A Few Random Thoughts

The health care debate seems to have settled on two issues: should Obamacare be repealed? And, how should Medicare be saved from bankruptcy. The democrats are arguing that without the constraints of Obamacare, the costs of Medicare will continue rising. The republicans are arguing that Ryan’s plan to slowly shift the system to one of vouchers and the use of private insurance companies. The democrat arguments against Ryan’s plan are that costs will rise so much that the voucher will be insufficient and the old people will end up without care. This is a great divide between those who have no idea how markets work versus those who want to rely on the market. If the third party payer in Medicare was eliminated, individuals would seek out their best options, private companies would offer policies that those individuals want and are willing to pay for. It would drive prices down not up. Costs would rise no faster than the rise in prices in other sectors.

The debt ceiling debate is also interesting. If the ceiling were not raised, the Treasury would have to figure out how to reduce spending. Since it would want to pay the debt costs, it would have to cut elsewhere. The question is whether there is enough to cut without dealing with Medicare and Social Security. Looking at the data, there is enough room to cut – all that has to happen is that revenue matches spending. But scare tactics and wild rhetoric will surely define the debate, and it is likely the debt ceiling will be passed due to fear of government shutdown.

Finally, Pratt links to the survey of economists. I find it not surprising but still depressing that economists consider Krugman a star and don't even think of Hayek or Mises, that 60 some percent vote republican and 20 percent republican.