So This is What a Ponzi Scheme Looks Like
The unfunded liability in Medicare, the trustees tell us, is $34 trillion over the next 75 years. Looking indefinitely into the future, the unfunded liability is $43 trillion — almost three times the size of today’s economy. Based on more plausible assumptions, such as those reflected in the “alternative” scenario for Medicare produced by the Congressional Budget Office in June 2012, the long-term shortfall is more than $100 trillion.
From an editorial by Larry Kotlikoff and me in the Wall Street Journal today.
Everything is great in a Ponzi scheme while it is running. The money is flowing and the people are happy.
So when does the music stop?
When there isn’t enough money to go around. For us, that is when tax revenue and ability to borrow are exceeded by the liability.
Holy Smoke! That’s a lot of scratch to expropriate from our grandchildren.
Liberal Democrats all worry about the environment. They fear CO2 levels are rising, average temperatures are rising and sea level is rising. They cannot fathom what’s possessing these crazy climate change deniers. They believe the looming threat should be obvious to anyone with an IQ above room temperature.
Yet I would argue a bigger problem facing the world in the next 50 years is the explosion of elderly entitlements. Our climate may theoretically worsen causing famine and costal flooding. But we know a couple billion people will grow old and become infirm in the next few decades. The promises made to them (or the need that cannot be ignored) will bankrupt countries worldwide (unless of course, all the old people die in famines and costal flooding).
Great point. We are absolutely sure that one of those two things will be disastrous. The other one’s impact is becoming less certain by the day…
You’re comparing two very different things, however. If the threat of climate is as alarming as some espouse, then that is something material we are altering to our own planet. The overspending problem is a problem within a system we created and therefore can easily manipulate. It’s hard for people of either side of the ideological spectrum to think outside the box it seems. In the end, we’ll need to figure out more about the function of our mental faculties in order to have a more cohesive society and world.
We do need to figure out how to resolve our differences without resorting to violence, although I don’t know if we are anywhere near homogenous thinking. Science can help with that in the long-run, but for now I think we are just stuck with in-the-box thinking and becoming red in the face arguing with one another.
True but my concern is if we don’t try to change that, there will most definitely be violence in the horizon. There is an exponential rise in tension in this country where people are caught up in these debates and finger-pointing instead of reaching out to each other to find solutions that will help our problems. I mean, history often repeats itself.
You are definitely right. We’re reaching a boiling point. We definitely need more empathy. Although, I think that people should defend their beliefs, while listening and considering the opposition. People do a lot of the former and little of the latter. We should be trying to convince one another, but that is more difficult than being hating.
True. Although we should try to encourage each other to be more objective thinkers while presenting one’s own belief in the most objective way possible. Conversely, by pointing the finger and insulting someone from “the other side” who may view his/her views as sensible and logical, it only ends up creating a deep divide that eventually can lead to violence.
Definitely. Good idea on how to encourage good behavior. We all need to realize that our “harmless” outbursts could cause trouble down the line.
I remember when Perry got slammed for calling SS a government ponzi scheme. He got bashed by both the left and right for those remarks. By definition though, he was right!
You don’t tell a parent that their baby is ugly.
It was incredible (or maybe predictable) that the media took seriously the notion that Medicare would pay providers less than Medicaid under PPACA. That was an absurd piece of the law inserted to ensure a good “score” by the Congressional Budget Office.
We don’t need a PhD in political science to know that government will not provide better access to care to poor people instead of old people. So, government will try to “fix” this part of PPACA like it fixes the physician fee-schedule today – short-term patches that deny the long-term fiscal reality.
Because this cannot last, the result will be declining access to care for everyone – seniors and the poor.
As for the working people who still have employer-based health care, the political reality is that their “gold-plated” coverage will be taxed in order to pay for Medicare, until their benefits are also of lower quality.