The cost of entitlement

The latest round of health care reform has produced a pair of bills which promise to not only fix the healthcare woes in this country, but to dramatically reduce the deficit at the same time
(the new plan could reduce the deficit by $138 billion over the first 10 years -- $20 billion more than the Senate bill, according to the CBO forecast).

Excuse me for being cynical, but I've heard this song and dance before:

"In 1967, the House Ways and Means Committee predicted that the new Medicare program, launched the previous year, would cost about $12 billion in 1990. Actual Medicare spending in 1990 was $110 billion—off by nearly a factor of 10."

So why were these cost estimates so far off?  The cost of entitlement.

The estimates failed to recognize or account for the behavioral change that occurs in people when they are promised a no-cost benefit.

"Roosevelt described Social Security as a modest offer to 'give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.'

Look what has happened since then. About 35 percent of Americans rely on Social Security for 90 percent or more of their retirement income. ... And Social Security is only one example. Over the years, the federal government has created a number of social insurance programs -- including the Medicare plans for doctors' visits and prescription drugs -- that provide significant taxpayer subsidies to even middle- and upper-income Americans.

We started these programs as a safety net for our hard-luck fellow citizens, and of course that safety net must remain strong. My point is that programs designed to help the needy should not become enshrined as benefits to which all are entitled. Too many of us who can afford to contribute more to our own well-being are jumping into the safety net instead. That approach is not affordable or sustainable. More important, it's not the American way."

--David Walker, Former GAO chief from his book, Comeback America.

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Need tax help? Don't ask the IRS.

Some highlights of a recent AP article about IRS phone traffic:

  • 3 in 10 calls to the IRS receive a busy signal.
  • The agency's goal is to connect 71 percent of callers to a real person, down from a recent high of 87 percent in 2004.
  • In 2008, the IRS received 151 million calls on its toll-free line -- up from 67 million the year before. Many of the calls were about tax rebate checks issued by the IRS as part of an economic stimulus package passed by Congress. That year, only 53 percent of callers to the toll-free line reached a person.
  • In 2009, the agency received 94 million calls -- some were about the previous year's rebate checks while others were about a new round of tax breaks approved in February to help revive the nation's ailing economy. In 2009, 70 percent of callers reached a person.
And here's my favorite:
  • "The IRS is committed to providing the best possible service to every taxpayer," said IRS spokeswoman Michelle Eldridge.
You can't really blame the IRS, though; they're just doing the best job they can trying to administer the bloated mockery that is our Federal income tax system.

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