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October 26, 2009

We Have Learned Nothing From the Financial Crisis

Noel Sheppard:

"60 Minutes" did a fabulous exposé Sunday on Medicare fraud that should be required viewing for all people who support a government run healthcare program in this country.

The facts and figures presented by CBS's Steve Kroft were disturbing as were the details concerning how shysters bilk the system for an estimated $60 billion a year.

As Kroft warned viewers in the segment's teaser, "We caution you that this story may raise your blood pressure, along with some troubling questions about our government's ability to manage a medical bureaucracy"

Now let me get this straight. We just suffered a devastating financial crisis. Industry and government analysts saw it coming years ago, but were powerless to avert it.

Having had our fingers badly burned by a massive national flirtation with disaster, some might conclude that caution and fiscal restraint were the order of the day.

They would be wrong. Instead, we've decided to stop paying the mortgage, untether major expenses from the tiresome obligation of earning money with which to pay them, and peel out for Vegas (en route to which, we plan to blithely "spend our way out of the doldrums", assuming levels of debt never before attempted - either in real terms or as a percentage of GDP).

What could possibly go wrong?

Certainly nationalizing health care will only make an already incestuous industry even more tightly interconnected? And no one seriously argues that Medicare and Social Security aren't already in over their heads:

The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt.

The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, this debt rose by $5 trillion. If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both.

But why the long face? As long as we keep moving (continuing to expand government services and taking on even MORE debt we've no idea how to pay for) we ought to be able to keep our heads above water!
On average, every year since 1970, Medicare and Medicaid spending per beneficiary has grown 2.5 percentage points faster than per capita Gross Do­mestic Product (GDP). In the future, Medicare spending may rise even faster than the Trustees estimate. According to the Congressional Budget Office (CBO), if Medicare and Medicaid spending continues growing annually at 2.5 percentage points above GDP growth:

* By 2050, Social Security, Medicare and Medicaid (health care for the poor) will consume nearly the entire federal budget.
* By 2082, Medicare spending alone will consume nearly the entire federal budget.

You'd think that, having just watched the banking industry nearly melt down, we'd learn that people do a really poor job of managing enormous, complex systems.

I work in software. Ten years ago software systems were enormous and they were failing with great regularity. The industry responded by breaking things down - carving up unmanageable behemoths into smaller, less complex projects that were easier to manage and measure. Not only were these smaller projects less likely to get into trouble; if one part of a project got into trouble, it was far less likely to take the rest of the project down with it.

Sounds suspiciously like common sense, doesn't it? We never learn.

Posted by Cassandra at October 26, 2009 12:34 PM

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It worked so well in Massachusetts, in Maine, in Tennessee, ...

Small-scale experiments (at the state level) make a good proof-of-concept test. Since those have demonstrably failed - somewhere between grandly and catastrophically, I have to wonder what motivates our wise and able leaders to push for it on a national scale.

It's tempting, but I can't believe they're that stupid or incompetent (with some exceptions).

What's left? Diabolical intentions. It's a way to either take over the country or to wreck it. Either way, they'll be willing to pick up the pieces and make things right.

Posted by: ZZMike at October 27, 2009 12:36 AM

Sounds suspiciously like common sense, doesn't it? We never learn.

Sense isn't all that common, really...so "common sense" is something of a misnomer. That why I named my (rarely visited) blog as I did...

Posted by: camojack at October 27, 2009 01:22 AM

It's tempting, but I can't believe they're that stupid or incompetent...

Add venal to the mix and you've nailed it. Their intent can only be considered diabolical if you believe that the galactical hubris they possess is evidence of

Waitaminnit. Wasn't it *pride* that caused the Debbil's plunge into the Pit?

Never mind.

Posted by: BillT at October 27, 2009 06:00 AM

Who says we were supposed to learn something from the financial crisis? Hey, somebody's to blame and its all their fault and everybody else needs to be bailed out!


Posted by: Eric Blair at October 27, 2009 10:32 AM


This looks pretty FISHY to me!!

Posted by: Obloodyhell at October 27, 2009 12:37 PM