Medicare: Did You Really Pay For That?

Dollar Bills SC Medicare: Did You Really Pay For That?

Editor’s note: A version of this article first appeared at Forbes.com.

Last summer, Barack Obama riled a lot of entrepreneurs when he got carried away at a campaign event and told any American who had built up a successful enterprise that “you didn’t build that.” An even greater backlash awaits any politician who dares to tell Medicare recipients “You didn’t pay for that”—for there are far more seniors than entrepreneurs in our country.

Time after time during Election Year 2012, seniors and near-seniors reacted to the slightest mention of Medicare reform with indignation and the emphatic insistence “Don’t you dare touch Medicare; I’ve paid for it!” There is only one problem with that statement: In a mathematical sense, it isn’t true.

The amount that American workers have paid and are paying into Medicare isn’t enough to fund all the benefits that are being paid out to seniors under Medicare. The trustees of Medicare have stated that the promises they have made exceed their projected revenues by tens of trillions of dollars. Senator Tom Coburn (a physician in private life) has estimated that the average American couple contributes approximately $110,000 to Medicare over their working careers and receives over $330,000 of Medicare benefits. On Feb. 20, USA Today cited Urban Institute data pegging those same figures at $88,000 and $387,000, respectively. There are differing estimates of the size of the gap, but clearly Medicare suffers from an unsustainable funding deficit.

Let me hasten to say that I have sympathy for those who make the “I paid for it” case. Through decades of their working lives, millions of seniors paid into the system and were promised that Medicare would be there for them starting at age 65. These citizens played by the rules, acted in good faith, and held up their end of the bargain.

The problem is that the politicians in Washington have not acted in good faith. Instead, they have committed a gigantic fraud by underfunding the program. The fact of the matter is that we’ve been swindled, and the anger and sense of pending betrayal that many seniors feel is understandable. At the same time, we the people need to accept some responsibility for this sorry state of affairs.

Certainly, the members of Congress and presidents who allowed the imbalance between Medicare income and expenditures to get so out of whack are ethically culpable. Still, “we the people” share some responsibility for the Medicare fiasco. The mistake was naïveté and gullibility. We can see now what an enormous mistake it was to trust politicians’ promises.

Regrets and recriminations aside, the question now is: Where do we go from here? What are our options? The only way that the oncoming flood of baby boomers will be able to receive all the Medicare benefits that they were promised would be to either increase payments into the system or reduce disbursements from it.

We already have seen how volatile, contentious, and divisive the political strife over Medicare has been. Sadly, it is likely to get much worse. Generations will be arrayed against generations.

On the one side, gray-haired Americans will demand that the promises made to them, and for which they upheld their end of the bargain, be kept. The progressives have played a masterful political game; they will have huge numbers of average Americans who think of themselves as anything but socialists egging them on and supporting them in their quest to absorb and appropriate more property. The great American middle class, which has the most to lose when Big Government supplants the private sector, will be energetically demanding some of the very policies that will crush the life out of the economy.

On the other side, at some point, the younger generations are going to rebel against the debt slavery to which they have been subjected, and they will push back as a matter of economic survival and a desire to feel as free as their elders once did. Responding to pressure from the young, the federal healthcare blob inevitably will ration health care.

What a terrible price Americans will pay for falling for the seductive promise of a benign government caring for us all in our old age. Not only will the country be poorer and less free, but the quality of health care itself is bound to decline—all while our society is riven between young and old when the common enemy is the idea that the compulsory economic relations imposed by government comprise a way of life that is somehow more just, more harmonious, more helpful, and more prosperous than a society in which each individual’s life and property are his own and economic exchanges are voluntary (i.e., a society in which people are free).

 

Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and fellow for economic and social policy with The Center for Vision & Valuesat Grove City College.

Erasing Reagan? The Illiberal War On Truth

Ronald Reagan Erasing Reagan? The Illiberal War on Truth

The prospect of four more years of Barack Obama in the White House has caused several conservative voices (among them The Wall Street Journal’s Daniel Henninger, Fox News commentator Charles Krauthammer, and noted Ronald Reagan scholar Paul Kengor) to opine that President Obama’s second term portends the passing of the Reagan era, the reversal of his pro-growth policies, and the attempted burial of Reagan’s credo that “government is the problem.”

None of this is news. It is a given that Obama and his fellow progressives reject Reagan’s values and philosophy. They will continue to try to expand government.

There is, however, a more sinister dimension to the progressive agenda: Rush Limbaugh asserted that Team Obama wants to “erase every trace of Reagan from America”—not just to repeal and reverse Reagan’s policies, but to engage in wholesale historical revisionism by obfuscating Reagan’s record and reshaping public opinion about him. It serves the progressives’ interests if they can obscure the fact that Reagan’s policies of lower tax rates, a sound dollar, and reductions in governmental regulatory micromanagement enhanced prosperity and raised standards of living. Those of us who lived through the Reagan years remember the resulting economic growth, but nobody under the age of 30 has first-hand knowledge of those years.

Is it really possible that the left could rewrite the history of the Reagan presidency? Absolutely. They’ve already perverted the record of earlier Republican presidents. Take, as Exhibit A, Warren G. Harding—the president who always appears at the bottom of presidential rankings.

Yes, I know there were a couple of crooks in Harding’s cabinet. Those odious men betrayed the trust of both a president and a nation. But while they gained a few hundred thousand dollars, Harding’s policies enriched the American people by billions. Harding entered office in the midst of the Depression of 1920-21—a downturn as rapid and severe as any in American history, with GNP contracting 24 percent and unemployment more than doubling to 11.7 percent.

Harding’s policy response was to get government out of the way and let free markets make the necessary adjustments. He induced Congress to slash federal spending by 40 percent in two years and lower the top marginal tax rate from 73 percent to 56 percent (on its way down to 25 percent under his successor, Calvin Coolidge). Demonstrating the fallacy of the Keynesian dogma that government should increase spending and deficits to cure recessions, the Harding spending cuts yielded large surpluses (used to pay down World War I indebtedness); and yet, by 1922, GDP was rising and unemployment falling, plummeting to a minuscule 2.4 percent by 1923. Maybe Harding wasn’t the best judge of character, but his economic program was arguably the most successful of any president in the 20th century. A “terrible” president? Absurd.

Another example of historical revisionism, progressive-style, involves Herbert Hoover. Today’s students are routinely taught that Hoover was the last of the “laissez faire” presidents. Last year, progressives produced a “take back the American dream” special edition of “The Big Picture,” during which the host denigrated the alleged laissez faire trio of Harding, Coolidge, and Hoover, contrasting them with the great economic savior Franklin Roosevelt. Part of the error is simple partisan bias—i.e., Republicans are bad and Democrats are good—but party aside, Hoover should have been lumped with FDR, not with his two predecessors. Harding and Coolidge truly were sympathetic to free markets. Hoover was not. He disdained and distrusted the laissez faire philosophy and was almost as much of an interventionist as Roosevelt. Indeed, FDR’s own advisers recorded in their memoirs that the true originator of the New Deal was Hoover. It is political propaganda, not historical verisimilitude, which paints Hoover as a clone of his predecessors rather than of his successor.

The lesson is clear: If those who understood and approved of Reagan’s policies fail to reiterate Reagan’s beliefs and policies, Reagan’s progressive opponents will distort his history; and he eventually will be as misunderstood as Harding and Hoover are today.

The progressive war against historical accuracy should concern all American citizens. When those in power mutilate truth, the welfare of the people is at risk. Think of what all the illiberal movements—whether fascist, socialist, communist, environmentalist, or progressive—have in common. All exalt state power at the expense of the individual rights of liberty, property, and ultimately life itself. In the effort to attain that power, they also commit depredations on truth, as George Orwell warned in “1984.” Watch to see how often Team Obama employs the Big Lie technique in attempting to revise Reagan’s record.

Whether we agree or disagree with what Ronald Reagan did, we shouldn’t let anyone lie about it. Falsehood is the enemy of human progress.

Editor’s note: A version of this article first appeared at Forbes.com.