Exhaustion of the Welfare State’s “Reserve Fund”

by Mario Rizzo  

“An essential point in the social philosophy of interventionism is the existence of an inexhaustible fund which can be squeezed forever. The whole system of interventionism collapses when this fountain is drained off: The Santa Claus principle liquidates itself.”  Ludwig von Mises, Human Action: A Treatise on Economics, 3^rd edition, p. 858 (1966).  

During the bad old days of the Bush Administration I wrote a post, “The Disorderly Bankruptcy of the Welfare State.”  I stand by it all. 

Healthcare Game

by Chidem Kurdas

Funny thing about the Obama healthcare plan. It resembles a Rube Goldberg machine, as did the 1990s Clinton version. The present proposal “relies on a combination of subsidies and regulation to achieve universal coverage, and introduces a public plan to compete with insurers and hold down costs,” according to Paul Krugman in the NYT.

Why not simply extend Medicare to everybody? Oh, I forgot, Medicare Part A is projected to run out of money by 2017. And the only reason the other parts don’t face potential insolvency is that they’re financed from general tax revenue. Given the government’s track record with medical entitlements, the claim that a new  public plan will hold down costs is laughable.

Medicare costs more than half a trillion dollars a year now; within a decade it will require almost $1 trillion a year. If you want to skirt the cost issue, it’s best not to mention Medicare. This is the kind thing Charlotte Twight identified as a way proponents of larger government quash opposition. Concoct an elaborate new program of subsidies and regulations, mask the cost, focus on the new entitlement, and you’ll get more people behind the program.