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Borat Economics: Why do the Debt Hawks Want to Copy Kazakhstan?
Rising Wages and Lower Healthcare Costs Will Make Deficit Cutting Idiotic
The Washington Post and most of the important people in Washington want the United States to be like Kazakhstan. Unfortunately, this is not another Borat movie; this is the about central focus of economic policy in the United States today. Because Kazakhstan has a debt to GDP ratio of just 14.2% - one of the lowest in the world.
By other measures, Kazakhstan doesn't score so well. Its per capita income is $11,800, just over one-fourth as much as the United States. Life expectancy for the people of Kazakhstan is just 68.2 years, putting it behind countries like Iraq and Honduras.
By most measures, Kazakhstan looks a rather unappealing place, but factors such as the health and wealth of the population don't matter to the policy elite in Washington. They care about budget deficits and debt - and, by that standard, Kazakhstan is golden.
If there was ever any doubt about the absurdity of Washington economic policy debates, it was eliminated with the release of 2010 social security and Medicare trustees reports. Usually, these reports do not differ much from one year to the next. They involve projections over a 75-year time horizon. Even a bad or terrible year, as 2009 or 2010 were, doesn't make much difference in the context of a 75-year planning horizon.
However, there was a big change in the 2010 reports. The trustees decided that Barack Obama's healthcare reform would substantially lower the growth trajectory for healthcare costs. (The chief actuary for Medicare strongly disagreed with this assessment, but that is another issue.)
The change in projections has very direct implications for Medicare. The slower projected growth in costs eliminated more than 80% of the projected long-term deficit.
The shortfall in Medicare over its 75-year planning horizon is now projected to be just 0.3% of GDP over this period. This is roughly equal to the annual cost of President George W Bush's tax cuts to the wealthy. If these projections prove accurate, then Medicare is very much an affordable programme long into the future.
The assumption of lower healthcare costs also had implications for social security. In the last several decades, the portion of workers' compensation that went to pay for employer-provided health insurance had been increasing at a rate of 0.2% each year. This was the result of rising healthcare costs.
The 2009 projections assumed that the cost of employer-provided health insurance would continue to rise. The 2010 projections assume that the cost will actually decline at the rate of 0.1% a year. This makes a small difference in improving the solvency of social security, since wages are subject to the payroll tax, while employer-provided health insurance is not. Therefore, the new numbers mean the taxable wage base is projected to increase more rapidly through time.
However, the change in the projected growth of healthcare costs also has another, much more important implication that went altogether unnoticed. It means that workers in the future will be considerably wealthier than we had previously believed. In other words, if healthcare reform will effectively contain cost growth without jeopardising quality, then our children and grandchildren will be far wealthier than in a world without healthcare reform.
The 2010 projections show the average worker's wage will be 47.8% higher in 2040 than it is today. This is after adjusting for inflation, so the projections show that workers' actual purchasing power in 2040 will be 47.8% greater than it is now. The new projected annual wage for 2040 is 6.3% higher than the figure projected for last year.
To understand the importance of this change in wage growth projections, suppose we told our children and grandchildren that the payroll tax would have to be raised by 3.0% to support social security (an extraordinarily large increase). They would still have more money in their pockets with the tax increase under the current projections, than they would have with no tax increase and the wage growth projected in the 2009 report.
If the important people in Washington actually cared about our children and grandchildren and their living standards, then they all would have been celebrating the prospect of the higher living standards implied by the new projections. But that wasn't the case. Not one of the big deficit fighters even mentioned the projected rise in living standards.
So, let's be really, really clear. The deficit hawks don't give a damn about the living standards of our children and our grandchildren. They just want to take away social security and Medicare. This is a class war where the wealthy want to take away anything and everything they can from the people who are not rich. The story about intergenerational equity is just a bad joke.
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Show AllOr to put it more simply. Unless your sister is #2 prostitute in United States, you don't have enough money to pay for your health care.
It is futile reading and discussing this day’s newest old news. The conclusion remains constant day after day; this economic system is inherently unjust, leads to the suffering of the masses, and threatens all species on all continents and in all waters by systemically destroying the components of ecosystem. Capitalism is a cancer infecting life.
Armed rebellion will lead to a glorious defeat, with high casualties, massive suffering, and increased violent oppression without a mass consensus.
If the goal is to retire the government protected capitalists, then vote straight ticket Republican. Elect them to every possible position. The phony republic will collapse in no time. That’s game-on time. The military pawns are halfway there.
That's 100% correct, Buck, and by voting Republican you also hasten judgment day, when the four horsemen of the apocalypse symbolizing the four Republican tenets of pestilence, war, famine, and death will ride in. The dead the Republicans have killed will be ressurected, Jesus will appear again in the form of Ralph Nader, and all those who voted Republican will be judged in perfect divine justice.
This is one of the first articles I've read that made the connection between healthcare reform and the longterm health of SocSec and Medicare. I'm not surprised Congress is going to ignore that connection!
So, what would happen if we really DID enact single payer healthcare on America? I suspect the situation would improve drastically, and have massive spillover effects on the general economy, employment, and the longterm health of the economy.
Huge costs are forthcoming: we've ignored Climate Change for far too long. We need to find the money to pay for these changes by attacking the freeloaders in our society: health insurance companies, WallStreet banks, and the MIC. These new challenges demand we take back our country from these vultures. As always (broken record) I believe the way to take the country back is through campaign finance reform, aka Dylan Ratigans four steps. Fix the democracy and we can fix these various problems and funnel the investment capital where it needs to go: into a brighter, better future, rather than into useless wars, robber banks, and broken healthcare.
According to this article, Kazakhstan has a per capita income of over $ 11,000 and a life expectancy of 68.
By most accounts, that makes the country a solidly middle income country, flush as it is with petroleum revenue. I am unsure if the author of this piece has actually been to Kazakhstan. By most accounts, it is actually one of the most successful and stable of the post Soviet stans.
The UNHDR Ranking of Kazakhstan is 82. Sure, it is better than most African or South Asian countries, but worse than most of South America.
Shouldn't the US (Rank 13) be looking at emulating Norway (Rank 1) or Australia (Rank 2) rather than Kazakhstan? (Rank 82)
This article does not mention the US emulating Kazakhstan. It mentions the US debt hawks learning from Kazakhstan's experience with debt. There is a difference.
Also, the Borat film is a work of pure fiction, this is something the article does not mention.
Just 10 years ago, may people thought the federal government would now have a $10 trillion surplus in its coffers. Gee, someone sure missed that prediction!
I travel a good bit, to many obscure places around the world. One thing that leaves a big impression on me is this: It seems that those in America who say that the USA is the best country in the world are the same who complain the most about their living situation and government. Is that oxymoronic or a conundrum?
"The 2010 projections show the average worker's wage will be 47.8% higher in 2040 than it is today."
This seems highly doubtful and this incredible statement weakens the article's argument tremendously. It sounds like "we'll all be driving flying saucers in the year 2000."
The Guardian, owned by a trust, committed to blah,blah...
Is no more valid to quote than Moon's Wa. Post.
Where's your Eds. on this?
None of your "readers" need more feel good crap.
I don't believe any of these projections.
Not just because "projections" never happen but also in four years when these new insurance plans start, the unemployment and numbers of uninsured based on how Obama's reforms have helped the unemployed and poor so far will increase.
Then the deficit will be much greater while the biggest threat to all these rosy projections are that the insurance corporations will just raise their premiums so that they can maximize their profits added to the rising costs of the War Machine's full spectrum domination which doesn't even dominate and produce anything but more fear, killing, refugees and of course more debt.
I am not even convinced that our government is capable of running a "Single Payer" system the way it is deadlocked and controlled by big money anyway.
The costs of maintaining the extra military contractors and new wars that are coming as a result of no peace plan at all will rise exponentially. A planned economy (called Socialism by most Americans) will never come about without a peace revolution that is planned by the people and government. The best mixed economies are planned but the USA is not planning anything but trouble.
We are not poor enough for peace yet but poorer by the hour and the peace part is not certain even with more economic collapse.
Kazakhstan's future looks better according my projections based on the facts as they are happening and getting worse.
I might write-in Borat.
It is amazing to me that people who claim the government can't do anything right will:
1. count on changes made by the government to fix something rather than make it worse than ever, kind of a logical paradox isn't it
2. Trust massive military intervention to fix something like terrorism, energy supply, or the economy. Isn't the military part of the government. Same logical paradox.
3. Trust contractors to keep a secret in the spy game when they work for a corporation that only exists to make a profit by any means possible. (This is the conservative and libertarian philosophy. Listen to them scream if you suggest that corporations must act in the peoples' interest.) Why wouldn't a corporation sell the 'secrets' exclusively to as many as possible? With hundreds of untraceable subsidiaries scattered all over the globe to duck taxes and fake books to dodge taxes - How could they pass up the chance?
4. Run for office so they can take the reins of a government that can never succeed, according to their own philosophy. Why take a job doomed to fail? Perhaps this is why they spend all their time with hookers, mistresses, strangers in mens rooms and running for re-election as family values Republicans?
5., 6. ... to infinity add your own list
in a situation of increasing world wide operational scarcity, the winners will win, consolidating and protecting their winnings, while the losers are left to die...from j. conrad's "heart of darkness"--"the horror..the horror.-"
What's that old saying,... oh ya, figures don't lie, but liers figure! It would seem appropriate for anything having to do with Republicans and Democrats now-a-days!
Remember SSA is just another ponzi, only authorized by the USA government. Replete with monthly, and annual summary reports, tracking the trends and the new trends, sustantiating past 60 year accomplishments and even painting the future 75 year projected estimate.
This Federal government continues to support the 'black box' theory, and refuses to believe the economy is bankrupt. That number 2,336.8 billion trust fund 'assets' current for 'SSA 2009', Bernie Madoff would of suggested such a number also.
Any value that was once associated with SSA assets was long ago stolen, its just a natural part of the ponzi scheme, to lie about the 'core asset'...just ask anybody.
whocares;)
It is a shame that the downfall of America will be our greed. Our tax system has regressed to where our top tax rate kicks in around $315K/year. However our highest tax bracket, supposedly 34% is not the tax rate paid by the richest of our class-separated population. No, the rich, who typically have their incomes arranged to be paid in stock options only pay a 15% tax on the major portion of their salaries. This capital gains rate makes their effective federal tax rate 18% according to Mr. Warren Buffet, who acknowledges that he pays less tax on the last dollar of the billion he “earned” than his secretary pays on her first.
We must acknowledge that nobody who rakes in more than a million dollars a year is “earning” their income, in the sense that they are trading their single most precious commodity, their short time on this earth, for a wage. The truly gigantic incomes are not made by one person, but rather by our entire society (or the entire world). This is because stock dividends are paid by the hard work of others in a company who create value for which the stock appreciates.
Yet, our economy is in the tank because of the excesses of Wall Street, who then took our money and paid themselves handsomely in bonuses and stock options. These same folks are telling us that our government must not spend any more money that we don’t have, and to a point, I would agree with them. However, if we need more income to cover our obligations, then we must increase the tax rate on those who have the money. Since the middle class has seen wages remain stagnant since the 1970’s, we should get what we need by increasing the taxes on those us who saw their ownership of our country increase over the same period. The argument that they should pay the same percent of their incomes as the factory worker who is building the widgets at the factory they own stock in neglects the difference in the true cost of that income: time away from our families and homes.
No, the true reason our economy is in trouble is not because we are broke. The economic numbers in this recovery, like the last jobless recovery, shows that our GDP increased based on the increased worth of a few, at the expense of the many. So the numbers say we are not broke. I recognize that if we don’t start acting like a society, i.e. knowing we’re all in this together, then we’ll all be at each other’s throats when our American experiment soon collapses. If we need more tax revenue in the short term to cover our obligations and not be a Greece, or Spain, return to Eisenhower tax rates adjusted for inflation. And YES, let’s look at all of our obligations as well. The U.S. is NOT Broke! Some folks are just extremely greedy.
To fix our country’s economy and to build acknowledgement that we’re all going to succeed or fail as Americans together, we need to equalize our net earnings and rebuild our middle class & infrastructure. This means a return to Eisenhower tax rates where incomes over $200K/year gets taxed at the 34% rate, and income over $3 million/year is taxed at 90%. This means the richest 400 families (aristocracies now, and even more so without an estate tax!) who average $345 Million dollars in income last year would suddenly be put in the same boat as the rest of us. Our budget would be bolstered by $122 Billion in a year just on the tax from these few households on their combined income that is over $5 million dollars. And just to be clear 5 million dollars is a lot to try to spend in a year.
Second, all bonuses over the minimum wage for a family of 4 in the local area should be taxed at 90% right off the top to disincentivize such unrealistic compensations. Nobody "earns" millions of dollars per year for anything without the work of a proportional number of people helping out! Since money can only be destroyed, spent, or invested (and saved=invested) it will always and ultimately get invested or cycled through the economy either way. No sane person will destroy their money. And in the short term the added revenue will also cover more of our debt obligations and create jobs fixing the infrastructure we all use and rely on (airports, roads, bridges, teachers, police, fire, etc). And to get beyond those who would play funny math with the numbers: anyone who is paying 90% on their riches beyond $5M per year are, and still will be, the richest folks on their blocks. And they will still be far richer than you or me.
-Follow on, in the interest of full disclosure:
I am right at the 15th percentile in income and feel I could pay more as long as the system was truly progressive. I believe the flat tax is morally wrong: to take the same 18 percent starting at dollar 1 from the working family as from the non-working investment earning dude living off an inherited trust fund. I also believe that if the poor folks can't afford to live here because their wages won’t cover them living above board, then they'll be at our homes when the few who still have jobs are at work, taking our stuff. And there won’t be any cops to report the crime to because the tax dollars to pay their salaries went away in the recession of ’08. The same goes for the fire department, which by sheer coincidence; had to furlough the closest firehouse that week due to severe budget cuts, so there is no one available to respond to the fire the thieves will set in the house before they leave.