Entitlements

It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.
- Mark Twain

Today I'll let a picture say its thousand words,

Bottom Line

Remember when Social Security was going to crash the government budget? With more seniors there will be higher payments out. The expense will rise from about 4% of Gross Domestic Product to 6 or 7%. Where is that money going to come from?

But it turns out that Social Security is just a drop in the bucket compared to Heath Care which was just 1% in 1970 and today is equal to Social Security. Look at the projected rate of climb on health care. The Obamacare bill was supposed to "bend the cost curve" so that health care would not grow so fast. It failed at that.

Keep in mind that the GDP itself is growing at 1 to 2% each year (3% in really good years). For the SS and health care to become a larger percentage of the GDP means that they are growing at an even faster rate than the economy as a whole. The GDP today is about 14 trillion dollars so each percentage point in the graph represents 140 billion dollars. That may sound "small" compared to the total but consider this: the 2 trillion dollars "cut" from spending over ten years in the recent debt cap bill comes to about 200 billion saved per year. It took a near collapse of the government to reach an agreement to cut just 200 billion a year. What will be cut in the future to pay for health care?

Retirement Savings

The trouble with retirement is that you never get a day off.
~Abe Lemons

How much retirement savings do you need? Probably more than you think. I read one column about a couple that thought 1 million dollars would be enough. But the children needed help with their mortgages and the money was greatly depleted.

Megan McArdle at TheAtlantic.com says, You Need More Retirement Savings. The old school thinking was that your expenses will be less during retirement. The house is paid off. (Maybe? Did you get a second mortgage or treat the house as an ATM with repeated home equity loans?) The kids have graduated college. Your house is furnished and you're not planning any major changes. Only a car loan remains.

In retirement the work expenses of commuting driving or train, business lunches, business clothes, etc are a thing of the past. But there'll be new expenses for health care - especially once you're off the Cadillac quality health plan and facing higher copays and deductions.

"Medicare does not cover everything--Medigap insurance is costly, and may still leave you with considerable out-of-pocket expenses."

You may also find that you'll need to hire a maid service to keep the house clean, or someone to mow the lawn, shovel the snow, etc. Not that you're lazy or lack the time but you might be physically unable to do the labor like you used to.

But I've thought of that you say. I'm planning to sell the house, buy a cheaper condo or assisted living apartment and pocket the difference. But suppose you're trapped in a terrible housing market like we have now where no one is buy or you get half of what your home used to be worth? Or you're competing with the other baby boomers for decent retirement space and prices for "retiree" homes shoot up.

Bottom Line

McArdle concludes that you retirement spending habits will be "about the same amount as I need now ... Even assuming that Social Security continues as promised, most people don't have nearly enough saved to make up their current incomes."

Are Health-Care Waivers Unconstitutional?

"The only way to keep your health is to eat what you don't want, drink what you don't like, and do what you'd rather not."
-Mark Twain

Philip Hamburger, a Professor of Law at Columbia Law School, has posted an intriguing article entitled, Are Health-Care Waivers Unconstitutional? He points out that there has been much debate over the constitutionality of ObamaCare, up to and including a Florida Judge voiding the law. But no one is questioning the legality of the 733 waivers given to unions, hospitals, and insurance companies. The political ethics of the waivers has been questioned but not their constitutionality.

Think about what a waiver means. The Executive branch of government, in the person of the President, is granting favored individuals or corporations exemption from a law. This undermines the United States as a nation where all are "equal" under the Law. Professor Hamburger notes that Congress may pass unequal laws, laws that tax some companies but not others, but once a Bill becomes Law it is binding upon everyone described by the bill.

Under our constitution a law may be voided in two ways, the Supreme Court may overturn it or the Congress may pass a new law replacing or voiding the an old law. But can a President refuse to enforce a law?  ChestOfBooks.com has a post on the topic, Obligation Of The President To Enforce Laws Believed By Him To Be Unconstitutional, which makes this point,

The President is an agent selected by the people, for the express purpose of seeing that the laws of the land are executed. If, upon his own judgment, he refuse to execute a law and thus nullifies it, he is arrogating to himself controlling legislative functions, and laws have but an advisory, recommendatory character, depending for power upon the good-will of the President. ...The President has not been given the power to defeat the will of the people or of the legislature as embodied in law.

In 1867 Congress passed the Tenure of Office Act, enacted over the veto of President Andrew Johnson, which denied the President of the United States the power to remove a Cabinet Official who had been appointed by a past President without the advice and consent of the United States Senate. Andrew Johnson refused to accept the law and fired Secretary of War Edwin Stanton which led to Congress holding Impeachment hearings for the President's refusal to uphold the Tenure of Office Act. Johnson won his Impeachment trial by a single vote in the Senate.

Did this set a legal precendent for a President to refuse to enforce or obey a law he considers unconstitutional? I'm not sure and I suspect that issue is still open to debate. See http://www.justice.gov/olc/nonexcut.htm for more details. But let's set that aside and return to waivers. A waiver is not issued over constitutional concerns. It's not issued equally to everyone over some objection to a law. In the instance of ObamaCare we're talking about a law the President passionately endorses! Instead waivers represent an arbitrary Executive decision regarding over whom the law will be enforced and who gets to ignore it. Professor Hamburger notes that there is historical precedent for this - but it's a precedent for Kings who are above the Law. The American constitution was carefully created to breakup Kingly power between the three branches of government so that no single individual or legislative body had total power.

Bottom Line

When the current session of Congress convened in January of 2010 with a new Republican majority, their first act of business was to read aloud the entire Constitution before the assembly. Their opponents mocked them for this. But it was done as a reminder that all branches of government are governed by the Constitution and must live within its restrictions. That is a lesson our Federal government appears to have forgotten.

Healthcare

"We Have Met The Enemy and He Is Us" - Walt Kelly

An interesting article at NewScientist.com makes the claim that Healthcare revamp won't cure America. It’s true that we have a problem. “Politicians are trying to revamp a system that spends around twice as much per person on healthcare as most European countries, while getting worse results overall, lagging on measures such as life expectancy at birth and infant mortality.”

But two new studies claim the problem is not the US Healthcare system, but rather with the poor habits of Americans. "One of the main reasons that US healthcare is so expensive is that we are sicker than other people."

One study concludes “that the blame lies largely with high rates of chronic disease caused by poor diet, lack of exercise and the lingering effects of tobacco use from a time when smoking was more prevalent in the US than in Europe.” The other study agrees and also found that “in some respects – screening and treatment of cancer and cardiovascular disease, for example – the US healthcare system is actually performing well.”

Bottom Line

Politicians are claiming that US Healthcare can save big bucks with more “pre-screening” of cancer, diabetes and cardiovascular disease. But Shannon Brownlee of the New America Foundation in Washington DC says, "[pre-screening is] not going to fix the underlying problems of poverty, poor diet, lack of exercise and smoking, which are the biggest determinants of health."

In the US we drive short distances instead of walking. Just yesterday a colleague from Poland suggested we walk a mile to lunch. That’s crazy, I replied, so we drove instead.

Also in America the great Industrial Food complex makes it cheaper to eat junk food than healthy food. I can get ramen or chips quite cheap. I have to spend real money to buy organic at Whole Foods.

The healthcare system does not insure good health habits. My wife was making real progress meeting with a nutritionist to lose weight until the Insurance Company changed its mind and decided to stop covering the cost.