Sunday, February 26, 2012

Santorum's Defense vs Entitelement Spending

Recently, my favorite Second-Place (in both the primary and the general) candidate (Rick Santorum) gave two interesting statements:

1)  "When I was born, less than 10 percent of the federal budget was entitlement spending. It's now 60 percent of the budget."

2) "When I was born, defense spending was 60 percent of the budget.  It's now 17 percent.  (Defense source)

First of all, most of the numbers he quoted were too low.  Some in his favor, but the 1958 entitlement number is significantly not in his favor.  As per, he was very wrong about the entitlement % in 1958, it was 25.4% not 10%.  (Entitlement Source) 

Second, he said 'entitlement' that includes pensions for every government employee - including pensions for generals.  But that is a small portion of the entitlement plan.

Thirdly, the real point is that most of what Santorum called "entitlement" is composed of Social Security.  Social Security, despite the lies put out by the GOP, is still solvent, and with minor changes (either what I want: increase the tax to apply to all income, not just the first 106k  OR [not both] increasing retirement age by just two years,will be solvent for the foreseeable future.)  But he appears to want to cut it.

The next two big "Entitelement" programs are Medicare and Medicaid.   Now Medicare and Medicaid are in trouble, we need a better way to pay for them and/or to hold the line on costs.  They are about 24% total, split pretty much down the middle at 12% each.

But let's take a look at entitlements, excluding Social Security, Medicare, and Medicare.

Well, Social Security is about 20% of the total Federal budget and Medicare and Medicaid are each another 12%  (as per Wikipedia, so hopefully it's accurate - but the government itself has confirmed that both together are 24%) (Source).

So lets compare 1958 without social security (Santorum's birth year) to 2011 without the big three (social security, medicaid, and medicare.

When he was born, the budget was 56.8% defense, 25.4%  Entitlement.
Currently, the budget is 19.6% defense, 65.1% Entitlement, (including 20% social security, 12% medicaid, 12% medicare, plus 21.1% for other entitlements), plus another 15.3% for stuff besides defense and entitlements.

Ignoring the big three, Defense becomes 24.5%, Entitlements become 26.4%
Using the those numbers, entitlements have risen 1%, while defense has dropped about 22%.  Entitlements up 1%  not a big deal if you ask me.   The defense drop is mainly do to getting out of Vietnam and no longer doing a cold war. 

So, Santorum is complaining about Social Security, Medicare and Medicaid.   For some reason, I don't think he is going to win any friends cutting Social Security and Medicare.  He is probably smart enough know this.

So that brings us to Medicaid.  Wow, a Republican complaining about spending money on healthcare for the poor.  Sound familiar?

The costs for Medicaid (and Medicare) have risen in line with other health care costs.  The problem is not and never has been government waste.  Instead it is the simple fact that we are developing new and expensive ways to provide healthcare.

Why is it expensive?

1)  In recent years, we have been finding a lot of treatments, not that many cures.  Partly because treatments pay a steady stream for the patients life, but cures are a one shot deal.

2)  Medicine continues to be a human intensive business.  Automation is not used or trusted.  We can't (or won't) automate surgery, examination (diagnosis - think House) or nurse work. 

3)  Pharmaceutical companies pay huge amounts of money to research new drugs - then demand huge amounts of money for their use, giving the research expenses as an excuse/reason.  

Putting limits on the pharmaceutical would be difficult in a free market economic system.    But we can try to automate medicine some.  Nursing is almost as much of the problem as doctors, except instead of one person getting paid 6 figures, we have 10 people getting paid 5 figures.  Both deserve their pay, but we need to find a way to limit our need for them.

More importantly, we let research companies get away with treatment instead of cure.  I propose a simple rule - if you create an expensive treatment, your patent protection is half as long as currently.  Leave the patent for cures as is.  We want the companies to work more on cures than on treatments and they are already too expensive.

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