war on seniors,” even though current seniors — and anyone 55 or older — are entirely exempt from Ryan’s Medicare proposal.
Let me say that again: No one who is currently elderly or who will be elderly within the next 10 years will see their Medicare change — at all, ever — according to Ryan’s plan.
You can hardly say the same thing about the president’s plan, or the congressional Democrats’ plan (since they don’t have one), or, most importantly, the status quo — because under them, our metaphorical plane will crash into a mountainside of insurmountable debt. That’s why Ryan’s plan is not an attempt to destroy the social safety net, it’s an attempt to mend it.
(Oh, and since only Republican talking points are subject to strict scrutiny from the “objective” press, let me quickly rebut Nancy Pelosi & Co.’s nonsense about “big oil.” Oil companies get the same business tax breaks as every other company. These are mostly what Democrats mean when they talk about giveaways to big oil. The Ryan plan would rightly eliminate many such breaks, while lowering the corporate-tax rate to a level competitive with other industrialized nations. The only “road to riches” for the oil companies in the Ryan plan is its call to allow more oil drilling on American soil, which, yes, would generate profits for oil companies — and tax revenues for the government and jobs for Americans and lower gas prices, too. The villains.)
But, but, but, sputter Ryan’s detractors, we can’t rewrite the social contract between the government and our seniors. Again, we’re not talking about that. We’re talking about revising the arrangement between the government and people who will be seniors more than a decade from now.
Regardless, let’s talk about this solemn promise in a bit more detail. Democrats sound a little like the passenger on the failing plane who complains, “You can’t end this flight as we know it! The airline promised we could get to Cincinnati!”
I’ll give you a hint what’s wrong with this. The correct response to such complaints isn’t, “Oh, they promised? Well, let me tell the captain to stick to his original flight plan. I’m sure he’ll be delighted to violate the laws of physics in order to honor that promise.”
All Republicans should explain the alternatives as clearly as Jonah.
Of course various leftists will insist the plane is fine and we'll be in Cincinnati soon right up until the crash. (Time for the Tea Party to say, "Let's Roll?")
I would like to opt into Ryan's plan, because Medicare isn't accepted by many doctors, and insurance alone will not help. I would need to get actual care.
The shrieks, screams and simplistic talking points are simply unsustainable. What Paul Ryan has done is to tee up the national adult conversation we need to have about the fiscal future of the country. The vast majority of Americans are already aware that we have a huge problem. The decision point for them about solutions is Nov 2012. It didn't take them a year and a half to decide that the rosy promises made about Obamacare were false. The American people are engaged now and aware they were mislead before. Bumper sticker talking points just won't cut it any more.
Even Ryan's plan doesn't even come close to addressing the problem since it doesn't really take a bite out of any entitlements until 2022. We'll blow up years before that.
Inflation is coming on strong right now too as the government desperately tries to print it's way to economic recovery.
Widespread awareness of an inevitable financial collapse will overwhelm the left vs. right debates very soon.
I think rather then a plane, the Titanic is a more apt scenario. The republican plan:
55 and over - You are offloaded on the Carpathia immediately to continue your voyage.
45 and under - You are thrown a life preserver giving you time to sink or swim.
46 to 54 - Your luggage is confiscated to give to the other two groups, then you are sent by gunpoint to the bowels of the ship to turn the propeller by hand and manually control the rudder. Poison gas is sent in just to make sure of your demise.
The democrats plan - Full steam ahead to the iceberg. Lets put all the coal dust where it can best explode on impact.
For those 45 and under or 55 and over the republican plan works better. For those between 46 and 54 the end is the same, death, but the democrats plan at least does it quickly.
Between 46 and 54, you don't have the time to adjust for the elimination of your health plan and social security like the younger people do, and you don't get the "free" ride those over 55 get. All you do is get to pay for the free ride of those over 55.
While everything Jonah writes about the Ryan roadmap is accurate as far as it goes, it's important to keep in mind that the federal spending it keeps and enshrines drives the debt up by $5T-6T over its first decade, then continues to run in deficit (albeit at relatively lower annual levels of 1-2% of GDP) well into the 2030s.
We still arrive at the same location as the Administration envisions in its current projections; we just get there a little bit later under the Ryan roadmap. It's not as bad as our current path, but it's also still fundamentally unserious -- as is =any= budget plan that continues to increase our already unsustainable debt levels.
MikeB - You're correct. Jonah doesn't know how oil depletion allowance works. Sad. For the rest of you - the company writes off its costs to drill and complete a well, at the rate the deposit is being used up.
Mercury - the only inflating costs are for raw materials (steel, copper, ...)and oil. Metals are driving by the demand in Asia. Oil is driven primarly by political uncertainty in the Middle East. In North America, we still have lots and lots of capacity sitting idle, so currency driven inflation is remote.
Under percentage depletion, the deduction for the recovery of one’s capital investment is a fixed percentage of the gross income (sales revenue) from the sale of the oil or gas. For oil and gas royalty owners, percentage depletion is calculated using a rate of 15% of the gross income based on your average daily production of crude oil or natural gas, up to your depletable oil or natural gas quantity. An attractive element of percentage depletion is that the cumulative depletion deductions may be greater than the capital amount spent by the taxpayer to acquire the property.
Taxable Income Limit
There is a taxable income limit for oil and gas royalty owners. Your annual deduction for percentage depletion is limited to the smaller of the following:
100% of your taxable income from the property figured without the deduction for depletion
65% of your taxable income from all sources, figured without the depletion allowance.
You buy a working interest in an oil well for $100k and your share of the income it produces is $100k. You get a $15k deduction year after year. The deduction doesn't end after you recover your $100k investment.
Now do you get how it's not the same as other deductions? Once you're done depreciating a building or a chair, you're done. Not so with oil.
Alternatively, Jonah does know, and see the more favorable oil depletion regime as intended to mitigate the massive risk associated with trying to find and develope the oil in the first place.
Part of the industry's argument for breaks like this is the highly capital intensive nature of the work, and the corresponding historically unimpressive RoE the industry suffers.
Personally, I'd rather see the de facto subsidy removed, but that comes more from a free-market perspective rather than an "eat the oil rich" perspective. And if we're going to be against subsiding U.S. businesses for ideological reasons, there are better targets (cough, agriculture, cough)...
About 15 years ago, when I was in the Navy, I informally polled people my age and younger--early to mid 20s at the time. Unanimous consensus:
a) we'll never see any of the money we pour into government for SS/Medicare;
b) we need to fund our own future.
People are willing to listen to things like Ryan's roadmap, because they understand realities--even the minorities Democrats like to talk down to.
Republicans just need to do message correctly and not cave in.
I wish everyone here thought like Western Palladin, who acknowledges that government should help mitigate the consequences of massive risks taken by private businesses in enterprises that the public at large considers worthy of government support.
Mike B, always towing the liberal line and wanting the world to be something it isn't. Mike, you live in a world as it is, wishing for all of your various alternative universe scenarios does nothing but prove you can't deal in reality.
As a counter argument, using your method, we should have been using hydrogen all along, no waste product and endless supply, Duh.
If Ryan's Medicare plan is so great, why does he make us wait 10 years to get it?
Because it's great if you plan correctly for it. The current system encourages people not to plan at all.
Look at it this way. If I offer you a 75% subsidy to buy a $250,000 in cash (no taking out a loan) home today but you have to cover the rest could you use it? Now, if I told you I'll give you that subsidy in 10 years to buy a house could you use it in 10 years?
Maybe, maybe not but for the typical person the odds of the later are much greater because you'll have the opportunity to plan for the event.
Finally current federal and Congressional retirees are on essentially the same plan. You might ask them their opinion of it.
No other industry gets to deduct more than the actual cost of their investment in determining their taxable income - only oil and gas. Percentage depletion should go.
A very simple solution would be to limit the total amount of the deductions to the total capital cost of the investment, even for royalty owners. (Cue screams of outrage from the oil patch.)
If we are going to use airplane analogies, the Ryan plan sounds like those of us who are 55 and older are being transferred to a plane that is being held up with chewing gum and bailing wire and being flown to Cincinnati in that.
Why should 55 and older be exempt from Ryan's plan? Why shouldn't I be able to choose plans and receive premium support from the Federal government like the rest of the people? This plan sounds a lot like Medicare Advantage, and if it is a lot like the Congressional and Federal employee health plans, I want in on that. Why should I be stuck with a system that will still be headed for insolvency?
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