Who Is FICA and Why Does He take All My Money?

Pretty sure those were the words of frustration I fumed as a 16 year old working at the mall for $5.70 an hour (minimum wage was $5.15 in 1998 so I felt like I was rolling) upon receiving my first paycheck.

Well my brother in law (the Quixotic Oklahoman) mentioned this over the weekend so I thought I should post it here. My only complaint is that this is broken down as a function of spending, and does not include the cost imposed by tax breaks like the ridiculous $105B mortgage interest deduction (2nd largest only to the employer health care deduction).

And just in case no one else cares to break out the old calculator, 51% of this tax bill goes to Social Security, Medicare, Medicaid, Interest on the debt, and Military Spending. Therefore anyone claiming to be interested in balancing the budget without tackling these areas first should be ignored.

Enjoy!

Why Does Congressman Roy Blunt Hate My Grandparents?

Via Matt Yglesias, I stumbled upon the following from Congressman Roy Blunt (R-MO):

HOST MIKE FERGUSON: What is the proper role of government, and what are the potential impacts of the direction that we’re going right now?

BLUNT: Well, you could certainly argue that government should have never have gotten in the health care business, and that might have been the best argument of all, to figure out how people could have had more access to a competitive marketplace.

Government did get into the health care business in a big way in 1965 with Medicare, and later with Medicaid, and government already distorts the marketplace.

You certainly could make that argument, but then again you'd probably not get reelected.

Matt then goes on to inform us that Medicare was passed in part because there is no free market solution to old and sick people, other than the one used prior to 1965 which was simply to remove them from the insurance pool:

Insurance takes advantage of risk-pooling and risk-aversion to offer people security at a price that’s both profitable and attractive. When the whole pool is bad risks, as senior citizens are, there’s no real business opportunity.

To further illustrate that point, I've included a handy chart which breaks out our nation's poverty rate since the late 1950's:

You'll notice that there is a pretty obvious drop sometime around the mid-1960's, but what may not be as clear is that the sharp decrease in the previous graph is primarily a result of the sharp decrease in old people living in poverty (see below).

So the next time some politician tells you that the "new deal" was a terrible idea, or as Mr. Blunt believes that the government should have never gotten involved in health care in the first place, you might want to ask if he's ready to return over 30% of the over 65 crowd back into poverty.

(whether or not you should invite Grandma and Grandpa to live in your house once they retire is a conversation for another day)