November 16, 2010

AND IT DOESN'T HELP THAT THE YOUNG ARE COLORED:

Greedy Geezers? (James Surowiecki, November 22, 2010, The New Yorker)

Why were seniors so furious with the Democrats? The weak economy and the huge deficits didn’t help, but retirees have actually been hit less hard by the financial crisis than other Americans. The real sticking point was health-care reform, which the elderly didn’t like from the start. While the Affordable Care Act was being debated, most seniors opposed it, and even after the law was passed Gallup found that sixty per cent of them thought it was bad. You sometimes hear (generally from Republicans) that the health-care bill is wildly unpopular. The truth is that, in every age group but one—seniors—a plurality of voters want to keep the bill intact.

Misinformation about “death panels” and so on had something to do with seniors’ hostility. But the real reason is that it feels to them as if health-care reform will come at their expense, since the new law will slow the growth in Medicare spending over the next decade. It won’t actually cut current spending, as Republicans claimed in campaign ads, but between now and 2019 total Medicare outlays will be half a trillion dollars less than previously projected. Never mind that this number includes cost savings from more efficient care, or that the bill has a host of provisions that benefit seniors—most notably the closing of the infamous drug-benefit “doughnut hole,” which had left people responsible for thousands of dollars in prescription-drug costs. The idea that the government might try to restrain Medicare spending was enough to turn seniors against the bill.

There’s a colossal irony here: the very people who currently enjoy the benefits of a subsidized, government-run insurance system are intent on keeping others from getting the same treatment. In part, this is because seniors think of Medicare as an “entitlement”—something that they have a right to because they paid for it, via Medicare taxes—and decry the new bill as a giveaway. This is a myth: seniors today get far more out of Medicare than they ever put in, which means that their medical care is paid for by current taxpayers. There’s nothing wrong with this: the U.S. is rich enough so that the elderly shouldn’t have to worry about having health insurance; before Medicare, roughly half of them didn’t have it. But the subsidies that seniors get aren’t fundamentally different from the ones that the Affordable Care Act will offer some thirty million Americans who don’t have insurance. Opposing the new law while reaping the benefits of Medicare is essentially saying, “I’ve got mine—good luck getting yours.”

MORE:
The Divisions That Tighten the Purse Strings (EDUARDO PORTER, 4/29/07, NY Times)

[A] growing body of research suggests that America’s antipathy toward big government has another, less-often-acknowledged underpinning: the nation’s racial and ethnic diversity.

Recent studies by economists and other social scientists have found that this mix tends to undermine support for government spending on “public goods” of all types, whether health care, roads or welfare programs for the disadvantaged.

Some of these studies suggest that America’s rich diversity — not only ethnic and racial but also religious and linguistic — goes a long way toward explaining why government spending on social welfare programs is much lower than it is in the more homogeneous nations of Europe. Other studies have found that within the United States, local support for various types of public spending falls as diversity rises.

“Racial divisions and ethnic divisions reduce incentives for people to be generous to others through social welfare,” said Alberto Alesina, a professor of economics at Harvard. “This is very unfortunate. But as social scientists, we can’t close our eyes to something we don’t like.”

In America, government spending on social transfers — everything from food stamps and unemployment insurance to health care and pensions — is about a third less than it is in Italy, France or Belgium, when expressed as a share of the economy, according to data from the Organization for Economic Cooperation and Development. And it is about half the level of Sweden’s. Moreover, Americans pay less in taxes than the citizens of nearly every other wealthy nation in the O.E.C.D.

In their 2004 book, “Fighting Poverty in the U.S. and Europe,” Mr. Alesina and Edward Glaeser, another Harvard economist, applied statistical regression techniques to correlate data on government spending with data on racial, ethnic, linguistic and religious diversity in Western Europe and the United States. The professors concluded that about half the gap between Europe and the United States in public spending on social programs could be explained by America’s more varied racial and ethnic mix. (They said that much of the rest resulted from stronger left-wing parties in Europe.)

Posted by Orrin Judd at November 16, 2010 6:55 AM
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