Think about you’re out within the jungle and that in entrance of you is a steep, miles-long cliff on both facet of your location. You see a stampeding herd of elephants coming your manner. Except one thing not possible occurs, they’ll quickly be trampling you. Must you act on that data now or wait till the elephants are on prime of you? Straightforward reply, proper? It’s best to act now.
The approaching shortfall in revenues to pay for Medicare and for Social Safety is like that herd of elephants. We are able to see it coming and if we do nothing, it is going to be right here. Our one huge benefit over the elephant situation is that we’ve roughly one decade to make reforms in order that we don’t get “trampled.”
That is from David R. Henderson, “Medicare and Social Safety: Sort out Them Now,” Defining Concepts, April 6, 2023.
Within the piece I lay out why it’s significantly better to chop Medicare and make it right into a system of per-capita subsidies than to chop Social Safety. Right here’s a taste:
For those who had to decide on between chopping the expansion of Medicare spending and chopping the expansion of Social Safety spending, which might be the higher alternative? You may suppose there’s no solution to inform. But when we settle for the concept that persons are, on common, higher judges of their very own welfare than the federal authorities is, then there’s a transparent reply: reduce Medicare spending and, on the identical time, make it a program of per capita subsidies.
Right here’s why. When Medicare beneficiaries use this system, they’re spending different individuals’s cash. The co-pays and deductibles they pay are sometimes a small fraction of their medical payments. And we spend different individuals’s cash a lot much less fastidiously than we spend our personal.
Additionally I appropriate a typical false impression concerning the Greenspan Fee on Social Safety and provides due credit score to a Texas Democratic Congressman named Jake Pickle.
Lastly, I lay out why elevating the FICA tax on the most-productive individuals within the economic system is a very dangerous concept.
Learn the entire factor.