Thursday, September 6, 2012

Mitt Romney's No Apology 6: Regulation, Entitlements, and the National Debt

In my latest reading of Mitt Romney's No Apology: Believe in America, Romney talked about regulation and the need to reform Social Security, Medicaid, and Medicare.  Then he warned about the national debt.

On regulation, Romney made some of the same talking-points that I have heard other conservatives make: that President Obama is hindering the hiring of workers by creating an environment of economic uncertainty.  Yet, while Romney does criticize certain regulations----such as labor regulations that make it hard to hire or fire workers, and the rules that must be satisfied for a business to even get started (and Romney appeals to the thoughts of Thomas Friedman in making these points)----Romney does believe that "The rule of law and the establishment of regulations that are clear, fair, and relevant to contemporary circumstances provide the predictability and stability that is needed for investment and risk-taking" (page 150).  Romney praises a law against "throwing used oils down the drain" because that "ultimately led to better machining industry practices" (page 150).  He also supports equal opportunity laws, maintains that occupational safety regulations help businesses by protecting skilled and experienced workers, and contends that the "requirement for unemployment insurance" helps the economy and provides a time of transition to workers who have been laid off, "perhaps due to an improvement in productivity" (page 150).

On entitlements, Romney believes that they need to be reformed.  Medicare eats up a lot of the federal budget, and Medicaid does the same for state budgets, and the spending on these programs continues to grow.  Moreover, there is a danger that the current Social Security system will become unsustainable----that it will not have the money for all of the people who will soon retire.

On Social Security, Romney supports increasing the retirement age (since people live and work longer now) and proposes allowing higher-income people to choose how their benefits would be calculated.  They could use the wage index, which would give them more Social Security money, yet they'd have to pay higher Social Security taxes.  Or they could choose the Consumer Price Index calculation, which would give them less Social Security money, as their Social Security tax remains the same.  While Romney is open to private accounts, he recognizes that the stock market goes up and down, so he wants for individual accounts to be "added to Social Security, not diverted from it" (page 175).

On Medicaid, Romney supports states being allowed to devise their own ways to help the poor in terms of health care, as they continue to receive federal dollars for Medicaid.  States could then move the poor into private health care plans through vouchers, pay a standard fee rather than reimbursing treatments, or "negotiate with fewer providers to obtain better rates" rather than "allowing Medicaid members to go to any hospital" (page 177).  Romney also laments that, under the current system, even higher and middle income people can make themselves look poor through legal machination and thus get Medicaid assistance to live in nursing homes when they are older.

On Medicare, Romney wants to move it away from a "fee-for-service reimbursement system", which gives money for every treatment and exam and thereby incentivizes doctors to prescribe more treatments and exams (whether they're essential or not).  Romney proposes offering a flat fee for every patient, which would encourage the doctors to keep every patient healthy.  Romney also says that higher-income enrollees could pay higher co-pays, deductibles, and co-premiums.  Romney also speaks highly of managed care, and so (if my impression is correct) he may favor allowing seniors to choose between Medicare and a private plan (which they'd buy through vouchers from the government).

Some of these ideas are good.  I'd like to make the following points, however:

----It has been argued that Obamacare itself is moving Medicare away from a fee-for-service model (see here).

----I like that Romney is supportive of higher-income people paying more in terms of Social Security and Medicare, especially since Republicans flinch from any notion that the rich should pay more taxes than they are currently paying.  At the same time, I fear that medical costs could take their financial toll even on people who are financially comfortable, since medical costs can get really high.  

----A problem that detractors have with Paul Ryan's plan is that it is inadequate----that it gives vouchers to people in Medicare so they can join private plans, and yet their medical needs are not sufficiently met.  I myself am distrustful of private health insurance companies, since they are out to make money.  Romney, however, refers to a private plan that is not-for-profit.

I'd like to close this post by talking about the national debt.  Romney warns that it is getting out of control, and that it will take a toll in terms of high interest rates, less foreign investment in the U.S., and financial constriction as the next generation has to pay this debt off.  I have questions about the national debt.  First of all, have we paid any of it off?  This article says that we haven't done much to pay it off since World War II, whereas this article maintains that we have been paying off some of it.  If the former is true, then I wonder why we haven't yet seen the sorts of catastrophes that Romney and others talk about.  Interest rates have been low, and there is still foreign investment in the U.S., probably because our economy still has a degree of strength, whatever its set-backs.  Can we continue to pass off the debt to our children, as our children pass it on to their children, and the process continues?  One of my relatives (a conspiracy theorist) remarked that he doesn't think that our creditors expect for us to pay off the national debt, but they're just holding it over our heads so they can control us.

Is the latter true, that we are paying off the national debt?  I remember that politicians not long ago wanted to increase the debt ceiling so that the country could borrow money, which (in part) would be used to pay the interest and some of the principal for the national debt.  But are we paying off a sufficient amount of the debt?  Second, which party is better in terms of the national debt?  Romney and Republicans may support reduced domestic spending, but they are also open to war, which increases the debt.  Of course, Democrats are open to war, too, but my impression is that they're less open to it than are the Republicans.

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