It's that time again. Time to remind everyone that that there are plenty of other disasters-in-the-making coming down the pike -- aside from all those poorly-managed financial institutions that are poised to go under -- that will require an urgent seeing-to in the not-too-distant future. They include the nation's taxpayer-financed social safety net for aging Americans. In "Medicare Running Out of Funds, Requiring Changes," Bloomberg gives us the latest.
Spending on Medicare, the U.S. health-care program for the elderly, will reach a legal limit by 2014, requiring the next president to propose changes.
The report issued today is the second consecutive year that Medicare's trustees have pulled the so-called trigger, a law mandating that the president introduce legislation the following year to protect the program's financing.
President George W. Bush proposed in February that wealthier seniors pay higher premiums for Medicare's prescription drug benefit to increase revenue. Bush's plan, which Democrats in Congress dismissed as insufficient, was required by the trustees' report of 2007. Because of the new report, Bush's successor will have to offer proposals next year. The trustees also urged action to shore up Social Security, the government's retirement program.
"As the baby boom generation moves into retirement, these programs face progressively larger financial challenges," said Treasury Secretary Henry Paulson, one of the trustees, in a press conference. "The Medicare program poses a far greater financial challenge than Social Security."
The trustees, all members of the Bush administration, offered projections for Medicare and Social Security similar to those in last year's report. They again estimated that Medicare's hospital fund will be insolvent by 2019, although earlier in that year than previously predicted, and that Social Security will run out of assets by 2041.
Medicare's Share
Medicare's share of the U.S. economy is expected to grow to 10.8 percent by 2082, the end of the 75-year projection period, from 3.2 percent in 2007, according to the report.
Medicare, started in 1965 to guarantee medical coverage to elderly and disabled patients, currently covers 44 million Americans. The program, which spent about $440 billion last year, is financed through a mix of payroll taxes, general tax revenue and beneficiary premiums.
When general tax revenue is projected to reach 45 percent of Medicare funding, the president is required under a 2003 law to propose legislative changes to reduce the share. The law was passed by Congress to keep spending on Medicare within bounds as the "baby boom" generation born from 1946 to 1964 qualifies for coverage and health-care costs grow faster than the economy.
Bush proposed in his fiscal 2009 budget holding the annual growth in Medicare spending to 5 percent, down from the projected 7.2 percent, largely by reducing payments to medical providers.
Democratic presidential candidates Hillary Clinton and Barack Obama have said they plan to hold down the rise in health-care spending through more cost-effective treatments, better preventive care and wider use of electronic records.
John McCain, the presumptive Republican nominee, has suggested similar measures, while proposing that Medicare reduce spending by paying a single fee for treatment of a disease, rather than reimbursing providers for individual procedures.
I suspect that as politicians put the squeeze on Medicare funding, fewer and fewer doctors will want to have Medicare patients. The outlook does not look good for older people with lots of medical conditions, or for 30 year olds who contract AIDS, for that matter. The last politician who campaigned on a platform to raise taxers to pay for Big Government was Walter Mondale and he went down in flames in 1984. In 1980, Congressman Al Ullman, then Chairman of the House Ways and Means Committee, was thrown out of office by his Oregon voters when he started promoting a national sales tax (VAT). Moral of the story: Don't get fat, don't be sexually promiscuous, don't smoke and do get some exercise regularly because the government safety net is rapidly disappearing.
Posted by: Rocky | March 25, 2008 at 10:40 PM
Brazilians shun 'American Dream'
At the tiny airport on the outskirts of the city of Governador Valadares a plane draws up to the terminal building, bringing with it just a handful of passengers.
On board - as with many flights these days - is a Brazilian who has decided that the "American dream" is no longer for him, after seven years away from his family.
Faced with a falling US dollar and a tougher climate for immigrants generally, Francisco Silva says many Brazilians are finding it harder to make a living in the US and are either returning home or going elsewhere.
"It's very hard now," he says.
"There is very little work and it is very difficult to get a driving licence.
"I think many are going to return this year and some will go to Canada because things in the States are much more difficult."
Increasingly difficult
On the slopes of the mountain that overlooks this city in the heart of the state of Minas Gerais, one local man who has returned home reflects on a trip he was forced to make, after 10 years in the US.
After being caught with illegal documents, Rodrigo Alves de Souza, 27, spent eight months in jail before finally being told he was to be deported, leaving behind his mother and sister.
"I had my life in America, and when I heard I was going to be deported I knew that I was going to be separated from my family, and my job and the dream that I had to go there," he says.
"America is a good place if you work and do the right thing. You can have everything there.
"I met a lot of people that are giving up because right now living in America with no documents, if you are illegal, is very hard."
Sending money
Despite this, some 30,000 people from this one city are still said to live in the US.
It is a link that stretches back to the 1940s, when American companies first came to this area seeking a heat resistant mineral called mica to help the war effort.
By the 1960s, encouraged by this contact, there was a steady flow of people setting off to the US in the hope of building a better future.
Among those who were to leave from this region to seek a better life was Jean Charles de Menezes, who later was to be mistakenly killed by police in London during an anti-terrorist operation.
The scale of the exodus was such that at one point emigrants were sending home around $5m a month, which in total amounted to more than half the city's annual budget.
Chasing a dream
At his office in the centre of Governador Valadares, the city's mayor, Jose Bonifacio Mourao, acknowledges income from the US has made a huge difference to the area, but says there are significant challenges ahead, such as attracting new firms and jobs.
However the mayor does not think it is the end of the "American dream".
"I couldn't say that the dream is ending because in the middle of this crisis there are still some people leaving from here," he says.
"But it is clear that the enthusiasm behind that dream has lost a lot of its force because of the growing difficulties there; the American economic crisis, the tightening of restrictions on immigrants and the fall in the dollar. Those are the three main reasons."
Eyeing Europe
Sueli Siqueira, a researcher who has studied patterns of migration from the city for many years, believes "the project of migrating to the US continues because this is part of people's imagination, the wish of the population".
"Now there is interesting data, that among this group that are returning, 28% have already come back with the idea in mind of going to Europe, with Portugal as the door."
Local officials believe that in the last three months some 10% of the local population that was living in the US, perhaps up to 2,500 people, have returned home.
In 2007 some 6,000 Brazilians left from the state of Massachusetts alone, according to an estimate by the Centre for Brazilian Immigrants in Boston.
Culture clash
Paulo Costa, a local politician and president of a support group for relatives with family abroad, says one of the challenges is the high expectations of those who are coming home to stay.
"They went there to work as waiters, carpenters and construction workers, but when they return they rarely want to work in those professions here," he says.
"They want to be businessmen, to run businesses, and most of the time, unfortunately, it is not possible for everyone."
"They have money, but with no understanding of how to invest it," adds Jose Geraldo Prata of the local retailers' association.
"They invest in areas that in a way copy how things are done in the United States, but which don't fit with Brazilian culture."
Training courses are now being run to help the returning migrants settle back into a community that for many of them has changed dramatically in the years since they left.
Persistent dreamers
But even though the American dream may have gone a little sour for some Brazilians it seems another younger generation still regards it as an option.
"I would go there just to work, to get better things here," says teenager Wagner de Souza.
"Usually people who go there to work buy better things here like houses, cars and things like that."
Similarly, Edna Marinho, 17, has not been put off by recent problems.
"I believe in the US," she says.
"The symbol of the eagle comes from this, always renewing your strength, so I think the American dream can't die."
"You do have to dream. A dream is what moves the world."
Since 1980, it is estimated that more than one million Brazilians have left their country seeking a new life elsewhere, and even a recent sustained period of economic growth in Brazil has not yet persuaded the majority to come back.
For generations of people in Governador Valadares, dollars from the US have helped to build new lives and homes.
It seems it may take more than an economic downturn and tough immigration laws to end those deeply rooted American ties, even if temporarily they have to seek their dreams elsewhere.
Posted by: SweetHomeMinasGerais | March 26, 2008 at 01:34 PM
This video is a must-watch:
Bloomberg video:
Grant Calls Fed's Balance Sheet an `Economist Nightmare': Video March 25 (Bloomberg) -- James Grant, editor of Grant's Interest Rate Observer, talks with Bloomberg's Pimm Fox in New York about the Federal Reserve's intervention in the credit market crisis and its impact on the value of the U.S. dollar. (Source: Bloomberg)
http://www.bloomberg.com
Posted by: FB | March 26, 2008 at 02:13 PM