I don’t think it would shock anyone to hear that the media sometimes use sensationalized terms in order to invoke more interest in a subject matter and to create faux-drama. During the past 3 months of election coverage we have seen pundits blatantly pretend as if the race was even for the purpose of increasing viewership. However, one of the most conniving of media ploys isn’t as visible as the above case. It comes from showing only the most extreme sides of an argument, using terms that infuriate or rally either side of the argument, and not explaining the reality of a situation.
During the debt crisis negotiations we heard a lot of noise and fury over the idea of cuts to entitlements and social programs. This was an opportunity missed by the media to explain what the cuts really mean. In a budget there is always a baseline of expected growth in any analysis. The budget designer always assumes that GDP and inflation will incur anywhere from 2-4% increases annually without having to add any new functions to the department.
What has been painted out as “cuts” in proposed budgets should really be noted as “delays” or “pauses” in growth. Do the delays cause budgetary constraints? Yes, because as noted above if you do not keep up with the pace of growth then you are effectively causing a cut. However, it doesn’t necessarily mean that the department or program will receive less money in future years.
There has been a lot of talk about raising the tax rate on the top 2%. I support this idea because there are tough solutions necessary and those who have reached the pinnacle of American success should want to be the leaders in setting this country back on track. These tax changes, and possible loop hole reforms, could bring in around $100 billion annually over the next 10 years. Unfortunately, our deficit is approximately $1 trillion for 2013. This 10% is a good start but it is just that, a start.
The biggest single items, and therefore the easiest to point to and correct, are the entitlements of Social Security, Medicare, and Medicaid totaling approximately $1.6 trillion annually. Whoa whoa whoa, no we are not going to all together cut those because they are important programs that through the past four recession cycles have proven to be very valuable in setting a bottom catchment for sudden economic shifts. To see the value of an economic safety net please see the free market laissez faire policies of the late 19th century and the devastating cyclical depressions that were characteristic of this period.
We don’t have to necessarily “cut” the programs to make them stronger. If you look at Social Security for instance, the intake annually for the program lags behind the payments for the program by approximately two years. We need to find a way to get the two lined up together, and thereby save the $150 billion deficit annually. You can do that by slowing the growth in the program from 6% to 3% annually over the next 7 years which would make the program neutral by 2020 and save on average $50 billion annually over that time (and nearly $200 billion in future years). In order to make this work, we might have to increase the age of recipients from the current 66 years (and some change) to a hard line 70 years old. The program was initially created not as a retirement plan, but as a safety net for elderly citizens who could no longer work after the age of 62 due to health conditions. In the 21st century this is no longer a valid argument, atleast at that age, and is currently viewed more as a retirement plan. Delaying this to age 70 at the same time as slowing the growth rate could relieve current recipients of reduced funds.
We also need reform of medicare, but unlike social security it isn’t as simple as defunding the program. Medicare does not have the benefit of selecting the value it will spend, it is dependent on how much medical service any given person might require. You can increase the age requirement for medicare slowly as noted for Social Security, however doing so does not address the true cost of the program. We have to address comprehensive medical reforms. We have to stop throwing money at the problem and start providing metrics for recipients that reflect a performance based criteria.
What does that all mean? It is no shock that the more unhealthy a person is the more costly they become to the system on medicare. There is still a factor of chance in much of medical spending, but for the most part systematic obesity, drinking, smoking, lack of movement, and avoiding check ups are all the main drivers of catastrophic medical cost. The American principal is against taxing those or outlawing vices that are part of our freedoms, as it should it be, but it is easier to catch a fly with honey than vinegar. By incorporating a program of annual checkups that also review a patients overall wellness through a series of metrics, decided by the medical community and not government officials, we can create an added benefits program that pays medicare recipients to stay healthier.
I know this sounds crazy, to save money lets pay people more money, but it has been proven to work in several private industry cases. The health insurance industry has already incorporated this idea in programs like pedometer tracking, annual check up deductions, etc. The car insurance industry does this through programs like safe driver discounts, ticket point metrics, etc. In fact a study in 2012 by the National Highway Traffic Safety Administration found that paying drivers small amounts of money to drive slower was more effective than penalizing equally small amounts of money. If you tell a medicare recipient they could get enough money to get a free trip to Aruba by losing 15 pounds, reduce their blood pressure, and get an annual breast exam/colonscopy/other screening then they will be a lot more likely to focus on their own health. By making the program performance based we can reduce the cost by providing recipients more control.
There are many, many ideas out in the world about what we can do to sensibly bring our deficit down. We in the media need to stop taking battle lines, presenting only the extremes in the arguments, and start looking at the other sides ideas. Raising taxes won’t get us to the end goal. In fact the President’s current proposed budget does not get us to a surplus in the next 10 years (though in many ways this is a political move to allow for space to compromise). The conservatives are right, we must do as generations in the past did and take some accountability and sacrifice in our own lives. This doesn’t have to be devastating as the media are portraying it as, it can be done slowly and fairly without necessarily cutting any funds.
Source Presidents Proposed Budget