News Rollback to 2008: How Would It Impact Your Personal Life?

[Al68]

My point was simply that the tax rate alone doesn't determine growth. Other factors are more important.

I don't think anyone is saying otherwise. We're saying that tax rates matter, not that they are all that matter.

Government infrastructure provides an increased opportunity to generate wealth.

I haven't heard anyone oppose roads and bridges, either, in general. Just the wasteful projects.

Under funding government diminishes opportunity, and hence diminishes wealth. The point is that government spending isn't just consumption, its also investment.

That's true of roads, but not government in general. And the biggest reason is that building/maintaining roads isn't practical for private individuals/businesses. That, and the fact that they are funded by vehicle fuel taxes by those who use them, make roads a very poor representation of other government spending.

 

[ParticleGrl]

I think it depends. A lot of it can legitimately be investment, but it can also turn into just spending on various pointless schemes. There is a base minimum amount of government spending needed for infrastructure, regulations, safety nets, public services like police, firefighters, etc...but after that, spending can easily become excessive and wasteful.

But is there really evidence of this excessive spending? Keep in mind, spending is growing mostly because of medicare. Also, remember that our infrastructure is underfunded and crumbling- http://www.infrastructurereportcard.org/report-cards

Wouldn't declining innovation (in pharmaceuticals) cause prices to increase?

Older drugs go off-patent and have to compete with generics. As innovation declines, generic use goes up. The rate of output of new prescription medications has dropped by half.

http://www.dailyfinance.com/2011/02/17/successful-drug-development-gets-harder/

The reason that medicare plan D is costing less than assumed is almost entirely do to the lower cost of prescription drugs. It would have cost far less if the government could bargain for price (the VA pays far less for drugs).

Innovation in health care is an odd things- it drives prices up rather than down.

Do balooning Medicare costs also cotnribute to rising private-sector costs. For example, I know that despite the acutal cost of treatment, that hospitals have a limit on how much they can charge Medicare patients.

Medicare and private-insurance price bargaining almost certainly means the uninsured pay more than they otherwise would for health-care (when they can afford to pay). But costs are rising in all sectors of health-care- the uninsured, insured, and government provided. And they are rising in all nations (though its worse here by far).

Part of the issue is that (as mentioned above) innovation is raising costs. Part of the issue is a lack of efficacy data- money is being spent on procedures and no one knows if they actually do anything.

 

[CAC1001]

But is there really evidence of this excessive spending? Keep in mind, spending is growing mostly because of medicare. Also, remember that our infrastructure is underfunded and crumbling- http://www.infrastructurereportcard.org/report-cards

I think at the state level, in some of the states (such as California), there is excessive spending. At the federal level, I don't know enough about that. Regarding infrastructure, is that so much a problem of lack of money, or bureaucrats spending the money on things besides infrastructure?

The reason that medicare plan D is costing less than assumed is almost entirely do to the lower cost of prescription drugs. It would have cost far less if the government could bargain for price (the VA pays far less for drugs).

From my understanding of it, the lower cost of the drugs is because it increased competition between the drug companies. Why would it have cost far less if the government could bargain for price?

Innovation in health care is an odd things- it drives prices up rather than down.

Why do you think this is? Also, is this just in certain parts of healthcare? For example, I would imagine with regards to medical equipment, that innovation drives costs down.

 

[ParticleGrl]

I think at the state level, in some of the states (such as California), there is excessive spending. At the federal level, I don't know enough about that. Regarding infrastructure, is that so much a problem of lack of money, or bureaucrats spending the money on things besides infrastructure?

What are specific examples of spending you consider excessive? Does CA have excessive regulations? Too much spent on higher ed?

From my understanding of it, the lower cost of the drugs is because it increased competition between the drug companies. Why would it have cost far less if the government could bargain for price?

What about the law do you think increased competition among drug companies?

The reason it would cost less with bargaining is purchasing power. The VA pays 58% less for drugs, on average, than medicare does. You would expect with its purchasing power, medicare could be paying less than the VA.

Why do you think this is? Also, is this just in certain parts of healthcare? For example, I would imagine with regards to medical equipment, that innovation drives costs down.

Its probably because health care isn't an ideal market. Demand, especially for life saving care, is very inelastic.

As far as medical equipment- an MRI costs maybe $2000, an x-ray costs $200.

 

[CAC1001]

What are specific examples of spending you consider excessive? Does CA have excessive regulations? Too much spent on higher ed?

From what I understand of it, California does over-regulate to the point of making it too costly to do business in the state for many companies. On spending, one culprit I believe is that they have among the most generous welfare systems in the country. Another problem I believe is the public unions in the state and their healthcare and pension costs.

What about the law do you think increased competition among drug companies?

I don't know the specifics, but I remember reading that that was the method by which the law was going to lower prices (increasing competition). Some thought it was nonsense and wouldn't work at the time.

The reason it would cost less with bargaining is purchasing power. The VA pays 58% less for drugs, on average, than medicare does. You would expect with its purchasing power, medicare could be paying less than the VA.

I see.

Its probably because health care isn't an ideal market. Demand, especially for life saving care, is very inelastic.

Definitely something to study more I think.

 

[Al68]

Innovation in health care is an odd things- it drives prices up rather than down.

That's just not true. It drives up "costs", not prices. The cost of Viagra may have been $0.00 twenty years ago, but its price was infinite. It's cost technically increased, but its price dropped dramatically.

The same goes for any new innovation: comparing it's cost or price to when it didn't exist at all can lead to odd conclusions, if one pretends they're talking about a change in the price of an existing product over time.

 

[Al68]

On a side note, I was listening to the radio yesterday and everyone was all googoo gaga over the new Atlas Shrugged movie. So I decided to go back and see what on Earth Ayn Rand was talking about, way back in 1957, when she wrote the novel.

I ended up looking at the http://www.taxfoundation.org/files/fed_individual_rate_history-20110323.xls" for the year. They were simply incredible. It's no wonder she wrote the book.

Atlas Shrugged was far more about government regulation and control than tax rates.

Having reread it recently myself, after reading it the first time at a young age, what stood out the most were the lines she gave the "villains" in the book. When I read it the first time, I remember thinking that no one could be so delusional and moronic as to actually say such things. I thought Rand was just giving them such over-the-top idiotic lines as exaggeration, to portray them as moronic as humanly possible. And I was 100% sure that even if a politician were to say such things, people were not so stupid as to believe them.

I was very young and naive, apparently. Virtually everything said by Democrats today about economic policy can be found in those villains' lines in Atlas Shrugged. And vice versa.

And far too people believe them.

 

[OmCheeto]

I won't bother explaining why, because anyone who can't figure it out themselves can never be convinced of it.

And I don't know why you would not bother trying to explain it to me. I'm very intelligent.

That is exactly why.

So... only an idiot would understand your explanation?

hmm...

 

[Al68]

So... only an idiot would understand your explanation?

hmm...

LOL. No, that's the opposite of what I said. Someone intelligent like you has no need for my explanation, while idiots wouldn't understand it.

 

[WhoWee]

That looks like about a 25% cut to me. Does anyone know where those extra 900 billion dollars are going? It strikes me that the question is impossible to answer unless we know where the extra cash is being spent. And where the 900 billion dollars would be cut.

hmmm... That's weird. 900 billion dollars a year is equivalent to 22.5 million $40k/year jobs.

hmmm...

You've hi-lited my point. Thus far we have one respondent that concludes he might be impacted personally. So far, nobody else has a personal connection to describe?

 

[WhoWee]

The reason that medicare plan D is costing less than assumed is almost entirely do to the lower cost of prescription drugs. It would have cost far less if the government could bargain for price (the VA pays far less for drugs).

Another factor is that many drugs were dropped from the formulaies in 2011 - with CMS approval of course.