Author: Larry Littlefield

I’ve often said that just because it is the national average, adjusted as best as possible for population, the cost of living, and other factors, doesn’t make it right. But a substantial deviation in any direction raises questions. As it happens, the U.S. Census Bureau makes data available that can be used to calculate an average public school spending per child for every region and every school district in the state. I compiled the data for 2005, simplifying the revenue and expenditure categories and adding a cost of living adjustment for high-cost Downstate New York; based on last year’s release, updated data should be available in late May or early June.

As the spreadsheet attached to this

It seems that, perhaps because my teenage kids spend too much time on the phone, no one called to ask that I serve on the Suozzi Commission on high property taxes. No matter. Rather than stand on ceremony, I’ll just make my contribution here on Room Eight. Those on the Commission are encouraged to download the spreadsheets attached to the posts linked here. What the data from the U.S. Census Bureau shows is the opposite of what people in the portion of New York State outside New York City insist on believing, and their elected officials insist on telling them. Property taxes are high in the rest of the state because spending is high, not because New York City has such a wonderful deal. Spending in the suburbs and upstate is high in particular categories, not in all categories, for reasons that are not unfamiliar in New York City. Spending in those categories benefits powerful interests with an outsized and unchallenged sense of entitlement. And spending in those categories is increased by one set of elected officials, who get credit, but funded by another set of elected officials, who get the blame. High staffing levels, particularly in the public schools, may also be a response to weaknesses elsewhere in the economy, as it was in New York City under Mayor John Lindsay. But whereas economic problems in New York City led to a growth in the welfare rolls, economic problems elsewhere have led to an increase of more than 100,000 local government jobs since 1990, jobs that have pensions and unfunded retiree health care attached to them.

Room 8 readers might not have appreciated this post when I wrote it last April, but might want to give it close a read now. I don’t think I could explain any better the economic situation we have gotten ourselves into, so I have decided not to try. We are about to have a recession driven by a cultural problem, a psychological need to spend significantly more than we produce. That is a condition that cannot persist forever, and only persisted as long as it did because people were allowed to borrow money they could never pay back.

According to a press release put up on this site “New York State Comptroller Thomas P. DiNapoli, New York City Comptroller William C. Thompson, Jr. and the New York City Pension Funds today announced the expansion of the consolidated class action lawsuit filed against Countrywide Financial Corporation and other defendants. The expanded suit will include 26 different financial services companies that underwrote Countrywide stock and bond offerings, two global accounting firms, and additional Countrywide officers and directors who signed SEC filings that contained false and misleading information about Countrywide’s
business and finances.”

With the price of oil having touched $100 per barrel and gasoline over $3.00 per gallon, Americans are beginning to adjust, just as they did in the late-1970s and early-1980s. They are looking to buy gas-sipping hybrids instead of gas guzzling SUVs, and compact urban condos or smaller, more efficient suburban homes, rather than sprawling exurban McMansions. Some are carpooling, others switching to mass transit, scooters, motorcycles or even bicycles. The boom in rooftop solar is so strong that there is a shortage of panels. American business has also started to make changes. Investment capital and research dollars are pouring into alternative energy sources. The nuclear energy market has revived. After killing off the electric car and fighting fuel economy standards, General Motors is desperately trying to develop a plug-in hybrid while killing off the H1 Hummer.

What are we, a bunch of idiots? OPEC knows that what most Americans really want is to be fat, lazy, and stupid, and that our politicians get elected by pandering to our worst instincts. As soon as conservation and alternatives begin to make a dent in our fossil fuel dependence OPEC will, as in the mid-1980s, pump up production and cut the price of oil. And as soon as it does Americans will forget all about our long-term economy, our national security, and the global environment, and suck that cheap oil like a pacifier. Those who conserve will again be derided as losers, as the winners drive more massive vehicles designed to cause rather than suffer fatalities in a crash, and those who invest in energy alternatives will go broke. Until they have us over a barrel yet again.

So I have proposed universal healthcare financing at the national level. How would I pay for it? My view is that we are already paying for it, directly or indirectly, through existing government programs, subsidies, and tax exclusions. My goal would not be to send health care soaring beyond its already world-leading nearly 16 percent of GDP, nor to increase the share of GDP devoted to health care by the government. My goal would be to shift government health care funding to basic, established care for everyone, rather than wasteful, luxury care for some and nothing for others. People could buy more, or contribute to charities that provide more to others, by choice. We need to avoid having the government force people to pay for wasteful, luxury care today, at the cost of national bankruptcy, and no care for today’s young people when they are senior citizens tomorrow. Federal politicians, including members of Congress and Presidential candidates, shrink from a simple, federally financed system for two reasons. First, they do not wish to confront those who benefit from the system as it is. Second, they do not wish to raise federal taxes for health care, and then get blamed, while saving businesses and state and local governments money, for which they will receive credit. Neither is an excuse for the disaster that is our existing health care finance system. Let’s move forward.

My experience in public policy tells me that in general anything that isn’t simple is a ripoff, and in the dark corners of back-door funding, money flows to power not to need. So what would I do about healthcare finance in the United States? Something like Senator Edwards proposed when he said “Health Care Markets will offer a choice between private insurers and a public insurance plan modeled on Medicare, but separate and apart from it. Families and individuals will choose the plan that works best for them.” And that’s all. People would be allowed to keep their current employer-provided insurance, but the back-door government subsidy for it via an exclusion from personal income taxes would be replaced by a front door subsidy that was equitable. Existing senior citizens could stay in Medicare as it now exists, but it would phase out and be replaced by the new “Medicare” as it would be. Medicaid would disappear, except for the custodial care of adults (mostly seniors and the severely disabled) with self-care limitations. And even in that case the continuation of Medicaid would be temporary, because the custodial care issue is massive and needs to be rethought carefully, and separately from health care for everyone else.

If the financial markets overseas tomorrow are like they were today and Wall Street follows, I have a suggestion for Governor Spitzer. Cancel the budget presentation, throw the document in the trash, and start over. He should probably do it anyway. Going along with a fantasy until after the November elections, at the price of far more severe damage to our public services and economy, is unethical — but absolutely consistent with past practice. Note the difference between Mayor Bloomberg’s already-announced budget cuts and news of spending increases already leaked from the Governor’s budget.

Well, I’ve read through the healthcare sections on the major candidate’s websites, even in cases where it wasn’t made easy (Hey Edwards, if you want fair comparisons and accurate citations, don’t put you policies in PDF), and I’ve got some good news.  If you take the best parts of the plans of Senator Clinton, Senator Obama, Senator Edwards, Senator McCain, Governor Romney, Mayor Giuliani, and Governor Huckabee (yep even he had a good point or two), the U.S. could have a plan that addresses the inequities, economic damage and waste in the U.S. healthcare finance system that I discussed in my prior three posts.  All of them accept there is a problem, and that public policy is at the center of it.  All of the Democrats propose reducing the inequity by creating a universal health care finance system.  Most of the Republicans accept the need to limit the economic damage by separating health insurance from place of work, and some assert the need to force people to make cost-benefit choices in health care.  In my next couple of posts I’ll lay out my suggestion, and to my surprise I’ll be able to do so while quoting all the candidates.  The problem is that if you take all the bad ideas and put them together, you have a disaster on your hands.  And most of the bad ideas are not the result of ideological beliefs; they are the result of bending those beliefs to accommodate those who benefit the mess as it is.  This post is about the bad ideas.

According to the 2008 Statistical Abstract of the United States, health expenditures accounted for 15.3% of GDP in the United States in 2004, up from 8.8% of GDP in 1980. That is vastly more than healthcare’s share of GDP in Canada (9.9%), France (10.5%), Germany (10.9%), Denmark (8.9%), Norway (9.7%), or Sweden (9.1%), all countries with publicly financed universal health insurance (see attached spreadsheet). In the United Kingdom, which also has public provision of health care via the National Health Service, healthcare only accounted for 8.3% of GDP. Italy and Japan have some of the longest-lived people in the world, but their healthcare expenditures absorbed only 8.4% of GDP and 8.0% of GDP, respectively. And not only did the U.S. have the highest health care expenditures as a share of GDP in 2003/2004, it also had the largest increase since 1980. So, from a public policy perspective, how large should U.S. healthcare expenditures be as a share of GDP? Well, according to public policy how large should U.S. entertainment expenditures be as a share of GDP? How large should housing expenditures be as a share of GDP? How large should travel expenditures be as a share of GDP? Perhaps you get the idea. That is not the right question.