The Hoax of Entitlement Reform

It has become accepted economic wisdom, uttered with deadpan certainty by policy pundits and budget scolds on both sides of the aisle, that the only way to get control over America’s looming deficits is to “reform entitlements.”

But the accepted wisdom is wrong.

Start with the statistics Republicans trot out at the slightest provocation — federal budget data showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase.

And Census data showing 49 percent of Americans living in homes where at least one person is collecting a federal benefit – food stamps, unemployment insurance, worker’s compensation, or subsidized housing — up from 44 percent in 2008.

But these expenditures aren’t driving the federal budget deficit in future years. They’re temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically, including 22 percent of our children.

What about Social Security and Medicare (along with Medicare’s poor step-child, Medicaid)?

Social Security won’t contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund.

That fund has been in surplus for the better part of two decades, as boomers contributed to it during their working lives. As boomers begin to retire, those current surpluses are disappearing.

But this only means the trust fund will be collecting from the rest of the federal government the IOUs on the surpluses it lent to the rest of the government.

This still leaves a problem for the trust fund about two decades from now.

Yet the way to deal with this isn’t to raise the eligibility age for receiving Social Security benefits, as many entitlement reformers are urging. That would put an unfair burden on most laboring people, whose bodies begin wearing out about the same age they did decades ago even though they live longer.

And it’s not to reduce cost-of-living adjustments for inflation, as even the White House seemed ready to propose in recent months. Benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Besides, Social Security’s current inflation adjustment actually understates the true impact of inflation on elderly recipients — who spend far more than anyone else on health care, the costs of which have been rising faster than overall inflation.

That leaves two possibilities that “entitlement reformers” rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered.

What’s left to reform? Medicare and Medicaid costs are projected to soar. But here again, look closely and you’ll see neither is really the problem.

The underlying problem is the soaring costs of health care — as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing — combined with the aging of the boomer generation.

The solution isn’t to reduce Medicare benefits. It’s for the nation to contain overall healthcare costs and get more for its healthcare dollars.

We’re already spending nearly 18 percent of our entire economy on health care, compared to an average of 9.6 percent in all other rich countries.

Yet we’re no healthier than their citizens are. In fact, our life expectancy at birth (78.2 years) is shorter than theirs (averaging 79.5 years), and our infant mortality (6.5 deaths per 1000 live births) is higher (theirs is 4.4).

Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.

For example, almost 95 percent of cases of lower back pain are best relieved by physical therapy. But American doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. There’s not much money in physical therapy.

Another example: American doctors typically hospitalize people whose diabetes, asthma, or heart conditions act up. Twenty percent of these people are hospitalized again within a month. In other rich nations nurses make home visits to ensure that people with such problems are taking their medications. Nurses don’t make home visits to Americans with acute conditions because hospitals aren’t paid for such visits.

An estimated 30 percent of all healthcare spending in the United States is pure waste, according to the Institute of Medicine.

We keep patient records on computers that can’t share data, requiring that they be continuously rewritten on pieces of paper and then reentered on different computers, resulting in costly errors.

And our balkanized healthcare system spends huge sums collecting money from different pieces of itself: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.

Cutting or limiting Medicare and Medicaid costs, as entitlement reformers want to do, won’t reform any of this. It would just result in less care.

In fact, we’d do better to open Medicare to everyone. Medicare’s administrative costs are in the range of 3 percent.

That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

Healthcare costs would be further contained if Medicare and Medicaid could use their huge bargaining leverage over healthcare providers to shift away from a “fee-for-the-most-costly-service” system to a system focused on achieving healthy outcomes.

Medicare isn’t the problem. It may be the solution.

“Entitlement reform” sounds like a noble endeavor. But it has little or nothing to do with reducing future budget deficits.

Taming future deficits requires three steps having nothing to do with entitlements: Limiting the growth of overall healthcare costs, cutting our bloated military, and ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries).

Obsessing about “entitlement reform” only serves to distract us from these more important endeavors.

Robert Reich served as the 22nd United States Secretary of Labor under President William Jefferson Clinton from 1992 to 1997. He shares many of his thoughts and columns at Robert Reich, where this post first appeared.

41 replies »

  1. Whether Mr Reich is right or wrong, that’s not the point. But the fact that he’s bringing some insightful ideas with complementary statistics is the important part. This spurs debate and that’s what we need so we can get to the best solution one way or another. Less politics, more input. Keep it going

  2. I am sorry that I missed this debate, but let me throw in a point or two in case anyone is interested…………..

    1. The cost of Medicare is going up for 2 reasons:

    a. demographics, i.e. more persons turning 65 than are dying, plus more
    disabled persons staying on social security disability for 2 years;


    b. higher spending per Medicare beneficiary.

    The demographics are not exactly a state secret. Either we raise the elibility age quite drasticallty, or we raise taxes and raise the premiums that seniors pay.

    We would have to do this even if America had the most efficient health care system in the world.

    Instead we have shills of both parties claiming that today’s seniors have already paid for their Medicare………..but let me move on.

    The amount that is spent per beneficiary is actually going up less than it used to. If we used the much harsher controls that you see in single-payer countries, we might be able to flatten this per-beneficiary amount altogether.

    The cost of Medicare is greatly determined by what Medicare pays for and how much it pays and how many claims it pays each year.

    There is nothing in the Consitution or the Ten Commandments that forces Medicare to pay for office visits, lab tests, transplants, or dialysis, or viagra.
    There is nothing which forces Medicare to pay $45,000 for some bypass surgeries.

    I am not making any specific recommendation here. All I am saying is that if money runs low, Medicare could stop paying for certain things. It does not pay for hearing aids or nursing homes right now. I wish it would, and I would pay higher taxes to accomplish this, but I am just one voter.

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  4. Bill, have you asked yourself why they’re IOUs and not cash in an account?

    It’s because that money was used for all sorts of government spending, like roads and education, which meant taxpayers were subsidized for that spending. It was robbing Peter to pay Paul – the great game in DC because taxpayers want something for nothing, or at least the illusion of getting something for nothing.

    SS is an IOU that must be paid because everyone put money into it for the promise of a minimal pension. Even you will get SS. Those saved taxes from robbing SS are now due. Pay up!

  5. Mr. Reich says that social security will continue to be payed from the “trust fund” but the trust fund is only a bunch of IOUs that are part of the deficit.

  6. ” But at the root of all of it was an epic credit binge by short sighted and stupid consumer borrowers who were living beyond their means”

    No, that was NOT the root of the problem. As a private lender who carries my risk I can tell you that there are always borrowers, consumer and business, who want money – it’s up to the LENDER to vet and risk assess the loan. Borrowers don’t force lenders to lend them money.

    The “Banks” were not blindsided by this, they were active participants financing the subprime fraud schemes.


  7. No place to continue this thread after Peter1’s last comment.

    Not so, Peter. I’ve spent literally hundreds of hours reading about the crash, which cost me a small fortune. Not only Michael Lewis’s BIg Short about the hedge funders who bet against all the bad loans but his classic Liar’s Poker about the Salomon Brothers traders who created the mortgage securities market in the first place.

    Also the Taleb classic Black Swan about the flawed risk estimation strategies used by the banks that failed AND the John Cassidy book How Markets Fail: The Logic of Economic Calamities, about the flawed macroeconomic theories from my alma mater, the University of Chicago, that sustained the failed banking regulatory regime. I also follow an excellent blog, Calculated Risk, which follows the real estate and credit markets. http://www.crgraphs.com/ Check it out.

    Plus, I’ve lectured at Wharton for a decade, whose alumni invented a lot of these new and unstable forms of risk. And I have a lot of friends in the hedge fund and private equity business. This is a political disagreement, not a product of my lack of homework or knowledge of credit markets.

    You are correct that there were multiple systemic failures- “independent auditors”, “credit rating agencies”, “federal regulators”- that created the tower of junk. But at the root of all of it was an epic credit binge by short sighted and stupid consumer borrowers who were living beyond their means

    .Look in the Calciulated Risk Chartpack at the Federal Reserve consumer debt trends and you’ll see that it was a broadbased credit binge, not just people piling into liar loans, that set up the crash. It was home equity loans, and credit card debt, and mortgage debt- and a culture of fearless and heedless borrowing UNQUESTIONABLY abetted by banks and their capital sources, that got us into trouble.

    And the hangover from that binge will last a decade, and despite all the huffing and puffing from Washington and a ton of free money from the Fed, there’s no cure for the hangover than deleveraging and smarter credit policies.

    And the saddest thing of all is that when we’ve finally sobered up, the Chinese, who are doing exactly the same thing, only with bad semi-public debts, will take us right back to where we were in 2008.

  8. “but the facts are that 3/4 of the wealth of this nation is held by 10% of it’s people, one tenth of which are holding over half of that 3/4 amount.”

    This was no accident of the cream rising to the top. This has been a result of legislative lobbying and back scratching. Medicare, Medicaid and SS are all that’s left to raid. Don’t expect the wealth imbalance to self correct even if Barry paints a rosy picture.

  9. “the facts are that 3/4 of the wealth of this nation is held by 10% of it’s people, one tenth of which are holding over half of that 3/4 amount.”

    Margalit –

    Some of this issue was addressed in the recent fiscal cliff negotiations and more of it is likely to be addressed as part of tax reform. I also think the estate tax will mitigate the issue further over time.

    There are already approximately 50,000 charitable foundations in the U.S. with over $400 billion of assets. Together they make about $20 billion of grants each year with at least half of that coming from the 300 largest foundations. Many billions more are controlled by colleges, universities and hospitals.

    The existence of the estate tax will, I think, prevent dynastic concentrations of wealth and will ensure that much of it will ultimately find its way into foundations that benefit society while $30 billion per year of estate taxes continue to be paid by a relatively tiny number of estates as a percentage of the number of people who die each year.

    The two richest Americans, Bill Gates and Warren Buffett have pledged to ultimately return 99% of their wealth to society and they are actively seeking to enlist other billionaires to eventually give away at least half of their wealth. Bottom line: I’m not as concerned about wealth concentration as you are. I do think, however, that investment income is still taxed too lightly relative to income from work and I continue to feel that way even after the recent fiscal cliff legislation.

  10. We can quibble about who did what in the housing market forever, but the facts are that 3/4 of the wealth of this nation is held by 10% of it’s people, one tenth of which are holding over half of that 3/4 amount.

    This is what is unsustainable. This is what needs to be reformed and transformed. Medicare, Medicaid and Social Security artificially heated arguments are just a side show to divert attention from the real business at hand.

  11. “The fact of the matter is that everyone involved in mortgage lending including banks, Wall Street investment firms that securitized mortgages, rating agencies, appraisers, Fannie Mae and Freddie Mac and home purchasers all behaved based on what turned out to be the wildly wrong assumption that house prices would continue to appreciate in value forever.”

    Barry, you are extremely generous explaining away fraud as a “wrong assumption.” There was no assumption, all the institutions knew exactly what they were doing. Do you think they were just stupid dupes?

    There’s no liberal spin about predatory lending, liar loans, ratings fraud.

    I’d do a little research, which is what I’ve done, as I’ve made no “assumptions” based on “liberal spin”.

  12. Spike –

    The 1986 Tax Reform Act was (1) revenue neutral and (2) raised taxes on the wealthiest because the capital gains rate was increased from 20% to 28% and the wealthiest among us derive most of their income from capital gains. Loopholes were also closed which disproportionately affected high income people.

    The Greenspan Commission Social Security reforms effectively called on the baby boomers to pre-fund their retirement as the payroll tax was increased in either rate or the wage based to which it applied several times over the following eight years. However, I don’t think politicians of either party ever seriously contemplated establishing an actual pension fund consisting of stocks and bonds with the surpluses that were generated by the difference between payroll taxes and current year outflows for social security benefits.

    I would also point out that the concept of tax reform intended to lower marginal tax rates while broadening the taxable income base was strongly supported and led by prominent Democrats, Senators Bill Bradley and Richard Gephardt and House Ways and Means Committee Chairman, Dan Rostenkowski. The latter two were both solid allies of organized labor. Democrats also controlled the House for 40 consecutive years through 1994 and controlled the Senate for most of that time as well.

  13. Peter1 –

    Hindsight is 20-20. I think your take is pure liberal spin. The fact of the matter is that everyone involved in mortgage lending including banks, Wall Street investment firms that securitized mortgages, rating agencies, appraisers, Fannie Mae and Freddie Mac and home purchasers all behaved based on what turned out to be the wildly wrong assumption that house prices would continue to appreciate in value forever.

    Nobody forced homebuyers to take out loans either to buy a house or to take cash out of a house in the course of refinancing. No homeowner who bought a house with a bank’s help and later made a nice profit ever went back to the bank and said here’s 10% of my profit; thanks for your help. When they bet wrong and lost money, suddenly they’re looking to sue the bank. Give me a break.

    Implicit in bank, Wall Street, rating agency and even appraiser behavior was that in the worst case, the homeowner defaults, the house is sold for more than the loan amount, the loan is paid off, and there is something left for the homeowner. Moreover, even if house prices did decline, they would only decline in a few places and not everywhere at once. The post World War II history of housing price behavior nationally generally supported that assumption which also turned out to be wildly wrong.

    Politicians pushed Fannie Mae and Freddie Mac to lower their underwriting assumptions because they wanted as many people as possible to be able to buy a house instead of just rent one. Yes, it all blew up in the end but there was plenty of blame to go around. If either Fannie Mae or the banks tried to enforce, say, a 20% down payment to get a mortgage, the politicians wouldn’t have tolerated it.

  14. tcoyote, I would expect you to have looked beneath the surface of what really went on.

    Half the sub-primes actually would have qualified for prime. Liar loans were originated by the lender. Predatory lending was legal in many states. Home appraisers were complicit in fraudulent valuations. The rating agencies issued fraudulent AAA ratings for junk. The recent “settlements” prove fraudulent foreclosure procedures by banks. Greenspan fed the industry with low interest rates, deregulation policy and approval of exotic predatory loan products.

    Countrywide and Washington Mutual were only the tip of the iceberg.

    The academy award winning movie, “Inside Job” gives you a lot of insight into how DC and the finance industry are co-mingled in fraud. It’s no accident that Goldman Sachs keeps coming up in Democratic and Republcan administrations, even if you overlook their knee deep in shit involvement in this mess.

    I enjoy your comments, which are usually well informed and factual. Not so here. I suggest you do some research on this before shooting from the hip.

  15. Barry on point 4, you can argue it however you want. Social Security accrued a positive balance since the bait and switch Ronal Reagan pulled in 1983, i.e. increase payroll taxes to “ensure the continued safety of social security”, then return those extra taxes back to the wealthy in the form of reduction in high-end tax rates. In other words, the positive margin between payroll taxes coming in and social security payments going out has been keeping the deficits lower than they otherwise would be. If you consider “The Social Security program” to be the total of Social Security taxes and Social Security payments, the “program” has been such a huge net positive to the federal government for so many decades that it is clearly disingenuous to blame the deficit problem on social security.

  16. No, it was the banks’ fault that they made loans they knew were bad, packaged them and repackaged them and sold them over and over again, and then had to be bailed out by the Feds when the music stopped.

  17. Let’s see.

    Those nasty banks simply held a gun to our little innocent middle class heads and FORCED us to take on $6 trillion in consumer debt in six years. What actually happened is that we borrowed ourselves into oblivion to keep up lifestyles our cash incomes couldn’t support and speculate in an overheated real estate market, assisted by nearly free money from the Federal Reserve. . .

    and its the BANKS’ fault we could make our payments. . . Poor us. . .

  18. “They’re comin’ back (the rentier class), to pick up the stuff they left behind in the mid 2000′s when the possibility of indictments still held ephemeral sway.”

    That pretty much sums it up. What we really have is not a Medicare crisis or a SS crisis, we have a destruction of the middle class crisis. This has been a concerted lobbing effort by corporate America since the late 70’s which had its finest hour in 2008 by driving the next to last stake in the middle class heart with the financial collapse (fraud).

    Lawmakers have walked hand in hand with lobbyists over the years to nip, nip, nip at the pool of middle class cash and wealth they saw as easy target when legislation was bent their way.

    Make no mistake, “reform” of Medicare and SS does not mean improvement. It means destroying the last two pillars of middle classdom.

    Why haven’t we seen massive arrests and imprisonment for financial but only “settlements” where a day or two or a week or two of profits has been the parking ticket for criminal behavior?

    The why is because they own the place – they own the political system.

  19. Imagine if the majority could tax all minorities out of existence (not just the higher earners/producers); maybe the USA could be more like Switzerland. Alas, it would be only a matter of time before the majority tax the wealthy out of existence also, so we would follow France, et al into A United States of Mediocrity or less.

  20. This is a disingenuous discussion. As long as this culture HAS to save everyone irregardless of prognosis and expense of time , money, and energy, there is no system to save or manage competently. No one has the guts nor ability to address just having a society above 300 million keep growing without realistic accountability is a fraud.

    Which are these leaders in DC and cronies in the media. oh, and the partisan shrill seekers here too. Again, the resources are finite.

    Is reality ever considered in these threads?

  21. Margalit –

    When it comes to the ultra mega wealthy, I agree with you. Indeed, as you probably know, I’ve been a consistent supporter of higher tax rates on capital gains and qualified dividends within reason. However, if you look at the vast majority of taxpayers with incomes between $250K and $5 – $10 million or so, most of their income is from salary, bonus, stock options and restricted stock awards, all of which are taxed at progressive ordinary income rates. In addition, many of these people live in states like NY, NJ and CA with quite high state income tax rates as well. They’re already paying a fair share and then some in my opinion. The hedge fund and private equity moguls who benefit from the carried interest rule are in a different category and that loophole needs to be closed. There are even quite a few hedge funds types who benefit from carried interest who agree believe it or not.

    On corporate profits taxes, there is a lot of debate among academics as to who actually bears the burden of this. Some think it is born by shareholders. Some think it’s pushed back onto workers in the form of lower wages. Others suggest it’s just another cost of doing business and is built into the price of the product or service the company sells. I’m in the last camp but nobody can definitively prove their case.

  22. The medicare/medicaid problem is a distraction from the real problem, which is that a very wealthy country has a dysfunctionally expensive healthcare system that takes too much money from too many people. Expanding medicare to cover everybody would release money that is committed to health insurance plans and that now forms a considerable part of people’s compensation package. Raising the taxes for the expansion would still be a win for most people, plus, of course, the government could use its monopoly power to keep costs lower – especially as the state has the power to push back on IP monopolies used by drug companies, put more people into the healthcare work force, and cut out much of the private insurance bureaucracy.

  23. The reality, Barry, is that exceedingly higher income people do pay a smaller percentage of their income in taxes, and people that are multibillion dollar corporations sometimes pay absolutely nothing in taxes. Sounds pretty regressive to me….

  24. @tcoyote: When we say that Medicare pays $120 billion for docs, is that really accurate? Don’t these billions include labs, imaging, outpatient services and whatever is not provided inside the hospital by the hospital? How much of the $120 billion is actually going to physicians? Half? If so wouldn’t this be comparable to drug costs?

  25. I second what tcoyote said to which I would add the following:

    1. An entitlement program is one where a beneficiary qualifies for benefits by meeting the eligibility criteria outlined in the underlying legislation. Payments are automatic to all who qualify and are not subject to annual appropriation by Congress. Whatever the program costs, it costs.

    2. A tax system that requires higher income people to pay a greater percentage of their income in taxes than someone with lower income is called a progressive tax structure as opposed to a flat structure – same percentage of income no matter what your income is or a regressive structure – lower income people pay a higher percentage of their income in taxes than those with higher income.

    3. Many of the approaches to lower healthcare costs that Robert Reich described we should be doing anyway even if we had no federal fiscal imbalance. We need to adjust Medicare benefits too. If the cost reduction strategies are ultimately successful, any benefit cuts enacted now could be partly or fully reversed later if resources permit. There is no question, however, that the relentless increase in healthcare costs generally and spending for Medicare and Medicaid specifically is they key driver of the federal debt and deficit.

    4. On social security, Reich’s suggestion that there is no near term fiscal issue here because of the presence of the trust fund, he’s wrong. The only way to redeem trust fund IOU’s is to sell Treasury bonds, notes and bills to actual investors, both foreign and domestic, to whom interest must be paid while the bonds are outstanding and the bonds must be either redeemed or rolled over by selling new bonds when they mature. That’s exactly what will happen as outlays for social security benefits exceed income from current year payroll taxes. When the trust fund accrues interest on the balances it already holds, it’s a mere bookkeeping entry. No new federal obligations need to be sold to public investors and no taxes have to be used for that purpose. Trust fund balances are not assets in the same sense that federal debt held by public investors is.

  26. this is a sadly misinformed and ideologically driven analysis. Medicare’s “overpayment” of Medicare Advantage is being phased out by ACA provisions, and is presently down to about 7% differential vs. FFS Medicare. . Will be at parity within three more years.

    Drug costs are a modest contributor to overall Medicare cost, dwarfed by what is spent on hospitals, physicians. Drugs are only $63 billion, vs. 240 billion for hospitals and $120 billion for docs. Even a 20% savings on drugs would make little difference in overall Medicare spending on a $550 billion base.

    And to negotiate effectively, Medicare would need to establish a formulary and thus the credible threat to exclude drugs that did not negotiate an adequate discount. not going to happen. Pharmacy benefits managers have done a fairly efficient job of squeezing Part D suppliers.

    Keep fishing. . .

  27. If you care about the healthcare crisis, comments and debates in this forum are important, but here’s a chance to make a more immediate and solid difference. My brother-in-law–one of the most decent guys I know–despite long hours working in construction for years, was a volunteer EMT, life saver, dedicated husband and father. He’s now a textbook casualty of the recession and an example of the failure of our healthcare. After the bottom fell out of his construction job when the recession hit, he, my sister, and my young niece weathered unemployment and foreclosure. They never stopped being the kind, giving family they always were, and things starting looking up when he took a paid job as an EMT, but the hiring company wouldn’t provide health insurance. Last summer, they lost all remaining savings when he suffered a sudden, surprise pancreatitis that destroyed most of his pancreas, nearly killed him, and forces him to be on medicine for the rest of his life; the medicine alone is over $700/month, and the multiple surgeries and procedures have erased all that was left of their hard-earned savings. Please go to http://helpdanandruth.yolasite.com/ and make a difference.

  28. Medicare could be immediately secured for several years by the simple measures of ending the 13% subsidy payments to private insurers and allowing the Medicare administration to negotiate drug prices. I thought the ending of subsidies was going to be easy, but President Obama seems to have accepted the idea that health care reform must protect private insurers against government insurance competition. This means that government insurance as a choice will have to be limited to compete on the terms of private companies and allowing Medicare to limit costs by cutting subsidies to private companies may be forgotten.

  29. In terms of not paying taxes to support the public welfare, Greece is a libertarian, John Gault paradise.

  30. According to your definition, “something that cannot be removed from the federal budget without passing a new law”, defense, education and pretty much every federal expenditure is an “entitlement”.
    Considering that taxation is means tested to figure out how much corporations do not pay, following your logic, I would then define the tax code as welfare to corporations. I don’t know what what Mr. Reich wants, but I want that those who extract more value from our system, should pay more into the system. It’s only fair.
    As to Greece, it is as relevant to the US experience, as the Scandinavian nations, Germany or Switzerland, to name a few, so why not pick those for comparison studies?

  31. It depends on your definition of entitlement (a word that did not exist before WWII). Technically it means something that cannot be removed from the federal budget without passing a new law. These are not obligations, since all of these programs are continued at the discretion (whim) of the next congress. They are, however, at least in part, welfare programs. When you means test what people pay for these programs (i.e. some folks pay more than others) then it is welfare. All three of these programs are means tested on how much you pay. If you mean test the benefits, which all three of these programs do, also welfare. Appears you and reich both want significantly more means testing and therefore significantly more welfare.
    So, how is Greece not relevant?

  32. They’re comin’ back (the rentier class), to pick up the stuff they left behind in the mid 2000’s when the possibility of indictments still held ephemeral sway.

    Austerity will provide a convenient distress-sale environment via which to acquire most of what’s left, for pennies (or basis points) on the dollar.

    Lower Class Losers can then fight amongst themselves over the residual micro-crumbs, much to the Luxury Box / Gated Community entertainment of their Betters.

    They won’t know what hit them until it’s far too late.

  33. Reich aside, Greece doesn’t issue its own currency. Greece could not be more irrelevant to the core issue.

  34. Medicare, Medicaid and Social Security are not entitlements. They are obligations of a democratic government, which contrary to the ultra-right belief, does not exist solely to protect property.
    What needs to be reformed is the entitlement of corporations, and the super rich, to rent and preferential taxation.

  35. Running an open bar tab for providers to care for 100 million Americans isn’t sound economic policy, Robert.

  36. Wow. Denial, anger, bargaining, acceptance. Mr. Reich has a few steps to work through.

  37. Robert,
    Your theories are not working in Greece, they won”t work in the USA either.