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Sunday, April 10, 2011

Dean Baker: Analysis from Another Planet

via Portside

David Brooks Brings You Analysis from Another Planet:
Praises Representative Ryan

By Dean Baker
Center for Economixc and Poicy Research
April 8, 2011

According to David Brooks, in the days following the
release of Representative Ryan's plan to essentially
end Medicare and Medicaid to help finance more tax
breaks to the wealthy:

"the Democrats are on defense because they are
unwilling to ask voters to confront the implications of
their choices."

I can't claim to have done a comprehensive survey, but
all the Democrats I know think that they were handed
the political gift of lifetime, as Representative Ryan
has explicitly proposed doing exactly what Democrats
have accused Republicans of wanting to do for decades:
eliminate health care programs that are essential for
middle class workers in order to give more money to
their wealthy contributors.

Things may be different on Mr. Brooks' planet, but here
in Washington there is no shortage of politicians
willing to denounce a plan that would require most
seniors to spend most of their income on health care,
if they want an insurance package equivalent to the one
provided by Medicare. The more obvious shortage is of
Republicans who are openly willing to embrace the Ryan
plan and say, "yes, we are the party that wants to
eliminate Medicare and give more tax breaks to the
richest people in the country."

Brooks again ignores the most obvious point that health
care is not a sidebar in this story, it is the story.
If the United States paid the same amount per person
for its health care as do people in other wealthy
countries, then we would be looking at huge budget
surpluses not deficits.

He also tries to pass off to NYT readers nonsense from
his Tea Party friends:

"The president's health reform plan relies on a
centralized board of technocrats to restrict choices.
The Ryan plan relies on a premium support model that
would allow individuals to exercise greater control
over what sorts of procedures they would not be covered

Can we get out the extra large ridicule box for this
one? There is nothing, as in zero, in President Obama's
health care plan that prevents any individual from
getting any health care procedure that he or she wants
to pay for. The "centralized board of technocrats" he
mentions would determine the procedures that Medicare
would pay for, not the procedures that individuals
could receive.

Obviously this will be a very serious restriction for
people who cannot pay for expensive procedures on their
own, but Ryan's plan does not change this situation one
iota. It gives people a choice of insurance companies,
each of which will rely on a board of technocrats to
restrict choices.

Using the Tea Party terminology, if President Obama's
plan is viewed as creating death panels, then Mr.
Ryan's plan gives seniors a choice of death panels and,
according to the Congressional Budget Office, we pay
trillions more for this choice.


Some folks have asked me about the generational equity
concerns raised by Brooks who tells readers that:

"two 56-years-olds with average earnings will pay about
$140,000 in dedicated Medicare taxes over their
lifetimes. They will receive about $430,000 in
benefits. This is an immoral imposition on future

There are two important points here. First, most of
that $430,000 is over-payments to drug companies,
hospitals, doctors and other health care providers. If
these two 56-years-olds were buying their health care
in Canada, Germany, or any other country with
comparable health care outcomes, they would pay less
than half as much for their care. Should my older
brother feel that he has done me an injustice because
the government gets overcharged for his health care?
Maybe on Planet Brooks, but that's not an easy one to
see here on Earth.

The other point that Brooks seems to have missed is
that people are getting richer through time. The
lifetime earnings for two average 26-year-olds will be
more than $1.3 million greater on average than the
average lifetime earnings for today's 56-year-olds. If
the 26-year-old gets to pocket this much more cash,
simply by virtue of being born later, is there any
reason for the 56-year-old to feel they have committed
an injustice because they got a better deal on their

Now, there is a serious issue of inequality that must
be considered. As a result of the fact that a larger
share of income is being distributed to those at the
top, most 26-year-olds may see little of this $1.3
million gain in earnings. But this is an issue of
intra-generational inequality, not inter-generational
inequality. On this dimension, Representative Ryan's
plan is a huge leap in the wrong direction.

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