Congress and the President are seriously considering a cut in Medicare benefits.  There is no doubt that Republicans are itching to cut both Medicare  and Social Security benefits.  I will not be surprised if the proponents of cutting Medicare and Social Security as a means of reducing the federal deficit succeed – especially considering Obama’s and many Democrats’ willingness to cave in to the whacky right wing. 

Propaganda blaming a growing elderly population for health care inflation and, consequently, a ballooning Medicare budget, is pervasive, and unquestioned.  The mainstream media has bought, lock-stock-and-barrel, the narrative created by power-elite and conservative think tanks such as the Cato Institute, the Heritage Foundation, the Committee for a Responsible Federal Budget, the Bipartisan Policy Commission, etc., etc.  This narrative – i.e. all these old people are busting the budget – is, at best, based on ignorance. At worst it is an out and out lie.

As CBO research determined in 2008, an increase in the elderly population adds very little to health care cost inflation (see Technological Change & the Growth of Health Care Spending at http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf). Furthermore, the so-called “Baby Boom” generation will not become eligible for Medicare instantaneously.  Currently, the 65+ population comprises 13% of the U.S. population.  This age group will gradually increase to 21% by 2035.  The elderly population will level off at 21% and remain at that level into the foreseeable future (U.S. Census Bureau at http://www.census.gov/population/www/socdemo/age/).

What you don’t hear on NPR, PBS, NBC, ABC or read in the New York Times, USA Today or in any other media outlet is this:  the United States devotes approximately 17% of GDP and nearly $8,000 per capita to health care.  The following GDP and per capita health care expenditures pertain to some other industrialized nations – none of which come close to spending what the U.S. spends:  (1) United Kingdom, 9% GDP & $3,200 per capita, (2) Sweden, 10% of GDP & $4,000 per capita, (3) Spain, 9.2% of GDP & $3,000 per capita, (4) Japan, 10% of GDP & $3,000 per capita.  Norway is the country that comes closest to the U.S. in per capita spending: $5,500 per capita.  However, health care spending is only 10% of GDP in Norway.  You can check health care spending in all advanced industrialized countries at http://www.oecd.org/document/16/0,3343,en_2649_34631_2085200_1_1_1_1,00.html.

All of the countries listed above – along with all other countries listed by the OECD – provide health care to all of its citizens, while 50 million U.S. citizens have no health insurance and at least 150 million are under insured or at the mercy of power health insurance companies that could terminate coverage under some pretense or other.  Another thing happens in the U.S. that happens in no other country of the world:  the U.S. Congress and the “medical industrial complex” collude to restrict competitiveness and reward corporate conglomerates.

Medicare has served as a conduit of U.S. taxpayer money to corporations such as G.E., Johnson & Johnson, Merck, and Siemens (a German company that helped exterminate Jews during the Holocaust).  As the eminent economist Dean Baker has indicated, health care in the U.S. operates outside of the basic free market concept of “marginal cost pricing.”  The cost of an X-ray is not priced at what the next X-ray costs to provide plus a profit.  The price of X-rays and all other medical services set by oligopolies in collusion with the government.

The elderly are not responsible for out of control government spending.  Corruption in the U.S. Congress is responsible.  It will be the poor and the middle class that will take the blame while the health care industry continues to reap the benefits.

Some of the major “buzz” amongst Washington insiders and the national media these days is about a so-called “moderate” group of Democrats who are eschewing extremists on the left of the Democratic Party and making ready to make the “hard choices” on the budget deficit. This relatively new organization is called the Third Way.  Since this group is just one more power-elite and Wall Street front group, you can translate “hard choices” to mean “cut the budget deficit on the backs of the middle class by reducing Social Security and Medicare benefits.  “Extremist” can be translated to mean any Democrat unwilling to buy into the mean spirited Simpson/Bowles recommendations, e.g.  Representative Jan Schakowsky, Senator Sherrod Brown, and all other progressives in the Democratic Party.

Democrats associated with this “let’s whack Social Security” wing of the Democratic Party includes a smattering of rather moderate Democrats plus some very conservative current and past office holders.  Past office holders include Blanche Lincoln, Mark Pryor, and our very own Kathleen Sibelius.  Current office holders associated with the Third Way include Claire McCaskill, James Clyburn, Kay Hagen, John Dingell, Chris Coons and others.

I can’t find any evidence that these Democrats display much interest in reining in the defense budget or restructuring the tax system in such a manner that it is not rigged against the middle classes.  Perhaps that has something to do with the Third Way Board of Trustees – almost all of whom come from Wall Street.  The following is the list of the Third Way Board of Trustees:

·         John L. Vogelstein: Chairman, New Providence Asset Management, LLC and Senior Advisor to Warburg Pincus, LLC

·         Bernard L. Schwartz:  Chairman & CEO of BLS Investments, LLC.  Mr. Schwartz retired in 2006 after 34 years as Chairman of the Board and Chief Executive Office of Loral Space & Communications Inc. (NASBAQ:LORL)

·         David Heller:  Global Head of Equity Trading for Goldman Sachs.

·         Dwight Anderson:  a Principal and Portfolio Manager of Ospraie Management, LLC, an $8billion investment firm focused on four investment strategies in the basic industry and commodities sectors – hedge fund, private equity, incubation/seeding and long only.

·         Georgette Bennett:  Sociologist, criminologist, and journalist

·         Jonathan Cowan:  a co-founder of Third Way, has served as a high level bureaucrat in the Clinton administration.  With funding from the anti-Social Security billionaire Peter Peterson, founded a Social Security benefits reduction group called Lead or Leave

·         Lewis Cullman:  Founder and President of Cullman Ventures, Inc.

·         John Dyson:  Chairman of Millbrook Capital Management, Inc. (MCM) – A hedge fund.

·         Robert Dyson:  Chairman and CEO of Dyson-Kissner-Moran Corp., a privately owned, diversified invest holding company that was founded by his father Charles H. Dyson in 1954.

·         Brian Frank:  Director and Portfolio Manager at MSD Capital, L.P., the private investment firm founded by Michael Dell.

·         Michael Goldberg:  Joined Kelso & Company in 1991 as a Partner and Managing Director.  Prior to joining the firm, he spent two years as a Managing Director and co-head of the mergers & acquisitions department at The First Boston Corporation.

·         Peter Joseph:  Managing Director of Palladium (investment firm).

·         General Claudia Kennedy:  First woman to achieve the rank of three-star general in the U.S. Army.

·         Derek Kirkland:  Managing Director and Co-Head of the Global Financial Institutions Group at Morgan Stanley’s Financial Institutions Group in Investment Banking

·         Reynold Levy:  President of Lincoln Center for the Performing Arts

·         Daniel Loeb:  CEO of Third Point (investment firm).  Prior to founding Third Point, Mr. Loeb was Vice President of High Yield sales at Citigroup.

·         Thurgood Marshall, Jr.:  A Partner at Bingham McCutchen LLP, and a Principal of Bingham Consulting Group (lobbyist for Wall Street)

·         Herbert Miller:  former CEO and Chairman of The Mills Corporation, one of America’s most innovative and successful mall developers and managers

·         Michael Novogratz:  President and Director of Fortress Investment Group LLC (spent 11 years at Goldman Sachs)

·         Andrew Parmentier:  Founding and Managing Partner of Height Analytics (has worked in the financial services industry since 1997)

·         David Roberts:  Senior Managing Director of Angelo, Gordon & Co. (manages the firm’s private equity and special situations area)

·         Howard Rossman:  President and Founder of Mesirow Advanced Strategies, Inc, and a Vice Chairman of its parent, Mesirow Financial Holdings Inc.

·         Tim Sweeney: President and CEO of the Denver-based Gill Foundation

·         Ted Trimpa: Lawyer active in conservative wing of the Democratic Party

·         Barbara Manfrey:  Specialist in venture capital and specialized equity investing.  A past Partner of Apax Partners & Co. Ventures, a leading worldwide venture capital firm

·         Joseph Zimlich:  Chief Executive Officer of Bohemian Companies, a group of family-owned real estate and private equity holdings.