Sunday, March 14, 2010

John Stossel, I like this guy. He presents both sides on his show and covers interesting topics.

Fiscal Responsibility is No FunAs the Democrats scramble to pass health care legislation, talk still returns to the idea that at least the health care bill is "deficit neutral". That is, while it spends more than a trillion on a new entitlement, it pays for itself mostly by cuts in Medicare. Of course, the doc fix -- scheduled Medicare cuts to doctors which Congress has no intention of making -- will dwarf those savings and add $89 billion to the deficit.
But leave that aside. Medicare already faces a $30 Trillion deficit. The bigger issue is that Democrats are poised to make cuts in Medicare -- something that is incredibly difficult to do -- but instead of applying those cuts towards Medicare, they are applying it towards a lavish new entitlement program.

Harvard economist Greg Mankiw sums up the absurdity of this attitude perfectly on his blog. He shows off his professorial side by writing this dialogue between a friend who consistently spends more money than he earns, racking up credit card debt--and you:

Friend: I am going to take off a few days from work and fly down to Bermuda for a quick vacation.

You: But isn't that expensive? Won't that just add to your growing debts?

Friend: Yes, it is expensive. But my plan is deficit-neutral. I have decided to give up that half-caf, extra-shot caramel macchiato I order at Starbucks twice every day. I really don't need that expensive drink. And if I give it up for the next three years, it will pay for my Bermuda trip.

You: Well, then, how are you going to solve the problem of your growing debts?

Friend: I am going to figure that out as soon as I return from Bermuda.

You: But in light of your budget problem, maybe you should give up Starbucks and skip the Bermuda vacation. Giving up Starbucks could be the easiest way to start balancing your budget.

Friend: You really aren't any fun, are you?

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