Wednesday, October 15, 2014

Basic Economics - SS & Medicare changes


OK, I am really tired of this crap going on about the budget and reducing SS & Medicare.

This is a very serious issue, so I will not make fun of the idiots that are presently fighting over their differing proposed solutions.

But, I am not stupid, and I did take a year of Economics in College and I utilized this knowledge often over my career. And I do understand what a major financial change to a major national financial system will do to the economy.

People ......... If you significantly change SS and Medicare distributions, all at once, then,


I put that in caps so it could be read clearly. It is not a subject for discussion, there will be a national shift in many affected business', industries, and employment.

Here is one of those basic principles of Economics: In a free economy Major (and even minor, really) change in the distribution of moneys will drive the whole economy to make adjustments to itself and seek a balance of some kind.

So, lets simplify this even further. Lets take one scenerio and look at it.

Lets say they do something like reducing the Medicare payout percentage from 80% to 70%. Now that doesn't sound too bad does it. Every one has to pay a little more out of their pocket to cover a larger portion of a benefit.

But here are some things you need to understand:

The Doctor, or Hospital, or Physical Therapist, or whomever is servicing you in the industry, well, they are not dropping their bill.

Nope, now you have to pay, out of your pocket, $30 of a $100 bill versus the previous $20.

Not such a big thing is it?

Well, lets now pick a number for the people that now have to spend this new level on their medical bills. Lets say there are 10-million people that are affected on each and every medical bill they get.

That puts the 10-million people's total loss of spending money at $10-times-10-million people or a total of 100-million dollars for one bill each.

Now, another assumption, lets assume that the average number of medical bills for the 10-million people is ten bills per year.

That's not unrealistic considering the things covered like; Doctors, Specialists X-Rays, Hospitals, Emergency Rooms, Therapists, etc. And considering the fact that older people are more frail and more needy of care than a healthy 25-year-old.

So, with that added to the equation, now we have $10 times 10-million times 10-visits. or 1-Billion dollars a year.

OK, now that money is still spent, regardless. Remember it is for necessary medical treatment, so the elderly and frail will get the treatment they need, its just that now it is spent in a specific industry, the Health industry.

An industry that is by the way, already pretty wealthy, and is pretty self contained. By that I mean that the extra money, the $1-Billion will create very few if any, new jobs.

Again, remember, this is not for extra treatment to extra people, it is already being done, so this money not extra and is gone with no added advantage for the economy!

Try to explain how that helps the economy. Very damn little my friend, very little!

But, now lets consider what the 10-million people that once had the $10-dollars for those 10 visits, or $100 will do.

Well, they are on a fixed income, so they have to make adjustments, adjustments like: Buy less or poorer quality food, buy less clothes, go out to eat less often, put off buying a new car, and on and on and on.

So, that $10-Billion dollars that was feeding a complex national economy, now goes to the federal government that is famous for spending everything they get, on what are typically the most ineffective and non-productive Pork-Barrel projects that they can come up with.

You see, you don't really think that those 10-million people will get an immediate tax break designed just for them do you? Oh, no, our Congress is famous for one thing, and one thing only, that can be relied on.

And that is to keep all or at least most of the extra revenue, and waste it better than any one person could ever dream of.

So, what do we end up with from an immediate and large reduction in a benefit that is used by so many people?

Well, one thing we get is more people laid of, from, Restaurants, Supermarkets, retail stores, Farms, cloths manufacturers, auto manufacturers, and pretty much across the full spectrum of employment.

So, Thanks a lot, you idiots, for reducing the payout for SS and Medicare.

You will be doing, in one fell swoop of your pens, what the enemies of democracy and capitalism have failed to do, and that is drive our, hard worked for, and hard paid for, standard of living down another notch to the level of their corrupted repressive and ineffective methods of government.

People, Change to a complex economy like ours must come in carefully planned and small steps. With careful reanalysis and adjustment of what happened along the way, in order to minimize the effect on the total economy.

Large and unplanned theoretical changes can ruin many peoples livelihood, often even people that were not even considered when a half-baked adjustment occurs.

I sit here looking for logical and careful leadership from people who are in turn looking for studied change, and what I see is a form of governmental throwback to the Crusade Era of our world history.

You know, when people with two religions, who didn't speak the same language, or have the same social mores, fought and slaughtered each other for hundreds of years, even though they worshiped the same GOD.

What did good old FORREST say that his MAMA told him?


by Don Bobbitt, 2012
Copyright Don Bobbitt, All Rights Reserved

No comments:

Post a Comment

LET ME KNOW! I want to provide useful and interesting information for my fellow Retirees, Seniors and Baby Boomers. So, Compliments are welcome, and Complaints or just other opinions are just as welcome. SO, LET ME KNOW what is on your mind!