Our current unfunded entitlement liabilities run about $100 trillion.
President Obama proposes to “strengthen” Medicare through a price-fixing panel called the Independent Payments Advisory Board (IPAB).
CBO took a look at IPAB and estimated that it might save us $28 billion over the next ten years, i.e., next to nothing.
And then it took another look and lowered its estimate from next to nothing to nothing:
For 2015 and subsequent years, the IPAB is obligated to make changes to the Medicare program that will reduce spending if the rate of growth in spending per beneficiary is projected to exceed a target rate of growth linked to the consumer price index and per capita changes in nominal gross domestic product. CBO’s projections of the rates of growth in spending per beneficiary in the March 2011 baseline are below the target rates of growth for fiscal years 2015 through 2021. As a result, CBO projects that, under current law, the IPAB mechanism will not affect Medicare spending during the 2011-2021 period.
You have to admire the president: To go out and give a morally preening speech like that, with IPAB front and center, on the assumption that nobody’s reading the footnotes.
I don't think he cares if anyone reads the footnotes. What can we do about it, anyway? We aren't going to storm the White House, haul him out and throw rotten eggs at him. The worst we can do is not re-elect him in 2012, by which time he will have accomplished a large part of his goal, and will have a cushy retirement as the first black ex-President. Bill Ayers can write a couple more memoirs for him and he can play even MORE golf.
Personally, I wish he and Janet Napolitano would take Tim Geithner and Ben Bernanke (and Pelosi and maybe even the whole Congress) and go camping for a few weeks at a national park in southern Arizona. Without the Secret Service.
Reply to this commentLinkReport AbuseI am just waiting for the bond market to revolt. There is no point for investors to wait any longer after Obama's speech.
Reply to this commentLinkReport AbuseI can't wait to see who the members of the board will be. Lets see... seat for the Drug companies.... seat for the AARP... seat for the Unions.... seat for the large Dem campaign contributors... did I forget anyone?
Reply to this commentLinkReport AbuseMedicare spent 28 billion on dialysis alone in 2010, because it has to pay after 30 months on private insurance or Medicaid. They covered 500,000 patients and each one consumes about $50,000 to $250,000 in care each year.
Reply to this commentLinkReport Abuserimfrel is really on to something. Maybe Obama, Geitner et al could take a canoe trip down a river someplace in darkest Georgia. They could do with some of that good old southern hospitality.
Obama's dishonesty is breathtaking. He understands that a few of us will read the footnotes and assumes that those few are politically insignificant. He thinks he can get away with pulling the same con on the American public a second time and David Brooks agrees with him (for the little that's worth). But it's not that easy to convince everyone to ignore the man behind the curtain once they've seen him clear as day.
Obama has tried lying his way through a political problem before. That was his approach to selling Obamacare. All the smart people were sure it would work; it failed spectacularly. Every lie was another wound to his standing and Obamacare is still unpopular. The President hasn't recovered and taking the same approach to the deficit wars will only hurt him more.
Reply to this commentLinkReport AbuseAnd David Brooks continues to claim that Obama is brilliant and sincerely believes we can maintain Medicare. What part of $100 trillion does The One not understand?
Reply to this commentLinkReport AbuseI think we all have to get comfortable with the idea of the country going bankrupt. The nation is at a point where the socialists wanted us: so dependent on government for everything that we dare not end or curtail our "entitlements".
As much as I believe in the Tea Party movement (I am a member), ultimately, the average citizen will not gut his personal financial needs for some abstract "future".
I say, the faster we bankrupt it, the better. Then we can start over that much faster. I seriously hope the bond markets freak out over the debt limit thing and the world yanks away our credit cards.
Reply to this commentLinkReport AbuseKevin:
IPAB savings were always long-term. CBO short- and medium-term projections were never important. The long-term savings on IPAB alone account for closing one-seventh of the long-term fiscal shortfall.
How do I know that? Easy. I read the IMF paper you quoted two blog posts under this. Page 27
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