This blog is a departure from the usual menu; it has nothing to do with the beef business, at least directly. But it does consider an issue important to us all—federal spending and how to pay for government programs.
It appears that the Darling of the Democratic Party as well as the popular media, Rep. Alexandria Ocasio-Cortez (D-N.Y.), knows every bit as much about economics as she does about science. You’ll recall that she was one of the perpetrators of the Green New Deal, which ignores real science in favor of political science.
She has also weighed in, among other things, on how to solve the Medicare crisis, which primarily revolves around keeping it funded. According to Ernie Goss, who holds the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, almost all of the major Democrat candidates for the party's presidential nomination support expanding Medicare to cover all U.S. residents. Medicare is already the second largest program in the federal budget.
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“The Congressional Budget Office (CBO) projects [Medicare] costs $583 billion in FY 2018, representing 14% of total federal spending. Adding to this burden, the Mercatus Center at George Mason University estimated that ‘Medicare for All’ would cost taxpayers approximately $3.3 trillion per year, or 75% of total federal spending of $4.4 trillion in 2019,” Goss writes.
How to pay for this? Ocasio-Cortez and other Democrats have proposed that spending growth on social programs can be paid for by printing more money and/or raising income taxes.
Really? I wonder if anyone ever explained to her the economic realities of those actions.
It certainly wasn’t Goss. However, he does agree there are no good ways to pay for expanding social programs like Medicare.
“There really are only three ways to pay for the Medicare expansion: 1) Printing more money and spurring excessive or hyper-inflation, 2) Issuing more debt and ballooning interest rates, and 3) Raising the tax burden on workers. All three outcomes would slow investment and economic growth,” Goss says.
“The oddity of Medicare for All is that the biggest supporters are young citizens, the same individuals who will have to pay for the rocketing debt burden with either excessive inflation, higher interest rates, higher taxes, or a combination of all three.”
I wonder if those young citizens, or Rep. Ocasio-Cortez for that matter, ever took a class on civics, basic economics and/or the economic history of the United States. Or maybe schools and colleges no longer teach basic economics and civics. If true, that’s a very frightening thought.
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Don’t misunderstand. I’m not suggesting that Medicare or other social programs are not needed. But do we need to expand them? At what cost?
As I recall, the U.S. has already experimented with printing more money and that came out badly. The federal deficit is out of control—excessive federal spending has ballooned the October to January federal deficit by 77% over the deficit for the same period last year, Goss says. These are not the answer.
Which means, of course, if we want to keep funding government social programs such as Medicare as we now know it, much less expand it to everyone, we’ll have to pay more taxes. Question is, who will bear the brunt of those increased taxes?
Medicare for All, which seems to me is just another version of Obamacare, is simply a bridge too far.